UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

|[X]   | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the Quarterly period ended March 31, 2001.
|----- | -------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                      
|[   ] | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the transition period from
 to .         

Commission File Number 0-15512

ALPNET, Inc.(Exact name of registrant as specified in its charter)

UTAH

87-0356708(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)4460 South Highland Drive, Suite #100, Salt Lake City, Utah

84124-3543(Address of principal executive offices)

(Zip Code)


Registrant's telephone number, including area code:(801) 273-6600

Not
applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate
by check mark whether the registrant (1) has filled 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 such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes X No

The
number of shares outstanding of the registrant's no par value Common Stock as of April 30, 2001 was 31,733,507.

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INDEX

|PART I. FINANCIAL INFORMATION |  |                                                                                         
|----------------------------- |  | ----------------------------------------------------------------------------------------
|Item 1.                       |  | Consolidated Financial Statements (Unaudited):                                          
|                              |  | Consolidated Statements of Operations  Three months ended March 31, 2001
   and 2000   
|                              |  | Consolidated Balance Sheets  March 31, 2001 and December 31, 2000                      
|                              |  | Consolidated Statements of Cash Flows  Three months ended March 31, 2001
   and 2000   
|                              |  | Notes to Consolidated Financial Statements  March 31, 2001                             
|Item 2.                       |  | Management's Discussion and Analysis of Financial Condition and
   Results of Operations
|PART II. OTHER INFORMATION    |  |                                                                                         
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                        
|SIGNATURES                    |  | 19                                                                                      

2

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ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ALPNET, INC. AND SUBSIDIARIES

Consolidated
Statements of Operations (Unaudited)

|                                       |                              | Three Months Ended |      
|-------------------------------------- | ---------------------------- | ------------------ | -----
|Thousands of dollars                   |                              | March 31           |      
|(except per share data)                |                              | 2001               |      
|                                       |                             
|Sales of services                      |                              | $11,088            |      
|Cost of services sold                  |                              | 7,782              |      
|                                       |                              |                    |      
|Gross profit                           |                              | 3,306              |      
|Operating expenses:                    |                              |                    |      
|                                       | Sales and marketing expenses |                    | 1,075
|                                       | General and administrative   |                    | 2,547
|                                       | Development costs            |                    | 310  
|                                       | Amortization of goodwill     |                    | 214  
|                                       |                              |                    |      
|Total operating expenses               |                              | 4,146              |      
|                                       |                              |                    |      
|Operating loss                         |                              | (840               | )    
|Interest expense, net                  |                              | 106                |      
|                                       |                              |                    |      
|Loss before income taxes               |                              | (946               | )    
|Income taxes                           |                              | 50                 |      
|                                       |                              |                    |      
|Net loss                               |                              | $    (996          | )    
|                                       |                              |                    |      
|Net loss per share  basic             |                              | $   (.031          | )    
|                                       |                              |                    |      
|Net loss per share  assuming dilution |                              | $   (.031          | )    
|                                       |                              |                    |      

See accompanying notes.

3

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ALPNET, INC. AND SUBSIDIARIES

Consolidated
Balance Sheets (Unaudited)

|                                                   |                                                                                 | March 31 |           | December 31
|-------------------------------------------------- | ------------------------------------------------------------------------------- | -------- | --------- | -----------
|Thousands of dollars                               |                                                                                 | 2001     |           | 2000       
|                                                  
|Assets                                             |                                                                                 |          |           |            
|Current assets:                                    |                                                                                 |          |           |            
|                                                   | Cash and cash equivalents                                                       |          | $     909 |            
|                                                   | Trade accounts receivable, less allowances of
   $246 in 2001 and $724 in 2000  |          | 8,066     |            
|                                                   | Work-in-process                                                                 |          | 2,341     |            
|                                                   | Prepaid expenses and other                                                      |          | 1,228     |            
|                                                   |                                                                                 |         
|Total current assets                               |                                                                                 | 12,544   |           | 15,096     
|Property, equipment and leasehold improvements:    |                                                                                 |          |           |            
|                                                   | Office facilities and leasehold improvements                                    |          | 402       |            
|                                                   | Equipment                                                                       |          | 6,487     |            
|                                                   | Software                                                                        |          | 4,722     |            
|                                                   |                                                                                 |         
|                                                   |                                                                                 | 11,611   |           | 11,571     
|                                                   | Less accumulated depreciation and amortization                                  |          | 3,629     |            
|                                                   |                                                                                 |         
|Net property, equipment and leasehold improvements |                                                                                 | 7,982    |           | 7,894      
|Other assets:                                      |                                                                                 |          |           |            
|                                                   | Goodwill, less accumulated amortization of
   $4,995 in 2001 and $5,597 in 2000 |          | 7,963     |            
|                                                   | Other                                                                           |          | 361       |            
|                                                   |                                                                                 |         
|Total other assets                                 |                                                                                 | 8,324    |           | 9,022      
|                                                   |                                                                                 |         
|Total assets                                       |                                                                                 | $28,850  |           | $32,012    
|                                                   |                                                                                 |         

