SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

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

     FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                                       OR

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

     FOR THE TRANSITION PERIOD FROM               TO
                                    -------------   -------------

COMMISSION FILE NUMBER: 000-25015

                         WORLDPORT COMMUNICATIONS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

             DELAWARE                                   84-1127336
     (STATE OR OTHER JURISDICTION OF                 (I.R.S. EMPLOYER
     INCORPORATION OR ORGANIZATION)                 IDENTIFICATION NO.)

            975 WEILAND ROAD, SUITE 160 BUFFALO GROVE, ILLINOIS 60089
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                                 (847) 229-8200
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                                                    NAMES OF EACH EXCHANGE
                                                    ----------------------
                  TITLE OF EACH CLASS               ON WHICH REGISTERED
                  -------------------               -------------------
                        None                               None

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                        Common Shares, $0.0001 Par Value

     Indicate by check mark whether the Registrant (l) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [ ]

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

         Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). Yes [ ] No [x]

     As of March 25, 2003, 39,087,252 shares of Registrant's common stock were
outstanding.

     The aggregate market value of the Registrant's common stock held by
non-affiliates on June 30, 2002 was approximately $14.0 million (based on a
closing sale price of $0.39 per share of common stock).

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                       DOCUMENTS INCORPORATED BY REFERENCE

     None.


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                         WORLDPORT COMMUNICATIONS, INC.

                         2002 ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS



                                                                            PAGE
                                                                            ----
                                     PART I
  Item 1       Business                                                        4
  Item 2       Properties                                                     12
  Item 3       Legal Proceedings                                              13
  Item 4       Submission of Matters to a Vote of Security Holders            14
  Item 4A      Executive Officers of the Registrant                           14

                                     PART II
  Item 5       Market for Registrant's Common Equity and Related              16
                   Stockholder Matters
  Item 6       Selected Financial Data                                        17
  Item 7       Management's Discussion and Analysis of Financial              18
                   Condition and Results of Operations
  Item 7A      Quantitative and Qualitative Disclosures about Market Risk     31
  Item 8       Financial Statements and Supplementary Data                    32
  Item 9       Changes in and Disagreements with Accountants on               62
                   Accounting and Financial Disclosure

                                    PART III
  Item 10      Directors and Executive Officers of the Registrant             63
  Item 11      Executive Compensation                                         64
  Item 12      Security Ownership of Certain Beneficial Owners and            66
                   Management
  Item 13      Certain Relationships and Related Transactions                 69
  Item 14      Controls and Procedures                                        69

                                     PART IV
  Item 15      Exhibits, Financial Statement Schedules and Reports on         70
                   Form 8-K

               Signatures                                                     71

                                                                               3
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                                     PART I


     This report contains certain "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of
the Securities Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995, including, among others (i) expected resolution
of the Company's contingent liabilities, (ii) prospective business opportunities
and (iii) the Company's potential strategies for redirecting and financing its
business. Forward-looking statements are statements other than historical
information or statements of current condition. Some forward-looking statements
may be identified by use of terms such as "believes", "anticipates", "intends"
or "expects". These forward-looking statements relate to the plans, objectives
and expectations of the Company. Although the Company believes that its
expectations with respect to the forward-looking statements are based upon
reasonable assumptions within the bounds of its knowledge of its business and
operations, in light of the risks and uncertainties inherent in all future
projections, the inclusion of forward-looking statements in this report should
not be regarded as a representation by the Company or any other person that the
objectives or plans of the Company will be achieved.


ITEM 1.   BUSINESS

COMPANY BACKGROUND

      From 1997 to 1999, Worldport Communications, Inc. (the "Company" or
"Worldport") was a facilities-based global telecommunications carrier offering
voice, data and other telecommunications services to carriers, Internet service
providers, medium and large corporations and distributors and resellers
operating in Europe and the United States. To finance certain acquisitions, the
Company borrowed $120 million in June 1998 under an interim loan facility
("Interim Loan Facility"). In order to meet its obligations under its Interim
Loan Facility, the Company sold substantially all of its material assets during
the first quarter of 2000 (as described below).

      In November 1999, the Company entered into a series of agreements with
Energis Plc to sell its 85% ownership interest in Worldport Communications
Europe Holdings, B.V., the parent of EnerTel N.V., and associated assets
("EnerTel"). The sale was consummated on January 14, 2000 for $453.2 million,
net of certain transaction expenses. The Company applied a portion of the net
proceeds realized from the sale to repay existing debt, including debt incurred
under the Interim Loan Facility, trade credit and other liabilities, and paid
U.S. federal income taxes of approximately $57 million on the gain.
Additionally, the Company completed the sale of International Interconnect, Inc.
("IIC") in March 2000 for $0.3 million.

      In the second quarter of 2000, the Company announced a new business
strategy, focused on the delivery of Internet solutions to global companies
doing business in the European marketplace. Pursuant to this strategy, the
Company invested over $40 million to construct a new Internet solutions
SuperCentre in Dublin, Ireland, which became operational in October 2000. In
September 2000, the Company purchased VIS-able International AB and its
affiliates ("VIS-able"), a Swedish professional services firm specializing in
complex systems development and consulting, for approximately $17.7 million.
Finally, in April 2001, the Company acquired hostmark entities in the U.K.,
Sweden and Germany ("hostmark"), including the assumption of approximately $22
million in liabilities, for 5.1 million shares of the Company's common stock.
The acquisition of hostmark provided Worldport with Internet solution centers
("ISC's") in London, Stockholm and Frankfurt. The hostmark companies had minimal
revenues when the transaction was completed, and only one ISC was open for
business.

      Following the acquisition of hostmark, the Company initiated an aggressive
integration program to rapidly identify and eliminate operational and system
redundancies in the two companies and to further streamline the combined
business. Additionally, the Company shut down the unprofitable U.S. and U.K.
professional services operations and took steps toward further cost alignment in
its Swedish professional services operation.

      After the completion of the hostmark acquisition, the Company did not
achieve the revenue growth in its managed hosting business that it had
anticipated. The Company also experienced a decline in revenue in its Swedish
professional services business. The general economic downturn, the slowdown in
technology spending and the

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lengthening in the sales cycle for managed hosting services all contributed to
these revenue shortfalls. In addition, the Company's Swedish professional
services business was negatively affected by excess capacity in the Swedish
consulting market, major pricing pressures, and slower customer decisions
related to new IT projects for those services. The Company believed that these
conditions, as well as the increasing level of competition and consolidation in
the Web hosting and Internet infrastructure markets, would continue to have an
adverse effect on Worldport's ability to achieve near term revenue targets and,
if they continued, could erode the financial resources of the Company more
rapidly than planned.

      Therefore, the Company began a review of various alternatives to its
existing business plan. As part of this review, the Company considered, among
other alternatives, partnering with a strategic investor, taking additional
actions to reduce operating expenditures, closing one or more facilities, or
selling all or part of the Company's assets or operations.

      Following the exploration and review of the strategic alternatives, the
Company determined that it was necessary to dramatically reduce the rate at
which its operations were using cash and to minimize its exposure in markets
that were experiencing significantly slower than expected market growth. As a
result, the Company made a decision to take further restructuring actions and to
divest itself of certain assets. Accordingly, the following actions were taken
in the fourth quarter of 2001:

      0   In November 2001, the Company announced that its Irish subsidiary was
          ceasing operations at its Dublin, Ireland facility. An orderly
          shutdown of the Ireland operations was commenced, and was
          substantially completed by December 31, 2001.

      0   In December 2001, the Company sold the assets and certain liabilities
          of its managed services business in Stockholm to OM Technology AB for
          10 million Swedish kronor, subject to the resolution of a final
          working capital adjustment. The parties agreed to a final sales price
          of 7.5 million Swedish kronor (approximately $0.8 million) in July
          2002. OM also agreed to assume the ownership of Worldport's Stockholm
          Internet solutions center and the operations at that center, and all
          customers' contracts.

      0   In December 2001, the Company also sold its Swedish professional
          services business to its employees in a management buyout for $0.9
          million, the majority of which is in the form of a note. Due to
          uncertainties related to the collectibility of this note, it has been
          fully reserved.

      0   In December 2001, the Company placed its German subsidiary, Hostmark
          GmbH, into receivership under German law.

      0   The Company also took steps to reduce corporate expenses at its
          Buffalo Grove, Illinois, headquarters in connection with these
          transactions.

      In connection with these activities, the Company recorded a restructuring
charge of $101.5 million in the fourth quarter of 2001, which included an $84.8
million asset impairment charge to write down the managed hosting long-lived
assets to their expected net realizable value. This restructuring charge is
described in more detail in the "Notes to Consolidated Financial Statements" and
in "Management's Discussion and Analysis of Financial Condition and Results of
Operations".

      In addition, the Company completed the sale of its remaining carrier
business, Telenational Communications, Inc. ("TNC") in October 2001 for $0.4
million.

      Following the completion of these activities, the Company had completely
disposed of its professional services segment and shut down or disposed of its
managed hosting centers in Ireland, Sweden and Germany. The Company continued to
operate its managed hosting center in the U.K., where it was believed that the
greatest opportunities for the European managed hosting market existed. However,
during the first quarter of 2002, the U.K. managed hosting market continued to
develop at a much slower rate than anticipated. In addition, increasing industry
consolidations and the closure or bankruptcy of competitors in the industry led
the Company to believe that market conditions would not improve in the near
future, bringing increased risk to the financial requirements for this business.

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      In March 2002, the Company's Board of Directors made the decision to make
no further investment in its U.K. managed hosting operation. The Company
recorded a $10.0 million restructuring charge in the first quarter of 2002
related to this action. This restructuring charge is described in more detail in
the "Notes to Consolidated Financial Statements" and in "Management's Discussion
and Analysis of Financial Condition and Results of Operations". On March 26,
2002, the Company's U.K. subsidiaries, Hostmark World Limited and Hostmark U.K.
Limited, filed a petition for Administration under the United Kingdom Insolvency
Act. An administrator was appointed for these subsidiaries to either reorganize,
find new investors, sell or liquidate the U.K. businesses for the benefit of
their creditors. As a result of this action, the administrator has control over
these subsidiaries' assets.

      As a result of the transactions described above, the Company no longer had
active business operations as of March 31, 2002.

      In April 2002, the Company received a $57.6 million income tax refund from
the Internal Revenue Service for the tax year ended December 31, 2001. The
Company generated a taxable loss of $167.2 million in 2001, primarily as a
result of the closure of its SuperCentre in Dublin, Ireland in the fourth
quarter of 2001. Under U.S. Federal tax law, the Company was able to carry back
that loss to offset taxable income from the sale of its EnerTel subsidiary in
2000, with respect to which the Company paid U.S. federal income taxes of
approximately $57 million for the tax year ended December 31, 2000. Accordingly,
the Company applied for a refund of past taxes paid in connection with the
filing of its 2001 Federal income tax return. The Company recorded a tax
receivable of approximately $52.0 million at December 31, 2001 and an additional
tax receivable of $5.6 million in the first quarter of 2002 for a $5.6 million
AMT tax credit carryforward which, under a new U.S. federal tax law that was
enacted in March 2002, allowed the Company to carry back the $5.6 million AMT
tax credit against taxable income in 2000 for an additional refund. Receipt of
this $57.6 million refund does not indicate that the Internal Revenue Service
agrees with the positions taken by the Company in its tax returns. The refund is
still subject to review by the Internal Revenue Service of the Company's 2001
tax return. It would not be unusual for the Internal Revenue Service to audit a
return resulting in a refund of this magnitude. The Internal Revenue Service
could require the Company to return all or a portion of this refund. The statute
of limitations for the notification of an audit is generally three years from
the filing of the applicable tax return, although this period can be extended by
agreement.


      Throughout 2002, the Company operated with a minimal headquarters staff
while it conducted activities related to exiting its prior businesses. Following
is a summary of the significant exit activities that occurred in 2002:

      0   In April 2002, Worldport Ireland Limited was given notice that a
          petition for winding up was filed and would be presented to the Irish
          High Court by Global Crossing Ireland Limited. The petition was heard
          by the Irish High Court on May 13, 2002 and a liquidator was appointed
          for this subsidiary to act on behalf of the creditors. As a result of
          this action, the liquidator has control over this subsidiary's assets.

      0   In August 2002, the U.K. administrator identified a new third party
          tenant for the Slough, U.K., data center. The Company had previously
          agreed to guarantee, on behalf of its U.K. subsidiary, the Slough data
          center lease expiring in 2015. In connection with the August 2002
          transaction, the landlord agreed to release the underlying lease
          guarantee and, therefore, relieve the Company from the $7.7 million
          lease liability upon the payment of 0.2 million British pounds
          (approximately $0.3 million), which payment was funded by the Company.

      0   In September 2002, the liquidator for the Company's Irish subsidiary
          disclaimed the leases for the two facilities previously used by the
          Irish subsidiary. The Company had provided a letter of credit to the
          landlord of these facilities equal to approximately 0.5 million Euros
          to support the lease of one of the facilities. Partial draws of
          approximately 0.2 million Euros and 0.3 million Euros were made in
          October 2002 and December 2002, respectively, and paid to the landlord
          under the letter of credit. The Company expects that the remaining
          amount of the letter of credit (less than 0.1 million Euros) will be
          drawn out. The Company provided a guarantee with respect to the lease
          of the other facility. In October 2002, the Company received a letter
          from legal counsel for the landlord with respect to its guarantee.
          This letter demanded the payment within 14 days of approximately 0.9
          million Euros and the confirmation of the


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          Company's liabilities as guarantor under the lease. In January 2003,
          the Company's legal counsel received a letter from legal counsel for
          the landlord in which the landlord demanded that the Company assume
          the position of tenant under the lease. Should the Company be forced
          to assume the position of tenant under the lease, the Company could be
          obligated for the full amount of rent through 2010 plus certain taxes
          and maintenance expenses. In February 2003, the landlord filed a
          Notice of Motion in the High Court of Ireland against the Company in
          which the landlord demanded payment of approximately 1.2 million
          Euros, which included additional rent that they claim had accrued
          since their prior demand. A hearing is scheduled for April 8, 2003.
          The Company is contesting the validity of the landlord's demands.
          There can be no assurance that such claims will not be successful
          against the Company. However, the outcome of the matter is not
          expected to have a material adverse effect on the consolidated results
          of the Company in excess of amounts already recorded. (See "Liquidity"
          in "Management's Discussion and Analysis of Financial Condition and
          Results of Operations".)

      0   Also in September 2002, Hostmark AB was put into liquidation and a
          liquidator was appointed to control this subsidiary. As a result of
          the asset sale to OM Technology AB in December 2001, there were no
          assets and minimal liabilities remaining in this Swedish subsidiary.

      0   In the third quarter of 2002, the Company was informed by its German
          attorneys that the receiver terminated the Frankfurt lease effective
          December 31, 2002 under the provisions of German law. The Frankfurt
          data center lease was a major outstanding liability of the Company's
          German subsidiary, Hostmark GmbH. As a result, Hostmark GmbH is no
          longer obligated for lease payments due after the effective date
          (approximately $1.6 million). The lease liability had originally been
          recorded by the Company as part of the $101.5 million restructuring
          charge taken on the discontinued businesses in the fourth quarter of
          2001. Additionally, the Company was informed that the receiver has
          declared insufficiency of the estate under the provisions of German
          law. This declaration was made because the receiver determined that
          the remaining net assets of the German company were not sufficient to
          cover the administrative costs of the proceedings, and consequently,
          no distributions would be made to the third party creditors (including
          the Frankfurt landlord for lease payments prior to the December 31,
          2002 termination date). This declaration can be revoked in the future
          to the extent money is collected by the receiver on behalf of Hostmark
          GmbH in an amount sufficient to provide a distribution to the third
          party creditors. Based on its understanding of the German proceedings,
          the Company does not believe it is obligated to fund the Frankfurt
          lease obligation or other creditor liabilities of the German
          subsidiary.


      Since ceasing its business operations, the Company has considered various
alternatives in determining how and when to use its cash resources. The Company
has sought and reviewed acquisition opportunities. However, the Company did not
pursue any of these opportunities since the Company did not believe that any of
them were in the best interests of its stockholders. The Company has also
analyzed a potential liquidation of the Company and its effects on the Company's
stockholders.


         On December 23, 2002, W.C.I. Acquisition Corp., a Delaware corporation
("W.C.I."), commenced a tender offer for any and all of the Company's
outstanding common stock at a price of $0.50 per share (the "W.C.I. Offer").
W.C.I. was formed by The Heico Companies, L.L.C. ("Heico"), J O Hambro Capital
Management Limited ("Hambro") and certain of their affiliates to complete the
W.C.I. Offer. As described further under "Risk Factors - The Heico Companies,
LLC and J O Hambro Capital Management Limited, combined, have significant voting
control over the Company", certain of the Company's directors are affiliated
with and/or control Heico. Heico, Hambro, and certain of their affiliates own or
have the right to acquire 17,889,147 shares of the Company's common stock, which
represents approximately 45% of the Company's outstanding common stock. The
W.C.I. Offer was conditioned on, among other things, the valid tender of a
majority of the outstanding shares, excluding the shares owned by W.C.I. or its
stockholders. W.C.I.'s tender offer expired on February 14, 2003 without the
purchase of any shares, as certain conditions were not satisfied. W.C.I.
reported that approximately 6.8 million shares were tendered in response to the
W.C.I. Offer. Several lawsuits alleging various misrepresentations have been
filed relating to the W.C.I. Offer (see "Legal Proceedings"). The Company
believes these allegations to be without merit. To date, there has been no final
adjudication or settlement of these lawsuits.
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      Recognizing the apparent desire of certain stockholders for liquidity
demonstrated by their tender of shares pursuant to the W.C.I. Offer, the
Company's Board of Directors considered the possibility of a self-tender offer.
Upon approval by the Company's Board of Directors, the Company commenced a
self-tender offer on March 7, 2003 for any and all of the Company's outstanding
common stock at a price of $0.50 per share (the "Self-Tender Offer"). The
Self-Tender Offer is not conditioned on any minimum number of shares being
tendered, however it is subject to certain conditions described in the Company's
Form TO-I filed with the Securities and Exchange Commission on March 7, 2003.
The Self-Tender Offer expires on April 4, 2003, unless extended by the Company.
Neither the Company nor the Board of Directors makes any recommendation as to
whether existing stockholders should tender or refrain from tendering their
shares. The Company has not engaged any financial advisor to advise on the
fairness of the Self-Tender Offer to its stockholders. The Company's
stockholders must make their own decision as to whether to tender all or any
portion of their shares and, if so, how many shares to tender. Stockholders
should discuss whether to tender all or any portion of their shares with their
broker or other financial and tax advisors. Certain of the Company's
stockholders (including the Company's Directors) who own approximately 45% of
the Company's common stock have advised the Company that they do not intend to
tender any shares in the Self-Tender Offer. Excluding these shares, up to
approximately 21.2 million shares could be repurchased by the Company, if all
other stockholders were to tender, for a purchase price of $10.6 million.

      On March 7, 2003, in a separate transaction, the Company repurchased
approximately 99% of its outstanding preferred stock from Heico. The shares were
repurchased for $67.4 million, which represents the aggregate liquidation
preference of the purchased shares, including a 7% dividend that is required to
be paid under the terms of the preferred stock before any distributions on or
purchase of the Company's common stock. The Company has made a similar purchase
offer to the three remaining preferred stockholders, the aggregate purchase
price of which is $0.2 million. Worldport has retired the stock it has
repurchased from Heico. A lawsuit alleging breach of fiduciary duty has been
filed relating to the repurchase of the preferred stock from Heico (see "Legal
Proceedings"). The Company is still evaluating this claim and has not yet made a
determination as to the merits of this case. The Company intends to vigorously
contest the allegations.

      As a result of the preferred stock repurchase transaction, the Company now
has approximately $38.7 million in cash and cash equivalents and $10.9 million
in marketable securities as of March 25, 2003. If the Self-Tender Offer is not
completed because a condition is not satisfied or waived, the Company expects to
operate the Company substantially as presently operated. However, in that event,
the Company will evaluate other potential strategies including acquiring a new
operating business or businesses or liquidating the Company. Following
completion of the Self-Tender Offer, the Company intends to explore the possible
benefits to its stockholders of a change in domicile to outside the United
States. The Company also intends to continue to consider potential acquisition
opportunities, although the Company has not identified a specific industry on
which it intends to focus and has no present plans, proposals, arrangements or
understandings with respect to the acquisition of any specific business.


EMPLOYEES

      The Company had three employees at March 25, 2003. None of its employees
are represented by a labor union and the Company believes that its employee
relations are good.

      During 2002, an employee of Heico was appointed a Vice President of
Worldport to assist the Company in certain activities. Since December 2001, this
employee has devoted substantially all of his working time to these efforts and
Worldport has reimbursed Heico for his salary and benefits during this period.
The total amount reimbursed by Worldport to Heico for this employee in 2002 was
approximately $0.2 million.


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                                  RISK FACTORS

ANY INVESTMENT IN THE COMPANY'S COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN ADDITION TO THE OTHER
INFORMATION CONTAINED IN THIS REPORT.


THE HEICO COMPANIES, LLC AND J O HAMBRO CAPITAL MANAGEMENT LIMITED, COMBINED,
HAVE SIGNIFICANT VOTING CONTROL OVER THE COMPANY.

       The Heico Companies, LLC ("Heico") currently beneficially owns 6,077,707
shares of common stock and pursuant to outstanding warrants has the right to
acquire an additional 679,451 shares of common stock. J O Hambro Capital
Management Limited ("Hambro") beneficially owns 9,367,869 shares of the
Company's common stock. Therefore, Heico and Hambro, on a combined basis, own
15.4 million shares of common stock, which represents 40% of the Company's
outstanding common stock. The Company has been informed that Heico and Hambro
intend to negotiate toward a voting agreement between them whereby they would
agree to vote their Shares in favor of their equal representation on the
Company's Board of Directors and to coordinate their votes on certain other
matters.

      As a result of their combined voting interest, Heico and Hambro have
significant voting influence regarding such matters as the election of the
Company's directors, amendments to the Company's charter, other fundamental
corporate transactions such as mergers, asset sales, and the sale of the
Company's business, and other issues regarding the direction of the Company's
business and affairs. In addition, this voting influence could result in actions
that could have an anti-takeover effect and may delay, defer or prevent a tender
offer or takeover attempt that a stockholder might consider in its best
interest, including an attempt that might result in the receipt of a premium
over the market price for the shares held by such stockholder. Such actions may
include creating additional classes of stock with disparate voting rights,
creating a classified Board of Directors with staggered terms, prohibiting the
stockholders to take any action by a written consent or requiring advance notice
for stockholder proposals and director nominations.

      The Company has been informed by Heico and Hambro that they do not intend
to tender their shares in the Company's Self-Tender Offer. If the Self-Tender
Offer is completed and the Company purchases outstanding shares of common stock,
Heico and Hambro's ownership percentage, and voting influence, will increase.

      Michael Heisley serves as Chairman of the Board of Worldport and his
daughter, Emily Heisley Stoeckel, also serves as a member of the Company's Board
of Directors. Mr. Heisley and Ms. Stoeckel are also directors, officers and
owners of Heico and certain of its affiliates. Mr. Heisley and his family
members control all of the outstanding ownership interests of Heico. Stanley H.
Meadows, a Director and Assistant Secretary of Worldport, is also an officer and
director of Heico and certain of its affiliates. Andrew Sage, a Director of
Worldport, serves as a director for other companies owned by Heico and receives
compensation in connection with such services. The Company's Board of Directors
consists of five individuals: Michael Heisley, Stanley Meadows, Emily Heisley
Stoeckel, Andrew Sage and Kathleen Cote.


THE COMPANY MAY HAVE TO RETURN A PORTION OR ALL OF ITS $57.6 MILLION TAX REFUND.

      The Company received a $57.6 million income tax refund from the Internal
Revenue Service ("IRS") in April 2002. The return which produced this refund is
still subject to audit by the IRS. Upon audit, the IRS could determine that
adjustments are required to the calculation of, or the return related to, this
amount and as a result the Company may be required to return to the IRS some
portion or all of such refund. The Company believes that it was entitled to this
tax refund and has not established any reserve for any potential actions related
to the tax refund. The Company has obtained a legal opinion that it should be
entitled to the $53.6 million portion of the tax refund attributable to losses
from the termination of most of the Company's European operations. The opinion
is not binding on the IRS and the IRS may take a different position. In
addition, the opinion is based upon various factual representations and
assumptions which, if untrue or inaccurate, could lead to a different
conclusion. The Company investigated the possibility of insuring the risk of a
potential return of all or some portion of the tax refund but the Company's
Board of Directors determined not to apply for such insurance. The Company is
not aware of any facts


                                                                               9
<PAGE>

that would lead to a return of any portion of the tax refund. Any portion of the
tax refund required to be returned would reduce the net book value per share of
common stock and the cash ultimately available for distribution to stockholders.


THE COMPANY COULD BE REQUIRED TO SPEND MATERIAL AMOUNTS OF ITS CASH ON
LITIGATION AND/OR SETTLEMENT COSTS.

      The Company is subject to a number of lawsuits, the significant ones of
which have been described in "Legal Proceedings". The outcome of these matters
are not expected to have a material adverse effect on the consolidated results
of the Company in excess of amounts already recorded. However, there can be no
assurance that such claims will not be successful against the Company or that
amounts already recorded will be sufficient to cover the total costs of
litigation and/or settlement. In certain circumstances, including the recent
lawsuits related to the W.C.I Offer and the preferred stock repurchase, the
legal costs related to these actions have not been accrued and are being
expensed when incurred. Additionally, the Company is obligated to indemnify its
directors and officers as required by the Company's bylaws under certain
circumstances. Accordingly, the Company may be required to pay any judgments and
legal costs to defend its directors and officers, in addition to the Company, in
these actions, to the extent that such costs are not covered by insurance.


APPROPRIATE ACQUISITIONS OR INVESTMENT OPPORTUNITIES MAY NOT BE AVAILABLE AND
FULL INVESTMENT OF THE COMPANY'S RESOURCES MAY NOT OCCUR IN THE NEAR FUTURE.

      The Company may use a portion of its cash resources to pursue acquisition
opportunities. If the Company decides to seek such opportunities, its future
results will be dependent upon its ability to identify, attract and complete
desirable acquisition opportunities, which may take considerable time. The
Company's future results will also be dependent upon the performance of the
acquired businesses. The Company may not be successful in identifying,
attracting or acquiring desirable acquisition candidates, or in realizing
profits from any acquisitions.

