<PAGE>

                                  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 1934
     For the Quarterly period ended March 31, 2000

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the transition period from __________ to __________ .

                         Commission File Number 0-15512

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

           UTAH                                                 87-0356708
           ----                                                 ----------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               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 May 5, 2000, was 27,964,040.

                                       1
<PAGE>

                                      INDEX


<TABLE>
<S>                                                                                   <C>
PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited):

        Consolidated Statements of Income - Three months ended March 31, 2000
          and 1999.......................................................................3

        Consolidated Balance Sheets - March 31, 2000 and December 31, 1999...............4

        Consolidated Statements of Cash Flows - Three months ended March 31, 2000
          and 1999.......................................................................6

        Notes to Consolidated Financial Statements - March 31, 2000......................7

Item 2. Management's Discussion and Analysis of Financial Condition and
          Results of Operations.........................................................11


PART II. OTHER INFORMATION


Item 6. Exhibits and Reports on Form 8-K................................................17


SIGNATURES..............................................................................18

</TABLE>


                                       2
<PAGE>

ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ALPNET, INC. AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited)

<TABLE>
<CAPTION>
                                                            Three Months Ended
THOUSANDS OF DOLLARS                                             March 31
(EXCEPT PER SHARE DATA)                                     2000          1999
                                                        --------       -------
<S>                                                     <C>            <C>
SALES OF SERVICES                                        $12,216       $12,462
Cost of services sold                                      8,386         8,949
                                                        --------       -------
GROSS PROFIT                                               3,830         3,513

OPERATING EXPENSES:
    Sales and marketing expenses                             992           887
    General and administrative                             3,057         2,218
    Development costs                                         47            48
    Amortization of goodwill                                 234            97
                                                        --------       -------
Total operating expenses                                   4,330         3,250
                                                        --------       -------
OPERATING INCOME (LOSS)                                     (500)          263

Interest expense, net                                        145            95
                                                        --------       -------
Income (loss) before income taxes                           (645)          168

Income taxes                                                  75            64
                                                        --------       -------
NET INCOME (LOSS)                                          $(720)         $104
                                                        ========       =======
Income (loss) per share - basic                           $(.026)        $.004
                                                        ========       =======
Income (loss) per share - assuming dilution               $(.026)        $.004
                                                        ========       =======

</TABLE>

SEE ACCOMPANYING NOTES.


                                       3
<PAGE>

ALPNET, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)

<TABLE>
<CAPTION>
                                                                    March 31     December 31
THOUSANDS OF DOLLARS                                                 2000         1999
                                                                  --------    -----------
<S>                                                               <C>         <C>
ASSETS

CURRENT ASSETS:
    Cash and cash equivalents                                     $ 1,215      $ 1,338
    Trade accounts receivable, less allowances of
      $487 in 2000 and $489 in 1999                                 9,724       11,398
    Work-in-process                                                 3,377        3,051
    Prepaid expenses and other                                      1,137          538
                                                                  -------      -------
Total current assets                                               15,453       16,325

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS:
    Office facilities and leasehold improvements                      330          370
    Equipment                                                       5,683        5,909
    Software                                                        3,327        2,812
                                                                  -------      -------
                                                                    9,340        9,091

    Less accumulated depreciation and amortization                  3,293        3,376
                                                                  -------      -------
Net property, equipment and leasehold improvements                  6,047        5,715

OTHER ASSETS:
    Goodwill, less accumulated amortization of
      $4,504 in 2000 and $4,384 in 1999                            10,906       11,250
    Other                                                             292          372
                                                                  -------      -------
Total other assets                                                 11,198       11,622
                                                                  -------      -------
TOTAL ASSETS                                                      $32,698      $33,662
                                                                  =======      =======

</TABLE>

SEE ACCOMPANYING NOTES.


