<PAGE>
                       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 September 30, 2000

                           OR

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

For the transition period from            to
                               -------       ------

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

                         COMMISSION FILE NUMBER: 0-28670

        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. EXECUTIVE TOWER, SALA 601
                             70.300-911 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  and a Quarterly
Report on Form 10-Q for the Period  Ended June 30,  2000.  On November 14, 2000,
Registrant  filed a  Notification  of Late Filing on Form 12b-25  detailing  the
reasons for the  delayed  filing of this  Quarterly  Report on Form 10-Q for the
period ended September 30, 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 February 28, 2001



<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, 1999
        and September 30, 2000 (Unaudited)........................    2

        Unaudited Consolidated Statements of Operations for the
        Three Months Ended September 30, 1999, the Twenty Days
        Ended July 20, 2000, and the Two Months and Eleven Days
        Ended September 30, 2000..................................    3

        Unaudited Consolidated Statements of Operations for the
        Nine Months Ended September 30, 1999, the Six Months
        and Twenty Days Ended July 20, 2000, and the Two Months
        and Eleven Days Ended September 30, 2000.................     4

        Unaudited Consolidated Statement of Changes in
        Stockholders' Equity for the Nine Months ended
        September 30, 2000.......................................     5

        Unaudited Consolidated Statements of Cash Flows for the
        Nine Months Ended September 30, 1999, the Six Months
        and Twenty Days Ended July 20, 2000 and the Two Months
        and Eleven Days Ended September 30, 2000.................     6

        Notes to Unaudited Consolidated Financial Statements......    7

ITEM 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations.......................    10

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk    15


PART II.    OTHER INFORMATION

ITEM 1. Legal Proceedings.........................................    15

ITEM 2. Changes in Securities and Use of Proceeds.................    15

ITEM 3. Defaults Upon Senior Securities...........................    15

ITEM 4. Submission of Matters to a Vote of Security Holders.......    16

ITEM 5. Other Information.........................................    16

ITEM 6. Exhibits and Reports on Form 8-K..........................    16

SIGNATURES........................................................    17



<PAGE>






                            PART I - FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS


                             ITSA LTD. (SUCCESSOR TO
                        TV FILME, INC.) AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>



                                             PREDECESSOR     SUCCESSOR
                                            DECEMBER 31,     SEPTEMBER 30,
                                                1999             2000
                                            --------------  ----------------
                                                     (UNAUDITED)
                                              (IN THOUSANDS OF US DOLLARS)
<S>                                        <C>                <C>
ASSETS
Current assets:
   Cash and cash equivalents............    $ 42,175           $ 6,379
   Accounts receivable, net.............       2,474             1,546
   Supplies.............................       2,750             2,745
   Prepaid expenses and other current          5,700             6,271
     assets.............................
                                            --------------  ----------------
     Total current assets...............      53,099            16,941
Property, plant and equipment, net......      25,005            18,275
Goodwill, net...........................          --            29,935
Other assets............................       5,218             6,077
                                            --------------  ----------------
     Total assets.......................    $ 83,322           $71,228
                                            ==============  ================

LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
   Accounts payable.....................    $  6,168           $ 5,197
   Payroll and other benefits payable...       1,577             2,180
   Accrued interest payable.............      18,776             3,267
   Accrued liabilities and taxes payable       7,543             7,256
   Senior notes subject to Chapter 11        140,000              --
     proceeding.........................
                                            --------------  ----------------
     Total current liabilities..........     174,064            17,900
Senior notes, 12% interest                        --            35,000
Deferred installation fees..............         900               486
Stockholders' equity:
   Common stock, $.01 par value,
     20,000,000 shares authorized,
     10,824,594 shares (Predecessor)
     and 10,000,000 (Successor) issued
     and outstanding....................         108               100
   Additional paid-in capital...........      45,657            21,668
   Accumulated deficit..................    (130,225)           (2,851)
   Cumulative translation adjustment....      (7,182)           (1,075)
                                            --------------  ----------------
     Total stockholders' equity
        (deficiency)....................     (91,642)           17,842
                                            --------------  ----------------
     Total liabilities and stockholders'    $ 83,322           $71,228
       equity...........................    ==============  ================


</TABLE>

                             See accompanying notes.