      Pending their possible application, the Company anticipates that its cash
resources will be invested in readily marketable, interest-bearing securities.
As a result of the lack of an operating business and its large number of
stockholders, the Company must maintain its liquid assets in government
securities, which generally produce low returns, or comply with the requirements
of the Investment Company Act of 1940. Consequently, until the Company completes
an acquisition, the Company anticipates that its cash resources will yield only
that rate of return earned by such interest-bearing securities. In addition, a
portion of its cash resources will be used to pay corporate overhead and
administrative costs, and other expenses associated with analyzing and pursuing
acquisition opportunities.

      The Company will have sole and absolute discretion in identifying and
selecting acquisition and investment opportunities and in structuring,
negotiating, undertaking and divesting of interests in the Company's target
companies. The Company may combine, reorganize, alter the business plan of or
sell any of the Company's investments at any time, as it determines is
appropriate. The Company's stockholders generally will not be able to evaluate
the merits of the acquisition of an interest in, or the reorganization or change
in business plans of, any particular company before the Company takes any of
these actions. In addition, in making decisions to complete acquisitions and
investments, the Company will rely, in part, on financial projections developed
by its management and the management of potential target companies. These
projections will be based on assumptions and subjective judgments. The actual
results of the Company's associated companies may differ significantly from
these projections.


IF THE COMPANY IS DEEMED TO BE AN INVESTMENT COMPANY, IT WILL BE FORCED TO
COMPLY WITH THE REQUIREMENTS UNDER THE INVESTMENT COMPANY ACT OF 1940, WHICH
COULD LIMIT THE FLEXIBILITY OF ITS OPERATIONS.

      U.S. companies that have more than 100 stockholders or are publicly traded
in the U.S. and are, or hold themselves out as being, engaged primarily in the
business of investing, reinvesting or trading in securities are subject to
regulation under the Investment Company Act of 1940. Unless a substantial part
of the Company's assets consists of, and a substantial part of the Company's
income is derived from, interests in majority-owned subsidiaries

                                                                              10
<PAGE>

and companies that the Company primarily controls, the Company may be required
to register and become subject to regulation under the Investment Company Act.

      If the Company is deemed to be, and is required to register as, an
investment company, the Company will be forced to comply with substantive
requirements under the Investment Company Act, including:

o        limitations on the Company's ability to borrow;

o        limitations on the Company's capital structure;

o        restrictions on acquisitions of interests in associated companies;

o        prohibitions on transactions with affiliates;

o        restrictions on specific investments; and

o        compliance with reporting, record keeping, voting, proxy disclosure and
         other rules and regulations.


MEMBERS OF THE COMPANY'S BOARD OF DIRECTORS ARE EXECUTIVE OFFICERS, DIRECTORS
AND OWNERS OF COMPANIES THAT MAY COMPETE WITH THE COMPANY FOR INVESTMENT AND
ACQUISITION OPPORTUNITIES.

      As discussed above, Michael Heisley serves as Chairman of the Board of
Worldport and his daughter, Emily Heisley Stoeckel, also serves as a member of
the Company's Board of Directors. Mr. Heisley and Ms. Stoeckel are also
directors, officers and owners of The Heico Companies LLC ("Heico") and certain
of its affiliates. Mr. Heisley and his family members control all of the
outstanding ownership interests of Heico. Stanley H. Meadows, a Director and
Assistant Secretary of Worldport, is also an officer and director of Heico and
certain of its affiliates. Andrew Sage, a Director of Worldport, serves as a
director for other companies owned by Heico and receives compensation in
connection with such services. Heico owns and operates a portfolio of diverse
businesses and, historically, has actively acquired and invested in a variety of
businesses. Therefore, Heico could be in competition with the Company in
pursuing investment and acquisition opportunities. Mr. Heisley, Ms. Stoeckel and
Mr. Meadows owe a duty of loyalty and a duty of care under Delaware law to both
the Company and to Heico. These duties obligate them to present certain business
opportunities to the company to which they owe the duties before pursuing such
opportunities themselves. In addition, there are no contractual or other
restrictions on Mr. Heisley, Ms. Stoeckel or Mr. Meadows which would restrict
them from acquiring, owning or operating any business, including any business
that competes with the Company or any of the Company's subsidiaries. Therefore,
these individuals may have conflicts of interest in determining to which of
these entities, if any, a particular relevant business opportunity should be
presented.


THE COMPANY HAS BROAD DISCRETION IN USING ITS RESOURCES AND MAY NOT USE THEM IN
A MANNER THAT THE COMPANY'S STOCKHOLDERS WOULD PREFER.

      The Company has not identified specific uses for a substantial portion of
the Company's resources, and it has broad discretion in how the Company uses
them. Although the Company may consider investment or acquisition opportunities,
the Company has not identified a specific industry on which it intends to
initially focus and has no present plans, proposals, arrangements or
understandings with respect to the acquisition of any specific business. The
Company may consider investment and acquisition opportunities outside of the
telecommunications and technology sector. The Company's shareholders will not
have the opportunity to evaluate the economic, financial or other information on
which the Company bases its decisions on how to use the proceeds. The failure of
Company management to apply the funds effectively could have a material adverse
effect on the Company's financial condition and performance.

                                                                              11
<PAGE>

THE COMPANY MAY FINANCE ACQUISITIONS BY ISSUING ADDITIONAL CAPITAL STOCK OR
INCURRING SUBSTANTIAL DEBT, BOTH OF WHICH COULD HAVE NEGATIVE CONSEQUENCES.

      The Company may use a portion of its resources to pursue acquisition
opportunities and, to a much lesser extent, for general corporate expenses. The
timing, size and success of its acquisition efforts and any associated capital
commitments cannot be readily predicted.

      The Company may raise additional funds to complete such acquisitions.
Generally, the Company's Board of Directors has the power to issue new equity
(to the extent of authorized shares) without stockholder approval. If additional
funds are raised through the issuance of equity securities, the percentage
ownership of the Company's then current stockholders would be diluted, the
Company's earnings and book value per share could be diluted and, if such equity
securities take the form of preferred stock, the holders of such preferred stock
may have rights, preferences or privileges senior to those of holders of common
stock. If the Company is able to raise additional funds through the incurrence
of debt, and the Company does so, the Company would likely become subject to
restrictive financial covenants and other risks associated with the incurrence
of debt.



      The Company makes available free of charge through its website,
www.wrdp.com, its annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and all amendments to those reports as soon as
reasonably practicable after such material is electronically filed with the
Securities and Exchange Commission. The Company's Internet website and the
information contained therein or incorporated therein are not intended to be
incorporated into this Annual Report on Form 10-K.




ITEM 2.   PROPERTIES

     The Company leases office space for its corporate headquarters in Buffalo
Grove, Illinois pursuant to an agreement which originally expired in 2010. In
December 2002, the Company signed an agreement to assign its Buffalo Grove lease
to a third party. In accordance with the agreement, the Company will be released
from this lease on June 1, 2003 upon the payment of approximately $0.4 million
to the landlord.

      The 125,000 square foot data center facility in Dublin, Ireland, and the
related office facilities in Dublin are leased pursuant to agreements which
expire in 2025, with early termination options in 2010. In September 2002, the
liquidator for the Company's Irish subsidiary disclaimed the leases for these
two facilities previously used by the Irish subsidiary. The Company had provided
a letter of credit to the landlord of these facilities equal to approximately
0.5 million Euros to support the lease of one of the facilities. Partial draws
of approximately 0.2 million Euros and 0.3 million Euros were made in October
2002 and December 2002, respectively, and paid to the landlord under the letter
of credit. The Company expects that the remaining amount of the letter of credit
(less than 0.1 million Euros) will be drawn out. The Company provided a
guarantee with respect to the lease of the other facility. In October 2002, the
Company received a letter from legal counsel for the landlord with respect to
the Company's guarantee. This letter demanded the payment within 14 days of
approximately 0.9 million Euros and the confirmation of the Company's
liabilities as guarantor under the lease. Should the Company be forced to assume
the position of tenant under the lease, the Company could be obligated for the
full amount of rent through 2010 plus certain taxes and maintenance expenses. In
January 2003, the Company's legal counsel received a letter from legal counsel
for the landlord in which the landlord demanded that the Company assume the
position of tenant under the lease. In February 2003, the landlord filed a
Notice of Motion in the High Court of Ireland against the Company in which the
landlord demanded payment of approximately 1.2 million Euros, which included
additional rent that they claim had accrued since their prior demand. A hearing
is scheduled for April 8, 2003. The Company is contesting the validity of the
landlord's demands. There can be no assurance that such claims will not be
successful against the Company. However, the outcome of the matter is not
expected to have a material adverse effect on the consolidated results of the
Company in excess of amounts already recorded. Included in Accrued Expenses at
December 31, 2002

                                                                              12
<PAGE>

is $5.7 million, which represents rent payable on the data center between
January 2002 and 2010, the earliest contractual termination date of the lease.

     The Company has office space located in the Atlanta, Georgia area and
Newark, Delaware area pursuant to agreements which expire in June 2003 and March
2005, respectively, which have been sublet to third parties.




ITEM 3.   LEGAL PROCEEDINGS

      In March 2002, an Administrator was appointed for the U.K. subsidiaries,
Hostmark World Limited and Hostmark U.K. Limited, by an order of the Companies
Court, Chancery Division of High Court under the United Kingdom Insolvency Act.
In April 2002, the Irish subsidiary, Worldport Ireland Limited, was given notice
that a petition for winding up was filed and would be presented to the Irish
High Court on behalf of Global Crossing Ireland Limited. The petition was heard
by the Irish High Court on May 13, 2002 and a liquidator was appointed for this
subsidiary to act on behalf of the creditors. As a result of these actions, the
Administrator or liquidator has control over these subsidiaries' assets. Certain
creditors of these subsidiaries have made claims directly against the parent
company, Worldport Inc., for liabilities related to the operation of these
subsidiaries and additional creditors could assert similar claims. There can be
no assurance that Worldport Inc. will be successful in defending these claims
and in limiting its liability for the obligations of its subsidiaries.

      One of the Company's subsidiaries, Hostmark World Limited, was the subject
of court action by WSP Communications ("WSP") in the Companies Court of the
Chancery Division of the High Court in the U.K. for the payment of approximately
$0.5 million. In addition, WSP has alleged that a total of approximately $3
million is owed to it by Hostmark World Limited. WSP alleges that these amounts
are owed for work completed on Internet solution centers in Germany, Sweden and
the U.K. This action was stayed by the appointment of an Administrator for
Hostmark World Limited.

         In June 2002, the High Court of Ireland issued a Summary Summons to the
Company on behalf of Cable & Wireless (Ireland) Limited, who is seeking payment
of 1.0 million British pounds and 2.3 million Euros, together with applicable
VAT. (Excluding VAT, this represents approximately $4.0 million.) These claims
relate to unpaid invoices for Internet services provided or to be provided by
Cable & Wireless (Ireland) Limited to the Company's subsidiary in Ireland (now
in liquidation) and termination of contract charges. The Company is contesting
the validity of the claims and believes that the claims, to the extent valid,
are obligations of the Company's Irish subsidiary and not of the parent company
("Worldport Inc."). There can be no assurance that such claims will not be
successful against Worldport Inc. However, the outcome of the matter is not
expected to have a material adverse effect on the consolidated results of the
Company in excess of amounts already recorded.

      In October 2002, the Company received a letter from legal counsel to
Channor Limited, the landlord of the data center in Dublin, Ireland, with
respect to the Company's guarantee on that facility. This letter demanded the
payment within 14 days of approximately 0.9 million Euros and the confirmation
of the Company's liabilities as guarantor under the lease. In January 2003, the
Company's legal counsel received a letter from legal counsel for the landlord in
which the landlord demanded that the Company assume the position of tenant under
the lease. Should the Company be forced to assume the position of tenant under
the lease, the Company could be obligated for the full amount of rent through
2010 plus certain taxes and maintenance expenses. In February 2003, Channor
Limited filed a Notice of Motion in the High Court of Ireland against Worldport
Inc. in which the landlord demanded payment of approximately 1.2 million Euros,
which included additional rent that they claim had accrued since their prior
demand. A hearing is scheduled for April 8, 2003. The Company is contesting the
validity of the landlord's demands. There can be no assurance that such claims
will not be successful against Worldport Inc. However, the outcome of the matter
is not expected to have a material adverse effect on the consolidated results of
the Company in excess of amounts already recorded. Included in Accrued Expenses
at December 31, 2002 is $5.7 million, which represents rent payable on the data
center between January 2002 and 2010, the earliest contractual termination date
of the lease.

                                                                              13
<PAGE>

      On January 8, 2003, four substantially identical complaints were filed in
the Circuit Court of Cook County, Illinois, County Department, Chancery Division
against the Company and its current directors. Additionally, on January 16,
2003, a complaint was filed in the Court of Chancery of the State of Delaware.
The foregoing actions purport to be brought on behalf of all public stockholders
of Worldport in connection with the W.C.I. Offer. The actions allege, among
other things, that certain of the defendants have breached their fiduciary
duties to Worldport and its stockholders. The complaints purport to seek, inter
alia, a variety of relief, including in certain circumstances damages and an
injunction preventing consummation of the W.C.I. offer. The Company believes
these allegations to be without merit and intends to vigorously contest the
allegations.

      On March 12, 2003, a complaint was filed in the United States Bankruptcy
Court for the District of Delaware against the Company. The complaint was filed
on behalf of one of the Company's former customers which is now in bankruptcy
and alleges breach of contract, fraud, and misrepresentation in connection with
the sale of indefeasible rights of use ("IRUs") to the customer. The plaintiff
is seeking payment of $2.2 million plus legal costs and punitive damages. The
Company is still evaluating this claim and has not yet made a determination as
to the merits of this case. Accordingly, no accrual has been recorded on the
Company's financial statements at this time. The Company intends to vigorously
contest the allegations.

      On March 13, 2003, a complaint was filed in the Court of Chancery of the
State of Delaware against the Company, its current directors and Heico. The
complaint alleges breach of fiduciary duty relating to the March 7, 2003
repurchase of the preferred stock from Heico. The complaint seeks relief in the
form of a declaration that the defendants have breached their fiduciary duties
to the Company and its common stockholders, an accounting by the defendant to
the Company for damages resulting from the defendants' breaches of fiduciary
duty and reimbursement of the plaintiffs' costs for the action, including
attorneys' fees. The Company is still evaluating this claim and has not yet made
a determination as to the merits of this case. The Company intends to vigorously
contest the allegations.

      In addition to the aforementioned claims, the Company is involved in
various lawsuits or claims arising in the normal course of business. In the
opinion of management, none of these lawsuits or claims will have a material
adverse effect on the consolidated financial position or results of operations
of the Company.




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

     None.




ITEM 4A.   EXECUTIVE OFFICERS OF THE REGISTRANT

      The following are the Company's executive officers as of March 25, 2003.

  NAME                        AGE    PRINCIPAL POSITION WITH REGISTRANT
  ----                        ---    ----------------------------------
Michael E. Heisley, Sr.        66    Chairman of the Board and Director
Kathleen A. Cote               54    Chief Executive Officer and Director


MICHAEL E. HEISLEY, SR.

         Michael E. Heisley, Sr., age 66, has been a member of the Board of
Directors since December 1998, Chairman of the Board of Directors since June
1999 and Chief Executive Officer of the Company from April 2000 to May

                                                                              14
<PAGE>

2001. Mr. Heisley has been the sole managing member of The Heico Companies
L.L.C. since October 1997. Mr. Heisley received a Bachelor's degree in Business
Administration from Georgetown University.


KATHLEEN A. COTE

      Kathleen A. Cote, age 54, has been Chief Executive Officer since May 2001
and a member of the Board of Directors since July 2000. Prior to becoming
Worldport's Chief Executive Officer, Ms. Cote was President of Sea grass
Partners, a consulting firm, since September 1998. From 1996 to 1998, Ms. Cote
served as President and Chief Executive Officer of Computervision Corporation,
an international supplier of product development and data management software,
where she also served as President and Chief Operating Officer. From 1989 to
1995, Ms. Cote served as President and General Manager of PrimeService, a
division of Prime Computer, the predecessor to Computervision Corporation. Ms.
Cote is also a director of Forgent Corporation, Radview Corporation and Western
Digital Corporation.

                                                                              15
<PAGE>



                                     PART II


ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      Worldport's common stock is traded on the OTC Bulletin Board under the
symbol "WRDP". The table below sets forth the high and low sales prices for the
common stock as reported on the OTC during the periods indicated. The OTC
quotations reflect high and low bid information and reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.

                                                             PRICE RANGE OF
                                                             --------------
                                                             COMMON STOCK
                                                             ------------
                                                             HIGH        LOW
                                                             ----        ---

               YEAR ENDED DECEMBER 31, 2002:
               First Quarter............................     $0.5000    $0.3000
               Second Quarter...........................     $0.5500    $0.3500
               Third Quarter............................     $0.4300    $0.2800
               Fourth Quarter...........................     $0.5000    $0.2300

               YEAR ENDED DECEMBER 31, 2001:
               First Quarter............................     $3.5700    $1.6250
               Second Quarter...........................     $3.0500    $1.5500
               Third Quarter............................     $1.7000    $0.4000
               Fourth Quarter...........................     $0.7600    $0.2300


     As of March 25, 2003, there were approximately 129 stockholders of record
of the Company's common stock.

      On March 7, 2003, the Company repurchased approximately 99% of its
outstanding preferred stock from Heico. The shares were repurchased for $67.4
million, which represents the aggregate liquidation preference of the purchased
shares, including a 7% dividend that is required under the terms of the
preferred stock before any distributions on or purchase of the Company's common
stock. The Company has made a similar purchase offer to the three remaining
preferred stockholders, the aggregate purchase price of which is $0.2 million.
Worldport has retired the stock it has repurchased from Heico.

      Except for the dividend paid to the Company's preferred stockholders in
connection with the above transaction, the Company has never declared or paid
any cash dividends on its capital stock






                                                                              16
<PAGE>


ITEM 6.   SELECTED FINANCIAL DATA

     The following selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and the Consolidated Financial Statements and Notes thereto,
included elsewhere in this Report.

     During the periods presented below, the Company acquired and sold numerous
operating companies, which significantly effects the comparability of the
following information. In addition, in the fourth quarter of 2001 and the first
quarter of 2002, the Company either sold or ceased operating all of its
operating businesses.


<TABLE>

       (IN THOUSANDS, EXCEPT RATIO AND PER SHARE DATA)                          YEARS ENDED DECEMBER 31,
                                                                                ------------------------
                                                                 1998(1)   1999       2000        2001      2002
                                                                 -------   ----       ----        ----      ----
<S>                                                             <C>           <C>         <C>        <C>       <C>
STATEMENTS OF OPERATIONS DATA:
Revenues...................................................     $28,591       $ --        $ --       $ --      $ --
Cost of services...........................................      21,187         --          --         --        --
                                                               --------  ---------    --------   ---------     -----
          Gross profit.....................................       7,404         --          --         --        --
Operating expenses:
   Selling, general and administrative expenses............      39,147      9,881        9,539      5,538     3,328
   Restructuring costs.....................................        --           --         --        1,018       --
   Depreciation and amortization...........................      11,069        245         326         203       151
   Asset impairment........................................       4,842          --         --          --       --
                                                               --------  ---------    --------   ---------     -----
          Operating loss...................................     (47,654)   (10,126)     (9,865)    (6,759)    (3,479)
                                                               --------  ---------    --------   ---------     -----
Other income (expense):
    Interest income (expense), net.........................     (24,570)        930     14,087       4,617     1,838
    Loss on sale of assets.................................       --            --        (739)      (289)       (89)
   Other...................................................      (5,451)        --         --           28        --
                                                               --------  ---------    --------   ---------     -----
          Income (loss) from continuing operations before
            minority interest and income taxes.............     (77,675)    (9,196)      3,483     (2,403)    (1,730)
Minority interest..........................................         903         --         --          --        --
                                                               --------  ---------    --------   ---------     -----
          Income (loss) from continuing operations before
            income taxes...................................     (76,772)    (9,196)      3,483     (2,403)    (1,730)
Income tax provision.......................................          --         --          --         --        --
                                                               --------  ---------    --------   ---------     -----
          Net income (loss) from continuing operations.....     (76,772)    (9,196)      3,483     (2,403)    (1,730)
Gain (loss) from discontinued operations, net of tax.......          --   (111,824)    (13,401)  (121,054)     1,492
Gain on sale of discontinued operations, net of tax...........       --         --     285,150       1,814        --
                                                               --------  ---------    --------   ---------     -----
          Net income (loss)................................... $(76,772) $(121,020)   $275,232   $(121,643)    $(238)
                                                               ========= ==========   ========= ==========    ======

Net earnings (loss) per common share from continuing operations:
    Basic...................................................    $ (4.47)   $ (0.38)     $ 0.11    $ (0.06)    $ (0.05)
    Diluted.................................................    $ (4.47)   $ (0.38)     $ 0.06    $ (0.06)    $ (0.05)
Net earnings (loss) per common share:
    Basic...................................................    $ (4.47)  $  (6.93)    $  9.03    $ (3.25)    $ (0.01)
    Diluted.................................................    $ (4.47)  $  (6.93)    $  4.85    $ (3.25)    $ (0.01)
Weighted average common shares:
    Basic...................................................     17,158     24,244      30,402     37,372      39,087
    Diluted.................................................     17,158     24,244      56,550     37,372      39,087

                                                                                AS OF DECEMBER 31,
                                                                 1998       1999        2000       2001       2002
                                                              --------- ---------- ---- ------ ---------  --------

BALANCE SHEET DATA:
Cash and marketable securities.........................         $ 6,826     $1,149    $132,396    $72,234    $118,538
Working capital (deficit)..............................          29,445    (80,138)    125,665     86,816      87,751
Total assets...........................................         158,464    104,288     231,917    134,816     119,120
Current liabilities....................................         122,380    183,749      25,689     39,357      31,071
Long-term obligations..................................          16,717      4,021          46      3,433         834
Stockholders' equity (deficit).........................          17,522    (83,482)    206,182     92,026      87,215


(1) The results of operations for 1998 have not been restated to conform to this
    discontinued operations presentation as it would be impractical to do so.


</TABLE>

                                                                              17
<PAGE>



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS


     The following discussion and analysis should be read in conjunction with
"Selected Financial Data," the Consolidated Financial Statements and Notes
thereto, and the other financial data appearing elsewhere in this Report.

     The information set forth in Management's Discussion and Analysis of
Financial Condition and Results of Operations ("MD&A") contains certain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995, including,
among others (i) expected resolution of the Company's contingent liabilities,
(ii) prospective business opportunities and (iii) the Company's potential
strategies for redirecting and financing its business. Forward-looking
statements are statements other than historical information or statements of
current condition. Some forward-looking statements may be identified by use of
terms such as "believes", "anticipates", "intends" or "expects". These
forward-looking statements relate to the plans, objectives and expectations of
the Company for future operations. Although the Company believes that its
expectations with respect to the forward-looking statements are based upon
reasonable assumptions within the bounds of its knowledge of its business and
operations, in light of the risks and uncertainties inherent in all future
projections, the inclusion of forward-looking statements in this report should
not be regarded as a representation by the Company or any other person that the
objectives or plans of the Company will be achieved.

     During the periods presented below, the Company acquired and sold numerous
operating companies, which significantly affects the comparability of the
following information. Therefore, the Company's historical results will not be
indicative of future performance. In addition, in the fourth quarter of fiscal
2001 and the first quarter of fiscal 2002, the Company either sold or ceased
operating all of its operating businesses. Accordingly, the results of
operations have been classified as discontinued. The Company undertakes no
obligation to release publicly the results of any future revisions it may make
to forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.

     The following discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto.


OVERVIEW

     From 1997 to 1999, Worldport was a facilities-based global
telecommunications carrier offering voice, data and other telecommunications
services to carriers, Internet service providers, medium and large corporations
and distributors and resellers operating in Europe and the United States. To
finance certain acquisitions, the Company borrowed $120 million in June 1998
under an interim loan facility ("Interim Loan Facility"). In order to meet its
obligations under its Interim Loan Facility, the Company sold substantially all
of its material assets during the first quarter of 2000 (as described below).

     In November 1999, the Company entered into a series of agreements with
Energis Plc to sell its 85% ownership interest in EnerTel. The sale was
consummated on January 14, 2000 for $453.2 million, net of certain transaction
expenses. The Company applied a portion of the net proceeds realized from the
sale to repay existing debt, including debt incurred under the Interim Loan
Facility, trade credit and other liabilities, and paid U.S. federal income taxes
of approximately $57 million on the gain. Additionally, the Company completed
the sale of IIC in March 2000 for $0.3 million.

     In the second quarter of 2000 the Company announced a new business
strategy, focused on the delivery of Internet solutions to global companies
doing business in the European marketplace. Pursuant to this strategy, the
Company invested over $40 million to construct a new Internet solutions
SuperCentre in Dublin, Ireland, which became operational in October 2000. In
September 2000, the Company purchased VIS-able, a Swedish professional services


                                                                              18
<PAGE>

firm specializing in complex systems development and consulting, for
approximately $17.7 million. Finally, in April 2001, the Company acquired
hostmark entities in the U.K., Sweden and Germany ("hostmark"), including the
assumption of approximately $22 million in liabilities, for 5.1 million shares
of the Company's common stock. The acquisition of hostmark provided Worldport
with Internet solution centers ("ISC's") in London, Stockholm and Frankfurt. The
hostmark companies had minimal revenues when the transaction was completed, and
only one ISC was open for business.

     Following the acquisition of hostmark, the Company initiated an aggressive
integration program to rapidly identify and eliminate operational and system
redundancies in the two companies and to further streamline the combined
business. Additionally, the Company shut down the unprofitable U.S. and U.K.
professional services operations and took steps toward further cost alignment in
its Swedish professional services operation. By the end of the third quarter of
2001, the Company had reduced its total workforce by approximately 41 percent
and reduced total monthly operations expense by over 50 percent. Expenses for
the third quarter of 2001 included $1.3 million of expenses related to employee
severance costs, termination penalties for excess bandwidth contracts and lease
disposition costs associated with this integration activity to streamline the
combined business.

