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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 SEPTEMBER 30, 2002
|OR                                               
|o                                                 | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-29391

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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)

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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

Indicate
by check mark whether the registrant is: an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes o        No ý

As
of November 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

|PART I FINANCIAL INFORMATION |  |                                                                                                      
|---------------------------- |  | -----------------------------------------------------------------------------------------------------
|Item 1.                      |  | Financial Statements:                                                                                
|                             |  | Consolidated Balance Sheets as of December 31, 2001 and September 30, 2002                           
|                             |  | Consolidated Statements of Operations for the three and nine months ended September 30, 2001 and 2002
|                             |  | Consolidated Statements of Cash Flows for the nine months ended September 30, 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                                           
|Item 4.                      |  | Controls and Procedures                                                                              
|PART II. OTHER INFORMATION   |  |                                                                                                      
|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                   |  | 32                                                                                                   
|CERTIFICATIONS               |  | 33                                                                                                   
|EXHIBIT INDEX                |  | 35                                                                                                   

1

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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)

|                                                                             |                                                                                                                                            | December 31, 2001                          |        | September 30,
2002 |        
|---------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ------ | ------------------ | -------
|
|ASSETS                                                                       |                                                                                                                                            |                                            |        |                    |        
|Current assets:                                                              |                                                                                                                                            |                                            |        |                    |        
|                                                                             | Cash and cash equivalents                                                                                                                  |                                            | $      | 137,854            |        
|                                                                             | Restricted cash                                                                                                                            |                                            |        |                   |        
|                                                                             | Trade and other accounts receivable, net of allowance of $8,393 and $6,704, 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 non-current assets                                                     |                                                                                                                                            |                                            | 767    |                    |        
|Assets of businesses transferred under contractual arrangement (Note 3)      |                                                                                                                                            |                                            |       |                    |        
|                                                                             |                                                                                                                                            |                                            |        |                    |        
|                                                                             |                                                                                                                                            | 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    |                    |        
|Liabilities of businesses transferred under contractual arrangement (Note 3) |                                                                                                                                            |                                            |       |                    |        
|                                                                             |                                                                                                                                            |                                            |        |                    |        
|                                                                             |                                                                                                                                            | 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            | )      
|                                                                             | Accumulated other comprehensive loss of businesses transferred under contractual arrangement (Note 3)                                      |                                            |        |                   |        
|                                                                             |                                                                                                                                            |                                            |        |                    |        
|                                                                             |                                                                                                                                            | Total stockholders' equity                 |        |                    | 156,241
|                                                                             |                                                                                                                                            |                                            |        |                    |        
|                                                                             |                                                                                                                                            | Total liabilities and stockholders' equity |        | $                  | 198,701
|                                                                             |                                                                                                                                            |                                            |        |                    |        

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

2

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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
September 30, |            | For the nine months ended
September 30, |  
|------------------------------------------------------------------------- | -------------------------------------------------- | ---------------------------------------- | ---------- | --------------------------------------- | -
|
|Revenue                                                                   |                                                    | $                                        | 19,979     |                                         | $
|Operating costs and expenses:                                             |                                                    |                                          |            |                                         |  
|                                                                          | Internet services                                  |                                          |            | 12,248                                  |  
|                                                                          | Selling, general and administrative                |                                          |            | 26,076                                  |  
|                                                                          | Impairment and restructuring charges (Note 4)      |                                          |            |                                        |  
|                                                                          | Depreciation and amortization                      |                                          |            | 12,404                                  |  
|                                                                          |                                                    |                                          |            |                                         |  
|Total operating costs and expenses                                        |                                                    |                                          | 50,728     |                                         |  
|                                                                          |                                                    |                                          |            |                                         |  
|Loss from continuing operations                                           |                                                    |                                          | (30,749    | )                                       |  
|                                                                          |                                                    |                                          |            |                                         |  
|Interest income, net                                                      |                                                    |                                          | 1,701      |                                         |  
|Other expense, net                                                        |                                                    |                                          | (683       | )                                       |  
|Foreign currency gains (losses), net                                      |                                                    |                                          | 4,693      |                                         |  
|                                                                          |                                                    |                                          |            |                                         |  
|Loss from continuing operations before minority interest and income taxes |                                                    |                                          | (25,038    | )                                       |  
|Income tax benefit                                                        |                                                    |                                          | 179        |                                         |  
|Minority interest in loss of consolidated subsidiaries                    |                                                    |                                          |           |                                         |  
|                                                                          |                                                    |                                          |            |                                         |  
|Net loss from continuing operations                                       |                                                    |                                          | (24,859    | )                                       |  
|                                                                          |                                                    |                                          |            |                                         |  
|Discontinued operations (Note 2):                                         |                                                    |                                          |            |                                         |  
|                                                                          | Loss from discontinued operations                  |                                          |            | (1,340                                  | )
|                                                                          | Gain (loss) on disposal of discontinued operations |                                          |            |                                        |  
|                                                                          |                                                    |                                          |            |                                         |  
|Net loss                                                                  |                                                    | $                                        | (26,199    | )                                       | $
|                                                                          |                                                    |                                          |            |                                         |  
|Basic and diluted loss per share:                                         |                                                    |                                          |            |                                         |  
|                                                                          | Continuing operations                              |                                          | $          | (0.41                                   | )
|                                                                          | Discontinued operations                            |                                          |            | (0.02                                   | )
|                                                                          |                                                    |                                          |            |                                         |  
|Net loss per share  basic and diluted                                    |                                                    | $                                        | (0.43      | )                                       | $
|                                                                          |                                                    |                                          |            |                                         |  
|Shares used in computing basic and diluted loss per share                 |                                                    |                                          | 60,635,252 |                                         |  
|                                                                          |                                                    |                                          |            |                                         |  

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

3

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

|                                                         |                                                                                                        | For the nine months ended
September 30,                |                                      
|-------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | ------------------------------------------------------ | -------------------------------------
|
|Cash flows from operating activities:                    |                                                                                                        |                                                        |                                      
|                                                         | Net loss from continuing operations                                                                    |                                                        | $                                    
|                                                         | Adjustments to reconcile net loss from continuing operations to net cash used in operating activities: |                                                        |                                      
|                                                         |                                                                                                        | Depreciation and amortization                          |                                      
|                                                         |                                                                                                        | Impairment charges                                     |                                      
|                                                         |                                                                                                        | Employee stock compensation                            |                                      
|                                                         |                                                                                                        | Provision (benefit) for doubtful accounts receivable   |                                      
|                                                         |                                                                                                        | Unrealized foreign currency transaction (gains) losses |                                      
|                                                         |                                                                                                        | Minority interest in loss of consolidated subsidiaries |                                      
|                                                         |                                                                                                        | Write-off of note receivable from related party        |                                      
|                                                         | Changes in assets and liabilities:                                                                     |                                                        |                                      
|                                                         |                                                                                                        | Trade accounts receivable                              |                                      
|                                                         |                                                                                                        | Other current assets                                   |                                      
|                                                         |                                                                                                        | Other non-current 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                                                                     |                                                        |                                      
|                                                         | Increase in restricted cash                                                                            |                                                        |                                      
|                                                         | Proceeds from the disposition of operating subsidiaries                                                |                                                        |                                      
|                                                         | Purchases of property, equipment and other assets                                                      |                                                        |                                      
|                                                         | Note receivable from related party                                                                     |                                                        |                                      
|                                                         | Repayment of 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                                  |                                                        |                                      
|                                                         | Purchase of treasury stock                                                                             |                                                        |                                      
|                                                         | Proceeds from issuance of common stock, net                                                            |                                                        |                                      
|                                                         |                                                                                                        |                                                        |                                      
|                                                         |                                                                                                        |                                                        | Net cash used in financing activities
|                                                         |                                                                                                        |                                                        |                                      
|Cash flows provided by (used by) discontinued operations |                                                                                                        |                                                        | (1,793                               
|                                                         |                                                                                                        |                                                        |                                      
|Effect of currency exchange rate changes on cash         |                                                                                                        |                                                        | (71                                  
|                                                         |                                                                                                        |                                                        |                                      
|Net decrease in cash and cash equivalents                |                                                                                                        |                                                        | (74,316                              
|Cash and cash equivalents, beginning of period           |                                                                                                        |                                                        | 237,839                              
|                                                         |                                                                                                        |                                                        |                                      
|Cash and cash equivalents, end of period                 |                                                                                                        | $                                                      | 163,523                              
|                                                         |                                                                                                        |                                                        |                                      
|Non-cash investing and financing transactions:           |                                                                                                        |                                                        |                                      
|                                                         | Treasury shares obtained in exchange for stock option exercises                                        |                                                        | $                                    
|                                                         |                                                                                                        |                                                        |                                      

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

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

1.    Basis of Presentation and Recent Pronouncements

These consolidated financial statements as of September 30, 2002 and for the three and nine month periods ended September 30, 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 to the financial statements 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 September 30, 2002 and the results of its operations and its cash flows for the nine month periods ended
September 30, 2001 and 2002. The results of operations for the three and nine month periods ended September 30, 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.

