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


                       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, 2001

                                 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                             (I.R.S. Employer
of Incorporation or Organization)                       Identification Number)

                C/O ITSA-INTERCONTINENTAL TELECOMUNICACOES LTDA.
                                 SCS, QUADRA 07-
                        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.[ ] Yes [|X|] 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.  [   ] Yes [|X|] No*

* Registrant became subject to filing requirements  pursuant to Rule 12g-3 under
the  Securities  Exchange  Act of 1934 on July  21,  2000,  when it  became  the
successor in interest to TV Filme, Inc., a Delaware corporation.  Since July 21,
2000,  Registrant has filed a Current Report on Form 8-K12G3, a Quarterly Report
on Form 10-Q for the Period Ended June 30, 2000, a Quarterly Report on Form 10-Q
for the Period Ended  September  30, 2000 and an Annual  Report on Form 10-K for
the Period Ended December 31, 2000.

        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, 2001

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<PAGE>


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

                                      INDEX



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

ITEM 1.  Financial Statements

         Consolidated Balance Sheets as of December 31, 2000 and
         March 31, 2001 (Unaudited)....................................     2

         Unaudited Consolidated Statements of Operations for
         the Three Months Ended March 31, 2000, and the Three
         Months Ended March 31, 2001...................................     3

         Unaudited Consolidated Statement of Changes in Stockholders'
         Equity for the Three Months ended March 31, 2001..............     4

         Unaudited Consolidated Statements of Cash Flows for the
         Three Months Ended March 31, 2000, and the Three Months
         Ended  March 31, 2001.........................................     5

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

ITEM 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations.....................................     9

ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk....     12


PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings.............................................     12

ITEM 2.  Changes in Securities and Use of Proceeds.....................     12

ITEM 3.  Defaults Upon Senior Securities...............................     12

ITEM 4.  Submission of Matters to a Vote of Security Holders...........     12

ITEM 5.  Other Information.............................................     12

ITEM 6.  Exhibits and Reports on Form 8-K..............................     12

SIGNATURES.............................................................     14

<PAGE>

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

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                                 SUCCESSOR     SUCCESSOR

                                                                                DECEMBER 31,    MARCH 31,
                                                                                    2000          2001
                                                                                    ----          ----
                                                                               (IN THOUSANDS OF US DOLLARS)
<S>                                                                                <C>            <C>
ASSETS
Current assets:
   Cash and cash equivalents ...................................................   $  3,858       2,569
   Trade accounts receivable, less allowance of $807 in
      2000 and $800 in March 31, 2001 ..........................................        795         592
   Prepaid expenses and other current assets ...................................      4,145       3,442
                                                                                   --------    --------
      Total current assets .....................................................      8,798       6,603
Property, plant and equipment, net .............................................     19,149      16,879
Reorganization value in excess of amounts allocable to
   identifiable assets .........................................................     26,983      23,543
Licenses .......................................................................      5,111       4,650
Other assets ...................................................................      2,884       2,590
                                                                                   --------    --------
         Total assets ..........................................................   $ 62,925    $ 54,265
                                                                                   ========    ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable ............................................................   $  3,180    $  3,334
   Payroll and other benefits payable ..........................................      1,668         960
   Accrued interest payable ....................................................        131       1,307
   Accrued liabilities .........................................................      1,935       1,852
                                                                                   --------    --------
         Total current liabilities .............................................      6,914       7,453

12% Senior Secured Notes .......................................................     39,200      39,200
Deferred installation fees .....................................................        407         321
Provision for tax, labor proceedings and other .................................      5,316       5,306

Stockholders' equity :
    Common stock, $.01 par value, shares authorized -
     20,000,000 in December 31,
      2000, and March 31, 2001 shares issued and
      outstanding - 10,000,000 in December 31, 2000
       and March 31, 2001.......................................................        100         100
    Additional paid-in capital .................................................     24,938      24,938
    Accumulated deficit ........................................................    (12,131)    (21,405)
    Cumulative translation adjustment ..........................................     (1,819)     (1,648)
                                                                                   --------    --------
      Total stockholders' equity ...............................................     11,088       1,985
                                                                                   --------    --------
      Total liabilities and stockholders' equity ...............................   $ 62,925    $ 54,265
                                                                                   ========    ========

                             See accompanying notes.