                                       4
<PAGE>

ALPNET, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)--continued

<TABLE>
<CAPTION>
                                                                    March 31      December 31
THOUSANDS OF DOLLARS AND SHARES                                       2000           1999
                                                                  --------     -----------
<S>                                                               <C>          <C>
LIABILITIES AND SHAREHOLDER'S EQUITY

CURRENT LIABILITIES:
    Credit facilities with banks                                    $3,378         $3,932
    Accounts payable                                                 3,839          3,759
    Accrued payroll and related benefits                             1,422          1,211
    Other accrued expenses                                           1,946          2,021
    Income taxes payable                                               769            962
    Current portion of related party debt                              762            793
    Current portion of long-term debt                                  922            827
                                                                  --------       --------
Total current liabilities                                           13,038         13,505

Related party debt, less current portion                               623            623

Long-term debt, less current portion                                 2,118          1,900

Commitments and contingencies

SHAREHOLDERS' EQUITY:
    Convertible Preferred Stock, no par value;
      authorized 2,000 shares; issued and
      outstanding 87 shares in 2000 and 1999                           242            242
    Common Stock, no par value; authorized
      40,000 shares; issued and outstanding
      27,964 shares in 2000 and 27,763
      shares in 1999                                                49,440         49,175
    Accumulated deficit                                            (29,967)       (29,247)
    Accumulated other comprehensive income                          (2,796)        (2,536)
                                                                  --------       --------
Total shareholders' equity                                          16,919         17,634
                                                                  --------       --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                         $32,698        $33,662
                                                                  ========       ========

</TABLE>

SEE ACCOMPANYING NOTES.


                                       5
<PAGE>

ALPNET, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

<TABLE>
<CAPTION>
                                                            Three Months Ended March 31
THOUSANDS OF DOLLARS                                            2000          1999
                                                             -------       -------
<S>                                                       <C>             <C>
OPERATING ACTIVITIES:
    Net income (loss)                                          $(720)         $104
    Adjustments to reconcile net income (loss) to
      net cash provided by operating activities:
        Depreciation and amortization of property,
          equipment and leasehold improvements                   248           277
        Amortization of goodwill                                 234            97
        Other                                                     94            21
        Changes in operating assets and liabilities:
          Trade accounts receivable                            1,408           958
          Accounts payable and accrued expenses                  398           216
          Work-in-process                                       (419)         (704)
          Income tax payable                                    (194)           42
          Prepaid expense and other                             (584)         (454)
                                                             -------       -------
Net cash provided by operating activities                        465           557

INVESTING ACTIVITIES:
    Purchase of property, equipment and leasehold
      improvements                                               (59)         (229)
    Capitalized development costs                               (416)           --
                                                             -------       -------
Net cash used in investing activities                           (475)         (229)

FINANCING ACTIVITIES:
    Payments on credit facilities with banks, net               (507)         (400)
    Proceeds from long-term debt                                 300            --
    Principal payments on long-term debt                        (126)         (119)
    Proceeds from exercise of stock options                      265            27
                                                             -------       -------
Net cash used in financing activities                            (68)         (492)

Effect of exchange rate changes on cash                          (45)          (54)
                                                             -------       -------
NET DECREASE IN CASH AND CASH EQUIVALENTS                       (123)         (218)

Cash and cash equivalents at beginning of period               1,338         1,499
                                                             -------       -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                    $1,215        $1,281
                                                             =======       =======

Supplemental schedule of non-cash investing and
financing activities:

    Equipment purchased under capital lease obligations      $   151       $   613

</TABLE>

SEE ACCOMPANYING NOTES.


                                       6
<PAGE>

ALPNET, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2000

1.   BASIS OF PRESENTATION

     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 services sector to businesses engaged in international trade.
     These services include localization, documentation, translation,
     information consultancy and language technology integration. ALPNET is one
     of the largest suppliers of such services in the world. The principal
     markets for the Company's services are North America, Europe and Asia.

     During 1999, the Company embarked on a strategic repositioning to evolve
     its current service offering into an Internet-based Application Service
     Provider ("ASP") which will host multilingual information management
     services via the Internet. The Company will also utilize this new ASP
     business model to more effectively deliver its value-added information
     consultancy and language technology integration services. This is discussed
     more fully in Item 2, "Management's Discussion and Analysis of Financial
     Condition and Results of Operations".

