<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB

                                   (Mark One)
     |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For the quarterly period ended MARCH 31, 2002

                                       OR

     |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

    For the transition period from ___________________ to ___________________

                          Commission File No. 000-29177

                            VIANET TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

           Delaware                                              87-0434285
           --------                                              ----------
(State or other jurisdiction of                                (IRS Employer
incorporation or organization)                               Identification No.)

                         6509 Windcrest Drive, Suite 160
                               Plano, Texas 75024
               (Address of principal executive offices, zip code)

                                 (972) 543-2700
              (Registrant's telephone number, including area code)

    Indicate by check mark whether the registrant (1) has filed all reports
    required to be filed by Section 13 or 15(d) of the Securities Exchange Act
    of 1934 during the preceding 12 months (or for such shorter period that the
    registrant was required to file such reports), and (2) has been subject to
    such filing requirements for the past 90 days. Yes |X| No |_|

    As of April 30, 2002, there were 571,195,876 shares of the registrant's
    Common Stock issued, par value $.001 per share, and 571,105,939 shares
    outstanding.

    Transitional Small Business Disclosure Format (check one).  Yes |_| No |X|

                                      -1-

<PAGE>

                   VIANET TECHNOLOGIES, INC. AND SUBSIDIARIES

                                      INDEX

                                                                            Page
                                                                            ----
Part 1  Financial Information

Item 1  Financial Statements

        Consolidated Balance Sheets at March 31, 2002 (unaudited) and
        December 31, 2001                                                      3

        Consolidated Statements of Operations for the three months
        ended March 31, 2002 and the period from February 16, 2002 through
        March 31, 2001 (unaudited)                                             4

        Consolidated Statements of Cash Flows for the three months
        ended March 31, 2002 and the period from February 16, 2002 through
        March 31, 2001 (unaudited)                                             5

        Notes to Consolidated Financial Statements (unaudited)               6-8

Item 2  Management's Discussion and Analysis                                9-17

Part II Other Information                                                     18

Item 1  Legal Proceedings

Item 2  Changes in Securities

Item 3  Defaults Upon Senior Securities

Item 4  Submission of Matters to a Vote of Security Holders

Item 5  Other Information

Item 6  Exhibits and Reports on Form 8-K

        (a) Exhibits

        (b) Reports on Form 8-K

Signatures                                                                    19

                                      -2-

<PAGE>
<TABLE>

VIANET TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<CAPTION>

                                                                March 31, 2002   December 31, 2001
                                                                  unaudited          audited
                                                                -------------      -------------
<S>                                                             <C>                <C>
CURRENT ASSETS
             Cash and cash equivalents                          $    568,819       $  1,462,653
             Accounts receivable, net                              2,719,542          2,729,289
             Prepaids and other current assets                       706,414            730,833
                                                                -------------      -------------
                                                                   3,994,775          4,922,775
                                                                -------------      -------------

PROPERTY AND EQUIPMENT, net                                        6,943,482          7,130,078

OTHER ASSETS
             Patents, net                                          6,911,036          7,167,000
             Trademarks, net                                       3,018,600          3,096,000
             Goodwill                                              1,435,757          1,435,757
             Security deposits                                       247,973            200,000
                                                                -------------      -------------

TOTAL ASSETS                                                    $ 22,551,623       $ 23,951,610
                                                                =============      =============

CURRENT LIABILITIES
             Accounts payable                                   $ 16,670,354       $ 14,820,663
             Accrued liabilities                                   3,240,765          3,338,411
             Current portion of note payable                         250,000            250,000
             Current portion of capital lease obligations          2,396,198          2,200,630
             Convertible notes payable                             1,207,088          1,207,088
             Demand notes payable                                    805,450            855,450
                                                                -------------      -------------
                                                                  24,569,855         22,672,242
                                                                -------------      -------------

LONG-TERM LIABILITIES
             Note payable, excluding current portion               4,700,000          4,700,000
             Long-term portion of capital lease obligation         4,638,559          4,905,024

SHAREHOLDERS' DEFICIT
             Common shares                                           571,106            571,106
             Treasury stock                                                -                  -
             Additional paid in capital                            5,271,894          5,271,894
             Accumulated deficit                                 (17,199,791)       (14,168,656)
                                                                -------------      -------------
                                                                 (11,356,791)        (8,325,656)
                                                                -------------      -------------

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                     $ 22,551,623       $ 23,951,610
                                                                =============      =============
</TABLE>

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

                                                -3-

<PAGE>
<TABLE>

VIANET TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

<CAPTION>

                                            Three Months Ended  Period February 16, 2001
                                              March 31, 2002     through March 31, 2001
                                              --------------     ----------------------
<S>                                           <C>                     <C>
Revenue:
     Telecommunication services               $   9,894,836           $           -
     Software sales                               1,329,068                       -
                                              --------------          --------------
Total revenue                                    11,223,904                       -

Costs of revenue:
     Telecommunication costs                      9,618,072                       -
     Software costs                                   9,576                       -
                                              --------------          --------------
                                                  9,627,648                       -

Gross margin                                      1,596,256                       -

Operating expenses:
     Personnel                                    1,609,753                       -
     Selling, general and administrative          1,508,739                  11,342
     Depreciation and amortization                1,293,864                       3
                                              --------------          --------------
Total operating expenses                          4,412,356                  11,345

Loss from operations                             (2,816,100)                (11,345)

Other expenses:
     Interest expense                              (205,064)                      -
     Other                                           (9,971)                      -
                                              --------------          --------------
Net loss                                      $  (3,031,135)          $     (11,345)
                                              ==============          ==============