</TABLE>

                                       2

<PAGE>

                             ITSA LTD. (SUCCESSOR
                       TO TV FILME, INC.) AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)



<TABLE>
<CAPTION>

                                                      PREDECESSOR            SUCCESSOR
                                                   THREE MONTHS ENDED    THREE MONTHS ENDED
                                                       MARCH 31,              MARCH 31,
                                                          2000                  2001
                                                   ----------------------------------------
                                                           (IN THOUSANDS OF US DOLLARS,
                                                              EXCEPT SHARE DATA)
                                                   ----------------------------------------

<S>                                                   <C>                     <C>
Revenues ..........................................   $  5,911                $  6,408
Operating costs and expenses:
  System operating ................................      2,600                   3,657
  Selling, general and administrative .............      4,018                   4,323
  Depreciation and amortization ...................      3,095                   2,668
                                                      --------                --------
   Total operating costs and expenses .............      9,713                  10,648
                                                      --------                --------
   Operating loss .................................     (3,802)                 (4,240)

Other (expense) income:
  Interest and other expense ......................     (5,794)                 (1,258)
  Interest and other income .......................      1,382                     174
  Foreign exchange gain (loss) ....................      2,189                  (3,950)
                                                      --------                --------
   Total other (expense) income ...................     (2,223)                 (5,034)
                                                      --------                --------

Net loss ..........................................   $ (6,025)               $ (9,274)
                                                      ========                ========

                                                      --------                --------
     Net loss per share ...........................   $  (0.56)               $  (0.93)
                                                      ========                ========
     Weighted average shares outstanding ..........     10,825                  10,000

</TABLE>


                            See accompanying notes.


                                       3

<PAGE>



                             ITSA LTD. (SUCCESSOR TO
                        TV FILME, INC.) AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (UNAUDITED)

                    FOR THE THREE MONTHS ENDED MARCH 31, 2001

                 (IN THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>

                                     COMMON STOCK            ADDITIONAL                   CUMULATIVE
                             ---------------------------      PAID-IN    ACCUMULATED      TRANSLATION
                               SHARES          PAR VALUE      CAPITAL       DEFICIT       ADJUSTMENT        TOTAL
                               ------          ---------      -------       -------       ----------        -----

<S>                          <C>                   <C>         <C>         <C>              <C>           <C>
PREDECESSOR BALANCE AT
  DECEMBER 31, 1999 .....    10,824,594            108         45,657      (130,225)        (7,182)       (91,642)
Cumulative translation
  adjustment ............            --             --             --            --          1,683          1,683
Net income for the
  period ................            --             --             --        62,920             --         62,920
                                                                                                        ---------
Comprehensive income ....                                                                                  64,603
Effect of reorganization
  and fresh-start
  accounting:
Cancellation of
  Predecessor equity ....   (10,824,594)          (108)            --            --             --           (108)
Issuance of new shares
  pursuant to the Plan of
  Reorganization ........    10,000,000            100         17,423            --             --         17,523
Fresh-start accounting
  valuation adjustment ..            --             --        (41,412)       67,305          5,499         31,392
                             ----------          -----       --------     ---------      ---------      ---------

SUCCESSOR BALANCE AT JULY
  21, 2000 ..............    10,000,000            100         21,668            --             --         21,768
Stock compensation ......            --             --          3,270            --             --          3,270
Cumulative translation
  adjustment ............            --             --             --            --         (1,819)        (1,819)
Net loss for the
  period ................            --             --             --       (12,131)            --        (12,131)
                                                                                                        ---------
Comprehensive loss ......                                                                                 (13,950)
                             ----------          -----       --------     ---------      ---------      ---------

