================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  ------------

                                   FORM 10-Q

(Mark One)

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

      For the quarterly period ended March 31, 2002

                                        OR

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

      For the transition period from ____________to______________


                                    ITSA LTD.
             (Exact name of Registrant as Specified in its Charter)

                         Commission File Number: 0-31247

        CAYMAN ISLANDS                             NOT APPLICABLE
(State or Other Jurisdiction of        (I.R.S. Employer Identification Number)
 Incorporation or Organization)


                C/O ITSA-INTERCONTINENTAL TELECOMUNICACOES LTDA.
                               SCS, QUADRA 07-BL.A
                        ED. TORRE PATIO BRASIL, SALA 601
                             70.307-901 BRASILIA-DF
                                     BRAZIL
          (Address, Including Zip Code, of Principal Executive Offices)

                               011-55-61-314-9904
              (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. |X|Yes |_|No

         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. |X|Yes |_| No

         Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date.

               CLASS                                    OUTSTANDING
               -----                                    -----------
         Ordinary Shares, par value $0.01               10,000,000 shares
         per share.                                     as of May 15, 2002

================================================================================

<PAGE>



                                    ITSA LTD.



<TABLE>
<CAPTION>
                                      INDEX

                                                                                                  PAGE NO.
                                                                                                  --------
PART I.       FINANCIAL INFORMATION

ITEM 1.    Financial Statements

<S>                                                                                                     <C>
           Consolidated Balance Sheets as of December 31, 2001 (Audited)
           and March 31, 2002 (Unaudited)........................................................        2

           Unaudited Consolidated Statements of Operations for the Three Months
           Ended  March 31, 2001 and March 31, 2002 .............................................        3

           Consolidated Statements of Changes in Stockholders' Deficit and Other
           Comprehensive Loss for the year ended December 31, 2001 (Audited)
           and the Three Months Ended March 31, 2002 (Unaudited).................................        4

           Unaudited Consolidated Statements of Cash Flows for the Three Months Ended
           March 31, 2001 and March 31, 2002.....................................................        5

           Notes to Unaudited Consolidated Financial Statements..................................        6

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

ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk............................       16


PART II.   OTHER INFORMATION

ITEM 1.    Legal Proceedings.....................................................................       17

ITEM 2.    Changes in Securities and Use of Proceeds.............................................       17

ITEM 3.    Defaults Upon Senior Securities.......................................................       17

ITEM 4.    Submission of Matters to a Vote of Security Holders...................................       17

ITEM 5.    Other Information.....................................................................       17

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

SIGNATURES.......................................................................................       18
</TABLE>



<PAGE>




            ITSA LTD. (SUCCESSOR TO TV FILME, INC.) AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                          (IN THOUSANDS OF US DOLLARS)


<TABLE>
<CAPTION>
                                                                                  AUDITED                    UNADITED
                                                                                  -------                    --------
                                                                            DECEMBER 31, 2001            MARCH 31, 2002
                                                                            -----------------            --------------
ASSETS
Current assets:
<S>                                                                                     <C>                       <C>
     Cash and cash equivalents..................................                 $       2,358             $      $2,880
     Trade accounts receivable, less allowance of $561 at
          December 31, 2001 and $589 at March 31, 2002..........                           589                       388
     Prepaid expenses and other current assets..................                           447                       503
                                                                                --------------           ---------------
          Total current assets..................................                         3,394                     3,771

Non-current assets:
     Recoverable taxes..........................................                         2,711                     2,834
     Judicial deposits..........................................                         1,259                     1,529
     Other assets...............................................                           985                       969

     Property, plant and equipment, net.........................                        13,665                    13,077
     Reorganization value in excess of amounts allocable to
         identifiable assets....................................                        20,161                    20,133
     Licenses...................................................                         4,324                     4,216
                                                                                --------------           ---------------
         Total non-current assets...............................                        43,105                    42,758
                                                                                --------------           ---------------
             Total assets.......................................                       $46,499                   $46,529
                                                                                ==============           ===============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
     Accounts payable...........................................                  $      2,560            $        2,919
     Payroll and other benefits payable.........................                           699                       648
     Accrued interest payable...................................                           147                     1,468
     Accrued liabilities and taxes payable......................                         3,546                     4,055
                                                                                --------------           ---------------
         Total current liabilities..............................                         6,952                     9,090

Non-current liabilities:
     12% Senior Secured Notes...................................                        44,045                    44,045
     Deferred installation fees.................................                           251                       248
     Reserve for tax, labor proceedings and other
         contingencies..........................................                         5,296                     5,270
                                                                                --------------           ---------------
         Total non-current liabilities..........................                        49,592                    49,563

Stockholders' deficit:
     Common stock, $.01 par value,
         shares authorized - 20,000,000 at December 31, 2001
         and March 31, 2002; shares issued and outstanding -
         10,000,000 at December 31, 2001 and March 31, 2002.....                           100                       100
     Additional paid-in capital.................................                        24,938                    24,938
     Accumulated deficit........................................                       (32,490)                  (34,540)
     Cumulative other comprehensive loss........................                        (2,593)                   (2,622)
                                                                                --------------           ---------------
        Total stockholders' deficit.............................                       (10,045)                  (12,124)
                                                                                --------------           ---------------
        Total liabilities and stockholders' deficit.............                 $      46,499            $       46,529
                                                                                ==============           ===============
</TABLE>

           See accompanying notes to the consolidated balance sheets.



                                       2
<PAGE>




            ITSA LTD. (SUCCESSOR TO TV FILME, INC.) AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
          (IN THOUSANDS OF US DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED MARCH 31,
                                                              -----------------------------------
                                                                     2001               2002
                                                              -----------------------------------

<S>                                                           <C>                 <C>
    Revenues................................................. $         6,408     $        4,797
    Operating costs and expenses:
         System operating....................................           3,657              2,572
         Selling, general and administrative.................           4,323              1,996
         Depreciation and  amortization......................           2,668                988
                                                             ----------------    ---------------
            Total operating costs and expenses...............          10,648              5,556
                                                             ----------------    ---------------
            Operating loss...................................          (4,240)              (759)

    Other income (expense):
         Interest and other expense..........................          (1,258)            (1,387)
         Interest and other income...........................             174                151
         Foreign exchange loss...............................          (3,950)               (55)
                                                              ---------------     --------------
            Total other expense, net.........................          (5,034)            (1,291)
                                                              ---------------     --------------

                                                              ---------------     --------------
    Net loss.................................................  $       (9,274)     $      (2,050)
                                                              ===============     ==============
    Net loss per share.......................................  $        (0.93)     $       (0.21)
                                                              ===============     ==============

    Weighted average number of shares
      outstanding............................................      10,000,000         10,000,000
</TABLE>




        See accompanying notes to the consolidated financial statements.