     The accompanying unaudited consolidated financial statements have been
     prepared in accordance with the rules and regulations of the U.S.
     Securities and Exchange Commission. Accordingly, they do not include all of
     the information and footnote disclosures required by generally accepted
     accounting principles for complete financial statements. In the opinion of
     management, all adjustments (consisting of normal recurring adjustments)
     considered necessary for a fair presentation have been included. Operating
     results for the periods presented are not necessarily indicative of the
     results that may be expected for the respective complete years. For further
     information, refer to the Consolidated Financial Statements and notes
     thereto included in the Company's Annual Report on Form 10-K for the year
     ended December 31, 1999.

     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 and liabilities and
     disclosure of contingent liabilities at the date of the financial
     statements, and the reported amounts of revenues and expenses during the
     reporting periods. Actual results could differ from those estimates.

     Certain prior period amounts have been reclassified to conform to the 2000
     presentation.

2.   COMPREHENSIVE INCOME

     The Company presents comprehensive income in the shareholders' equity
     section of the consolidated balance sheet. Accumulated other comprehensive
     income is entirely accumulated foreign currency translation adjustments.

                                       7
<PAGE>

3.   INCOME (LOSS) PER SHARE

     Basic income (loss) per share is computed by dividing net income (loss) by
     the weighted average number of common shares outstanding during the
     accounting period excluding any dilutive effects of options and convertible
     securities. Diluted income per share includes the potential dilution as a
     result of stock options and convertible securities.

     The following table sets forth the computation of basic and diluted income
     per share.

<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                                                     March 31
THOUSANDS OF DOLLARS AND SHARES, EXCEPT INCOME (LOSS) PER SHARE                 2000          1999
                                                                            --------       -------
<S>                                                                         <C>            <C>
Numerator:
    Numerator for basic and diluted earnings
      per share - net income (loss)                                            $(720)         $104
                                                                            ========       =======
Denominator:
    Denominator for basic income (loss) per share
      weighted-average shares                                                 27,862        24,310

    Effect of dilutive securities:
      Convertible Preferred Stock                                                 --           786
      Employee stock options                                                      --           955
                                                                            --------       -------
    Dilutive potential common shares                                              --         1,741
                                                                            --------       -------
    Denominator for diluted income per share
      adjusted weighted-average shares and
      Assumed conversions                                                     27,862        26,051
                                                                            ========       =======

Income (loss) per share - basic                                               $(.026)        $.004

Income (loss) per share - assuming dilution                                   $(.026)        $.004

</TABLE>

4.   INCOME TAXES

     The Company files a consolidated U.S. Federal income tax return, which
     includes all domestic operations. Tax returns for states within the U.S.
     and for foreign subsidiaries are filed in accordance with applicable laws.
     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.


                                       8
<PAGE>

ALPNET, INC. AND SUBSIDIARIES


5.   SOFTWARE

     Purchased software is recorded at cost. The Company capitalized certain of
     the costs of developed software for internal use in accordance with
     Statement of Position 98-1, "Accounting for the Costs of Computer Software
     Developed or Obtained for Internal Use." Costs incurred during the
     application development stage are capitalized and amortized over the
     estimated useful life of the software. The proceeds of any funds received
     under joint development contracts are deducted from internal development
     costs. Amortization of software is provided on a straight line basis over
     useful lives ranging from two to six years. No amortization has been
     recorded as the software is not ready for use as of March 31, 2000. The
     software is expected to be ready for use in the third quarter of 2000.

<TABLE>
<CAPTION>
                                                                  31 March  31 December
         THOUSANDS OF DOLLARS                                      2000        1999
                                                                --------   -----------
<S>                                                           <C>         <C>
     Software obtained on acquisition of subsidiary in 1999        $630        $630
     Internal development costs, net                              1,726       1,374
     Purchased software                                             782         683
     Capitalized interest                                           189         125
                                                                 ------      ------
     Total                                                       $3,327      $2,812
                                                                 ======      ======
</TABLE>

6.   COMMITMENTS AND CONTINGENCIES

     The Company has committed to purchase approximately $1.6 million of
     software and related computer equipment during 2000 of which approximately
     $150,000 was acquired under capital leases in the three-month period ended
     March 31, 2000.