The
preparation of financial statements in conformity with generally accepted accounting principles requires VIA to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenue and expenses, together with amounts disclosed in the related notes to the consolidated financial statements. Actual results could differ from the recorded estimates.

In
July 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 146 (SFAS 146), "Accounting for Costs Associated with Exit or Disposal
Activities."SFAS 146 addresses accounting for costs associated with exit or disposal
activities and supercedes Emerging Issues Task Force (EITF) Issue No. 94-3"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity."This statement is effective for exit disposal activities that are initiated after December 31, 2002, with early adoption encouraged. VIA plans to
adopt SFAS 146 on January 1, 2003 and is currently assessing the impact of SFAS 146 on its financial position and results of operations.

2.    Discontinued Operations

As part of its turnaround plan and its focus on substantially reducing its negative cash flow, VIA determined to cease funding certain country operations deemed
to not materially contribute to its financial strength in the long term. Consistent with this conclusion, VIA completed the sale of its operations in Argentina and Austria during the three months
ended June 30, 2002 and completed the sale of its operation in Ireland during the three months ended September 30, 2002. The operation in Argentina, which had been included in the
Americas region for segment reporting, was sold on June 11, 2002 to an unrelated third party purchaser. The Austrian operation, which had been included in the European region for segment
reporting, was sold to the then-current management team on May 29, 2002. The Irish operation, which had been included in the European region for segment reporting, was sold on
August 12, 2002 to a former shareholder and managing director of the Irish operation. These operations were sold for nominal consideration and VIA recognized a gain on the disposal of the three
operations in the aggregate amount of $1.9 million, which was entirely due to the reclassification of the accumulated foreign currency translation adjustment to the statement of operations. Of
the $1.9 million gain reported, a $2.4 million gain was recorded in the second quarter of

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2002 related to the sale of VIA's operations in Argentina and Austria. A $527,000 loss was recorded in the third quarter of 2002 related to the sale of VIA's operation in Ireland.

Effective
January 1, 2002, VIA adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets."As each of the Argentine, Austrian and Irish operations disposed of during 2002 represent a component of an entity as defined by SFAS 144, VIA has classified
each operation as a discontinued operation for all periods presented. Revenues related to the discontinued operations through the date of sale were approximately $120,000 and $1.8 million for
the three and nine months ended September 30, 2002. The revenues related to these operations for the three and nine months ended September 30, 2001 were approximately $1.4 million
and $4.0 million, respectively. The pre-tax loss, excluding accounting for the sale transaction, related to discontinued operations was approximately $19,000 and $1.7 million
for the three and nine months ended September 30, 2002, respectively. For the three and nine months ended September 30, 2001, the pre-tax loss related to the discontinued
operations was $1.3 million and $5.1 million, respectively.

3.    Businesses Transferred Under Contractual Arrangement

In May 2002, VIA closed a transaction for the sale of its Brazilian operation to the then-current management team, which included Antonio
Tavares, a former executive officer of VIA. Under this transaction, VIA sold 100% of the outstanding capital stock of VIA NET.WORKS Brasil S.A. ("VIA Brasil") for $428,000, of which $30,000 was paid
in cash at closing and the balance by delivery of a promissory note payable over 18 months. The note is secured by a pledge of 93% of the outstanding shares in VIA Brasil, subject to reduction
on a pro-rata basis for payments made under the note. The collateralization of the outstanding shares enables VIA to reacquire, at its option, a controlling interest in VIA Brasil if the purchasers
default on the obligations under the promissory note.

VIA
expects the funds for payment of the note to come from the individual buyers. Because VIA does not have reasonable assurances that the note will be paid in full, the Company fully
reserved against the note receivable at June 30, 2002. Furthermore, management does not consider the shares held as collateral to have significant value.

Consistent
with the accounting treatment prescribed under Staff Accounting Bulletin (SAB) Topic 5E, VIA will neither treat the Brazilian operation as a discontinued operation nor
consolidate any future results of this Brazilian operation. However, once the sale qualifies as an accounting disposition under SAB Topic 5E, VIA will recognize a $2.6 million loss related to
the accumulated translation adjustment in the statement of operations. The total assets and liabilities related to the Brazilian operation are shown on the consolidated balance sheet under the
captions assets and liabilities of business transferred under contractual arrangement. The results of VIA Brasil through the date of sale are included within the results from continuing operations for
the three and nine months ended September 30, 2001 and 2002. Likewise, the cash flows for VIA Brasil for these periods are included in VIA's consolidated cash flows from continuing operations.

On
September 4, 2002, VIA closed a transaction for the sale of 100% of the outstanding capital stock of its subsidiary, VIA NET.WORKS México S.A. de C.V. ("VIA
Mexico") to a group of buyers led by the then-current management of VIA Mexico. The purchase price for the shares was $100. As a part of the sale transaction, the parties also entered into
a convertible credit agreement under which VIA agreed to loan VIA Mexico a sum of $2.2 million through three cash draws to be made on or about the closing date of September 4, 2002,
September 30, 2002 and October 30, 2002. Under the convertible credit agreement, all outstanding loan amounts together with accrued interest become due and payable on September 4,
2004. This convertible credit agreement provides that upon a change of control of VIA Mexico (which is defined to include a change of greater than 33% of the current equity holding of the company),
VIA may elect to convert the outstanding loan amounts into a 19% equity interest of VIA Mexico or accept a cash payment of $600,000 as payment in full. If VIA accepts

6

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conversion of the loan amounts into equity, VIA will be protected from equity dilution, but only with respect to any initial capital increase that causes a change of control event.

VIA
expects the funds for repayment of the loan to come exclusively from future operations of VIA Mexico. Management believes that VIA Mexico's history of past operating losses combined
with the difficult economic conditions in the telecommunications industry in the region makes recovery of the loan uncertain. Accordingly, VIA fully provided against the whole amounts under the loan
in its results of operations for the three months ended September 30, 2002.

Consistent
with the accounting treatment prescribed under Staff Accounting Bulletin (SAB) Topic 5E, VIA will neither treat the Mexican operation as a discontinued operation nor
consolidate any future results of this Mexican operation. However, once the sale qualifies as an accounting disposition under SAB Topic 5E, VIA will recognize a $2.3 million gain related to the
accumulated translation adjustment in the statement of operations. The total assets and liabilities related to the Mexican operation are shown on the consolidated balance sheet under the captions
assets and liabilities of business transferred under contractual arrangement. The results of VIA Mexico through the date of sale are included within the results from continuing operations for the
three and nine months ended September 30, 2001 and 2002. Likewise, the cash flows for VIA Mexico for these periods are included in VIA's consolidated cash flows from continuing operations.

4.    Impairment and Restructuring Charges

On January 1, 2002, the Company adopted SFAS No. 144,"Accounting for the Impairment or Disposal of Long-Lived
Assets."During the second quarter of 2002, in light of the significant underperformance of the Italian operation during the first half of the year, the Company initiated an
impairment analysis of its long-lived assets for this operation. Based on this analysis, the Company determined that the carrying amounts of certain of its Italian operation's
long-lived assets exceeded the future undiscounted cash flows as of June 30, 2002. As a result of the impairment review, the Company determined that the operation's
long-lived assets were impaired and recorded an impairment charge of $625,000. Additionally, the Company tested the operation's goodwill for impairment in accordance with SFAS 142
using the same future undiscounted cash flow methodology. As a result of this analysis, the Company recorded a goodwill impairment charge of $316,000 as of June 30, 2002.

The
composition of impairment charges recorded during the second quarter of 2002 was as follows (in thousands of U.S. dollars):

Fixed assets

$
625Goodwill and other intangible assets


316Total impairment charge

$
941


The
assumptions made in calculating the impairment charges, including estimates of cash flows, discount rates, revenue streams and comparable market transactions, represent management's
best estimates.

During
the three months ended September 30, 2002, the Company recorded a restructuring charge of $1.0 million related to the closing of the Reston, Virginia office and
transfer of functions to the

7

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United Kingdom. The composition of the restructuring charge was as follows (in thousands of U.S. dollars):

Future operating lease obligations

$
527Employee termination payments


415Other


85Total restructuring charge

$
1,027


The
future operating lease obligations of $527,000 relate to the payments on the Reston office lease for the remainder of the term, which continues through February 2005, and
related legal fees less anticipated income from a sublease of the space. The total future obligation under the lease is approximately $687,000. This total obligation could be offset by a sublease or a
potential cash payment made in connection with vacating the premise before the lease expires. The Company is currently looking for potential candidates to sublease the space and expects to have either
subleased the office or
negotiated a cash settlement by the second quarter 2002. The employee termination payments of $415,000 relate to the severance and benefits to be paid to seven employees, all of whom were notified of
their termination during the third quarter 2002. They will cease employment by June 30, 2003. The other expense of $85,000 was related to consulting fees related to the office close planning.
This does not include any costs that will have future benefit to the Company. As of September 30, 2002, the only cash payments made related to the restructuring charge have been the $85,000 in
consulting fees.