                                       3
<PAGE>




            ITSA LTD. (SUCCESSOR TO TV FILME, INC.) AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
                          AND OTHER COMPREHENSIVE LOSS

    FOR YEAR ENDED DECEMBER 31, 2001 (AUDITED) AND FOR THE THREE MONTHS ENDED
                           MARCH 31, 2002 (UNAUDITED)
                 (IN THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>

                                                                                                 CUMULATIVE
                                         COMMON STOCK          ADDITIONAL                           OTHER
                                   --------------------------   PAID-IN       ACCUMULATED       COMPREHENSIVE
                                      SHARES      PAR VALUE     CAPITAL         DEFICIT         INCOME (LOSS)      TOTAL
                                      ------      ---------     -------       -----------       -------------      -----
BALANCE AT
<S>         <C> <C>                 <C>              <C>        <C>            <C>                 <C>           <C>
   DECEMBER 31, 2000                10,000,000       $100       $24,938       $ (12,131)           $(1,819)      $11,088
Cumulative other comprehensive
   loss                                     --         --            --              --            $  (774)        $(774)
Net loss                                    --         --            --       $ (20,359)                --     $ (20,359)
                                                                                                              -----------
Comprehensive loss                                                                                             $ (21,133)
                                   --------------------------------------------------------------------------------------

BALANCE AT
   DECEMBER 31, 2001                10,000,000       $100       $24,938       $ (32,490)           $(2,593)    $ (10,045)
                                    ==========       ====       =======       =========           ========     =========

Cumulative other comprehensive
   loss                                     --         --            --              --            $   (29)    $     (29)
Net loss                                    --         --            --         $(2,050)                --     $  (2,050)
                                                                                                               ---------
Comprehensive loss                                                                                             $  (2,079)
                                  ---------------------------------------------------------------------------------------

BALANCE AT
   MARCH 31, 2002                   10,000,000       $100       $24,938       $ (34,540)           $(2,622)    $ (12,124)
                                    ==========       ====       =======       =========           ========     =========

</TABLE>

         See accompanying notes to the consolidated financial statements



                                       4
<PAGE>




            ITSA LTD. (SUCCESSOR TO TV FILME, INC.) AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (IN THOUSANDS OF US DOLLARS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                                      THREE MONTHS ENDED MARCH 31,
                                                               2001                            2002
                                                         ----------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                  <C>                               <C>
Net loss...........................................  $             (9,274)              $             (2,050)
Adjustments to reconcile net loss to net cash
used in operating activities:
   Depreciation and amortization...................                 2,668                                988
   Provision for doubtful accounts.................                   508                                251
   Deferred installation fees......................                   (51)                                (3)
   Gain on disposal of property,  plant and
    equipment......................................                   (15)                                 -
   Foreign exchange loss...........................                 3,950                                 55
Changes in operating assets and liabilities:
   Accounts receivable.............................                  (654)                               (54)
   Prepaid expenses and other current assets.......                   918                               (179)
   Other assets....................................                   184                               (251)
   Accounts payable................................                   530                                369
   Payroll and other accrued benefits..............                   (79)                               (49)
   Accrued interest................................                 1,176                              1,311
   Accrued liabilities and taxes payable...........                  (379)                               407
   Sale of operating loss carryforwards............                   264                                  -
                                                         ----------------                  -----------------
Net cash provided by (used in) operating activities                  (254)                               795
                                                         ----------------                  -----------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property, plant and equipment.......                  (903)                              (283)
   Sales of property, plant and equipment..........                   166                                  -
                                                         ----------------                  -----------------
   Net cash used in investing activities...........                  (737)                              (283)
                                                         ----------------                  -----------------

Effect of exchange rate changes on cash............                  (298)                                10
                                                         ----------------                  -----------------
Net increase (decrease) in cash and cash equivalents               (1,289)                               522

Cash and cash equivalents at beginning of period...  $              3,858              $               2,358
                                                         ----------------                  -----------------
Cash and cash equivalents at end of period.........  $              2,569              $               2,880
                                                         ================                  =================



SUPPLEMENTAL NONCASH FINANCING AND INVESTING
ACTIVITIES:
Accrued interest on loans refinanced                 $                  -              $               1,320
</TABLE>


        See accompanying notes to the consolidated financial statements.


                                       5
<PAGE>







            ITSA LTD. (SUCCESSOR TO TV FILME, INC.) AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            (IN THOUSANDS OF US DOLLARS, UNLESS OTHERWISE INDICATED)
                                   (UNAUDITED)

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A.  COMPANY BACKGROUND

         On July 21, 2000, ITSA Ltd., a Cayman Islands company, became the
successor to TV Filme, Inc., a Delaware corporation, following the successful
completion of a debt restructuring pursuant to a plan of reorganization of TV
Filme, Inc. under Chapter 11 of the United States Bankruptcy Code. On March 18,
2002, the U.S. Bankruptcy Court for the District of Delaware closed the Chapter
11 bankruptcy case involving TV Filme, Inc. Unless otherwise indicated, ITSA
Ltd., the successor company to TV Filme, Inc., and its subsidiaries will
hereinafter be referred to as the "Company," and TV Filme, Inc., the predecessor
company to ITSA Ltd., will hereinafter be referred to as "TV Filme."

         As of July 21, 2000, the Company adopted fresh-start reporting (see
Note 3).