See accompanying notes.

4

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ALPNET, INC. AND SUBSIDIARIES

Consolidated
Balance Sheets (Unaudited)  continued

|                                                |                                              | March 31                               |           | December 31 |          
|----------------------------------------------- | -------------------------------------------- | -------------------------------------- | --------- | ----------- | ---------
|Thousands of dollars and shares                 |                                              | 2001                                   |           | 2000        |          
|                                                |                                             
|Liabilities and shareholders' equity            |                                              |                                        |           |             |          
|Current liabilities:                            |                                              |                                        |           |             |          
|                                                | Credit facilities with banks                 |                                        | $   3,115 |             | $   3,367
|                                                | Accounts payable                             |                                        | 5,287     |             | 4,595    
|                                                | Accrued payroll and related benefits         |                                        | 1,906     |             | 1,743    
|                                                | Accrued restructuring and related activities |                                        | 1,289     |             | 1,820    
|                                                | Other accrued expenses                       |                                        | 1,334     |             | 2,207    
|                                                | Income taxes payable                         |                                        | 756       |             | 734      
|                                                | Current portion of capital lease obligations |                                        | 677       |             | 770      
|                                                | Current portion of long-term debt            |                                        | 46        |             | 71       
|                                                |                                              |                                        |          
|Total current liabilities                       |                                              | 14,410                                 |           | 15,307      |          
|Related party debt                              |                                              | 425                                    |           | 462         |          
|Capital lease obligations, less current portion |                                              | 412                                    |           | 514         |          
|Long-term debt, less current portion            |                                              | 3,402                                  |           | 3,408       |          
|Commitments and contingencies                   |                                              |                                        |           |             |          
|Shareholders' equity:                           |                                              |                                        |           |             |          
|                                                | Convertible Preferred Stock, no par value;   |                                        |           |             |          
|                                                |                                              | authorized 4,000 shares; issued and    |           |             |          
|                                                |                                              | outstanding 87 shares in 2001 and 2000 |           | 242         |          
|                                                | Common Stock, no par value; authorized       |                                        |           |             |          
|                                                |                                              | 100,000 shares; issued and outstanding |           |             |          
|                                                |                                              | 31,734 shares in 2001 and 31,712       |           |             |          
|                                                |                                              | shares in 2000                         |           | 56,429      |          
|                                                | Accumulated deficit                          |                                        | (41,290   | )           | (40,294  
|                                                | Accumulated other comprehensive income       |                                        | (5,180    | )           | (4,020   
|                                                |                                              |                                        |          
|Total shareholders' equity                      |                                              | 10,201                                 |           | 12,321      |          
|                                                |                                              |                                        |          
|Total liabilities and shareholders' equity      |                                              | $ 28,850                               |           | $ 32,012    |          
|                                                |                                              |                                        |          

See accompanying notes.

5

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ALPNET, INC. AND SUBSIDIARIES

Consolidated
Statements of Cash Flows (Unaudited)