Management
has no other current plans that would affect the carrying value of VIA's assets or liabilities. However, as discussed in Management's Discussion and Analysis, certain of the
actions VIA might take as part of its turnaround plan may lead to additional impairment or restructuring charges in future periods and such amounts may be material.

5.    Comprehensive Loss

Comprehensive loss for the three and nine months ended September 30, 2001 and 2002 was as follows (in thousands of U.S. dollars):

|                                        |  | Three months ended
September 30, |         | Nine months ended
September 30, |  
|--------------------------------------- |  | -------------------------------- | ------- | ------------------------------- | -
|
|Net loss                                |  | $                                | (26,199 | )                               | $
|Foreign currency translation adjustment |  |                                  | 2,837   |                                 |  
|                                        |  |                                  |         |                                 |  
|Comprehensive loss                      |  | $                                | (23,362 | )                               | $
|                                        |  |                                  |         |                                 |  

6.    Property and Equipment

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

|                               |  | December 31, 2001 |         | September 30,
2002 |  
|------------------------------ |  | ----------------- | ------- | ------------------ | -
|Hardware and other equipment   |  | $                 | 15,520  |                    | $
|Network and data center assets |  |                   | 12,526  |                    |  
|Software                       |  |                   | 11,174  |                    |  
|Furniture and fixtures         |  |                   | 2,140   |                    |  
|                               |  |                   |         |                    |  
|                               |  |                   | 41,360  |                    |  
|Accumulated depreciation       |  |                   | (20,781 | )                  |  
|                               |  |                   |         |                    |  
|Property and equipment, net    |  | $                 | 20,579  |                    | $
|                               |  |                   |         |                    |  

8

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Depreciation
expense was $3.6 million and $2.4 million for the three months ended September 30, 2001 and 2002, respectively. Depreciation expense was
$9.8 million and $7.7 million for the nine months ended September 30, 2001 and 2002, respectively.

7.    Goodwill and Acquired Intangible Assets

VIA 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 acquired workforce as goodwill and ceased amortization of goodwill as of January 1, 2002. During the three months ended March 31,
2002, the Company completed its SFAS 142 transitional impairment test and determined that its goodwill was not impaired as of January 1, 2002, the date of SFAS 142 adoption. The
Company will perform its annual goodwill impairment analysis for balances as of October 1, 2002.

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

|                                                                     |  | Three Months Ended September 30, |            | Nine Months Ended September 30, |  
|-------------------------------------------------------------------- |  | -------------------------------- | ---------- | ------------------------------- | -
|
|Net loss from continuing operations                                  |  | $                                | (24,859    | )                               | $
|Adjustments:                                                         |  |                                  |            |                                 |  
|Amortization of goodwill and acquired workforce                      |  |                                  | 8,139      |                                 |  
|                                                                     |  |                                  |            |                                 |  
|Adjusted net loss from continuing operations                         |  | $                                | (16,720    | )                               | $
|Weighted average shares outstanding                                  |  |                                  | 60,635,252 |                                 |  
|Adjusted basic and diluted loss per share from continuing operations |  | $                                | (0.28      | )                               | $
|Reported basic and diluted loss per share from continuing operations |  | $                                | (0.41      | )                               | $

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

September 30,
2002Customer lists

$
2,561

$
2,582Workforce


1,415


Accumulated amortization


(2,226
)

(2,425
)Intangible assets, net

$
1,750

$
157


The
acquired intangible asset amortization expense for the three and nine months ended September 30, 2002 was $209,000 and $764,000, respectively. The acquired intangible assets
amortization expense for the year ending December 31, 2002 will total approximately $900,000. As of December 31, 2002, all intangible assets will be fully amortized.

9

---

The
changes in the carrying amount of goodwill during the nine months ended September 30, 2002 are as follows (in thousands of U.S. dollars):

Balance as of December 31, 2001

$
17,134Acquired workforce


850Impairment charges related to continuing operations


(316
)Impairment charges related to discontinued operations


(487
)Foreign exchange adjustment


1,277Balance as of September 30, 2002

$
18,458


8.    Stockholders' Equity

In the first quarter of 2002, 886,667 shares of non-voting common stock were converted to voting shares of common stock at the request of the holder
of the shares. All non-voting common stock can be converted to voting common stock at the request of the shareholders. During the three months ended March 31, 2002, VIA recorded
stock option forfeitures of $1.8 million, which reduced the deferred compensation balance to zero with the corresponding adjustment to additional paid-in capital. The deferred
compensation expense for the three months ended September 30, 2001 was $749,000. VIA recorded no deferred compensation expense during the three months ended September 30, 2002. For the
nine months ended September 30, 2001 and 2002, VIA recorded deferred compensation expense of $2.2 million and $527,000, respectively.

9.    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 [sic], et al
[01-CV-9720] (the "Complaint"). An amended complaint was filed in April 2002. There is currently pending before the trial judge a motion to
dismiss all claims against the defendants. 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," all of which are included in a single coordinated proceeding in the Southern District of New York. VIA believes that any allegations in the Complaint of wrongdoing on the part of VIA or
our officers are without legal merit. The Company has retained legal counsel and intends to vigorously defend against these allegations.

VIA
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.

10

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10.  Segment Reporting

VIA offers a variety of Internet access, managed bandwidth, web hosting, ecommerce, Internet security and related services to businesses and consumers in Europe
and the Americas. As of September 30, 2002, VIA served primary markets in 9 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, impairment and restructuring charges 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 below presents information about the reported revenue, EBITDA, impairment and restructuring charges and assets from continuing operations of the Company's segments for the
three and nine months ended September 30, 2001 and 2002 (in thousands of U.S. dollars).

|                                       |                                      | Europe |         | Americas |   | Corporate |        | Total |        
|-------------------------------------- | ------------------------------------ | ------ | ------- | -------- | - | --------- | ------ | ----- | -------
|Total assets as of September 30, 2001  |                                      | $      | 122,255 |          | $ | 37,191    |        | $     | 177,905
|Total assets as of September 30, 2002  |                                      | $      | 44,923  |          | $ | 6,429     |        | $     | 106,678
|Three months ended September 30, 2001: |                                      |        |         |          |   |           |        |       |        
|                                       | Revenue                              |        | $       | 14,939   |   | $         | 5,040  |       | $      
|                                       | EBITDA                               |        |         | (8,982   | ) |           | (3,080 | )     |        
|                                       | Impairment and restructuring charges |        |         |         |   |           |       |       |        
|Three months ended September 30, 2002: |                                      |        |         |          |   |           |        |       |        
|                                       | Revenue                              |        |         | 17,528   |   |           | 2,081  |       |        
|                                       | EBITDA                               |        |         | 670      |   |           | (749   | )     |        
|                                       | Impairment and restructuring charges |        |         |         |   |           |       |       |        
|Nine months ended September 30, 2001:  |                                      |        |         |          |   |           |        |       |        
|                                       | Revenue                              |        |         | 50,163   |   |           | 16,072 |       |        
|                                       | EBITDA                               |        |         | (17,062  | ) |           | (6,577 | )     |        
|                                       | Impairment and restructuring charges |        |         | 524      |   |           | 47,468 |       |        
|Nine months ended September 30, 2002:  |                                      |        |         |          |   |           |        |       |        
|                                       | Revenue                              |        |         | 46,958   |   |           | 10,349 |       |        
|                                       | EBITDA                               |        |         | (4,886   | ) |           | (3,348 | )     |        
|                                       | Impairment and restructuring charges |        | $       | 941      |   | $         |       |       | $      

At
September 30, 2002, goodwill for Europe and the Americas was $16.3 million and $2.2 million, respectively. During the second quarter of 2002, VIA sold its
operations in Argentina, Austria and Brazil. During the third quarter of 2002, VIA sold its operations in Ireland and Mexico. Our operations in Argentina, Austria and Ireland are considered
discontinued operations. The Argentine operation was previously reported in the Americas region and the Austrian and Irish operations were previously reported in the Europe region. See Notes 2 and 3.

