<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q/A
                                (Amendment No. 1)

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.

                  For the quarterly period ended March 31, 2001

                                       OR

[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.

                       For the transition period from      to       .

                        Commission file number 000-24661

                          FiberNet Telecom Group, Inc.
             (Exact Name of Registrant as Specified in its Charter)

            Delaware                                     52-2255974
(State or Other Jurisdiction of            (I.R.S. Employer Identification No.)
Incorporation or Organization)

                    570 Lexington Avenue, New York, NY 10022
                    (Address of Principal Executive Offices)

                                 (212) 405-6200
                (Issuer's Telephone Number, Including Area Code)

     Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for past 90 days. Yes [X] No [_]

     The number of shares outstanding of the issuer's common stock, as of June
25, 2002, was 64,331,722 shares of Common Stock, $.001 par value.

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                                      INDEX

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                                                                                                         Page
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PART I.    FINANCIAL INFORMATION
 Item 1.  Consolidated Financial Statements ............................................................   1
          Consolidated Balance Sheets as of March 31, 2001 and December 31, 2000........................  11
          Consolidated Statements of Operations for the three months ended March 31, 2001 and 2000......  12
          Consolidated Statements of Cash Flows for the three months ended March 31, 2001 and 2000......  13
          Notes to Consolidated Financial Statements ...................................................  14
 Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations ........   1
 Item 3.  Quantitative and Qualitative Disclosures About Market Risk ...................................   6

PART II.  OTHER INFORMATION ............................................................................   9
 Item 2.  Changes in Securities and Use of Proceeds ....................................................   9
 Item 6.  Exhibits and Reports on Form 8-K .............................................................   9

                                       2

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<PAGE>

                                EXPLANATORY NOTE

         The purpose of this amendment is to amend and restate Part I of our
Form 10-Q, which was originally filed on May 15, 2001. We restated our
consolidated financial statements for the quarter ended March 31, 2001 to record
a beneficial conversion feature of $21.0 million in connection with the
reduction of the conversion price on our series H and I preferred stock on
February 9, 2001. Other than with respect to the consolidated financial
statements for the quarter ended March 31, 2001, this restatement has no impact
on our assets or total stockholders' equity, and it resulted in an increase in
additional paid-in-capital and an increase in net loss. The change increased net
loss by $21.0 million and increased net loss applicable to common stockholders
per share by $0.56. The change has no impact on our cash flows. This change was
previously reflected in our annual report on Form 10-K for the fiscal year ended
December 31, 2001, as amended.

                                     PART I

                              FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

         See attached.

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

         This report contains certain forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995. Such statements
are based on management's current expectations and are subject to a number of
factors and uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements. Investors are cautioned
that there can be no assurance that actual results or business conditions will
not differ materially from those projected or suggested in such forward-looking
statements as a result of various factors, including, but not limited to, the
following: the difficulty inherent in operating an early-stage company in a new
and rapidly evolving market; our history of operating losses and accumulated
deficit; our limited financial resources and uncertainty as to the availability
of additional capital to fund our operations on acceptable terms, if at all; our
success in obtaining additional carrier hotel lease agreements and license
agreements with building owners; growth in demand for our services; the
frequency of service interruptions on our networks; the potential development by
competitors of competing products and technologies; restrictions imposed on us
as a result of our debt; and changes in the regulatory environment. As a result,
our future operations involve a high degree of risk. Except as required by law,
we undertake no obligation to update any forward- looking statement, whether as
a result of new information, future events or otherwise.

         The telecommunications industry is currently experiencing a period of
uncertainty and rationalization. Many companies in our industry are in financial
distress, and some of our largest customers have filed for bankruptcy. We have
been negatively impacted by the general economic environment and by the
difficulties that are impacting our industry. Most significantly, customer
contracts and services have been cancelled, resulting in a loss of recurring
revenues to us. We are unable to determine the extent to which additional
contracts or services that we provide to our customers will be cancelled, and we
cannot forecast our ability to replace those cancelled contracts with new
contracts. As a result, our revenues, business operations and liquidity may
continue to be negatively affected by the market environment.

Overview

         We deploy, own and operate fiber-optic networks designed to provide
comprehensive broadband connectivity for data, voice and video transmission to
service providers in major metropolitan areas. These networks provide an
advanced, high bandwidth fiber-optic solution to support the demand for network
capacity in the local loop. We provide optical transport within and between
carrier hotels, which are facilities where service providers exchange and route
communications traffic, as well as optical transport from carrier hotels to
tenants in commercial office buildings. Our networks support multiple
transmission protocols including synchronous optical network, or SONET,
Ethernet, Frame Relay, asynchronous transfer mode, or ATM and Internet Protocol,
or IP. We are currently operating in the three gateway markets of New York,
Chicago and Los Angeles.

         We have experienced significant operating losses, net losses and
negative cash flows from operating activities. We expect to continue to
experience such losses and negative cash flows as we continue to operate our
business. We also have a limited operating history. Consequently, prospective
investors have limited operating history and financial data upon which to
evaluate our performance.

         We began operating our first metropolitan network in New York City in
January 2000, and we began deploying our infrastructure in Chicago and Los
Angeles in the fourth quarter of 2000. As of March 31, 2001, we had accomplished
the following:

         .    We deployed fiber-optic transport infrastructure in seven major
              carrier hotels in the New York metropolitan area,

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              including 60 Hudson Street and 111 Eighth Avenue, four major
              carrier hotels in Los Angeles and one major carrier hotel in
              Chicago.