Loss per share - basic and diluted            $       (0.01)                    n/a
                                              ==============          ==============

Weighted average shares outstanding             571,105,939                     n/a
                                              ==============          ==============

</TABLE>

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

                                           -4-

<PAGE>
<TABLE>

VIANET TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<CAPTION>

                                                                        Three Months Ended  Period February 16, 2001
                                                                          March 31, 2002     through March 31, 2001
                                                                          --------------     ----------------------
<S>                                                                         <C>                   <C>
Operating Activities:
Net loss                                                                    $(3,031,135)          $   (11,345)
Adjustments to reconcile net loss to net cash used
  in operating activities:
Provision for bad debts                                                         196,200                     -
Depreciation and amortization                                                 1,293,864                     3

Increase (decrease) in cash attributable to changes in
  operating assets and liabilities:

Accounts receivable                                                            (186,453)                    -
Prepaids and other current assets                                                24,419               (11,624)
Accounts payable and accruals, and other                                      1,232,827                11,550
                                                                            ------------          ------------
Net Cash Used In Operating Activities                                          (470,278)              (11,416)
                                                                            ------------          ------------

Investing Activities:
Security deposits                                                               (47,973)                    -
Capital expenditures                                                           (325,583)                 (208)
                                                                            ------------          ------------
Net Cash Used In Investing Activities                                          (373,556)                 (208)
                                                                            ------------          ------------

Financing Activities:
Issuance of common stock and warrants                                                 -                 1,000
Loans from related parties                                                            -                14,355
Payment of demand notes                                                         (50,000)                    -

                                                                            ------------          ------------
Net Cash (Used In) Provided By Financing Activities                             (50,000)               15,355
                                                                            ------------          ------------
Net (Decrease) Increase In Cash                                                (893,834)                3,731

Cash at beginning                                                             1,462,653                     -
                                                                            ------------          ------------
Cash at end                                                                 $   568,819           $     3,731
                                                                            ============          ============

Supplemental disclosure of noncash investing and financing activities:

Transfer of Capital lease obligations to accounts payable                       525,355                     -
                                                                            ============          ============

Acquisition of equipment through capital lease obligations                      450,863                     -
                                                                            ============          ============

</TABLE>

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

                                                -5-

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1.    Basis of Presentation:

The accompanying consolidated financial statements have been prepared by the
Company without audit in accordance with generally accepted accounting
principles for interim financial statements and with instructions to Form 10-QSB
and Article 10 of Regulation S-X. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered necessary for a
fair presentation have been included.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has suffered
recurring losses from operations and their current and total liabilities exceed
their current and total assets, respectively. This raises substantial doubt
about the Company's ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

The accompanying consolidated financial statements do not include certain
footnotes and financial presentations normally required under generally accepted
accounting principles and, therefore, should be read in conjunction with the
audited financial statements included in the Company's Form 10-KSB as of
December 31, 2001.

The consolidated financial statements include the accounts of Vianet
Technologies, Inc. (Vianet) and its wholly-owned subsidiaries, Comm Services
Corporation, Inter-Tel.NET, Inc., Vianet Labs, Inc. (Labs) and Vianet Access,
Inc. (Access) (collectively, the "Company"). All significant intercompany
accounts and transactions have been eliminated.

Per share amounts are not reflected for the quarter ending March 31, 2001 due to
the recapitalization of the Company as a result of the reverse acquisition on
December 31, 2001.

2.  Demand Notes Payable

In January 2002, the Company paid $50,000 to a shareholder in settlement of
demand notes.

3.  Patents and Trademarks

In connection with the acquisition of Vianet, the Company recorded patents and
trademarks at fair value based upon independent valuations on December 31, 2001.
The Company amortizes the patents and trademarks using the straight-line method
over periods ranging from 7 to 10 years. Amortization expense for patents and
trademarks was $333,364 and nil for the three-month periods ended March 31, 2002
and 2001, respectively. Amortization expense for each of the next five years is
estimated to be $1,333,457 per year.

4.  Goodwill - Adoption of Statement 142

The Company adopted FAS 142 on January 1, 2002, at which time it ceased the
amortization of goodwill. At March 31, 2002, the Company's goodwill had a
carrying value of $1,435,757. Pursuant to FAS 142, the Company will complete its
test for goodwill impairment during the second quarter 2002 and, if impairment
is indicated, record such impairment as a cumulative effect of accounting change
effective January 1, 2002. The following table sets forth the effect of the
adoption of FAS 142 for each period:

                                      -6-
<PAGE>

<TABLE>
<CAPTION>
                                                                    For the period
                                                                    ended February
                                               For the three-month    16, 2001
                                                   period ended        through
                                                  March 31, 2002    March 31, 2001
                                                  -------------    -----------------
<S>                                                <C>              <C>
Reported net loss                                  $ (3,031,135)    $    (11,345)
   Add back: Goodwill amortization, net of tax
   effect                                                     -                -
                                                   -------------    -------------
Adjusted net loss                                  $ (3,031,135)    $    (11,345)
                                                   =============    =============

BASIC AND DILUTED EARNINGS PER SHARE:
   Reported net loss                               $      (0.01)            n/a
   Goodwill amortization                                      -               -
                                                   -------------    -------------
   Adjusted net loss                               $      (0.01)            n/a
                                                   =============    =============

</TABLE>

5. Proforma Results of Operations

On a proforma, unaudited basis, as if the acquisition of Vianet had occurred on
February 16, 2001, total revenues and operating loss for the quarter ended March
31, 2001 would have been approximately $28,000 and ($5,560,000), respectively.
Proforma basic and diluted loss per share would have approximated ($0.01) per
share. These unaudited proforma results have been prepared for comparative
purposes only and are not necessarily indicative of the results of operations
that would actually have occurred had the acquisition been in effect on the
dates indicated.