11

---

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

|                                                                          |  | For the three
months ended
September 30,
2001 |         | For the three
months ended
September 30,
2002 |   | For the nine
months ended
September 30,
2001 |   | For the nine
months ended
September 30,
2002 |         
|------------------------------------------------------------------------- |  | --------------------------------------------- | ------- | --------------------------------------------- | - | -------------------------------------------- | - | -------------------------------------------- | --------
|EBITDA from continuing operations                                         |  | $                                             | (17,596 | )                                             | $ | (4,955                                       | ) | $                                            | (40,935 
|Non-cash compensation                                                     |  |                                               | (749    | )                                             |   |                                             |   |                                              | (2,228  
|Impairment and restructuring charges                                      |  |                                               |        |                                               |   | (1,027                                       | ) |                                              | (47,992 
|Depreciation and amortization                                             |  |                                               | (12,404 | )                                             |   | (2,627                                       | ) |                                              | (41,735 
|                                                                          |  |                                               |         |                                               |   |                                              |   |                                              |         
|Loss from continuing operations                                           |  |                                               | (30,749 | )                                             |   | (8,609                                       | ) |                                              | (132,890
|Interest income, net                                                      |  |                                               | 1,701   |                                               |   | 493                                          |   |                                              | 6,239   
|Other income (expense) and foreign currency gains (losses), net           |  |                                               | 4,010   |                                               |   | (3,070                                       | ) |                                              | (4,114  
|                                                                          |  |                                               |         |                                               |   |                                              |   |                                              |         
|Loss from continuing operations before income taxes and minority interest |  | $                                             | (25,038 | )                                             | $ | (11,186                                      | ) | $                                            | (130,765
|                                                                          |  |                                               |         |                                               |   |                                              |   |                                              |         

12

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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 turnaround plan, future disposal of operations,
projections of revenues, costs (direct and operating costs), cost reductions and capital expenditures. 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.

Background

VIA NET.WORKS, Inc. is a single source provider of managed Internet services to small and mid-sized businesses in Europe and the United States.
We were founded in 1997 with the goal of establishing an international Internet services provider with a footprint primarily in Europe in order to take advantage of the expected growth opportunities
for Internet services in these 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 developing and deploying an integrated provisioning,
billing and customer care platform to support this growth. In February 2000, VIA engaged in an initial public offering of its common stock in which it raised $333.0 million in capital,
net of estimated expenses and underwriting discounts and commissions. During 2000, VIA increased its revenue base significantly through a combination of organic growth and the acquisition of 9
independent Internet services providers. VIA ended 2000 reporting $99.4 million in revenues, up from $39.3 million in 1999.

In
2001, we experienced a downward turn in our financial results and operational difficulties. As a result of deteriorating market conditions and internal disruptions during the year, we
incurred negative cash flow of $100 million, our revenues declined on a consolidated basis by nine percent from 2000 levels, we restated our financial statements twice and experienced problems
resulting from the integration of acquired companies and significant personnel turnover in our key operations.

13

---

During
the first quarter of 2002, we conducted a strategic review and assessment of VIA's financial situation, operations and market positioning. The result of this review was a
turnaround plan, which was approved by the board of directors and which included four primary components:



Reduction of VIA's negative cash flow and a drive toward profitability

During 2001, VIA's quarterly cash usage rate was approximately $25 million. We entered 2002 with approximately $138 million in cash reserves.
Preserving cash and reducing our negative cash flow to
ensure long-term viability is a primary focus of our turnaround plan. During the first nine months of 2002, we have taken the following actions to begin addressing these issues:



We
believe we have made meaningful progress in addressing VIA's cash flow issues and in driving the Company towards profitability. As noted in the chart below, our net cash usage has
been reduced by approximately 64%; from $25.0 million in the fourth quarter of 2001 to $8.9 million in the third quarter of 2002. Our EBITDA deficit has improved by 72% from ($17.6)
million in the third quarter 2001 to ($5.0) million in the third quarter 2002. Part of our EBITDA improvement from the third quarter of 2001 to the third quarter of 2002 is the result of our billing
system and process improvements during 2002. These improvements, combined with our intensified focus on cash collection

14

---

resulted in a bad debt expense benefit for the three and nine months ended September 30, 2002 of ($970,000) and ($3.0) million, respectively.

|                                                                           |  | 3Q 2001 |         | 4Q 2001 |   | 1Q 2002 |   | 2Q 2002 |         | 3Q 2002 |  
|-------------------------------------------------------------------------- |  | ------- | ------- | ------- | - | ------- | - | ------- | ------- | ------- | -
|
|Cash and restricted cash balance (end of quarter)                          |  | $       | 163,523 |         | $ | 137,854 |   | $       | 121,838 |         | $
|Net decrease in cash                                                       |  | $       | 22,388  |         | $ | 25,669  |   | $       | 16,016  |         | $
|Realized foreign currency gain (loss) on foreign denominated cash accounts |  | $       | 2,172   |         | $ | (688    | ) | $       | (438    | )       | $
|                                                                           |  |         |         |         |   |         |   |         |         |         |  
|Net cash usage                                                             |  | $       | 24,560  |         | $ | 24,981  |   | $       | 15,578  |         | $
|EBITDA from continuing operations                                          |  | $       | (17,596 | )       | $ | (16,011 | ) | $       | (13,076 | )       | $

Going
forward, where appropriate, we will continue to take steps toward reducing cash usage and EBITDA losses with the goal of achieving positive EBITDA and cash flow self-sufficiency as
quickly as possible. These steps could include our disposition of additional country operations, further headcount reductions, consolidation of operational functions across country operations and
other similar actions. There can be no assurances that we will be successful in these efforts.

Stabilization of billing systems and business process issues

From 1998 through 2000, we acquired multiple independent companies in a number of our geographic markets, including the United Kingdom and Germany. In 2001, we
began the process of integrating these multiple local operations into a single entity operation in each country. In the United Kingdom and Germany, our two largest markets, the integration activities
failed to address appropriately billing systems limitations, business practice and processes inadequacies and organizational cohesiveness. As a result, we have encountered significant customer billing
and process issues, financial reporting difficulties which created an increased burden on local and corporate financial staffs to derive accurate information and a high staff turnover in these country
operations. In addition, our prior independent accountants advised us that our legacy billing systems and practices in these operations constituted material weaknesses in our internal control
structure.

We
have taken a number of steps to address these issues during the first nine months of 2002. In both countries, we have expanded our monthly and quarterly financial reporting close and
analytical procedures. In Germany, an interim management team and corporate task force together with professional advisors was sent to address the systems, processes and billing data issues as well as
the organizational problems that these issues exacerbated. We have also initiated a significant business reengineering of that organization. As a part of this reengineering, our German operation will
cease to provide service to its low-margin, customer-service intensive customer base by the end of 2002, which will enable the operation to reduce its headcount substantially. In the
United Kingdom, we have initiated a comprehensive and priority one project with team members from corporate and the local operation to:



These
ongoing efforts have led to tangible improvements in the operations and financial reporting capabilities of our German and United Kingdom operations. Nonetheless, many of the
improvements in both operations result from significantly expanded manual processes, analysis and validation processes. Permanent improvement will most likely require the replacement of the UK legacy
billing system. We anticipate that process will not be complete until first quarter 2003. However, there can be no

15

---

assurances that we will be able to complete this process in that timeframe. We have incurred and anticipate that we will continue to incur substantial costs and expenses relating to our remediation
efforts, enhanced financial reporting close and analytical procedures, and ultimately, the repair or replacement of required systems and severance costs for terminated employees. These cash outlays
may impact our ability to reduce our negative cash flow in the future.

As
a public company, VIA is committed to the spirit and intent of the recently-enacted Sarbanes-Oxley Act of 2002, particularly with respect to the focus on top management responsibility
for financial reporting and greater transparency in the reporting of company events. During the third quarter, in recognition of the new requirements for certification of financial statements by the
Chief Executive Officer and Chief Financial Officer, we established a more extensive quarterly close process, which included the detailed certification by each country managing director and financial
director of financial results, adherence to company policy, and disclosure of non-financial matters that could be material to VIA as a whole. During the third quarter 2002, VIA has also
made a substantial commitment to the enhancement of our internal audit function through the engagement of external professionals to support our internal staff efforts. Our enhanced internal audit
plan, which has been adopted and approved and will be overseen by the audit committee and our board of directors, was launched in November and has begun intensive financial reviews of our major
operations.

As
noted above under"Reduction of VIA's negative cash flow and a drive toward profitability"and as described in further detail in our
Annual Report under the section entitledOverviewof Management's Discussion and Analysis of Results of Operations and Financial Condition, we suspended
the development and deployment of our multi-vendor integrated provisioning, billing and customer care platform, or Integrated Platform, that was intended to replace legacy systems or automate manual
processes in our operations. As a result of this suspension, we are reviewing, on a case-by-case basis, the adequacy of our legacy systems to ensure that we can properly
provision our services, bill and service our customers and report accurately our results. To the extent that we are required to repair or replace any of these systems, the cash expenditure required to
do so may impact our ability to reduce our negative cash flow in the future.