     After the completion of the hostmark acquisition, the Company did not
achieve the revenue growth in its managed hosting business that the Company had
anticipated. The Company also experienced a decline in revenue in its Swedish
professional services business. The general economic downturn, the slowdown in
technology spending and the lengthening in the sales cycle for managed hosting
services all contributed to these revenue shortfalls. In addition, the Company's
Swedish professional services business was negatively affected by excess
capacity in the Swedish consulting market, major pricing pressures, and slower
customer decisions related to new IT projects for those services. The Company
believed that these conditions, as well as the increasing level of competition
and consolidation in the Web hosting and Internet infrastructure markets, would
continue to have an adverse effect on Worldport's ability to achieve near term
revenue targets and, if they continued, could erode the financial resources of
the Company more rapidly than planned.

     Therefore, the Company began a review of various alternatives to its
existing business plan. As part of this review, the Company considered, among
other alternatives, partnering with a strategic investor, taking additional
actions to reduce its operating expenditures, closing one or more facilities or
selling all or part of the Company's assets or operations.

     Following the exploration and review of the strategic alternatives, the
Company determined that it was necessary to dramatically reduce the rate at
which its operations were using cash and to minimize its exposure in markets
that were experiencing significantly slower than expected market growth. As a
result, the Company made a decision to take further restructuring actions and to
divest itself of certain assets. Accordingly, the Company took the following
actions in the fourth quarter of 2001 and recorded a $101.5 million
restructuring charge in that quarter related to these actions:

     0    In November 2001, the Company announced that its Irish subsidiary was
          ceasing operations at its Dublin, Ireland facility. An orderly
          shutdown of the Ireland operations was commenced, and was
          substantially completed by December 31, 2001.

     0    In December 2001, the Company sold the assets and certain liabilities
          of its managed services business in Stockholm, Sweden, to OM
          Technology AB for approximately 10 million Swedish kronor, subject to
          the resolution of a final working capital adjustment. The parties
          agreed to a final sales price of 7.5 million Swedish kronor
          (approximately $0.8 million) in July 2002, which was fully collected
          by August 2002. OM also agreed to assume the ownership of Worldport's
          Stockholm Internet solution center and the operations at that center,
          and all customers' contracts.

     0    In December 2001, the Company also sold its Swedish professional
          services business (formerly known as VIS-able International AB) to its
          employees in a management buyout for $0.9 million, the majority of
          which is in the form of a note. Due to uncertainties related to the
          collectibility of this note, it has been fully reserved for.

                                                                              19
<PAGE>

     0    In December 2001, the Company placed its German subsidiary, Hostmark
          GmbH, into receivership under Germany law. As a result of this action,
          the receiver has control over this subsidiary's assets.

     0    The Company also took steps to reduce corporate expenses at its
          Buffalo Grove, Illinois, headquarters in connection with these
          transactions.

     In connection with these activities, the Company recorded a restructuring
charge of $101.5 million in the fourth quarter of 2001, which included an $84.8
million asset impairment charge to write down the managed hosting long-lived
assets to their expected net realizable value. This restructuring charge is
described in more detail below.

     In addition, the Company completed the sale of its remaining carrier
business, Telenational Communications, Inc. ("TNC") in October 2001 for a $0.4
million promissory note. Due to uncertainties related to the collectibility of
this note, the note was fully reserved for in 2001. However, in the fourth
quarter of 2002, the Company reached an agreement with the purchaser to accept
$0.3 million in full satisfaction of the note. This amount was paid to the
Company in the fourth quarter of 2002 and resulted in a cash gain of $0.3
million.

     At the end of 2001, the Company continued to operate its managed hosting
center in the U.K., where the Company believed the greatest opportunities for
the European managed hosting market existed. However, during the first quarter
of 2002, the U.K. managed hosting market continued to develop at a much slower
rate than anticipated. In addition, increasing industry consolidations and the
closure or bankruptcy of competitors in the industry led the Company to believe
that market conditions would not improve in the near future, bringing increased
risk to the financial requirements for this business.

     In March 2002, the Company's Board of Directors made the decision to make
no further investment in its U.K. managed hosting operation. The Company
recorded a $10.0 million restructuring charge in the first quarter of 2002
related to this action. On March 26, 2002, the Company's U.K. subsidiaries,
Hostmark World Limited and Hostmark U.K. Limited, filed a petition for
Administration under the United Kingdom Insolvency Act. An administrator was
appointed for these subsidiaries to either reorganize, find new investors, sell
or liquidate the U.K. businesses for the benefit of their creditors. As a result
of this action, the administrator has control over these subsidiaries' assets.

     As a result of the transactions described above, the Company no longer had
active business operations as of March 31, 2002.

     Throughout 2002, the Company operated with a minimal headquarters staff
while it conducted the activities related to exiting its prior businesses.
Following is a summary of the significant exit activities that occurred in 2002.

     0    In April 2002, Worldport Ireland Limited was given notice that a
          petition for winding up was filed and would be presented to the Irish
          High Court by Global Crossing Ireland Limited. The petition was heard
          by the Irish High Court on May 13, 2002 and a liquidator was appointed
          for this subsidiary to act on behalf of the creditors. As a result of
          this action, the liquidator has control over this subsidiary's assets.

     0    In August 2002, the U.K. administrator identified a new third party
          tenant for the Slough, U.K., data center. The Company had previously
          agreed to guarantee, on behalf of its U.K. subsidiary, the Slough data
          center lease expiring in 2015. In connection with the August 2002
          transaction, the landlord agreed to release the underlying lease
          guarantee and, therefore, relieve the Company from the $7.7 million
          lease liability upon the payment of 0.2 million British pounds
          (approximately $0.3 million), which payment was funded by the Company.
          The $7.7 million lease liability had originally been recorded by the
          Company as part of the $10.0 million restructuring charge taken on the
          U.K. business in the first quarter of 2002. Accordingly, the Company
          reduced its liabilities by, and recorded a non-cash gain from
          discontinued operations of, $7.7 million in the second quarter of
          2002.

     0    In September 2002, the liquidator for the Company's Irish subsidiary
          disclaimed the leases for the two facilities previously used by the
          Irish subsidiary. The Company had provided a letter of credit to the
          landlord of these facilities equal to approximately 0.5 million Euros
          to support the lease of one of the

                                                                              20
<PAGE>

          facilities. Partial draws of approximately 0.2 million Euros and 0.3
          million Euros were made in October 2002 and December 2002,
          respectively, and paid to the landlord under the letter of credit. The
          Company expects that the remaining amount of the letter of credit
          (less than 0.1 million Euros) will be drawn out. The Company provided
          a guarantee with respect to the lease of the other facility. In
          October 2002, the Company received a letter from legal counsel for the
          landlord with respect to the Company's guarantee. This letter demands
          the payment within 14 days of approximately 0.9 million Euros and the
          confirmation of the Company's liabilities as guarantor under the
          lease. Should the Company be forced to assume the position of tenant
          under the lease, the Company could be obligated for the full amount of
          rent through 2010 plus certain taxes and maintenance expenses. In
          January 2003, the Company's legal counsel received a letter from legal
          counsel for the landlord in which the landlord demanded that the
          Company assume the position of tenant under the lease. In February
          2003, the landlord filed a Notice of Motion in the High Court of
          Ireland against the Company in which the landlord demanded payment of
          approximately 1.2 million Euros, which included additional rent that
          they claim had accrued since their prior demand. A hearing is
          scheduled for April 8, 2003. The Company is contesting the validity of
          the landlord's demands. There can be no assurance that such claims
          will not be successful against the Company. However, the outcome of
          the matter is not expected to have a material adverse effect on the
          consolidated results of the Company in excess of amounts already
          recorded. Included in Accrued Expenses at December 31, 2002 is $5.7
          million, which represents rent payable on the data center between
          January 2002 and 2010, the earliest contractual termination date of
          the lease.

     0    Also in September 2002, Hostmark AB was put into liquidation and a
          liquidator was appointed to control this subsidiary. As a result of
          the asset sale to OM Technology AB in December 2001, there were no
          assets and minimal liabilities remaining in this Swedish subsidiary.

     0    In the third quarter of 2002, the Company was informed by its German
          attorneys that the receiver terminated the Frankfurt lease effective
          December 31, 2002 under the provisions of German law. As a result,
          Hostmark GmbH is no longer obligated for lease payments due after the
          effective date (approximately $1.6 million). The lease liability had
          originally been recorded by the Company as part of the $101.5 million
          restructuring charge taken on the discontinued businesses in the
          fourth quarter of 2001. Additionally, the Company was informed that
          the receiver has declared insufficiency of the estate under the
          provisions of German law. This declaration was made because the
          receiver determined that the remaining net assets of the German
          company were not sufficient to cover the administrative costs of the
          proceedings, and consequently, no distributions would be made to the
          third party creditors (including the Frankfurt landlord for lease
          payments prior to the December 31, 2002 termination date). This
          declaration can be revoked in the future to the extent money is
          collected by the receiver on behalf of Hostmark GmbH in an amount
          sufficient to provide a distribution to the third party creditors.
          Based on its understanding of the German proceedings, the Company does
          not believe it is obligated to fund the Frankfurt lease obligation or
          other creditor liabilities of the German subsidiary. Therefore, in the
          third quarter of 2002, the Company reduced its Net Liabilities of
          Non-controlled Subsidiaries by, and recorded a non-cash gain from
          discontinued operations of, $1.4 million relating to the net
          liabilities of the German subsidiary.


     As a result of the transactions described above, the Company no longer has
active business operations. Accordingly, the historical results of operations
for prior periods are not comparable to the current period and are not
representative of what future results will be.


RESULTS OF OPERATIONS

     As described above, the Company had no active business operations as of
March 31, 2002. Accordingly, results of these operations have been classified as
discontinued.

YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

     There were no revenues or cost of services from continuing operations in
2002 and 2001.

                                                                              21
<PAGE>

     Selling, general and administrative ("SG&A") expenses were $3.3 million
and $5.5 million in 2002 and 2001, respectively. SG&A expenses primarily
consisted of corporate salaries and benefits, professional service fees,
corporate governance expenses and facility costs. The decrease from the prior
year expenses was primarily attributable to the steps taken at the end of 2001
to reduce corporate expenses at the Company's Buffalo Grove, Illinois,
headquarters in connection with the transactions described above.

     Restructuring charges of $1.0 million from continuing operations were
recorded in the fourth quarter of 2001 relating primarily to actions taken to
reduce corporate expenses at the Company's Buffalo Grove, Illinois, headquarters
in connection with the fourth quarter transactions described above. These
restructuring charges consisted primarily of facility exit costs, severance and
asset impairment charges.

     Depreciation and amortization expense represented depreciation on the
corporate office leasehold improvements and related computer hardware and
software. Depreciation and amortization expense was $0.2 million in both 2002
and 2001.

     Interest income, which was earned on the Company's cash and cash
equivalents, was $1.8 million and $4.6 million in 2002 and 2001, respectively.
The decrease in interest income in the current year is primarily a result of a
lower average yield on invested cash due to a decline in market interest rates
and the Company's move to lower yielding instruments in 2002, including money
market funds and government securities. As a result of the lack of an operating
business and its large number of stockholders, the Company must maintain its
liquid assets in government securities, which generally produce low returns, or
comply with the requirements of the Investment Company Act of 1940. The loss on
the sale of assets of $0.3 million in 2001 relates to the sale of a Virginia
residence originally purchased in October 2000 in connection with an employment
arrangement with a former chief executive officer of the Company.

     Net loss from continuing operations was $1.7 million and $2.4 million in
2002 and 2001, respectively.

     The Company had income from discontinued operations of $1.5 million in
2002, as compared to a loss from discontinued operations of $121.1 million in
2001. The operating results of discontinued operations for 2002 and 2001 were as
follows (in thousands):

                                                          2002         2001
                                                          ----         ----
           Net revenue                                   $   291     $  10,934
           Restructuring costs (see Note 5 to the
                Consolidated Financial Statements)       $   672     $ 100,442
           Asset impairment                              $    --     $  13,222
           Loss before income taxes                      $(4,105)    $(165,305)
           Income tax benefit                            $ 5,597     $  44,251
           Net income (loss) from discontinued
              operations                                 $ 1,492     $(121,054)

       The $4.1 million loss before taxes from discontinued operations in 2002
was composed primarily of the following:

     0    $10.0 million restructuring charge recorded in the first quarter of
          2002 relating to the actions taken in the U.K. in March 2002. This
          charge consisted of approximately $7.9 million in facility exit costs,
          approximately $0.4 million in bandwidth termination costs, and
          approximately $1.7 million in other related costs.
     0    $7.7 million gain recorded in the second quarter of 2002 as a result
          of the Company's release from its underlying lease guarantee on the
          Slough, U.K. data center lease.
     0    $3.0 million of operating losses incurred in the first quarter of 2002
          from the U.K. business prior to it being discontinued.
     0    $1.7 million asset impairment charges recorded during 2002 related to
          certain equipment from the discontinued businesses.
                                                                              22
<PAGE>

     0    $1.4 million non-cash gain recorded in the third quarter of 2002
          relating to the Company's understanding that it is not obligated to
          fund the Frankfurt lease obligation and other creditor liabilities of
          the German subsidiary.
     0    $1.4 million gain as a result of favorably settling previous accruals
          on items related to the discontinued businesses.
     0    $0.3 million loss recorded in the second quarter of 2002 as a result
          of the final adjustment to the sale price for Hostmark AB.
     0    $0.3 million gain as a result of collecting on a note from the sale of
          TNC that the Company had previously reserved for as uncollectible.

     A $5.6 million tax benefit from discontinued operations was recorded in
the first quarter of 2002 as the result of a new U.S. federal tax law that was
enacted in March 2002. This new tax law allowed the Company to carry back a $5.6
million AMT tax credit from 2001 against taxable income in 2000 that was
previously 100% reserved by a valuation allowance (see additional discussion
regarding the 2001 tax benefit below).

     Revenue from discontinued operations in 2001 of $10.9 million was
comprised of $2.9 million, $3.6 million and $4.4 million from the Company's
three business segments, managed hosting, professional services and carrier
operations, respectively.

     Restructuring charges of $101.5 million (approximately $100.4 million of
which was included in loss from discontinued operations) were recorded in 2001,
relating to the actions taken in the fourth quarter of 2001 and the first
quarter of 2002. The restructuring charges primarily consisted of:

     0    an $84.8 million asset impairment charge to write down the long-lived
          assets located primarily in Ireland, Germany, and the U.K. to their
          expected net realizable value,
     0    facility exit costs of $9.3 million for the Ireland and Germany
          centers,
     0    bandwidth contract termination costs of $4.7 million associated with
          the Company's Ireland operations,
     0    severance of $1.3 million for approximately 100 employees, who were
          primarily located in Ireland, and
     0    other related costs of $1.4 million.

     The following table summarizes the significant components of the
restructuring reserve remaining from the original $101.5 million charge recorded
in 2001. The restructuring reserve is included in Accrued Expenses at December
31, 2002 (in thousands):

<TABLE>

                                           Balance At                                              Balance At
                                            December                     Cash        Non-cash       December
                                            31, 2001     Additions     Payments     Adjustments     31, 2002
                                            --------     ---------     --------     -----------     --------
       <S>                                     <C>          <C>            <C>        <C>              <C>
       Facility exit costs                     $ 9,213      $ 7,936        $(336)     $ (10,926)       $ 5,887
       Bandwidth contract termination            4,329          418            --          (448)         4,299
       Severance                                   761           --         (761)            --             --
       Other costs                               1,257        1,646         (482)        (2,232)           189
                                               -------     --------     --------      ---------        -------
       Total                                   $15,560     $ 10,000     $ (1,579)     $ (13,606)       $10,375
                                               =======     ========     =========     ==========       =======

</TABLE>

     The additions represent the $10.0 million restructuring charge recorded in
the first quarter of 2002 relating to the actions taken in the U.K. in March
2002. The non-cash adjustments of $13.6 million primarily consist of $7.7
million related to the Slough, U.K., lease liability that the Company was
released from in August 2002 (as discussed above) and $6.9 million of
liabilities related to the U.K., German, and Irish subsidiaries that, along with
the other assets and liabilities of those subsidiaries, have been deconsolidated
into a separate line item on the Company's balance sheet called Net Liabilities
of Non-controlled Subsidiaries (see Note 6 to the Consolidated Financial
Statements).

     A non-cash asset impairment charge from discontinued operations of $13.2
million was recorded in the third quarter of 2001. The Company experienced a
decline in revenue in the Swedish professional services business in the third
quarter of 2001, as there was excess capacity in the Swedish consulting market,
major pricing pressures, and slower customer decisions related to new IT
projects for those services. In response to this, the Company compared the


                                                                              23
<PAGE>

carrying value of VIS-able's long-lived assets with their estimated future
undiscounted cash flows in the third quarter of 2001 and determined that an
impairment loss had occurred. The carrying value was then compared to the
estimated future discounted cash flows and the excess carrying value of $13.2
million was recorded as a non-cash asset impairment charge from discontinued
operations.

     A $44.3 million tax benefit was recorded on the operating losses from
discontinued operations in 2001. In 2001, the Company generated a taxable loss
of $167.2 million, primarily as a result of the closure of its SuperCentre in
Dublin, Ireland in the fourth quarter of 2001. Under U.S. Federal tax law, the
Company was able to carry back that loss to offset taxable income from the sale
of its EnerTel subsidiary in 2000, with respect to which the Company paid U.S.
federal income taxes of approximately $57 million for the tax year ended
December 31, 2000. Accordingly, the Company applied for a refund of past taxes
paid in connection with the filing of the Company's 2001 Federal income tax
return. The Company recorded a tax receivable of approximately $52.0 million at
December 31, 2001, and an additional tax receivable of $5.6 million in the first
quarter of 2002 for a $5.6 million AMT tax credit carryforward which, under a
new U.S. federal tax law that was enacted in March 2002, allowed the Company to
carry back the $5.6 million AMT tax credit against taxable income in 2000 for an
additional refund. In April 2002, the Company received the $57.6 million income
tax refund. However, receipt of this refund does not indicate that the Internal
Revenue Service agrees with the positions taken by the Company in its tax
returns. The refund is still subject to review by the Internal Revenue Service
of the Company's 2001 tax return. It would not be unusual for the Internal
Revenue Service to audit a return resulting in a refund of this magnitude. The
Internal Revenue Service could require the Company to return all or a portion of
this refund. The statute of limitations for the notification of an audit is
generally three years from the filing of the applicable tax return, although
this period can be extended by agreement.

     The Company recorded a $1.8 million net gain in 2001 on the disposal of the
Company's discontinued managed hosting and professional services businesses in
Sweden. This gain included a tax benefit of $8.6 million, which related to the
tax loss on the Company's investment in the sold VIS-able operation that can be
carried back against 2000 taxable income for a refund.

      As a result, the Company had a net loss of $0.2 million in 2002, as
compared to a net loss of $121.6 million in 2001.


YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     As the Company has exited all of its operations and has classified the
results of those businesses as discontinued, the Company had no revenue or cost
of services from continuing operations in 2001 and 2000.

     Selling, general and administrative expenses were $5.5 million for the
year ended December 31, 2001, as compared to $9.5 million for the year ended
December 31, 2000. These expenses primarily consisted of legal, accounting and
other professional fees, corporate salaries and facility costs, and corporate
governance costs. The decrease in expenses from the prior year is primarily
reflective of the cost savings efforts that were undertaken throughout the
second half of 2001.

     As discussed above, restructuring charges of $1.0 million from continuing
operations were recorded in 2001 relating primarily to actions taken to reduce
corporate expenses at the Company's Buffalo Grove, Illinois, headquarters in
connection with the fourth quarter transactions described above.

     Depreciation and amortization expense was $0.2 million in 2001, as
compared to $0.3 million in 2000 and represented depreciation on the corporate
office and related computer hardware and software.

     Other income and expense consisted primarily of interest income of $4.6
million and $14.1 million in 2001 and 2000, respectively. This interest income
was attributable to the Company's cash and cash equivalents remaining from the
January 2000 sale of EnerTel, which were used to pay taxes on the EnerTel sale
and fund operating expenses and capital expenditures primarily relating to the
discontinued operations.

                                                                              24
<PAGE>

     Net loss from continuing operations was $2.4 million in 2001, compared to
net income from continuing operations of $3.5 million in2000.

     The Company had net losses from discontinued operations of $121.1 million
and $13.4 million in 2001 and 2000, respectively. The operating results of
discontinued operations in 2001 and 2000 were as follows (in thousands):

                                                           2001        2000
                                                           ----        ----
           Net revenue                                  $  10,934     $  9,795
           Restructuring costs (see Note 5 to the
                Consolidated Financial Statements)      $ 100,442     $  --
           Asset impairment                             $  13,222     $  --
           Loss before income taxes                     $(165,305)    $(15,185)
           Tax benefit                                  $  44,251     $  1,784
           Net loss from discontinued operations        $(121,054)    $(13,401)

      As discussed above in more detail, the following items were included in
net loss from discontinued operations in 2001:

     0    Restructuring charges of $100.4 million relating to the actions taken
          in the fourth quarter of 2001 and the first quarter of 2002,
     0    a non-cash asset impairment charge of $13.2 million recorded in the
          third quarter of 2001 relating to VIS-able's long-lived assets, and
     0    a $44.3 million tax benefit on the operating losses from discontinued
          operations for the year ended December 31, 2001.

     The Company recorded a $1.8 million net gain in 2001 on the disposal of the
Company's managed hosting and professional services businesses in Sweden. This
gain included a tax benefit of $8.6 million, which related to the tax loss on
the Company's investment in the sold VIS-able operation that was carried back
against 2000 taxable income for a refund.

     The Company recorded a $285.2 million gain (net of a tax provision of $61.8
million) in 2000 on the disposal of the Company's carrier operation, EnerTel, in
January 2000. A total tax provision of $60.0 million ($61.8 million from the
disposal of discontinued operations offset by a tax benefit of $1.8 million on
the losses from discontinued operations in 2000) resulted from the taxable gain
from the sale of EnerTel, offset partially by the realization of the Company's
net operating loss carryforwards from previous years that had not been benefited
for tax purposes.

     As a result, the Company had net losses of $121.6 million in 2001,
compared to net income of $275.2 million in 2000.

     See "Liquidity and Capital Resources" below for a discussion of the
Company's future outlook.


LIQUIDITY AND CAPITAL RESOURCES

     The Company's continuing operations used cash of $2.9 million, $4.4 million
and $7.3 million in 2002, 2001 and 2000, respectively, due primarily to changes
in working capital.

     There were minimal investing activities in 2002. Investing activities used
$9.8 million during 2001, due primarily to the $11.0 million purchase of
marketable securities, which was partially offset by the $1.3 million proceeds
on the sale of a Virginia residence acquired in 2000 in conjunction with an
employment arrangement with a former chief executive officer of the Company.
Investing activities used $3.0 million during 2000 primarily attributable to the
original purchase of the Virginia residence and capital expenditures.

     The Company had minimal or no financing activities in 2002, 2001 and 2000.



                                                                              25
<PAGE>

     The Company's discontinued operations provided $49.1 million in 2002,
primarily attributable to the receipt of the $57.6 million tax refund in April
2002. The Company's discontinued operations used $56.7 million during 2001 and
included capital expenditures of $23.7 million (primarily for customer equipment
and the Company's ISC's and software systems), the third quarter settlement of
approximately $15.8 million of liabilities assumed in the hostmark acquisition,
and operating costs related to the continued execution of the Company's managed
hosting business plan. The Company's discontinued operations generated $141.0
million in 2000 and primarily consisted of the proceeds from the EnerTel sale
transaction of $453.2 million offset by $158.5 million used to repay the Interim
Loan Facility and a related party note payable, $57.6 million paid in taxes
related to the gain on the EnerTel sale transaction, $61.9 million of capital
expenditures associated with the buildout of the Company's SuperCentre in
Ireland and the development of related software systems, $17.7 million for the
acquisition of VIS-able, and operating costs related to the execution of the
Company's managed hosting business plan.


     As described above, the Company received its $57.6 million income tax
refund in April 2002. However, receipt of this refund does not indicate that the
Internal Revenue Service agrees with the positions taken by the Company in its
tax returns. The refund is still subject to review by the Internal Revenue
Service of the Company's 2001 tax return. It would not be unusual for the
Internal Revenue Service to audit a return resulting in a refund of this
magnitude. The Internal Revenue Service could require the Company to return all
or a portion of this refund. The statute of limitations for the notification of
an audit is generally three years from the filing of the applicable tax return,
although this period can be extended by agreement.

     Since ceasing its business operations, the Company has considered various
alternatives in determining how and when to use its cash resources. The Company
has sought and reviewed acquisition opportunities. However, the Company did not
pursue any of these opportunities since it did not believe that any of them were
in the best interests of its stockholders. The Company has also analyzed a
potential liquidation of the Company and its effects on the Company's
stockholders.

     The Company commenced a self-tender offer on March 7, 2003 for any and all
of its outstanding common stock at a price of $0.50 per share (the "Self-Tender
Offer"). The Self-Tender Offer is not conditioned on any minimum number of
shares being tendered, however it is subject to certain conditions described in
the Company's Form TO-I filed with the Securities and Exchange Commission on
March 7, 2003. The Self-Tender Offer expires on April 4, 2003, unless extended
by the Company. Neither the Company nor the Board of Directors makes any
recommendation as to whether existing stockholders should tender or refrain from
tendering their shares. Certain of the Company's stockholders (including the
Company's Directors) who own approximately 45% of the Company's common stock
have advised the Company that they do not intend to tender any shares in the
Self-Tender Offer. Excluding these shares, up to approximately 21.2 million
shares could be repurchased by the Company, if all other stockholders were to
tender, for a purchase price of $10.6 million.

     On March 7, 2003, in a separate transaction, the Company repurchased
approximately 99% of its outstanding preferred stock from Heico. The shares were
repurchased for $67.4 million, which represents the aggregate liquidation
preference of the purchased shares, including a 7% dividend that is required
under the terms of the preferred stock before any distributions on or purchase
of the Company's common stock. The Company has made a similar purchase offer to
the three remaining preferred stockholders, the aggregate purchase price of
which is $0.2 million. Worldport has retired the stock it has repurchased from
Heico. A lawsuit alleging breach of fiduciary duty has been filed relating to
the repurchase of the preferred stock from Heico (see "Legal Proceedings"). The
Company is still evaluating this claim and has not yet made a determination as
to the merits of this case. The Company intends to vigorously contest the
allegations.