6. Segment Information

SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION, establishes standards for public companies relating to the
reporting of financial and descriptive information about their operating
segments in financial statements. Operating segments are components of an
enterprise about which separate financial information is available that is
evaluated regularly by chief operating decision makers in deciding how to
allocate resources and in assessing performance.

The Company identifies its segments based upon components of revenue and
considers its operating segments to be Telecommunications Services and Video
Products.

The Company's reportable operating segments have been determined as separately
identifiable business units. The Company measures segment earnings as Earnings
Before Interest, Taxes, Depreciation and Amortization (EBITDA). The Company had
no significant operations for the period ended February 16, 2001 through March
31, 2001. The following amounts are disclosed for the three months ended March
31, 2002:


                                      -7-
<PAGE>

<TABLE>
<CAPTION>
                                                         Tele-
                                                    communications
                                                       Services          Video Products             Total
                                                   ------------------    ----------------       ---------------
<S>                                                      <C>                   <C>                 <C>
FOR THE THREE MONTHS ENDED MARCH 31, 2002:
Revenue from external customers                            9,894,836           1,329,068            11,223,904
Inter-segment revenue                                              -                   -                     -
Gross profit                                                 276,764           1,319,492             1,596,256
Depreciation and amortization                                918,493             375,371             1,293,864
Interest expense                                             185,818              19,245               205,063
Net loss                                                 (2,288,148)           (742,987)           (3,031,135)

EBITDA                                                   (1,183,837)           (348,371)           (1,532,208)

AS OF MARCH 31, 2002:

Segment assets                                             9,403,578          13,148,045            22,551,623

Intangibles                                                        -          11,365,393            11,365,393

</TABLE>

7.  Subsequent Events

Capital leases:

The Company is in arrears on capital lease obligations in the amount of
$1,429,168 as of March 31, 2002 for amounts due to one lessor. The lessor has
presented the Company with a demand letter requesting payment of all outstanding
amounts under the capital leases and is currently in discussions with the
Company regarding payment and resolution of various service issues relating to
the equipment.

Equity transaction:

In May 2002, the Company issued 800,000 shares of common stock for investor
relations services.



                                      -8-
<PAGE>
ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2002

This quarterly report on Form 10-QSB contains forward-looking statements that
are subject to risks and uncertainties, which could cause actual results to
differ materially from those expressed or implied in the statements.
Forward-looking statements (including oral representations) are statements about
future performance or results, and include any statements using the words
"believe," "expect," "anticipate" or similar words. All forward-looking
statements are only predictions or statements of current plans, which we are
constantly reviewing. All forward-looking statements may differ from actual
future results due to, but not limited to, changes in the local and overall
economy, the nature and pace of technological changes, the number and
effectiveness of competitors in the Company's markets, success in overall
strategy, the Company's ability to identify future markets and successfully
expand existing ones and the mix of products and services offered in the
Company's target markets. You should consider these important factors in
evaluating any statement contained in this report and/or made by us or on our
behalf. We have no obligation to update or revise forward-looking statements.

The following information has not been audited. You should read this information
in conjunction with the condensed financial statements and related notes to
financial statements included in this report. In addition, please see our
Management Discussion and Analysis of Financial Condition and Results of
Operations and audited financial statements and related notes included in our
Annual Report on Form 10-KSB for the year ended December 31, 2001. Vianet
Technologies, Inc. is referred to as "we," "us" or "our" in this report.

DESCRIPTION OF BUSINESS.

OVERVIEW

We were originally incorporated in the State of Delaware on March 20, 1998. In
March 1999, we consummated a merger with Radar Resources, Inc., a Nevada
Corporation, under the terms of which we merged with and into Radar through an
exchange of shares. Upon completion of the merger, Radar changed its name to
Vianet Technologies, Inc. In June 2000, we reincorporated under the laws of the
State of Delaware.

In December 2001, we acquired 100% of the outstanding capital stock of Comm
Services Corporation ("CSC") in a merger transaction. CSC operates as a division
of Vianet and is a wholesaler of telecommunications services that sells
international long distance voice and data service to global carriers that
include regional Bell operating companies, competitive local exchange carriers,
long distance companies and private network providers. CSC provides its services
through a combination of its own international network facilities, various
international termination relationships and resale arrangements with other
international long distance service providers. CSC was originally incorporated
on February 16, 2001.

Although Vianet was the surviving legal entity in the merger, the transaction
has been accounted for as an issuance of equity by CSC, and a recapitalization
of CSC under the capital structure of Vianet in exchange for the net assets of
Vianet. This type of transaction is commonly referred to as a reverse
acquisition. Under the purchase method of accounting, the historical results of
CSC have been carried forward and Vianet's operations have been included in the
financial statements commencing on the merger date. Accordingly, all of the
historical 2001 results included here are those of CSC only. Further, on the
date of the merger, the assets and liabilities of Vianet were recorded at their
fair values, with the excess purchase consideration allocated to goodwill and
consolidated with the balance sheet of CSC. Results of operations after the
merger will include the results of both companies on a consolidated basis.