|                                                                         |                                                                                              | Three Months Ended March 31                                                        |                                      
|------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | -------------------------------------
|Thousands of dollars                                                     |                                                                                              | 2001                                                                               |                                      
|                                                                         |                                                                                             
|Operating activities:                                                    |                                                                                              |                                                                                    |                                      
|                                                                         | Net loss                                                                                     |                                                                                    | $   (996                             
|                                                                         | Adjustments to reconcile net loss to net cash
   (used in) provided by operating activities: |                                                                                    |                                      
|                                                                         |                                                                                              | Depreciation and amortization of property,
   equipment and leasehold improvements |                                      
|                                                                         |                                                                                              | Amortization of goodwill                                                           |                                      
|                                                                         |                                                                                              | Other                                                                              |                                      
|                                                                         |                                                                                              | Changes in operating assets and liabilities:                                       |                                      
|                                                                         |                                                                                              |                                                                                    | Trade accounts receivable            
|                                                                         |                                                                                              |                                                                                    | Accounts payable and accrued expenses
|                                                                         |                                                                                              |                                                                                    | Work-in-process                      
|                                                                         |                                                                                              |                                                                                    | Income tax payable                   
|                                                                         |                                                                                              |                                                                                    | Prepaid expense and other            
|                                                                         |                                                                                              |                                                                                    |                                      
|Net cash (used in) provided by operating activities                      |                                                                                              | (1,116                                                                             | )                                    
|Investing activities:                                                    |                                                                                              |                                                                                    |                                      
|                                                                         | Purchase of property, equipment and leasehold
   improvements                                |                                                                                    | (197                                 
|                                                                         | Capitalized development costs                                                                |                                                                                    | (364                                 
|                                                                         |                                                                                              |                                                                                    |                                      
|Net cash used in investing activities                                    |                                                                                              | (561                                                                               | )                                    
|Financing activities:                                                    |                                                                                              |                                                                                    |                                      
|                                                                         | Payments on credit facilities with banks, net                                                |                                                                                    | (144                                 
|                                                                         | Proceeds from long-term debt                                                                 |                                                                                    |                                      
|                                                                         | Principal payments on long-term debt                                                         |                                                                                    | (199                                 
|                                                                         | Proceeds from exercise of stock options                                                      |                                                                                    |                                      
|                                                                         |                                                                                              |                                                                                    |                                      
|Net cash used in financing activities                                    |                                                                                              | (343                                                                               | )                                    
|Effect of exchange rate changes on cash                                  |                                                                                              | (448                                                                               | )                                    
|                                                                         |                                                                                              |                                                                                    |                                      
|Net decrease in cash and cash equivalents                                |                                                                                              | (2,468                                                                             | )                                    
|Cash and cash equivalents at beginning of period                         |                                                                                              | 3,377                                                                              |                                      
|                                                                         |                                                                                              |                                                                                    |                                      
|Cash and cash equivalents at end of period                               |                                                                                              | $     909                                                                          |                                      
|                                                                         |                                                                                              |                                                                                    |                                      
|Supplemental schedule of non-cash investing and financing
   activities: |                                                                                              |                                                                                    |                                      
|                                                                         | Equipment purchased under capital lease obligations                                          |                                                                                    | $         0                          

See accompanying notes.

6

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ALPNET, INC. AND SUBSIDIARIES

Notes
to Consolidated Financial Statements (Unaudited)

March 31,
2001

1.     BASIS OF PRESENTATION



2.     COMPREHENSIVE INCOME



7

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3.     LOSS PER SHARE



|                                                       |                                          | Three Months Ended                   |  
|------------------------------------------------------ | ---------------------------------------- | ------------------------------------ | -
|                                                       |                                          | March 31                             |  
|Thousands of dollars and shares, except loss per share |                                          | 2001                                 |  
|                                                       |                                         
|Numerator:                                             |                                          |                                      |  
|                                                       | Numerator for basic and diluted earnings |                                      |  
|                                                       |                                          | per share  net loss                 |  
|                                                       |                                          |                                      |  
|Denominator:                                           |                                          |                                      |  
|                                                       | Denominator for basic loss per share     |                                      |  
|                                                       |                                          | weighted-average shares              |  
|                                                       | Effect of dilutive securities:           |                                      |  
|                                                       |                                          | Convertible Preferred Stock          |  
|                                                       |                                          | Employee stock options               |  
|                                                       |                                          |                                      |  
|                                                       | Dilutive potential common shares         |                                      | 
|                                                       |                                          |                                      |  
|                                                       | Denominator for diluted income per share |                                      |  
|                                                       |                                          | adjusted weighted-average shares and |  
|                                                       |                                          | Assumed conversions                  |  
|                                                       |                                          |                                      |  
|Net loss per share  basic                             |                                          | $   (.031                            | )
|Net loss per share  assuming dilution                 |                                          | $   (.031                            | )



