---

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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

|ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002 OR
|- | ----------------------------------------------------------------------------------------------------------------------------------------
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                                

Commission file number: 000-29391

VIA NET.WORKS, INC.(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction)

84-1412512(I.R.S. Employer Identification No.)


12100 Sunset Hills Road, Suite 110
Reston, Virginia 20190(Address of principal executive offices)

Registrant's
telephone number, including area code:(703) 464-0300

(Former
name or former address, if changed since last report)

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

As
of May 1, 2002, there were outstanding 55,794,900 shares of the registrant's common stock and 5,050,000 shares of the registrant's non-voting common stock.

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VIA NET.WORKS, INC.        TABLE OF CONTENTS        (UNAUDITED)

|PART I FINANCIAL INFORMATION |  | 3                                                                                       
|---------------------------- |  | ----------------------------------------------------------------------------------------
|Item 1.                      |  | Financial Statements:                                                                   
|                             |  | Consolidated Balance Sheets as of December 31, 2001 and March 31, 2002                  
|                             |  | Consolidated Statements of Operations for the three months ended March 31, 2001 and 2002
|                             |  | Consolidated Statements of Cash Flows for the three months ended March 31, 2001 and 2002
|                             |  | Notes to the Consolidated Financial Statements                                          
|Item 2.                      |  | Management's Discussion and Analysis of Financial Condition and Results of Operations   
|Item 3.                      |  | Quantitative and Qualitative Disclosures About Market Risk                              
|PART II. OTHER INFORMATION   |  | 23                                                                                      
|Item 1.                      |  | Legal Proceedings                                                                       
|Item 2.                      |  | Changes in Securities and Use of Proceeds                                               
|Item 3.                      |  | Defaults Upon Senior Securities                                                         
|Item 4.                      |  | Submission of Matters to a Vote of Security Holders                                     
|Item 5.                      |  | Other Information                                                                       
|Item 6.                      |  | Exhibits and Reports on Form 8-K                                                        
|SIGNATURES                   |  | 24                                                                                      
|EXHIBIT INDEX                |  | 25                                                                                      

2

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PART I

Item 1. Financial Statements

VIA NET.WORKS, INC.        CONSOLIDATED BALANCE SHEETS        (In thousands of U.S dollars, except share data)        (unaudited)

|                                                                   |                                                                                                                                            | December 31,
2001                          |        | March 31,
2002 |        
|------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ------ | -------------- | -------
|
|ASSETS                                                             |                                                                                                                                            |                                            |        |                |        
|Current assets:                                                    |                                                                                                                                            |                                            |        |                |        
|                                                                   | Cash and cash equivalents                                                                                                                  |                                            | $      | 137,854        |        
|                                                                   | Trade and other accounts receivable, net of allowance of $8,393 and $7,201, respectively                                                   |                                            |        | 16,020         |        
|                                                                   | Other current assets                                                                                                                       |                                            |        | 4,597          |        
|                                                                   |                                                                                                                                            |                                            |        |                |        
|                                                                   |                                                                                                                                            | Total current assets                       |        |                | 158,471
|Property and equipment, net                                        |                                                                                                                                            |                                            | 20,579 |                |        
|Goodwill, net                                                      |                                                                                                                                            |                                            | 17,134 |                |        
|Intangible assets, net                                             |                                                                                                                                            |                                            | 1,750  |                |        
|Other noncurrent assets                                            |                                                                                                                                            |                                            | 767    |                |        
|                                                                   |                                                                                                                                            |                                            |        |                |        
|                                                                   |                                                                                                                                            | Total assets                               |        | $              | 198,701
|                                                                   |                                                                                                                                            |                                            |        |                |        
|LIABILITIES AND STOCKHOLDERS' EQUITY                               |                                                                                                                                            |                                            |        |                |        
|Current liabilities:                                               |                                                                                                                                            |                                            |        |                |        
|                                                                   | Accounts payable                                                                                                                           |                                            | $      | 11,200         |        
|                                                                   | VAT and other taxes payable                                                                                                                |                                            |        | 1,442          |        
|                                                                   | Short-term notes, current portion of long-term debt and capital lease obligations                                                          |                                            |        | 1,632          |        
|                                                                   | Deferred revenue                                                                                                                           |                                            |        | 12,188         |        
|                                                                   | Accrued expenses                                                                                                                           |                                            |        | 13,708         |        
|                                                                   | Other current liabilities                                                                                                                  |                                            |        | 2,049          |        
|                                                                   |                                                                                                                                            |                                            |        |                |        
|                                                                   |                                                                                                                                            | Total current liabilities                  |        |                | 42,219 
|Long-term debt and capital lease obligations, less current portion |                                                                                                                                            |                                            | 241    |                |        
|                                                                   |                                                                                                                                            |                                            |        |                |        
|                                                                   |                                                                                                                                            | Total liabilities                          |        |                | 42,460 
|Commitments and contingencies                                      |                                                                                                                                            |                                            |        |                |        
|Stockholders' equity:                                              |                                                                                                                                            |                                            |        |                |        
|                                                                   | Preferred stock, $.001 par value; 10,000,000 shares authorized; no shares issued and outstanding                                           |                                            |        |               |        
|                                                                   | Common stock, $.001 par value; 125,000,000 shares authorized; 54,908,233 and 55,794,900 shares issued and outstanding, respectively        |                                            |        | 55             |        
|                                                                   | Non-voting common stock, $.001 par value; 7,500,000 shares authorized; 5,936,667 and 5,050,000 shares issued and outstanding, respectively |                                            |        | 6              |        
|                                                                   | Additional paid-in capital                                                                                                                 |                                            |        | 557,358        |        
|                                                                   | Treasury Stock, 697,196 shares                                                                                                             |                                            |        | (733           | )      
|                                                                   | Accumulated deficit                                                                                                                        |                                            |        | (384,621       | )      
|                                                                   | Deferred compensation                                                                                                                      |                                            |        | (2,311         | )      
|                                                                   | Accumulated other comprehensive loss                                                                                                       |                                            |        | (13,513        | )      
|                                                                   |                                                                                                                                            |                                            |        |                |        
|                                                                   |                                                                                                                                            | Total stockholders' equity                 |        |                | 156,241
|                                                                   |                                                                                                                                            |                                            |        |                |        
|                                                                   |                                                                                                                                            | Total liabilities and stockholders' equity |        | $              | 198,701
|                                                                   |                                                                                                                                            |                                            |        |                |        