     As a result of the preferred stock repurchase transaction, the Company now
has approximately $38.7 million in cash and cash equivalents and $10.9 million
in marketable securities as of March 25, 2003. The Company's cash equivalents
currently consist of highly rated money market funds.

     If the Self-Tender Offer is not completed because a condition is not
satisfied or waived, the Company expects to operate the Company substantially as
presently operated. However, in that event, the Company will evaluate other


                                                                              26
<PAGE>

potential strategies including acquiring a new operating business or businesses
or liquidating the Company. Following completion of the Self-Tender Offer, the
Company intends to explore the possible benefits to its stockholders of a change
in domicile to outside the United States. The Company also intends to continue
to consider potential acquisition opportunities, although the Company has not
identified a specific industry on which it intends to focus and has no present
plans, proposals, arrangements or understandings with respect to the acquisition
of any specific business.



     The Company's December 31, 2002 consolidated balance sheet reflected total
liabilities of approximately $31.9 million. Included in this amount are $9.5
million of Net Liabilities of Non-Controlled Subsidiaries for the U.K., Irish
and Swedish operations (see Note 6). The Company believes the parent company,
Worldport Inc., will not be required to pay these liabilities. However, there
can be no assurance that these creditors will not make claims against Worldport
Inc. for these obligations. The Company used estimates to calculate these net
liabilities. These estimates are subject to change based on the ability of the
administrator, receiver or liquidator, as applicable, to sell the remaining
assets and negotiate the final liability amounts.

     In August 2002, an agreement was reached between the Administrator for
Hostmark U.K. Limited and a third party, in which the third party paid
approximately 5.7 million British pounds, in addition to the assumption of the
lease liability, for the Slough, U.K., data center and related assets. The 5.7
million British pounds proceeds may be used to satisfy all or a portion of the
Net Liabilities of Non-controlled Subsidiaries for the U.K. entities, and
accordingly, the Company may recognize non-cash gains in future periods as a
result of this transaction. Additionally, prior to the Company's subsidiaries
entering into receivership and administrative proceedings, Worldport Inc. from
time to time made advances to these subsidiaries. Therefore Worldport Inc. is
also a creditor of these subsidiaries in these proceedings. The Company is not
able to determine at this time the priority of Worldport Inc.'s claim in such
proceedings or whether or not Worldport Inc. will be able to recover any portion
of these advances. If Worldport Inc. is successful in collecting any portion of
these advances, the Company would recognize a gain and an increase of cash at
that time.

     Excluding the Net Liabilities of Non-Controlled Subsidiaries for the U.K.,
Irish and Swedish operations discussed above, there are approximately $22.4
million of liabilities reflected on the Company's December 31, 2002, balance
sheet attributable to Worldport Inc. and the remaining subsidiaries not in
Administration, receivership or liquidation. Approximately $2.7 million of that
amount represents normal operating accruals and reserves related to the
continuing operations. The remaining $19.7 million consist of the following
accruals for potential obligations related to the exited businesses:

     0    $5.7 million of future rent payments on the Dublin data center lease
          for which Worldport Inc. had provided a guarantee,

     0    $4.6 million accrued for the potential exposure (including VAT)
          related to the litigation by Cable & Wireless described below,

     0    $4.0 million of obligations under capital leases, which expire in
          2004,

     0    $3.9 million of obligations related to bandwidth contracts entered
          into in Ireland,

     0    $0.8 million of obligations relating to the old telecommunications
          business, and

     0    $0.7 million of other Worldport Inc. obligations related to the Irish
          operations.

     The Company has assumed, for purposes of calculating these liabilities,
that it will not be able to mitigate them. However, Company management is
currently seeking opportunities to further reduce these liabilities. There can
be no assurance that the Company will be successful in its efforts to mitigate
these liabilities or that additional claims will not be asserted against
Worldport Inc.
                                                                              27
<PAGE>

     In June 2002, the High Court of Ireland issued a Summary Summons to the
parent company, Worldport Inc., on behalf of Cable & Wireless (Ireland) Limited,
who is seeking payment of 1.0 million British pounds and 2.3 million Euros,
together with applicable VAT. (Excluding VAT, this represents approximately $4.0
million.) These claims relate to unpaid invoices for Internet services provided
by Cable & Wireless (Ireland) Limited to the Company's subsidiary in Ireland
(now in liquidation) and termination of contract charges. The Company is
contesting the validity of the claims and believes that the claims, to the
extent valid, are obligations of the Company's Irish subsidiary and not of
Worldport Inc. There can be no assurance that such claims will not be successful
against Worldport Inc. However, the outcome of the matter is not expected to
have a material adverse effect on the consolidated results of the Company in
excess of amounts already recorded.

     As discussed above, in October 2002, the Company received a letter from
legal counsel to Channor Limited, the landlord of the data center in Dublin,
Ireland, with respect to the Company's guarantee on that facility. This letter
demanded the payment within 14 days of approximately 0.9 million Euros and the
confirmation of the Company's liabilities as guarantor under the lease. In
January 2003, the Company's legal counsel received a letter from legal counsel
for the landlord in which the landlord demanded that the Company assume the
position of tenant under the lease. Should the Company be forced to assume the
position of tenant under the lease, the Company could be obligated for the full
amount of rent through 2010 plus certain taxes and maintenance expenses. In
February 2003, Channor Limited filed a Notice of Motion in the High Court of
Ireland against Worldport Inc. in which the landlord demanded payment of
approximately 1.2 million Euros, which included additional rent that they claim
had accrued since their prior demand. A hearing is scheduled for April 8, 2003.
The Company is contesting the validity of the landlord's demands. There can be
no assurance that such claims will not be successful against Worldport Inc.
However, the outcome of the matter is not expected to have a material adverse
effect on the consolidated results of the Company in excess of amounts already
recorded. Included in Accrued Expenses at December 31, 2002 is $5.7 million,
which represents rent payable on the data center between January 2002 and 2010,
the earliest contractual termination date of the lease.

     On March 12, 2003, a complaint was filed in the United States Bankruptcy
Court for the District of Delaware against the Company. The complaint was filed
on behalf of one of the Company's former customers which is now in bankruptcy
and alleges breach of contract, fraud, and misrepresentation in connection with
the sale of indefeasible rights of use ("IRUs") to the customer. The plaintiff
is seeking payment of $2.2 million plus legal costs and punitive damages. The
Company is still evaluating this claim and has not yet made a determination as
to the merits of this case. Accordingly, no accrual has been recorded on the
Company's financial statements at this time. The Company intends to vigorously
contest the allegations.


Lease Commitments

     The Company leases office and network facilities under various
noncancelable operating lease agreements. Certain lease agreements contain
escalation clauses, along with options that permit early terminations or
renewals for additional periods. Additionally, the Company leases EMC storage
equipment under a noncancelable capital lease agreement. Future minimum
commitments under capital leases and operating leases having initial or
remaining noncancelable lease terms in excess of one year are as follows as of
December 31, 2002:

<TABLE>

                                          Total       2003        2004 - 2005   2006 - 2007    Thereafter
                                          -----       ----        -----------   -----------    ----------
       <S>                               <C>         <C>           <C>            <C>         <C>
       Capital Lease Obligations         $ 4,233     $ 3,386       $   847        $  --       $  --
       Operating Leases                    6,445       1,375         1,395          1,316       2,359
                                         -------     -------       -------        -------     -------
         Total                           $10,678     $ 4,761       $ 2,242        $ 1,316     $ 2,359
                                         =======     =======       =======        =======     =======

</TABLE>

     In December 2002, the Company signed an agreement to assign its Buffalo
Grove, Illinois, office lease to a third party. In accordance with the
agreement, the Company will be released from this lease on June 1, 2003 upon the
payment of approximately $0.4 million to the landlord. This amount has been
included in Accrued Expenses on the Company's December 31, 2002 balance sheet.

                                                                              28
<PAGE>

      Total rental expense for operating leases for the years ended December 31,
2002, 2001 and 2000 was approximately $0.2 million, $2.4 million and $0.9
million, respectively (including $0.2 million, $2.2 million and $0.3 million
from discontinued operations for 2002, 2001 and 2000, respectively).


CRITICAL ACCOUNTING POLICIES

      The following discussion of accounting policies is intended to supplement
the Company's Significant Accounting Policies as presented in Note 2 to the
Company's consolidated financial statements. The expenses and accrued
liabilities related to certain of these policies are initially based on the
Company's best estimate at the time of original entry into the Company's
accounting records. Adjustments are recorded when the Company's actual
experience differs from the expected experience underlying the estimates. These
adjustments could be material if the Company's experience were to change
significantly. The Company makes frequent comparisons of actual experience and
expected experience in order to mitigate the likelihood of material adjustments.


Revenue Recognition

     As a result of the fourth quarter 2001 and first quarter 2002 transactions
described above, all of the Company's revenues for 2002, 2001 and 2000 have been
included in Loss from Discontinued Operations. The Company recognized revenues
as services were provided. Amounts billed in advance of services provided were
recorded as deferred revenues until such related services are provided and are
included in Accrued Expenses. The Company adopted Staff Accounting Bulletin No.
101 ("SAB 101"), "Revenue Recognition in Financial Statements" effective January
1, 2000, the adoption of which had no impact on the Company's financial
statements. In accordance with SAB 101, installation fees were amortized over
the life of the relevant contract, which generally ranged from one to three
years.


Impairment

     SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," was issued in August 2001. SFAS No. 144, which addresses financial
accounting and reporting for the impairment of long-lived assets and for
long-lived assets to be disposed of, supercedes SFAS No. 121 and is effective
for fiscal years beginning after December 15, 2001. The Company adopted this
pronouncement on January 1, 2002. There was no impact to the financial position
and results of operations of the Company as a result of the adoption.

     In accordance with SFAS No. 144, the Company continually reviews whether
events and circumstances subsequent to the acquisition of any long-lived assets
have occurred that indicate the remaining estimated useful lives of those assets
may warrant revision or that the remaining balance of those assets may not be
recoverable. If events and circumstances indicate that the long-lived assets
should be reviewed for possible impairment, the Company uses projections to
assess whether future cash flows or operating income (before amortization) on an
undiscounted basis related to the tested assets is likely to exceed the recorded
carrying amount of those assets, to determine if a write-down is appropriate.
Should an impairment be identified, a loss would be reported to the extent that
the carrying value of the impaired assets exceeds their fair values as
determined by valuation techniques appropriate in the circumstances that could
include the use of similar projections on a discounted basis.

     As a result of this periodic review, the Company recorded non-cash asset
impairment charges in 2001 and 2002 to write down its long-lived assets of
various businesses to their estimated net realizable value, as described in Note
4 to the consolidated financial statements.


Restructuring Costs

     The Company records estimates of restructuring costs, primarily for
severance, facility exit costs, bandwidth contract termination costs, and the
write down of assets to their expected net realizable value, in accordance with


                                                                              29
<PAGE>

Emerging Issues Task Force No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (Including Certain
Costs Incurred in a Restructuring)". The Company used estimates to calculate the
restructuring charges, including the ability and timing of the Company to
sublease space and the net realizable value of remaining assets. These estimates
are subject to change based on the sale of the remaining assets along with the
sublease or settlement of future rent obligations.


Income Tax Valuation Allowances

     SFAS No. 109, "Accounting for Income Taxes", requires a valuation
allowance to reduce the deferred tax assets reported if, based on the weight of
the evidence, it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ability of the Company to fully
realize deferred tax assets in future years is generally contingent upon its
success in generating sufficient levels of taxable income in those future years.


MARKET RISK

     Prior to the fourth quarter 2001 and first quarter 2002 transactions
described above, the majority of the Company's operations were in Europe, and
the revenue and expenses of those operations were denominated in local
currencies. The remaining assets and liabilities of the Company's non-U.S.
subsidiaries are translated at period-end rates of exchange, and income
statement items are translated at the average rates prevailing during the
period. The resulting translation adjustment is recorded as a component of
stockholders' equity. Exchange gains and losses on intercompany balances of a
long-term investment nature are also recorded as a component of stockholders'
equity. Other foreign exchange gains and losses are recorded in income on a
current basis and have been included in Loss from Discontinued Operations. Due
to the volatility of currency exchange rates, among other factors, the Company
cannot predict the effect of exchange rate fluctuations on the Company's future
operating results. As a result, the Company may incur gains and losses on
foreign currency fluctuations. For 2002, other foreign exchange gains and losses
included in income were minimal. For 2001 and 2000, other foreign exchange gains
and losses equaled gains of $0.1 million and losses of $2.6 million,
respectively. These foreign exchange gains and losses have been included in Loss
from Discontinued Operations. The Company has used derivative instruments to
hedge its foreign currency exposure only on a limited basis, and had no
significant foreign currency hedge contracts outstanding at December 31, 2002.


RECENT ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board issued SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 prospectively prohibits the pooling of interests method of
accounting for business combinations initiated after June 30, 2001. Under SFAS
No. 142, goodwill amortization ceases when the new standard is adopted. In 2001
and 2000, the Company recorded $2.5 million and $1.0 million, respectively, of
goodwill amortization from discontinued operations. No goodwill amortization was
recorded in 2002. SFAS No. 142 also requires an initial goodwill impairment
assessment in the year of adoption and an impairment test both on an annual
basis and upon the occurrence of any event or change in circumstances that would
reduce the fair value of a reporting unit below its carrying value. SFAS No. 142
also requires the Company to complete a transitional goodwill impairment test
six months from the date of adoption. The Company adopted this standard at the
beginning of its 2002 fiscal year. As the Company had no goodwill or intangibles
at December 31, 2001, the adoption of this statement had no impact on the
Company's consolidated financial statements.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". The statement provides a single
accounting model for long-lived assets to be disposed of. The Company adopted
SFAS No. 144 at the beginning of its 2002 fiscal year. The adoption of this
statement had no impact on the Company's consolidated financial statements.

                                                                              30
<PAGE>

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." The statement requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred as opposed to the date of an entity's commitment
to an exit plan. The Company will adopt SFAS No. 146 for any exit or disposal
activities initiated after December 31, 2002.

     In June 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure--an amendment of FASB Statement No.
123." The statement amends FASB Statement No. 123, "Accounting for Stock-Based
Compensation", to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, this Statement amends the disclosure requirements of
Statement 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The Company
adopted the new disclosure requirements in this statement in 2002.




ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Prior to the fourth quarter 2001 and first quarter 2002 transactions
described above, the majority of the Company's operations were in Europe, and
the revenue and expenses of those operations were denominated in local
currencies. The remaining assets and liabilities of the Company's non-U.S.
subsidiaries are translated at period-end rates of exchange, and income
statement items are translated at the average rates prevailing during the
period. The resulting translation adjustment is recorded as a component of
stockholders' equity. Exchange gains and losses on intercompany balances of a
long-term investment nature are also recorded as a component of stockholders'
equity. Other foreign exchange gains and losses are recorded in income on a
current basis and have been included in Loss from Discontinued Operations. Due
to the volatility of currency exchange rates, among other factors, the Company
cannot predict the effect of exchange rate fluctuations on the Company's future
operating results. As a result, the Company may incur gains and losses on
foreign currency fluctuations. For 2002, other foreign exchange gains and losses
included in income were minimal. For 2001 and 2000, other foreign exchange gains
and losses equaled gains of $0.1 million and losses of $2.6 million,
respectively. These foreign exchange gains and losses have been included in Loss
from Discontinued Operations. The Company has used derivative instruments to
hedge its foreign currency exposure only on a limited basis, and had no
significant foreign currency hedge contracts outstanding at December 31, 2002.





                                                                              31
<PAGE>


ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The following financial information is included in this Report:

                                                                            Page
                                                                            ----
Independent Auditors' Report...............................................   33

Copy of Report of Arthur Andersen LLP, Independent
  Public Accountants................................ ......................   34

Consolidated Balance Sheets--December 31, 2002 and 2001....................   35

Consolidated Statements of Operations for the years ended
  December 31, 2002, 2001, and 2000.......... .............................   36

Consolidated Statements of Stockholders' Equity for the years ended
  December 31, 2002, 2001, and 2000........................................   37

Consolidated Statements of Comprehensive Income (Loss) for the years
  ended December 31, 2002, 2001, and 2000..................................   38

Consolidated Statements of Cash Flows for the years ended
  December 31, 2002, 2001, and 2000........................................   39

Notes to Consolidated Financial Statements ................................   40

                                                                              32
<PAGE>



                          INDEPENDENT AUDITORS' REPORT

To Worldport Communications, Inc.:

     We have audited the accompanying consolidated balance sheet of Worldport
Communications, Inc. (a Delaware corporation) and subsidiaries (the "Company")
as of December 31, 2002, and the related consolidated statements of operations,
stockholders' equity (deficit), comprehensive income (loss), and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The consolidated financial statements
of the Company as of December 31, 2001 and 2000 and for each of the two years
then ended were audited by other auditors, who have ceased operations. Those
auditors expressed an unqualified opinion on those financial statements in their
report dated June 5, 2002.

     We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

     In our opinion, such 2002 consolidated financial statements present fairly,
in all material respects, the financial position of Worldport Communications,
Inc. and subsidiaries as of December 31, 2002, and the results of their
operations and their cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of America.





DELOITTE & TOUCHE LLP

Chicago, Illinois
March 21, 2003



                                                                              33
<PAGE>


                  REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS (1)

To Worldport Communications, Inc.:

     We have audited the accompanying consolidated balance sheets of Worldport
Communications, Inc. (a Delaware corporation) and subsidiaries as of December
31, 2001 and 2000, and the related consolidated statements of operations,
stockholders' equity (deficit), comprehensive income (loss), and cash flows for
each of the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Worldport
Communications, Inc. and subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.

     The Company no longer has active business operations as of March 2002 and
is considering its alternatives. Among the alternatives that may be considered
is the pursuit of acquisition opportunities or a liquidation of the Company. See
Note 1 to the financial statements for further discussion.


                                               /s/   ARTHUR ANDERSEN LLP
                                               -------------------------

                                               ARTHUR ANDERSEN LLP

Chicago, Illinois
June 5, 2002



   (1)        This is a copy of the audit report for the years ended December
              31, 2001 and 2000, previously issued by Arthur Andersen LLP. This
              audit report has not been reissued by Arthur Andersen LLP in
              connection with this filing on Form 10-K.
                                                                              34
<PAGE>

<TABLE>

                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>

                                                                                                     DECEMBER 31,
                                                                                                     ------------
                                                                                                   2002       2001
                                                                                                   ----       ----
                                            ASSETS

<S>                                                                                              <C>        <C>
CURRENT ASSETS:
  Cash and cash equivalents...................................................................   $ 107,697  $ 61,475
    Marketable securities.....................................................................      10,841    10,759
    Income tax receivable.....................................................................        --      51,964
  Other current assets........................................................................         284     3,230
                                                                                                 ---------  --------
    Total current assets......................................................................     118,822   127,428
PROPERTY AND EQUIPMENT, net...................................................................         101     5,666
OTHER ASSETS, NET.............................................................................         197     1,722
                                                                                                 ---------  --------
    TOTAL ASSETS..............................................................................   $ 119,120 $ 134,816
                                                                                                 ========= =========

                             LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable............................................................................     $ 3,014   $ 9,938
  Accrued expenses............................................................................      14,473    21,264
  Net liabilities of non-controlled subsidiaries..............................................       9,528     1,277
  Current portion of obligations under capital leases.........................................       3,210     4,335
  Other current liabilities...................................................................         846     2,543
                                                                                                 ---------  --------
    Total current liabilities.................................................................      31,071    39,357

Long-term obligations under capital leases, net of current portion............................         834     3,433
                                                                                                 ---------  --------
    Total liabilities.........................................................................      31,905    42,790
                                                                                                 ---------  --------

STOCKHOLDERS' EQUITY:
  Undesignated preferred stock, $0.0001 par value, 4,004,000 shares authorized, 0 shares
    issued and outstanding....................................................................        --        --
  Series A convertible preferred stock, $0.0001 par value, 750,000 shares authorized, 0 shares
    issued and outstanding in 2002 and 2001...................................................        --        --
  Series B convertible preferred stock, $0.0001 par value, 3,000,000 shares authorized,
    956,417 shares issued and outstanding in 2002 and 2001....................................        --        --
  Series C convertible preferred stock, $0.0001 par value, 1,450,000 shares authorized,
    1,416,030 shares issued and outstanding in 2002 and 2001..................................        --        --
  Series D convertible preferred stock, $.0001 par value, 650,000 shares authorized, 316,921
    shares issued and outstanding in 2002 and 2001............................................        --        --
  Series E convertible preferred stock, $.0001 par value, 145,000 shares authorized, 141,603
    shares issued and  outstanding in 2002 and 2001...........................................        --        --
  Series G convertible preferred stock, $.0001 par value, 1,000 shares authorized, 1,000
    shares issued and outstanding in 2002 and 2001............................................        --        --
  Common stock, $0.0001 par value, 200,000,000 shares authorized, 39,087,252 and 38,087,252
    shares issued and outstanding in 2002 and 2001............................................          4         4
  Warrants....................................................................................      2,611     2,611
  Additional paid-in capital..................................................................    187,213   187,213
  Accumulated other comprehensive loss........................................................     (6,511)   (1,938)
  Accumulated deficit.........................................................................    (96,102)  (95,864)
                                                                                                 ---------  --------
    Total stockholders' equity................................................................      87,215   92,026
                                                                                                 ---------  --------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................................................   $ 119,120 $ 134,816
                                                                                                 ========= =========

 The accompanying notes are an integral part of these consolidated financial statements.


</TABLE>
                                                                              35
<PAGE>

<TABLE>

                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>

                                                                                             YEAR ENDED DECEMBER 31,
                                                                                             -----------------------
                                                                                           2002         2001        2000
                                                                                           ----         ----        ----
<S>                                                                                        <C>          <C>         <C>
REVENUES...........................................................................        $ --         $ --        $ --
COST OF SERVICES...................................................................          --           --          --
                                                                                         --------   ----------   --------
   Gross profit....................................................................          --           --          --
                                                                                         --------   ----------   --------

OPERATING EXPENSES:
   Selling, general and administrative expenses....................................         3,328        5,538      9,539
   Restructuring costs.............................................................            --        1,018          --
   Depreciation and amortization...................................................           151          203        326
                                                                                         --------   ----------   --------
        Operating loss.............................................................        (3,479)      (6,759)    (9,865)
                                                                                         --------   ----------   --------

OTHER INCOME (EXPENSE):
   Interest income.................................................................         1,838        4,617     14,087
   Loss on sale of assets..........................................................           (89)        (289)      (739)
   Other income....................................................................          --             28        --
                                                                                         --------   ----------   --------

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
     INCOME TAXES..................................................................        (1,730)      (2,403)     3,483

INCOME TAX PROVISION...............................................................           --          --           --
                                                                                         --------   ----------   --------

NET INCOME (LOSS) FROM CONTINUING OPERATIONS.......................................        (1,730)      (2,403)     3,483

DISCONTINUED OPERATIONS:
   Income (loss) from discontinued operations (net of a tax benefit of $5,597,
        $44,251, and $1,784 in 2002, 2001 and 2000, respectively)..................         1,492     (121,054)   (13,401)
   Gain on disposal of discontinued operations (including a tax benefit of $8,632
        in 2001 and net of a tax provision of $61,784 in 2000).....................           --         1,814    285,150
                                                                                         --------   ----------   --------


NET INCOME (LOSS)..................................................................          (238)    (121,643)   275,232

PREFERRED STOCK BENEFICIAL CONVERSION..............................................           --          --         (688)

                                                                                         --------   ----------   --------
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS.................................      $   (238)   $(121,643)  $274,544
                                                                                         ========   ==========   ========

NET EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS:
   Basic...........................................................................      $  (0.05)   $   (0.06)  $   0.11
                                                                                         ========   ==========   ========
   Diluted.........................................................................      $  (0.05)   $   (0.06)  $   0.06
                                                                                         ========   ==========   ========

NET EARNINGS (LOSS) PER SHARE:
   Basic...........................................................................      $  (0.01)     $ (3.25)  $   9.03
                                                                                         ========   ==========   ========
   Diluted.........................................................................      $  (0.01)     $ (3.25)  $   4.85
                                                                                         ========   ==========   ========

SHARES USED IN NET EARNINGS (LOSS) PER SHARE CALCULATION:
   Basic...........................................................................        39,087       37,372     30,402
   Convertible Preferred Stock.....................................................          --           --       21,513
   Warrants........................................................................          --           --        3,815
   Options.........................................................................           --          --          820
                                                                                         --------   ----------   --------
   Diluted.........................................................................        39,087       37,372     56,550
                                                                                         ========   ==========   ========

 The accompanying notes are an integral part of these consolidated financial statements.


</TABLE>
                                                                              36
<PAGE>


<TABLE>

                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                 (IN THOUSANDS)
<CAPTION>

                                                                                         ACCUMULATED
                                                                            ADDITIONAL      OTHER       RETAINED
                                             PREFERRED   COMMON              PAID-IN-   COMPREHENSIVE   EARNINGS
                                               STOCK     STOCK   WARRANTS    CAPITAL    INCOME (LOSS)   (DEFICIT)    TOTAL
                                               -----     -----   --------    -------    -------------   ---------    -----

<S>                                              <C>       <C>    <C>        <C>              <C>      <C>          <C>
Balance, January 1, 2000.....................    $ --      $   3  $ 23,398   $ 149,824        $ (7,942)$ (248,765)  $(83,482)
Issuance of Series G Preferred Stock.........      --        --        --        2,000             --         --       2,000
Issuance of warrants.........................      --        --      1,229         --              --         --       1,229
Exercise of warrants.........................      --        --    (22,016)     22,016             --         --         --
Exercise of stock options....................      --        --        --          489             --         --         489
Issuance of common stock.....................      --        --        --          340             --         --         340
Preferred Stock beneficial conversion
features.....................................      --        --        --          688             --        (688)       --
Amortization of compensation expense.........      --        --        --          120             --         --         120
Tax benefit from stock option exercises......      --        --        --          262             --         --         262
Cumulative translation adjustment............      --        --        --          --            9,992        --       9,992
Net income...................................      --        --        --          --              --      275,232   275,232
                                                 ------   ------   -------   ---------         --------   --------- ---------
Balance, December 31, 2000...................      --         3     2,611      175,739           2,050      25,779   206,182
Issuance of common stock.....................      --         1        --       11,474             --         --      11,475
Cumulative translation adjustment............      --        --        --          --           (3,747)       --      (3,747)
Unrealized losses on marketable securities
held-for-sale................................      --        --        --          --             (241)       --        (241)
Net loss.....................................      --        --        --          --              --    (121,643)  (121,643)
                                                 ------   ------   -------   ---------         --------   --------- ---------
Balance, December 31, 2001...................      --         4      2,611     187,213          (1,938)   (95,864)    92,026
Cumulative translation adjustment............      --        --        --          --           (4,656)       --      (4,656)
Unrealized gains on marketable securities
held-for-sale................................      --        --        --          --               83        --          83
Net loss.....................................      --        --        --          --              --         (238)     (238)
                                                 ------   ------   -------   ---------         --------   --------- ---------
Balance, December 31, 2002...................    $ --     $   4    $ 2,611   $ 187,213         $(6,511)   $(96,102) $ 87,215
                                                 ======   ======   =======   =========         ========   ========= =========



 The accompanying notes are an integral part of these onsolidated financial statements.