         Following financial difficulties in the years 1998 and 1999, TV Filme
selected a financial advisor to assist in evaluating strategic alternatives for
the restructuring of its long-term debt, represented by the 12-7/8% Senior Notes
due 2004 (the "TV Filme Senior Notes"). On August 13, 1999, TV Filme reached an
agreement in principle with a committee representing holders of TV Filme's
Senior Notes. On January 26, 2000, TV Filme filed a voluntary petition under
Chapter 11 of the United States Bankruptcy Code, together with a pre-negotiated
Plan of Reorganization and the Disclosure Statement relating to such Plan, with
the U.S. Bankruptcy Court for the District of Delaware. The court approved the
Disclosure Statement on March 1, 2000. Following approval of the Disclosure
Statement, ballots respecting the Plan were circulated to those parties entitled
to vote on the Plan, and the Plan was confirmed at a hearing by the court on
April 10, 2000. Consummation of the Plan was completed on July 21, 2000,
following approval of ANATEL (the Brazilian Telecommunications Agency) and the
Central Bank of Brazil.

         In accordance with the terms of the Plan of Reorganization, the TV
Filme Senior Noteholders received a $25 million cash payment and their existing
notes were converted into (i) secured notes in the aggregate principal amount of
$35 million, due 2004, at an interest rate of 12% per annum (the "12% Senior
Secured Notes"), and (ii) 80% of the new common equity of the reorganized
company. Current management received 15% of the new common equity, and the
existing common stockholders of TV Filme received 5% of the new common equity of
the reorganized company. Shares granted to current management have been expensed
in the financial statements of the successor based on the fair value at that
date. They have been expensed in the period as there are no contractual
requirements in connection with the issuance of these shares. TV Filme's stock
option plan and outstanding stock options under the plan were cancelled. ITSA
Ltd. (the reorganized company) is a Cayman Islands holding company and is the
successor issuer to TV Filme. The TV Filme Senior Notes were cancelled upon
surrender. The 12% Senior Secured Notes were issued by ITSA-Intercontinental
Telecommunicacoes Ltda., a wholly-owned subsidiary of the Company.

         The Company develops, owns and operates broadband wireless
telecommunications systems in markets in Brazil, offering video, high-speed
Internet and data communications services. Through its subsidiaries, the Company
has licenses in the cities of Brasilia, Goiania, Belem, Campina Grande, Caruaru,
Porto Velho, Presidente Prudente, Bauru, Franca, Uberaba, Belo Horizonte and
Vitoria, covering over 3 million households and approximately 13 million people.

         The Company offers a pre-paid subscription video service, called MAIS
TV, which is comprised of a self-install kit available in retail stores in most
of the cities where the Company has operations.

         ITSA was also the first company in Brazil to launch a high-speed
Internet access system using the technology of high-speed modems. The system,
called LinkExpress, has been available on a commercial basis in the city of
Brasilia since 1998.



                                       6
<PAGE>

         Although the economic situation in Brazil has remained relatively
stable in recent years, a return to higher levels of inflation and currency
fluctuations could adversely affect the Company's operations. The devaluation of
the Brazilian REAL in relation to the U.S. dollar has had significant effects on
the Company's financial statements. The exchange rate of the Brazilian REAL
("R$") to the U.S. dollar was R$1.9554:US$1.00 at December 31, 2000 and
R$2.3204:US$1.00 at December 31, 2001. At March 31, 2002, the exchange rate was
R$2.3236:US$1.00.

         ITSA Ltd. (the parent company) has no material assets of its own other
than the investment in its subsidiaries. All assets of the subsidiaries are
restricted.

         The Company is dependent upon a single supplier of decoders to serve
its operating markets. This supplier announced that it was planning to
discontinue production of these decoders in the future and gave the Company a
limited time in which to give additional orders for the manufacturing of this
product. While the Company has a sufficient inventory of decoders to serve new
subscribers based on the projections of future subscribers' activity, the
technology used in the decoding process is proprietary and no other supplier
currently could provide the Company with additional decoders should they become
necessary. The Company is currently exploring alternatives, including the
possibility of the supplier licensing its technology for production of such
decoders in Brazil. If the Company encounters an interruption in the supply or
limited availability of these decoders, it could have a material adverse effect
on the Company's financial condition or results of operations, including current
estimates on recoverability of long-lived assets being currently held and used
by the Company.

         STOCKHOLDERS (DEFICIT)

         The Company's management is concentrating its efforts to address the
Company's negative stockholders equity and negative working capital. To this
end, the Company initiated and still continues to undertake a short-term action
plan of reducing selling, general and administrative expenses. Further, the
Company continues its efforts to restructuring its organization and downsizing
its work force, renegotiating its supply contracts, and creating a Survey and
Development Group to provide the Company with new services and products.

         FUTURE OPERATIONS AND LIQUIDITY

         The Company has incurred operating losses since inception and had a
working capital and stockholders deficit at March 31, 2002. Operating losses are
expected to continue in the future until such time as the Company is successful
in securing a subscriber base capable of generating a significantly higher level
of operating revenues.

         The Company has limited capital resources available to fund capital
expenditures, fund maturities of debt as they become due and to support its
operations until such time the Company is able to generate significant levels of
positive cash flow from operations.

         The Company is therefore dependent upon obtaining additional financing
to provide funds to support operations and fund maturities of debt as they
become due. The Company is negotiating with certain of its stockholders to
provide additional equity or debt financing, but the Company can give no
assurance that acceptable agreements for such financing will be reached. The
future success of the Company is dependent upon its ability to increase its
subscriber base and to obtain additional financing.

         B.  BASIS OF PRESENTATION

         The unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three months ended March 31, 2002 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2002.



                                       7
<PAGE>

         The balance sheet at December 31, 2001 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by the accounting principles generally
accepted in the United States for complete financial statements.

         The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany balances have been
eliminated in consolidation.

         In preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the amounts reported in
the consolidated financial statements and accompanying notes. Actual results
could differ from those estimates.

         During June 1998, the Financial Accounting Standards Board ("FASB")
issued statement of Financial Accounting Standards No. 133 (SFAS 133),
"Accounting for Derivative and Hedging Activities." SFAS 133 established
accounting and reporting standards requiring that all derivative financial
instruments (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS 133 requires that changes in the derivative's
fair value be recognized in earnings unless specific hedge accounting criteria
are met. In June 2000, the FASB issued Statement of Financial Accounting
Standards No. 138 (SFAS 138) which amends SFAS 133 for certain derivative
instruments and certain hegding activities. SFAS 133, as amended, is effective
for fiscal years beginning after June 15, 2000. The effect of adopting SFAS 133,
as amended, beginning January 1, 2001 did not have a material impact on the
Company's consolidated financial statements.