Focus on Europe as VIA's core operating region

One component of our turnaround plan is to focus on Europe as our core operating region. Consistent with this determination and because of ongoing economic
weakness in Argentina, Brazil and Mexico and the continuing cash funding requirements of our operations in these countries, we engaged in an auction process to dispose of our operations in those
countries. During the second quarter of 2002, we successfully sold our Argentine and Brazilian operations. During the third quarter of 2002, we sold our Mexican operation. Together, our operations in
Argentina, Brazil, and Mexico generated approximately 6 and 13 percent of our consolidated revenues for the three months and nine months ended September 30, 2002, respectively.

In
order to bring corporate decision-making closer to our core operations, we decided to establish an office in the United Kingdom and relocate certain corporate executive and key
headquarters positions. We have begun the transition of headquarters positions to the new office in the United Kingdom beginning with corporate operational functions. Our President and Chief Operating
Officer and Vice PresidentCorporate Development have relocated to the United Kingdom. Our newly appointed Chief
Executive Officer, our Senior Vice PresidentTechnology and Operations and our Vice PresidentHuman Resources are currently resident in Europe; our Senior Vice President,
General Counsel and Secretary will be relocating in the first quarter of 2003. We have also begun to seek to sublet or terminate the remaining term of our headquarters office lease in Reston,
Virginia, which we anticipate will be completed by the second quarter 2003. VIA intends to maintain a dual headquarters structure, one in the U.S. and one in Europe.

16

---

In
connection with the office relocation to the United Kingdom, during the three months ended September 30, 2002, the Company recorded a restructuring charge of
$1.0 million related to the closing of the Reston office and transfer of functions. The composition of the restructuring charge was as follows (in thousands of U.S. dollars):

Future operating lease obligations

$
527Employee termination payments


415Other


85Total restructuring charge

$
1,027


The
future operating lease obligations of $527,000 relate to the payments on the Reston office lease for the remainder of the term, which continues through February 2005, and
related legal fees less anticipated income from a sublease of the space. The total future obligation under the lease is approximately $687,000. This total obligation could be offset by a sublease or a
potential cash payment made in connection with vacating the premise before the lease expires. We are currently looking for potential candidates to sublease the space and we expect to have either
subleased the office or negotiated a cash settlement by the second quarter 2002. The employee termination payments of $415,000 relate to the severance and benefits to be paid to seven employees, all
of whom were notified of their termination during the third quarter 2002. They will cease employment by June 30, 2003. The other expense of $85,000 was related to consulting fees for the office
close planning. This does not include any costs that will have future benefit to the Company. As of September 30, 2002, the only cash payments made related to the restructuring charge have been
the $85,000 in consulting fees.

In
connection with the move of the principal headquarter functions to a United Kingdom office, during the third quarter 2002, management determined that the company would need to engage
an audit team that was based in the United Kingdom, as it would no longer be practical to continue working with the engagement team of its independent auditors in Virginia. Accordingly, our audit
committee, with the full concurrence of the board of directors and after an evaluation of other firms and fee proposals, decided to engage the London office of Deloitte & Touche to serve as the
Company's independent auditors.

Enhancement of VIA's country management teams, senior management, and board of directors

As a part of our turnaround plan, we initiated a review of the strengths and capabilities of our senior and country management teams. We also assessed our needs
for additional personnel to address the requirements of the Company during this turnaround phase and the Company's determination to focus on Europe as its core operating region. At the country
operations level, a number of senior staff changes and new hires at senior levels have been effected, including finance, sales and customer care directors as well as human resources. At the corporate
level, during the first half of 2002 we addressed the Company's immediate needs through the hiring of a Chief Financial Officer to replace the prior officer who left the Company and a Vice
President-Corporate Development to support our withdrawal from certain country operations and review of acquisition opportunities. We also hired a Senior Vice President-Technology and Operations, a
Vice President-Human Resources and a Vice President-Corporate Controller, all of whom were based in Europe. During the third quarter of 2002, Karl Maier, our acting Chief Executive Officer, relocated
to England and was appointed by the board as President and Chief Operating Officer, also retaining his title as acting CEO.

In
late October 2002, VIA announced the appointment of Rhett Williams as its new Chief Executive Officer, effective November 18, 2002. Recognizing that the Company's
financial turnaround efforts led by Mr. Maier were showing substantial results in line with the turnaround plan, the board hired Mr. Williams, a long-time senior executive in
the European data and telecommunications market to assume the leadership of VIA and develop and lead the Company in a strategic reassessment of

17

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VIA's sales and marketing plans, allowing Mr. Maier to continue his focus and efforts as President and COO on VIA's ongoing financial turnaround.

To
complement its European operations focus, VIA has also made substantial changes in the make-up of its board of directors. Since the beginning of 2002, VIA has both reduced
the size of its board to enable more efficient decision-making and transformed the board towards a more operationally and Europe-oriented group of directors. Consistent with this approach, VIA's board
is now comprised of Messrs. Mike McTighe, John Steele, Gabriel Battista, Rhett Williams, and Karl Maier, all of whom have significant telecommunications operational experience, together with
Messrs. Steve Halstedt, Erik Torgerson and Stephen Eley, who each bring strategic financial and investment expertise to the Company.

Ongoing product and market strategy

Despite setbacks in 2001 and our focused turnaround in 2002, 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:









While
we will continue to pursue this strategy, our most immediate focus has been to ensure our long-term financial viability, improve our financial control environment and
stabilize our back-office systems and processes. 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

18

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assets and second, by concentrating our sales efforts on high margin producing services. In addition, the hiring of Mr. Williams marks a new phase in VIA's turnaround strategy. While
continuing our focus on reaching profitability through cost reduction and business optimization strategies, VIA will now begin to focus on leveraging its assets and capabilities and launch a new sales
and marketing strategy to address the market opportunities for data and telecommunications providers. There can be no assurance that we will be successful in any of these efforts.

The
following table summarizes our continuing operations in Europe and the Americas by country and revenue contribution from continuing operations for the three and nine months ended
September 30, 2002.

|Country of Operation |  | Percentages of
Total Revenue
for the Three Months
Ended September 30,
2002 |  | Percentages of
Total Revenue
for the Nine Months
Ended September 30,
2002
|-------------------- |  | -------------------------------------------------------------------------- |  | -------------------------------------------------------------------------
|Brazil               |  |                                                                           |  | 2%                                                                       
|France               |  | 9%                                                                         |  | 10%                                                                      
|Germany              |  | 13%                                                                        |  | 13%                                                                      
|Italy                |  | 1%                                                                         |  | 2%                                                                       
|Mexico               |  | 6%                                                                         |  | 11%                                                                      
|The Netherlands      |  | 10%                                                                        |  | 9%                                                                       
|Portugal             |  | 6%                                                                         |  | 6%                                                                       
|Spain                |  | 2%                                                                         |  | 2%                                                                       
|Switzerland          |  | 15%                                                                        |  | 9%                                                                       
|United Kingdom       |  | 33%                                                                        |  | 30%                                                                      
|United States        |  | 5%                                                                         |  | 6%                                                                       

Discontinued Operations

As part of our turnaround plan and our focus on substantially reducing our negative cash flow, we determined to cease funding certain country operations deemed to
not materially contribute to our financial strength in the long term. Consistent with this conclusion, we completed the sale of our operations in Argentina and Austria during the three months ended
June 30, 2002 and completed the sale of our operation in Ireland during the three months ended September 30, 2002. The operation in Argentina, which had been included in the Americas
region for segment reporting, was sold on June 11, 2002 to an unrelated third party purchaser. The Austrian operation, which had been included in the European region for segment reporting, was
sold to the then-current management team on May 29, 2002. The Irish operation, which had been included in the European region for segment reporting, was sold on August 12,
2002 to a former shareholder and managing director of the Irish operation. These operations were sold for nominal consideration and we recognized a gain on the disposal of the three operations in the
aggregate amount of $1.9 million, which was entirely due to the reclassification of the accumulated foreign currency translation adjustment to the statement of operations. Of the
$1.9 million gain reported, a $2.4 million gain was recorded in the second quarter of 2002 related to the sale of our operations in Argentina and Austria. A $527,000 loss was recorded in
the third quarter of 2002 related to the sale of our operation in Ireland. See Note 2 to the consolidated financial statements for further information.