4.     INCOME TAXES



8

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5.     Restructuring and Related Activities



|                                    |  |           |  | Employee   |  |              |  | Other   |  |       
|----------------------------------- |  | --------- |  | ---------- |  | ------------ |  | ------- |  | ------
|Thousands of dollars                |  | No. of    |  | Separation |  | Lease        |  | Exit    |  |       
|(except employee no.'s)             |  | Employees |  | Expenses   |  | Cancellation |  | Costs   |  | Total 
|                                   
|Total                               |  | 63        |  | $1,150     |  | $363         |  | $1,503  |  | $3,016
|Paid prior to December 31, 2000     |  | 15        |  | 40         |  |              |  |         |  | 40    
|Non cash charges                    |  |           |  |            |  |              |  | 1,156   |  | 1,156 
|                                    |  |          
|Outstanding as of December 31, 2000 |  | 48        |  | 1,110      |  | 363          |  | 347     |  | 1,820 
|Paid in 2001                        |  | 25        |  | 456        |  |              |  | 75      |  | 531   
|                                    |  |          
|Outstanding as of March 31, 2001    |  | 23        |  | $   654    |  | $363         |  | $   272 |  | $1,289
|                                    |  |          



6.     SOFTWARE



| |                              | 31 March |        | 31 December
| | ---------------------------- | -------- | ------ | -----------
| | Thousands of dollars         |          | 2001   |            
|
| | Internal development costs   |          | $3,111 |            
| | Purchased software           |          | 599    |            
| | Capitalized interest         |          | 382    |            
| |                              |         
| | Capitalized development cost |          | 4,092  |            
| | Acquired software            |          | 630    |            
| |                              |         
| | Total                        |          | $4,722 |            
| |                              |         

9

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7.     GEOGRAPHICAL AND SEGMENT DATA



|                          |               | Three Months Ended |          
|------------------------- | ------------- | ------------------ | ---------
|                          |               | March 31           |          
|Thousands of dollars      |               | 2001               |          
|                          |              
|Net external sales:       |               |                    |          
|                          | North America |                    | $  3,742 
|                          | Europe        |                    | 6,443    
|                          | Asia          |                    | 903      
|                          |               |                    |          
|                          |               |                    | $11,088  
|                          |               |                    |          
|Intercompany sales:       |               |                    |          
|                          | North America |                    | $     583
|                          | Europe        |                    | 867      
|                          | Asia          |                    | 1,133    
|                          |               |                    |          
|                          |               | $  2,583           |          
|                          |               |                    |          
|Loss before income taxes: |               |                    |          
|                          | North America |                    | $    (149
|                          | Europe        |                    | (537     
|                          | Asia          |                    | (260     
|                          |               |                    |          
|                          |               | $    (946          | )        
|                          |               |                    |          

8.     NON-STATUTORY STOCK OPTION PLAN



10

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9.     SUBSEQUENT EVENTS



11

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|ITEM 2: |  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
|------- |  | -------------------------------------------------
|        |  | CONDITION AND RESULTS OF OPERATIONS              

The following Management's Discussion and Analysis should be read in conjunction with the accompanying unaudited Consolidated Financial Statements and Notes thereto.

Forward Looking Statements

The statements in this Quarterly Report on Form 10-Q that are not based on historical data are forward looking, including for example: information about
future sales growth in various markets in future periods; expected changes in the levels of various expenses, including income taxes; the Company's plans for future investments in new offices,
services, or products; and financing plans and expectations.

Forward
looking statements involve numerous known and unknown risks and uncertainties that could cause actual results to be materially different from estimated or expected results. Such risks and
uncertainties include, among others, adequate funding for and effective implementation of the Company's current business plan, fluctuating foreign currency exchange rates, fluctuating gross margins,
changing levels of demand for the Company's services, the effect of constantly changing general business, economic and political conditions in all of the various countries in which the Company has
operations, the impact of competitive services and pricing, uncertainties caused by clients (including the timing of projects and changes in the scope of services requested) and other risks and
uncertainties that may be disclosed from time to time in future public statements or in documents filed with the Securities and Exchange Commission. As a result, no assurance can be given as to future
operating results.

General

ALPNET, Inc. ("ALPNET" or the "Company") is a United States multinational corporation which was incorporated in the State of Utah in 1980. The Company provides services
and solutions in the multilingual information management solutions sector to businesses engaged in international trade. These solutions include information consultancy, language technology
integration, translation and localization.