                                       2
<PAGE>

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


<TABLE>



                                                            SUCCESSOR
                               PREDECESSOR   PREDECESSOR    TWO MONTHS
                                  THREE      TWENTY DAYS    AND ELEVEN
                               MONTHS ENDED     ENDED       DAYS ENDED
                                SEPTEMBER       JULY        SEPTEMBER
                                   30,           20,           30,
                                  1999          2000          2000
                               -----------------------------------------
                            (IN THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)
                               -----------------------------------------
<S>                               <C>           <C>           <C>
Revenues                          $6,095        $1,459        $5,285
Operating costs and
expenses:
  System operating                 2,850           552         1,897
  Selling, general and
   administrative                  4,618         1,670         2,938
  Depreciation and
   amortization                    3,443           478         2,535
                               ------------- ------------- -------------
   Total operating costs
    and  expenses                 10,911         2,700         7,370
                               ------------- ------------- -------------
   Operating loss                 (4,816)       (1,241)       (2,085)

Other (expense) income:
  Interest and other
   expense                        (6,167)       (1,224)         (907)
  Interest and other
   income                          1,580           126           323
  Foreign exchange loss           (6,492)         (143)         (182)
                               ------------- ------------- -------------
   Total other (expense)
   income                        (11,079)       (1,241)         (766)
                               ------------- ------------- -------------

Loss before
  reorganization items
  and extraordinary item         (15,895)       (2,482)       (2,851)
Reorganization items:
  Reorganization costs              (840)            -             -
  Adjust accounts to fair
  value                                -        (3,221)            -
                               ------------- ------------- -------------
   Total reorganization
   items                            (840)       (3,221)            -
                               ------------- ------------- -------------
Loss before extraordinary
 item                            (16,735)       (5,703)       (2,851)
Extraordinary item:
  Extinguishment of debt               -        87,585             -
                               ------------- ------------- -------------
Net Income (loss)               $(16,735)      $81,882       $(2,851)
                               ============= ============= =============

Basic earnings (loss) per
  share:
 Before extraordinary item        $(1.55)       $(0.53)       $(0.29)
 Extraordinary item                    -          8.09             -
                               ------------- ------------- -------------
 Net income (loss)                $(1.55)       $ 7.56        $(0.29)
                               ============= ============= =============
 Weighted average
  shares outstanding           10,824,594   10,824,594     10,000,000


</TABLE>

                             See accompanying notes.


                                       3

<PAGE>




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


<TABLE>


                                PREDECESSOR   PREDECESSOR        SUCCESSOR
                                NINE MONTHS   SIX MONTHS AND   TWO MONTHS AND
                                   ENDED      TWENTY DAYS     ELEVEN DAYS ENDED
                               SEPTEMBER 30,  ENDED JULY 20,    SEPTEMBER 30,
                                    1999          2000             2000
                              -------------------------------------------------
                               (IN THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)
                              -------------------------------------------------
<S>                               <C>           <C>            <C>
Revenues                          $19,483       $13,044        $5,285
Operating costs and
 expenses:
  System operating                  9,154         6,076         1,897
  Selling, general and
   administrative                  12,324         9,681         2,938
  Depreciation and
   amortization                    11,202         6,442         2,535
                                ------------- ------------- -------------
   Total operating costs
    and  expenses                  32,680        22,199         7,370
                                ------------- ------------- -------------
   Operating loss                 (13,197)       (9,155)       (2,085)

Other (expense) income:
  Interest and other
   expense                        (16,799)      (11,697)         (907)
  Interest and other
   income                           5,510         2,895           323
  Foreign exchange loss           (35,900)        (778)          (182)
                                ------------- ------------- -------------
   Total other (expense)
    income                        (47,189)       (9,580)         (766)
                                ------------- ------------- -------------

Loss before
  reorganization items
  and extraordinary item          (60,386)      (18,735)       (2,851)
Reorganization items:
  Reorganization costs             (1,435)       (2,709)            -
  Adjust accounts to fair
   value                                -        (3,221)            -
    Total reorganization        ------------- ------------- -------------
    items                          (1,435)       (5,930)            -

Loss before extraordinary
 item                             (61,821)      (24,665)       (2,851)
Extraordinary item:
  Extinguishment of debt                -        87,585             -
Net income (loss)                $(61,821)      $62,920       $(2,851)
                                ============= ============= =============

Basic earnings (loss) per
  share:
 Before extraordinary item        $(5.71)       $(2.28)       $(0.29)
 Extraordinary item                    -          8.09             -
                               ------------- ------------- -------------
 Net income (loss)                $(5.71)       $ 5.81        $(0.29)
                               ============= ============= =============
 Weighted average
  shares outstanding           10,824,594   10,824,594     10,000,000

</TABLE>

                             See accompanying notes.