</TABLE>

                                                                              37
<PAGE>

<TABLE>


                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES

             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                                 (IN THOUSANDS)
<CAPTION>


                                                                             YEAR ENDED DECEMBER 31,
                                                                             -----------------------
                                                                        2002        2001        2000
                                                                        ------      ------      ----
<S>                                                                     <C>       <C>            <C>
Net income (loss).................................................      $  (238)  $(121,643)     $275,232
Other comprehensive income (loss):
   Foreign currency translation adjustments.......................        4,656)     (3,747)        9,992
   Unrealized gains (losses) on marketable securities held-for-sale          83        (241            --
                                                                        --------  ----------     --------
Comprehensive income (loss).......................................      $(4,811)  $(125,631)     $285,224
                                                                        ========  ==========     ========



 The accompanying notes are an integral part of these consolidated financial statements.


</TABLE>
                                                                              38
<PAGE>


<TABLE>

                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<CAPTION>

                                                                                          YEAR ENDED DECEMBER 31,
                                                                                          -----------------------
                                                                                       2002         2001       2000
                                                                                       ----         ----       ----
<S>                                                                                   <C>        <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss).............................................................      $ (238)    $(121,643)   $275,232
  Adjustments to reconcile net income (loss) to net cash flows from operating
      activities:
    Gain (loss) from discontinued operations, net of tax benefit................      (1,492)      121,054      13,401
    Gain on disposal of discontinued operations, net of tax provision or
      benefit...................................................................         --         (1,814)   (285,150)
    Depreciation and amortization...............................................         151           203         326
    Loss on sale of assets......................................................          89           289         739
    Asset impairment............................................................         --            263         --
    Non-cash compensation expense...............................................         --            --          120
    Change in other current assets..............................................       1,304         2,007      (4,062)
    Change in accounts payable, accrued expenses and other liabilities..........      (2,710)       (4,803)     (7,876)
                                                                                    --------      --------   ---------
        Net cash flows from operating activities................................      (2,896)       (4,444)     (7,270)
                                                                                    --------      --------   ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures..........................................................         --            (69)       (673)
  Purchase of marketable securities.............................................         --        (11,000)        --
  Sale of assets................................................................          20         1,311         --
  Purchase of real estate held for sale.........................................         --            --       (2,338)
                                                                                    --------      --------   ---------
        Net cash flows from investing activities................................          20        (9,758)     (3,011)
                                                                                    --------      --------   ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Exercise of stock options and warrants........................................         --            --          489
                                                                                    --------      --------   ---------
        Net cash flows from financing activities................................         --            --          489
                                                                                    --------      --------   ---------

Net cash flows from discontinued operations.....................................      49,098       (56,719)    141,039
                                                                                    --------      --------   ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............................      46,222       (70,921)    131,247
CASH AND CASH EQUIVALENTS, beginning of period..................................      61,475       132,396       1,149
                                                                                    --------      --------   ---------

CASH AND CASH EQUIVALENTS, end of period........................................    $107,697      $ 61,475   $ 132,396
                                                                                    ========      ========   =========



SUPPLEMENTAL CASH FLOW INFORMATION - See Note 3



 The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>
                                                                              39
<PAGE>



                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (IN THOUSANDS)


(1)   ORGANIZATION

      Worldport Communications, Inc., a Delaware corporation (together with its
subsidiaries, the "Company"), was originally organized as a Colorado corporation
under the name Sage Resources, Inc. in January 1989. Worldport remained inactive
until 1996 when the Company's domicile was changed to Delaware and the name was
changed to Worldport Communications, Inc.

      From 1997 to 1999, the Company was a facilities-based global
telecommunications carrier offering voice, data and other telecommunications
services to carriers, Internet service providers, medium and large corporations
and distributors and resellers operating in Europe and the United States. In
order to meet its obligations under its interim loan facility, the Company sold
substantially all of its material assets during the first quarter of 2000.

       During 2000 and 2001, the Company pursued a new business strategy,
focused on the delivery of Internet managed hosting services to global companies
doing business in the European marketplace. However, the Company did not achieve
the revenue growth it had anticipated, which, combined with the general economic
downturn and the slowdown in technology spending, prompted the Company to review
various alternatives to its existing business plan. The Company made the
decision to take restructuring actions and to divest certain assets during the
fourth quarter of 2001 and the first quarter of 2002, as described in Note 4. As
a result, the Company no longer has active business operations. Accordingly,
results of the exited operations have been classified as discontinued.

      Since the beginning of 2002, the Company has been operating with a minimal
headquarters staff while it completes the activities related to exiting its
prior businesses and determine how to use its cash resources. Since ceasing its
business operations, the Company has actively worked to resolve and settle the
Company's outstanding liabilities. Additionally, the Company has considered
various alternatives in determining how and when to use its cash resources. The
Company has sought and reviewed acquisition opportunities. However, the Company
did not pursue any of these opportunities since it did not believe that any of
them were in the best interests of its stockholders. The Company has also
analyzed a potential liquidation of the Company and its effects on the Company's
stockholders.


Recent Developments

      On December 23, 2002, W.C.I. Acquisition Corp., a Delaware corporation
("W.C.I."), commenced a tender offer for any and all of the Company's
outstanding common stock at a price of $0.50 per share (the "W.C.I. Offer").
W.C.I. was formed by The Heico Companies, L.L.C. ("Heico"), J O Hambro Capital
Management Limited ("Hambro") and certain of their affiliates to complete the
W.C.I. Offer. These entities own or have the right to acquire 17,889,147 shares
of the Company's common stock, which represents approximately 45% of the
Company's outstanding common stock. The W.C.I. Offer was conditioned on, among
other things, the valid tender of a majority of the outstanding shares,
excluding the shares owned by W.C.I. or its stockholders. W.C.I.'s tender offer
expired on February 14, 2003 without purchase of any shares, as certain
conditions were not satisfied. W.C.I. reported that approximately 6.8 million
shares were tendered in response to the W.C.I. Offer.

      Recognizing the apparent desire of certain stockholders for liquidity
demonstrated by their tender of shares pursuant to the W.C.I. Offer, the
Company's Board of Directors considered the possibility of a self-tender offer.
Upon approval by the Company's Board of Directors, the Company commenced a
self-tender offer on March 7, 2003 for any and all of the Company's outstanding
common stock at a price of $0.50 per share (the "Self-Tender Offer"). The
Self-Tender Offer is not conditioned on any minimum number of shares being
tendered, however it is subject to certain conditions described in the Company's
Form TO-I filed with the Securities and Exchange

                                                                              40
<PAGE>

Commission on March 7, 2003. The Self-Tender Offer expires on April 4, 2003,
unless extended by the Company. Certain of the Company's stockholders (including
the Company's Directors) who own approximately 45% of the Company's common stock
have advised the Company that they do not intend to tender any shares in the
Self-Tender Offer. Excluding these shares, up to approximately 21.2 million
shares could be repurchased by the Company, if all other stockholders were to
tender, for a purchase price of $10.6 million.

      On March 7, 2003, in a separate transaction, the Company repurchased
approximately 99% of its outstanding preferred stock from Heico. The shares were
repurchased for $67.4 million, which represents the aggregate liquidation
preference of the purchased shares, including a 7% dividend that is required
under the terms of the preferred stock before any distributions on or purchase
of the Company's common stock. The Company has made a similar purchase offer to
the three remaining preferred stockholders. Worldport has retired the stock it
has repurchased from Heico.

      As a result of the preferred stock repurchase transaction, the Company now
has approximately $38.7 million in cash and cash equivalents and $10.9 million
in marketable securities as of March 25, 2003. If the Self-Tender Offer is not
completed because a condition is not satisfied or waived, the Company expects to
operate the Company substantially as presently operated. However, in that event,
the Company will evaluate other potential strategies including acquiring a new
operating business or businesses or liquidating the Company. Following
completion of the Self-Tender Offer, the Company intends to explore the possible
benefits to its stockholders of a change in domicile to outside the United
States of America. The Company also intends to continue to consider potential
acquisition opportunities, although the Company has not identified a specific
industry on which it intends to focus and has no present plans, proposals,
arrangements or understandings with respect to the acquisition of any specific
business.


(2)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

      The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries that are under the Company's
control. All significant intercompany accounts and transactions have been
eliminated.

      Under generally accepted accounting principles, consolidation is generally
required for investments of more than 50% of the outstanding voting stock of any
investee, except when control is not held by the majority owner. Under these
principles, legal reorganization or other proceedings (including Administration,
receivership, or liquidation) represent conditions which can preclude
consolidation in instances where control rests with an administrator, receiver
or liquidator rather than the majority owner. As discussed in Note 4, the U.K.,
Irish, German and Swedish subsidiaries filed or were placed into the local
jurisdiction's applicable proceedings. As a result, the Company deconsolidated
the subsidiaries' financial results and began accounting for its investment in
the subsidiaries under the equity method of accounting and began recording gains
and losses upon settlement.


Use of Estimates

      The Company's financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America
("GAAP"). Financial statements prepared in accordance with GAAP require the use
of management estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

                                                                              41
<PAGE>



Revenue Recognition

      As a result of the fourth quarter 2001 and first quarter 2002 transactions
described in Note 4, all of the Company's revenues for 2002, 2001 and 2000 have
been included in Income (Loss) from Discontinued Operations. The Company
recognized revenues as services were provided. Amounts billed in advance of
services provided were recorded as deferred revenues until such related services
were provided. The Company adopted Staff Accounting Bulletin No. 101 ("SAB
101"), "Revenue Recognition in Financial Statements" effective January 1, 2000,
the adoption of which had no impact on the Company's financial statements. In
accordance with SAB 101, installation fees were amortized over the life of the
relevant contract, which generally ranged from one to three years.


Cash and Cash Equivalents

      Cash and cash equivalents include cash on hand and all liquid investments
with an original maturity of three months or less when purchased.


Marketable Securities

      The Company currently owns a marketable debt security with a contractual
maturity of 2004, but has classified that debt security as available-for-sale in
accordance with the provisions of Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." This security is carried at fair market value, with unrealized
gains and losses reported in stockholders' equity as a component of accumulated
other comprehensive loss. For 2002, 2001 and 2000, there have been no gains or
losses on securities sold. However, in computing realized gains and losses, the
Company will use the specific identification method.


Property and Equipment

      Property and equipment is carried at cost less writedowns for impairments
where necessary. Expenditures for additions, improvements and renewals, which
add significant value to the asset or extend the life of the asset, are
capitalized. Expenditures for maintenance and repairs are charged to expense as
incurred. The Company provides for depreciation of property and equipment using
the straight-line method based on the estimated useful lives of the assets as
follows:

                 Leasehold improvements              10  - 25 years
                 Computer software                    2  -  3 years
                 Computer hardware                    2  -  3 years
                 Office equipment & furniture         5  - 10 years

      Leasehold improvements and equipment recorded under capital leases are
amortized using the straight-line method over the shorter of the respective
lease term or the estimated useful life of the asset.


Asset Impairment

      SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," was issued in August 2001. SFAS No. 144, which addresses financial
accounting and reporting for the impairment of long-lived assets and for
long-lived assets to be disposed of, supercedes SFAS No. 121 and is effective
for fiscal years beginning after December 15, 2001. The Company adopted this
pronouncement on January 1, 2002. There was no impact to the financial position
and results of operations of the Company as a result of the adoption.

      In accordance with SFAS No. 144, the Company continually reviews whether
events and circumstances subsequent to the acquisition of any long-lived assets
have occurred that indicate the remaining estimated useful lives

                                                                              42
<PAGE>

of those assets may warrant revision or that the remaining balance of those
assets may not be recoverable. If events and circumstances indicate that the
long-lived assets should be reviewed for possible impairment, the Company uses
projections to assess whether future cash flows or operating income (before
amortization) on an undiscounted basis related to the tested assets is likely to
exceed the recorded carrying amount of those assets, to determine if a
write-down is appropriate. Should an impairment be identified, a loss would be
reported to the extent that the carrying value of the impaired assets exceeds
their fair values as determined by valuation techniques appropriate in the
circumstances that could include the use of similar projections on a discounted
basis.

      As a result of this periodic review, the Company recorded non-cash asset
impairment charges, primarily from discontinued operations, to write down its
long-lived assets of various businesses to their estimated net realizable value
as follows:

     0    In the third quarter of 2001, the Company recorded a non-cash asset
          impairment charge from discontinued operations of approximately $13.2
          million in connection with the write off of goodwill relating to its
          VIS-able subsidiaries, as described in Note 4.
     0    In the fourth quarter of 2001, the Company recorded non-cash asset
          impairment charges of approximately $84.8 million ($0.3 million from
          continuing operations, included in Restructuring Costs, and $84.5
          million from discontinued operations) in connection with the fourth
          quarter 2001 transactions discussed in Note 5.
     0    During 2002, the Company recorded non-cash asset impairment charges
          from discontinued operations totaling approximately $1.7 million
          related to certain equipment from the discontinued businesses.


Financial Instruments

      The carrying value of the Company's financial instruments, including cash
and cash equivalents, marketable securities, other receivables, accounts
payable, and capital lease obligations approximate their fair market values.


Income Taxes

      The Company uses the asset and liability method of accounting for income
taxes prescribed in SFAS No. 109, "Accounting for Income Taxes". Under this
method, deferred tax assets and liabilities are determined based on the
difference between the financial statement and tax basis of assets and
liabilities using statutory or enacted tax rates in effect for the year in which
the differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts expected
to be recovered.


Earnings (Loss) per Share

      The Company has applied the provisions of SFAS No. 128, "Earnings Per
Share", which establishes standards for computing and presenting earnings per
share. Basic earnings per share is computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
for the period. The calculation of diluted earnings per share includes the
effect of dilutive common stock equivalents. In 2002 and 2001, basic and diluted
loss per share are the same because all dilutive securities had an antidilutive
effect on loss per share. In 2000, diluted earnings per share include the effect
of the Company's convertible preferred stock, stock options and warrants. The If
Converted method was used to calculate the weighted average shares outstanding
for convertible preferred stock. The Treasury Stock method was used to calculate
the weighted average shares outstanding for warrants and options.


Accounting for Stock-Based Compensation

      The Company issued stock-based compensation under its existing stock
option plans. The Company continues to use the intrinsic fair value method under
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for

                                                                              43
<PAGE>

Stock Issued to Employees," to account for the plan. Therefore, no compensation
costs are recognized in the Company's financial statements for options granted.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure." SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock-Based Compensation," to provide alternative methods of
transition for companies who voluntarily change to the fair value based method
of accounting for stock-based employee compensation. The statement also
increases stock-based compensation quarterly and annual disclosure requirements
for all companies and is effective for financial statements of companies with
fiscal years ending after December 15, 2002. The Company adopted the new
disclosure requirements in this statement in December 2002. In accordance with
SFAS No. 148, the following table presents what the Company's net income (loss)
would have been had the Company determined compensation costs using the fair
value-based accounting method.

                                                    2002      2001        2000
                                                    ----      ----        ----
      Net income (loss) - as reported             $(238)  $ (121,643)  $ 275,232
      Stock-based compensation cost, net of tax    (738)      (1,960)    (3,846)
                                                  -----   ----------   ---------
      Net income (loss) - pro forma               $(976)  $ (123,603)  $ 271,386
                                                  ======  ===========  =========


Segment Reporting

      SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information", requires the reporting of profit and loss, specific revenue and
expense items and assets for reportable segments. It also requires the
reconciliation of total segment revenues, total segment profit or loss, total
segment assets, and other amounts disclosed for segments to the corresponding
amounts in the general purpose financial statements.

      During 2001, the Company had three reportable segments: managed hosting,
professional services and carrier operations. The managed hosting segment
derived revenues primarily from the delivery of services including Internet
networking, applications and value-added services, infrastructure, and systems
support. The professional services segment derived revenues primarily from
Internet-based applications, systems development, and content management
support. The carrier operations segment derived revenues primarily from voice,
data and other telecommunication services. Company management viewed the three
distinct business strategies as different business segments when making
operating and investment decisions and for assessing performance. There were no
intersegment revenues in any of the years presented.

      As a result of the transactions discussed in Note 4, the Company exited
all of its operating segments as of March 31, 2002.


Foreign Currency

      Prior to the transactions described in Note 4, substantially all of the
Company's operations were in Europe. The assets and liabilities of the Company's
non-U.S. subsidiaries were translated at the rates of exchange as of the balance
sheet date, and income statement items were translated at the average rates
prevailing during the period. The resulting translation adjustment was recorded
as a component of stockholders' equity. Exchange gains and losses on
intercompany balances of a long-term investment nature were also recorded as a
component of stockholders' equity. Other foreign exchange gains and losses were
recorded in income on a current basis and have been included in Loss from
Discontinued Operations. For 2002, other foreign exchange gains and losses
included in income were minimal. For 2001 and 2000, other foreign exchange gains
and losses equaled gains of $0.1 million and losses of $2.6 million,
respectively.


Derivatives

      The Company has used derivative instruments to hedge its foreign currency
exposure only on a limited basis. Accordingly, the Company is not subject to any
additional significant foreign currency market risk other than normal
fluctuations in exchange rates.

                                                                              44
<PAGE>

      In June 2000, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities--an Amendment of FASB Statement No. 133," which is effective for
fiscal years beginning after June 15, 2000. SFAS No. 133 establishes accounting
and reporting standards for derivative instruments and transactions involving
hedge accounting. The Company adopted SFAS No. 133, as amended, on January 1,
2001, which had no impact on the consolidated financial statements.

      At December 31, 2002, there were no significant foreign currency hedge
contracts outstanding.


New Accounting Pronouncements

      In June 2001, the Financial Accounting Standards Board issued SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 prospectively prohibits the pooling of interests method of
accounting for business combinations initiated after June 30, 2001. Under SFAS
No. 142, goodwill amortization ceases when the new standard is adopted. In 2001
and 2000, the Company recorded $2.5 million and $1.0 million, respectively, of
goodwill amortization from discontinued operations. No goodwill amortization was
recorded in 2002. SFAS No. 142 also requires an initial goodwill impairment
assessment in the year of adoption and an impairment test both on an annual
basis and upon the occurrence of any event or change in circumstances that would
reduce the fair value of a reporting unit below its carrying value. SFAS No. 142
also requires the Company to complete a transitional goodwill impairment test
six months from the date of adoption. The Company adopted this standard at the
beginning of its 2002 fiscal year. As the Company had no goodwill or intangibles
at December 31, 2001, the adoption of this statement had no impact on the
Company's consolidated financial statements. Following is a reconciliation of
net income (loss) and earnings (loss) per share for the years ended December 31,
2002, 2001 and 2000 assuming the adoption of SFAS No. 142 at the beginning of
the periods presented:

<TABLE>

                                                                             2002          2001         2000
<S>                                                                          <C>         <C>          <C>
  Net income (loss) from continuing operations, as reported                  $(1,730)    $  (2,403)   $   3,483
  Goodwill amortization from continuing operations                               --            --           --
                                                                             -------     ---------    ---------
      Net income (loss) from continuing operations, proforma                 $(1,730)    $  (2,403)   $   3,483
                                                                             ========     =========   =========

  Net income (loss), as reported                                             $  (238)    $(121,643)   $ 275,232
  Goodwill amortization                                                           --         2,533        1,038
                                                                             -------     ---------    ---------
      Net income (loss), proforma                                            $  (238)    $(119,110)   $ 276,270
                                                                             ========    ==========   =========

  Basic earnings (loss) per share from continuing operations, as
    reported                                                                 $ (0.05)    $   (0.06)   $    0.11
  Goodwill amortization from continuing operations                              --            --           --
                                                                             -------     ---------    ---------
      Basic earnings (loss) per share from continuing operations, proforma   $ (0.05)    $   (0.06)   $    0.11
                                                                             ========    ==========   =========

  Diluted earnings (loss) per share from continuing operations, as           $ (0.05)    $   (0.06)   $    0.06
    reported
  Goodwill amortization from continuing operations                              --            --           --
                                                                             -------     ---------    ---------
      Diluted earnings (loss) per share from continuing operations,
        proforma                                                             $ (0.05)    $   (0.06)   $    0.06
                                                                             ========    ==========   =========


  Basic earnings (loss) per share, as reported                               $ (0.01)    $   (3.25)   $    9.03
  Goodwill amortization                                                           --          0.06         0.03
                                                                             -------     ---------    ---------
      Basic earnings (loss) per share, proforma                              $ (0.01)    $   (3.19)   $    9.06
                                                                             ========    ==========   =========

  Diluted earnings (loss) per share, as reported                             $ (0.01)    $   (3.25)   $    4.85
  Goodwill amortization                                                           --          0.06         0.02
                                                                             -------     ---------    ---------
      Diluted earnings (loss) per share, proforma                            $ (0.01)    $   (3.19)   $    4.87
                                                                             ========    ==========   =========

</TABLE>

      In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." The statement requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred as opposed to the date of an entity's commitment
to an exit plan. The Company will adopt SFAS No. 146 for any exit or disposal
activities initiated after December 31, 2002.

                                                                              45
<PAGE>

Certain Reclassifications

      Certain reclassifications have been made to amounts previously reported to
conform to current period presentation.


(3)      SUPPLEMENTAL CASH FLOW INFORMATION

      Non-cash investing and financing information for the years ended December
31, 2002, 2001 and 2000 is as follows :

<TABLE>

                                                                                       2002       2001      2000
                                                                                       ----       ----      ----

<S>                                                                                   <C>       <C>        <C>
Issuance of common stock for the acquisition of hostmark                              $ --      $ 11,475   $  --
Acquisition of property and equipment under capital lease.......................      $ --      $  7,875   $  --
Exercise of warrants for common stock...........................................      $ --      $   --     $22,016
Deferral of VIS-able purchase price collateralized by letter of credit..........      $ --      $   --     $ 2,700
Conversion of related party note payable to 1,000 shares of Series G Preferred
  Stock.........................................................................      $ --      $   --     $ 2,000
Issuance of warrants in connection with Interim Loan Facility...................      $ --      $   --     $ 1,229

</TABLE>

      Cash paid for interest in 2002, 2001 and 2000 was approximately $0.3
million, $0.5 million and $0.8 million, respectively. Cash paid for income taxes
was approximately $59.9 million in 2000. No cash was paid in 2002 and 2001 for
income taxes.


(4)  DISCONTINUED OPERATIONS

      During 2001, the Company did not achieve its expected revenue growth in
its managed hosting business. The general economic downturn, the slowdown in
technology spending and the lengthening in the sales cycle for managed hosting
services all contributed to these revenue shortfalls. Company management
believed that these conditions, as well as the increasing level of competition
and consolidation in the Web hosting and Internet infrastructure markets, would
continue to have an adverse effect on the Company's ability to achieve near term
revenue targets and, if they continued, could erode the financial resources of
the Company more rapidly than planned.

      Following the exploration and review of the strategic alternatives, the
Company determined that it was necessary to take certain actions in the fourth
quarter of 2001 and the first quarter of 2002 to dramatically reduce the rate at
which its operations were using cash and to minimize the Company's exposure in
markets that were experiencing significantly slower than expected market growth.
Following is a summary of these fourth quarter 2001 and first quarter 2002
actions and the subsequent exit activities that have occurred in 2002 related to
these actions.

          0    In November 2001, the Company announced that its Irish subsidiary
               was ceasing operations at its Dublin, Ireland facility. An
               orderly shutdown of the Ireland operations was commenced, and was
               substantially completed by December 31, 2001. In April 2002,
               Worldport Ireland Limited was given notice that a petition for
               winding up was filed and would be presented to the Irish High
               Court by Global Crossing Ireland Limited. The petition was heard
               by the Irish High Court on May 13, 2002 and a liquidator was
               appointed for this subsidiary to act on behalf of the creditors.
               As a result of this action, the liquidator has control over this
               subsidiary's assets. The assets and liabilities of the Irish
               subsidiary that were not guaranteed or incurred directly by the
               parent company, Worldport Communications, Inc. ("Worldport
               Inc."), were deconsolidated in the second quarter of 2002 and
               reflected in Net Liabilities of Non-controlled Subsidiaries on
               the Company's balance sheets (see Note 6). At December 31, 2002,
               the Net Liabilities of Non-controlled Subsidiaries relating to
               Ireland equaled $4.0 million. Approximately $18.8 million of
               liabilities that were guaranteed or incurred by Worldport Inc.
               have not been deconsolidated and continue to be reflected as
               liabilities of the Company.
                                                                              46
<PAGE>

               In September 2002, the liquidator disclaimed the leases for the
               two facilities previously used by the Irish subsidiary. The
               Company had provided a letter of credit to the landlord of these
               facilities equal to approximately 0.5 million Euros to support
               the lease of one of the facilities. Partial draws of
               approximately 0.2 million Euros and 0.3 million Euros were made
               in October 2002 and December 2002, respectively, and paid to the
               landlord under the letter of credit. The Company expects that the
               remaining amount of the letter of credit (less than 0.1 million
               Euros) will be drawn out. This letter of credit is reflected in
               Other Assets on the Company's balance sheets.