         During June 2001, FASB issued Statement of Financial Accounting
Standards No. 141 (SFAS 141), "Business Combinations." SFAS 141 addresses
financial accounting and reporting for business combinations and supersedes APB
Opinion No. 16 (Opinion 16), "Business Combinations" and FASB Statement No. 38,
"Accounting for Preacquisition Contingencies of Purchased Enterprises." All
business combinations in the scope of SFAS 141 are to be accounted for using the
purchase method. In addition, SFAS 141 requires that intangible assets be
recognized as assets apart from goodwill if they meet two criteria: the
contractual-legal criterion or the separability criterion. To assist in
identifying acquired intangible assets, SFAS 141 also provides a list of
intangible assets that meet either of those criteria. In addition to the
disclosure requirements prescribed in Opinion 16, SFAS 141 requires disclosure
of the primary reasons for a business combination and the allocation of the
purchase price paid to the assets acquired and liabilities assumed by major
balance sheet caption. SFAS 141 also requires that when the amounts of goodwill
and intangible assets acquired are significant to the purchase price paid,
disclosure of other information about those assets is provided, such as the
amount of goodwill by reportable segment and the amount of the purchase price
assigned to each major intangible asset class. The provisions of SFAS 141 apply
to all business combinations initiated after June 30, 2001. SFAS 141 also
applies to all business combinations accounted for using the purchase method for
which the date of acquisition is July 1, 2001, or later. The Company has
evaluated the impact of the provisions of SFAS 141 to its consolidated financial
position and results of operations, and at this time, believes that the possible
impact of the adoption of this new accounting standard will be immaterial.

         During June 2001, FASB issued Statement of Financial Accounting
Standards No. 142 (SFAS 142), "Goodwill and Other Intangible Assets." SFAS 142
addresses financial accounting and reporting for acquired goodwill and other
intangible assets and supersedes APB Opinion 17, Intangible Assets. SFAS 142
also amends FASB Statement No. 121, "Accounting for the Impairment of Long Lived
Assets and for Long Lived Assets to Be Disposed Of," to exclude from its scope
goodwill and intangible assets that are not amortized. SFAS 142 addresses how
intangible assets that are acquired individually or with a group of other assets
(but not those acquired in a business combination) should be accounted for in
financial statements upon their acquisition. This Statement also addresses how
goodwill and other intangible assets should be accounted for after they have
been initially recognized in the financial statements. The provisions of SFAS
142 are required to be applied starting with fiscal years beginning after
December 15, 2001. The Company has commenced the process of evaluating the
impact of the provisions of SFAS 142 to its consolidated financial position and
results of operations, and at this time, is still determining the possible
impact of the adoption of this new accounting standard. Nevertheless, the
adoption of SFAS 142 already resulted in not recognizing amortization of US$575
for the quarter ended March 31, 2002, associated with the reorganization value
in excess to amounts allocable to identifiable assets. The Company is still
evaluating if the adoption of SFAS 142 impairment provisions will have a
material impact on the consolidated financial position and results. Management
expects to finalize its evaluation during the quarter ended June 30, 2002.



                                       8
<PAGE>

         During June 2001, FASB issued Statement of Financial Accounting
Standards No. 143 (SFAS 143), "Accounting for Asset Retirement Obligations."
SFAS No. 143 basically requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The associated asset retirement
costs are capitalized as part of the carrying amount of the long-lived asset.
Under SFAS 143, the liability for an asset retirement obligation is discounted
and accretion expense is recognized using the credit-adjusted risk-free interest
rate in effect when the liability was initially recognized. In addition,
disclosure requirements contained in SFAS 143 will provide more information
about asset retirement obligations. SFAS 143 is effective for financial
statements issued for fiscal years beginning after June 15, 2002 with earlier
application encouraged. The Company has evaluated the impact of the provisions
of SFAS 143 to its financial statements and believes that the adoption of SFAS
143 will not have a material impact on the Company's financial position and
results of operations.

         During August 2001, FASB issued Statement of Financial Accounting
Standards No. 144 (SFAS 144), "Accounting for the Impairment or Disposal of
Long-Lived Assets," which supersedes Statement of Financial Accounting Standards
No. 121 (SFAS 121), "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" but retains SFAS 121 fundamental provisions
for (a) recognition/measurement of impairment of long-lived assets to be held
and used and (b) measurement of long-lived assets to be disposed of by sale.
SFAS 144 also supersedes the accounting and reporting provisions of APB Opinion
No. 30 (APB 30), "Reporting the Results of Operations" for segments of a
business to be disposed of but retains APB 30's requirement to report
discontinued operations separately from continuing operations and extends that
reporting to a component of an entity that either has been disposed of or it is
classified as held for sale. SFAS 144 is effective for fiscal years beginning
after December 15, 2001. The Company has commenced the process of evaluating the
impact of the provisions of SFAS 144 to its consolidated financial position and
results of operations, and at this time, believes that impact of the adoption of
this new accounting standard will be immaterial.

2.       LONG-TERM DEBT

         The 12% Senior Secured Notes ($44,045 outstanding at March 31, 2002)
are U.S. dollar denominated and are due on December 20, 2004. Interest payments
are due on June 20 and December 20 of each year until maturity. Interest is
payable in kind at the Company's option through its first four payment dates.
The Company exercised its option at December 31, 2001 and issued additional
notes for the $9,045 interest accrued to that date representing three of the
four exempted payment dates. The 12% Senior Secured Notes are secured by all of
the assets of the Company. In the event of a default on the 12% Senior Secured
Notes, 25% or more of the lenders thereunder may declare the unpaid principal
or, and any accrued interest on, all the 12% Senior Secured Notes to be due and
payable immediately. In the event the Company becomes subject to a voluntary or
involuntary insolvency proceeding, the 12% Senior Secured Notes become
immediately due and payable.

3.       FRESH START REPORTING AND REORGANIZATION

         As of July 21, 2000, the Company adopted fresh-start reporting in
accordance with AICPA Statement of Position 90-7, "Financial Reporting by
Entities in Reorganization under the Bankruptcy Code." Fresh-start reporting
resulted in significant changes to the consolidated balance sheet based upon the
appraised reorganization value of the Company.