The
Company was originally established to develop and market foreign language translation software, which included its invention of translation memory technology. ALPNET is regarded as a pioneer in
the field of multilingual software development. The acquisition by the Company of several leading translation service providers in 1987 and 1988 established the Company's international presence and
multilingual information services capabilities. The Company further expanded into foreign markets in 1994 through the formation of additional foreign subsidiaries and branches and in 1999 with the
acquisition of subsidiaries in Germany and the Netherlands. As of March 31, 2001, the Company has wholly-owned foreign subsidiaries or branches in the following countries: Canada, United
Kingdom, Republic of Ireland, Germany, Belgium, the Netherlands, Singapore, Korea, China, Japan and Thailand.

The
globalization of business and rapid growth of the Internet has intensified the need for companies to implement effective multilingual information strategies to support their Internet and eCommerce
business models as well as their traditional business models. Product life cycles and time-to-market requirements are shortening in many industries and businesses need to
manage information in accelerated time frames while reducing multilingual information costs. The Company's 21-year history has provided it with substantial experience in managing
linguistic resources spanning people, linguistic data and technology which enable it to meet the globalization requirements of such companies.

12

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During 1999 and 2000, the Company embarked on a strategic repositioning to evolve its service offering to include a full range of value-added multilingual information services and move up the services
chain in the information creation, localization and information management process (the "InfoCycle"). During the fourth quarter of 2000, the Company commenced implementation of certain
strategic initiatives along with a restructuring plan as a result of limited capital resources, depressed capital market conditions and the Company's operating performance. The primary focus of these
initiatives is to strengthen the Company's sales team worldwide; reduce costs by centralizing and consolidating production operations; reduce infrastructure and overhead; eliminate various
unprofitable operations; and increase outsourcing of certain production activities. During the first quarter of 2001, the Company announced that it had substantially completed the implementation of
its strategic initiatives and restructuring plan.

ALPNET
is expanding its consultancy and systems integration services capabilities. The Company's technology development is being focused on enabling ALPNET to efficiently manage the
InfoCycle process in support of its clients' global businesses through its modular ALPNETXchange system which is expected to automate the sales, project management,
production workflow, supply chain and finance functions. The Company is focusing on its distinctive service benefits and core competencies and on becoming the vendor of choice for new and existing
clients to secure a greater portion of their multilingual information management services business.

Results of Operations

For the three months ended March 31, 2001, the Company reported a net loss of $996,000 compared to a net loss of $720,000 for the three months ended March 31,
2000.

Sales of Services

Sales of services were approximately $11.1 million for the three months ended March 31, 2001 compared to approximately $12.2 million for the three months
ended March 31, 2000. Sales volume in the first quarter of 2001 was negatively impacted by volatile economic conditions and market changes particularly affecting key US and Europe-based
industries served by the Company. Sales for the three months ended March 31, 2000 included approximately $600,000 for the Company's offices in Glasgow and Nuremburg. These offices were closed
in connection with the Company's restructuring plan and sales for the three months ended March 31, 2001 included no sales from these offices.

The
value of sales reported in US dollars has also been impacted by the effects of fluctuations in foreign currencies against the US dollar. Total sales for the three months ended March 31,
2001 would have been approximately $660,000 higher if translated at the weighted average exchange rates for the first quarter of 2000. This is described in more detail in the section "Foreign Exchange
Risk."

Sales
in North America were approximately $3.7 million for the three months ended March 31, 2001 compared to approximately $4.8 million in 2000, with sales decreasing primarily
due to delays in project commencement and reduced scope of certain client projects.

Sales
in Europe were approximately $6.4 million for the three months ended March 31, 2001 compared to approximately $6.5 million in 2000. If translated at the weighted average
exchange rates for the comparable periods in 2000, sales in Europe would have been approximately $6.9 million for the three months ended March 31, 2001. A comparison of sales in Europe
for the two quarters is also affected by the closure of the Glasgow and Nuremburg offices as discussed above.

Sales
in Asia were approximately $900,000 for the three months ended March 31, 2001 compared to $840,000 in 2000. The Company has taken action to expand its presence in Asia to take advantage
of the increase in demand for translation and localization services in this market.

13

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Management has significantly expanded and strengthened its sales teams in the U.S., Europe and Japan to increase the Company's share of these markets.

The
Company's business can be impacted dramatically by changes in the strength of the economies of the countries in which it has a presence, and results of operations are highly influenced by general
economic trends. Moreover, sales and profitability are increasingly affected by the number and size of larger, more complex multi-language projects. The Company experiences fluctuations in quarterly
sales and profitability levels largely as a result of the increase or decrease in the number of such projects. Management expects this trend to continue within its current sales base.