                                       4

<PAGE>




                             ITSA LTD. (SUCCESSOR TO
                        TV FILME, INC.) AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (UNAUDITED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000



<TABLE>

                                     ADDITIONAL                OTHER
                     COMMON STOCK     PAID-IN   ACCUMULATED COMPREHENSIVE
                    SHARES  PAR VALUE CAPITAL     DEFICIT      LOSS       TOTAL
                    ------  --------- ---------  ---------- ------------- -----
                              (IN THOUSANDS OF US DOLLARS, EXCEPT SHARES)
<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)
Predecessor
  cumulative
  translation
  adjustment.........       --   --      --           --       1,683       1,683
Predecessor net income
  for the period.....       --   --      --        62,920         --      62,920
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
Successor cumulative
  translation
  adjustment.......        --   --       --           --       (1,075)   (1,075)
Successor Net Loss
  for the period....       --   --       --       (2,851)         --     (2,851)
                  --------------------------------------------------------------

SUCCESSOR BALANCE AT
  SEPTEMBER 30,
 2000............ 10,000,000  $100    $21,668    $(1,075)   $(2,851)    $17,842
                  ==============================================================



</TABLE>


                             See accompanying notes.

                                       5

<PAGE>



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

                                   (UNAUDITED)

<TABLE>



                                      PREDECESSOR   PREDECESSOR  SUCCESSOR
                                        NINE        SIX MONTHS   TWO MONTHS
                                       MONTHS       AND TWENTY   AND ELEVEN
                                        ENDED       DAYS ENDED   DAYS ENDED
                                      SEPTEMBER 30,  JULY 20,   SEPTEMBER 30,
                                         1999         2000         2000
                                      ------------  ----------  ------------
                                            (IN THOUSANDS OF US DOLLARS)
<S>                                  <C>            <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                     $ (61,821)    $ 62,920    $  (2,851)
Adjustments to reconcile net income
(loss) to net cash
provided by (used in)
 operating activities:
 Depreciation and amortization           10,885        6,442        2,535
 Allowance for doubtful accounts          1,140          548          254
 Amortization of debt issuance costs      1,405           -             -
 Deferred installation fees                (234)        (392)           19
 Gain on disposal of property,
  plant and equipment                                   (197)          (42)
 Foreign exchange loss                   31,687          778           182
 Adjust accounts to fair value                -        3,221             -
 Extinguishment of debt                       -      (87,585)            -
Changes in operating assets
   and liabilities:
     Accounts receivable                 (1,253)        535          (454)
     Supplies                               370        (250)          164
     Prepaid expenses and other
        current assets                   (3,098)     (1,297)          540
     Other assets                           956        (779)         (317)
     Accounts payable                     2,448         142        (1,675)
     Payroll and other benefits
        payable                            (349)        738           (11)
     Accrued interest payable            13,713     (16,148)          886
     Accrued liabilities and taxes
        payable                           2,864         492           186
                                      ------------  ----------  ------------
Net cash provided by (used in)
operating activities                      (1,287)   (30,832)         (584)
                                      ------------  ----------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and
 equipment                                 (2,845)    (4,382)       (1,498)
Sales of property, plant and
 equipment                                               709           187
                                      ------------  ----------  ------------
Net cash used in investing
 activities                                (2,845)    (3,673)       (1,311)
                                      ------------  ----------  ------------

Effect of exchange rate changes on
 cash                                      (8,954)       591            13
                                      ------------  ----------  ------------
Net change in cash and cash
 equivalents                              (13,086)   (33,914)       (1,882)

Cash and cash equivalents at
 beginning of period                       57,492     42,175         8,261
                                      ------------  ----------  ------------
Cash and cash equivalents at end of
 period                                 $  44,406    $ 8,261       $ 6,379
                                      ============  ==========  ============


</TABLE>

                             See accompanying notes.


                                       6

<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., 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."

      Since  fresh-start  reporting  has  been  reflected  in  the  accompanying
consolidated financial statements as of September 30, 2000, which are those of a
reorganized entity,  certain material aspects of these financial  statements are
not  comparable  to such  statements  of any  prior  period.