               The Company provided a guarantee with respect to the lease of the
               other facility. In October 2002, the Company received a letter
               from legal counsel for the landlord with respect to the Company's
               guarantee. This letter demanded the payment within 14 days of
               approximately 0.9 million Euros and the confirmation of the
               Company's liabilities as guarantor under the lease. In January
               2003, the Company's legal counsel received a letter from legal
               counsel for the landlord in which the landlord demanded that the
               Company assume the position of tenant under the lease. Should the
               Company be forced to assume the position of tenant under the
               lease, the Company could be obligated for the full amount of rent
               through 2010 plus certain taxes and maintenance expenses. In
               February 2003, the landlord filed a Notice of Motion in the High
               Court of Ireland against the Company in which the landlord
               demanded payment of approximately 1.2 million Euros, which
               included additional rent that they claim had accrued since their
               prior demand. A hearing is scheduled for April 8, 2003. The
               Company is contesting the validity of the landlord's demands.
               There can be no assurance that such claims will not be successful
               against the Company. However, the outcome of the matter is not
               expected to have a material adverse effect on the consolidated
               results of the Company in excess of amounts already recorded.
               Included in Accrued Expenses at December 31, 2002 is $5.7
               million, which represents rent payable on the data center between
               January 2002 and 2010, the earliest contractual termination date
               of the lease.

          0    In December 2001, the Company sold the assets and certain
               liabilities of its Swedish subsidiary, Hostmark AB, to OM
               Technology AB for approximately 10 million Swedish kronor,
               subject to the resolution of a final working capital adjustment.
               The parties agreed to a final sales price of 7.5 million Swedish
               kronor (approximately $0.8 million) in July 2002, which was fully
               collected by August 2002. OM also agreed to assume the ownership
               of Hostmark AB's Stockholm Internet solutions center and the
               operations at that center, and all customers' contracts. In
               September 2002, Hostmark AB was put into liquidation and a
               liquidator was appointed to control this subsidiary. As a result
               of the asset sale to OM Technology AB in December 2001, there
               were no assets and minimal liabilities remaining in this Swedish
               subsidiary. Those liabilities were deconsolidated in the third
               quarter of 2002 and are reflected in Net Liabilities of
               Non-controlled Subsidiaries on the Company's balance sheets (see
               Note 6). At December 31, 2002, the Net Liabilities of
               Non-controlled Subsidiaries relating to Hostmark AB equaled $0.1
               million.

          0    In the third quarter of 2001, the Company experienced a decline
               in revenue in the Swedish professional services business
               (formerly known as VIS-able International AB) as there was excess
               capacity in the Swedish consulting market, major pricing
               pressures, and slower customer decisions related to new IT
               projects for those services. In response to this, the Company
               compared the carrying value of the VIS-able long-lived assets
               with their estimated future undiscounted cash flows and
               determined that an impairment loss had occurred. The carrying
               value was then compared to the estimated future discounted cash
               flows and the excess carrying value of $13.2 million was recorded
               as a non-cash asset impairment charge and included in Loss from
               Discontinued Operations.

               In December 2001, the Company sold its Swedish professional
               services business to its employees in a management buyout for
               $0.9 million, the majority of which is in the form of a note. Due
               to uncertainties related to the collectibility of this note, it
               has been fully reserved.

          0    In December 2001, the Company placed its German subsidiary,
               Hostmark GmbH, into receivership under German law. As a result of
               this action, the receiver has control over this subsidiary's
               assets. The assets and liabilities of Hostmark GmbH held in
               receivership were deconsolidated in the Company's financial
                                                                              47
<PAGE>

               statements in the fourth quarter of 2001 and were reflected in
               Net Liabilities of Non-controlled Subsidiaries on the Company's
               balance sheet as a net liability of approximately $1.4 million
               (see Note 6).

               In the third quarter of 2002, the Company was informed by its
               German attorneys that the receiver terminated the Frankfurt lease
               effective December 31, 2002 under the provisions of German law.
               As a result, Hostmark GmbH is no longer obligated for lease
               payments due after the effective date (approximately $1.6
               million). The lease liability had originally been recorded by the
               Company as part of the $101.5 million restructuring charge taken
               on the discontinued businesses in the fourth quarter of 2001.
               Additionally, the Company was informed that the receiver has
               declared insufficiency of the estate under the provisions of
               German law. This declaration was made because the receiver
               determined that the remaining net assets of the German company
               were not sufficient to cover the administrative costs of the
               proceedings, and consequently, no distributions could be made to
               the third party creditors (including the Frankfurt landlord for
               lease payments prior to the December 31, 2002 termination date).
               This declaration can be revoked in the future to the extent money
               is collected by the receiver on behalf of Hostmark GmbH in an
               amount sufficient to provide a distribution to the third party
               creditors. Based on its understanding of the German proceedings,
               the Company does not believe it is obligated to fund the
               Frankfurt lease obligation and other creditor liabilities of the
               German subsidiary. Therefore, in the third quarter of 2002, the
               Company reduced its Net Liabilities of Non-controlled
               Subsidiaries by, and recorded a non-cash gain from discontinued
               operations of, $1.4 million relating to the net liabilities of
               the German subsidiary.

          0    In March 2002, the Company made the decision to make no further
               investment in its U.K. managed hosting operation. On March 26,
               2002, the Company's U.K. subsidiaries, Hostmark World Limited and
               Hostmark U.K. Limited, filed a petition for Administration under
               the United Kingdom Insolvency Act. An administrator was appointed
               for these subsidiaries to either reorganize, find new investors,
               sell or liquidate the U.K. businesses for the benefit of its
               creditors. As a result of this action, the administrator has
               control over these subsidiaries' assets. The assets and
               liabilities of the U.K. subsidiaries that were not guaranteed by
               Worldport Inc. were deconsolidated in the Company's financial
               statements in the first quarter of 2002 and are reflected in Net
               Liabilities of Non-controlled Subsidiaries on the Company's
               balance sheets (see Note 6). At December 31, 2002, the Net
               Liabilities of Non-controlled Subsidiaries relating to the U.K.
               equaled $5.5 million.

               Approximately $7.7 million of liabilities relating to the Slough,
               U.K. data center lease that were guaranteed by Worldport Inc.
               were not deconsolidated on the Company's balance sheet. In August
               2002, the U.K. administrator identified a new third party tenant
               for the Slough data center. The Company had previously agreed to
               guarantee, on behalf of its U.K. subsidiary, the Slough data
               center lease expiring in 2015. In connection with the August 2002
               transaction, the landlord agreed to release the underlying lease
               guarantee and, therefore, relieve the Company from the $7.7
               million lease liability upon the payment of 0.2 million British
               pounds (approximately $0.3 million), which payment was funded by
               the Company. The $7.7 million lease liability had originally been
               recorded by the Company as part of the $10.0 million
               restructuring charge taken on the U.K. business in the first
               quarter of 2002. Accordingly, the Company reduced its liabilities
               by, and recorded a non-cash gain from discontinued operations of,
               $7.7 million in the second quarter of 2002.


      In addition, the Company completed the sale of its remaining carrier
business, Telenational Communications, Inc. ("TNC") in October 2001 for $0.4
million. Due to uncertainties related to the collectibility of this note, the
note was fully reserved for in 2001. However, in the fourth quarter of 2002, the
Company reached an agreement with the purchaser to accept $0.3 million in full
satisfaction of the note. This amount was paid to the Company in the fourth
quarter of 2002 and resulted in a cash gain of $0.3 million.

      As a result of these transactions, the Company had exited all three of its
operating segments as of March 31, 2002 and is currently operating with only a
minimal headquarters staff. Accordingly, results of these operations have been
classified as discontinued.
                                                                              48
<PAGE>

      The operating results of discontinued operations were as follows:

                                              2002         2001          2000
                                              ----         ----          ----
           Net revenue                       $   291    $   10,934    $   9,795
           Restructuring costs (see Note 5)  $   672    $  100,442    $      --
           Asset impairment                  $  --      $   13,222    $      --
           Loss before income taxes          $(4,105)   $ (165,305)   $ (15,185)
           Income tax benefit                $ 5,597    $   44,251    $   1,784
           Net income (loss) from
              discontinued operations        $ 1,492    $ (121,054)   $ (13,401)


       Assets and liabilities related to the discontinued operations consist of
the following:

                                                      December 31,  December 31,
                                                          2002          2001
                                                          ----          ----
          Current assets                               $       5    $  3,733
          Other noncurrent assets                              9       6,847
          Current liabilities                            (27,578)    (30,313)
          Long-term liabilities                             (834)     (3,433)
                                                       ---------    ---------
          Net liabilities of discontinued operations   $ (28,398)   $(23,166)
                                                       ==========   =========


(5)      RESTRUCTURING ACTIVITIES

      In the fourth quarter of 2001 and in the first quarter of 2002, the
Company recorded restructuring charges of $101.5 million and $10.0 million,
respectively, relating to the actions described in Note 4. These restructuring
charges primarily included severance, facility exit costs, bandwidth contract
termination costs, and the write down of assets to their expected net realizable
value and have been primarily included in Income (Loss) from Discontinued
Operations.

      The Company compared the carrying value of the long-lived assets located
primarily in Ireland, Germany and the U.K. to fair values determined
substantially through independent appraisals and estimated future discounted
cash flows. The excess carrying value of $84.8 million was recorded as a
non-cash asset impairment charge in the fourth quarter of 2001.

      Facility exit costs of $9.3 million and $7.9 million were recorded in the
fourth quarter of 2001 and the first quarter of 2002, respectively. These
facility exit costs represented rent payments on the Company's U.K., Ireland and
German facilities, net of certain estimated sublease recoveries. As discussed in
Note 4, the obligations related to the Slough, U.K., and the Frankfurt, Germany,
data center leases have been extinguished through the administration or
receivership proceedings. Accordingly, the Company has recognized a non-cash
gain of $7.7 million and $1.6 million in the second and third quarters,
respectively, of 2002 related to the Slough and Frankfurt lease obligations that
were originally recorded as restructuring charges.

      Bandwidth contract termination costs of $4.7 million and $0.4 million were
recorded in the fourth quarter of 2001 and the first quarter of 2002,
respectively. These costs represent early termination penalties incurred by the
Company to cancel certain bandwidth contracts related to its ceased managed
hosting operations in Ireland and the U.K.

      Severance of $1.3 million was recorded in the fourth quarter of 2001 and
all severance payments had been made by June 30, 2002. The headcount reduction
affected approximately 100 employees, who were primarily located in Ireland.
Substantially all employees terminated under this plan were released by December
31, 2001, with the few remaining employees terminated in the first quarter of
2002.
                                                                              49
<PAGE>

      Other costs of $1.4 million and $1.6 million were recorded in the fourth
quarter of 2001 and the first quarter of 2002, respectively, and include
estimated legal expenses, costs to settle outstanding purchase commitments, and
other shutdown related expenses.

      The following table summarizes the significant components of the
restructuring reserve included in Accrued Expenses at December 31, 2002 (in
thousands):

<TABLE>

                                           Balance At                                              Balance At
                                            December                     Cash        Non-cash       December
                                            31, 2001     Additions     Payments     Adjustments     31, 2002
                                            --------     ---------     --------     -----------     --------
       <S>                                     <C>         <C>          <C>           <C>              <C>
       Facility exit costs                     $ 9,213     $  7,936     $   (336)     $ (10,926)       $ 5,887
       Bandwidth contract termination            4,329          418            --          (448)         4,299
       Severance                                   761           --         (761)            --             --
       Other costs                               1,257        1,646         (482)        (2,232)           189
                                               -------     --------     --------      ---------        -------
       Total                                   $15,560     $ 10,000     $ (1,579)     $ (13,606)       $10,375
                                               =======     ========     =========     ==========       =======
</TABLE>

      The non-cash adjustments of $13.6 million primarily consist of $7.7
million related to the Slough, U.K., lease liability that the Company was
released from in August 2002 (as discussed above) and $6.9 million of
liabilities related to the U.K., German, and Irish subsidiaries that, along with
the other assets and liabilities of those subsidiaries, have been deconsolidated
into a separate line item on the Company's balance sheet called Net Liabilities
of Non-controlled Subsidiaries (see Note 6). These items were slightly offset by
the impact of foreign currency fluctuations on translated balances.

      The Company's management is currently seeking opportunities to further
reduce its liabilities related to the exited businesses and evaluating the
possible sale or disposition of the remaining assets, including potentially
subleasing the facilities remaining under operating lease agreements. All
remaining restructuring costs are due to be paid by December 31, 2010, with $4.6
million due in 2003, $0.9 million in 2004, $0.9 million in 2005, $0.9 million in
2006, $0.8 million in 2007 and $2.3 million thereafter.

      The Company used estimates to calculate the restructuring charges,
including the ability and timing of the Company to sublease space and the net
realizable value of remaining assets. These estimates are subject to change
based on the sale of the remaining assets along with the sublease or settlement
of future rent obligations.


(6)  NET LIABILITIES OF NON-CONTROLLED SUBSIDIARIES

       As described in Note 4, the Company placed its German subsidiary,
Hostmark GmbH, into receivership under German law in December 2001 and a
receiver was appointed for this subsidiary. In March 2002, the Company's U.K.
subsidiaries, Hostmark World Limited and Hostmark U.K. Limited, filed a petition
for Administration under the United Kingdom Insolvency Act and an administrator
was appointed for these subsidiaries. In April 2002, the Company's Irish
subsidiary, Worldport Ireland Limited, was given notice that a petition for
winding up was filed and would be presented to the Irish High Court on behalf of
Global Crossing Ireland Limited. The petition was heard by the Irish High Court
on May 13, 2002 and a liquidator was appointed for this subsidiary to act on
behalf of the creditors. In September 2002, the Company's Swedish subsidiary,
Hostmark AB was placed into liquidation and a liquidator was appointed for this
subsidiary. As a result of these actions, the Company no longer has control over
these subsidiaries' assets.

       Under generally accepted accounting principles, consolidation is
generally required for investments of more than 50% of the outstanding voting
stock of any investee, except when control is not held by the majority owner.
Under these principles, legal reorganization or other proceedings (including
Administration, receivership, or liquidation) represent conditions which can
preclude consolidation in instances where control rests with an administrator,
receiver or liquidator rather than the majority owner. As discussed above, the
U.K., Irish, German and Swedish subsidiaries filed or were placed into the local
jurisdiction's applicable proceedings. As a result, the Company deconsolidated
the subsidiaries' financial results and began accounting for its investment in
the subsidiaries under the equity method of accounting and began recording gains
and losses upon settlement.
                                                                              50
<PAGE>

       Prior to the filing or placement into the respective proceedings, under
generally accepted accounting principles of consolidation, the Company had
recognized losses in excess of its investment in these subsidiaries of $10.8
million. Since these subsidiaries' results are no longer consolidated and the
Company believes that it is not probable that it will be obligated to fund
losses related to these investments, any adjustments reflected in the
subsidiaries' financial statements subsequent to the effective dates of these
proceedings are not expected to adversely affect the Company's consolidated
results.

      However, as the liabilities of these subsidiaries exceed the value of its
assets, there can be no assurance that these creditors will not make claims
against the parent company, Worldport Inc., for these obligations or that,
through the proceedings, Worldport Inc. would not be required to satisfy any of
these obligations. As a result, the Company has not reflected any adjustments
relating to the deconsolidation of these subsidiaries other than by presenting
the net liability for each of these subsidiaries as Net Liabilities of
Non-controlled Subsidiaries and discontinuing the recording of earnings or
losses from these subsidiaries after the effective dates of these proceedings.
To the extent that any of these liabilities are extinguished through these
proceedings without funding from the Company, the Company may recognize non-cash
gains in future periods as a result of the forgiveness of such obligations.
Conversely, when the proceedings are completed and liabilities are extinguished,
the Company may recognize non-cash losses on the foreign currency translation
losses currently included in Accumulated Other Comprehensive Income.

      As discussed in Note 4, a new third party tenant was identified for the
Slough, U.K., data center by the U.K. administrator in August 2002. The third
party paid approximately 5.7 million British pounds to the U.K. administrator,
in addition to the assumption of the lease liability, for the Slough data center
operation and related assets. The 5.7 million British pounds proceeds may be
used to satisfy all or a portion of the Net Liabilities of Non-controlled
Subsidiaries for the U.K. entities, and accordingly, the Company may recognize
non-cash gains in future periods as a result of this transaction. Since
Worldport Inc. had agreed to guarantee this lease, the related liability was not
included in Net Liabilities of Non-controlled Subsidiaries, and the assumption
of that liability by the tenant resulted in the recognition of a $7.7 million
gain from discontinued operations in the second quarter of 2002.

      Also discussed in Note 4, based on its understanding of the German
proceedings, the Company believed that it will not be obligated to fund the
Frankfurt lease obligation and other creditor liabilities of the German
subsidiary. Therefore, in the third quarter of 2002, the Company reduced its Net
Liabilities of Non-controlled Subsidiaries by, and recorded a non-cash gain from
discontinued operations of, $1.4 million relating to the net liabilities of the
Germany subsidiary.

      In addition to the third party creditors of the Company's subsidiaries,
Worldport Inc. from time to time made advances to these subsidiaries prior to
the Company's subsidiaries entering into the relevant proceedings. Therefore,
Worldport Inc. is also a creditor of these subsidiaries in these proceedings.
The Company is not able to determine at this time the priority of Worldport
Inc.'s claim in such proceedings or whether or not Worldport Inc. will be able
to recover any portion of these advances. If Worldport Inc. is successful in
collecting any portion of these advances, the Company would recognize a gain and
an increase in cash at that time.

      The Company used estimates to calculate the Net Liabilities of
Non-controlled Subsidiaries. These estimates are subject to change based on the
ability of the administrator, receiver or liquidator, as applicable, to sell the
remaining assets and negotiate the final liability amounts. Net Liabilities of
Non-controlled Subsidiaries do not include obligations that the parent company,
Worldport Inc., has guaranteed or incurred directly. Only those liabilities of
these subsidiaries which Worldport Inc. believes it will not be required to pay
have been included in Net Liabilities of Non-controlled Subsidiaries.

      Excluding the liabilities of the U.K., Irish and Swedish subsidiaries that
are recorded in Net Liabilities of Non-controlled Subsidiaries as discussed
above, there are approximately $22.4 million of liabilities reflected on the
Company's December 31, 2002, balance sheet attributable to Worldport Inc. and
the remaining subsidiaries not in Administration, receivership or liquidation.
The Company has assumed, for purposes of calculating these liabilities, that it
will not be able to mitigate them, however, Company management is currently
seeking opportunities to further

                                                                              51
<PAGE>

reduce these liabilities. There can be no assurance that the Company will be
successful in its efforts to mitigate these liabilities or that additional
claims will not be asserted against Worldport Inc.


(7)  FIXED ASSETS

     The Company's fixed assets as of December 31, 2002 and 2001 consist of the
following:

                                                            2002       2001
                                                            ----       ----
     Computer hardware.................................     $ 137     $3,759
     Equipment & furniture.............................         7      1,863
     Computer software.................................       257        257
                                                            -----     ------
                                                              401      5,879
        Accumulated depreciation.......................      (300)      (213)
                                                            -----     ------
          Net fixed assets............................      $ 101     $5,666
                                                            =====     ======

     Depreciation expense was approximately $0.2 million, $15.8 million and $3.3
million in 2002, 2001 and 2000, respectively. Of those amounts, $15.6 million
and $3.0 million in 2001 and 2000, respectively, were reflected in Income (Loss)
from Discontinued Operations.


(8)  ACCRUED EXPENSES

     The Company's accrued expenses as of December 31, 2002 and 2001 consist of
the following:

                                                            2002          2001
                                                            ----          ----
     Restructuring costs (see Note 5)..................   $ 10,375    $ 15,560
     Bandwidth costs...................................      1,720       1,750
     Payroll and benefits..............................         13         795
     Other   ..........................................      2,365       3,159
                                                          --------    --------
          Total accrued expenses.......................   $ 14,473    $ 21,264
                                                          ========    ========


(9)   COMMITMENTS AND CONTINGENCIES

Leases

     The Company leases office and network facilities under various
noncancelable operating lease agreements. Certain lease agreements contain
escalation clauses, along with options that permit early terminations or
renewals for additional periods. Additionally, the Company leases EMC storage
equipment under a noncancelable capital lease agreement. Future minimum
commitments under capital leases and operating leases having initial or
remaining noncancelable lease terms in excess of one year are as follows as of
December 31, 2002:

<TABLE>

     YEAR ENDING DECEMBER 31                                       OPERATING  CAPITAL
     -----------------------                                       ---------  -------
     <S>                                                              <C>       <C>
     2003.......................................................      $ 1,375   $3,386
     2004.......................................................          717      847
     2005.......................................................          678       --
     2006.......................................................          658       --
     2007.......................................................          658       --
     Thereafter.................................................        2,359       --
                                                                      -------    ------
     Future minimum lease payments..............................      $ 6,445    4,233
                                                                      =======

        Less portion attributable to interest                                     (189)
                                                                                 ------
        Principal repayments due at December 31, 2002                            4,044
        Less current portion of obligations under capital lease                  3,210
                                                                                 ------
        Long-term obligations under capital lease                               $  834
                                                                                 ======


</TABLE>
                                                                              52
<PAGE>

     In December 2002, the Company signed an agreement to assign its Buffalo
Grove, Illinois, office lease to a third party. In accordance with the
agreement, the Company will be released from this lease on June 1, 2003 upon the
payment of approximately $0.4 million to the landlord. This amount has been
included in Accrued Expenses on the Company's December 31, 2002 balance sheet.

     Total rental expense for operating leases for the years ended December 31,
2002, 2001 and 2000 was approximately $0.2 million, $2.4 million and $0.9
million, respectively (including $0.2 million, $2.2 million and $0.3 million
from discontinued operations for 2002, 2001 and 2000, respectively).


Legal

      In March 2002, an Administrator was appointed for the U.K. subsidiaries,
Hostmark World Limited and Hostmark U.K. Limited, by an order of the Companies
Court, Chancery Division of High Court under the United Kingdom Insolvency Act.
In April 2002, the Irish subsidiary, Worldport Ireland Limited, was given notice
that a petition for winding up was filed and would be presented to the Irish
High Court on behalf of Global Crossing Ireland Limited. The petition was heard
by the Irish High Court on May 13, 2002 and a liquidator was appointed for this
subsidiary to act on behalf of the creditors. As a result of these actions, the
Administrator or liquidator has control over these subsidiaries' assets. The
Company believes that each of these subsidiaries has potential liabilities which
exceed the value of its assets. Certain creditors of these subsidiaries have
made claims directly against the parent company, Worldport Inc., for liabilities
related to the operation of these subsidiaries and additional creditors could
assert similar claims. There can be no assurance that Worldport Inc. will be
successful in defending these claims and in limiting its liability for the
obligations of its subsidiaries.

      One of the Company's subsidiaries, Hostmark World Limited, was the subject
of court action by WSP Communications ("WSP") in the Companies Court of the
Chancery Division of the High Court in the U.K. for the payment of approximately
$0.5 million. In addition, WSP has alleged that a total of approximately $3
million is owed to it by Hostmark World Limited. WSP alleges that these amounts
are owed for work completed on Internet solution centers in Germany, Sweden and
the U.K. This action was stayed by the appointment of an Administrator for
Hostmark World Limited.

      In June 2002, the High Court of Ireland issued a Summary Summons to the
parent company, Worldport Inc., on behalf of Cable & Wireless (Ireland) Limited,
who is seeking payment of 1.0 million British pounds and 2.3 million Euros,
together with applicable VAT. (Excluding VAT, this represents approximately $4.0
million.) These claims relate to unpaid invoices for Internet services provided
by Cable & Wireless (Ireland) Limited to the Company's subsidiary in Ireland
(now in liquidation) and termination of contract charges. The Company is
contesting the validity of the claims and believes that the claims, to the
extent valid, are obligations of the Company's Irish subsidiary and not of
Worldport Inc., but is continuing to investigate the claims. There can be no
assurance that such claims will not be successful against Worldport Inc.
However, the outcome of the matter is not expected to have a material adverse
effect on the consolidated results of the Company in excess of amounts already
recorded.

      In October 2002, the Company received a letter from legal counsel to
Channor Limited, the landlord of the data center in Dublin, Ireland, with
respect to the Company's guarantee on that facility. This letter demanded the
payment within 14 days of approximately 0.9 million Euros and the confirmation
of the Company's liabilities as guarantor under the lease. In January 2003, the
Company's legal counsel received a letter from legal counsel for the landlord in
which the landlord demanded that the Company assume the position of tenant under
the lease. Should the Company be forced to assume the position of tenant under
the lease, the Company could be obligated for the full amount of rent through
2010 plus certain taxes and maintenance expenses. In February 2003, Channor
Limited filed a Notice of Motion in the High Court of Ireland against Worldport
Inc. in which the landlord demands payment of approximately 1.2 million Euros,
which included additional rent that they claim had accrued since their prior
demand. A hearing is scheduled for April 8, 2003. The Company is contesting the
validity of the landlord's demands. However, the outcome of the matter is not
expected to have a material adverse effect on the consolidated results of the
Company in excess of amounts already recorded. Included in Accrued Expenses at
December 31, 2002

                                                                              53
<PAGE>

is $5.7 million, which represents rent payable on the data center between
January 2002 and 2010, the earliest contractual termination date of the lease.

      On January 8, 2003, four substantially identical complaints were filed in
the Circuit Court of Cook County, Illinois, County Department, Chancery Division
against Worldport and its current directors. Additionally, on January 16, 2003,
a complaint was filed in the Court of Chancery of the State of Delaware. The
foregoing actions purport to be brought on behalf of all public stockholders of
Worldport in connection with the W.C.I. Offer. The actions allege, among other
things, that certain of the defendants have breached their fiduciary duties to
Worldport and its stockholders. The complaints purport to seek, inter alia, a
variety of relief, including in certain circumstances damages and an injunction
preventing consummation of the W.C.I. offer. The Company believes these
allegations to be without merit and intends to vigorously contest the
allegations.

      On March 12, 2003, a complaint was filed in the United States Bankruptcy
Court for the District of Delaware against the Company. The complaint was filed
on behalf of one of the Company's former customers which is now in bankruptcy
and alleges breach of contract, fraud, and misrepresentation in connection with
the sale of indefeasible rights of use ("IRUs") to the customer. The plaintiff
is seeking payment of $2.2 million plus legal costs and punitive damages. The
Company is still evaluating this claim and has not yet made a determination as
to the merits of this case. Accordingly, no accrual has been recorded on the
Company's financial statements at this time. The Company intends to vigorously
contest the allegations.