7.   GEOGRAPHICAL AND SEGMENT DATA

     The Company operates in one business segment, multilingual information
     management services. Within this segment, the Company also evaluates its
     performance internally by significant geographic regions: North America,
     Europe and Asia.

     The following selected financial data summarizes the Company's domestic and
     foreign operations for financial reporting purposes. Allocations of
     corporate and country overheads to domestic and foreign operations are
     based upon the Company's policies for financial reporting consistently
     applied during the periods. Intercompany sales are normally billed on a
     margin-sharing basis. All intercompany sales are eliminated in
     consolidation.

                                       9
<PAGE>

7.   GEOGRAPHICAL AND SEGMENT DATA (continued)

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                                 March 31
THOUSANDS OF DOLLARS                                        2000           1999
                                                        --------       --------
<S>                                                     <C>            <C>
Net external sales:
    North America                                         $4,833         $4,231
    Europe                                                 6,539          7,638
    Asia                                                     844            593
                                                        --------       --------
                                                         $12,216        $12,462
                                                        ========       ========

Intercompany sales:
    North America                                           $909           $308
    Europe                                                 1,827          1,581
    Asia                                                   1,261            566
                                                        --------       --------
                                                          $3,997         $2,455
                                                        ========       ========

Income (loss) before income taxes:
    North America (a)                                      $(237)         $(318)
    Europe                                                  (321)           293
    Asia                                                     (87)           193
                                                        --------       --------
                                                           $(645)          $168
                                                        ========       ========

</TABLE>

(a)  Includes corporate, general, and administrative expenses.


8.   RECENT ACCOUNTING PRONOUNCEMENTS

     In December 1999, the Securities and Exchange Commission released Staff
     Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements,"
     ("SAB 101"). The bulletin summarizes the views of the staff on applying
     generally accepted accounting principles to revenue recognition. SAB 101
     expresses the opinion that revenue is earned when four criteria are met;
     persuasive evidence of an arrangement exists; delivery has occurred or
     services have been rendered; the sales price to the buyer is fixed or
     determinable; and collectibility is reasonably assured. The Company
     believes that its existing revenue recognition policies are in conformity
     with SAB 101. The Company will adopt SAB101 in the second quarter of 2000.
     It is not anticipated that the adoption of this pronouncement will have a
     material effect on the financial statements of the Company


                                       10
<PAGE>

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, a change in the Company's business model, adequate funding to execute
the new business plan, fluctuating foreign currency exchange rates, changing
levels of demand for the Company's services, the effect of constantly changing
general 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 results.

RESULTS OF OPERATIONS

The following paragraphs discuss the results of operations for the three month
period ended March 31, 2000 ("2000"), as compared with the three month period
ended March 31, 1999 ("1999").

Sales of services were $12.2 million for 2000 compared to $12.5 million for 1999
and the Company reported a net loss of $720,000 in 2000 compared to net income
of $104,000 in 1999.

The results for 2000 reflect the significant investments the Company has made as
it integrates and completes the development of its new Internet-based
Application Service Provider ("ASP") business model and completes the
development of its ALPNETXchange enterprise system.

The integration will have a significant impact on the operating results of the
Company. The necessary investment in the technical infrastructure, human
resources, branding and marketing support required to build the ASP capability
will involve significant operating expenditures that will run in excess of
revenue. As a result, the Company expects to report operating losses throughout
the year 2000. Historical trends in revenue and expense will become less
comparable as the Company establishes a new revenue base and cost structure. The
investments which are planned for the year 2000 are expected to position the
Company for accelerated growth and profitability in future years.

In addition, the Company has invested approximately $3.6 million through March
31, 2000 in capitalized software and equipment relating to ALPNETXchange. The
levels of expenditure, both capital and operating, are in accordance with
management's plan. The commercial release of ALPNETXchange is on target for the
fall of 2000.