                                      -9-
<PAGE>

PRINCIPAL PRODUCTS AND SERVICES

The Company, through CSC, offers telecommunications services both domestically
and internationally, providing high quality Voice Over Internet Protocol,
commonly referred to as VoIP, long distance services. These services, which
include transport and termination services, a switched direct dialing VoIP,
commonly referred to as 1+dialing, voice, fax and modem service, and Network
Monitoring Operations Center Services, are provided to telecommunication
carriers, business enterprises and other service providers. CSC enables
telephony communications service providers to offer their consumers high quality
voice, data, and video communications. CSC delivers its services through its
IP-based packet switching network that is designed to be more efficient than
traditional circuit-switching networks. CSC is able to charge customers highly
competitive rates because its transmission costs are generally lower than those
incurred by traditional circuit-switching competitors. The CSC network reduces
transmission costs by providing routing which bypasses many local access,
long-distance tariff and settlement charges.

The Company's network is designed to allow it to accommodate rapid deployment of
new services like video conferencing, enterprise Virtual Private Networks (VPN)
and enhanced data services. Vianet is continuing its business of designing and
marketing advanced data visual communication technologies and services, which
utilize a wavelet compression technique Wavelet based technologies deliver data,
video and multimedia content faster than conventional compression techniques.
Furthermore, wavelet compression typically uses less bandwidth, costs less and
yields higher quality video and still imagery than conventional techniques. Our


key products include the Lightning Strike suite of products, which include LS
Video Messenger, LS Video Interactive, LS Power Zoom and LS Video Stream. All of
these products utilize our wavelet technology, and offer customers high quality
desktop video applications. Our key video products include the Lightning Strike
suite of products such as:

         o        LS Video Messenger Pro - a product that enables users to send
                  V-Mail, which consist of the E-mailing of a video file;

         o        LS Video Interactive - a suite of Video Conferencing products;

         o        LS Power Zoom - a product that allows a user to zoom and pan
                  on still images;

         o        LS Video Stream - a streaming video product that allows users
                  to view video on demand; and

         o        LS Licensing Server - a server based application that manages
                  deployment and version control for the other LS products.

The combination of CSC's global IP network and Vianet's suite of visual media
applications results in the Company being able to offer consistent, high quality
voice, video and data services to customers on a privately managed IP-based
network. This network has Tier 1 bandwidth connections, providing service at
levels of quality and reliability that are difficult to achieve over public
networks, such as the Internet, and making it ideal for applications like VoIP
and Video conferencing. In addition, a state-of-the-art network operations
center is in place to monitor, analyze and test all aspects of the network
performance 24 hours a day, 7 days a week, to assure high quality and to
minimize interruption of service to customers.

The Company is now able to provide enterprise customers with a global Virtual
Private Network, with bandwidth management and Quality of Service, or QoS,
features, for business quality video conferencing and data collaboration, any
time, anywhere. Further, the Company can now provide managed broadband network
access, combining the use of traditional broadband copper access and broadband
wireless access where traditional wire access isn't practical. This combination
allows the Company to offer both the traditional service providers and the
enterprise customers a business reason to justify VPN services.

We also offer video compression technology, as well as value added services,
which provide our customers with a competitive edge. We believe our products
will enable communications across broadband networks that efficiently combine
voice, data, graphics and video across geographic locations with high
throughput, protocol flexibility, and system expandability.

                                      -10-
<PAGE>

MARKETS

Our principal target markets for video products are ISPs (Internet Service
Providers) and ASPs (Application Service Providers), corporate enterprises and
government agencies seeking to provide a visual experience to improve
communications, brand awareness and access to digitized documents and images.
Our market for telecommunications services is primarily to international
long-distance telecommunication service providers on a wholesale basis.

We believe that our video markets are tied to the progress and development of
the Internet, the deployment of broadband access, the growth of the SOHO (Small
Office Home Office), distance learning and to private network infrastructure.

The Company believes that growth in these sectors is currently high, and that it
appears to be continuing. We believe that this growth will require a similar
growth in the demand for software and hardware to support the systems used by
Internet service providers, private networks and individual end users, as well
as a similar growth in the demand for products that more efficiently communicate
over these systems. Video communications technology allows two or more parties
in different locations to use video and audio to communicate simultaneously in a
real-time environment. Since video provides an effective means of communication
with "face to face" benefits when participants are unable to meet in a common
location, we expect this market to expand substantially. The overall video
communications market is a rapidly growing large market. According to industry
sources, the total video communications market in the United States is expected
to grow to $5.8 billion by 2005.

The telecommunications market was dramatically affected by deregulation of
certain aspects of the telecommunications industry and especially with the
divestiture by AT&T (American Telephone & Telegraph, Inc.) of the regional bell
operating companies. A number of competitive telecommunications companies were
formed to avail themselves of the business opportunities thus offered. Today,
there are over 500 U.S. long distance companies. Foreign deregulation and
privatization have also allowed new long distance providers to emerge in other
foreign markets, although the timing and effects are still uncertain.
Deregulation has encouraged competition, which in turn has prompted carriers to
offer a wider selection of products and services at lower prices. Industry
estimates provide that the lower prices for telecommunications services that
have resulted from increased competition have been more than offset by decreases
in the costs of providing such services and increases in telecommunications
usage. These estimates rely upon FCC data for the period 1989 through 1995,
during which per-minute settlement payments by U.S.-based carriers to
the companies outside the United States that are primarily responsible for
providing telecommunication services in particular countries (commonly
referred to as "Post, Telephone and Telegraphs," or "PTTs") fell 31.4%,
from $0.70 per minute to $0.48 per minute while per-minute
international billed revenues fell only 13.7%, from $1.02 in 1989 to $0.88 in
1995. It is expected that as settlement rates and capacity costs continue to
decline, international long distance will continue to provide opportunities in
the telecommunications market.