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

3

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VIA NET.WORKS, INC.        CONSOLIDATED STATEMENTS OF OPERATIONS        (in thousands of U.S. dollars, except share and per share data)        (Unaudited)

|                                                          |                                     | For the three months ended March 31, |           
|--------------------------------------------------------- | ----------------------------------- | ------------------------------------ | ----------
|
|Revenue                                                   |                                     | $                                    | 25,436    
|                                                          |                                     |                                      |           
|Operating costs and expenses:                             |                                     |                                      |           
|                                                          | Internet services                   |                                      |           
|                                                          | Selling, general and administrative |                                      |           
|                                                          | Depreciation and amortization       |                                      |           
|                                                          |                                     |                                      |           
|Total operating costs and expenses                        |                                     |                                      | 52,669    
|Loss from operations                                      |                                     |                                      | (27,233   
|Interest income                                           |                                     |                                      | 2,643     
|Interest expense                                          |                                     |                                      | (118      
|Other expense, net                                        |                                     |                                      | (45       
|Foreign currency losses, net                              |                                     |                                      | (5,545    
|                                                          |                                     |                                      |           
|Loss before minority interest and income taxes            |                                     |                                      | (30,298   
|Income tax expense                                        |                                     |                                      | (332      
|Minority interest in loss of consolidated subsidiaries    |                                     |                                      | 140       
|                                                          |                                     |                                      |           
|Net loss                                                  |                                     | $                                    | (30,490   
|                                                          |                                     |                                      |           
|Basic and diluted loss per share                          |                                     | $                                    | (0.50     
|                                                          |                                     |                                      |           
|Shares used in computing basic and diluted loss per share |                                     |                                      | 60,811,180
|                                                          |                                     |                                      |           

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

4

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VIA NET.WORKS, INC.        CONSOLIDATED STATEMENTS OF CASH FLOWS        (in thousands of U.S. dollars)        (Unaudited)

|                                                 |                                                                             | For the three months ended March 31,                   |                                      
|------------------------------------------------ | --------------------------------------------------------------------------- | ------------------------------------------------------ | -------------------------------------
|
|Cash flows from operating activities:            |                                                                             |                                                        |                                      
|                                                 | Net loss                                                                    |                                                        | $                                    
|                                                 | Adjustments to reconcile net loss to net cash used in operating activities: |                                                        |                                      
|                                                 |                                                                             | Depreciation and amortization                          |                                      
|                                                 |                                                                             | Employee stock compensation                            |                                      
|                                                 |                                                                             | Provision for doubtful accounts receivable             |                                      
|                                                 |                                                                             | Unrealized foreign currency transaction losses         |                                      
|                                                 |                                                                             | Minority interest in loss of consolidated subsidiaries |                                      
|                                                 |                                                                             | Impairment of related party note receivable            |                                      
|                                                 | Changes in assets and liabilities, net of acquisitions:                     |                                                        |                                      
|                                                 |                                                                             | Trade accounts receivable                              |                                      
|                                                 |                                                                             | Other current assets                                   |                                      
|                                                 |                                                                             | Other noncurrent assets                                |                                      
|                                                 |                                                                             | Accounts payable                                       |                                      
|                                                 |                                                                             | VAT and other taxes payable                            |                                      
|                                                 |                                                                             | Accrued expenses                                       |                                      
|                                                 |                                                                             | Other current liabilities                              |                                      
|                                                 |                                                                             | Deferred revenue                                       |                                      
|                                                 |                                                                             |                                                        |                                      
|                                                 |                                                                             |                                                        | Net cash used in operating activities
|                                                 |                                                                             |                                                        |                                      
|Cash flows from investing activities:            |                                                                             |                                                        |                                      
|                                                 | Acquisitions, net of cash acquired                                          |                                                        |                                      
|                                                 | Proceeds from the disposition of operating subsidiary                       |                                                        |                                      
|                                                 | Purchases of property and equipment                                         |                                                        |                                      
|                                                 | Note receivable from related party                                          |                                                        |                                      
|                                                 |                                                                             |                                                        |                                      
|                                                 |                                                                             |                                                        | Net cash used in investing activities
|                                                 |                                                                             |                                                        |                                      
|Cash flows from financing activities:            |                                                                             |                                                        |                                      
|                                                 | Repayment of debt and principal payments on capital lease obligations       |                                                        |                                      
|                                                 | Proceeds from issuance of common stock, net                                 |                                                        |                                      
|                                                 |                                                                             |                                                        |                                      
|                                                 |                                                                             |                                                        | Net cash used in financing activities
|                                                 |                                                                             |                                                        |                                      
|Effect of currency exchange rate changes on cash |                                                                             |                                                        | (396                                 
|                                                 |                                                                             |                                                        |                                      
|Net decrease in cash and cash equivalents        |                                                                             |                                                        | (30,379                              
|Cash and cash equivalents, beginning of period   |                                                                             |                                                        | 237,839                              
|                                                 |                                                                             |                                                        |                                      
|Cash and cash equivalents, end of period         |                                                                             | $                                                      | 207,460                              
|                                                 |                                                                             |                                                        |                                      

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

5

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VIA NET.WORKS, INC.        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        (Unaudited)

1.    Basis of Presentation and Overview

These consolidated financial statements as of March 31, 2002 and for the three month periods ended March 31, 2001 and 2002 and the related footnote
information are unaudited and have been prepared on a basis substantially consistent with the audited consolidated financial statements of VIA NET.WORKS, Inc. ("VIA" or "the Company") as of and
for the year ended December 31, 2001, included in VIA's Annual Report on Form 10-K as filed with the Securities and Exchange Commission (2001 Annual Report). These financial
statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the 2001 Annual Report. In the opinion of management, the
accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) which management considers necessary to present fairly the consolidated
financial position of VIA at March 31, 2002 and the results of its operations and its cash flows for the three month periods ended March 31, 2001 and 2002. The results of operations for
the three month period ended March 31, 2002 may not be indicative of the results expected for any succeeding quarter or for the year ending December 31, 2002. Certain prior period
amounts have been reclassified to conform to the current period presentation.

To
ensure its long-term viability, the Company has taken and will continue to take steps to reduce its negative cash flow and preserve capital. The Company continues to
reassess its geographic footprint, market opportunities, product offerings and cost structure in order to best position VIA in its markets and ensure that it reaches positive cash flow with sufficient
cash reserves remaining. This reassessment has to date resulted in the Company taking the following actions, among others: suspending the development and deployment of its planned integrated
provisioning, billing and customer care platform, eliminating its regional management structure and staff, initiating steps to withdraw from certain
country operations, deciding to relocate certain key headquarter positions to Europe and continuing layoffs in its operations and headquarters. It is likely that the Company will incur substantial
costs to implement one or more of the restructuring actions. As of March 31, 2002, the Company had $121.8 million in cash and cash equivalents. The Company believes that its available
cash will be sufficient to fund its working capital and capital expenditure requirements for at least the next twelve months. However, unless the capital markets improve in the interim, there is no
assurance that the Company will be able to obtain further financing if it is unsuccessful in reaching a steady cash flow position before its cash reserves are depleted.