         TV Filme's reorganization value of $76,184 was based on a valuation
performed by an independent firm using 10-year forecasted discounted cash flows
and other economic measures. The value resulted in a greater value than the fair
value of the tangible net assets. As such, the difference of $31,413 was
recorded as Reorganization value in excess of amounts allocable to identifiable
assets.



                                       9
<PAGE>

         The effect of the plan of reorganization and adoption of fresh-start
reporting was as follows:

<TABLE>
<CAPTION>
                                                             DEBT       EXCHANGE      FRESH
                                       PRECONFIRMATION     DISCHARGE    OF STOCK      START     REORGANIZED
                                      ------------------  ------------ ------------ ---------- ---------------

ASSETS
------
Current Assets:
<S>                                         <C>            <C>           <C>         <C>           <C>
   Cash and cash equivalents          $     36,163        $  (27,902)   $       --   $       --   $  8,261
   Accounts receivable, net                  1,380                --            --           --      1,380
   Prepaid expense and other current
    assets                                   6,964                                                   6,964
                                      ------------        ----------    ----------   ----------   --------
     Total current assets                   44,507           (27,902)           --           --     16,605

Property, plant and equipment               25,369                --            --       (3,221)    22,148
Reorganization value in excess of
   amounts allocable to identifiable
   assets                                       --                --            --       31,413     31,413
Licenses                                     5,638                --            --           --      5,638
Other assets                                   380                --            --           --        380
                                      ------------        ----------    ----------   ----------   --------
TOTAL ASSETS                          $     75,894        $  (27,902)   $       --   $   28,192   $ 76,184
                                      ============        ==========    ==========   ==========   ========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
   Accounts payable                   $      9,908        $   (2,902)   $       --   $       --   $  7,006
   Payroll and other accrued benefits        2,243                --            --           --      2,243
   Accrued interest                         28,646           (26,196)           --           --      2,450
   Accrued liabilities and taxes
    payable                                  7,238                --            --           --      7,238
   Senior notes in default                 140,000          (140,000)           --           --         --
                                      ------------        ----------     ---------    ---------   --------
     Total current liabilities             188,035          (169,098)           --           --     18,937

12% Senior Secured Notes                        --            35,000            --           --     35,000
Deferred installation fees                     479                --            --           --        479

Minority interest                              (21)               --            --           21         --

Stockholders' equity (deficit):
   Common stock                                108                86           (94)          --        100
   Additional paid-in capital               45,657            17,329            94      (41,412)    21,668
   Accumulated deficit                    (152,865)           88,781            --       64,084         --
Cumulative translation adjustment           (5,499)               --            --        5,499         --
                                      ------------        ----------     ---------   ----------   --------
     Total stockholders' equity
      (deficit)                           (112,599)          106,196            --       28,171     21,768


                                     -------------        ----------    ----------   ----------   --------
TOTAL LIABILITIES AND STOCKHOLDERS'
  EQUITY (DEFICIT)                   $      75,894        $  (27,902)   $       --    $  28,192   $ 76,184
                                     =============        ==========    ==========    ==========  ========
</TABLE>

At December 31, 2001 and March 31, 2002, the unamortized balance on the
reorganization value in excess of amounts allocable to identifiable assets
amounted to US$20,133 and US$20,161, respectively.



                                       10
<PAGE>

Until December 31, 2001, the reorganization value in excess of amounts allocable
to identifiable assets was being amortized over 10 years. In accordance with the
provisions of SFAS 142, this intangible asset falls within the definition of an
intangible asset with indefinite life. According to the provisions of SFAS 142,
amortization of this intangible was discontinued on January 1, 2002, and it is
currently being evaluated for impairment according to the provisions of such
accounting standard.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS.
         -------------------------------------------------
         Statements in this Quarterly Report on Form 10-Q that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including statements regarding the Company's expectations, hopes,
intentions or strategies regarding the future. Forward-looking statements
include: statements regarding the Company's expansion plans, the start-up of
certain operations and trends affecting the Company's financial condition and
results of operations, including the Company's ability to meet future cash
requirements. All forward-looking statements in this Report are based on
information available to the Company as of the date this Report is filed with
the Securities and Exchange Commission, and the Company assumes no obligation to
update any such forward-looking statements. Factors that could cause actual
results to differ materially from those expressed or implied by such
forward-looking statements include, but are not limited to, the factors set
forth below under "Certain Factors Which May Affect the Company's Future
Results.


RESULTS OF OPERATIONS

         Although the Company's financial statements are presented in U.S.
dollars and pursuant to accounting principles generally accepted in the United
States, the Company's transactions are consummated in both REAIS and U.S.
dollars. Inflation and devaluation in Brazil have had significant effects on the
Company's results of operations and financial condition. See "Inflation and
Exchange Rates."

         As a result of the changes in exchange rates during the periods
presented, the period-to-period comparisons of the Company's results of
operations are not necessarily meaningful and should not be relied upon as an
indication of future performance of the Company.

         The following table is included solely for use in comparative analysis
of results of operations, and to complement management's discussions and
analysis:

<TABLE>
<CAPTION>

                                                         SUCCESSOR                             SUCCESSOR
                                                THREE MONTHS ENDED MARCH 31,          THREE MONTHS ENDED MARCH 31,
                                             -----------------------------------   -----------------------------------
                                                                       % OF                                   % OF
                                                         2001        REVENUE                    2002         REVENUE
                                             -------------------------------------------------------------------------
                                               (IN THOUSANDS OF US DOLLARS, EXCEPT SUBSCRIBER, PER SHARE AND SHARE
                                                                              DATA)
<S>                                            <C>                       <C>          <C>                       <C>
Revenues                                       $        6,408            100%         $        4,797            100%
Operating costs and expenses:
     System operating                                   3,657             57%                  2,572             54%
     Selling, general and administrative                4,323             67%                  1,996             42%
     Depreciation and amortization                      2,668             42%                    988             21%
                                               --------------     -----------         --------------     -----------
         Total operating costs and  expenses           10,648            166%                  5,556            116%
                                               --------------     -----------         --------------     -----------
         Operating loss                                (4,240)           (66%)                  (759)           (16%)

