<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549
                            ----------------------

                                   FORM 10-Q


    [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 _______________ .


                       COMMISSION FILE NUMBER: 000-31201

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

               DELAWARE                                  94-3228782
   (STATE OR OTHER JURISDICTION OF                     (IRS EMPLOYER
    INCORPORATION OR ORGANIZATION)                  IDENTIFICATION NO.)

                      2000 ALAMEDA DE LAS PULGAS, SUITE 125
                           SAN MATEO, CALIFORNIA 94403
                                 (650) 524-1790

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF THE
                   REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)


Indicate by check mark whether the registrant (1) has filed all reports required
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

The number of outstanding shares of the registrant's Common Stock, $0.001 par
value, was 39,291,557 at October 31, 2000
<PAGE>

                                iAsiaWorks, Inc.
                                   FORM 10-Q

                                     INDEX
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION                                                                                 PAGE
<S>                                                                                                           <C>
Item 1. Financial Statements

            Condensed Consolidated Balance Sheets as of December 31, 1999 and
            September 30, 2000................................................................................   3

            Condensed Consolidated Unaudited Statements of Operations for the
            Three Months and Nine Months Ended September 30, 1999 and 2000....................................   4

            Condensed Consolidated Unaudited Statements of Cash Flows for the
            Nine Months Ended September 30, 1999 and 2000.....................................................   5

            Notes to Condensed 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............................................  24

PART II: OTHER INFORMATION

Item 1. Legal Proceedings.....................................................................................  25
Item 2. Changes in Securities and Use of Proceeds.............................................................  25
Item 3. Defaults Upon Senior Securities.......................................................................  25
Item 4. Submission of Matters to a Vote of Security Holders...................................................  25
Item 5. Other Information.....................................................................................  25
Item 6. Exhibits and Reports on Form 8-K......................................................................  25
</TABLE>

Signatures

     We have filed an application with the United States Patent and Trademark
office seeking to register "iAsiaWorks" as a trademark in the U.S., and
iAsiaWorks/TM/ with the accompanying design and the iAsiaWorks logo are
trademarks of iAsiaWorks, Inc. Each trademark, trade name or service mark of
any other company appearing in this document belongs to its holder. The
inclusion of other companies' brand names and products in this document is not
an endorsement by us. These companies are not involved with the offering of our
securities.

                                       2.
<PAGE>

                         PART I: FINANCIAL INFORMATION
                         ITEM 1. FINANCIAL STATEMENTS
                               IASIAWORKS, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                     (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                             December 31,          September 30,
                                                                                 1999                  2000
                                                                             -------------         -------------
                                                                                                    (unaudited)
<S>                                                                          <C>                   <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                 $      42,222         $      88,390
   Marketable securities                                                                 -                13,477
   Restricted cash                                                                      50                 5,999
   Accounts receivable, net                                                          2,735                 3,622
   Prepaid expenses and other assets                                                   679                 5,396
                                                                             -------------         -------------
          Total current assets                                                      45,686               116,884
Property and equipment, net                                                          5,585                28,769
Goodwill, intangibles and other assets                                              40,084                38,853
                                                                             -------------         -------------
          Total assets                                                       $      91,355         $     184,506
                                                                             =============         =============

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
   Accounts payable and other liabilities                                    $       4,694         $      10,091
   Deferred revenue                                                                    275                 1,270
   Current portion of capital lease obligations                                         56                   472
   Current portion of long-term debt                                                   397                   343
                                                                             -------------         -------------
           Total current liabilities                                                 5,422                12,176
Capital lease obligations, net of current portion                                      234                 1,574
Long-term notes payable                                                                201                     -
                                                                             -------------         -------------
                                                                                     5,857                13,750
                                                                             -------------         -------------

Convertible preferred stock; 83,100 shares authorized, $0.001
   par value; 24,722 shares issued and outstanding at
   December 31, 1999 and no shares issued and
   September 30, 2000 (unaudited)                                                  114,699                     -
                                                                             -------------         -------------
Stockholders' equity (deficit):
Common stock, $0.001 par value; 109,100 shares authorized;
     2,916 shares issued and outstanding at December 31, 1999
     and 39,292 shares issued and
     outstanding at September 30, 2000 (unaudited)                                       3                    39
Additional paid-in capital                                                          13,561               251,366
Deferred stock-based compensation                                                  (13,242)              (15,568)
Accumulated other comprehensive loss                                                  (900)                 (295)
Accumulated deficit                                                                (28,623)              (64,786)
                                                                             -------------         -------------
          Total stockholders' equity (deficit)                                     (29,201)              170,756
                                                                             -------------         -------------

          Total liabilities, convertible preferred stock and
          stockholders' equity (deficit)                                     $      91,355         $     184,506
                                                                             =============         =============
</TABLE>

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

                                       3.
<PAGE>

                               IASIAWORKS, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
                                  (unaudited)


<TABLE>
<CAPTION>
                                                                       Three Months Ended               Nine Months Ended
                                                                         September 30,                     September 30,
                                                                      1999           2000             1999             2000
                                                                    --------       ---------        --------        ---------
<S>                                                                 <C>            <C>              <C>             <C>
Revenue:
     Internet access and related services                           $  1,529       $   4,027        $  3,530        $  11,373
     Hosting, co-location and other managed services                      13           3,968              20            7,389
                                                                    --------       ---------        --------        ---------
        Total revenue                                                  1,542           7,995           3,550           18,762

Cost of revenue:
     Cost of Internet access and related services                      1,404           4,064           3,570           11,344
     Cost of hosting, co-location and other managed services              86           3,308             260            5,844
                                                                    --------       ---------        --------        ---------
        Total cost of revenue                                          1,490           7,372           3,830           17,188
                                                                    --------       ---------        --------        ---------
     Gross margin                                                         52             623            (280)           1,574
                                                                    --------       ---------        --------        ---------
Operating expenses:
  Network operations and support (excluding stock-based                  317           3,502           1,059            5,452
    compensation of $95 and $433 for the three months
    ended September 30, 1999 and 2000, respectively, and
    $114 and $1,154 for the nine months ended September
    30, 1999, and 2000, respectively)
  Sales and marketing (excluding stock-based                             657           3,650           1,583            7,034
    compensation of $62 and $634 for the three months
    ended September 30, 1999, and 2000, respectively, and
    $95 and $1,552 for the nine months ended September
    30, 1999, and 2000, respectively)
  General and administration (excluding stock-based                      828           2,679           2,245            6,261
    compensation of $1,370 and $1,695 for the three months
    ended September 30, 1999 and 2000, respectively, and
    $1,825 and $6,603 for the nine months ended September
    30, 1999, and 2000, respectively)
  Amortization of intangibles                                              -           3,993               -           11,709
  Stock-based compensation                                             1,527           2,762           2,034            9,309
                                                                    --------       ---------        --------        ---------
        Total operating expenses                                       3,329          16,586           6,921           39,765
                                                                    --------       ---------        --------        ---------
Loss from operations                                                  (3,277)        (15,963)         (7,201)         (38,191)
Interest income and other income                                          53           1,165             192            2,233
Interest expense, other expense and other charges                       (147)            (60)           (241)            (205)
                                                                    --------       ---------        --------        ---------
Net loss                                                              (3,371)        (14,858)         (7,250)         (36,163)
Dividend accretion on preferred stock                                   (597)              -          (1,791)               -
                                                                    --------       ---------        --------        ---------
Net loss attributable to common stockholders                        $ (3,968)      $ (14,858)       $ (9,041)       $ (36,163)
                                                                    ========       =========        ========        =========

Net loss per share - basic and diluted                              $  (6.59)      $   (0.57)       $ (20.64)       $   (3.31)
                                                                    ========       =========        ========        =========

Shares used in computing basic and diluted net loss per share            602          25,982             438           10,922
                                                                    ========       =========        ========        =========
</TABLE>