      As a result of the  economic  slowdown in Brazil in years 1998  and  1999,
and the  devaluation of the Brazilian  currency (the REAL) in 1999,  among other
factors,  TV Filme selected a financial  advisor,  BT Alex.  Brown (now Deutsche
Bank), 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. This agreement was effected on July 21, 2000 pursuant to a
pre-arranged plan of reorganization  which received court approval under Chapter
11 of the U.S.  Bankruptcy  Code on April 10, 2000. 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 (interest  payable-in-kind at the Company's option through
its first four interest payments),  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. All outstanding stock options were cancelled.
ITSA Ltd., (the  reorganized  Company) is a newly-formed  Cayman Islands holding
company and is the  successor  issuer to TV Filme,  Inc.  pursuant to Rule 12g-3
under the  Securities  Exchange Act. The 12% Senior Secured Notes were issued by
ITSA-Intercontinental  Telecommunicacoes Ltda., a wholly-owned subsidiary of the
Company.

      On January 26, 2000, as part of the restructuring  process, TV Filme filed
a voluntary  petition  under  Chapter 11 of the United States  Bankruptcy  Code,
together with a pre-negotiated  Plan of  Reorganization  implementing the agreed
upon restructuring 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 adequacy 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.  Overwhelming  majorities  of holders of TV Filme's
12-7/8%  Senior  Notes and holders of TV Filme's  common stock voted in favor of
the restructuring set forth in the Plan.  Effectuation of the Plan was completed
on   July   21,   2000,   following   support   from   ANATEL   (the   Brazilian
Telecommunications Agency) and the Central Bank of Brazil.

      The   Company   develops,    owns   and   operates    broadband   wireless
telecommunications  systems in markets in  Brazil,  offering  video,  high-speed
Internet and data communications services. Through it 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.


                                       7

<PAGE>

      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.

      The Company has all its licenses covering the frequency band from 2,500 to
2,686   MHz.   In  the  third   quarter  of  2000,   ANATEL  --  the   Brazilian
Telecommunications  Agency -- approved  and awarded  additional  spectrum to the
Company, in the frequency band of 2,170 to 2,182 MHz. Currently, with a total of
198 MHz of spectrum  available  in each  market,  the Company is able to offer a
wide range of two-way advanced communication services, including high-speed data
services and  high-speed  Internet,  both to the  residential  and the corporate
market.  The Company also owns  additional  specific  licenses,  which allow the
offering  of  voice  and  VPN  (Virtual  Private   Network) corporate  services.
Currently,  the  Company  owns and  operates  its own NOC --  Network  Operating
Control Center -- which is located in its headquarters in Brasilia.

      Additionally,  the  Company  owns and  maintains  its  proprietary  SMS --
Services  Management System -- called Mythos,  which was developed  in-house and
customized to the Brazilian needs and standards.  This advanced software package
allows the Company to have full control of every aspect of its businesses,  from
marketing to sales, customer service,  technical support,  inventory control and
billing.  The Company believes that the ability to control and customize the SMS
is a key point in quickly offering  reliable  services to the market.  Recently,
the Company has licensed its software to some third party operations in Brazil.

      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   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- and  nine-months  periods ended  September  30, 2000  are
not  necessarily  indicative  of the  results  that may be expected for the year
ended December 31, 2000.

      The balance  sheet at December  31, 1999 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  the TV Filme, Inc.'s annual report on Form
10-K for the year ended December 31, 1999.

      C.  COMPREHENSIVE INCOME

      Total comprehensive loss of  the Company was $3,926,000 for the two months
and  eleven days ended September 30, 2000.  Total comprehensive income (loss) of
TV Filme was $(15,170,000) and  $(64,429,000) for the  three  months  and   nine
months ended September 30, 1999 and $82,770,000  and  $64,603,000 for the twenty
days and the six months and twenty days ended July 20, 2000.

2.    LONG-TERM DEBT

      On December 20, 1996,  TV Filme  issued $140 million  principal  amount of
12-7/8%  Senior Notes due December 15, 2004.  The proceeds of the 12-7/8% Senior
Notes  were  loaned  to  ITSA-Intercontinental  Telecomunicacoes  S.A.  and  its
subsidiaries  ("ITSA")  and  evidenced  by an  intercompany  note.  Interest was
payable  semi-annually  in  arrears  on June 15 and  December  15 of each  year,
commencing on June 15, 1997. Of the $140 million  loaned to ITSA,  approximately
$33.5 million was used to purchase  U.S.  government  securities.  Cash received


                                       8

<PAGE>

from scheduled interest and principal payments on such government securities was
in an amount  sufficient  to provide  for  payment in full when due of the first
four scheduled  interest payments on the 12-7/8% Senior Notes, the last of which
occurred on December 15, 1998.  Until the third  quarter of 1999,  debt issuance
costs  were  capitalized  and  amortized  over the  period of the debt under the
effective yield method (see below).