SUCCESSOR BALANCE AT ....
  DECEMBER 31, 2000 .....     10,000,00          $ 100       $ 24,938     $ (12,131)      $ (1,819)     $  11,088
                             ==========          =====       ========     =========      =========      =========
Successor cumulative
  translation
  adjustment ............                                                                      171            171
Successor Net Loss for
  the period ............                                                    (9,274)                       (9,274)
                                                                                                        ---------
Comprehensive loss ......                                                                                  (9,103)
SUCCESSOR BALANCE AT
  MARCH 31, 2001 ........    10,000,000          $ 100       $ 24,938     $ (21,405)     $  (1,648)     $   1,985
                             ==========          =====       ========     =========      =========      =========
</TABLE>

                             See accompanying notes.

                                       4

<PAGE>

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



                                                    PREDECESSOR      SUCCESSOR
                                                    THREE MONTHS    THREE MONTHS
                                                       ENDED           ENDED
                                                      MARCH 31,       MARCH 31,
                                                        2000            2001
                                                    ----------------------------
                                                    (IN THOUSANDS OF US DOLLARS)

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                     $ (6,025)       $ (9,274)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
     Depreciation and amortization                       3,095           2,668
     Allowance for doubtful accounts                       236             508
     Deferred installation fees                           (305)            (51)
     Gain on disposal of property,  plant
       and equipment                                         -             (15)
     Foreign exchange (gain) loss                       (2,169)         (3,950)
Changes in operating assets and liabilities:
     Accounts receivable                                   295            (654)
     Prepaid expenses and other current assets            (121)            918
     Other assets                                       (1,771)            184
     Accounts payable                                     (498)            530
     Payroll and other benefits payable                    150             (79)
     Accrued interest payable                            4,506           1,176
     Accrued liabilities and taxes payable               1,537            (379)
     Sale of operating loss carryforwards                    -             264
                                                      --------        --------
Net cash used in operating activities                   (1,070)           (254)
                                                      --------        --------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment               (1,445)           (903)
Sales of property, plant and equipment                       -             166
                                                      --------        --------
Net cash used in investing activities                   (1,445)           (737)
                                                      --------        --------

Effect of exchange rate changes on cash                    572            (298)
                                                      --------        --------
Net change in cash and cash equivalents                 (1,943)         (1,289)
Cash and cash equivalents at beginning of
  period                                              $ 42,175        $  3,858
                                                      --------        --------
Cash and cash equivalents at end of period            $ 40,232        $  2,569
                                                      ========        ========

                             See accompanying notes.

                                       5

<PAGE>



                             ITSA LTD. (SUCCESSOR TO
                        TV FILME, INC.) AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (IN THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)
                                   (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.  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 "12-7/8% Senior  Notes").  On August 13, 1999, TV Filme reached an
agreement  in  principle  with a  committee  representing  holders of TV Filme's
outstanding  12-7/8%  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.  Effectuation 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 12-7/8%
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, 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  succcessor
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  newly-formed
Cayman  Islands  holding  company and is the successor  issuer to TV Filme.  The
12-7/8% 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 MAISTV,
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$1.2087:US$1.00 at December 31, 1998,  R$1.7890:US$1.00
at December 31, 1999 and  R$1.9554:US$1.00  at December  31, 2000.  At March 31,
2001 the exchange rate was R$2.1616:US$1.00.

     The Company has projected  cash operating  deficiencies  for the year 2001.
Its ability to continue operating is based on a commitment for a $10,000 secured
revolving  credit  facility on the terms and subject to the conditions set forth
in the credit agreement.

     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.

     B. METHOD OF PRESENTATION

     The  accompanying   unaudited  condensed  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-month  period  ended  March 31, 2001 are not  necessarily
indicative  of the results that may be expected for the year ended  December 31,
2001.

     The balance  sheet at December  31, 2000 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.