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

                                       4.
<PAGE>
                                 IASIAWORKS, INC.
                           STATEMENTS OF CASH FLOWS
                                (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                                         Nine Months Ended September 30,
                                                                                              1999               2000
                                                                                         --------------     --------------
<S>                                                                                      <C>                <C>
Cash flows from operating activities:
     Net loss                                                                             $  (7,250)         $ (36,163)
     Adjustments to reconcile net loss to net cash used in operating activities:
         Depreciation and amortization                                                          529             13,838
         Stock-based compensation                                                             2,034              9,309
         Warrant accretion                                                                      112                 23
         Provision for doubtful accounts                                                        140                496
         Loss on sale of property and equipment                                                   8                  -
         Changes in operating assets and liabilities:
            Accounts receivable                                                                (324)            (1,328)
            Prepaids and other assets                                                          (489)            (9,863)
            Accounts payable and accrued liabilities                                            895              6,344
            Deferred revenue                                                                    156                996
                                                                                          ---------          ---------
                 Net cash used in operating activities                                       (4,189)           (16,348)
                                                                                          ---------          ---------

Cash flows from investing activities:
     Purchase of property and equipment                                                      (1,777)           (25,470)
     Sale of (purchase of) marketable securities                                              4,433            (13,477)
     Proceeds on sale of assets                                                                  39                  -
     Business acquisitions                                                                        -             (1,950)
     (Increase) decrease in restricted cash and deposits                                        135             (5,948)
                                                                                          ---------          ---------
                Net cash provided by (used in) investment activities                          2,830            (46,845)
                                                                                          ---------          ---------
Cash flows from financing activities:
     Proceeds from issuance of common stock, net                                                 17            106,578
     Proceeds from issuance of preferred stock and preferred stock warrants, net                  -                943
     Proceeds from long-term debt                                                             1,902              1,557
                                                                                          ---------          ---------
                Net cash provided by financing activities                                     1,919            109,078
                                                                                          ---------          ---------

Effect of exchange rate changes on cash                                                        (550)               283
Net increase in cash and cash equivalents                                                        10             46,168
Cash and cash equivalents at beginning of period                                              2,654             42,222
                                                                                          ---------          ---------
Cash and cash equivalents at end of period                                                $   2,664          $  88,390
                                                                                          =========          =========

Supplemental cash flow disclosures:
    Cash paid during the period for:
            Interest                                                                      $     164          $     134
                                                                                          =========          =========
            Taxes                                                                         $       2          $      22
                                                                                          =========          =========

Disclosure of non-cash activities:
         Assets acquired under capital leases                                             $     225          $   1,521
                                                                                          =========          =========
         Issuance of preferred stock in connection with acquisition                       $       -          $   4,850
                                                                                          =========          =========
         Dividend accretion on preferred stock                                            $  (1,791)         $       -
                                                                                          =========          =========
</TABLE>

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

                                      5.
<PAGE>

                               IASIAWORKS, INC.

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                              SEPTEMBER 30, 2000

                                  (unaudited)

NOTE 1 -- THE COMPANY

iAsiaWorks, Inc. (the "Company") offers a broad range of Internet solutions that
allows business customers to build or extend their presence across multiple
markets in the Asia-Pacific region. These Internet solutions include high-speed,
leased-line Internet access, hosting, co-location, managed services and other
value-added services.


NOTE 2 -- INTERIM BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information, the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not contain all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the accompanying unaudited
condensed consolidated financial statements include all adjustments, consisting
only of normal recurring adjustments, necessary for the fair presentation of the
Company's financial position as of September 30, 2000, the results of its
operations for the three month and the nine month periods ended September 30,
2000 and 1999, and cash flows for the nine months ended September 30, 2000 and
1999. These financial statements should be read in conjunction with the
Company's audited consolidated financial statements as of December 31, 1999 and
1998 and for each of the years in the three year period ended December 31, 1999,
including notes thereto, included in the Company's Registration Statement on
Form S-1. Operating results for the nine month period ended September 30, 2000
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2000.

Share numbers included in this document reflect the 3 for 1 reverse stock split
which was effected prior to the consummation of the initial public offering on
August 8, 2000.


NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

The condensed consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All inter-company transactions and
balances have been eliminated in this consolidation.

Revenue Recognition

The Company's revenue consists of contracts for Internet access and related
services and monthly fees from customer use of Internet data centers, managed
services, and professional services and use of equipment provided by the
Company. Internet access, hosting and co-location revenues are generally billed
and recognized ratably over the term of the contract, which generally has a

                                       6.
<PAGE>

one year term. Internet access-related services revenue includes installation
fees and related direct costs. Installation fees and related direct costs are
deferred and recognized over the contract term.

Managed and other value-added services include administration, monitoring,
security, data backup, consulting services and equipment sales. The Company
recognizes revenue from maintenance fees for ongoing customer support ratably
over the period of the maintenance contract. Payments for maintenance fees are
generally made in advance and are non-refundable. Consulting revenue is
generally billed on a time and materials basis, and is recognized as the
consulting services are rendered. Equipment revenues are recognized when the
equipment is delivered to the customer or placed into service at one of the
Company's Internet data centers.

Net Loss Per Share

Net loss per share has been computed by dividing the net loss by the
weighted-average number of shares outstanding during the period.

The following table sets forth the computation of net loss per share for the
periods indicated. For periods prior to the Company's initial public offering,
the computation does not reflect the conversion of preferred stock into common
stock, which occurred upon the closing of our initial public offering, nor does
it include the exercise of outstanding options and warrants for any period. The
information set forth is stated in thousands, except for per share data:

<TABLE>
<CAPTION>
                                                                    Three Months Ended                Nine Months Ended
                                                                       September  30,                    September 30,
                                                                   1999              2000            1999             2000
                                                               ------------      -----------      ----------       ----------
<S>                                                            <C>               <C>              <C>              <C>
Numerator:
       Net loss attributable to common stockholders            $     (3,968)     $   (14,858)     $   (9,041)      $  (36,163)
                                                               ============      ===========      ==========       ==========

Denominator:
       Shares used in computing net loss per
       share attributable to common
       stockholders, basic and diluted                                  602           25,982             438           10,922
                                                               ============      ===========      ==========       ==========

       Net loss per share attributable to
       common stockholders, basic and diluted                  $      (6.59)     $     (0.57)     $   (20.64)      $    (3.31)
                                                               ============      ===========      ==========       ==========
</TABLE>


NOTE 4 -- INITIAL PUBLIC OFFERING

On August 3, 2000, the Company completed its initial public offering and issued
9,000,000 shares of its common stock at a price of $13.00 per share. The Company
received approximately $108.8 million in cash, net of underwriting discounts and
commissions. Simultaneously with the closing of the initial public offering,
each outstanding share of the Company's Convertible Preferred Stock was
automatically converted into Common Stock based on the appropriate conversion
ratio.


NOTE 5 -- COMPREHENSIVE LOSS

The components of comprehensive loss are as follows (in thousands):

                                       7.
<PAGE>

<TABLE>
<CAPTION>
                                                             Three Months Ended            Nine Months Ended
                                                                September 30,                September 30,
                                                           1999             2000          1999            2000
                                                        ----------       -----------   -----------     -----------
<S>                                                     <C>              <C>           <C>             <C>
Net loss                                                 $ (3,371)        $ (14,858)    $  (7,250)      $ (36,163)
Dividend accretion on preferred stock                        (597)               --        (1,791)             --
Change in unrealized gain on marketable securities            (17)               --            12              10
Change in foreign currency translation adjustments             15               439          (482)            600
                                                        ----------       -----------   -----------     -----------

Comprehensive loss                                       $ (3,970)        $ (14,419)    $  (9,511)      $ (35,553)
                                                        ==========       ===========   ===========     ===========
</TABLE>

Accumulated other comprehensive loss consists of unrealized gains or losses on
marketable securities, dividend accretion on preferred stock, and cumulative
translation adjustments.