2.    Comprehensive Loss

Comprehensive loss for the three months ended March 31, 2001 and 2002 was as follows (in thousands of U.S. dollars):

Three months ended March 31,2001

2002Net loss

$
(30,490
)
$
(18,592
)Foreign currency translation adjustment


(4,071
)

1,988Comprehensive loss

$
(34,561
)
$
(16,604
)


6

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3.    Property and Equipment

Property and equipment consisted of the following (in thousands of U.S. dollars):

December 31,
2001

March 31,
2002Hardware and other equipment

$
15,520

$
15,733Network and data center assets


12,526


12,378Software


11,174


10,924Furniture and fixtures


2,140


2,02241,360


41,057Accumulated depreciation and amortization


(20,781
)

(22,319
)Property and equipment, net

$
20,579

$
18,738


Depreciation
expense was $3.3 million and $2.6 million for the three months ended March 31, 2001 and 2002, respectively.

The
Company has a 25-year Indefeasible Right of Use, or IRU, from Global Crossing and its wholly owned affiliates that expires June 2024. In January 2002,
Global Crossing and certain other affiliated subsidiaries filed for U.S. bankruptcy protection. A number of groups have publicly stated their intentions to submit proposals to acquire some or all of
the assets or the businesses of Global Crossing. Global Crossing has continued to maintain service on the trans-Atlantic rings on which the Company has acquired IRU capacity and has publicly stated
its intention to continue most or all of its network services upon reorganization. If service on our trans-Atlantic IRU is interrupted or terminated because of the financial difficulties or decisions
made in the course of the bankruptcy proceedings of Global Crossing, peering and transit relationships the Company has in place from our pan-European backbone network will provide
contingency and quality backup capabilities for its Internet traffic to reach U.S. destinations. However, if the Company is required to rely on these peering and transit relationship for all its
trans-Atlantic traffic, the Company may incur additional costs and experience a lesser quality of service in reaching non-European destinations. There can be no assurances that Global
Crossing or any potential acquirers of its assets or business will continue to provide service on the cable on which the Company has acquired trans-Atlantic capacity. If this service becomes
unavailable to the Company, and
if the Company does not successfully acquire alternative service of materially similar capacity and quality, its ability to provide quality levels of IP service will be adversely impacted.

4.    Goodwill and Acquired Intangible Assets

The
Company adopted Statement of Financial Accounting Standards No. 142,"Goodwill and Other Intangible Assets"(SFAS 142)
as of January 1, 2002. SFAS 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets. In accordance with the requirements of SFAS 142,
the Company reclassified $850,000 of assembled workforce as goodwill and ceased amortization of goodwill as of January 1, 2002. During the three months ended March 31, 2002, the Company
completed SFAS 142 transitional impairment test and determined that its goodwill was not impaired as of January 1, 2002, the date of SFAS 142 adoption. Goodwill will be tested for
impairment at least annually at the reporting unit level. Goodwill will be tested for impairment on an interim basis if an event occurs or circumstances change that would more likely than not reduce
the fair value of a reporting unit below its carrying value. Intangible assets that are subject to amortization will be reviewed for impairment in accordance with SFAS 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets."The Company adopted SFAS 144 as of January 1, 2002.

7

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The
reconciliation of reported net loss to adjusted net loss and adjusted net loss-per-share amounts is as follows (in thousands of U.S. dollars):

Three Months Ended March 31,2001

2002Net loss

$
(30,490
)
$
(18,592
)Adjustments:Amortization of goodwill and acquired workforce


11,360


Adjusted net loss


(19,130
)

(18,592
)Weighted average shares outstanding


60,811,180


60,147,704Adjusted basic and diluted loss per share

$
(0.31
)
$
(0.31
)Reported basic and diluted loss per share

$
(0.50
)
$
(0.31
)


The
Company's intangible assets, consisting of acquired customer lists and acquired workforce, are as follows (in thousands of U.S. dollars):

December 31,
2001

March 31,
2002Customer lists

$
2,561

$
2,557Workforce


1,415


Accumulated amortization


(2,226
)

(1,904
)Net intangible assets

$
1,750

$
653


Amortization
expense related to intangible assets for the three months ended March 31, 2002 was $242,000. The acquired intangible assets amortization expense for the year ended
December 31, 2002 will total approximately $900,000. Goodwill increased by $568,000 to $17.7 million at March 31, 2002 due to the reclassification of $850,000 of acquired
workforce offset by a decrease of $282,000 related to changes in exchange rates.

5.    Short-term Notes, Long-term Debt and Capital Lease Obligations

Short-term notes, long-term debt and capital lease obligations consisted of the following (in thousands of U.S. dollars):

|                                                                                                |  | December 31,
2001 |        | March 31,
2002 |  
|----------------------------------------------------------------------------------------------- |  | ----------------- | ------ | -------------- | -
|Debt related to IRU agreements, 12%, due in the second quarter of 2002                          |  | $                 | 1,293  |                | $
|Capital lease obligations at interest rates ranging from 7.8% to 8.0%, due monthly through 2004 |  |                   | 369    |                |  
|Notes payable, due monthly through 2002                                                         |  |                   | 211    |                |  
|                                                                                                |  |                   |        |                |  
|                                                                                                |  |                   | 1,873  |                |  
|Less current portion                                                                            |  |                   | (1,632 | )              |  
|                                                                                                |  |                   |        |                |  
|Long-term portion                                                                               |  | $                 | 241    |                | $
|                                                                                                |  |                   |        |                |  

6.    Stockholders' Equity

In the first quarter of 2002, 886,667 shares of non-voting common stock were converted to voting shares of common stock. In June 2001, the
Company announced a stock repurchase plan that allows the Company to spend up to $10 million to repurchase shares of its common stock. Under the plan, the Company may repurchase shares of its
common stock from time to time, subject to market conditions,

8

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applicable legal requirements and other factors. This plan does not require that the Company purchase any specific number of shares and the plan may be suspended at any time and from time to time.
The Company's repurchase of shares of common stock are recorded as treasury stock and result in a reduction of stockholders' equity.

During
the three months ended March 31, 2002, due to the departure of several key executives, the Company recorded stock options forfeitures of $1.8 million, which reduced
the deferred compensation balance to zero. The deferred compensation amortization was $763,000 and $527,000 for the quarters ended March 31, 2001 and 2002, respectively.