      As  discussed  in  Note 1,  all  outstanding  12-7/8%  Senior  Notes  were
exchanged in  conjunction  with TV Filme's  reorganization  for a combination of
cash, 12% Senior Secured Notes of ITSA-Intercontinental  Telecomunicacoes,  Inc.
(the Company's Brazilian  subsidiary) and new common equity of the Company.  The
12-7/8% Senior Notes were cancelled upon surrender.

      As  of  September 30th 2000, the  Company  had $35.0 million of 12% Senior
secured Notes.

3.    FRESH START ACCOUNTING AND REORGANIZATION

      The Company's unaudited  consolidated financial statements as of September
30, 2000 have been  presented  in  conformity  with the  American  Institute  of
Certified Public Accountants' Statement of Position 90-7 "Financial Reporting by
Entities in  Reorganization  under the Bankruptcy Code." While it was in Chapter
11,  TV Filme adopted  fresh-start  reporting  and gave  effect to its emergence
as of July 21, 2000.  Under  fresh-start  accounting, all assets and liabilities
are restated to reflect their reorganized  value, which approximates fair  value
and  equity  based upon the  appraised  reorganization  value of  TV Filme.

      The Predecessor's reorganization value of $76,184 was based on a valuation
performed by an independent  firm using 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 goodwill.

      The  following  journal  entries record the provisions of the Plan and the
adoption of fresh-start accounting:

<TABLE>


                                             EXCHANGE
                                    DEBT       OF     FRESH
                    PRECONFIRMATION DISCHARGE STOCK   START   REORGANIZE
                    --------------- --------- ------- ------  ----------
                                 (IN THOUSANDS)
ASSETS
------
<S>                    <C>        <C>       <C>     <C>      <C>
CURRENT ASSETS
  Cash and cash
   equivalents       $  36,163   $(27,902)  $       $       $  8,261
  Accounts
   receivable, net       1,380                                 1,380
  Supplies               2,976                                 2,976
  Prepaid expense
   and other
   current assets        6,964                                 6,964
                    ------------- -------- -------- ------- ----------
   Total Current
    Assets              47,483    (27,902)     -      -       19,581

Property, plant
 and equipment,
 net                    28,260          -      -    (3,221)   25,039

  Goodwill                   -                      31,413    31,413

  Other assets             151                                   151

                    ------------- -------- -------- ------- ----------
TOTAL ASSETS         $  75,894    $(27,902) $  -   $ 28,192 $ 76,184
                    ============= ======== ======== ======= ==========


</TABLE>


                                       9

<PAGE>



<TABLE>

                                              EXCHANGE
                                     DEBT       OF     FRESH
                    PRECONFIRMATION DISCHARGE  STOCK   START   REORGANIZE
                    --------------- --------- -------- ------- ----------
                                    (IN THOUSANDS)
<S>                   <C>          <C>         <C>       <C>   <C>
LIABILITIES AND
 STOCKHOLDERS'
  EQUITY

CURRENT LIABILITIES
  Accounts payable   $   7,739    $(2,902)    $          $    $4,837
  Payroll and
   other benefits
   payable               2,243                                 2,243
  Accrued interest
   payable              27,450    (25,000)                     2,450
  Accrued
   liabilities and
   taxes payable         9,407                                 9,407
  Senior notes in
   default             140,000   (140,000)
                    ------------- -------- -------- ------- ----------

   Total Current       186,839   (167,902)    -      -        18,937
    Liabilities

SENIOR NOTES, 12%
  INTEREST                         35,000                     35,000

DEFERRED
 INSTALLATION FEES         479                                   479

MINORITY INTERESTS         (21)                          21

STOCKHOLDER'S
 EQUITY
  Common stock             108         86    (94)                100
  Additional
   paid-in capital      45,657     17,329     94    (41,412)  21,668
  Accumulated
   deficit            (130,225)                     130,225
  Net income (loss)    (21,444    87,585            (66,141)
Cumulative
    Translation
    Adjustment          (5,499)                       5,499
                    ------------- -------- -------- ------- ----------

   Total
    Stockholders'
    Equity            (111,403)   105,000      -     28,171   21,768


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

</TABLE>

      The  Company's  pre-petition  liabilities  open  at  September  30,  2000,
amounted to $694 and were all related to professional fees.