                                       11
<PAGE>

NEW BUSINESS MODEL AND ALPNETXCHANGE

The Company's position as a leading supplier of multilingual information
management services has provided it with substantial experience in managing
linguistic resources spanning people, linguistic data and technology. The
Company currently offers its services on a project by project basis according to
the specific needs of the client. This project-based approach makes client
demand and resource planning difficult to predict which can lead to fluctuating
revenue and operating results. However, the globalization of business and rapid
growth of the Internet have intensified the need for clients to implement
effective multilingual information strategies to support their Internet and
eCommerce business models. Product life cycles and time-to-market are shortening
in many industries and businesses need to manage information in Internet time
while substantially reducing localization costs. A project-based approach to
information management is too slow and costly in this new business environment.

The Company has recognized that a key business problem faced by its clients is
the absence of a cost-effective information management platform that exploits
the systematic use and reuse of information. Information reuse is essential in
translating and managing content in multiple languages. Poor reuse compromises
information quality and value and increases the cost of doing business globally.

The Company proposes to solve this business problem for its existing and future
clients by repositioning itself as an Internet-based ASP. Through ALPNETXchange,
the Company will host integrated Web-based software applications that will
enable clients to create, localize, manage, warehouse, reuse and distribute
information tailored for global and local needs. The Company will host dedicated
client data servers allowing clients to integrate multilingual information
management capabilities directly into their own business processes. The
Company's new ASP business model is expected to transform multilingual business
information into a globally reusable asset.

ALPNETXchange includes the enterprise information system that the Company
started designing and developing during 1999 which automates all workflow
processes throughout the Company's operations. ALPNETXchange also includes an
extranet portal through which clients can transact business with ALPNET and
access their multilingual information stored and managed on ALPNET servers. The
most valuable part of the ALPNETXchange system is a knowledge management
component which centralizes and leverages all translation memories, terminology
databases and localization know-how. This component provides the critical
function of information reuse.

SALES OF SERVICES BY GEOGRAPHIC SEGMENT

The value of revenues, costs, and net income reported in US dollars has been
impacted significantly by the effects of fluctuations in foreign currencies
against the US dollar. Total sales for 2000 would have been approximately
$560,000 higher without the negative effect of foreign currency exchange rates.
This is described in more detail in the section "Foreign Exchange Risk."

North America total sales were $4.8 million in 2000 compared with $4.2 million
in 1999, an increase of 14%. During 1999, the operations in North America were
brought under common management to maximize the region's sales opportunities and
production efficiency. In the United States, which represents one of the largest
potential markets for the Company's services, sales increased 23%. Sales in
Canada increased 5% where demand, especially in the automotive and financial
sectors, remains strong.


                                       12
<PAGE>

Sales in Europe were $6.5 million in 2000 and represent approximately 54% of the
Company's total sales, compared with $7.6 million, or 61% of total sales, in
1999. Most of the decrease occurred in the UK where the Company has actively
eliminated revenue which is low margin and not consistent with the new business
model. This was achieved by reducing the number of operating locations and
outsourcing production. These actions, combined with ongoing general trading
difficulties in the UK, resulted in a reduction of revenue in the UK of
approximately $1.3 million comparing 2000 with 1999, of which approximately
$700,000 relates to eliminated low margin revenue. In Germany, the Company's
largest European operation, underlying sales revenues in 2000 (net of the effect
of negative currency fluctuations) remain at approximately the same level as
1999. The Company's two acquisitions in Europe, completed in the second half of
1999, contributed approximately $1.9 million of revenue in 2000, as integrated
with existing operations.

Asia's reported sales of services in 2000 were $844,000, an increase of $251,000
over 1999. The Company's presence in Asia has been significantly expanded in
recent years by opening offices in new countries and expanding the capacities of
existing offices. Demand for translation and localization for Asian markets from
the business communities in the United States and Europe is currently at a
relatively high level.

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 revenue base. Nevertheless, through its new ASP
business model, the Company expects to be able to obtain a larger share of a
rapidly expanding global market for multilingual information management services
for information created for the Internet marketplace.