NOTE 6 -- RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. SFAS No. 133, as amended by SFAS No.
137, is effective for fiscal years beginning after June 15, 2000. In June 2000
the FASB issued SFAS No.138 "Accounting for certain Derivative Instruments and
certain Hedging Activities - an Amendment of FASB statement No. 133", which
deferred the effective date until the quarter ending March 31, 2001. The Company
is evaluating the possible impact, if any, that SFAS No. 133 may have on its
financial statements.

In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin ("SAB") 101, "Revenue Recognition", which provides guidance
on the recognition, presentation and disclosure on revenue in financial
statements filed with the SEC. SAB 101 outlines the basic criteria that must be
met to recognize revenue and provides guidance for disclosure related to revenue
recognition policies. In June 2000, the SEC issued SAB 101B to defer the
effective date for implementation of SAB 101 until the fourth quarter of fiscal
2000. The Company believes that its current revenue recognition policy is in
compliance with SAB 101.

In March 2000, the Financial Accounting Standards Board issued Interpretation
No. 44, ("FIN 44"), "Accounting for Certain Transactions Involving Stock
Compensation - an Interpretation of APB 25." This Interpretation clarifies (a)
the definition of employee for purposes of applying Opinion 25, (b) the criteria
for determining whether a plan qualifies as a non-compensatory plan, (c) the
accounting consequences of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. This Interpretation is effective
July 1, 2000, but certain conclusions in this Interpretation cover specific
events that occur after either December 15, 1998, or January 12, 2000, but
before the effective date of July 1, 2000, the effects of applying this
Interpretation are recognized on a prospective basis from July 1, 2000. The
adoption of FIN 44 did not have a material impact on the Company's financial
statements.

                                       8.
<PAGE>

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

     This Form 10-Q contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A
of the Securities Act of 1933, as amended. Forward-looking statements are
identified by words such as "believes," "anticipates," "expects," "intends,"
"will," "may" and other similar expressions. In addition, any statements that
refer to expectations, projections or other characterizations of future events
or circumstances are forward looking statements. Furthermore, the section
labeled "Factors Affecting Future Results" consists primarily of forward looking
statements. Readers are urged to review and consider carefully the various
disclosures made by us in this report and in other reports filed with the
Securities and Exchange Commission that advise interested parties of risks and
uncertainties that may affect our business. Our actual results may differ
materially from any forward looking statements due to such risks and
uncertainties.

Overview

     From inception in August 1995 until July 1999, we focused on providing
high-speed, leased-line Internet access to business customers in selected
markets in the Asia-Pacific region and derived substantially all of our revenue
from these services. In July 1999, we began to implement a significant change in
our business strategy to focus on providing dedicated hosting, co-location and
managed services. Prior to that time, we derived virtually no revenue from
hosting, co-location and managed services. During the quarters ended June 30,
2000, and September 30, 2000, hosting, co-location and other managed services
accounted for 37% and 50%, respectively, of our revenue. We expect hosting, co-
location and managed services to continue to grow both in absolute terms and as
a percentage of total revenue, and if we are successful in implementing our
business plan, they will represent a substantial majority of our revenue over
the next several years. We intend to continue offering Internet access and
expect to derive increased revenue from Internet access in absolute terms, but
expect Internet access revenue to decline significantly as a percentage of total
revenue.

     Internet access, hosting, co-location and certain managed services, such as
security and monitoring services, are billed on a monthly basis. Contracts for
these services are generally for an initial one year term. Certain other managed
services and value-added services are typically billed on a usage basis.

     Cost of revenue consists primarily of the cost of contracting for lines
from telecommunication providers worldwide, expenses related to data centers,
depreciation of equipment and data centers. Generally, we lease lines under
contracts of one year or more. The leasing of international private lines
comprises the largest component of our telecommunications expense, with
additional costs arising from leasing local circuits into our Internet data
centers. In the future, we expect to increase the size and number of circuits
leased as our network volume grows and we expand geographically. We expect
depreciation expense to increase as we open more data centers.

     We intend to establish a network of large-scale, high performance Internet
data centers throughout the Asia-Pacific region with most expected to exceed
50,000 square feet. As we establish these facilities, we will also need to
increase substantially our sales, marketing, product development and network
operations support staff and infrastructure to support our network growth and
geographic expansion. Most of these developmental costs will be incurred prior
to the realization of any significant growth in revenue. As a result, we believe
that we will continue
                                       9.
<PAGE>

to incur operating and net losses for at least the next several years, and that
our losses will increase significantly from current levels. Our net losses in
1999 of $12.3 million and in the first nine months of 2000 of $36.2 million do
not include any of the significant costs associated with the establishment of
our new Internet data centers although some capital expenditure has already been
incurred. We expect these costs to continue for the foreseeable future.

      On August 3, 2000, we raised $108.8 million, net of underwriting expenses,
in an initial public offering of nine million shares of our common stock on the
Nasdaq National Market Exchange. The proceeds from the offering have been and
will continue to be used to fund the build out of Internet data centers in the
Asia-Pacific region, and to fund our growth.

      The Company has recently acquired a building and land which will be
financed to build out Internet data center facilities in Seoul, Korea. We have
also entered into a definitive agreement to acquire a building and land in
Taipei, Taiwan. These two new facilities along with the Hong Kong facility, for
which the Company entered into a lease agreement in June 2000, will add over
330,000 gross square feet of new premium Internet data center space.

                                      10.
<PAGE>

Results of Operations

      We believe that period-to-period comparisons of our historical operational
results are not necessarily meaningful and should not be relied upon as being
indicative of future performance. Our prospects must be considered in light of
the risks, expenses and difficulties frequently experienced by companies in the
early stages of development, particularly companies in new and rapidly evolving
markets like ours. Although we have experienced significant revenue growth
recently, some of which results from acquisitions, this trend may not continue.
Furthermore, we may not achieve or maintain profitability in the future. The
following table presents financial data for the periods indicated as a
percentage of total revenue.

<TABLE>
<CAPTION>
                                                                          Three Months Ended              Nine Months Ended
                                                                          ------------------              -----------------
                                                                            September 30,                   September 30,
                                                                            -------------                   -------------
                                                                         1999              2000          1999          2000
                                                                         ----              ----          ----          ----
                                                                               (unaudited)                  (unaudited)
<S>                                                                <C>               <C>           <C>           <C>
Revenue:
     Internet access and related services                                 99%                50%           99%           61%
     Hosting, co-location and other managed services                       1                 50             1            39
                                                                   ----------        -----------   -----------   -----------

                        Total revenue                                    100%               100%          100%          100%

Cost of revenue:
     Cost of Internet access and related services                         91                 51           101            61
     Cost of hosting, co-location and other managed services               6                 41             7            31
                                                                   ----------        -----------   -----------   -----------

                        Total cost of revenue                             97                 92           108            92
                                                                   ----------        -----------   -----------   -----------

     Gross margin                                                          3                  8           (8)             8

Operating expenses:
     Network operations and support                                       21                 44            30            29
     Sales and marketing                                                  42                 46            45            38
     General and administration                                           54                 33            63            33
     Amortization of intangibles                                           -                 50             -            62
     Stock-based compensation                                             99                 35            57            50
                                                                   ----------        -----------   -----------   -----------
                        Total operating expenses                         216                208           195           212
                                                                   ----------        -----------   -----------   -----------
Loss from operations                                                    (213)              (200)         (203)         (204)
Interest income and other income                                           3                 15             5            12
Interest expense, other expense and other charges                         (9)                (1)           (6)           (1)
                                                                   ----------        -----------   -----------   -----------
Net loss                                                                (219)              (186)         (204)         (193)
Dividend accretion on preferred stock                                    (38)                 -           (51)            -
                                                                   ----------        -----------   -----------   -----------
Net loss attributable to common stockholders                            (257%)             (186%)        (255%)        (193%)
                                                                   ----------        -----------   -----------   -----------
</TABLE>


Three and nine months ended September 30, 2000 and 1999

Comparison of the financial data for the three months ended September 30, 2000,
with the three months ended September 30, 1999, and the nine months ended
September 30, 2000, with the nine months ended September 30, 1999, may not be
meaningful as the financial data for the three

                                      11.
<PAGE>

quarters of 2000 reflects a shift in the focus of our business strategy in
mid-1999 and the results of acquisitions in late 1999 and early 2000.