7.    Contingencies

On November 5, 2001 a class action lawsuit was filed in the District Court for the Southern District of New York against VIA NET.WORKS, Inc.,
certain of the underwriters who supported our initial public offering ("IPO") and certain of our officers, under the title O'Leary v. VIA NET.WORKS, et al
[01-CV-9720] (the "Complaint") The Complaint alleges that the prospectus the Company filed with its registration statement in connection with our IPO
was materially false and misleading because it failed to disclose, among other things, that: (i) the named underwriters had solicited and received excessive and undisclosed commissions from
certain investors in exchange for the right to purchase large blocks of VIA IPO shares; and (ii) the named Underwriters had entered into agreements with certain of their customers to allocate
VIA IPO shares in exchange for which the customers agreed to purchase additional VIA shares in the aftermarket at pre-determined prices ("Tie-in Arrangements"), thereby
artificially inflating the Company's stock price. The Complaint further alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder arising out of the alleged failure to disclose and the alleged materially misleading disclosures made with respect to the
commissions and the Tie-in Arrangements in the prospectus. The plaintiffs in this action seek monetary damages in an unspecified amount. This Complaint is one of over 300 similar suits
filed to date against underwriters, issuers and their officers alleging similar activities, known as "laddering". We believe that any allegations in the Complaint of wrongdoing on the part of VIA or
our officers are without legal merit. We have retained legal counsel and intend to vigorously defend against these allegations.

The
Company is subject to certain other claims and legal proceedings that arise in the normal course of business. Management believes that the ultimate resolution of these matters will
not be material to the Company's financial position, results of operations or cash flows.

8.    Segment Reporting

The Company offers a variety of Internet access, managed bandwidth, web hosting, ecommerce, Internet security and related services to businesses and consumers in
Europe, Latin America and the United States. As of March 31, 2002, the Company served primary markets in 14 countries. These country operations generate Internet-related revenues from leased
lines, dial-up Internet access, web hosting and design, Internet security and consulting services, and sale of third-party hardware and software.

Beginning
in the first quarter of 2002, VIA reevaluated its reportable segments and grouped all of the European operating companies into one reportable segment. Similarly, the Company
grouped all of the operating companies located in North and South America into one reportable segment. The Company evaluates the performance of its segments based on revenue and loss from operations
before depreciation, amortization and non-cash compensation charges ("EBITDA"). Corporate expenses, which also include the regional IRU companies, are shown to reconcile to the total
consolidated figures. Total segment assets, as presented in the table below, are total assets net of intercompany funding amounts. Prior period amounts have been reclassified to conform to the current
period presentation. The table

9

---

below presents information about the reported revenue, EBITDA and assets of the Company's segments for the three months ended March 31, 2001 and 2002.

|           |  | Three months ended March 31, 2001 |        | Three months ended March 31, 2002
|---------- |  | --------------------------------- | ------ | ---------------------------------
|
|Europe:    |  | $                                 | 19,518 |                                  
|Americas:  |  |                                   | 5,918  |                                  
|Corporate: |  |                                   |       |                                  
|           |  |                                   |        |                                  
|Total:     |  | $                                 | 25,436 |                                  
|           |  |                                   |        |                                  

At
March 31, 2002, goodwill for Europe and the Americas was $15.5 milion and $2.2 million, respectively. As a result of the strategic reassessment and the Company's
focus on reducing substantially its negative cash flow, the Company has concluded that it should cease funding certain country operations that will not materially contribute to its financial strength
in the long term and explore the optimal method to withdraw from these countries. Consistent with this conclusion, the Company has received bids from third party and management groups to acquire its
operations in Argentina and Brazil and expect to conclude agreements relating to each of the operations during the second quarter of 2002. (In both cases it is anticipated that the Company will not
recover any substantial amount, if any, on its original investment.) Together, the Company's operations in Argentina and Brazil generated approximately five percent of consolidated revenues for the
three months ended March 31, 2002. As of March 31, 2002, the accumulated foreign currency translation for the Company's operations in Brazil and Argentina was $3.1 million loss
and $2.7 million gain, respectively. The accumulated foreign currency translation adjustment will be reclassified to the statement of operations when realized upon the sale of the Company's
operations in Brazil and Argentina.

A
reconciliation from total EBITDA to loss before income taxes and minority interest is as follows (in thousands of U.S. dollars):

|                                               |  | For the
three months
ended March 31,
2001 |         | For the
three months
ended March 31,
2002 |  
|---------------------------------------------- |  | ----------------------------------------- | ------- | ----------------------------------------- | -
|EBITDA                                         |  | $                                         | (11,051 | )                                         | $
|Non-cash compensation                          |  |                                           | (763    | )                                         |  
|Depreciation and amortization                  |  |                                           | (15,419 | )                                         |  
|                                               |  |                                           |         |                                           |  
|Loss from operations                           |  |                                           | (27,233 | )                                         |  
|Interest income, net                           |  |                                           | 2,525   |                                           |  
|Other expense and foreign currency losses, net |  |                                           | (5,590  | )                                         |  
|                                               |  |                                           |         |                                           |  
|Loss before income taxes and minority interest |  | $                                         | (30,298 | )                                         | $
|                                               |  |                                           |         |                                           |  

9.    Related Party Transaction

During the three months ended March 31, 2002, VIA NET.WORKS Europe Holding, B.V. ("VIA Europe"), a wholly-owned indirect subsidiary of VIA, entered into a
loan agreement with MERCUR Einhundertsechzehnte Vermögensverwaltung GmbH ("Mercur") under which VIA Europe agreed to lend Mercur $1 million. Mercur is a wholly-owned indirect
subsidiary of Norwest Equity Partners VII LP ("NEP VII"), which is an affiliated fund of Norwest Venture Capital Management ("NVCM"). Norwest Equity Capital and Norwest Venture Partners VI L.P.,
affiliates of NVCM, hold over 5% of VIA's common stock. Erik Torgerson, a General Partner of Norwest Equity Partners and an officer of

10

---

NVCM and a member of Norwest Equity Capital, is a member of VIA's board of directors and chairman of its audit committee. The loan by VIA was part of an aggregate $2.9 million lending facility
provided to Mercur by VIA, NEP VII and J.P. Morgan International Capital Corporation. The purpose of the facility was to enable Mercur to lend an equivalent amount to riodata GmbH, a German Internet
virtual private network and data services provider ("riodata"). The loan to riodata, which was secured by a lien on its accounts receivable, was intended to provide riodata a period of time of
approximately three weeks to pay its obligations and avoid being required to file for insolvency under German law. As a part of the loan transaction, riodata agreed to provide VIA, NEP VII and J.P.
Morgan exclusive rights to conduct commercial, financial and legal due diligence of riodata for the purposes of a possible investment in riodata. Currently, NEP VII and J.P. Morgan are minority
investors in riodata. VIA's loan participation was discussed and approved by its board of directors. Subsequent to the funding of the loan, VIA determined that, based on its diligence of riodata, it
would not proceed with an investment in riodata. riodata has subsequently filed for insolvency under German law. Subsequent to March 31, 2002, VIA received from Mercur payment of $641,000 on
the loan amounts. A loss of $359,000 was recorded as other expense in VIA's statement of operations for the period ended March 31, 2002.