Telecommunications VoIP services consist of both traditional and enhanced voice
and data services between ordinary phones and the addition of interactive voice
capability to computers, web sites and email. These services satisfy both the
extensive market of existing phone users and the expanding market of computer
users. Our data networks as compared to traditional telephone networks are
better suited to deliver future enhanced services to both phone users and
computer users due to the ability to address user specific needs and flexible
utilization. Moreover, the Internet is the most cost-effective data network for
transmitting any type of data worldwide, including voice. According to the
International Telecommunications Union the year 2000 was the first time Internet
capacity exceeded international telephone circuit capacity. According to
industry sources, the international long distance market by 2003 may approach
$190 billion in revenues.

As the Internet continues to develop as a communications and business tool, we
believe that both business and home Internet users will adopt enhanced services
that require additional bandwidth and web functionality. We intend to serve
these market segments by providing video compression technology, as well as
value added services to provide our customers with the competitive edge they
need. We believe our products will enable communications across broadband
networks that efficiently combine voice, data, graphics and video across
geographic locations with high throughput, protocol flexibility, and system
expandability. We feel our products currently offer the service and quality the
video market is seeking.

                                      -11-
<PAGE>

Sales, Marketing & Distribution

We market and sell our video, data and voice products and services to
corporations, advertising agencies, ISPs/ASPs, distributors and VARs (Value
Added Resellers) in commercial, government, medical and educational markets
through direct sales, resellers and agents. We primarily market our
international telecommunications services through our direct wholesale carrier
services sales staff. We regularly attend and are exhibitors at Internet and
telecom trade shows where we meet potential customers and offer new products and
services to existing customers.

Our existing and prospective customers are provided with sales, advertising and
promotional materials by our account service personnel. Product demonstration
facilities are maintained in our offices. We also provide our sales force with
ongoing training to ensure that it has the necessary expertise to effectively
market and promote our products.

We also maintain an Internet web site, which provides extensive information
about our Company, our products and services and contact information.

The five largest telecommunications customers represented 74.4% and 69.6% of the
Company's revenue for the period February 16, 2001 to December 31, 2001 and the
three-month period ended March 31, 2002, respectively. The ten largest customers
represented 92.5% and 81.0% of the Company's revenue for the period February 16,
2001 to December 31, 2001 and the three-month period ended March 31, 2002,
respectively.

Competition

We operate in markets that are extremely competitive and are influenced
significantly by the marketing and pricing decisions of other industry members.
The barriers to entry are not insurmountable in any of the markets in which we
compete. We expect competition in these markets to intensify in the future. We
compete with both telecommunication service providers and manufacturers or
resellers of video communications products, some of which are larger, have
longer operating histories have substantially greater financial, technical and
marketing resources, larger customer bases, longer operating histories, greater
name recognition and more established relationships in the industry than we
have. Consequently, these competitors can devote greater resources to the
development, promotion, sale and support of their products. In addition,
competitors with a large installed customer base may have a significant
competitive advantage over us. Accordingly, these potential customers may not
consider or evaluate our products. We expect to face increased competition,
particularly price competition, from other technology providers. These vendors
may develop products with functionality similar to our products or may provide
alternative solutions. Our distributors and OEMs may also compete with us by
selling their own current products or products that they may develop, as well as
selling products that they purchase from us. In addition, current and potential
competitors may establish cooperative relationships among themselves or with
third parties to develop and offer competing products.

We believe that we must invest significant resources in developing new products,
enhancing current products and maintaining customer satisfaction to remain
competitive. If we fail to do so, our products may not compete favorably with
our competitors' products, and our business could be materially adversely
affected.

It is also common in the networking industry for competitors to acquire
companies to introduce new products or emerging technologies. Consequently,
competitors with larger market capitalizations or cash reserves than us will be
better positioned to acquire new technology or products capable of displacing
our product lines. If we fail to effectively introduce new products and
enhancements on a timely basis, our business may be materially adversely
affected.

                                      -12-
<PAGE>

The long distance telecommunication market is highly competitive as we compete
for customers in the telecommunications markets primarily based on price and
quality of service offered and experience intense price competition in our
telecommunications business. There are several large and numerous small
competitors and we expect to face continuing competition on price and service
offerings from existing competitors and new market entrants in the future.
Increased competition could force us to reduce our prices if our competitors are
able to procure rates or enter into service agreements that are comparable to or
better than those we obtain. Similarly, we have no control over the prices set
by our competitors in the long distance resale carrier-to-carrier market.

Intellectual Property

As of March 31, 2002, we have filed three patent and two trademark applications,
which applications are in various stages in the process for approval. The patent
information is as follows:

----------------------------------------------  ------------------------------
                                                         APPLICATION
                    TITLE                                  NUMBER
----------------------------------------------  ------------------------------

System and Method for Image Compression and
     Decompression                                        09/038,562

System and Method for Image Compression and
   Decompression                          -
     Divisional                                           09/727,242

System and Method for Image Compression and
     Decompression - Divisional                           09/727,241

The trademark matters are an application for "Changing the Bandwidth Equation
(CTM)" which is being examined and an approved application for "Lightning
Strike."


Government Regulation of the Telecommunications Industry

As a U.S. telecommunications company, the Company is subject to regulation by
federal agencies and states within which it operates. As a non-dominant carrier,
as classified by the Federal Communications Commission ("FCC") and defined as
lacking substantial power to influence market prices in the U.S., the Company's
provision of international and domestic long distance telecommunications
services in the U.S. is generally subject to less regulation than a dominant
carrier. The FCC and relevant state authorities regulate ownership of
transmission facilities, provision of services and the terms and conditions
under which the Company's services are provided. The Company's services are
subject to the provisions of the Communications Act of 1934, as amended by the
Telecommunications Act of 1996 (the "Act") and the related regulations. Various
state laws and regulations as administered by the relevant state authorities are
also applicable.