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."


                                       10
<PAGE>

      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 January 26, 2000, the Company emerged from Chapter 11 bankruptcy
proceedings and implemented  "fresh start accounting".  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.  However,  for
purposes of this discussion,  the two months and eleven days ended September 30,
2000 have been  combined  to the twenty  days ended July 20, 2000 and to the six
months and twenty  days ended July 20,  2000 and then  compared  to the nine and
three months period ended September 30, 1999, respectively.  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>

                                          THREE MONTHS ENDED SEPTEMBER 30
                                     -------------------------------------------
                                         1999     % OF        2000      % OF
                                                 REVENUE               REVENUE
                                        (IN THOUSANDS, EXCEPT SUBSCRIBER DATA)
<S>                                    <C>         <C>      <C>          <C>
Revenue...........................     $6,095      100%     $6,744       100%
Operating costs and expenses:
  System operating................      2,850       47%      2,449        36%
  Selling, general and administrative   4,618       76%      4,608        68%
  Depreciation and amortization...      3,443       56%      3,013        45%
                                       ------      ------   ------       ----
    Total operating costs and
    expenses......................     10,911      179%     10,070       149%
    Operating loss................     (4,816)     (79%)    (3,326)      (49%)
Other income (expense):
  Interest and other expense......     (6,167)    (101%)    (2,131)      (32%)
  Interest and other income.......      1,580       26%        449         7%
                                       ------      ------   ------       ----
  Interest and other income
  (expense), net..................     (4,587)     (75%)    (1,682)      (25%)
  Foreign exchange loss...........     (6,492)     (107%)     (325)       (5%)
                                       -------     ----------------      -----
    Total other (expense) income..     (11,079)    (182%)   (2,007)       30%
                                       --------    ----------------      ----
Loss before reorganization items
   and extraordinary item..........    (15,895)    (261%)   (5,333)      (79%)

Reorganization items:
  Reorganization costs
  Adjust accounts to fair value         (840)      (14%)    (3,221)      (48%)
                                      ---------    -------- -------      -----
   Total reorganization items           (840)      (14%)    (3,221)      (48%)
                                      ---------    -------- -------      -----
Loss before extraordinary item        (16,735)    (275%)    (8,554)      (127%)
Extraordinary item:
  Extinguishment of debt                                     87,585     1,299%
                                      ---------    -------- -------     ------
NET INCOME (LOSS)                     $(16,735)   (275%)    $79,031     1,172%
                                      ========    ======     ======     ======
Other Data:
  EBITDA (a)......................     $(1,373)             $ (313)
                                       ========             =======
  Number  of  subscribers  at  end of
   period .........................     73,162              77,725
                                       ========            ========
  Number of operating  systems at end
   of period.......................          4                   4
                                       ========            ========
  Exchange  rate  (R $:  US $) at end
   of period.......................    1.9223:1            1.8437:1
                                       ========            ========