11

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Item. 2. Management's Discussion and Analysis of Financial Condition and Results of Operation

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in Item 1 of this
Form 10-Q. This discussion and the discussion in Item 1, Note 1, contain forward-looking statements based on current expectations, which involve risks and
uncertainties. Forward-looking statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "will,"
"should," "expects," "plans," "anticipates," "could," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or similar words. Forward-looking statements on this
Form 10-Q include, but by way of example only, statements regarding our expectations relating to the Company's ongoing strategic reassessment, sale of operations, projections of
revenues, costs (direct and operating costs), cost reductions, specific product and service sales and capital expenditures, and the future amounts and relative percentages as compared to total
revenues of our value-added revenues and our operating and service-related costs. Actual events or results may differ materially. Information regarding the risks, uncertainties and other factors that
could cause actual results to differ from the results in these forward-looking statements are discussed in the "Risk Factors" described in Exhibit 99.1 on this Form 10-Q, as well as
those described in the "Risk Factors" section of VIA's Annual Report on Form 10-K for the year ended December 31, 2001, or 2001 Annual Report, as filed with the Securities
and Exchange Commission. You are urged to carefully consider these factors, as well as other information contained in this Form 10-Q and in our other periodic reports and documents
filed with the Securities and Exchange Commission.

Overview

VIA NET.WORKS, Inc. is a single source provider of managed Internet services to small and mid-sized businesses in Europe and the Americas. We
were founded in 1997 to quickly establish an international Internet services provider with a footprint in the rapidly developing markets of Europe and Latin America. VIA was founded to take advantage
of the expected growth opportunities for Internet services in these emerging markets.

The
market conditions for Internet services providers today are significantly different from those that the company faced in 1997 and as recently as 2000. The ongoing economic slowdown
has significantly reduced earlier anticipated growth rates and the projected overall size of the Internet market. Equity and debt funding for new and existing telecommunications and data
communications providers has become extremely difficult to obtain. As a result, many market participants in a wide range of
telecommunications infrastructure and Internet services have entered bankruptcy, ceased or sold their operations or are actively pursuing capital restructuring.

From
our inception, our business plan was founded on an aggressive growth strategy. As a part of this strategy, we focused on the acquisition of Internet services providers in our
targeted markets, growing our customer base and product portfolio, establishing a reliable international network to service these customers and new products and developing and deploying an integrated
provisioning, billing and customer care platform to support this growth. However, in 2001, a combination of market conditions and internal disruptions severely impacted our revenues and we experienced
a revenue decline of nine percent to $90.1 million as compared to $99.4 million in 2000. For further details please see the discussion in the section entitled Overviewin our 2001 Annual
Report under Part I, Item 1 Business.VIA also had negative cash flow
of $99.9 million during 2001, leaving us with $137.9 million in cash at December 31, 2001. This reduction in cash reserves was significantly more than originally anticipated.

As
a result of the revenue decline, the negative cash flow and other difficulties we experienced in 2001, during the first quarter 2002, we announced that we were reassessing our
business plan and strategy to reduce substantially our negative cash flow and better position VIA to compete successfully

12

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in the Internet services market. This reassessment included, among other things, the continuing review of our geographic footprint, market opportunities, product offerings and cost structure. As a
part of this reassessment, during the first quarter and through the middle of May 2002, we have taken the following actions:



We
had planned to deploy the first instance of our multi-vendor integrated provisioning, billing and customer care platform, or the Integrated Platform, in the fall of 2001. However,
deployment, support and cost issues made us reconsider this project. As part of our ongoing cost-cutting measures and in view of certain implementation issues, we suspended development and
deployment of the Integrated Platform.



As
a result of the strategic reassessment and our focus on reducing substantially our negative cash flow, we have concluded that VIA should cease funding certain country operations that
will not materially contribute to our financial strength in the long term and explore the optimal method to withdraw from these countries. Consistent with this conclusion, we have received bids from
third party and management groups to acquire our operations in Argentina and Brazil and expect to conclude agreements relating to each of the operations during the second quarter of 2002. (In both
cases it is anticipated that we will not recover any substantial amount, if any, on our original investment.) Together, our operations in Argentina and Brazil generated approximately five percent of
our consolidated revenues for the three months ended March 31, 2002.

We
had maintained a small sales office in Belgium. As a part of our cost cutting program, the office was closed and the staff and sales director were terminated during the first quarter.



Our
European operations account for approximately 76% of our total consolidated first quarter revenues. After our expected withdrawal from South America, our European operations will
account for approximately 80% of total consolidated revenues. In order to bring corporate decision-making closer to our operations, we will establish an office in Europe and relocate certain corporate
executive and key headquarters positions. We anticipate that personnel decisions relating to relocation will be made during the second quarter and personnel transfers will occur by the end of 2002.



We
continue to streamline our operations and corporate functions by eliminating non-essential personnel. We anticipate that we will engage in further headcount reductions for
a period of time in 2002.

Despite
setbacks in 2001, we continue to pursue our primary goal to become a premier provider of managed IP services to businesses in selected markets. Our ongoing strategy is to reach
that goal by:



13

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While
we will continue to pursue this strategy, our most immediate focus is to ensure our long-term financial viability. While our competitors and peers struggle under heavy
debt or have gone out of business, we have little debt and substantial cash reserves and the ability to pursue our short term strategy of reaching profitability, first by focusing on cost cutting and
eliminating non-contributing assets and second, by concentrating our sales efforts on high margin producing services. There can be no assurance that we will be successful in any of these
efforts.

The
following table summarizes our operations in Europe and the Americas by country, operating company and revenue contribution for the three months ended March 31, 2002.

|Country of Operation |  | Operating Company         |  | Percentages of Total Revenue for the Three Months Ended March 31, 2002 |  
|-------------------- |  | ------------------------- |  | ---------------------------------------------------------------------- | -
|Argentina            |  | VIA NET.WORKS Argentina   |  | 1                                                                      | %
|                     |  | ServiceNet                |  | less than 1                                                            | %
|Austria              |  | Net4You                   |  | 2                                                                      | %
|Brazil               |  | VIA NET.WORKS Brasil      |  | 4                                                                      | %
|France               |  | VIA NET.WORKS France      |  | 11                                                                     | %
|Germany              |  | VIA NET.WORKS Deutschland |  | 12                                                                     | %
|Ireland              |  | VIA NET.WORKS Ireland     |  | 2                                                                      | %
|Italy                |  | VIA NET.WORKS Italia      |  | 1                                                                      | %
|Mexico               |  | VIA NET.WORKS Mexico      |  | 14                                                                     | %
|The Netherlands      |  | VIA NET.WORKS Nederland   |  | 6                                                                      | %
|Portugal             |  | VIA NET.WORKS Portugal    |  | 5                                                                      | %
|Spain                |  | VIA NET.WORKS Espana      |  | 2                                                                      | %
|Switzerland          |  | VIA NET.WORKS Schweiz     |  | 4                                                                      | %
|United Kingdom       |  | VIA NET.WORKS U.K.        |  | 31                                                                     | %
|United States        |  | VIA NET.WORKS U.S.A.      |  | 5                                                                      | %

14

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Three months endedMarch 31,
2001

March 31,
2002

% Increase/
(Decrease)(in thousands of U.S. dollars)Residential Access

$
1,823

$
1,329

(27
)%% of Total Revenue


7
%

7
%Business Access

$
11,175

$
9,569

(14
)%% of Total Revenue


44
%

47
%Value Added Services

$
12,438

$
9,325

(25
)%% of Total Revenue


49
%

46
%Total Revenue

$
25,436

$
20,223

(20
)%


We
derive our revenue from the sale of Internet goods and services, specifically Internet access and other Internet value added services, such as managed bandwidth, web and applications
hosting. As described below, management judgments and estimates must be made in connection with the revenue recognized in any accounting period. Material differences might result in the amount and
timing of our revenue for any period if our management made different judgments or utilized different estimates, primarily with respect to collectibility assessment.