Businesses Transferred Under Contractual Arrangement

In May 2002, we closed a transaction for the sale of our Brazilian operation to the then-current management team, which included Antonio
Tavares, a former executive officer of VIA. Under this transaction, we sold 100% of the outstanding capital stock of VIA NET.WORKS Brasil S.A. ("VIA Brasil") for $428,000, of which $30,000 was paid in
cash at closing and the balance by delivery of a

19

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promissory note payable over 18 months. The note is secured by a pledge of 93% of the outstanding shares in VIA Brasil. The collateralization of the outstanding shares enables VIA to
reacquire, at its option, a controlling interest in VIA Brasil if the purchasers default on the obligations under the promissory note.

VIA
expects the funds for payment of the note to come from the individual buyers. Because VIA does not have reasonable assurances that the note will be paid in full, the Company fully
reserved against the note receivable at June 30, 2002. Furthermore, management does not consider the shares held as collateral to have significant value.

Consistent
with the accounting treatment prescribed under Staff Accounting Bulletin (SAB) Topic 5E, we will neither treat the Brazilian operation as a discontinued operation nor
consolidate any future results of this Brazilian operation. However, once the sale qualifies as an accounting disposition under SAB Topic 5E, we will recognize a $2.6 million loss related to
the accumulated translation adjustment in the statement of operations. The total assets and liabilities related to the Brazilian operation are shown on the consolidated balance sheet under the
captions assets and liabilities of businesses transferred under contractual arrangement. The results of VIA Brasil through the date of sale are included within the results from continuing operations
for the three and nine months ended September 30, 2001 and 2002. Likewise, the cash flows for VIA Brasil for these periods are included in VIA's consolidated cash flows from continuing
operations.

On
September 4, 2002, we closed a transaction for the sale of 100% of the outstanding capital stock of our subsidiary, VIA NET.WORKS México S.A. de C.V. ("VIA
Mexico") to a group of buyers led by the then-current management of VIA Mexico. The purchase price for the shares was $100. As a part of the sale transaction, the parties also entered into
a convertible credit agreement under which VIA agreed to loan VIA Mexico a sum of $2.2 million through three cash draws to be made on or about the closing date of September 4, 2002,
September 30, 2002 and October 30, 2002. Under the convertible credit agreement, all outstanding loan amounts together with accrued interest become due and payable on September 4,
2004. This convertible credit agreement provides that upon a change of control of VIA Mexico (which is defined to include a change of greater than 33% of the current equity holding of the company),
VIA may elect to convert the outstanding loan amounts into a 19% equity interest of VIA Mexico or accept a cash payment of $600,000 as payment in full. If VIA accepts conversion of the loan amounts
into equity, VIA will be protected from equity dilution, but only with respect to any initial capital increase that causes a change of control event.

VIA
expects the funds for repayment of the loan to come exclusively from future operations of VIA Mexico. Management believes that VIA Mexico's history of past operating losses combined
with the difficult economic conditions in the telecommunications industry in the region makes recovery of the loan uncertain. Accordingly, VIA fully provided against the whole amounts under the loan
in its results of operations for the three months ended September 30, 2002.

Consistent
with the accounting treatment prescribed under Staff Accounting Bulletin (SAB) Topic 5E, we will neither treat the Mexican operation as a discontinued operation nor
consolidate any future results of this Mexican operation. However, once the sale qualifies as an accounting disposition under SAB Topic 5E, we will recognize a $2.3 million gain related to the
accumulated translation adjustment in the statement of operations. The total assets and liabilities related to the Mexican operation are shown on the consolidated balance sheet under the captions
assets and liabilities of businesses transferred under contractual arrangement. The results of VIA Mexico through the date of sale are included within the results from continuing operations for the
three and nine months ended September 30, 2001 and 2002. Likewise, the cash flows for VIA Mexico for these periods are included in VIA's consolidated cash flows from continuing operations.

20

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RESULTS OF OPERATIONS

Internal controls and systems issues

As a part of our turnaround plan, we are addressing certain internal control and systems issues that VIA has experienced as a result of its rapid growth through
acquisitions and its integration efforts in its largest operations. Our original business plan involved acquiring, integrating and growing multiple independent Internet services providers throughout
Europe and Latin America. We grew rapidly from inception in 1997 through the end of 2000, acquiring 26 foreign companies during that period.

In
mid-2000 we began a series of projects to integrate a number of our acquired companies to achieve economies of scale and improve business processes. An element of each
integration project involved combining data from the legacy billing, provisioning and customer care systems of each operation into a single integrated system as well as making changes to the
organization structures of these companies. Poor execution of these integration efforts affected sales, billing and customer care functions of certain of the operations, particularly in Germany and
the United Kingdom. We also planned the development and deployment of an enterprise-wide integrated provisioning, billing and customer care system, or Integrated Platform, that would
address some of the technical issues arising from legacy systems. This Integrated Platform was intended to improve the ability of corporate and regional management teams to oversee the financial
reporting of local operations. However, because of a downturn in the market, an emphasis on cost cutting and technical issues that arose during the development and deployment of the Integrated
Platform, further funding for this project was suspended, and we decided to pursue a series of improvements of the legacy systems at the local operations level.

Over
the past year our management has focused on systems issues in our United Kingdom and German operations. VIA has implemented procedures designed to alleviate issues arising from the
legacy billing
system and internal control problems. These procedures include significantly expanded monthly and quarter-end financial close processes in these operations and additional manual checks and
reconciliation procedures to compensate for known systemic limitations. We have also engaged a team of internal staff and external advisors to initiate system remediation and data validation projects,
which are ongoing, as described more fully above under the caption "Stabilization of billing systems and business process issues."

We
believe that these procedures enable us to present our financial results fairly in all material respects, as required by U.S. generally accepted accounting principles. When the system
remediation and data validation projects have progressed sufficiently, some or all of these additional procedures may become unnecessary. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, together with amounts
disclosed in the related notes to the consolidated financial statements. The current systems and process issues that are being addressed in our largest operations make it more difficult for management
to arrive at estimates. Actual results could differ from the recorded estimates.

Three and nine months ended September 30, 2002 compared with the three and nine months ended September 30, 2001

Revenue:

|        |  | Three months ended |  |         |  | Nine months ended |  |        
|------- |  | ------------------ |  | ------- |  | ----------------- |  | -------
|
|
|Revenue |  | $19,979            |  | $19,609 |  | (2%)              |  | $66,235

21

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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.

For
revenue transactions we apply the provisions of SAB 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. 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 September 30, 2002 decreased 2% to $19.6 million as compared to $20.0 million for the three months ended September 30,
2001. Revenue for the nine months ended September 30, 2002 decreased 13% to $57.3 million as compared to $66.2 million for the nine months ended September 30, 2001. Our
revenue has decreased from 2001 levels due to the continued slowdown in corporate technology spending and certain internal disruptions and distractions caused by staff and management turnover and
reduction of our sales and marketing efforts. Additionally, the decrease in revenue is a result of the decrease in revenues for our operations in Brazil and Mexico, which were sold during the second
and third quarters of 2002, respectively. The decline in revenue was partially
offset by an increase in revenues at our Switzerland operation as a result of a customer list purchase during the second quarter of 2002.

In
prior reporting periods, we have provided information on categories of revenues that we generate. Because of the systemic errors and limitations we have experienced in and with our
legacy billing platforms and our ongoing projects to address these and process issues, we are not currently able to provide an accurate breakdown of our revenues. We anticipate that when we have
completed our various systems and process remediation efforts, we will begin again to report revenue categories.

OPERATING COSTS AND EXPENSES:

Internet services:

|                   |  | Three months ended |  |        |  | Nine months ended |  |        
|------------------ |  | ------------------ |  | ------ |  | ----------------- |  | -------
|
|
|Internet services  |  | $12,248            |  | $9,592 |  | (22%)             |  | $36,770
|% of Total Revenue |  | 61%                |  | 49%    |  |                   |  | 56%    

22

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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 $9.6 million for the three months ended September 30, 2002 as compared to $12.2 million for the three months ended
September 30, 2001. We had $31.5 million of Internet services operating costs for the nine months ended September 30, 2002, a 14% decrease from the same period in 2001. In both
periods, the decrease in Internet services costs is due to the decrease in costs at our Brazilian and Mexican operations, which were sold in the second and third quarters of 2002. Additionally, during
the quarter ended September 30, 2002, we incurred approximately $500,000 of settlement costs associated with the cancellation of network contracts. We will continue to actively review our cost
structure to reduce or redirect costs that are not warranted.

Selling, general and administrative:

|                                  |  | Three months ended |  |         |  | Nine months ended |  |        
|--------------------------------- |  | ------------------ |  | ------- |  | ----------------- |  | -------
|
|
|Selling, general & administrative |  | $26,076            |  | $14,972 |  | (43%)             |  | $72,628
|% of Total Revenue                |  | 131%               |  | 76%     |  |                   |  | 110%   

Our
largest selling, general and administrative (S, G&A) 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. Other S, G&A expenses include the costs of travel, rent, utilities,
insurance and bad debt expense. For the nine months ended September 30, 2002 and 2001, 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, the data validation projects in Germany and the U.K., as well as the cost of using outside consultants for financial review and
attestation engagements.