Revenue

Total revenue increased 419% to $8.0 million for the three months ended
September 30, 2000, from $1.5 million for the three months ended September 30,
1999. Total revenue increased 429% to $18.8 million for the nine months ended
September 30, 2000, from $3.6 million for the nine months ended September 30,
1999. The increase in revenue for both periods is in part attributable to
acquisitions made in late 1999 and early 2000, an increase in the number of
customers, and the addition of hosting, co-location and managed services, which
represented $4.0 million, or 50%, of the revenue for the third quarter of 2000.
We began offering hosting and co-location services early in the third quarter of
1999. Based upon our projections, which include assumptions that may not be
correct, we believe that, if we successfully execute our business plan, revenue
from hosting, co-location and other managed services could be 80 percent of
our total revenue by the end of 2001.

Expenses

Cost of Revenue

Cost of revenue increased 395% to $7.4 million for the three months ended
September 30, 2000, from $1.5 million for the three months ended September 30,
1999. Cost of revenue increased 349% to $17.2 million for the nine months ended
September 30, 2000, from $3.8 million for the nine months ended September 30,
1999. As a percentage of sales, cost of revenue decreased to 92% for the three
months ended September 30, 2000, from 97% for the three months ended September
30, 1999. As a percentage of sales, cost of revenue decreased to 92% for the
nine months ended September 30, 2000, from 108% for the nine months ended
September 30, 1999. These decreases in cost of revenue were caused by several
factors including the change in business mix in the third quarter of 1999 as
described above.  However, cost of revenue is anticipated to grow relative to
revenue in the near term.

We expect cost of revenue for Internet access and related services to remain
relatively constant as a percentage of Internet access revenue. We expect cost
of revenue for hosting, co-location and managed services to increase as a
percentage of revenue. Going forward, we expect gross margin for hosting, co-
location and managed services to decrease until we have achieved the necessary
revenue levels to offset the initial fixed costs and expenses related to
establishing and operating our Internet data center facilities and other
infrastructure.

Network Operations and Support

Network operations and support expenses increased over one thousand percent to
$3.5 million for the three months ended September 30, 2000, from $317,000 for
the three months ended September 30, 1999. Network operations and support
expenses increased 415% to $5.5 million for the nine months ended September 30,
2000, from $1.1 million for the nine months ended September 30, 1999. Network
operations and support expense as a percentage of total revenue increased to 44%
for the three months ended September 30, 2000, from 21% for the three months
ended September 30, 1999. Network operations and support expense as a percentage
of total revenue decreased slightly to 29% for the nine months ended September
30, 2000, from 30% for the nine months ended September 30, 1999. The increase in
network operations and support expense in dollar terms in both periods is
primarily due to an increase in our engineering, operations and professional
service staff in all regions we serve. The growth in staff was due in large part
to the need for network operations and support staff created by the change in
our business mix toward hosting, co-location and other managed services early in
the third quarter of 1999. We expect network operations

                                      12.
<PAGE>

expenses to increase at a high rate in terms of absolute dollars as we deploy
new Internet data centers and hire additional engineers, operations and
professional service staff to support them.

Sales and Marketing

Sales and marketing expenses increased 456% to $3.7 million for the three months
ended September 30, 2000, from $657,000 for the three months ended September 30,
1999. Sales and marketing expenses increased 344% to $7.0 million for the nine
months ended September 30, 2000, from $1.6 million for the nine months ended
September 30, 1999. Sales and marketing expense as a percentage of total revenue
increased to 46% for the three months ended September 30, 2000, from 42% for the
three months ended September 30, 1999. The increase between the three month
periods is due to the timing of publicity campaigns, primarily late in the third
quarter of 2000. Sales and marketing expense as a percentage of total revenue
decreased to 38% for the nine months ended September 30, 2000, from 45% for the
nine months ended September 30, 1999. Sales and marketing expense will continue
to increase in absolute dollar terms and decrease in relative terms as we
continue to hire more sales staff in the Asia-Pacific region and the United
States and as we continue to roll out our worldwide branding campaign in the
fourth quarter.

General and Administration

General and administration expenses increased 224% to $2.7 million for the
three months ended September 30, 2000, from $828,000 for the three months
ended September 30, 1999. General and administration expenses increased 179%
to $6.3 million for the nine months ended September 30, 2000, from $2.2
million for the nine months ended September 30, 2000. This increase was
primarily due to the growth in general and administrative staff levels due to
the Company's overall expansion, including hiring in anticipation of the
Company's initial public offering. General and administration expense as a
percentage of total revenue decreased to 33% for the three months ended
September 30, 2000, from 54% for the three months ended September 30, 1999.
General and administration expense as a percentage of total revenue decreased to
33% for the nine months ended September 30, 2000, from 63% for the nine months
ended September 30, 1999. This trend of increases in absolute dollar terms is
expected to continue as the Company continues to expand.

Amortization of Intangible Assets

In connection with the earnout payment relating to the acquisition of Web
Professionals, Inc., a U.S. based Web hosting company that we acquired in
January 2000, we recorded additional goodwill of $375,000 during the three
months ended September 30, 2000. We recorded amortization of intangible assets
of $4.0 million for the three months ended September 30, 2000. We recorded
amortization of intangible assets of $11.7 million for the nine months ended
September 30, 2000. We recorded no comparable expense for the three month and
nine month periods ended September 30, 1999. As of September 30, 2000,
$38.9 million was recorded as Goodwill, intangibles and other assets which will
be amortized over a period of three years.

Stock-Based Compensation

In connection with the grant of stock options to employees and consultants, we
recorded stock-based compensation expense of approximately $2.8 million for
the three months ended September 30, 2000, compared with $1.5 million for the
three months ended September 30, 1999. We recorded stock-based compensation of
approximately $9.3 million for the nine months ended September 30, 2000,
compared with $2.0 million for the nine months ended September 30, 1999. These
increases in stock-based compensation expense were due to increases in the
value of the Company's stock and the increase in the number of employees who
received stock option grants.

                                      13.
<PAGE>

As of September 30, 2000, $15.6 million was recorded as deferred stock-based
compensation which will be amortized and recorded as charges to operations over
the vesting periods of the options.

Interest income and other income

Net interest and other income/(charges) increased to $1.1 million for the three
months ended September 30, 2000, from ($94,000) for the three months ended
September 30, 1999. Net interest and other income increased to $2.0 million for
the nine months ended September 30, 2000, from ($49,000) for the nine months
ended September 30, 1999. The increase in net interest and other income was due
to increased levels of interest earning short-term securities and bank deposits
as a result of our initial public offering.

Provision for Income Taxes

We have incurred operating losses for all periods from inception through
September 30, 2000. We have recorded a valuation allowance for the full amount
of our net deferred tax assets, as the future realization of the tax benefits is
not currently likely.

Liquidity and Capital Resources

From our inception until our initial public offering, we financed our operations
primarily from private sales of convertible preferred stock, net of issuance
costs, totaling $109.4 million and, to a lesser extent, from bank borrowings and
lease financings.