</TABLE>

                                       11


<PAGE>
<TABLE>

                                            NINE MONTHS ENDED SEPTEMBER 30
                                     -------------------------------------------
                                         1999     % OF        2000      % OF
                                                 REVENUE               REVENUE
                                        (IN THOUSANDS, EXCEPT SUBSCRIBER DATA)
<S>                                    <C>         <C>      <C>          <C>
Revenue...........................     $19,483     100%     $ 18,329     100%
Operating costs and expenses:
   System operating...............      9,154       47%      7,973        43%
   Selling, general  and
    administrative................     12,324       63%     12,619        69%
   Depreciation and amortization..     11,202       57%      8,977        49%
    Total   operating  costs  and      -------     ------   ------       ----
     expenses.....................     32,680      168%     29,569       161%
                                       -------     ------   ------       ----
    Operating loss................    (13,197)     (68%)   (11,240)      (61%)
Other income (expense):
  Interest and other expense......    (16,799)     (86%)   (12,604)      (69%)
  Interest and other income.......      5,510       28%      3,218       (18%)
                                       ------      ------   ------       -----
  Interest income (expense), net..    (11,289)     (58%)    (9,386)      (51%)
  Foreign exchange loss...........    (35,900)    (184%)      (960)       (5%)
                                       --------    ------  --------      -----
      Total other expense, net....     (47,189)    (242%)  (10,346)      (56%)
                                       --------    ------  --------      -----
Loss before reorganization items
 and extraordinary item...........     (60,386)    (310%)  (21,586)     (118%)
Reorganization items:
  Reorganization costs                 (1,435)      (7%)    (2,709)      (15%)
  Adjust accounts to fair value                             (3,221)      (18%)
                                      ---------    -------- -------      -----
   Total reorganization items          (1,435)      (7%)    (5,930)      (32%)
                                      ---------    -------- -------      -----
Loss before extraordinary item        (61,821)    (317%)    (27,516)    (150%)
Extraordinary items:
  Extinguishment of debt                                     87,585      478%
                                      ---------   --------  -------      -----
NET INCOME (LOSS)                     (61,821)    (317%)    $60,069      328%
                                      ========    ======     ======      ====
Other Data:
   EBITDA (a).....................    $(1,995)              $(2,263)
                                      ========              ========
   Number  of  subscribers  at end of
    period .......................     73,162                77,725
                                      ========              ========
   Number  of  operating  systems  at
    end of period.................          4                     4
                                      ========              ========
   Exchange  rate  (R $: US $) at end
    of period.....................    1.9223:1             1.8437:1
                                      =========            =========

</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.

      NET INCOME (LOSS).  For   the   three  months  ended   September  30, 2000
compared to the three  months ended  September  30, 1999,  net income (loss) was
$79.0  million  versus  $(16.7)  million,  primarily  due  to  reduced  interest
expenses,  a   decrease in  recorded   currency  exchange  loss,  a decrease  in
operating   loss   and  the    reorganization   and   the   extraordinary   item
associated with TV Filme's restructuring.  Net income (loss) for the nine months
ended  September 30, 2000 was $60.1  million as compared to $(61.8) million  for
the nine  months  ended  September 30, 1999,  primarily due to  recovery from  a
monetary loss associated with the Company's  net  dollar-denominated   liability
position   caused  by  a  51% devaluation of the REAL against the U.S. dollar in
1999  and  the  reorganization  and  the  extraordinary  item associated with TV
Filme's restructuring.

      REVENUES.  For the three months ended  September  30, 2000 compared to the
three months ended September 30, 1999,  revenues increased by 11%, primarily due
to an increase of 2,000 in the average number of subscribers  and an increase of
7% in the average monthly fee.  Revenues for the nine months ended September 30,
2000  decreased by 6% compared to the nine months ended  September 30, 1999, due
primarily to converting from a post-paid to a pre-paid subscription model in two
of the Company's markets, Brasilia and Belem.

                                       12
<PAGE>

      SYSTEM OPERATING  EXPENSES.  For the three months ended September 30, 2000
compared to the three months ended September 30, 1999, system operating expenses
decreased by 14%,  primarily due to a reduction of programming  costs related to
lower priced packages now offered by the Company.  System operating expenses for
the nine months ended September 30, 2000 decreased by 13%,  compared to the nine
months ended  September 30, 1999,  primarily  due to a reduction of  programming
costs related to lower priced packages now offered by the Company.

      SELLING,  GENERAL  AND  ADMINISTRATIVE  ("SG&A")  EXPENSES.  For the three
months ended September 30, 2000 compared to the three months ended September 30,
1999, SG&A expenses did not vary significantly. SG&A expenses for the nine month
period  ended  September  30, 2000  increased  by 2% compared to the nine months
ended September 30, 1999, primarily due to expenses related to the transition to
the new pre-paid subscription model in the Brasilia and Belem systems.

      DEPRECIATION  AND  AMORTIZATION.  For the three months ended September 30,
2000  compared to the three months ended  September 30, 1999,  depreciation  and
amortization   decreased  by  12%,   primarily  due  to  assets  becoming  fully
depreciated.  Depreciation  and  amortization  for the nine month  period  ended
September 30, 2000 decreased by 20% compared to the nine months ended  September
30, 1999, primarily due to assets becoming fully depreciated.

      INTEREST AND OTHER EXPENSE.  For the three months ended September 30, 2000
compared to the three  months  ended  September  30,  1999,  interest  and other
expense  decreased by 65%,  primarily  due to a decrease in  liability  position
associated with TV Filme's restructuring process. Interest and other expense for
the nine month period ended  September 30, 2000 decreased by 25% compared to the
nine months ended  September 30, 1999,  primarily due to a decrease in liability
position associated with TV Filme's restructuring process.