      On March 13, 2003, a complaint was filed in the Court of Chancery of the
State of Delaware against the Company, its current directors and Heico. The
complaint alleges breach of fiduciary duty relating to the March 7, 2003
repurchase of the preferred stock from Heico. The complaint seeks relief in the
form of a declaration that the defendants have breached their fiduciary duties
to the Company and its common stockholders, an accounting by the defendant to
the Company for damages resulting from the defendants' breaches of fiduciary
duty and reimbursement of the plaintiffs' costs for the action, including
attorneys' fees. The Company is still evaluating this claim and has not yet made
a determination as to the merits of this case. The Company intends to vigorously
contest the allegations.

      In addition to the aforementioned claims, the Company is involved in
various lawsuits or claims arising in the normal course of business. In the
opinion of management, none of these lawsuits or claims will have a material
adverse effect on the consolidated financial position or results of operations
of the Company.


(10)   STOCKHOLDERS' EQUITY

COMMON STOCK

     The Company is authorized to issue 200,000,000 shares of common stock,
$.0001 par value per share.

     During 2000, 5.3 million and 0.3 million shares of common stock were issued
upon exercise of warrants and options, respectively. Additionally in August
2000, the Company issued 0.1 million shares of common stock to a third party in
lieu of payment for legal services.

     In April 2001, the Company issued 4.1 million shares of common stock in
connection with the acquisition of hostmark. An additional 1.0 million shares
was issued in May 2002, pursuant to the terms of the purchase agreement.

     In August 2001, holders of 9,225 shares of Series B Preferred Stock
converted their shares into 36,900 shares of the Company's common stock in
accordance with the terms of the Series B Preferred Stock agreement.

     At December 31, 2002, 39,087,252 shares of common stock were issued and
outstanding.

                                                                              54
<PAGE>

PREFERRED STOCK

     The Company is authorized to issue 10,000,000 shares of Preferred Stock,
$.0001 par value per share.

     On March 7, 2003, the Company repurchased approximately 99% of its
outstanding preferred stock from a single owner, The Heico Companies L.L.C. The
shares were repurchased for $67.4 million, which represents the aggregate
liquidation preference of the purchased shares, including a 7% dividend that is
required under the terms of the preferred stock before any distributions on or
purchase of the Company's common stock. Worldport has made a similar purchase
offer to the three remaining preferred stockholders, who own, in aggregate,
34,056 shares of Series B. Worldport has retired the stock it has repurchased
from Heico.

     Following is a description of the preferred stock designated and
outstanding at December 31, 2002.


Series A Preferred Stock

     The Company has designated 750,000 shares of its preferred stock to be
Series A Convertible Preferred Stock ("Series A") with a par value of $0.0001
and a stated value of $2.25.

     At December 31, 2002, no shares of Series A were outstanding.


Series B Preferred Stock

     The Company has designated 3,000,000 shares of its preferred stock to be
Series B Convertible Preferred Stock ("Series B") with a par value of $0.0001
and a stated value of $5.36. The Series B is non-cumulative and bears dividends
at the rate of 7% per annum, payable in cash or shares of the Company's common
stock at the option of the Company. Prior to the declaration or payment of any
dividend or other distribution to the common stockholders, the Company must
first declare and pay a dividend equal to 7% of the stated value to the holders
of the Series B. The Series B is convertible at any time, at the option of the
holder, and will be mandatorily converted upon the occurrence of certain events,
at a rate of 4 shares of common stock for each share of Series B. Holders of
Series B have voting rights equal to 40 votes per share on all matters submitted
to a vote of the stockholders of the Company.

     Upon any liquidation, dissolution or winding up of the Company, the holders
of Series B shall be entitled to receive $5.36 per share (or such amount that is
distributed ratably to holders of all the various outstanding series of the
Company's preferred stock), plus all declared but unpaid dividends, prior to the
distribution of any assets of the Company to the holders of the common stock.

     In 2001, various holders of Series B Preferred Stock converted their
preferred shares into 36,900 shares of the Company's common stock in accordance
with the terms of the Series B Preferred Stock agreement.

     At December 31, 2002, 956,417 shares of Series B were outstanding.


Series C Preferred Stock

     The Company has designated 1,450,000 shares of its preferred stock to be
Series C Convertible Preferred Stock ("Series C") with a par value of $0.0001
per share and a stated value of $35.31 per share. The Series C is non-cumulative
and bears dividends at the rate of 7% per annum, payable in cash or shares of
the Company's common stock at the option of the Company. Prior to the
declaration or payment of any dividend or other distribution to the common
stockholders, the Company must first declare and pay a dividend equal to 7% of
the stated value to the holders of the Series C. The Series C is convertible at
any time, at the option of the holder, and will be mandatorily converted upon
the occurrence of certain events, at a rate of 10.865 shares of common stock for
each share of Series C. Holders of Series C have voting rights equal to 40 votes
per share on all matters submitted to a vote of the stockholders of the Company.


                                                                              55
<PAGE>

     Upon any liquidation, dissolution or winding up of the Company, the holders
of Series C shall be entitled to receive $35.31 per share (or such amount that
is distributed ratably to holders of all the various outstanding series of the
Company's preferred stock), plus all declared but unpaid dividends including any
dividends required to be paid as described above, prior to the distribution of
any assets of the Company to the holders of the common stock.

     At December 31, 2002, 1,416,030 shares of Series C were outstanding.


Series D Preferred Stock

     The Company has designated 650,000 shares of its preferred stock to be
Series D Convertible Preferred Stock ("Series D") with a par value of $0.0001
per share and a stated value of $3.25 per share. The Series D is non-cumulative
and bears dividends at the rate of 7% per annum, payable in cash or shares of
the Company's common stock at the option of the Company. Prior to the
declaration or payment of any dividend or other distribution to the common
stockholders, the Company must first declare and pay a dividend equal to 7% of
the stated value to the holders of the Series D. The Series D is convertible at
any time, at the option of the holder, and will be mandatorily converted upon
the occurrence of certain events, at a rate of one share of common stock for
each share of Series D. Holders of Series D have voting rights equal to one vote
per share on all matters submitted to a vote of the stockholders of the Company.

     Upon any liquidation, dissolution or winding up of the Company, the holders
of Series D shall be entitled to receive $3.25 per share (or such amount that is
distributed ratably to holders of all the various outstanding series of the
Company's preferred stock), plus all declared but unpaid dividends including any
dividends required to be paid as described above, prior to the distribution of
any assets of the Company to the holders of the common stock.

     At December 31, 2002, 316,921 shares of Series D were outstanding.


Series E Preferred Stock

     The Company has designated 145,000 shares of its preferred stock to be
Series E Convertible Preferred Stock ("Series E") with a par value of $0.0001
per share and a stated value of $35.31 per share. The Series E is non-cumulative
and bears dividends at the rate of 7% per annum, payable in cash or shares of
the Company's common stock at the option of the Company. Prior to the
declaration or payment of any dividend or other distribution to the common
stockholders, the Company must first declare and pay a dividend equal to 7% of
the stated value to the holders of the Series E. The Series E is convertible at
any time, at the option of the holder, and will be mandatorily converted upon
the occurrence of certain events, at a rate of 10.865 shares of common stock for
each share of Series E. Holders of Series E have voting rights equal to 10.865
votes per share on all matters submitted to a vote of the stockholders of the
Company.

     Upon any liquidation, dissolution or winding up of the Company, the holders
of Series E shall be entitled to receive $35.31 per share (or such amount that
is distributed ratably to holders of all the various outstanding series of the
Company's preferred stock), plus all declared but unpaid dividends including any
dividends required to be paid as described above, prior to the distribution of
any assets of the Company to the holders of the common stock.

     At December 31, 2002, 141,603 shares of Series E were outstanding.

     In connection with the issuance of the Series E in July 1999, the Company
granted the holder a three-year option to purchase 424,809 shares of Series F
Convertible Preferred Stock for an aggregate purchase price of $15.0 million.
This option expired, unexercised, in 2002.

                                                                              56
<PAGE>


Series G Preferred Stock

     The Company has designated 1,000 shares of its preferred stock to be Series
G Convertible Preferred Stock ("Series G") with a par value of $0.0001 per share
and a stated value of $2,000 per share. The Series G is non-cumulative and bears
dividends at the rate of 7% per annum, payable in cash at the option of the
Company. Prior to the declaration or payment of any dividend or other
distribution to the common stockholders, the Company must first declare and pay
a dividend equal to 7% of the stated value to the holders of the Series G. The
Series G is convertible at any time at the option of the holder, and will be
mandatorily converted upon the occurrence of certain events, at a rate of 1,000
shares of common stock for each share of Series G. Holders of the Series G have
voting rights equal to 1,000 votes per share on all matters submitted to a vote
of the stockholders of the Company. Both the conversion rate and the number of
votes per share may be adjusted from time to time under the terms of the Series
G.

     Upon any liquidation, dissolution or winding up of the Company, the holders
of Series G shall be entitled to receive $2,000 per share (or such amount that
is distributed ratably to holders of all the various outstanding series of the
Company's preferred stock), plus all declared but unpaid dividends including any
dividends required to be paid as described above, prior to the distribution of
any assets of the Company to the holders of the common stock.

     In August 2000, 1,000 shares of Series G were issued in connection with the
conversion of a $2.0 million note payable to a related party.

     At December 31, 2002, 1,000 shares of Series G were outstanding.


     Certain of the Company's preferred stock issuances have conversion
privileges which constitute beneficial conversion features under the provisions
of Emerging Issues Task Force No. 98-5, "Accounting for Convertible Securities
with Beneficial Conversion Features or Contingently Adjustable Conversion
Ratios" ("EITF 98-5"). To reflect the value of such conversion features under
EITF 98-5, the Company recorded a $0.7 million charge to retained earnings and
an equal and offsetting credit to additional paid in capital in 2000. This
charge is also included as a decrease in net income attributable to common
stockholders in the net earnings per share calculation.


WARRANTS

     The Company entered into a $120 million Interim Loan facility with a
consortium of lenders effective June 23, 1998, the terms of which also included
the issuance of warrants. The Company repaid the Interim Loan Facility including
interest ($147.8 million) with proceeds from the sale of its European operations
in January 2000. The Interim Loan Facility holders, in aggregate, received
warrants exercisable for 6,643,519 shares of Common Stock at a price per share
of $0.01. These warrants were valued at an aggregate of approximately $33.1
million. During 2000, 5,301,063 shares of common stock were issued upon exercise
of warrants. At December 31, 2002, 679,451 warrants remained outstanding.


(11)   LONG-TERM STOCK INCENTIVE PLANS

     The Company adopted an incentive stock option plan for employees and
consultants in September 1996. The Company has reserved 7.5 million shares of
common stock for issuance pursuant to the plan. Options vest over a period
ranging from one to three years and have a term of ten years. Options granted to
consultants are valued using the Black-Scholes model and are recorded as
compensation expense over the period of service to which they relate. Such
amounts were not material for any of the periods presented.

     The Company adopted a new long-term stock incentive plan for employees in
July 2000. The Company originally reserved 15.0 million shares of common stock
for issuance pursuant to the plan. However, the plan provides for an annual
increase in the number of shares reserved for issuance equal to 1% of the issued
and outstanding shares on each January 1 through 2007. At December 31, 2002,
approximately 15.7 million shares had

                                                                              57
<PAGE>

been reserved. Options are awarded at the fair market value on the date of
grant. Options vest over a period ranging from three to four years and have a
term of ten years.

     A summary of the status of the Company's stock option plans at December 31,
2002 is as follows (in thousands, except share price data):

<TABLE>

                                                               1996 OPTION PLAN      2000 OPTION PLAN
                                                               ----------------      ----------------
                                                                        WEIGHTED              WEIGHTED
                                                                        AVERAGE                AVERAGE
                                                              SHARES     PRICE       SHARES     PRICE
                                                              ------     -----       ------     -----
<S>                                                              <C>        <C>        <C>        <C>
Outstanding at January 1, 2000.............................      4,356      $7.95          --       --
Granted ...................................................         --        --        5,590     $2.87
Exercised..................................................       (375)     $1.53          --       --
Forfeited..................................................       (782)     $8.15         (87)    $2.75
                                                                 -----                  -----
Outstanding at December 31, 2000...........................      3,199      $8.65       5,503     $2.88
Granted ...................................................         --        --        2,202     $3.19
Exercised..................................................         --        --           --       --
Forfeited..................................................       (305)     $9.02      (2,827)    $3.05
                                                                 -----                  -----
Outstanding at December 31, 2001...........................      2,894      $8.61       4,878     $2.92
Granted ...................................................         --        --           --       --
Exercised..................................................         --        --           --       --
Forfeited..................................................       (195)     $7.45      (2,187)    $2.81
                                                                 -----                  -----
Outstanding at December 31, 2002...........................      2,699      $8.69       2,691     $3.01
                                                                 =====                  =====


</TABLE>

     The following table sets forth by exercise price range the number of shares
outstanding and exercisable, the weighted average exercise price, and the
remaining contractual lives of options issued:

                                 WEIGHTED
                   NUMBER OF     AVERAGE      WEIGHTED    NUMBER OF    WEIGHTED
                    OPTIONS     REMAINING     AVERAGE      OPTIONS      AVERAGE
     RANGE OF     OUTSTANDING  CONTRACTUAL    EXERCISE   EXERCISABLE   EXERCISE
  EXERCISE PRICES  AT 12/31/02      LIFE        PRICE     AT 12/31/02     PRICE
  ---------------  -----------      ----        -----     -----------     -----

      $0.75             115      4.3 years      $ 0.75           115       $0.75
   $2.25--$2.88        2,602     7.4 years      $ 2.85         2,044       $2.84
   $3.09--$9.08        1,261     6.0 years      $ 5.83         1,170       $5.91
  $10.00--$14.19       1,412     5.5 years      $11.83         1,412      $11.83
--------------------------------------------------------------------------------
     Total             5,390     6.5 years      $ 5.85         4,741       $6.23

       If the Company had determined the compensation cost for stock options
under SFAS No. 123, net income (loss) and net earnings (loss) per share for the
years ended December 31, 2002, 2001 and 2000 would have been the following pro
forma amounts:

<TABLE>

                                                       2002        2001          2000
                                                       ----        ----          ----
     <S>                                              <C>        <C>           <C>
     Net income (loss):
          As reported............................    $  (238)    $(121,643)    $ 275,232
          Pro forma..............................    $  (976)    $(123,603)    $ 271,386

     Net earnings (loss) per share - as reported:
          Basic..................................    $ (0.01)    $   (3.25)    $    9.03
          Diluted................................    $ (0.01)    $   (3.25)    $    4.85
     Net earnings (loss) per share - pro forma:
          Basic..................................    $ (0.01)    $   (3.31)    $    8.93
          Diluted................................    $ (0.02)    $   (3.31)    $    4.79


</TABLE>

                                                                              58
<PAGE>

     Under SFAS No. 123, the fair value of each option grant was estimated on
the date of grant using the Black-Scholes option pricing model. The following
weighted average assumptions were used for grants:

                                   YEAR ENDED DECEMBER 31,
                                   -----------------------
                                  2002       2001        2000
                                  ----       ----        ----

     Risk free rate........     2.6%        3.8%        5.1%
     Expected dividend.....       0%          0%          0%
     Expected lives........    2 years    2 years     10 years
     Volatility............    42.5%       51.3%       30.0%

     The Black-Scholes option pricing model and other existing models were
developed for use in estimating the fair value of traded options that have no
vesting restrictions and are fully transferable. In addition, option valuation
models require the input of and are highly sensitive to subjective assumptions
including the expected stock price volatility. The Company's employee stock
options have characteristics significantly different from those of traded
options, and changes in the subjective input assumptions can materially affect
the fair value estimate.


(12)   EMPLOYEE BENEFIT PLAN

     The Company has established a 401(k) profit-sharing plan. Employees 21
years or older are eligible to participate in the plan. Participants may elect
to contribute, on a tax-deferred basis, up to 20% of their compensation. The
Company will match one-half of a participant's contribution, up to a maximum of
6% of the participant's compensation. The Company's matching contribution fully
vests after three years of service. The Company's contributions to the plan were
less than $0.1 million in 2002 and were approximately $0.1 million in 2001 and
2000.


(13)   RELATED PARTY TRANSACTIONS

      In October 2000, the Company purchased a Virginia residence from its
majority stockholder for $2.3 million in conjunction with an employment
arrangement with a former chief executive officer of the Company. This real
estate was sold by the Company to an unrelated third party in June 2001 for $1.3
million.

      During 2002, an employee of Heico was appointed a Vice President of
Worldport to assist the Company in certain activities. Since December 2001, this
employee has devoted substantially all of his working time to these efforts and
Worldport has reimbursed Heico for his salary and benefits during this period.
The total amount reimbursed by Worldport to Heico for this employee in 2002 was
approximately $0.2 million.


(14)   TAXES

     Earnings (loss) before income taxes from continuing operations for the
years ended December 31, 2002, 2001 and 2000 consisted of the following:

                                                     2002       2001       2000
                                                     ----       ----       ----
    U.S.                                            $(1,730) $ (2,403)  $3,483
   Foreign                                               --        --       --
                                                    -------  --------   ------
       Income (loss) from continuing operations
          before income taxes...................    $(1,730) $ (2,403)  $3,483
                                                    ======== ========   ======

     There was no income tax provision or benefit from continuing operations in
2002, 2001 and 2000. For each of the three years presented, the income tax
provision or benefit was allocated entirely to discontinued operations.

     A reconciliation from the statutory federal tax rate to the Company's
effective tax rate for the income tax provision (benefit) from continuing
operations for 2002, 2001 and 2000 is as follows:
                                                                              59
<PAGE>

                                              2002       2001       2000
                                              ----       ----       ----
     Federal statutory rate.............      (35)%      (35)%        34%
     Change in valuation allowance......       35         35         (34)
                                              ----       ----        ----
          Total.........................       -- %       -- %       -- %
                                              ====       ====        ====


     Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The significant
components of the Company's deferred tax assets and liabilities as of December
31, 2002 and 2001 are as follows:

                                                      2002        2001
                                                      ----        ----
     Deferred tax assets (liabilities):
          Net operating loss carryforwards.....     $  4,570   $ 16,520
          Accrued liabilities..................        2,584      2,005
                Asset reserves.................          298        591
          Property related.....................          149        248
                AMT tax credit carryforward....           --      5,597
          Asset impairment.....................           --      2,322
          Other................................          (59)       (97)
                                                    ---------   --------
             Total deferred tax assets, net....        7,542     27,186
     Less: Valuation allowance.................       (7,542)   (27,186)
                                                    ---------   --------
             Net deferred tax asset............     $    --     $    --
                                                    =========   ========

     SFAS No. 109 requires a valuation allowance to reduce the deferred tax
assets reported if, based on the weight of the evidence, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
The ability of the Company to fully realize deferred tax assets in future years
is generally contingent upon its success in generating sufficient levels of
taxable income in those future years. After an assessment of all available
evidence, including historical and projected operating trends, the Company was
unable to conclude that realization of the deferred tax assets existing at
December 31, 2002 and 2001 was more likely than not. Accordingly, valuation
allowances totaling $7.5 million and $27.2 million were established to offset
the full amount of the deferred tax assets at December 31, 2002 and 2001,
respectively.

     At December 31, 2002, the Company had net operating loss carryforwards for
U.S. income tax purposes of approximately $13.0 million, which will expire in
2021. Use of the U.S. net operating loss carryforwards may be subject to
limitation if the Company undergoes a more than 50% change in ownership during a
three-year testing period. If the Company undergoes an ownership change,
utilization of the U.S. net operating loss carryforwards will be limited on an
annual basis to the fair value of the Company at the date of the change
multiplied by the long-term tax-exempt rate as published by the Internal Revenue
Service during the month of the ownership change. It is possible that the
Company's net operating loss carryforwards may be limited as a result of the
repurchase of the preferred stock that occurred in March 2003, as described in
Note 1. Beginning in 2002, the assets and liabilities of the Company's Irish
subsidiary, which include the deferred tax assets and the related valuation
allowance, are presented as part of the Net Liabilities of Non-controlled
Subsidiaries, as discussed in Note 4.

     Additionally, the Company had a $5.6 million alternative minimum tax credit
carryforward at December 31, 2001, which under a new U.S. federal tax law that
was enacted in March 2002, allowed the Company to carry back the $5.6 million
alternative minimum tax credit against taxable income in 2000 for a refund. The
Company recognized the additional $5.6 million tax benefit from discontinued
operations in the first quarter of 2002.

      In April 2002, the Company received its $57.6 million income tax refund
relating to carryback claims filed for the tax year ended December 31, 2001.
Receipt of this refund does not indicate that the Internal Revenue Service
agrees with the positions taken by the Company in its tax returns. The refund is
still subject to review by the Internal Revenue Service of the Company's 2001
tax return. It would not be unusual for the Internal Revenue Service to audit a
return resulting in a refund of this magnitude. The Internal Revenue Service
could require the Company to return all or a portion of this refund. The statute
of limitations for the notification of an audit is generally three years from
the filing of the applicable tax return, although this period can be extended by
agreement.
                                                                              60
<PAGE>

(15)   QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>

                                                                               3 MONTHS ENDED
                                                            ---------------------------------------------------
                                                            MARCH 31,    JUNE 30,   SEPTEMBER 30,  DECEMBER 31,
                                                            ---------    --------   -------------  ------------
2002
----
<S>                                                           <C>          <C>          <C>          <C>
Revenues...............................................       $  --        $  --        $  --        $  --
Operating loss.........................................       $   (969)    $ (1,016)    $   (703)    $   (791)
Net loss from continuing operations....................       $   (780)    $   (421)    $   (138)    $   (391)
Net income (loss)......................................       $ (8,099)    $  6,541     $  1,466     $   (146)
Net loss per share from continuing operations:
     Basic.............................................       $  (0.02)    $  (0.01)    $  (0.00)    $  (0.01)
     Diluted...........................................       $  (0.02)    $  (0.01)    $  (0.00)    $  (0.01)
Net income (loss) per share:
     Basic.............................................       $  (0.21)    $   0.17     $   0.04     $  (0.00)
     Diluted...........................................       $  (0.21)    $   0.11     $   0.02     $  (0.00)

2001
----
Revenues...............................................       $  --        $  --        $  --        $   --
Operating loss.........................................       $ (1,963)    $ (1,542)    $ (1,448)    $ (1,806)
Net loss from continuing operations....................       $   (173)    $   (501)    $   (475)    $ (1,254)
Net loss...............................................       $ (8,737)    $(16,322)    $(27,580)    $(69,004)
Net loss per share from continuing operations:
     Basic.............................................       $  (0.01)    $  (0.02)    $  (0.01)    $  (0.03)
     Diluted...........................................       $  (0.01)    $  (0.02)    $  (0.01)    $  (0.03)
Net loss per share:
     Basic.............................................       $  (0.26)    $  (0.44)    $  (0.71)    $  (1.77)
     Diluted...........................................       $  (0.26)    $  (0.44)    $  (0.71)    $  (1.77)

</TABLE>

      The net loss from discontinued operations for the fourth quarter of 2001
include a $100.5 million restructuring charge related primarily to the shutdown
of certain of the Company's managed hosting centers (see Note 5).

                                                                              61
<PAGE>




ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

      There have been no disagreements with independent auditors on accounting
and financial disclosure for the 2002 fiscal year.

      Prior to August 16, 2002, Arthur Andersen LLP ("Andersen") served as the
Company's independent auditors. On March 14, 2002, Andersen was indicted on
federal obstruction of justice charges arising from the government's
investigation of the Enron Corporation. On June 15, 2002, Andersen was convicted
of those charges and the firm ceased practicing before the SEC on August 31,
2002. On August 16, 2002, the Company retained Deloitte & Touche LLP as its
independent auditors for the year ended December 31, 2002.

      SEC rules require the Company to present historical audited financial
statements in its periodic filings with the SEC along with Andersen's consent to
the Company's inclusion of its audit report in those filings. Since the
Company's former engagement partner and audit manager have left Andersen and in
light of the cessation of Andersen's SEC practice, the Company has not been able
to obtain the consent of Andersen to the inclusion of its audit report in the
Company's relevant current filings and will not be able to obtain Andersen's
consent with respect to the Company's future filings. The absence of this
consent may limit recovery against Andersen under Section 11 of the Securities
Act of 1933.





                                                                              62
<PAGE>


                                    PART III


ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The Company's directors and executive officers, as of March 25, 2003, are
as follows:

NAME                          AGE    PRINCIPAL POSITION WITH REGISTRANT
----                          ---    ----------------------------------
Michael E. Heisley, Sr.        66    Chairman of the Board and Director
Kathleen A. Cote               54    Chief Executive Officer and Director
Stanley H. Meadows             58    Director
Andrew G. C. Sage II           77    Director
Emily Heisley Stoeckel         39    Director


MICHAEL E. HEISLEY, SR.

      Michael E. Heisley, Sr. has been a member of the Board of Directors since
December 1998, Chairman of the Board of Directors since June 1999 and Chief
Executive Officer of the Company from April 2000 to May 2001. Mr. Heisley has
been the sole managing member of The Heico Companies L.L.C. since October 1997.
Mr. Heisley received a Bachelor's degree in Business Administration from
Georgetown University.


KATHLEEN A. COTE

      Kathleen A. Cote has been Chief Executive Officer since May 2001 and a
member of the Board of Directors since July 2000. Prior to becoming Worldport's
Chief Executive Officer, Ms. Cote was President of Seagrass Partners, a
consulting firm, since September 1998. From 1996 to 1998, Ms. Cote served as
President and Chief Executive Officer of Computervision Corporation, an
international supplier of product development and data management software,
where she also served as President and Chief Operating Officer. From 1989 to
1995, Ms. Cote served as President and General Manager of PrimeService, a
division of Prime Computer, the predecessor to Computervision Corporation. Ms.
Cote is also a director of Forgent Corporation, Radview Corporation and Western
Digital Corporation.


STANLEY H. MEADOWS

      Mr. Stanley H. Meadows has been a member of the Board of Directors since
December 1998 and has served as Secretary or Assistant Secretary of Worldport
since July 2000. Mr. Meadows has been General Counsel of Heico since February
1998 and is the president of a professional corporation that is a partner at the
law firm of McDermott, Will & Emery since 1985. Mr. Meadows is a director of
Tom's Foods, Inc. Mr. Meadows received a Bachelor of Science degree from the
University of Illinois and a law degree from the University of Chicago.