In the United States, to the extent that the Company offers services as a
carrier, the Company is required to obtain authority under Section 214 of the
Act, in order to provide telecommunications service that originates within the
U.S. and terminates outside the United States. The Company has obtained the
required Section 214 authorization from the FCC to provide U.S. international
service. In addition, as a condition of the Company's Section 214 authorization,
the Company is subject to various reporting and filing requirements. Failure to
comply with the FCC's rules could result in fines, penalties, forfeitures or
revocation of the Company's FCC authorization.

The use of the Internet to provide telephone service is a recent development.
Although the FCC has determined that information service providers, including
Internet protocol ("IP") telephony providers, are not telecommunications
carriers, the Company cannot be certain that the FCC will continue to maintain
this position. If the FCC determines that IP telephony is subject to regulation
as a telecommunications service, it may subject providers of Internet telephony
services to traditional common carrier regulation and require them to make
universal service contributions and pay access charges to terminate long
distance traffic. In addition to the FCC and Congress, state regulatory
authorities and legislators may also assert jurisdiction and regulate the
provision of intrastate IP telephony services.


                                      -13-
<PAGE>

Although the Company provides international long-distance termination services,
it is common in the industry for domestic vendors to impose certain fees upon
services unless specifically exempted. The FCC issued an order in 1997 to
implement the provisions of the Act relating to the preservation and advancement
of universal telephone service (the "Universal Service Order"). The Universal
Service Order requires all telecommunications carriers providing interstate
telecommunications services to pay fees based on certain interstate and
international end user telecommunications revenues. Many state regulatory
agencies have also begun proceedings to revise state universal support
mechanisms to make them consistent with the requirements of the Act. As a
result, the Company may be subject to state, as well as federal, universal
service fund contribution requirements, which will vary from state to state. The
amounts remitted to the Universal Service Fund may be billed to the Company's
customers. If the Company does not bill these amounts to its customers, its
profit margins may be less than if it had elected to do so. However, if the

Company elects to bill these amounts to its customers, customers may reduce
their use of the Company's services, or elect to use the services provided by
the Company's competitors. In May 2001, the FCC proposed several changes to its
Universal Service Fund regulations that, if adopted, would alter the basis on
which the Company's Universal Service Fund contributions are determined and the
ability and means by which such contributions may be recovered from the
Company's customers. The effect of the Universal Service Fund requirements (and
comparable state contribution requirements) on the telecommunications industry
generally and on certain of the Company's business activities are not known at
this time.

Research and Development Activities

We employ a technical staff that is devoted to the improvement and enhancement
of our existing Internet products and services as well as the development of new
technologies and products. We employ a staff of 13 software engineers who
develop, test and evaluate proprietary applications. The costs associated with
these efforts in the quarter ended March 31, 2002 totaled approximately
$315,000. To augment these resources, we employ independent consultants. We
expect that we will continue to commit resources to research and development in
the future to further develop our products.

On acquisition, the Vianet Labs products were in the form of CODECS (COmpressor
- DECompressors) representing mathematical algorithms that had been utilized in
a "proof of concept" suite of products known as LS Interactive, LS Messenger, LS
Video Streaming, LS Power Zoom, LS Still Image, and LS Facial recognition. These
products were in "pre alpha" form, worked only on one limited platform and were
extremely "buggy" causing computer lock-ups and worse. Since the acquisition,
Vianet's engineering effort has consisted of the design of professional Graphic
User Interfaces (GUI's), a suite of end user applications, debugging and the
integration across multiple platforms, as well the further enhancement and
development of the basic CODECS.

LS Messenger Pro has moved from a proof of concept to a product phase. LS
Messenger Pro has been tested on Windows 98, Windows NT, and Windows 2000. A new
release of Messenger Pro has eliminated the need to send an executable file,
which frequently was being blocked by email systems and firewalls. By sending a
link instead of an executable the product now lends itself to be utilized in a
number of new application areas. We have sold and deployed more then 300,000
licenses of Messenger Pro. Additionally we have a number of service providers
deploying Messenger Pro as an enhanced monthly service offering. In those
instances, Vianet and the Service Provider shares in the monthly revenue
generated.

A new release of Video Interactive has become generally available as of May 1.
This new release adds a number of new features and capabilities including the
ability to change window sizes from small (176x144) to large (320x240), document
viewing camera (640x480), user selectable bandwidth usage, and interoperability
with other major H.323 video conferencing systems. Using Vianet's Licensing
Server allows Service Providers to offer multiple versions (class of Service) of
Video Interactive including audio-only, 2-way, 3-way, 5-way or fully
functioning. In addition to the more then 300,000 licenses deployed of our
previous release, our latest version is now in trials with both enterprise and
service providers.

                                      -14-
<PAGE>

Power Zoom gives Web Developers the capability to serve up high-resolution
images over the Internet. By using a Power Zoom server, hosting sites give users
the capability to zoom in on the details of a high-resolution image not seen
with traditional serving techniques. Power Zoom is certified on IBM's Netfinity
product line, and is available for general release.

We will continue to add additional features that our customers ask for in future
releases of all our products.