Other income (expense):
     Interest and other expense                        (1,258)           (20%)                (1,387)           (29%)
     Interest and other income                            174              3%                    151              3%
                                               --------------     -----------         --------------     -----------
     Interest income (expense), net                    (1,084)           (17%)                (1,236)           (26%)
</TABLE>


                                       11
<PAGE>
<TABLE>
<CAPTION>
<S>                                            <C>                       <C>          <C>                       <C>
     Foreign exchange gain (loss)                      (3,950)           (62%)                   (55)            (1%)
                                               --------------     -----------         --------------     -----------
         Total other income (expense)                  (5,034)           (79%)                (1,291)           (27%)
                                               --------------     -----------         --------------     -----------

         NET LOSS                              $       (9,274)          (145%)         $      (2,050)           (43%)
                                               ==============     ===========          =============     ===========


Net loss per share                             $        (0.93)                         $       (0.21)
                                               ==============                         ==============
Weighted average shares
   outstanding                                         10,000                                 10,000
                                               ==============                         ==============

Other Data:
     EBITDA (a)                                $       (1,572)                         $         230
                                               ==============                         ==============

     Number of subscribers at end of period            82,630                                 66,492
                                               ==============                         ==============

     Exchange rate (R $: US $) at end of             2.1616:1                               2.3236:1
       period                                  ==============                         ==============
</TABLE>
-----------------
(a) EBITDA is defined as operating loss plus depreciation and amortization.
While EBITDA should not be construed as a substitute for operating loss or a
better measure of liquidity than cash flow from operating activities, which are
determined in accordance with U.S. GAAP, it is included herein to provide
additional information regarding the ability of the Company to meet its capital
expenditures, working capital requirements and debt service. EBITDA, however, is
not necessarily a measure of the Company's ability to fund its cash needs.

         REVENUES. The Company's revenues for three months ended March 31, 2002
decreased by 25% compared to the three months ended March 31, 2001, primarily
due to a decrease in the average number of subscribers.

         SYSTEM OPERATING EXPENSES. For the three months ended March 31, 2002,
system operating expenses decreased by 30% compared to the three months ended
March 31, 2001, primarily due to a reduction of the Company<180>s costs (Payroll
and Benefits, programming costs, vehicle rentals) resulting from the decrease in
the average number of subscribers.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. For the three months
ended March 31, 2002, selling, general and administrative expenses ("SG&A")
decreased by 54% compared to the three months ended March 31, 2001, primarily
due to the reorganization of the Company's internal structure, which consisted
of a reduction in the number of employees and in other administrative expenses.

         DEPRECIATION AND AMORTIZATION. For the three months ended March 31,
2002, depreciation and amortization decreased by 63% compared to the three
months ended March 31, 2001, primarily due to assets becoming fully depreciated
and the Reorganization value in excess of amounts allocable to identifiable
assets will not be amortized of the to year 2002 in accordance with FAS 142.

         INTEREST EXPENSE. For the three months ended March 31, 2002, interest
expense increased by 10% compared to the three months ended March 31, 2001,
primarily due to a increase in liability position which was $39,200 and $44,045
in the mentioned periods.

         INTEREST INCOME. For the three months ended March 31, 2002, interest
income decreased by 13% compared to the three months ended March 31, 2001,
primarily due to a decrease in average cash balances between the two periods.

         FOREIGN EXCHANGE LOSS. For the three months ended March 31, 2002,
foreign exchange loss expense decreased by 99% compared to the three months
ended March 31, 2001, due to the appreciation of the REAL against the U.S.
Dollar during the first quarter of 2002. For the first quarter of 2001, the REAL
suffered a devaluation against the U.S. Dollar.



                                       12
<PAGE>

         NET LOSS. For the three months ended March 31, 2002, net loss decreased
by 78% compared to the three months ended March 31, 2001, primarily due to the
reorganization of the Company's internal structure, which consisted of a
reduction in the number of employees, administrative and system operating
expenses.


LIQUIDITY AND CAPITAL RESOURCES

         The telecommunications business is capital intensive. In previous
years, the Company made a substantial amount of import purchases of equipment
with the use of letters of credit provided by banks in Brazil. As of March 31,
2002, the Company had no amounts outstanding under letters of credit. While the
Company believes that additional vendor financing may be available, the Company
currently has no lines of credit or other credit facilities available. Although
the Company is in negotiations to obtain a line of credit, there can be no
assurance that the Company will be successful in such negotiations or that any
such line of credit will be on terms favorable to the Company. Net cash provided
by operating activities for the three months ended March 31, 2002 was $0.8
million.

         The Company's Common Stock is currently tradable in the
over-the-counter market and is listed on the OTC Bulletin Board. The effects of
shares trading in the over-the-counter market, as opposed and to being listed on
a National Exchange, include, without limitation, the limited release of market
prices of the Common Stock, limited news coverage of the Company, and
restriction of investors' interest in the Company, and may have a significant
adverse effect on the trading market and prices for the Common Stock, thereby
affecting the Company's ability to issue additional securities or secure
additional financing. In addition, because the Common Stock is deemed penny
stock under the Securities Enforcement Penny Stock Reform Act of 1990,
additional disclosure is required in connection with trading in the Common
Stock, including delivery of a disclosure schedule explaining the nature and
risk of the penny stock market. Such requirements could limit the liquidity of
the Common Stock.

         The Company has developed a business strategy to invest in its wireless
network on a nationwide basis in order to be able to offer video, high-speed
Internet and data communications services. Considering the demand for
telecommunications services in Brazil and the lack of infrastructure in many
markets, the Company believes it has the opportunity to offer efficient services
to gain market share.

         The Company's strategy also involves extending LinkExpress, its
high-speed Internet and data service, to all major markets. The Company will
focus primarily on developing its high-speed Internet and data communications
services, serving both the residential and the corporate markets. In order to
offer the high-speed and data services, the Company will have to invest on
average approximately $1.5 million over the next two years, for each of the
major markets where this service will be available.

         The Company made capital expenditures of approximately $0.3 million
during the three months ended March 31, 2002. These capital expenditures were
financed with available cash.

         The Company has limited capital resources available to fund capital
expenditures, fund maturities of debt as they become due and to support its
operations until such time the Company is able to generate significant levels of
positive cash flow from operations.