On August 3, 2000, the Company completed its initial public offering and
received approximately $108.8 million in cash, net of underwriting discounts and
commissions.

Net cash used by operating activities for fiscal year 1999 was $5.8 million and
for investing activities was $40.1 million. Net cash provided by financing
activities was $85.5 million related primarily to the issuance of our Series D
preferred stock in December 1999.

At September 30, 2000, we had cash and cash equivalents and marketable
securities aggregating $107.9 million. In addition, we had a debt balance at
September 30, 2000, of $343,000, related to the remaining balance on a line of
credit, and we had capital lease obligations of $2.0 million at September 30,
2000.

We expect to devote substantial resources to continue to establish additional
Internet data centers throughout the Asia-Pacific region, expand our sales,
support, engineering, professional services, marketing and product development
organizations and build the infrastructure necessary to support our growth.

Our capital outlays over the next three months are estimated to be between
$30 million and $35 million, and for the next six to nine months estimated to be
in the range of $60 to $80 million for the establishment of additional Internet
data center facilities. These outlays are net of secured financing of $35
million. We are currently seeking additional financing for these projects. As
part of these estimated expenditures, we have entered into fixed asset purchase
commitments for fiscal year 2000 and fiscal year 2001, which are estimated to be
$12.9 million and $40.4 million, respectively. Included in these commitments are
our lease of an Internet data center facility in Hong Kong and our purchase of
buildings and land in Taiwan and Korea, which we intend to use primarily as
Internet

                                      14.
<PAGE>

data centers. Except as set forth above, we are unable to accurately predict the
level of capital expenditures associated with establishing new Internet data
centers because these expenses can vary significantly based upon the quality,
timing, location and size of each Internet data center as well as the manner of
financing, such as whether we acquire or lease the center.

We expect to continue to make decisions regarding our Internet data center
deployment based upon what is most appropriate in light of the status of our
business and the opportunities available in the specific markets at the relevant
times. We have estimated that it will cost an average of $400 to $500 per square
foot to locate sites for, build and equip each Internet data center.

In August 2000, we offered nine million common shares at a price of $13.00 per
share, raising approximately $117 million (approximately $109 million net of
underwriting discounts and commissions) in an initial public offering. If the
anticipated Internet data center buildout expenditures are incurred, we may
require additional financing. The Company believes it will be able to obtain the
additional financing required to complete its Internet data center buildout on
acceptable terms. To date, we have financed the Korea building site and we are
finalizing the financing for the Taiwan site. As well, we will continue to use
equipment financing to reduce our capital expenditures going forward. There is
the risk that additional funding, if needed, may not be available to us on terms
acceptable to us, or at all, to fund the second stage of our expansion plans. In
addition, we are regularly evaluating potential acquisitions, and we may need to
rely on additional equity or debt financings to finance future acquisitions.

In October and November 2000, the Company secured loan financing for its
Internet data center projects in Korea and Taiwan, respectively. The loan in
Korea is for approximately $12.6 million. It is secured against the land and
buildings, is for a term of 5 years, and currently bears interest at a variable
rate no greater than 11% per annum. The loan in Taiwan is for approximately
$14.1 million. It is secured against the land and buildings, is for a term of 15
years, and currently bears interest at 7.5% per annum.

RISK FACTORS

Our business, financial condition or operating results could be seriously harmed
by any of the following risks. In addition, the trading price of our common
stock could decline due to any of the following risks, and you may lose all or
part of any investment you make in our common stock.

                         Risks Related to Our Business

We may not grow our business or become profitable if we are not successful in
implementing a change in our strategic focus.

     From inception in August 1995 until July 1999, we focused on providing
high-speed, leased-line Internet access in selected markets in the Asia-Pacific
region. In July 1999, we began to implement a significant change in our business
strategy to focus on providing dedicated hosting, co-location and managed
services throughout the Asia-Pacific region. Our inability to successfully
execute this business strategy could compromise our future growth and
profitability.

                                      15.
<PAGE>

Our Internet data center expansion plans may be delayed, never be completed or
experience other significant problems, which would delay or prevent us from
realizing our expected growth and ultimate profitability.

         The Internet data centers currently operated by us or our strategic
partners are not large-scale facilities. Our anticipated growth and ultimate
profitability will be jeopardized if we cannot establish significant new
Internet data center capacity, which may not occur due to inadequate facilities
available for sale or lease, construction delays, inability to obtain necessary
authorizations or technological problems.

         We do not have a proven track record for the construction or the
operation of large-scale, high performance Internet data centers and therefore
will be dependent upon third party project managers, contractors, other service
providers and strategic partners. In addition, if any of these risks affect our
Internet data center expansion plans, the benefits of our substantial investment
in these Internet data centers may be delayed or never occur. In that case, we
will be delayed or prevented from realizing our expected growth and ultimate
profitability.

If we are successful in establishing our new Internet data centers, we will need
to greatly expand our customer base to benefit from these investments.

         We will incur significant costs to establish and operate our new
Internet data centers. If we are unable to significantly grow our customer base,
we will not be able to achieve the economies of scale necessary to offset our
fixed and other operating costs. We have limited experience in attracting and
servicing our hosting, co-location, managed services and other value-added
services customers. Our ability to attract and retain additional customers for
these services depends on a variety of factors including the willingness of
businesses to outsource their Internet operations and the quality, reliability
and cost-effectiveness of our services. If we are unable to significantly
increase our customer base for hosting, co-location, managed services and other
value added services, we will not realize our expected growth or achieve
profitability.

Our stock price has been extremely volatile in the past and is likely to be
extremely volatile in the future, which could lead to a high rate of attrition
of our employees and lost revenue and lost contracts with customers and vendors.

         The market price of our common stock may be extremely volatile in the
future. The stocks of Web-related and technology companies like ours have
experienced extreme price and volume fluctuations in recent months, many of
which appear unrelated to the companies' business, financial condition or
operating results. Although the market price of our stock will in part be based
on our business, financial condition and operating results, we expect that it
will also be affected to a significant degree by these market-wide and
industry-wide factors.

         Fluctuations in our stock price could lead to employees leaving us due
to their perception of the value of their stock options in relation to the price
of our common stock. If this were to occur, our business, results of operations
and financial condition could be harmed.

         Fluctuations in our stock price could also lead to a loss of revenue
due to our inability to engage new customers and vendors and to renew contracts
with our current customers and vendors. Existing and potential customers and
vendors may perceive our fluctuating stock price as a sign of instability and
may therefore be unwilling to do business with us. If this were to occur, our
business, results of operations and financial condition could be harmed.

                                      16.
<PAGE>

We expect significant increases in our operating expenses and continued losses.
We may not be able to grow our business or continue operating if we cannot raise
additional financing.

         We have never achieved profitability, have accumulated net losses of
$64.8 million from our inception through September 30, 2000 and have had to rely
on the proceeds of the sale of equity securities to fund our operations. We
believe that we will continue to incur losses for at least the next several
years and that our losses will increase significantly from current levels. We
expect to fund our growth through equity or debt financings. Our inability to
finance our operations may limit our growth potential or render us unable to
continue operating. Furthermore, we may not be able to obtain financing on
satisfactory terms. If we issue securities to raise capital, our existing
stockholders may experience additional dilution or the new securities may have
rights senior to those of our common stock.

We operate in a relatively new and evolving market with rapid technological
changes and uncertain prospects for growth. This market may evolve in a manner
that jeopardizes our prospects for growth and profitability.

         The market for our services in the Asia-Pacific region has only
recently begun to develop and is evolving rapidly. Projected growth of this
market may not be realized. The market for our services may not grow, our
services may not be adopted and businesses may not use these Internet based
services to the degree or in the manner that we expect. In addition, if we are
not able to effectively respond to technological changes or if technological
advances diminish the benefits derived by our customers from the use of our
products and services, future demand for our services could be reduced. For
example, it is possible that businesses may find it cheaper, more secure or
otherwise preferable to host their web sites and applications internally and
decide not to outsource the management of their web sites and applications. If
we are not able to react quickly to changes in the market, if the market fails
to develop or develops more slowly than expected or if our services do not
achieve market acceptance, we will not achieve growth levels necessary to become
profitable.