     For further information, refer to the consolidated financial statements and
footnotes  thereto  included in ITSA Ltd.'s  annual  report on Form 10-K for the
year ended December 31, 2000.

2.   LONG-TERM DEBT

     The Company's 12% Senior Secured Notes ($39,200 outstanding at December 31,
2000) 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, 2000 and issued
additional  notes for the $4,200  interest  accrued to that date. The 12% Senior
Secured Notes are secured by all of the assets of the Company. In the event of a
default on the Senior Secured Notes,  25% of the lenders  thereunder may declare
the unpaid  principal  of, and any accrued  interest on, all the 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.

     As of March 31, 2001,  the Company had $39.2 million of 12% Senior  Secured
Notes.

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 material  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
carrying  value of the net  assets.  As such,  the  difference  of  $31,413  was
recorded as reorganization  value in excess of amounts allocable to identifiable
assets.


                                       7

<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
                               ---------------  ---------   --------    -----    -----------

<S>                                 <C>         <C>          <C>      <C>          <C>
ASSETS

CURRENT ASSETS
  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, net                     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 benefits
   payable                            2,243            --      --           --       2,243
  Accrued interest payable           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>


                                       8

<PAGE>



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

        This Form 10-Q contains forward-looking statements,  including pro forma
information, which involve risks and uncertainties. The Company's actual results
may differ  significantly  from the results  discussed in these  forward-looking
statements.  The following  discussion  should be read in  conjunction  with the
Consolidated  Financial  Statements,   including  the  notes  thereto,  included
elsewhere in this Form 10-Q.

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 substantial 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.

        Effective July 21, 2000, the Company  emerged from Chapter 11 bankruptcy
proceedings and implemented "fresh start reporting". Accordingly, all assets and
liabilities  were  restated  to  reflect  their  respective  fair  values.   The
consolidated  financial  statements after that date are those of a new reporting
entity  and are not  comparable  to the  Pre-Confirmation  periods.  Differences
between periods due to fresh start accounting are explained when necessary.  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>

                                                        THREE MONTHS ENDED MARCH 31,
                                           ---------------------------------------------------
                                             2000      % OF REVENUE     2001      % OF REVENUE
                                           ---------   ------------   ---------   ------------
                                                   (IN THOUSANDS, EXCEPT SUBSCRIBER DATA)

<S>                                        <C>             <C>        <C>     <C>     <C>
Revenue..................................  $  5,911         100%      $   6,408        100%
Operating costs and expenses:
  System operating.......................     2,600          44%          3,657         57%
  Selling, general and administrative....     4,018          68%          4,323         67%
  Depreciation and amortization..........     3,095          52%          2,668         42%
                                           --------        ------     ---------       ------
     Total operating costs and expenses..     9,713         164%         10,648        166%
                                           --------        ------     ---------       ------
     Operating loss......................    (3,802)        (64%)        (4,240)       (66%)
Other income (expense):
  Interest and other expense.............    (5,794)        (98%)        (1,258)       (20%)
  Interest and other income..............     1,382          23%            174          3%
                                           --------        ------     ---------       ------
  Interest and other income (expense), net   (4,412)        (75%)        (1,084)       (17%)
  Foreign exchange loss..................     2,189          37%         (3,950)       (62%)
                                           --------        ------     ---------       ------
     Total other (expense) income........    (2,223)        (38%)        (5,034)       (79%)
                                           --------        ------     ---------       ------
NET LOSS                                   $ (6,025)       (102%)     $  (9,274)      (145%)
                                           =========       ======     =========       ======
Other Data:
  EBITDA (a).............................  $   (707)                  $  (1,572)
                                           =========                  =========
  Number of subscribers at end of period     72,282                      82,630
                                           =========                  =========
  Number of  operating  systems  at end of
  period.................................         4                           4
                                           =========                  =========
  Exchange  rate  (R $:  US $) at  end  of
  period.................................   1.747:1                    2.1616:1
                                           =========                  =========

</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.