Cost of Services Sold

Cost of services as a percentage of sales fluctuates primarily as a result of competition in the marketplace and the volume and nature of direct production costs, especially on
large projects. The gross margin in the three months ended March 31, 2001 was 29.8% compared to 31.4% in 2000. The primary reason for this gross margin decrease is that the Company has
maintained a relatively higher level of fixed direct production costs to sales in the first quarter of 2001 than in 2000 to position the Company to meet future production commitments related to
expected increased sales levels in future quarters of 2001. Management expects competitive pricing pressures to continue in the Company's existing service lines. Management anticipates future cost
savings and margin improvement resulting from the realignment of Company operations, strengthening of its sales force in key markets and the extended implementation of production and management
technology in the Company's operating entities.

Other Costs and Expenses

Sales
and marketing expenses were approximately $1.1 million in the three months ended March 31, 2001 compared to $990,000 in 2000. The net increase in the first quarter of 2001 compared
with the first quarter of 2000 relate primarily to
the additional sales personnel in the U.S., Europe and Japan, less the elimination of certain marketing expenses in selected areas.

General
and administrative costs were approximately $2.5 million in the three months ended March 31, 2001 compared to approximately $3.1 million in 2000. This decrease is the
result of the realignment and restructuring of the Company's operations as discussed previously.

Development
costs for the three months ended March 31, 2001 were $310,000 compared to $47,000 in 2000. This increase arises as amortization of the cost of certain modules of
ALPNETXchange has commenced and certain development costs, previously capitalized in connection with the development of ALPNETXchange are expensed as incurred.

Goodwill
amortization for the three months ended March 31, 2001 was $214,000 compared to $234,000 in 2000. This decrease in the first quarter of 2001 is partially the result of a lower goodwill
cost base after goodwill was written off in the fourth quarter of 2000 in locations closed. The decrease is also due to lower foreign currency exchange rates applicable to goodwill amortization costs
in the Company's acquired foreign subsidiaries.

Net
interest expense was $106,000 in the three months ended March 31, 2001 compared to $145,000 in 2000. $112,000 of interest has been capitalized during the first quarter of 2001 in connection
with the development of ALPNETXchange. Without the effect of capitalized interest, net interest expense for the first quarter of 2001 would be significantly higher than the first quarter
of 2000 as a result of the cost of the increased level of debt funding.

14

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The US parent company, and each of its subsidiaries, are separate legal and taxable entities and are subject to domestic or foreign taxes pertaining to operations in their respective jurisdictions.
For tax purposes, the US parent company, and certain of its subsidiaries, have unused net operating losses from prior years which can be utilized to reduce future years' taxable income of the
respective entities. The availability of these net operating losses is governed by applicable domestic and foreign tax rules and regulations, some of which limit the utilization of such losses due to
minimum tax requirements and other provisions. Income tax expense, as presented in the Consolidated Financial Statements, represents the combined income tax expense and income tax credits of all of
the entities of the Company.

After
the utilization of net operating loss carryforwards, income tax expense was $50,000 in the three months ended March 31, 2001 compared to $75,000 in 2000. Fluctuations in the amount of
income taxes arise primarily from the varying combinations of income and losses of the Company's subsidiaries in the various domestic and foreign tax jurisdictions, including the utilization of net
operating loss carryforwards in many of these jurisdictions. The US parent company has a net operating loss carryforward for US Federal and State income tax purposes.

Due
to prior years' operating losses, the Company and certain of its subsidiaries have net operating loss carryforwards available to offset future taxable income in the various countries in which the
Company operates. The levels of net operating losses available to offset future taxable income are generally much lower for the new offices opened in recent years.

Substantially
all of the Company's deferred tax assets at March 31, 2001 and December 31, 2000 were comprised of net operating loss carryforwards for which the Company has provided
valuation allowances. The ability of the Company to utilize these loss carryforwards in the future is dependent on profitable operations in the various countries in which loss carryforwards exist, and
the specific rules and regulations governing the utilization of such losses, including the dates by which the losses must be used.

Liquidity and Sources of Capital

The Company had a negative cash flow from operations of approximately $1.1 million in the three months ended March 31, 2001 compared to a positive cash flow from
operations of $465,000 in the three months ended March 31, 2000. Included in cash flow used in operations during the first quarter of 2001 was approximately $530,000 related to the
restructuring and realignment of the Company. Management expects to generate positive cash flows from operations in 2001 as a result of the expected increasing levels of sales from the Company's
investment in additional sales resources in the US, Europe and Japan, and the future effect of the realignment and restructuring plan that the Company has implemented.