The potential market for Internet services in the Asia-Pacific region may
attract new and existing competitors, which could narrow our margins and limit
our growth prospects.

         The market for Internet access, as well as for hosting, co-location and
managed services, is extremely competitive and there are few substantial
barriers to entry. New market entrants or the creation of stronger competitors
through combinations could result in increased price competition, which would
make it difficult for us to attract new customers, retain existing customers, or
attain revenue and gross margin levels sufficient to generate a return on our
prior investment in our business.

         We are dependent upon businesses, such as national telecommunications
carriers that are monopolies or have significant regulatory advantages over us,
which provide us with resources we need to provide services in one or more
markets. These businesses either currently compete with us or may compete with
us in the future. Increasingly, Internet service providers, hosting companies,
telecommunications companies and equipment manufacturers based in North America
have announced plans to enter into or expand their operations in markets in the
Asia-Pacific region. For example, companies such as PSINet, AboveNet
Communications, and its parent Metropolitan Fiber Networks, Exodus
Communications, Inc., Global Crossing GlobalCenter, Level 3, WorldCom, Telegis
Networks, Pihana Pacific, and Intel have announced plans to enter into or expand
their current operations in the Asia-Pacific region. When these companies expand
their presence in the Asia-Pacific region, customers may decide to use their
services in the region instead of ours.

                                      17.
<PAGE>

         Many of our competitors have substantially greater financial, technical
and marketing resources, larger customer bases, longer operating histories,
greater name recognition and more established relationships in the industry than
we do. As a result, certain of these competitors may be able to develop and
expand their network infrastructures and service offerings more quickly, adapt
to new or emerging technologies and changes in customer requirements more
readily, take advantage of acquisition and other opportunities more effectively,
devote greater resources to the marketing and sale of their products and adopt
more aggressive pricing policies than we can. In addition, these competitors
have entered and will likely continue to enter into joint ventures or
consortiums to provide additional value-added services competitive with those
provided by us. We may not have, or be able to acquire, the resources or
expertise to compete successfully in the future, which could narrow our margins
and limit our growth prospects.

Our limited operating history makes forecasting difficult. Because most of our
expenses are based on planned operating results, failure to achieve forecast
revenue could significantly increase our net losses in any given period.

         As a result of our limited operating history, particularly since our
change in strategic focus in mid-1999, it is difficult to accurately forecast
our revenue, and we have limited meaningful historical financial data upon which
to base planned operating expenses. We base our current and future expense
levels on our operating plans, the anticipated dates that our new large-scale,
high performance Internet data centers will be completed and available for
customer use, expected use of our new Internet data centers and estimates of
future revenue. Because our significant expenses are to a large extent fixed in
the short term, we may be unable to adjust our spending in a timely manner to
compensate for any unexpected revenue shortfall. This inability could
significantly increase our net losses in any given period.

Our operating results are difficult to predict. If we fail to meet the
expectations of public market analysts and investors, the market price of our
common stock may decline significantly.

         Our annual and quarterly operating results have fluctuated in the past
and may fluctuate significantly in the future due to a variety of factors, many
of which are outside of our control. For example, for several quarters beginning
in late 1997, our operating results were adversely affected by the economic
crisis in the Asia-Pacific region. It is possible that, in the future, our
quarterly operating results may fall below the expectations of securities
analysts and investors. In this event, the trading price of our common stock may
decline significantly.

If we cannot effectively manage our growth in the number of personnel, our
increasing geographic breadth and our acquisitions, our projected revenue growth
may not occur, and we may not be able to achieve our projected plan and
operating results.

         We expect to grow our business by hiring additional personnel and
acquiring businesses in our existing markets and other markets in the
Asia-Pacific region. The additional personnel, increased geographic breadth of
our operations, and challenges presented by an evolving corporate culture, will
make it increasingly difficult to effectively manage our operations in order to
implement our business plan and effectively oversee our personnel. We may be
unable to maintain uniform standards, controls, procedures and policies if we
fail in these efforts. If we cannot effectively manage our growth, our projected
revenue growth may not occur and we may not be able to achieve our projected
plan and operating results.

                                      18.
<PAGE>

We may be unable to hire and retain the skilled engineering and technical
personnel necessary to develop our business.

         We intend to hire a significant number of additional engineering and
technical personnel. Competition for these individuals with relevant experience
and expertise is intense, and we may not be able to attract, assimilate or
retain highly qualified personnel in the future. The market for qualified
engineering and technical personnel in the Asia-Pacific region is extremely
limited and finding individuals with relevant country specific experience may be
difficult. Our failure to attract and retain the highly trained engineering and
technical people who are integral to our business may limit our growth rate and
harm our business. We expect to face greater difficulty attracting these
personnel with equity incentives as a public company than we did as a privately
held company.

The expansion of our network is dependent upon the availability of adequate
connectivity with third party providers and failure or delay in obtaining
necessary connectivity would limit our growth.

         In building our network we rely upon connectivity and bandwidth from
Internet service providers and local and international telecommunications
carriers. In some of our markets we are dependent on one or a limited number of
connectivity providers. Many of these carriers are our competitors. Because of
market and competitive factors, it is uncertain whether we will be able to
obtain the requisite network connectivity at commercially viable prices or that
the necessary connectivity will be available on a timely basis or at all.
Failure to obtain this connectivity would jeopardize our ability to conduct our
business in the Asia-Pacific region and would restrict our growth.

We must offer services priced above the overall cost of bandwidth, and any
failure to do so could cause us to sell our services at a loss.

         We purchase our bandwidth capacity in amounts based upon projected
usage by our customers on a fixed-price basis in advance of the sale of our
services. We sell our services, by contract, on the basis of actual usage. If we
do not obtain adequate bandwidth capacity on acceptable terms and realize
appropriate customer volume for such bandwidth, we will not achieve positive
gross profit.

         We expect that the cost of obtaining bandwidth for the transport of
data over our network will decline over time as a result of, among other things,
the large amount of capital currently being invested to build network
infrastructure. We expect the prices we charge for data transported over our
network will also decline over time as a result of, among other things, the
lower cost of obtaining bandwidth and existing and new competition in the
markets we address. If we fail to accurately predict the decline in costs of
bandwidth, are unable to sell our services at acceptable prices, or fail to
offer additional services from which we can derive additional revenue, the value
of our services will be substantially reduced, our revenue will decrease and our
business, results of operations and financial condition will suffer.

If we lose the services of key members of our management, in particular our
Chief Executive Officer and our Chief Financial Officer and President-U.S., we
may not be able to effectively execute our business plan and our trading price
may suffer.

         Our future success depends to a significant degree on the skills,
experience and efforts of JoAnn Patrick-Ezzell, our Chief Executive Officer,
Jonathan Beizer, our Chief Financial Officer and President-U.S., and other key
personnel. The loss of the services of any of these individuals

                                      19.
<PAGE>

could compromise our ability to effectively operate our business. In addition,
we have not obtained key person life insurance on any of our key employees. If
any of our key employees left or was seriously injured and unable to work and we
were unable to find a qualified replacement, our business, results of operations
and financial condition could be harmed.

We could lose customers and be exposed to liability if our service to our
customers is disrupted or damaged or the security of confidential information
stored in our computer systems is compromised.