                                       9

<PAGE>


        NET LOSS. For the three months ended March 31, 2001 compared to
the three months ended March 31, 2000, net loss was  $9,274,000  versus
$6,025,000, primarily due to the devaluation of the REAL between the periods.

        REVENUES.  For the three  months  ended March 31,  2001  compared to the
three months ended March 31, 2000,  revenues  increased by 8%,  primarily due to
an increase in the number of subscribers.

        SYSTEM  OPERATING  EXPENSES.  For the three  months ended March 31, 2001
compared to the three  months ended March 31, 2000,  system  operating  expenses
increased by 41%, primarily due to the programming costs and Soccer Championship
transmission rights in Belem.

        SELLING,  GENERAL AND ADMINISTRATIVE  ("SG&A")  EXPENSES.  For the three
months  ended March 31, 2001  compared to the three months ended March 31, 2000,
SG&A  expenses  increased  8%,  primarily  due to the  increase  in bad debt and
expenses in new systems launched in year 2000.

        DEPRECIATION AND AMORTIZATION. For the three months ended March 31, 2001
compared to the three months ended March 31, 2000, depreciation and amortization
decreased by 14%, primarily due to assets becoming fully depreciated.

        INTEREST  AND OTHER  EXPENSE.  For the three months ended March 31, 2001
compared to the three months ended March 31,  2000,  interest and other  expense
decreased by 78%, primarily due to a decrease in liability  positions associated
with TV Filme's restructuring process.

        INTEREST  AND OTHER  INCOME.  For the three  months ended March 31, 2001
compared to the three  months  ended March 31,  2000,  interest and other income
decreased by 87%,  primarily  due to a decrease in average cash balance  between
the two periods.

        FOREIGN  EXCHANGE  LOSS.  Due to its  net  dollar-denominated  liability
position, the Company generates monetary gain and losses in any reporting period
in which the value of the REAL  depreciates or appreciates in relation to the
value of the U.S. dollar.  In the three  months  ended March 31,  2001,  the
Company  generated a monetary  loss of $4.0  million,  compared to a monetary
gain of $2.2 million in the three months ended March 31, 2000.

LIQUIDITY AND CAPITAL RESOURCES

        The telecommunications  business is capital intensive. From 1993 through
the first part of 1996,  TV Filme  raised an aggregate  of  approximately  $16.8
million  through a series of private  equity  placements to Tevecap and Warburg,
Pincus  Investors,  L.P. In August 1996,  TV Filme  completed an initial  public
offering  with net proceeds to TV Filme of $24.4 million and in December 1996 TV
Filme  completed  the sale of the 12-7/8%  Senior Notes with net proceeds to the
Company  of  approximately   $134.0  million.   In  the  past,  working  capital
requirements  have been primarily met by (i) venture  capital  financings,  (ii)
capital markets  financings,  (iii) vendor  financing  which generally  requires
payment  within  420 days of  shipment,  some of which  had  been  supported  by
irrevocable  letters of credit guaranteed by Abril and certain of its affiliates
and (iv) borrowings from Abril and certain  affiliates.  As of June 30, 2000, TV
Filme  had no  outstanding  borrowings  from  Abril and its  affiliates  and the
Company does not expect to borrow from Abril or its affiliates in the future.

        In  previous  years,  TV  Filme  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,  2001,  the  Company had no amounts  outstanding  under
letters of credit.  Pursuant  to the terms of a  commitment  letter  executed by
various proposed lenders (including certain shareholders of the Company) on July
20, 2000,  the Company is able to borrow,  on a secured  basis,  $10,000,000  of
additional  capital for use in its operations.  While the Company  believes that
lines of credit,  additional  vendor  financing and other credit  facilities are
available, the terms and conditions of such financing vehicles are uncertain and
may not be  available  on  terms  acceptable  to the  Company.  Net cash used in
operating activities for the three months ended March 31, 2001 was $0.3 million.