For
the three months ended March 31, 2001 and 2000, investing activities of approximately $561,000 and $475,000, respectively, consisted primarily of investments in ALPNETXchange.
Capitalized software development costs for 2001, including interest, approximate $364,000 as compared to $416,000 in 2000. The decrease in capitalized software costs in the first quarter of 2001 as
compared to the first quarter of 2000 is consistent with the Company's reduced level of spending as part of its restructuring plan. In addition to its investment in ALPNETXchange, the
Company also invested in other equipment to maintain and upgrade its production capabilities.

Financing
activities for the three months ended March 31, 2001 used cash in the approximate net amount of $340,000 including a net reduction in credit facilities with banks and principal
payments on long-term equipment financing obligations. Financing activities for the three months ended March 31, 2000 used cash in the approximate net amount of $68,000 including a
net reduction in credit facilities with banks, proceeds from the issuance of convertible, unsecured notes, principal payments on long-term equipment financing obligations and proceeds from
the exercise of employee stock options.

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At March 31, 2001, the Company's cash and cash equivalents were approximately $900,000, which represents a decrease of approximately $2.5 million during the first quarter of 2001. During
the quarter, cash resources were used to partially fund the realignment and restructuring of the Company's operations and to strengthen its sales force in the US, Europe and Japan. The realignment and
restructuring plan that has been implemented has lowered the Company's annual fixed cost base by approximately $3 million. At March 31, 2001, the Company had negative working capital of
approximately $1.9 million, compared to negative working capital of approximately $200,000 at December 31, 2000. This calculation of negative working capital includes approximately
$3.1 million of credit facilities with banks which have scheduled renewal dates within one year. Management expects these credit facilities to be renewed as discussed below.

The
Company's primary working capital requirements relate to the funding of accounts receivable and work-in-process on large projects. The Company funds some of its working
capital needs through credit facilities with financial institutions in the US, Canada, the UK, Germany and Singapore. Most of the Company's credit facilities are secured by accounts receivable and
other assets of the Company's subsidiaries and by guarantees of the Company. As of March 31, 2001, the Company had unused amounts under these credit facilities of approximately $516,000. Most
of the Company's credit facilities are subject to annual renewals and the Company expects them to be renewed on substantially the same terms as those that currently exist. In addition, the Company
expects to be able to increase the maximum amounts that can be borrowed under credit facilities. Some of the financial institutions, which have loaned funds to the Company's subsidiaries under the
credit facilities referred to above, have placed certain limits on the flow of cash outside the respective countries. Such limitations have not been an undue burden to the Company in the past, nor are
they expected to be unduly burdensome in the foreseeable future.

In
May 2001, the Company negotiated financing transactions with a major shareholder and with a Netherlands financial institution as discussed in note 9 to the unaudited consolidated
interim financial statements. The Company has also obtained a commitment for an additional direct loan with another major shareholder, as discussed in note 9 to the unaudited consolidated
interim financial statements. These financing transactions are expected to provide a total of approximately $2.0 million of funding for use in the general operations of the Company. Management
also believes that it has other available sources of funding that can be obtained in amounts and on terms acceptable to the Company and sufficient to enable the Company to be able to fund its working
capital needs, meet its scheduled debt repayments and satisfy future operational and development costs.

Inflation
has not been a significant factor in the Company's operations. Competition, however, has been and is expected to remain a major factor. To the extent permitted by competition and general
economic and market conditions, the Company will pass on increased costs from inflation and operations to clients by increasing prices.

On
March 29, 2001, the Company was informed by Nasdaq® that the Company's common stock had failed to maintain a minimum bid price of $1.00 over the last 30 consecutive trading days
as required for continued listing on The Nasdaq SmallCap MarketSM. The Company has until June 27, 2001, to regain compliance with this Nasdaq® rule or the Company's
common stock will be delisted. In order to regain compliance, the bid price of the Company's common stock must be at least $1.00 for a minimum of 10 consecutive trading days prior to June 27,
2001. If the Company's common stock is delisted from The Nasdaq SmallCap MarketSM, this may have an adverse effect on the market liquidity for the Company's common stock. If delisting
occurs, the Company will immediately request that all market markers in the Company's common stock who are eligible register to quote its common stock on the OTC Bulletin Board®(OTCBB).
The OTCBB is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter (OTC)
securities. In addition, the Company proposes to take such actions as it deems necessary and prudent to meet the listing requirements of The Nasdaq SmallCap MarketSM.