         Our success, in particular our ability to successfully provide our
services in a high quality and reliable manner, largely depends upon the
efficient and uninterrupted operation of our Internet data centers, including
our computer and communications hardware and software systems and the power and
cooling systems upon which they rely. Any of the acts or events described below
could lead to interruptions, physical or electronic loss of data, delays or
cessation of service to our customers or a decrease in responsiveness, which
could harm our relationships with our customers, result in liability damages and
reduce revenue. Our systems and operations are vulnerable to damage or
interruption from:

         .    earthquake, fire, flood and other natural disasters;

         .    failure of our internal systems, including failure of our computer
              systems or our telecommunications network, operator negligence,
              improper operation by or supervision of our employees;

         .    third party or systemic infrastructure failures, including
              Internet network outages, power and utility loss and problems with
              the satellite systems used for our data back-up; and

         .    disruptions due to human intervention, including computer viruses,
              interruption, break ins, security breaches, misappropriation,
              denial of service, vandalism and similar disruptive problems
              caused by our customers or Internet hackers.

         Furthermore, any inappropriate use of the network by third parties
could potentially jeopardize the security of confidential information stored in
our computer systems and our customers' computer systems, which may result in
liability to us and act as a deterrent to potential customers. Although we
intend to continue to implement security measures, any measures we implement may
be circumvented in the future. The costs and resources required to eliminate
computer viruses and alleviate other security problems may divert resources from
other activities and may result in interruptions or delays to our customers that
could cause our business, results of operations and financial condition to
suffer.

Because of the significant stock ownership of our officers, directors and
significant stockholders, you will be unable to exert significant control over
our future direction.

         Based upon our shares outstanding as of October 31, 2000, our executive
officers and directors, their affiliates and other significant stockholders will
together control approximately 63% of our outstanding common stock as a result
of their shareholdings, which if they act together, would enable them to control
all matters requiring our stockholders' approval, including the election of
directors and approval of significant corporate transactions. This concentration
of ownership may delay, prevent or deter a change in control, could deprive our
stockholders of an opportunity to receive a premium for their common stock as
part of a sale of iAsiaWorks or our assets and might adversely affect the
trading price of our common stock.

                                      20.
<PAGE>

Provisions of our certificate of incorporation and bylaws may make changes of
control difficult, even if they would be beneficial to stockholders.

         Anti-takeover provisions of Delaware law and in our certificate of
incorporation and bylaws may make a change in control of iAsiaWorks difficult,
even if a change in control would be beneficial to our stockholders. These
provisions may allow our board of directors to prevent or make changes in the
management and control of iAsiaWorks. In addition, under Delaware law, our board
of directors may adopt additional anti-takeover measures in the future. The
rights of holders and the price of our common stock could be adversely affected
by these anti-takeover provisions.

         Risks specific to the Internet, our industry and our markets

The political, legal and economic climate in the Asia-Pacific region is
volatile, uncertain, subject to change and presents risks that could adversely
affect our business.

         We currently operate throughout the Asia-Pacific region. As a result,
our results of operation and future growth depend on the economies in these
markets. There are certain risks inherent in conducting business in the
Asia-Pacific region that could affect our profitability, including:

         .    political and economic instability;

         .    risk of expropriation;

         .    risk of currency exchange controls and repatriation;

         .    export restrictions, tariffs and other trade barriers;

         .    changes in regulatory requirements;

         .    legal restrictions on the business practices of United States
              companies operating outside of the United States, such as the
              Foreign Corrupt Practices Act;

         .    lack of clarity, transparency and consistency in the application
              of laws in various jurisdictions; and

         .    potential adverse tax consequences.

         Beginning in mid-1997, many countries in the Asia-Pacific region
experienced significant economic downturns and related difficulties. As a result
of the decline in the value of the region's currencies, many governments in the
Asia-Pacific region and companies operating in the region had difficulties
servicing foreign currency denominated debt and many corporate borrowers
defaulted on their payments. These currency fluctuations, as well as resulting
higher interest rates and other factors, materially and adversely affected the
economies of many countries in the Asia-Pacific region. While the region has
generally shown signs of improvement in recent periods, the economic conditions
in the Asia-Pacific region may not continue to improve and any recent
improvements may not be sustained.

                                      21.
<PAGE>

         Governmental regulation and the application of existing laws of
countries in the Asia-Pacific region often lack clarity and are subject to
change without notice. Such uncertainty and transparency may result in
unexpected liabilities and increases the likelihood of our unknowingly violating
local law, especially with regard to obtaining local and national government
approvals, limitations on foreign investments and the purchase of real property,
and complying with zoning, environmental, labor and similar regulatory
requirements.

         Any new adverse political, legal or economic development in the
Asia-Pacific region could materially and adversely affect our markets and our
business. For example, while Hong Kong is a Special Administrative region under
the government of mainland China, with its own government and legislature, it
may not remain autonomous from mainland China. Any loss of autonomy could affect
the regulation of business in Hong Kong, hinder our ability to operate in Hong
Kong, and destabilize the Asia-Pacific region. Similarly, any conflict between
mainland China and Taiwan or between North Korea and South Korea may also
destabilize the region and render us unable to transact business in the region.
If any of these events were to occur, our business model would be undermined.

Governmental regulation and the application of existing laws to the Internet may
slow the Internet's growth, increase our costs of doing business and create
potential liability for the dissemination of information over the Internet.

         Laws and regulations directly applicable to Internet communications are
becoming more prevalent. Uncertainty and new laws and regulations, as well as
the application of existing law to the Internet, in our markets could prevent or
limit our ability to operate in certain of our markets, expose us to compliance
costs and substantial liability and could result in costly and time consuming
litigation, all of which could materially harm our business, operating results
and financial condition.

         The international nature of the Internet and the possibility that we
may be subject to conflicting laws of, or the exercise of jurisdiction by,
different countries may make it difficult or impossible to comply with all the
laws that may govern our activities. Furthermore, the law relating to the
liability of online service providers for information carried on or disseminated
through their networks is currently unsettled.

Underdeveloped telecommunications and Internet infrastructure may limit the
growth of the Internet in the Asia-Pacific region and the growth of our
business.

         Access to the Internet requires advanced telecommunications
infrastructure. The telecommunications infrastructure in many parts of the
Asia-Pacific region is not as well developed as in the United States and is
owned and operated by current or former national monopoly telecommunications
carriers or may be subject to a restrictive regulatory environment. The quality
and continued development of telecommunications infrastructure in the
Asia-Pacific region will have a substantial impact on our ability to deliver our
services and on the market use and acceptance of the Internet in general.

         In addition, the recent growth in the use of the Internet has caused
frequent periods of performance degradation, requiring the upgrade of routers
and switches, telecommunications links and other components forming the
infrastructure of the Internet by Internet service providers and other
organizations with links to the Internet. Any perceived degradation in the
performance of the Internet as a whole could undermine the benefits of our
services. The quality of our services is ultimately limited by and reliant upon
the speed and reliability of the networks operated by third parties.
Consequently, the emergence and growth of the market for our services

                                      22.
<PAGE>

is dependent on improvements being made to the entire Internet infrastructure in
the Asia-Pacific region to alleviate overloading and congestion.

Inability to acquire sufficient power to facilitate our operations may limit our
growth in the Asia-Pacific region.

         The underdeveloped infrastructure in  many countries in the
Asia-Pacific region may inhibit our ability to attain sufficient, reasonably
priced sources of electrical power to support our Internet data centers. The
quality and reliability of the available power sources may also interfere with
the uninterrupted operation of our services, which could adversely impact the
operation of our Internet data centers.

Currency fluctuations could decrease our revenue or increase our costs. In
addition, restrictions on currency exchange could prevent us from effectively
using our funds.