COST OF SERVICES SOLD

Cost of services as a percentage of revenue fluctuate primarily as a result of
competition in the marketplace and the volume and nature of direct production
costs, especially on large projects. Gross margins in 2000 were 31.3% compared
with 28.2% in 1999. Part of the increase in margins is attributable to the
elimination of low margin revenue in the UK. Management expects competitive
pricing pressures to continue in the Company's existing service lines. The new
business model both lessens the Company's dependence on short-term individual
projects, which are highly price sensitive, and offers long-term solutions based
around higher value services. Margins are anticipated to increase and become
more predictable as the new model is implemented.

OTHER COSTS AND EXPENSES

Sales and marketing expenses were $992,000 in 2000 compared with $887,000 in
1999, an increase of $105,000. The increase relates to additional sales and
marketing activity in substantially all of the Company's markets together with
an expanded corporate marketing and e-Commerce group to support the launch of
the new business model. Further substantial increases are expected throughout
2000.

General and administrative costs were $3.1 million in 2000 compared with $2.2
million in 1999, an increase of approximately $900,000. The increase is
attributable to additional personnel recruited to implement the transition to
the new business model together with the general and administrative costs of the
subsidiaries acquired in the second half of 1999. Costs associated with the new
technical and managerial infrastructure required are expected to continue to
increase throughout 2000.


                                       13
<PAGE>

In 2000, the Company capitalized approximately $416,000 of software development
costs related to ALPNETXchange. This amount is net of reimbursement from joint
development partners. Development costs which were expensed in 2000 amounted to
$47,000 in 2000, approximately the same level as 1999.

Goodwill amortization was $234,000 in 2000 compared with $97,000 in 1999, an
increase of $137,000. The additional amortization in 2000 relates to the
acquisitions completed in the second half of 1999.

Net interest expense was $145,000 in 2000, an increase of $50,000 compared to
1999. The increase is due to additional long-term debt used to finance certain
equipment and software purchases, the issuance of convertible notes, and the
assumption of debt relating to the acquisitions completed in the second half of
1999. Approximately $64,000 of interest has been capitalized in 2000 in
connection with the ALPNETXchange developed software.

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 $75,000 in 2000, compared with $64,000 in 1999. 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 tax purposes but has no net operating loss
carryforwards for state income tax purposes.

LIQUIDITY AND SOURCES OF CAPITAL

The Company had a positive cash flow from operations of approximately $465,000
in 2000 compared with $557,000 in 1999. In 2000, investing activities of
$475,000 included equipment acquisitions of $59,000 and approximately $416,000
of software development costs. Approximately $150,000 of equipment purchases
were also made, financed under capital leases. In 1999, investing activities
consisted primarily of the acquisition of equipment needed to maintain or
upgrade production capability.

Financing activities for 2000 and 1999 include fluctuations in the amounts
utilized under bank lines of credit to finance the Company's working capital
needs. These credit facilities are generally secured by accounts receivable and
fluctuate according to the level of receivables. During 2000, the Company issued
long-term, unsecured convertible notes to private investors totaling $300,000.
The notes were issued on identical terms to the existing convertible notes with
conversion prices between $4.56 and $5.30.

At March 31, 2000, the Company's cash and cash equivalents were approximately
$1.2 million, which represented a decrease of approximately $100,000 during
2000. At March 31, 2000, the Company had working capital of approximately $2.4
million, compared to working capital of approximately $2.8 million at December
31, 1999.


                                       14
<PAGE>

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 with credit facilities with financial
institutions in the US, Canada, the UK, Germany, Spain and the Netherlands. Most
of the credit facilities are secured by accounts receivable and other assets of
the Company or its subsidiaries. As of March 31, 2000, the Company had unused
amounts under these credit facilities of approximately $1.0 million. 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 which
currently exist. In addition, the Company expects to be able to increase the
maximum amounts which 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.

The Company will be required to obtain additional financing in order to continue
the implementation of its new Internet-based ASP business model and the related
expenditures for technical infrastructure, human resources, branding and
marketing support. The Company is actively seeking sufficient funding through
the private or public placement of debt or equity securities as well as other
possible sources. Management believes that it has available alternative sources
of such 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 its planned
investment requirements for the new ASP business model.