For
revenue transactions we apply the provisions of Staff Accounting Bulletin No. 101"Revenue Recognition."We recognize revenue
from the sale of Internet goods and services when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the fee is fixed or determinable and collection of
the resulting receivable is reasonably assured. At the time of the transaction, we assess collectibility based on a number of factors, including past transaction history with the customer and the
credit-worthiness of the customer. We generally do not perform credit checks on potential customers before providing services. If we determine that collection of a fee is not reasonably assured, the
revenue is generally recognized upon the receipt of cash, provided other revenue recognition criteria have been satisfied.

Our
practices regarding the evidence of an arrangement vary from country to country. Generally, for sales, other than those completed over the Internet, we use either a purchase order or
a customer agreement as evidence of an arrangement. For sales over the Internet, we generally use a credit card authorization as evidence of an arrangement.

All
of our access revenue is recognized as it is earned over the period the services are provided. Revenues from the sale of value added Internet services are also recognized over the
period in which the services are provided. Revenue from installation, training and consulting is recognized as the related services are rendered, although such amounts have not been material. Revenue
from hardware
and third-party software sales is recognized upon delivery or installation of the products, depending on the terms of the arrangement, provided other revenue recognition criteria have been satisfied.

Revenue
for the three months ended March 31, 2002 decreased 20% to $20.2 million as compared to $25.4 million for the three months ended March 31, 2001.
Residential access revenue declined by 27% in the first quarter 2002, as compared to the same period in 2001. The business access revenue decreased by 14% for the three months ended March 31,
2002 as compared to the three months ended March 31, 2001. We do not generally market to wholesale and residential customers in any of our operations and hence we expect these revenues to
continue to run-off. Our revenue has decreased from 2001 levels due to the continued slowdown in corporate technology spending and certain internal

15

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disruptions and distractions caused by staff and management turnover and our ongoing cost cutting programs. Value added services, which include web-hosting, web-design, domain
name registration, data networking, managed bandwidth and bundled service offerings decreased by 25% for the first quarter of 2002, as compared to the same period in 2001.



|                   |  | Three months ended |        |   |  
|------------------ |  | ------------------ | ------ | - | -
|
|
|Internet services  |  | $                  | 13,491 |   | $
|% of Total Revenue |  |                    | 53     | % |  

Our
Internet services operating costs are the costs we incur to carry customer traffic to and over the Internet. We lease lines that connect our points of presence, or PoPs, either to
our own network or to other network providers. We pay other network providers for transit, which allows us to transmit our customers' information to or from the Internet over their networks. We also
pay other recurring telecommunications costs and personnel costs, including the cost of the local telephone lines our customers use to reach our PoPs and access our services, and costs related to
customer support and care.

Our
Internet services operating costs were $11.6 million for the three months ended March 31, 2002 as compared to $13.5 million for the three months ended
March 31, 2001. The decrease in Internet services costs corresponds to the decrease in revenue for the three months ended March 31, 2002 as compared to the prior year corresponding
period.



|                                  |  | Three months ended |        |   |  
|--------------------------------- |  | ------------------ | ------ | - | -
|
|
|Selling, general & administrative |  | $                  | 23,759 |   | $
|% of Total Revenue                |  |                    | 93     | % |  

Our
largest selling, general and administrative expenses are compensation costs, the costs associated with marketing our products and services, and professional fees paid to outside
consultants. Compensation costs include salaries and related benefits, commissions, bonuses and costs associated
with staff reductions. In many of our markets, we are required to make significant mandatory payments for government-sponsored social welfare programs, and we have little control over these costs. Our
marketing expenses include the costs of direct mail and other mass marketing programs, advertising, customer communications, trade show participation, web site management and other promotional costs.
Our professional fees included the cost of using outside consultants to assist with the implementation of our financial and back office systems at our operating companies, as well as the cost of using
outside consultants for financial review and attestation engagements. Other selling, general and administrative expenses include the costs of travel, rent, utilities, insurance and bad debt expense.

We
incurred selling, general and administrative expenses of $21.6 million for the three months ended March 31, 2002, a 9% decrease from the $23.8 million we incurred
for the three months ended March 31, 2001.

16

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Compensation
expense decreased from $13.4 million for the three months ended March 31, 2001 to $12.5 million for the three months ended March 31, 2002. This
$900,000 decrease corresponds to our decrease in headcount from first quarter 2001 to first quarter 2002, offset by severance and other termination benefits and costs. The amount of severance related
to our executives was $675,000.

In
conjunction with our cost cutting measures, marketing and sales expenses decreased 72% from $1.9 million for the three months ended March 31, 2001 to $536,000 for the
three months ended March 31, 2002.

Professional
fees increased from $2.2 million for the first quarter of 2001 to $3.8 million for the first quarter of 2002, primarily due to costs associated with the
implementation of our financial systems and our multi-vendor integrated provisioning, billing and customer care platform, or Integrated Platform. As part of our ongoing cost-cutting
measures, we suspended the development and deployment of the Integrated Platform.

Bad
debt expense for the three months ended March 31, 2001 and 2002 was $859,000 and $(776,000), respectively. During the first quarter of 2002, our intensified focus on cash
collection resulted in collections of certain accounts receivable that were previously deemed uncollectible and for which a bad debt provision was recorded in previous periods.

Our
selling, general and administrative expenses include the amortization of deferred compensation. The deferred compensation amortization was $763,000 and $527,000 for the quarters
ended March 31, 2001 and 2002, respectively. In March 2002, due the departure of several senior executives, we recorded forfeitures of unvested stock options in the amount of
$1.8 million, which reduced the deferred compensation balance to zero.



|                              |  | Three months ended |        |   |  
|----------------------------- |  | ------------------ | ------ | - | -
|
|
|Depreciation and amortization |  | $                  | 15,419 |   | $
|% of Total Revenue            |  |                    | 61     | % |  

The
largest component of our depreciation and amortization expense has been the amortization of the goodwill and other acquired intangible assets arising from our acquisitions. Goodwill,
which has been amortized over five years, is created when the price at which we acquire a company exceeds the fair value of its net tangible and intangible assets. As a result of our acquisitions, we
amortized substantial amounts of goodwill and other intangible assets in prior years. In January 2002, upon adoption of SFAS 142, the Company reclassified acquired workforce of $850,000
as goodwill and ceased amortizing the remaining goodwill balance. Other intangible assets, consisting of customer lists, continue to be amortized over their estimated useful lives.