      INTEREST AND OTHER INCOME.  For the three months ended  September 30, 2000
compared to the three months ended September 30, 1999, interest and other income
decreased  by 72%,  primarily  due to a decrease  in the  average  cash  balance
between the two  periods.  Interest  and other  income for the nine month period
ended  September  30, 2000  decreased  by 42%  compared to the nine months ended
September  30,  1999,  primarily  due to a decrease in the average  cash balance
between the two periods.

      FOREIGN  EXCHANGE  LOSS.  Due  to  its  net  dollar-denominated  liability
position, the Company generates monetary losses in any reporting period in which
the value of the REAL  depreciates in relation to the value of the U.S.  dollar.
In the three months ended  September 30, 2000, the Company  generated a monetary
loss of $0.3  million,  compared to a monetary loss of $6.5 million in the three
months ended  September 30, 1999.  In the nine months ended  September 30, 2000,
the Company  generated a monetary loss of $1.0  million,  compared to a monetary
loss of $35.9 million in the nine months ended September 30, 1999.

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 September  30, 2000,  TV Filme 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


                                       13

<PAGE>

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.  As a  result  of
reclassifying  its 12-7/8%  Senior  Notes as a current  liability,  TV Filme had
negative working capital at September 30, 2000 of $1.0 million. Net cash used in
operating  activities  for the nine months ended  September  30, 2000 was  $31.4
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
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.

      As a result of the economic slowdown in Brazil in years 1998 and 1999, and
the  devaluation  of the  Brazilian  currency  (the REAL) in 1999,  among  other
factors,  TV Filme selected a financial  advisor,  BT Alex.  Brown (now Deutsche
Bank), to assist in evaluating  strategic  alternatives for the restructuring of
its long term debt, represented by 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. This agreement was effected on
July 21, 2000 pursuant to a pre-arranged plan of  reorganization  which received
court approval under Chapter 11 of the U.S.  Bankruptcy  Code on April 10, 2000.
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) Senior Secured Notes in the aggregate principal amount of $35
million,   due  2004,   at  an  interest   rate  of  12%  per  annum   (interest
payable-in-kind  at  the  Company's  option  through  its  first  four  interest
payments),  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.  All outstanding  stock options were cancelled.  ITSA Ltd.
(the reorganized  Company) is a newly-formed  Cayman Islands holding company and
is the  successor  issuer to TV Filme,  Inc.  pursuant  to Rule 12g-3  under the
Securities   Exchange  Act.  The  12%  Senior   Secured  Notes  were  issued  by
ITSA-Intercontinental  Telecommunicacoes Ltda., a wholly-owned subsidiary of the
Company.

      The Company made capital expenditures of approximatley $2.2 million during
the  three  months  ended   September  30, 2000.  Such capital expenditures were
financed  with  the  proceeds  from  the 12% Senior Notes offering and from cash
generated from the Company's operations.

      As of September 30, 2000, of the Company's  approximately  $6.4 million in
cash and cash equivalents, approximately $1.2 million (19%) 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


                                       14


<PAGE>

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, TV Filme'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 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 will become  effective  on
January  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.
      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.

                           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
third quarter of 2000. See Item 1 of Part II of the Company's  Quarterly  Report
on Form 10-Q for the period  ended June 30,  2000,  for a  description  of legal
proceedings which took place during the first and second quarters of 2000.

ITEM 2.     CHANGES IN SECURITIES AND USE OF PROCEEDS.
            -----------------------------------------

      None.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES.
            -----------------------------------------

      None.

                                       15

<PAGE>

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

      27.   Financial Data Schedule.

      (b)   REPORTS ON FORM 8-K

      During the third quarter of 2000,  the Company  filed a Current  Report on
Form  8-K12G3 on August 4, 2000,  pursuant to Item 5 thereof,  announcing  that,
following the successful  reorganization of TV Filme, the Company had become the
successor  in  interest  to TV Filme  pursuant  to Rule 12g-3 of the  Securities
Exchange Act of 1934, as amended.





                                       16

<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:      March 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)



                                       17


<PAGE>



                                  EXHIBIT INDEX




NO.               DESCRIPTION

27               Financial Data Schedule


















                                       18