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Foreign Exchange Risk

The Company serves its customers from offices throughout North America, Europe and Asia. The majority of the Company's operations are located outside the US. Consequently, the
Company is exposed to fluctuations of the dollar against the foreign currencies of those countries in which the Company has a substantial presence. For all of the Company's foreign subsidiaries, the
functional currency is the local currency. Accordingly, assets and liabilities are translated at period-end exchange rates, and operating statement items are translated at weighted-average
exchange rates prevailing during the periods presented. The Company has exchange rate exposure in the following principal currencies: the Canadian dollar, the British Pound and the Euro. The Singapore
dollar is closely tied to the US dollar and therefore has low exchange risk.

Fluctuations
against the US dollar can produce significant differences in the reported value of sales and expenses. The following table shows a comparison of sales of services in each of the Company's
significant geographic segments for the three months ended March 31, 2001 and 2000, along with the effect of foreign currency exchange rate fluctuations on sales between periods.

|                     |  |                |  |                          |  | Increase (Decrease) |   |              |  
|-------------------- |  | -------------- |  | ------------------------ |  | ------------------- | - | ------------ | -
|                     |  | Three Months   |  | Sales of Services due to |  | Total               |  
|                     |  | Ended March 31 |  | Sales                    |  | Currency            |   | Increase     |  
|Thousands of dollars |  | 2001           |  | 2000                     |  | Volume              |   | Fluctuations |  
|                     | 
|North America        |  | $  3,742       |  | $  4,833                 |  | $(981               | ) | $(110        | )
|Europe               |  | 6,443          |  | 6,539                    |  | 399                 |   | (495         | )
|Asia                 |  | 903            |  | 844                      |  | 115                 |   | (56          | )
|                     |  |                | 
|Total Sales          |  | $11,088        |  | $12,216                  |  | $(467               | ) | $(661        | )
|                     |  |                | 

The sales mix of the Company's operations and the effect of foreign currency exchange rate fluctuations on costs and expenses generally mitigate the impact on consolidated net
income (loss). However, the negative impact of foreign currency fluctuations increased the loss for the three months ended March 31, 2001 by approximately $20,000. For sales in the US which are
produced outside of the US, any weakening of the US dollar against a particular country's currency reduces the amount of net income reported in US dollars. Conversely, the same weakening of the US
dollar generates an offsetting increase in the dollar value of profits arising from sales within that country. This natural currency effect reduces the net foreign exchange risk to the Company. Any
weakening of the US dollar that negatively impacts a foreign operation's trading profit will similarly reduce the dollar value of any overhead expense located in that country. The sales mix and
currency trends are monitored on an ongoing basis to identify any changes that might significantly affect the Company's net results.

The
translation of foreign denominated assets and liabilities at period-end exchange rates results in an unrealized foreign currency translation adjustment recorded as a separate component
of shareholders' equity and reported as other comprehensive income. The negative impact of foreign currency adjustment to shareholders' equity for the three months ended March 31, 2001 was
$1.2 million. As of March 31, 2001, the cumulative net effect to the Company of the equity adjustment from movements in foreign currency exchange rates was a reduction of approximately
$5.2 million in shareholders' equity. A significant portion of the cumulative foreign currency adjustment relates to changes in the carrying value of goodwill, which is partly denominated in
foreign currencies.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

None.

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SIGNATURES

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

|      |  |             |  |  |  | ALPNET, Inc.                       |  | 
|----- |  | ----------- |  |  |  | ---------------------------------- |  | 
|      |  |             |  |  |  | Registrant                         |  | 
|Date: |  | 14 May 2001 |  |  |  | /s/ Michael F. Eichner             |  | 
|      |  |             |  |  |  | Michael F. Eichner                 |  | 
|      |  |             |  |  |  | Acting CEO                         |  | 
|      |  |             |  |  |  | Chairman of the Board of Directors |  | 
|Date: |  | 14 May 2001 |  |  |  | /s/ John W. Wittwer                |  | 
|      |  |             |  |  |  | John W. Wittwer                    |  | 
|      |  |             |  |  |  | Vice President Finance and CFO     |  | 

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