We launched the development of the Licensing Server early in 2001 and completed
the first release in the third quarter 2001. The Licensing Server allows service
providers the flexibility to offer Video Messenger Pro and Video Interactive as
a service offering. In addition, it allows service providers to decide what set
of features to implement within each application and offer different feature
sets at different fees. The Licensing Server has the ability to easily implement
enhanced services. The Licensing Server application is server based, can allow
billing by the transaction, monthly, yearly or any increment the provider
chooses, allows providers to offer free trials for any period they choose,
tracks valid users and insures piracy protection.

No assurance can be given that a market will exist for the products once the
development is completed, nor can there be any assurance that we will be able to
successfully develop new technologies or effectively respond to technological
changes or new industry standards or developments on a timely basis, if at all.

Results of Operations for the Three-Month Period Ended March 31, 2002 and the
Period Ended February 16, 2001 Through March 31, 2001

Revenues

Revenues for the three-month period ended March 31, 2002 increased to
$11,223,904, as compared to revenues of nil during the period from February 16,
2001 to March 31, 2001. The 2002 revenue was comprised of approximately $8.7
million associated with telecom services provided in Mexico, approximately
$398,000 attributable to other international services, approximately $310,000
attributable to domestic services, approximately $499,000 of other telecom
services and fees, and approximately $1.3 million from software sales of our
video products and professional services relating to the installation and
maintenance of our software.

Costs and Expenses

Costs of Goods and Services Sold

Costs of good and services sold for the three-month period ended March 31, 2002
were approximately $9.6 million, as compared to costs of good and services sold
of nil during the period from February 16, 2001 to March 31, 2001. The 2002
costs primarily relate to costs associated with our telecom services.

Selling, General and Administrative

Selling, general and administrative expenses for the three-month period ended
March 31, 2002 increased $1,497,397 to $1,508,739, as compared to selling,
general and administrative expenses of $11,342 during the period from February
16, 2001 to March 31, 2001. The 2002 expenses relate to the costs associated
with the operations of the Company over the three-month period, while the 2001
expenses relate to the startup operations of the Company prior to the December
31, 2001 merger.

Personnel

Personnel costs for the three-month period ended March 31, 2002 were
approximately $1.6 million, as compared to Personnel costs of nil during the
period from February 16, 2001 to March 31, 2001. The 2002 costs are costs
associated with salaries and benefits for 75 employees.

Depreciation and Amortization

Depreciation and amortization expense for the three-month period ended March 31,
2002 was approximately $961,000 and $333,000, respectively, as compared to
depreciation and amortization expense of three dollars and nil, respectively,
during the period from February 16, 2001 to March 31, 2001. The 2002
depreciation was taken upon fixed assets costing approximately $9.8 million,
while the Company did not own any significant fixed assets at March 31, 2001.
The 2002 amortization relates to $255,964 for Patents and $77,400 for
Trademarks.

                                      -15-
<PAGE>

Net Loss

Net loss during the three-month period ended March 31, 2002 was $3,031,135, as
compared to $11,345 during the period from February 16, 2001 to March 31, 2001.

Cash Position

For the three-month period ended March 31, 2002, the Company's cash position
decreased by $893,834 from $1,462,653 to $568,819. Investing activities
consisted of $325,583 used for purchases of fixed assets, while $47,973 were
used for security deposits. Financing activities consisted of $50,000 used as
payment on past due demand notes. The remaining $470,278 were used in operating
activities of the Company.

Inflation

Vianet has experienced minimal impact from inflation and changing prices on its
net sales and on its income from continuing operations for the periods it has
been engaged in business.

Liquidity and Capital Resources

Vianet and CSC have operated at a deficit since inception and expect to incur
significant additional operating losses until the Company generates significant
cash flow from operations. Management believes the Company will be able to
satisfy its cash needs through outside sources and internal operations. We
reported a net loss of $3,031,135 during the three-month period ended March 31,
2002 and a net loss of $14,168,656 during the year ended December 31, 2001 for
the operations of CSC and Vianet. The Company's operations were funded
principally by cash flow provided by working capital deficits.

Positive cash flow from operations is expected to begin in third quarter 2002.
We face considerable risk in completing each of our business plan steps, such as
potential cost overruns; a lack of interest in our products in the market on the
part of customers; potential further deterioration of the telecommunications
market; and/or a shortfall of funding due to an inability to raise capital
through equity transactions or financing. If further funding is required and no
funding is received, this would hinder our ability to meet our operating goals
until such time as necessary funds could be raised. There can be no assurance
that the Company will be able to obtain additional financing on terms and
conditions acceptable to the Company or at all.

Potential Future Sources of Capital

We are currently seeking sources of additional financing, either in the form of
equity and/or debt financing, to provide the additional capital in order to fund
our current operations, expand our scope of operations and pursue our business
strategy. We intend to complete any equity financing by issuing securities at
prices equal or close to the current market value on the date of such financing.
In addition, we anticipate that we will be required to issue equity securities
in consideration of obtaining any such debt financing. We also plan to satisfy
outstanding liabilities in the form of equity subject to the acceptance of each
debt holder. However, no assurance can be given that we will be successful in
completing any financing or liability satisfaction. If we are unsuccessful in
completing any financing, we will not be able to fund our current expenses.

We have used and intend to continue to use the proceeds from the financings
described to execute our sales plan. Our ability to achieve success with our
business is dependent upon obtaining additional financing.