         The Company is therefore dependent upon obtaining additional financing
to provide funds to support operations and to fund maturities of debt as they
become due. The Company is negotiating with certain of its stockholders to
provide additional equity or debt financing, but the Company can give no
assurance that acceptable agreements for such financing will be reached. The
Company also can give no assurance that it will be able to obtain sufficient
financing from sources other than its stockholders on commercially reasonable
terms, or at all. The future success of the Company is dependent upon its
ability to increase its subscriber base and to obtain additional financing.

         In order to improve its operating results in the current difficult
economic environment, the Company has reduced its work force in the first
quarter of 2002, which the Company expects will result in considerable savings
in labor expenses.




                                       13
<PAGE>

INFLATION AND EXCHANGE RATES

         Inflation and exchange rate variations have had, and are expected to
continue to have for the foreseeable future, substantial effects on the
Company's results of operations and financial condition. In periods of
inflation, many of the Company's expenses will tend to increase. Generally, in
periods of inflation, a company is able to raise its prices to offset the rise
of its expenses and may set its prices without governmental regulation. However,
under a Brazilian law designed to reduce inflation, the prices which the Company
may charge to a particular subscriber may not be increased until the next
anniversary of the subscriber's initial subscription date and may only be
increased by a percentage no greater than the percentage of the increase in the
general inflation rate which occurred during the subscriber's contract year.
Thus, the Company is less able to offset expense increases with revenue
increases. Accordingly, inflation may have a material adverse effect on the
Company's results of operations and financial condition.

         Generally, inflation in Brazil has been accompanied by devaluation of
the Brazilian currency relative to the US dollar. The Company collects
substantially all of its revenues in REAIS, but pays certain of its expenses,
including a significant portion of its equipment costs, substantially all
interest expense and most of its programming costs, in US dollars. To the extent
the REAL depreciates at a rate greater than the rate at which the Company is
able to raise prices, the value of the Company's revenues (as expressed in US
dollars) is adversely affected. This effect on the Company's revenues also
negatively impacts the Company's ability to fund US dollar-based expenditures.

         The Company's financial statements reflect foreign exchange gains and
losses associated with monetary assets and liabilities denominated in currencies
other than the REAL. As a result, the devaluation of the REAL against the U.S.
dollar has caused, and is expected to cause, for the foreseeable future, the
Company to record a loss associated with its U.S. dollar monetary liabilities
and a gain associated with its U.S. dollar monetary assets. Given that the
Company has a net U.S. dollar monetary liability position, the net effect of the
devaluation of the REAL against the U.S. dollar is to generate losses in the
Company's financial statements. In order to protect against a possible further
devaluation of the REAL, the Company may from time to time enter into certain
derivative foreign exchange contracts. As of and for the year and the quarter
ended December 31, 2001 and March 31, 2002, respectively, the Company did not
have any derivative instruments outstanding.


CERTAIN FACTORS WHICH MAY AFFECT THE COMPANY'S FUTURE RESULTS

FACTORS RELATING TO BRAZIL GENERALLY

         THE COMPANY'S BUSINESS COULD SUFFER FROM POLITICAL AND ECONOMIC
UNCERTAINTIES IN BRAZIL. Changes in policies involving, among other things,
tariffs, exchange controls, regulatory policy and taxation, as well as events
such as inflation, currency devaluation, social instability or other political,
economic or diplomatic developments could adversely affect the Company's
business, results of operations and financial condition.

         GOVERNMENT RESTRICTIONS ON THE CONVERSION AND REMITTANCE OF FUNDS
ABROAD COULD HINDER THE COMPANY'S ABILITY TO OPERATE ITS BUSINESS. The Brazilian
government has the authority to restrict the transfer of funds abroad. If the
Brazilian government were to exercise this power, as it has done in the past,
the Company's subsidiaries could be prevented from purchasing equipment required
to be paid for in U.S. dollars and from transferring funds to the Company, which
are required in order for the Company to make scheduled interest payments on its
outstanding 12% Senior Secured Notes. Either of these events could have a
material adverse impact on the Company's business, operating results and
financial condition.

FACTORS RELATING TO THE COMPANY

         THE COMPANY'S SUBSTANTIAL LEVERAGE COULD ADVERSELY AFFECT ITS ABILITY
TO RUN ITS BUSINESS. The Company has a significant amount of indebtedness. This
substantial indebtedness could have important consequences. For example, it
could:


                                       14
<PAGE>

o    limit the Company's ability to obtain additional financing in the future to
     refinance existing indebtedness and for working capital, capital
     expenditures, acquisitions, and general corporate purposes or other
     purposes;

o    require the Company to dedicate a substantial portion of its cash flow from
     operations and cash and/or marketable securities on hand to the payment of
     principal and interest on the Company's indebtedness, thereby reducing
     funds available for market expansion and additional market development;

o    hinder the Company's ability to adjust rapidly to changing market
     conditions; and

o    make the Company more vulnerable to economic downturns, limiting its
     ability to withstand competitive pressures and reduce the Company's
     flexibility in responding to changing business and economic conditions.

         THE COMPANY'S ABILITY TO DISTRIBUTE DIVIDENDS AND MEET DEBT OBLIGATIONS
IS DEPENDENT ON ITS SUBSIDIARIES. Because the Company is a holding company, the
Company's ability to distribute dividends and meet its debt obligations are
dependent upon the earnings of its subsidiaries and the distribution of those
earnings to, or upon loans or other payment of funds by the subsidiaries to, the
Company. The Company's subsidiaries may be obligated as guarantors of the
Company's debt to pay any amounts to its creditors or to make any funds
available to its creditors. The payment of dividends from the Company's
subsidiaries and the payment of any interest on or the repayment of any
principal of any loans or advances made to the Company by its subsidiaries, or
by the Company to its subsidiaries (1) may be subject to statutory or
contractual restriction, (2) are contingent upon the earnings of such
subsidiaries and (3) are subject to various business considerations.

         THE COMPANY HAS A HISTORY OF LOSSES AND MAY NEVER ACHIEVE
PROFITABILITY. The Company has incurred net losses from operations since its
formation. The Company expects that it will continue to incur losses from
operations in the foreseeable future. The Company can give no assurance that it
will ever become profitable in the future.