We
incurred S, G&A expenses of $15.0 million for the three months ended September 30, 2002, a 43% decrease from the $26.1 million we incurred for the three months
ended September 30, 2001. S, G&A expenses decreased by 26% to $54.1 million for the nine months ended September 30, 2002, as compared to the $72.6 million for the
corresponding period in the previous year. These decreases are tied directly to our aggressive cost cutting measures, which have included meaningful headcount reductions, substantial marketing and
advertising budget reductions and tighter controls on costs across the Company.

Compensation
expense for the three and nine month periods ended September 30, 2002 were $10.5 million and $34.3 million, respectively, as compared to the three and
nine month periods ended September 30, 2001 of $13.3 million and $38.5 million, respectively. The decrease corresponds to our decrease in headcount from third quarter 2001 to
third quarter 2002, offset by severance and other

23

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termination benefits and costs related to our cost cutting efforts and selling of operations. The amount of severance related to certain executives in the first nine months of 2002 was $762,000.

In
conjunction with our cost cutting measures, marketing and sales expenses decreased 36% from $770,000 for the three months ended September 30, 2001 to $496,000 for the three
months ended September 30, 2002. Marketing and sales expenses for the nine months ended September 30, 2002 were $1.9 million, a 57% decrease from the $4.4 million for the
same period in 2001. Included in this total of $1.9 million was approximately $325,000 related to an acquired right to market to a customer list in one of our operating companies.

Professional
fees decreased from $2.6 million for the third quarter of 2001 to $1.9 million for the third quarter of 2002. For the nine months ended September 30,
2002, professional fees were $7.9 million as compared to $7.6 million for the nine months ended September 30, 2001. The costs in prior year were primarily due to costs associated
with the implementation of our financial systems and our Integrated Platform. As part of our ongoing cost-cutting measures, we suspended the development and deployment of the Integrated
Platform during the first quarter of 2002. The costs in the current period were primarily due to accounting fees and data validation projects by outside vendors.

As
a result of the issues arising from the legacy billing systems and business processes substantial reserves were recorded against the carrying value of receivables. For the three and
nine months ended September 30, 2001, bad debt expense was $3.4 million and $5.1 million, respectively. The billing system and process improvements made during 2002, combined with
our intensified focus on cash collection, have resulted in the collection of accounts receivable previously provided against. Therefore, the bad debt expense for the three and nine months ended
September 30, 2002, was a benefit of ($970,000) and ($3.0) million, respectively. We anticipate that these billing system and process improvements will continue through 2003.

Our
S, G&A expenses include the amortization of deferred compensation. In March 2002, we recorded forfeitures of unvested stock options in the amount of $1.8 million, which
reduced the deferred compensation balance to zero with a corresponding adjustment to additional paid in capital. As a result, we did not record any deferred compensation expense for the second and
third quarters of 2002. The deferred compensation amortization for the nine months ended September 30, 2002 was $527,000. For the three and nine months ended September 30, 2001, the
deferred compensation expense recorded was $749,000 and $2.2 million, respectively.

Depreciation and amortization:

|                              |  | Three months ended |  |        |  | Nine months ended |  |        
|----------------------------- |  | ------------------ |  | ------ |  | ----------------- |  | -------
|
|
|Depreciation and amortization |  | $12,404            |  | $2,627 |  | (79%)             |  | $41,735
|% of Total Revenue            |  | 62%                |  | 13%    |  |                   |  | 63%    

The
largest component of our depreciation and amortization expense in prior periods was 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.

24

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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, net of impairment charges, 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 $2.6 million and $8.5 million for the three and nine months ended September 30, 2002, respectively. This is a decrease
from the depreciation and amortization expense that was recorded for the three and nine months ended September 30, 2001 of $12.4 million and $41.7 million, respectively. For the
three months ended September 30, 2002, $209,000, or 8%, of our depreciation and amortization expense was related to the amortization of intangible assets and $2.4 million, or 92% was
related to the depreciation of fixed assets. For the same period in 2001, $8.8 million, or 71%, of our depreciation and amortization expense was related to the amortization of acquisition
goodwill and other intangible assets and $3.6 million, or 29% was related to the depreciation of fixed assets. For the nine months ended September 30, 2002, $764,000, or 9%, of our
depreciation and amortization expense was related to the amortization of intangible assets and $7.7 million, or 91%, was related to the depreciation of fixed assets. For the same period in
2001, $31.9 million, or 76%, of our depreciation and amortization expense was related to the amortization of acquisition goodwill and other intangible assets and $9.8 million, or 24%,
was related to the depreciation of fixed assets. The decrease in depreciation of fixed assets in both periods is related to the asset impairment, which was recorded in the fourth quarter of 2001.
These impairment charges reduced the balance of fixed assets by $24.5 million.

Impairment and restructuring charges:

|                                     |  | Three months ended |  |        |  | Nine months ended |  |        
|------------------------------------ |  | ------------------ |  | ------ |  | ----------------- |  | -------
|
|
|Impairment and restructuring charges |  |                   |  | $1,027 |  |                  |  | $47,992
|% of Total Revenue                   |  |                   |  | 5%     |  |                   |  | 72%    

On
a periodic basis, management reviews the carrying value of the investment in our operations to determine if an event has occurred, with respect to any operation, which could result in
an impairment of long-lived assets. In its review, management considers market and competitive factors, operating and financial trends and the business outlook for each operation. During
the second quarter 2002, management concluded that an impairment of our long-lived assets had occurred. As a result, we recorded an impairment charge of $941,000. This impairment charge is
comprised of $316,000 related to goodwill and other acquired intangible assets and $625,000 related to fixed assets at our Italian operation. During the second quarter 2001, management concluded that
an impairment of goodwill had occurred. As a result, we recorded goodwill impairment charges of $48.0 million related to operations in our Americas and European regions. The goodwill impairment
charges for these regions were $47.5 million and $524,000, respectively.

As
a part of our focus on Europe as our core operating region, we have decided to move our principal headquarter functions from Reston, Virginia to the United Kingdom. See Note 4
to the consolidated financial statements for further information.

25

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Interest income, net:

|                     |  | Three months ended |       |   |      | Nine months ended |       | 
|-------------------- |  | ------------------ | ----- | - | ---- | ----------------- | ----- | 
|
|
|Interest income, net |  | $                  | 1,701 |   | $493 |                   | (71%) | 
|% of Total Revenue   |  |                    | 9     | % | 3%   |                   |       | 

For
the three months ended September 30, 2002, we earned $513,000 in interest income, a 71% decrease over the $1.8 million we earned for the three months ended
September 30, 2001. We earned $1.9 million in interest income for the nine months ended September 30, 2002, down from the $6.5 million for the nine months ended
September 30, 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 $20,000 of interest expense for the three months ended September 30, 2002, as compared to $52,000 of
interest expense incurred in the same period in 2001. Interest expense for the nine months ended September 30, 2002 and 2001 was $83,000 and $263,000, respectively. 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.

Other expense, net:

|                   |  | Three months ended |  |          |  | Nine months ended |  |       
|------------------ |  | ------------------ |  | -------- |  | ----------------- |  | ------
|
|
|Other expense, net |  | $(683)             |  | $(1,959) |  | 187%              |  | $(768)
|% of Total Revenue |  | 3%                 |  | 10%      |  |                   |  | 1%    

For
the three months and nine months ended September 30, 2002, we incurred other expense, net of $2.0 million and $1.9 million, respectively. Other expense, net
includes a $292,000 loss resulting from a loan made to a related party in the first quarter 2002. Additionally, in the third quarter of 2002, we entered into a convertible credit agreement with the
then-current management of VIA NET.WORKS Mexico in the amount of $2.2 million. See Note 3 to the consolidated financial statements for further information. For the same
periods in 2001, we incurred $683,000 and $768,000, respectively. These costs primarily relate to the impairment of a residual investment security at our Mexican operation in the third quarter of
2001. These amounts are offset by gains and losses on the sale of equipment and other fixed assets.

Foreign currency gains (losses), net:

|                                     |  | Three months ended |  |          |  | Nine months ended |  |         
|------------------------------------ |  | ------------------ |  | -------- |  | ----------------- |  | --------
|
|
|Foreign currency gains (losses), net |  | $4,693             |  | $(1,111) |  | (124%)            |  | $(3,346)
|% of Total Revenue                   |  | 23%                |  | 6%       |  |                   |  | 5%      

We
recognized a $1.1 million foreign currency loss for the three months ended September 30, 2002, as compared to a $4.7 million foreign currency gain for the same
period in the prior year. Our

26

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foreign currency gain was $7.0 million for the nine months ended September 30, 2002, as compared to a loss of $3.3 million for the nine months ended September 30, 2001.
The fluctuation in both periods was primarily due to the change in the Euro and its 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
September 30, 2002, VIA maintained a cash reserve of 24.4 million Euros.