We
also recognize depreciation expense primarily related to telecommunications equipment, computers and network infrastructure. We depreciate telecommunications equipment and computers
over their useful lives, generally ranging from three to five years. The cost of network infrastructure purchased under indefeasible right of use agreements, or IRU, is being amortized over the lesser
of the estimated useful life or term of the agreement, generally 20 to 25 years

Our
depreciation and amortization expense was $2.9 million for the three months ended March 31, 2002, down from $15.4 million for the three months ended
March 31, 2001. For the three months ended March 31, 2002, $242,000, or 8%, of our depreciation and amortization expense was related to the amortization of intangible assets and
$2.6 million, or 92% was related to the depreciation of fixed

17

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assets. For the same period in 2001, $12.1 million, or 78%, of our depreciation and amortization expense was related to the amortization of acquisition goodwill and other intangible assets and
$3.3 million, or 22% was related to the depreciation of fixed assets. The decrease in depreciation of fixed assets is related to the asset impairment, which was recorded in the fourth quarter
of 2001. This impairment charge reduced the balance of fixed assets by $24.5 million.



|                     |  | Three months ended |       |   |  
|-------------------- |  | ------------------ | ----- | - | -
|
|
|Interest income, net |  | $                  | 2,525 |   | $
|% of Total Revenue   |  |                    | 10    | % |  

For
the three months ended March 31, 2002, we earned $595,000 in interest income, a 77% decrease over the $2.6 million we earned for the three months ended March 31,
2001. Interest income in both periods was generated from investing funds received from our initial public offering in February 2000, until those funds were used for acquisitions, operating
expenses or capital expenditures. Net proceeds from the public offering were $333.0 million. The decrease in the interest income is the combined result of the decrease in the available cash for
investing and the decrease in the interest rates. We also
incurred $42,000 of interest expense for the three months ended March 31, 2002, as compared to $118,000 of interest expense incurred in the same period in 2001. Interest expense relates to the
debt arising from the notes payable to the former owners of businesses acquired and vendor financing at both the subsidiary and corporate levels.



|                             |  | Three months ended |        |   |  
|---------------------------- |  | ------------------ | ------ | - | -
|
|
|Foreign currency losses, net |  | $                  | (5,545 | ) | $
|% of Total Revenue           |  |                    | 22     | % |  

We
recognized a $3.0 million foreign currency loss for the three months ended March 31, 2002, as compared to a $5.5 million foreign currency loss for the same period
in the prior year. The loss in both periods was primarily due to the decrease in the Euro and its negative impact on our Euro denominated cash accounts as well as the revaluation of intercompany
balances. We established the Euro denominated cash accounts in connection with our initial public offering in February 2000, in which we sold shares of our common stock for both U.S. dollars
and Euros. At March 31, 2002, the Company held €25.5 million in cash. The remainder of the loss was contributed by fluctuations in the five other
non-Euro-linked currencies in which we hold monetary assets.



Since inception, we have financed our operations primarily through the sale of equity securities. We raised approximately $181.0 million, in the aggregate,
through three private preferred stock offerings between August 1997 and April 1999. Through our initial public offering of common stock in

18

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February 2000, we raised approximately $333.0 million, net of underwriting discounts and commissions. At March 31, 2002, we had cash and cash equivalents of
$121.8 million.

Cash
used in operating activities was $16.8 million for the three months ended March 31, 2001 and $13.2 million for the three months ended March 31, 2002.
Cash flows from operating activities can vary significantly from period to period depending on the timing of operating cash receipts and payments and other working capital changes, especially accounts
receivable, other current assets, accounts payable, accrued expenses and other current liabilities. In both periods, our net losses were the primary component of cash used in operating activities,
offset by significant non-cash depreciation and amortization, non-cash stock compensation charges and unrealized foreign currency transaction losses.

Cash
used in investing activities was $12.7 million for the three months ended March 31, 2001 and $2.1 million for the same period in 2002. In the first quarter of
2001, cash was primarily used to increase our investment in one partially owned operation and to pay two contingent earn-out payments in connection with two companies acquired in 2000. In
2002, we used cash for capital expenditures. Additionally, during the three months ended March 31, 2002, VIA NET.WORKS Europe Holding, B.V. ("VIA Europe"), a wholly-owned indirect subsidiary of
VIA, entered into a loan agreement with MERCUR Einhundertsechzehnte Vermögensverwaltung GmbH ("Mercur") under which VIA Europe agreed to lend Mercur $1 million. Mercur is a
wholly-owned indirect subsidiary of Norwest Equity Partners VII LP ("NEP VII"), which is an affiliated fund of Norwest Venture Capital Management ("NVCM"). Norwest Equity Capital and Norwest Venture
Partners VI L.P., affiliates of NVCM, hold over 5% of VIA's common stock. Erik Torgerson, a General Partner of Norwest Equity Partners and an officer of NVCM and a member of Norwest Equity Capital, is
a member of VIA's board of directors and chairman of its audit committee. The loan by VIA was part of an aggregate $2.9 million lending facility provided to Mercur by VIA, NEP VII and J.P.
Morgan International Capital Corporation. The purpose of the facility was to enable Mercur to lend an equivalent amount to riodata GmbH, a German Internet virtual private network and data services
provider ("riodata"). The loan to riodata, which was secured by a lien on its accounts receivable, was intended to provide riodata a period of time of approximately three weeks to pay its obligations
and avoid being required to file for insolvency under German law. As a part of the loan transaction, riodata agreed to provide VIA, NEP VII and J.P. Morgan exclusive rights to conduct commercial,
financial and legal due diligence riodata for the purposes of a possible investment in riodata. Currently, NEP VII and J.P. Morgan are minority investors in riodata. VIA's loan participation was
discussed and approved by its board of directors. Subsequent to the funding of the loan, VIA determined that, based on its diligence of riodata, it would not proceed with an investment in riodata.
riodata has subsequently filed for insolvency under German law. Subsequent to March 31, 2002, VIA received from Mercur payment of $641,000 on the loan amounts. A loss of $359,000 was recorded
as other expense in VIA's statement of operations for the period ended March 31, 2002.

Cash
used in financing activities was $436,000 for the three months ended March 31, 2001. In the same period in 2002, cash used in financing activities was $486,000. In both
periods, cash was used primarily to repay debt.