ANDREW G. C. SAGE II

       Mr. Andrew G.C. Sage, II has been a member of the Board of Directors
since April 1999. Mr. Sage has served as Chief Executive Officer of Sage Capital
Corporation, a general business and financial management corporation
specializing in business restructuring and problem solving, since 1993 and was
President and Chief Executive Officer of Robertson-Ceco Corporation, a metal
buildings manufacturing company, from November 1992 to December 1993. Mr. Sage
held various positions with Lehman Brothers, Inc. and its predecessors, Lehman
Brothers and Lehman Brothers Kuhn Loeb, Inc., since joining the investment bank
in 1948, including General Partner from 1960-1970, President from 1970-1973,


                                                                              63
<PAGE>

Vice Chairman from 1973-1977, Managing Director from 1977-1987, and Senior
Consultant from 1987-1990. Since 1990, Mr. Sage has been a consultant in general
business and financial management. . Mr. Sage is a director of American
Superconductor Corporation and Tom's Foods, Inc. and is currently the Chairman
of the Board of Robertson-Ceco Corporation.


EMILY HEISLEY STOECKEL

      Ms. Emily Heisley Stoeckel has been a member of the Board of Directors
since October 2000. Ms. Heisley Stoeckel is a Managing Director of Heico
Acquisitions and a Director of The Heico Companies, L.L.C. Ms. Heisley Stoeckel
is also a director of Tom's Foods, Inc. Ms. Heisley Stoeckel received a
bachelor's degree from Northwestern University and a Master of Business
Administration from the University of Chicago. Ms. Heisley Stoeckel is the
daughter of Mr. Michael Heisley, Sr., the Company's Chairman of the Board.



             SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and officers, and persons who beneficially own
more than 10% of the Company's common stock, to file with the Securities and
Exchange Commission ("SEC") reports of beneficial ownership and changes in
beneficial ownership of common stock and other equity securities of the Company.
Officers, directors and greater than 10% stockholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.

      Based solely on the review of the copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that, during the 2002 fiscal year, all filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with, except a Form 4 relating to a single transaction was
inadvertently filed late on Jonathan Hicks' behalf.




ITEM 11.   EXECUTIVE COMPENSATION

      The following summary compensation table sets forth information concerning
cash and non-cash compensation for services rendered during the fiscal years
ended December 31, 2002, 2001 and 2000 to (a) the Chief Executive Officer of the
Company during 2002, (b) the highest paid executive officers who were executive
officers as of December 31, 2002 and (c) certain other executive officers who
would have been among the highest paid executive officers if they had been
executive officers of the Company as of December 31, 2002 (the "Named Executive
Officers").

<TABLE>

                           SUMMARY COMPENSATION TABLE
<CAPTION>

                                               Annual Compensation        Long-Term Compensation
                                               -------------------        ----------------------
                                                                        Restricted    Securities
                                                                           Stock      Underlying      All Other
Name and Principal Position          Year     Salary        Bonus         Awards     Options/SARs    Compensation
                                     ----     ------        -----         ------     ------------    ------------

<S>                                  <C>      <C>             <C>          <C>        <C>                 <C>
Kathleen A. Cote (1)                 2002     $300,000         --           --           --               --
      Chief Executive Officer        2001     $173,077         --           --           --               --
      and Director                   2000           --         --           --        100,000(2)          --

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

1)       Ms. Cote has served as Chief Executive Officer of the Company since May 2001.

                                                                              64
<PAGE>

2)       Stock options were granted to Ms. Cote in July 2000 for her role as director of the Company.


</TABLE>


                                     OPTIONS

     No individual grants of options to purchase common stock were made to any
of the Named Executive Officers during the year ended December 31, 2002.


     The following table sets forth certain information with respect to each
Named Executive Officer concerning the exercise of options to purchase common
stock during the fiscal year ended December 31, 2002, as well as unexercised
options to purchase common stock held as of the end of such fiscal year:

<TABLE>

 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

<CAPTION>

                                  Shares                     Number of Securities
                                 Acquired                         Underlying                Value of Unexercised
                                    On        Value         Unexercised Options at          In-the-Money Options
             NAME                Exercise   Realized          December 31, 2002             December 31, 2002 (1)
                                 --------   --------          -----------------             ---------------------
                                                        Exercisable    Unexercisable    Exercisable    Unexercisable
                                                        -----------    -------------    -----------    -------------
<S>                                     <C>         <C>       <C>              <C>                <C>          <C>
Kathleen A. Cote                        --          --        56,250           43,750             --            --
      Chief Executive Officer
      and Director

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

1) Value is calculated in accordance with the rules of the SEC by subtracting
the exercise price per share for each option from the fair market value of the
underlying common stock as of December 31, 2002 and multiplying that difference
by the number of shares of common stock subject to the option. Based on the fair
market value of one share of common stock of $0.48 as of December 31, 2002,
there were no unexercised options in-the-money at December 31, 2002.

</TABLE>


                             DIRECTORS' COMPENSATION

      No compensation was paid to the non-employee members of the Board of
Directors for their service as Directors in 2002. The Directors are entitled to
reimbursement by the Company for their reasonable expenses incurred in acting as
Directors.



           COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

      During 2002, the entire Board of Directors performed the functions of a
Compensation Committee for the Company. Ms. Cote, one of the Company's
directors, has been the Chief Executive Officer of the Company since May 2001.
Mr. Meadows, one of the Company's directors, is a partner of McDermott, Will &
Emery, a law firm which provided the Company with legal services during 2002,
2001, and 2000.


                                                                              65
<PAGE>



ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                                  COMMON STOCK

      The following table sets forth certain information as of March 25, 2003
(except as otherwise indicated) regarding the beneficial ownership of the common
stock by (i) all individuals known to beneficially own 5% or more of the
outstanding common stock, (ii) each of the Named Executive Officers (as defined
above under Executive Compensation), directors and nominees for director and
(iii) all of the Company's executive officers and directors as a group, in each
case to the best of the Company's knowledge. Except as otherwise indicated, the
Company believes that the beneficial owners of such securities listed below have
sole investment and voting power with respect to such shares. Unless otherwise
indicated, the address of the directors and officers listed in the tables below
is that of the Company's principal offices located at 975 Weiland Road, Suite
160, Buffalo Grove, Illinois 60089.

<TABLE>


                                                                   Number of Shares
                                                                     Beneficially          Percent of
                   Name of Beneficial Owner                            Owned (1)           Class (2)
                                                                       ---------           ---------
<S>                                                                    <C>                    <C>
The Heico Companies, LLC (3)                                           6,757,158              17.3%
Michael E. Heisley (4)                                                 8,811,324              22.5%
J O Hambro Capital Management Limited (5)                              9,367,869              24.0%
Stanley H. Meadows (6)                                                 1,832,870               4.7%
Andrew G. C. Sage II (6)                                                 168,750                 *
Kathleen A. Cote (7)                                                      68,750                 *
Emily Heisley Stoeckel (8)                                                63,700                 *
Executive officers and directors as a group (five people) (9)         10,945,394              28.0%

-----------

   * Less than 1%.


1)       With respect to any particular individual or group, the number of
         shares of common stock beneficially owned by such individual or group
         includes the number of shares of common stock issuable upon the
         conversion of convertible securities or the exercise of options owned
         by such individual or group, in each case if such securities are
         convertible or exercisable within 60 days of March 25, 2003.

2)       Based on 39,087,252 shares of common stock outstanding as of March 25,
         2003.

3)       Includes 679,451 shares of common stock issuable upon exercise of a
         warrant. The address of this stockholder is 5600 Three First National
         Plaza, Chicago, Illinois 60602.

4)       Represents all shares beneficially owned by The Heico Companies, LLC
         ("Heico"), an entity which Mr. Heisley controls, plus 2,054,166 shares
         of common stock which may be acquired pursuant to options owned
         directly by Mr. Heisley.  Mr. Heisley's address is c/o Heico, 5600
         Three First National Plaza, Chicago, Illinois 60602.

5)       Pursuant to a Schedule 13D filed on December 24, 2002 by (i) J O Hambro
         Capital Management Group Limited ("J O Hambro Group"), (ii) J O Hambro
         Capital Management Limited ("J O Hambro Capital Management"), (iii)
         Christopher Harwood Bernard Mills, (iv) American Opportunity Trust plc
         ("American Opportunity Trust"), (v) Growth Financial Services Limited
         ("GFS"), (vi) North Atlantic Smaller Companies Investment Trust plc
         ("NASCIT"), (vii) Oryx International Growth Fund Limited ("Oryx"),
         (viii) Consulta (Channel Islands) Limited ("Consulta"), (ix) The
         Trident North Atlantic Fund ("Trident North Atlantic") and (x) The
         Trident European Fund ("Trident European"), as of December 24, 2002,
         such persons/entities beneficially owned the following shares of common
         stock pursuant to shared investment and voting power: 9,367,869 shares

                                                                              66
<PAGE>

         (24.0%), 9,367,869 shares (24.0%), 9,367,869 shares (24.0%), 1,924,000
         shares (4.9%), 1,743,000 shares (4.5%), 1,743,000 shares (4.5%),
         625,000 shares (1.6%), 625,000 shares (1.6%), 1,087,500 shares (2.8%)
         and 1,051,500 shares (2.7%), respectively. The address of J O Hambro
         Group, J O Hambro Capital Management, Christopher Harwood Bernard
         Mills, GFS, NASCIT and American Opportunity Trust is Ryder Court, 14
         Ryder Street, London SW1Y 6QB England. The address of Oryx and Consulta
         is Bermuda House, St. Julian's Avenue, St. Peter Port, Guernsey. The
         address of Trident North Atlantic and Trident European is P.O. Box 309
         Ugland House, George Town, Grand Cayman, Cayman Islands. J O Hambro
         Group is the ultimate holding company for J O Hambro Capital
         Management. J O Hambro Capital Management serves as co-investment
         advisor to American Opportunity Trust and NASCIT (two publicly-held
         investment trust companies), as investment advisor to Oryx (a
         closed-end investment company) and as investment advisor to Trident
         North Atlantic Fund and Trident European Fund (two publicly-held
         regulated Mutual Funds). Christopher Harwood Bernard Mills serves as an
         executive director of NASCIT and American Opportunity Trust, as a
         director of J O Hambro Capital Management, Oryx and Trident North
         Atlantic Fund, and as co-investment advisor to American Opportunity
         Trust and NASCIT. Consulta serves as investment manager to Oryx. GFS
         has undertaken to provide the services of Christopher Mills to NASCIT.

6)       Includes 68,750 shares of common stock issuable upon the exercise of
         options.

7)       Represents shares of common stock issuable upon the exercise of
         options.

8)       Includes 63,700 shares of common stock issuable upon the exercise of
         options.

9)       Includes 3,002,367 shares of common stock issuable upon the exercise
         of options or warrants.

</TABLE>

                                 PREFERRED STOCK

       On March 7, 2003, the Company repurchased approximately 99% of its
outstanding preferred stock from Heico. The shares were repurchased for $67.4
million, which represents the aggregate liquidation preference of the purchased
shares, including a 7% dividend that is required under the terms of the
preferred stock before any distributions on or purchase of the Company's common
stock. The Company has made a similar purchase offer to the three remaining
preferred stockholders, the aggregate purchase price of which equals $0.2
million. Worldport has retired the stock it has repurchased from Heico.

      At March 25, 2003, there were 34,056 shares of Series B Preferred Stock
outstanding. The Series B Preferred Stock votes as a single class with the
common stock, with each share entitled to 40 votes. Each share of Series B
Preferred Stock is currently convertible into four shares of common stock and is
subject to mandatory conversion upon the date on which 70% of the Series B
Preferred Stock has been converted.

      Upon any liquidation, dissolution or winding up of the Company, the
holders of the outstanding preferred stock, in the aggregate, shall be entitled
to receive approximately $0.2 million prior to the distribution of any assets of
the Company to the holders of the common stock.

     The following table sets forth certain information as of March 25, 2003
(except as otherwise indicated) regarding the beneficial ownership of Series B
Preferred Stock by (i) all individuals known to beneficially own 5% or more of
the outstanding shares of such class of security, (ii) each of the Named
Executive Officers (as defined above under Executive Compensation), directors
and nominees for director and (iii) all of the Company's executive officers and
directors as a group, in each case to the best of the Company's knowledge.
Except as otherwise indicated, the Company believes that the beneficial owners
of such securities listed below have sole investment and voting power with
respect to such shares. Unless otherwise indicated, the address of the directors
and officers listed in the tables below is that of the Company's principal
offices located at 975 Weiland Road, Suite 160, Buffalo Grove, Illinois 60089.

                                                                              67
<PAGE>

<TABLE>



                                                              Number of Shares
                                                                Beneficially       Percent of
                       Name of Beneficial Owner                     Owned          Class (1)
                                                                    -----          ---------
        <S>                                                          <C>            <C>
        Peter A. Howley (2)                                          18,657         54.8%
        Mario Monello (3)                                            10,261         30.1%
        Dean Kehler (4)                                               5,136         15.1%
        Michael E. Heisley                                               --            --
        Stanley H. Meadows                                               --            --
        Andrew G. C. Sage II                                             --            --
        Kathleen A. Cote                                                 --            --
        Emily Heisley Stoeckel                                           --            --
        Executive officers and directors as a group (five                --            --
        people)

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

1)       Based on 34,056 shares of Series B Preferred Stock outstanding as of
         March 25, 2003.

2)       Mr. Howley's address is c/o The ConnectME Center, 135 Third Street,
         San Rafael, California, 94901.

3)       Mr. Monello's address is 425 Lexington Avenue, 5th Floor, New York,
         New York 10017.

4)       Mr. Kehler's address is 1172 Park Avenue, New York, New York 10128.


</TABLE>

                      EQUITY COMPENSATION PLAN INFORMATION

     The Company adopted an incentive stock option plan for employees and
consultants in September 1996. The Company has reserved 7.5 million shares of
common stock for issuance pursuant to the plan. Options vest over a period
ranging from one to three years and have a term of ten years. Options granted to
consultants are valued using the Black-Scholes model and are recorded as
compensation expense over the period of service to which they relate. Such
amounts were not material for any of the periods presented.

     The Company adopted a new long-term stock incentive plan for employees in
July 2000. The Company originally reserved 15.0 million shares of common stock
for issuance pursuant to the plan. However, the plan provides for an annual
increase in the number of shares reserved for issuance equal to 1% of the issued
and outstanding shares on each January 1 through 2007. At December 31, 2002,
approximately 15.7 million shares had been reserved. Options are awarded at the
fair market value on the date of grant. Options vest over a period ranging from
three to four years and have a term of ten years.

     The following table sets forth certain information with respect to the
Company's equity compensation plans existing at December 31, 2002 (number of
shares in thousands):

<TABLE>

                                            Number of                           Number of securities
                                         securities to be                       remaining available
                                           issued upon       Weighted-average   for future issuance
  Plan Category                            exercise of         exercise price       under equity
                                           outstanding         of outstanding    compensation plans
                                        options, warrants        options,      (excluding securities
                                            and rights         warrants and     reflected in column
                                               (a)                rights                (a))
  <S>                                                 <C>               <C>                    <C>
  Equity compensation plans
      approved by security holders                    5,390             $5.85                  17,830
  Equity compensation plans
      not approved by security                          --                 --                     --
                                                      -----             -----                  ------
  holders
          Total                                       5,390             $5.85                  17,830
                                                      =====                                    ======

</TABLE>
                                                                              68
<PAGE>


ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Mr. Meadows, one of the Company's directors, is a partner of McDermott,
Will & Emery, a law firm which provided the Company with legal services during
2002, 2001 and 2000.

      During 2002, an employee of Heico was appointed a Vice President of
Worldport to assist the Company in certain activities. Since December 2001, this
employee has devoted substantially all of his working time to these efforts and
Worldport has reimbursed Heico for his salary and benefits during this period.
The total amount reimbursed by Worldport to Heico for this employee in 2002 was
approximately $0.2 million.

      In October 2000, the Company purchased a Virginia residence for
approximately $2.3 million in connection with an employment arrangement with Mr.
Grivner, a former chief executive officer of the Company. This real estate was
sold by the Company in June 2001 to an unrelated third party for $1.3 million.




ITEM 14.  CONTROLS AND PROCEDURES

      Kathleen A. Cote, the Company's Chief Executive Officer and acting Chief
Financial Officer, has evaluated the Company's disclosure controls and
procedures within 90 days of the filing date of this report. Based on her
evaluation, she has concluded that the Company's disclosure controls and
procedures are effective to ensure that information required to be disclosed in
the reports that the Company files or submits under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported, within the time periods
specified in the Securities and Exchange Commission's rules and forms.

      There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of the previously mentioned evaluation.
                                                                              69
<PAGE>



                                     PART IV


ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A)

1.   FINANCIAL STATEMENTS

      None.

2.   FINANCIAL STATEMENT SCHEDULES

     The following financial statement schedules are submitted as part of this
report:

          (i) Independent Auditors' Report

          (ii) Copy of Arthur Andersen LLP's Report of Independent Public
               Accountants on Financial Statement Schedule

          (iii) Schedule II--Valuation and Qualification Accounts

     All other schedules are not submitted because they are not applicable or
are not required under Regulation S-X or because the required information is
included in the financial statements or notes thereto.

3.   EXHIBITS

     The exhibits required by Item 601 of Regulation S-K are listed in the
Exhibit Index hereto.



(B)  REPORTS ON FORM 8-K

      None.


                                                                              70
<PAGE>



                                   SIGNATURES

     PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.


                                           WORLDPORT COMMUNICATIONS, INC.


                                                      /S/ KATHLEEN A. COTE
                                           By:  -------------------------------

                                                    Kathleen A. Cote
                                                 Chief Executive Officer

Dated: March 28, 2003

     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED:


        SIGNATURE                          TITLE                     DATE
        ---------                          -----                     ----
    /s/ KATHLEEN A. COTE         Chief Executive Officer          March 28, 2003
    --------------------         and Director
                                 (Principal Executive,
      Kathleen A. Cote           Financial and Accounting
                                 Officer)


/s/ MICHAEL E. HEISLEY, SR.      Director and Chairman of the     March 28, 2003
---------------------------      Board

  Michael E. Heisley, Sr.


   /s/ STANLEY H. MEADOWS        Director                         March 28, 2003
   ----------------------

     Stanley H. Meadows


 /s/ EMILY HEISLEY STOECKEL      Director                         March 28, 2003
 --------------------------

   Emily Heisley Stoeckel


 /s/ ANDREW G. C. SAGE, II       Director                         March 28, 2003
 -------------------------

   Andrew G. C. Sage, II



                                                                              71
<PAGE>



                                 CERTIFICATIONS
                                 --------------

         I, Katheen A. Cote, certify that:

                  1. I have reviewed this annual report on Form 10-K of
         Worldport Communications, Inc.;

                  2. Based on my knowledge, this annual report does not contain
         any untrue statement of a material fact or omit to state a material
         fact necessary to make the statements made, in light of the
         circumstances under which such statements were made, not misleading
         with respect to the period covered by this annual report;

                  3. Based on my knowledge, the financial statements, and other
         financial information included in this annual report, fairly present in
         all material respects the financial condition, results of operations
         and cash flows of the registrant as of, and for, the periods presented
         in this annual report;

                  4. I am responsible for establishing and maintaining
         disclosure controls and procedures (as defined in Exchange Act Rules
         13a-14 and 15d-14) for the registrant and I have:

                           a) designed such disclosure controls and procedures
                  to ensure that material information relating to the
                  registrant, including its consolidated subsidiaries, is made
                  known to me by others within those entities, particularly
                  during the period in which this annual report is being
                  prepared;

                           b) evaluated the effectiveness of the registrant's
                  disclosure controls and procedures as of a date within 90 days
                  prior to the filing date of this annual report (the
                  "Evaluation Date"); and

                           c) presented in this annual report our conclusions
                  about the effectiveness of the disclosure controls and
                  procedures based on our evaluation as of the Evaluation Date;

                  5. I have disclosed, based on my most recent evaluation, to
         the registrant's auditors and the audit committee of the registrant's
         Board of Directors (or persons performing the equivalent function):

                           a) all significant deficiencies in the design or
                  operation of internal controls which could adversely affect
                  the registrant's ability to record, process, summarize and
                  report financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

                           b) any fraud, whether or not material, that involves
                  management or other employees who have a significant role in
                  the registrant's internal controls; and

                  6. I have indicated in this annual report whether or not there
         were significant changes in internal controls or in other factors that
         could significantly affect internal controls subsequent to the date of
         our most recent evaluation, including any corrective actions with
         regard to significant deficiencies and material weaknesses.

           /s/ Kathleen A. Cote
         ---------------------------------------
         Kathleen A. Cote
         Chief Executive Officer and acting Chief Financial Officer


         March 28, 2003

                                                                              72
<PAGE>



                          INDEPENDENT AUDITORS' REPORT


To Worldport Communications, Inc.:

      We have audited the consolidated financial statements of Worldport
Communications, Inc. and subsidiaries as of December 31, 2002, and for the year
then ended and have issued our report thereon dated March 21, 2003; such
consolidated financial statements and report are included in this Annual Report
on Form 10-K of Worldport Communications, Inc. for the year ended December 31,
2002. The 2002 financial statement schedule of Worldport Communications, Inc.
listed in Item 15 is presented for the purpose of complying with the reporting
requirements of the Securities and Exchange Commission and is not a required
part of the basic financial statements. This schedule is the responsibility of
the Company's management. Such schedule has been subjected to the auditing
procedures applied in our audit of the 2002 basic financial statements and, in
our opinion, is fairly stated in all material respects when considered in
relation to the 2002 basic financial statements taken as a whole. The 2001 and
2000 schedules were subject to auditing procedures by other auditors who have
ceased operations and whose report, dated March 27, 2002, stated that such
information is fairly stated in all material respects when considered in
relation to the basic 2001 and 2000 financial statements taken as a whole.



/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Chicago, Illinois
March 21, 2003


                                                                              73
<PAGE>



      The following Report of Independent Public Accountants is a copy of a
report that Arthur Andersen LLP previously issued in connection with Worldport
Communications, Inc.'s Annual Report on Form 10-K for the year ended December
31, 2001. Effective August 16, 2002, Worldport Communications, Inc. dismissed
Arthur Andersen LLP as its independent auditors. Arthur Andersen LLP has not
reissued this report in connection with the preparation of Worldport
Communications, Inc.'s Annual Report on Form 10-K for the year ended December
31, 2002, and this report related only to Worldport Communications, Inc.'s
financial statements as of and for the years ended December 31, 2001 and
December 31, 2000.




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                         ON FINANCIAL STATEMENT SCHEDULE

     We have audited in accordance with auditing standards generally accepted in
the United States, the consolidated financial statements of WORLDPORT
COMMUNICATIONS, INC. AND SUBSIDIARIES included in this Form 10-K and have issued
our report thereon dated March 27, 2002. Our audits were made for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
schedule on page 75 is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.


                                                /s/   ARTHUR ANDERSEN LLP
                                                -------------------------

                                                ARTHUR ANDERSEN LLP

Chicago, Illinois
March 27, 2002

                                                                              74
<PAGE>


<TABLE>

                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002
                                 (IN THOUSANDS)
<CAPTION>



                                                                  ADDITIONS
                                                                  ---------
                                             BALANCE AT           CHARGED TO               BALANCE AT
                                              BEGINNING CHARGED TO   OTHER                   END OF
     DESCRIPTION                              OF PERIOD   INCOME   ACCOUNTS   DEDUCTIONS     PERIOD
     -----------                              ---------   ------   --------   ------------   ------
     <S>                                           <C>       <C>        <C>       <C>          <C>
     Provision for uncollectible accounts
          2000..............................       $ 359     $ 368      $ --      $ 706 (1)     $  21
          2001..............................       $  21     $ 799      $ --      $ 43          $ 777
          2002..............................       $ 777     $ --       $ --      $ 777 (1)     $ --

(1)      Represents write-off of accounts considered to be uncollectible, less recoveries of amounts
         previously written off.


</TABLE>

                                                                              75
<PAGE>



                                  EXHIBIT INDEX


2.1           Stock Purchase Agreement, dated April 25, 2001, between Worldport
              Holdings, Inc., a wholly owned subsidiary of the Company, and
              Hostmark World, LP previously filed as Exhibit 2.1 to Form 8-K
              dated April 26, 2001 and incorporated herein by reference.

3.1           Certificate of Incorporation of the Company, as amended,
              previously filed as Exhibit 3.1 to Form 10-KSB/A for the fiscal
              year ended December 31, 1997, and incorporated herein by
              reference.

3.2           Bylaws of the Company, as amended, previously filed as Exhibit 3.2
              to Form 10-Q for the quarter ended June 30, 2002, and incorporated
              herein by reference.

4.1           Certificate of Designation, Preferences and Rights of Series B
              Convertible Preferred Stock of the Company, dated March 6, 1998,
              previously filed as Exhibit 4.1 to Form 10-Q for the fiscal
              quarter ended March 31, 1998, and incorporated herein by
              reference.

10.1         *Worldport Communications, Inc. Amended and Restated Long-Term
             Incentive Plan, as amended, effective October 1, 1996, previously
             filed as Exhibit 10.17 of form 10-K for the fiscal year ended
             December 31, 1998, and incorporated herein by reference.

10.2         *Worldport Communications, Inc. 2000 Long-Term Stock Incentive
              Plan, previously filed as Exhibit 10.3 to Form 10-Q for the fiscal
              quarter ended June 30, 2000, and incorporated herein by reference.

10.3         Shareholders Agreement, dated April 25, 2001, between the Company
             and Hostmark World, LP, previously filed as Exhibit 10.1 to Form
             8-K Dated April 26, 2001, and incorporated herein by reference.

10.4         Registration Rights Agreement, dated April 25, 2001, among the
             Company, Hostmark World LP and N.M. Rothschild and Sons Limited
             previously filed as Exhibit 10.2 to Form 8-K dated April 26, 2001,
             and incorporated herein by reference.

10.5         Lease Agreement by and between the Company, Channor Limited and
             Blanchardstown Corporate Park, dated August 3, 2000 previously
             filed as Exhibit 10.18 to Form 10-Q for the fiscal quarter ended
             March 31, 2001 and incorporated herein by reference.

21.1         +Subsidiaries of the Company

23.1         +Independent Auditors' Consent

99.1         +Certification Pursuant to 18 U.S.C. Section 1350 as Adopted
             Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


     +   Filed herewith
     *   Compensation plan or agreement

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