If management's efforts to obtain sufficient funding are unsuccessful, the
Company has various options available to it including the cancellation or
postponement of expenditures related to the implementation of the new ASP
business model, reduction of operating expenditures, renegotiation and
rescheduling of debt repayments and utilization of equipment lease financing as
an alternative to purchasing. Management believes that these measures would
enable the Company to continue operations, albeit at a reduced level. In certain
past years, the Company has relied on major shareholders of the Company to fund
some obligations, but the Company currently has no firm commitments from, nor
are there any obligations of, any such shareholders to provide any debt or
equity funds to the Company.

The Company's only significant commitments for capital expenditures during 2000
approximate $1.6 million for ALPNETXchange software and related computer
equipment which will be acquired primarily under capital leases during 2000.
Approximately $150,000 of software and equipment was acquired during the three
month period ended March 31, 2000.

In November 1998, the Company commenced implementation of an aggressive
reorganization of the Company's structure and operations. This plan was
completed during 1999. At March 31, 2000 approximately $100,000 of outstanding
obligations on long-term facility leases relating to this reorganization remains
accrued.

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.



                                       15
<PAGE>

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. As a
result, the Company historically has not had income tax liabilities requiring
the significant expenditure of cash. The Company expects this general trend to
continue into the future for certain offices which sustained large losses in
previous years. 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, 2000 and
December 31, 1999 were comprised of net operating loss carryforwards for which
the Company has provided 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.

FOREIGN EXCHANGE RISK

The Company serves its customers from more than 15 countries. 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 years presented. The Company may have 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 revenues 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, 2000 and 1999, along with the effect of
foreign currency exchange rate fluctuations on sales between periods.

<TABLE>
<CAPTION>
                                                                  Increase (Decrease)
                                  Three Months                 Sales of Services due to             Total
                                 Ended March 31               Sales             Currency           Increase
THOUSANDS OF DOLLARS        2000               1999           Volume          Fluctuations        (Decrease)
                         -------            -------           ------          ------------        ----------
<S>                      <C>                <C>               <C>             <C>                 <C>
North America            $ 4,833            $ 4,231            $ 523             $  79             $   602
Europe                     6,539              7,638             (430)             (669)             (1,099)
Asia                         844                593              222                29                 251
                         -------            -------            -----             -----             -------
Total Sales              $12,216            $12,462            $ 315             $(561)            $  (246)
                         =======            =======            =====             =====             =======
</TABLE>

The revenue mix of the Company's operations and the effect of foreign currency
exchange rate fluctuations on costs and expenses generally mitigate the
consolidated net income impact. For revenues 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 revenues within that country. This natural
currency effect reduces the net foreign exchange risk to the Company. In
addition, the increased costs related to the implementation of the new business
model are spread throughout the Company's operations and many are denominated in
foreign currencies. 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.

                                       16
<PAGE>

The Company has not historically experienced significant differences in net
income as a result of fluctuations in foreign currencies. The negative impact of
foreign currency fluctuations increased the loss in 2000 by approximately
$30,000. The Company does not currently use any financial instruments to manage
or hedge foreign exchange risk either for trading or other purposes. The revenue
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 year-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 foreign currency adjustment to shareholders' equity
for the three months ended March 31, 2000, was negative $260,000. As of March
31, 2000, the cumulative net effect to the Company of the equity adjustment from
movements in foreign currency exchange rates was a reduction of approximately
$2.8 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.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  The following exhibits are included herein:

     27   Financial Data Schedule




                                       17
<PAGE>

                                   SIGNATURES

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


                                       ALPNET, Inc.
                                       -------------------------------
                                       Registrant



Date: 12 May 2000                      /s/ Michael F. Eichner
                                       -------------------------------
                                       Michael F. Eichner
                                       Chairman of the Board



Date: 12 May 2000                      /s/ John W. Wittwer
                                       -------------------------------
                                       John W. Wittwer
                                       Vice President Finance



                                       18