Liquidity and Capital Resources

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
February 2000, we raised approximately $333.0 million, net of underwriting discounts and commissions. At September 30, 2002, we had cash and cash equivalents of
$104.2 million and $884,000 in restricted cash.

Cash
used in operating activities was $43.9 million for the nine months ended September 30, 2001 and $28.5 million for the nine months ended September 30,
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, impairment charges, non-cash stock compensation charges, provision (benefit) for doubtful accounts and
unrealized foreign currency transaction losses.

Cash
used in investing activities was $26.5 million for the nine months ended September 30, 2001 and $3.2 million for the same period in 2002. In 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, a loan to a related party and an increase in restricted cash.

Cash
used in financing activities was $2.0 million for the nine months ended September 30, 2001. In the same period in 2002, cash used in financing activities was
$1.6 million. In both periods, cash was used primarily to repay debt.

We
have incurred and anticipate that we may incur in the future substantial costs to implement one or more of the restructuring actions and similar actions that we may take in the future
as described inBackgroundabove. As of September 30, 2002, we had $104.2 million in cash and cash equivalents and $884,000 in restricted
cash. We believe that our available cash will be sufficient to fund our operating losses, working capital and capital expenditure requirements for the foreseeable future. However, unless the capital
markets improve, 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 possible need for additional capital resources are forward-looking statements based on our current expectations, which involve
certain risks and uncertainties. Actual results and the timing of these events could differ materially from these forward-looking statements depending upon certain factors that we cannot predict,
including the nature, size and timing of future acquisitions and dispositions, if any, our future net income and our success in executing our turnaround plan as well as other factors discussed in
"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.

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Foreign Currency Exchange Risks

During the nine months ended September 30, 2002 and prior to the sale of our operations in Argentina, Austria, Brazil, Ireland and Mexico, we conducted
business in seven 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 high and low rates varied by approximately 46% in relation to the U.S. dollar during the third quarter of 2002. This variation affects the
average exchange rates used to translate amounts on the income statement. At September 30, 2002, the Euro exchange rate was approximately 10% above where it was at the beginning of the year.
This variation affects the ending exchange rates used to translate amounts on the balance sheet. This fluctuation in the exchange rate resulted in a foreign currency loss of $1.1 million and a
gain of $7.0 million for the three and nine month periods ended September 30, 2002, respectively. These gains and 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 12 of the 15 European Union member countries. This includes nine of our operating markets. As a result, during
the nine months ended September 30, 2002, we conducted business in only seven currencies compared to 15 currencies in 2001.

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 September 30, 2002, VIA's financial instruments consisted of
primarily short-term investments. Our investments are generally fixed rate short-term investment grade and government securities denominated in U.S. dollars. At
September 30, 2002 all of our investments are due to mature within three months and the carrying value of such investments approximates fair value.

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
September 30, 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 $2.4 million. VIA is also subject to risk from changes in foreign exchange rates for its international

28

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operations that use a foreign currency as their functional currency and are translated into U.S. dollars. VIA does not hedge any foreign currency exposure using derivative financial instruments.

Item 4. Controls and Procedures

As described underStabilization of billing systems and business process issuesin Item 2 Management's Discussion
and Analysis of Financial Condition and Results of Operations (MD&A), we have encountered significant customer billing and process issues and financial reporting difficulties in our United Kingdom and
German operations arising out of poorly executed past integration efforts. This situation led to our former independent accountants advising us that the legacy billing systems and practices in these
operations constituted material weaknesses in our internal control structure.

Internal
controls are procedures and processes designed to provide reasonable assurance that we have maintained accurate books and records relating to our transactions, that our
transactions are properly authorized and that our assets are safeguarded against improper use, all of which enable us to prepare, report and fairly present our financial results and financial
condition in accordance with generally accepted accounting standards. A "material weakness" in internal controls means that the ability to detect errors or fraud in amounts that would be material to
the financial statements is significantly limited.

Our
senior management team, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), has engaged in the development and review of high priority projects established
to fix the systems, processes and practices and organizational issues in our United Kingdom and German operations, two of our largest subsidiaries. Management has also developed procedures to enhance
and tighten our management and internal controls throughout our entire organization.

In
recognition of the difficulties in its United Kingdom and German operations the Company and the audit committee of the board of directors has engaged in regular evaluations of our
internal controls, as well as the processes we maintain to ensure that all material information relating to VIA and its subsidiaries is recorded, processed, summarized, evaluated and reported within
the time periods specified by rules established by the Securities and Exchange Commission. These latter processes are known as Disclosure Controls and Procedures. Disclosure Controls and Procedures
are also designed to ensure that all such information is communicated to VIA's management, including our CEO and CFO, in such a manner as to allow timely decisions to be made regarding required
disclosures.

In
addition, in light of known issues in our internal control structure, we have initiated projects to fix or replace critical billing, customer care and provisioning systems and
instituted a number of additional controls and procedures designed to address the previously identified weaknesses. These projects and efforts are described in Item 2 MD&A above. Some of these efforts
are intended to establish new control structures and processes; others are intended to reinforce our current internal control and Disclosure Controls and Procedures structures such that we are able to
report the information required to be disclosed in our periodic reports and present it as required by law, until more permanent or systemic controls are put in place.

Within
the 90 days prior to the date of filing of this report, we engaged in an evaluation, with the oversight and participation of our CEO and CFO, of the effectiveness of our
Disclosure Controls and Procedures. In designing and evaluating the Disclosure Controls and Procedures, our management necessarily was required to apply its judgment in evaluating the costs and
benefits of possible controls and procedures. In addition, we recognize that Disclosure Controls and Procedures by their nature can provide only reasonable assurance that our information flow
objectives are met. Upon the completion of that evaluation, our CEO and CFO concluded that our Disclosure Controls and Procedures, which included the additional or enhanced processes, procedures and
controls noted above, were effective in all material respects.

Since
the date of the evaluation, there have been no significant changes in our internal controls or in other factors that could significantly affect internal controls.

29

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PART II

Item 1. Legal Proceedings

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 [sic], et al
[01-CV-9720] (the "Complaint"). An amended complaint was filed in April 2002. There is currently pending before the trial judge a motion to
dismiss all claims against the defendants. 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," all of which are included in a single coordinated proceeding in the Southern District of New York. VIA
believes that any allegations in the Complaint of wrongdoing on the part of VIA or our officers are without legal merit. VIA has retained legal counsel and intends to vigorously defend against these
allegations.

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 September 30, 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, $45.0 million for capital expenditures and approximately $106.9 million to fund operating losses.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K

a) Exhibits

| |  | Exhibits     |  |                                                                                                                                   
| |  | ------------ |  | ----------------------------------------------------------------------------------------------------------------------------------
| |  | Exhibit 99.1 |  | Risk Factors                                                                                                                      
| |  | Exhibit 99.2 |  | Written Statement of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

b) Reports on Form 8-K

During the third quarter of 2002, VIA filed four reports on Form 8-K. VIA filed a report on Form 8-K on August 19,
2002 to announce that the CEO and CFO of the Company each executed the certifications required per the Sarbanes-Oxley Act of 2002 in connection with the Amended Form 10-Q/A for the
quarter ended March 31, 2002 and for the Form 10-Q for the quarter ended June 30, 2002. VIA filed a report on Form 8-K on August 20, 2002 to announce its
second quarter 2002 results. On September 20, 2002, VIA filed a report on Form 8-K to announce the sale of its operation in Mexico. VIA filed a report on
Form 8-K on September 26, 2002, to announce the dismissal of PricewaterhouseCoopers LLP as its independent public accountants. VIA filed no other reports on
Form 8-K during the three months ended September 30, 2002.

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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: November 14, 2002 |  | By:                
|Date: November 14, 2002 |  | By:                

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Certification

I,
Karl A. Maier, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of VIA NET.WORKS, Inc.;

2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:



5.
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent function):



6.
The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:
November 14, 2002

/s/
Karl A. Maier
Karl A. Maier
Chief Executive Officer

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Certification

I, E. Benjamin Buttolph, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of VIA NET.WORKS, Inc.;

2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:



5.
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent function):



6.
The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:
November 14, 2002

/s/
E. Benjamin Buttolph
E. Benjamin Buttolph
Chief Financial Officer

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EXHIBIT INDEX

|Exhibit |  |                                                                                                                                   
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------
|99.1    |  | Risk Factors                                                                                                                      
|99.2    |  | Written Statement of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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