         We conduct business in multiple countries in the Asia-Pacific region
and generate revenue, expenses and liabilities in multiple Asia-Pacific
currencies. Gains and losses on the conversion of foreign payments may
contribute to fluctuations in our results of operations and fluctuating exchange
rates could cause reduced revenue and gross margins from our international
sales. We currently engage only in very limited currency hedging activities. In
addition, some of the countries in which we operate or plan to operate impose
exchange controls. As a result, we may not be able to freely convert the
relevant local currencies into other Asia-Pacific or non Asia-Pacific
currencies, including U.S. dollars, which could prevent us from effectively
using our funds. Currency rate fluctuations and exchange controls could
negatively impact our financial performance by increasing costs and offsetting
revenue or income from our operations.

Our business and prospects will suffer if the Internet does not develop into an
effective commercial and information medium in the Asia-Pacific region.

         The market for Internet services in the Asia-Pacific region has only
begun to develop. Because the Internet is an unproven medium for information,
advertising and other commercial services in the Asia-Pacific region, our future
operating results and prospects depend substantially on the increased acceptance
and use of the Internet for publication, distribution and commerce in the
Asia-Pacific region. Many potential customers may have limited experience with
the Internet, may not have devoted a significant portion of their available
funds to web site development and may not find the Internet to be effective for
promoting, distributing or conducting their products and services relative to
traditional means. Furthermore, critical issues concerning the commercial use of
the Internet in the Asia-Pacific region, such as security, reliability, cost,
ease of deployment, administration and quality of services, may affect the
adoption of the Internet to solve business needs.

                       Risks related to our Common Stock

Our stock price has been extremely volatile in the past and is likely to be
extremely volatile in the future, which could cause you to lose all or a part of
your investment and may result in costly and distracting securities litigation.

         The market price of our common stock has been volatile in the past and
is likely to be extremely volatile in the future. In the past, following periods
of volatility in the market price of a company's securities, securities class
action litigation has often been instituted against such a company. Securities
litigation could result in substantial costs and a diversion of our management's
attention and resources. The stocks of Web-related and technology companies like
ours have experienced extreme price and volume fluctuations in recent months,
many of which appear unrelated to the companies' business, financial condition
or operating results. Although the market price of our stock will in part be
based on our business, financial condition and operating results, we expect that
it will also be affected to a significant degree by these market-wide and
industry-wide price and volume fluctuations.

                                      23.
<PAGE>

The large number of shares that may be resold in the public market could cause
our stock price to decline.

         As our shares become eligible for public resale, the market price of
our common stock may drop if the holders of these shares sell them or are
perceived by the market as intending to sell them. Most of the shares we have
outstanding or issuable upon exercise of options or warrants will become
eligible for public resale 180 days after the closing of our initial public
offering, in August 2000. For a more detailed description of the eligibility of
the outstanding shares of our common stock for resale in the public market, see
our Registration Statement filed with the SEC, SEC File No. 333-35278.

ADDITIONAL DISCUSSION OF THESE AND OTHER RISK FACTORS IS DISCLOSED IN OUR
REGISTRATION STATEMENT ON FORM S-1, AS AMENDED, FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, SEC FILE NO. 333-35278.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

         We are exposed to market risks inherent in our operations, primarily
related to currency risk. This risk arises from transactions and operations
entered into in the normal course of business.

         Our subsidiaries primarily operate in foreign markets, and
predominantly have their local currencies as their functional currencies. These
subsidiaries do not have third party borrowings in currencies other than their
local currencies, and therefore there are no appropriate quantitative
disclosures.

         Our primary currency rate risk exposures relate to:

     .   our decentralized operations, whereby, for example, approximately 84%
         of our revenues during the fiscal quarter ended September 30, 2000 were
         derived from operations in the Asia-Pacific region, and were
         denominated in currencies other than the U.S. dollar;

     .   the ability of our United States operations to satisfy cash flow
         requirements of predominantly U.S. dollar denominated long-term debt
         without the need to repatriate into the United States foreign earnings
         and profits, which are denominated in currencies other than the U.S.
         dollar; and

     .   our investments in foreign subsidiaries being primarily directly from
         us as the U.S. parent, resulting in U.S. dollar investments in foreign
         currency functional companies.

         We manage our currency rate risks through a variety of measures. We
operate on a decentralized regional basis with operations located in most major
Asia-Pacific markets. As a result, our individual markets are not necessarily
impacted by changes in currency exchange rates. In addition, in certain limited
instances in fiscal 2000, we have entered into, and expect to enter into
additional, forward exchange contracts in connection with inter-company
transactions. We do not expect these contracts to extend longer than one year.

PART II:   OTHER INFORMATION

                                      24.
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ITEM 1.  LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

On August 8, 2000, we consummated our initial public offering of common stock,
$0.001 par value. The underwriters in the offering were Goldman Sachs & Co.,
Morgan Stanley & Co. Incorporated and Salomon Smith Barney Inc. The shares of
common stock sold in the offering were registered under the Securities Act of
1933, as amended, on a registration statement on Form S-1 (Reg. No. 333-35278)
that was declared effective by the SEC on August 2, 2000. All 9,000,000 shares
of common stock registered under the registration statement were sold at a price
of $13.00 per share. The aggregate offering amount registered was $117,000,000.
In connection with the offering, iAsiaWorks paid an aggregate of $8,190,000 in
underwriting discounts to the underwriters.

The net offering proceeds to us after deducting the underwriting discounts and
total expenses related to the offering were approximately $106,061,000. We
intend to use such net offering proceeds over an approximate nine month period
from August 8, 2000. We estimate that we will use between $60 million and $80
million of the proceeds for the establishment of additional Internet data center
facilities, the hiring of additional personnel and the remainder for general
corporate purposes and acquisitions. Pending these uses, we will invest the net
proceeds of the offering in short-term, interest-bearing, investment grade
securities. Through September 30, 2000, we have used approximately $18 million
of these proceeds towards the purposes mentioned above.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

Not applicable.

ITEM 5.  OTHER INFORMATION

Not applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8 K.

       a. Exhibits

Exhibit
Number              Description
-------             -----------

3.1                 Second Amended and Restated Certificate of Incorporation, as
                    filed with the Delaware Secretary of State on August 8, 2000
                    (incorporated by reference to Exhibit 3.2 to the
                    Registrant's registration statement on Form S-1 (File No.
                    333-35278), originally filed with the Commission on April
                    20, 2000, as subsequently amended).

10.1                Certified Resolution and Loan Agreement, dated October 7,
                    2000, by and

                                      25.
<PAGE>

                    among the registrant's subsidiary iAsiaWorks Korea Ltd., the
                    registrant, and Korea First Bank, Yangjae dong Branch.

10.2                Turnkey System Agreement and Novation Agreement, dated July
                    6, 2000, by and among the registrant's subsidiary iAsiaWorks
                    (HK) Limited, Weelek Company Limited and Piller GmbH Germany
                    (incorporated by reference to Exhibit 10.23 to the
                    Registrant's registration statement on Form S-1 (File No.
                    333-35278), originally filed with the Commission on April
                    20, 2000, as subsequently amended).

10.3                Sale and Purchase Agreement, dated July 22, 2000, by and
                    among the registrant's subsidiary iAsiaWorks Korea Ltd.,
                    Senan Corp. and Mr. Eui Seok Lee (incorporated by reference
                    to Exhibit 10.24 to the Registrant's registration statement
                    on Form S-1 (File No. 333-35278), originally filed with the
                    Commission on April 20, 2000, as subsequently amended).

27.1                Financial Data Schedule.


       b. Reports on Form 8-K

         The Company filed a report on Form 8-K on November 2, 2000 announcing
         the resignation of Peter Morris from its board of directors.

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.

Date: November 14, 2000



                                        IASIAWORKS, INC.


                                        By: /s/ JoAnn Patrick-Ezzell
                                           -------------------------------------
                                           JoAnn Patrick-Ezzell
                                           Chief Executive Officer


                                        By: /s/ Jon F. Beizer
                                           -------------------------------------
                                           Jon F. Beizer
                                           Chief Financial Officer President -
                                           U.S.

                                      26.