        Common   shares  of  the   Company   are   currently   tradable  in  the
over-the-counter market and are listed on the OTC Bulletin Board. The effects of
shares trading in the  over-the-counter  market, as opposed to being listed on a

                                       10

<PAGE>

National Exchange,  include,  without limitation,  the limited release of market
prices of the  ordinary  shares,  limited  news  coverage  of the  Company,  and
restriction  of  investors'  interest  in the  Company,  and may have a material
adverse effect on the trading market and prices for the ordinary shares, thereby
affecting  the  Company's  ability  to issue  additional  securities  or  secure
additional financing. In addition,  because the ordinary shares are deemed penny
stock  under  the  Securities  Enforcement  Penny  Stock  Reform  Act  of  1990,
additional  disclosure  is required in  connection  with trading in the ordinary
shares,  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 shares.

        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
gaining rapid market share.

        In the area of video delivery, the Company intends to upgrade its system
and use digital  compression  technology  to offer as many as 100 digital  video
channels to its  subscribers  in the major  markets.  All  transmission  systems
already in place are capable of offering digital video channels, but substantial
capital  investment will be needed to upgrade  customers'  set-top  decoders and
equipment.  The Company  estimates  that,  in order to offer the  digital  video
services,  it will have to invest  approximately  $2.0 million over the next two
years, for each of the major markets where this service will be available.

        Additionally, the Company's strategy involves extending LinkExpress, its
high-speed  Internet and data service,  to all other major markets.  The Company
will  focus   primarily  on  developing   its   high-speed   Internet  and  data
communications services,  serving both the residential and the corporate market.
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  $0.9 million
during the three  months ended March 31, 2001.  Such capital  expenditures  were
financed with available cash.

        As of March 31, 2001,  of the  Company's  approximately  $2.6 million in
cash and cash  equivalents,  approximately  $0.6 million  (23%)  was invested in
U.S.  dollar  denominated  securities.  In the long term, the Company's  funding
needs are subject to a variety of factors, including, the number and size of new
system launches or acquisitions,  the implementation of alternative transmission
technologies  and  the  offering  of  additional   telecommunications  services.
Accordingly, there can be no assurance that the Company will be able to meet its
future funding needs.

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 U.S.  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 U.S.  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
U.S. dollars) is adversely affected.  This effect on the Company's revenues also
negatively impacts the Company's ability to fund U.S. dollar-based expenditures.

        As of  January 1,  1998,  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

                                       11

<PAGE>

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 foreign exchange contracts.

RECENT ECONOMIC EVENTS

        In August of 2000, the Brazilian  Congress passed and approved a new law
#9998 - August  17th,  which  establishes  a new tax to be paid monthly by every
telecommunications  operator in the country.  This tax,  called FUST -- Fundo de
Universalizacao dos Servicos de Telecommunicacoes (Fund for the Universalization
of Telecommunications  Services) -- will be calculated based on 1% (one percent)
of the total gross income of every  operation,  and became  effective in January
2001. This tax will adversely affect the Company's results of operations.

        In November of 2000,  the Brazilian  Congress  passed and approved a new
law # 10052 - November 28th,  which  establishes a new tax to be paid monthly by
every  telecommunications  operator in the country.  This tax,  called FUNTTEL -
Fundo para o  desenvolvimento  Tecnologico  das  Telecomunicacoes  (Fund for the
Technological  Development of Telecommunicatons) - - will be calculated based on
0.5 % (half  percent) of the total gross income of every  operation,  and become
effective  on   April  2001.  This  tax  will  adversely  affect  the  Company's
results of operations.

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.  This is due to the
fact that the Company has all of its operations based in Brazil, and most of its
revenues and some of its expenses are  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.


                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

        No  material  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 2001.

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


                                       12
<PAGE>


        None.

        (b)    Reports on Form 8-K

        None.


                                       13

<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, 2001


                                 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)


                                       14