To
ensure our long-term viability, we have taken and will continue to take steps to reduce our negative cash flow and preserve capital. We continue to reassess our geographic footprint,
market opportunities, product offerings and cost structure in order to best position us in our markets and ensure that we reach positive cash flow with significant cash reserves remaining. This
reassessment has to date resulted in VIA taking the following actions, among others: suspending the development and deployment of our planned integrated provisioning, billing and customer care
platform, eliminating our regional management structure and staff, initiating steps to withdraw from certain country operations, deciding to relocate certain key headquarter positions to Europe and
continuing layoffs in our operations and headquarters. It is likely that we will incur substantial costs to implement one or more of the restructuring actions. As of March 31, 2002, we had
$121.8 million in cash and cash equivalents.

19

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We believe that our available cash will be sufficient to fund our working capital and capital expenditure requirements for at least the next twelve months. However, unless the capital markets improve
in the interim, there is no assurance that we will be able to obtain further financing if we are unsuccessful in reaching a steady cash flow position before our cash reserves are depleted.

The
foregoing statements regarding our liquidity and need for additional capital resources are forward-looking statements based on current expectations, which involve certain risks and
uncertainties. Actual results and the timing of certain events could differ materially from these forward-looking statements depending upon the nature, size and timing of future acquisitions and
dispositions, if any, future amounts of net income before amortization and the degree of success of our reassessment and business strategy, which we cannot predict, as well as other factors discussed
in the "Risk Factors" included on this Form 10-Q as Exhibit 99.1, as well as those described in the "Risk Factors" section of VIA's 2001 Annual Report.



We conduct business in 7 different currencies, including the Euro and the U.S. dollar. The value of foreign currencies fluctuates in relation to the U.S. dollar.
At the end of each reporting period, the revenues and expenses of our operating companies are translated into U.S. dollars using the average exchange rate for that period, and their assets and
liabilities are translated into U.S. dollars using the exchange rate in effect at the end of that period. Fluctuations in these exchange rates impact our financial condition, revenues and results of
operations, as reported in U.S. dollars.

Exchange
rates can vary significantly. The Euro-linked currencies varied by approximately 6% in relation to the U.S. dollar during the first quarter of 2002 and at
March 31, 2002 were approximately 2% below where they were at the beginning of the quarter. This decrease in the exchange rate resulted in a foreign currency loss of $3.0 million for the
first quarter of 2002. These losses are primarily due to the impact of the fluctuation in the value of the Euro on our Euro denominated cash accounts as well as the revaluation of intercompany
balances. Future changes in the value of the Euro could have a material impact on our financial position and results of operations. We also experienced fluctuations in other exchange rates.

Our
local operations transact business in their local currencies. They do not have significant assets, liabilities or other accounts denominated in currencies other than their local
currency, and therefore are not subject to exchange rate risk with respect to their normal operations, with the exception of intercompany transactions. On a consolidated basis, we are subject to
exchange rate risks because we translate our local operations' financial data into U.S. dollars.

As
of January 1, 2002, the Euro became the sole legal currency for 11 of the 15 European Union member countries. This includes nine of our operating markets. As a result, in 2002,
we conduct business in only 7 currencies compared to 15 currencies in 2001.

Our
operations in Argentina have been adversely affected as a result of unfavorable economic conditions and exchange restrictions introduced by the Argentine government. Our operating
results in Argentina for the three months ended March 31, 2002 reflected a significant devaluation of the Argentine peso against the U.S. dollar. The transfer of U.S. dollars out of Argentina
continues to be restricted. We expect that current uncertainties of the Argentine economic state will continue to have a negative impact on the results of our operations in Argentina, although we are
currently engaged in an auction process to sell our Argentina operations as noted above underOverview. In the first quarter of 2002, we derived 1% of
the consolidated revenue from our Argentine operations. As of March 31, 2002, net assets of our Argentine subsidiary were insignificant. As of March 31, 2002, the accumulated foreign
currency translation adjustment for our operations in Brazil and Argentina was $3.1 million loss and $2.7 million gain, respectively. The accumulated foreign currency translation
adjustment will be reclassified to the statement of operations when realized upon the sale of our operations in Brazil and Argentina.

20

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The following discussion relates to our exposure to market risk, related to changes in interest rates and changes in foreign exchange rates. This discussion
contains forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially due to a number of factors, as set forth in the "Risk Factors" included as
Exhibit 99.1 on this Form 10-Q and included in the "Risk Factors" section of VIA's 2001 Annual Report.

VIA
has exposure to financial market risks, including changes in interest rates and foreign exchange rates. At March 31, 2002, VIA's financial instruments consisted of
short-term investments and fixed rate debt related to acquisitions and network purchases. Our investments are generally fixed rate short-term investment grade and government
securities denominated in U.S. dollars. At March 31, 2002 all of our investments are due to mature within three months and the carrying value of such investments approximates fair value. The
majority of our debt obligations have fixed rates of interest and are due in the coming year.

As
mentioned previously in the "Foreign Currency Exchange Risks" section, VIA has Euro denominated cash accounts, which expose the company to foreign currency exchange rate risk. As of
March 31, 2002, a 10 percent increase or decrease in the level of the Euro exchange rate against the U.S. dollar with all other variables held constant would result in a realized gain or
loss of $2.2 million. VIA is also subject to risk from changes in foreign exchange rates for its international operations that use a foreign currency as their functional currency and are
translated into U.S. dollars. These risks cannot be reduced through hedging arrangements.

21

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PART II

Item 1. Legal Proceedings

We are subject to claims and legal proceedings that arise in the ordinary course of our business operations. Each of these matters is subject to various
uncertainties, and it is possible that some of these matters may be decided unfavorably to us. We do not believe that any of these matters will have a material adverse affect on our business, assets
or operations.

Item 2. Changes in Securities and Use of Proceeds

None.

Use of Initial Public Offering Proceeds

On February 16, 2000, VIA completed its initial public offering of shares of common stock, par value $.001 per share. VIA's initial public offering was
made pursuant to a prospectus dated February 11, 2000, which was filed with the SEC as part of a registration statement, file no. 333-91615, that was declared effective by
the SEC on February 10, 2000.

The
estimated net offering proceeds to VIA after deducting the estimated expenses and underwriting discounts and commissions was approximately $333.0 million. From the effective
date of the initial public offering through March 31, 2002, VIA has used $86.9 million for acquisitions of other businesses, including the repayment of debt for 1999 acquisitions and
increases in VIA's investment in various partially owned subsidiaries, $44.0 million for capital expenditures and approximately $91.6 million to fund operating losses.

Item 3. Defaults Upon Senior Securities.

None.

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

None.

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K





22

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SIGNATURES

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

|                   |  | VIA NET.WORKS, Inc.
|------------------ |  | -------------------
|Date: May 15, 2002 |  | By:                
|Date: May 15, 2002 |  | By:                

23

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EXHIBIT INDEX

99.1    Risk
Factors

24

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