         A FAILURE TO EFFECTIVELY MANAGE INTERNAL GROWTH WOULD ADVERSELY AFFECT
THE COMPANY'S BUSINESS. The Company's growth has placed a significant strain on
managerial and operation resources. Any inability to manage growth effectively,
or a drop in productivity of the Company's employees could have a material
adverse effect on the Company's business, results of operations and financial
condition.

         THE COMPANY WILL NEED ADDITIONAL CAPITAL TO FINANCE GROWTH. The
Company's business requires substantial investment on a continuing basis to
finance:

o    debt service obligations;

o    capital expenditures and expenses related to subscriber growth and system
     development;

o    the acquisition of new wireless licenses and operations; and

o    net losses.

     The amount and timing of the Company's future capital requirements will
     depend upon a number of factors, many of which are not within the Company's
     control, including:

o    programming costs;

o    backbone and infrastructure costs;

o    capital costs;

o    competitive conditions; and




                                       15
<PAGE>

o    the costs of any necessary implementation of technological innovations or
     alternative technologies.

         The Company can give no assurance that it will be able to obtain
additional debt or equity capital on satisfactory terms, or at all, to meet the
Company's future financing needs. Furthermore, the indenture under which the
Company's outstanding debt was issued restricts the amount of additional
indebtedness which the Company may incur. Failure to obtain any required
additional financing could adversely affect the Company's growth and,
ultimately, could have a material adverse effect on the Company's business,
results of operations and financial condition.

         THE COMPANY IS IN A COMPETITIVE BUSINESS. The Company faces potential
competition from hardwire cable operators, DBS, local off-air VHF/UHF channels,
telecommunications operators, home videocassette recorders and out-of-home
theaters. Currently, there are three DBS providers in Brazil and the private
telephone companies have started offering high-speed Internet access services,
using DSL technologies, in some markets. Legislative, regulatory and
technological developments may result in additional and significant competition.
Many of the Company's actual and potential competitors have greater financial,
marketing and other resources than does the Company.

         THE COMPANY'S BUSINESS COULD SUFFER FROM CHANGES IN GOVERNMENT
REGULATION. Changes in the regulation of the Company's business activities,
including decisions by regulators affecting the Company's operations, could have
an adverse effect on the Company's business.

         THE COMPANY IS DEPENDENT ON CERTAIN KEY SUPPLIERS. The Company
currently purchases decoders, modems and antennas from a limited number of
sources. The Company's inability to obtain sufficient components as required
from these sources, or to develop alternative sources if and as required in the
future, could result in delays or reductions in customer installations which, in
turn, could have a material adverse effect on the Company's results of
operations and financial condition.

         In February 2000, the Company's only supplier of decoders (General
Instruments, which has been acquired by Motorola) in its four operating markets
announced that it was planning to discontinue production for this product in the
future, and gave the Company a limited time in which to give additional orders
for the manufacturing of this product. While the Company has a substantial
inventory of decoders available for use for new subscribers, the technology used
in the decoding process is proprietary and no other supplier currently could
provide the Company with additional decoders should they become necessary.
Discussions between the Company, Motorola and several other operators in Brazil
have raised the possibility of Motorola licensing its technology for production
of the decoders in Brazil. The Company and other operators in Brazil continue to
negotiate this matter with Motorola. It is unclear if Motorola will license its
proprietary decoding technology to any other manufacturer or if it will continue
to manufacture the decoders. If Motorola does not continue production of this
decoder, or permit any other manufacturer to do so, and if the Company requires
additional decoders for subscriber use, it could have a material adverse effect
on the Company's results of operations and financial condition.



ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         The Company's primary market risk exposure is foreign currency exchange
rate risk between the U.S. dollar and the Brazilian REAL due to the Company
having all of its operations based in Brazil, and most of its revenues and some
of its expenses denominated in REAIS while substantially all of its debt and
many of its expenses and capital equipment needs are denominated in dollars. In
addition, for operating purposes, the Company holds a significant portion of its
available cash in REAIS.

         The Company manages its risk exposure on its available cash held in
REAIS by purchasing, from time to time, foreign currency exchange contracts
which have the effect of "locking-in" a dollar based exchange rate for the
Company's cash held in Brazil. The Company believes that the cost of managing
risk exposure to its dollar-denominated debt and expenses is too high to warrant
an attempt at mitigating this risk.



                                       16
<PAGE>

         In addition to the Company's $44 million debt outstanding, the Company
is subject to the payment of the interest on such debt, which is also
dollar-denominated. Assuming the Company exercises its option of capitalizing
the interest portion due on June 20, 2002, the Company expects total interest to
be paid in 2002 will be approximately $2.8 million.

         Although the Company's reporting currency is the U.S. dollar, the cash
flow required to service its indebtedness is generated in REAIS. Using the year
end 2001 exchange rate (R$ 2.3204 per US$ 1.00), the cash flow in REAIS to pay
interest ($2.8 million) due in 2002 would be R$6.5 million. A devaluation of the
REAL to R$2.80 per U.S. dollar would require cash flow of R$7.8 million to pay
the interest ($2.8 million). If the REAL devalued to R$3.00 per U.S. dollar, the
cash flow in REAIS to pay the interest due in 2002 would be R$8.4 million.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.
         -----------------

         No significant legal proceedings in which the Company or any of its
subsidiaries is a party, or of which any of their property is subject, are
currently pending, nor have any such proceedings been terminated during the
first quarter of 2002.

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.
         --------------------------------

         (a)      Exhibits

         None.

         (b)      Reports on Form 8-K

         None.


                                       17
<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.

DATED:   May 15, 2002

                                 ITSA LTD.
                                 -----------------------------------------------
                                 (Registrant)

                                 /s/  Hermano Studart Lins de Albuquerque
                                 -----------------------------------------------
                                 Hermano Studart Lins de Albuquerque
                                 Chief Executive Officer (Principal
                                 Executive Officer)


                                 /s/  Carlos Andre Studart Lins de Albuquerque
                                 -----------------------------------------------
                                 Carlos Andre Studart Lins de Albuquerque
                                 Acting Chief Financial Officer  (Principal
                                 Financial and Accounting Officer)



                                       18