Going Concern Matters

The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements for the period ended March 31, 2002, the Company incurred losses of
$3,031,135 in the first quarter 2002. The Company is also in arrears on its
capital lease obligations in the amount of $1,429,168 as of March 31, 2002 and


                                      -16-
<PAGE>

has negative working capital of $20,575,080. The lessor has presented the
Company with a demand letter requesting payment of all outstanding amounts under
the capital leases and is currently in discussions with the Company regarding
payment and resolution of various service issues relating to the equipment. The
majority of the Company's Accounts Payable are delinquent. The Company is
working with its vendors to procure revised payment terms, although there can be
no assurances that the Company will be successful in this endeavor. These
factors among others may indicate that the Company will be unable to continue as
a going concern for a reasonable period of time. The financial statements do not
include any adjustment relating to the recovery and classification of assets and
liabilities that might be necessary should the Company be unable to continue as
a going concern.

The Company's continuation as a going concern is dependent upon its ability to
generate sufficient cash flow from operations, to obtain financing arrangements
or equity investment on a timely basis sufficient to satisfy current working
capital needs and ultimately to attain profitability. The Company is actively
pursuing additional financing and equity financing through discussions with
lenders and investment bankers.

Summary

Our management believes that upon full implementation of our business plan,
sufficient revenues will be generated to meet operating requirements. However,
no assurance can be given that such goal will be obtained or that our expected
revenues will be realized at sufficient levels and profitability to fund our
operations without additional capital. Such inability could have a materially
adverse effect on our business, operating results and financial condition.
Moreover, the estimated cost of the proposed expansion of our production and
marketing activities is subject to numerous uncertainties, including the
problems, expenses, difficulties, complications and delays, many of which are
beyond our control, frequently encountered in connection with the establishment
and development of new business activities, and may be affected by the
competitive environment in which we are operating. Forward-looking statements
are based on management's current views and assumptions and involve known and
unknown risks that could cause actual results, performance or events to differ
materially from those expressed or implied in those statements. These risks
include, but are not limited to, the following risks:

         o        we may be unable to obtain adequate sources of outside
                  financing in order to continue to satisfy our cash needs until
                  cash flow from operations is sufficient to fund our needs;
         o        our telecommunications services are highly sensitive to
                  declining prices;
         o        competition in our core businesses could substantially reduce
                  our revenues and our profits;
         o        our revenues and profits will not increase if we are unable to
                  effectively market our video products and expand our
                  telecommunications business;
         o        our operations will be impaired if we are unable to obtain
                  cost effective services from the telecommunications vendors
                  that we rely upon;
         o        termination of our carrier agreements with foreign partners or
                  our inability to enter into carrier agreements in the future
                  could materially and adversely affect our ability to compete
                  in foreign countries;
         o        our revenues and our growth will suffer if our retailers and
                  sales representatives fail to effectively market and
                  distribute our products and services;
         o        our profitability will be impaired if we experience
                  difficulties in collecting our receivables;
         o        the infringement or duplication of our proprietary technology
                  could increase our competition and we could incur substantial
                  costs in defending or pursuing any claims relating to
                  proprietary rights;
         o        network construction or upgrade delays and system disruptions
                  or failures could prevent us from providing our services,
                  cause us to lose customers and adversely affect our business;
         o        we may infringe on third party intellectual property rights
                  and could become involved in costly intellectual property
                  litigation;
         o        creditors who have remained unpaid may initiate collection
                  proceedings which could hamper our operations due to the short
                  term cash needs required or the effect on assets subject to
                  debt.

                                      -17-
<PAGE>

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any material legal proceedings, except as described below.

We were a defendant in an action for a breach of contract claim relating to
outstanding invoices for services rendered in the amount of $702,739 (Superior
Court of California, County of Alameda, Cause # H217819-8). In March 2001, a
default judgment was entered against Vianet in this matter. We engaged in
discussions with the plaintiff regarding settlement and reached agreement with
regard to a payment schedule whereby we paid the defendant $36,500 in July 2001,
with the balance payable over the following eleven months. In September 2001, we
paid the defendant $73,000 and agreed to pay $62,000 per month starting in
January 2002. We paid the defendant $124,100 in January 2002. As such, the
Company has recorded $469,139 in accounts payable on the balance sheet at March
31, 2002.

We are a defendant in an action pending before the Superior Court of Justice,
Ontario, Canada in which the plaintiffs have asserted breach of contract and
damages in the amount of $155,928 and punitive damages in the amount of $50,000.
Agreement in principal has been reached between the parties on mutually
satisfactory terms for the resolution of this matter and withdrawal of the
claim. The Company is currently awaiting the receipt of the formal Settlement
Agreement.

In addition, there are approximately 13 vendors with pending litigation matters,
which relate to collection actions for existing accounts payable in the
aggregate of $321,000. We are not aware of any fact indicating that a
governmental authority is contemplating a proceeding against the company.

Item 2. Changes in Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K

         o        On January 2, 2002, the registrant filed a report on Form 8-K
                  regarding an Agreement and Plan of Merger, dated December 23,
                  2001, by and among Vianet Technologies, Inc. and Comservices
                  Acquisition Corp.

         o        On February 26, 2002, the registrant filed a report on Form
                  8-K regarding Change in Registrant's Certifying Accountant as
                  of February 21, 2002.

         o        On March 12, 2002, the registrant filed a report on Form 8-K/A
                  regarding an Agreement and Plan of Merger, dated December 23,
                  2001, by and among Vianet Technologies, Inc. and Comservices
                  Acquisition Corp., filed on January 2, 2002.



                                      -18-
<PAGE>

                                   SIGNATURES

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

                                                     VIANET TECHNOLOGIES, INC.
                                                     --------------------------
                                                     (Registrant)

Date:   May 20, 2002                                 /s/ VICTOR E. GOETZ
                                                     ---------------------------
                                                     Victor E. Goetz
                                                     Chief Financial Officer





                                      -19-