         .    We have deployed our advanced, vertical in-building networks,
              known as FiberNet In-Building Networks, or FINs, in 12 office
              buildings in New York City and seven in Chicago.

         .    We had 57 customers and entered into 79 interconnection agreements
              with existing and potential customers, establishing the basis for
              purchase orders from them.

         .    We entered into exclusive license agreements that give us the
              right to build and operate our FINs in 36 office buildings in our
              target markets.

         .    We had exclusive license agreements that give us the right to
              manage communications access and infrastructure in approximately
              185 other office buildings nationwide.

         We have experienced significant operating losses, net losses and
negative cash flows from operating activities. We expect to continue to
experience such losses and negative cash flows as we continue to deploy our
network infrastructure and expand our business operations. As a result of our
limited operating history, prospective investors have limited operating history
and financial data upon which to evaluate our performance.

Factors Affecting Future Operations

     Revenues. We generate revenues from selling network capacity and related
services to other communications service providers. We recognize revenues when
earned as services are provided throughout the life of each contract with a
customer.

  Revenues are derived from three general types of services:

     Transport services. Our transport services include the offering of
broadband circuits on our metropolitan transport networks and FiberNet
In-building Networks, or FINs. Over our metropolitan transport networks, we can
provision circuits from one of our carrier point facilities to another carrier
point facility or to an on-net building via an interconnection with our FIN in
that building. We can also provision circuits vertically between floors in a
carrier point facility or an on-net building.

     Colocation services. Our colocation services include providing customers
with the ability to locate their communications and networking equipment at our
carrier point facilities in a secure technical operating environment. We can
also provide our customers with colocation services in the central equipment
rooms of certain of our on-net and off-net buildings. Typically, if a customer
colocates its equipment at our facilities, our agreement with them may include a
minimum commitment to use our transport services.

     Communications access management services. Our access management services
include providing our customers with the non-exclusive right to market and
provide their retail services to tenants in our on-net and off-net buildings.
Customers typically enter into an agreement with us to gain access to all or a
significant number of our properties. For certain of our on-net and off-net
buildings, we have the exclusive right to manage communications access. Once a
customer has entered into an agreement with us for access services, we typically
require that customer to utilize our in-building networking infrastructure for
connectivity to its retail customers, if such networking infrastructure is
available.

     Our revenues are generated on a monthly recurring basis under contracts
with our customers. The terms of these contracts can range from month-to-month
to five years in length. During the past year, we experienced a trend of
entering into shorter-term contracts with our customers. Previously, our
customers typically entered into contracts with terms of three to five years.
Increasingly, our customers are electing to purchase services on a
month-to-month basis or for a contracted period of only one year.

     Our services are typically sold under fixed price agreements. In the case
of transport services, we provide an optical circuit or other means of
connectivity for a fixed price. Revenues from transport services are not
dependent on customer usage or the distance between the origination point and
termination point of a circuit. The pricing of colocation services is based upon
the size of the colocation space or the number of colocation units, such as
cabinets, provided to the customer. Revenues from access management services are
typically determined by the square footage of the commercial office properties
to which a customer purchases access. The pricing of all of our services have
declined significantly over the past year, although we believe not to the extent
that the pricing in other segments of the telecommunications market has
declined.

     The growth of our revenues is dependent upon our ability to provide
additional services in our existing facilities. We also believe that the
majority of the growth in our revenues will come from our existing customers.
Consequently, our growth in revenues is dependent on the underlying growth of
our customers' businesses and their need for our services within the facilities
that we already operate. We continue to add additional customers. However, we
believe the number of companies that are potential customers is
decreasing, due to the industry environment. In addition, we currently do
not anticipate expanding our network infrastructure to other

                                       4

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carrier point facilities or on-net buildings and off-net buildings. Within each
of our existing facilities, our revenues will depend upon the demand for our
services, the competition that we face and our customer service.

     We typically begin our sales cycle by entering into a non-binding business
services agreement with a customer. This agreement establishes our mutual
interest in exploring a business relationship and the general parameters upon
which we will proceed. As a next step, we execute a telecommunications services
agreement, also known as an interconnection agreement. This is a technical
document that outlines the engineering specifications and operating standards
that are required of us by the customer. With the technical requirements
complete, we finalize a sales contract. Customers can order a specific circuit
or colocation space, or, alternatively, they can purchase general availability
on our networks or in our facilities by establishing minimum revenue commitments
on a recurring basis.

     In the first quarter of 2001, our colocation and access services produced
approximately one-third of our revenues. In the future we anticipate generating
significantly more of our revenues from transport services than from colocation
or access management services. The scalability of our network architecture
allows us to increase transport capacity to a greater degree than is possible
with our colocation and access management services.

     Cost of Services. Cost of services are associated with the operation of our
networks and facilities. The largest component of our cost of services is the
occupancy expenses at our carrier point facilities, on-net buildings and off-net
buildings. Other specific costs include maintenance and repair costs and utility
costs. Our license agreements for our on-net and off-net buildings require us to
pay license fees to the owners of these properties. These license fees typically
are calculated as a percentage of the revenues that we generate in each
particular building. Other than our license fees, our cost of services are
generally fixed in nature. We do not anticipate that cost of services will
change commensurately with any change in our revenues.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses generally include all of our personnel costs, including
wages and benefits, occupancy costs for our corporate offices, professional
fees, and other miscellaneous expenses. Sales and marketing expenses, including
advertising and promotions, are also included.

     Stock Related Expense. Stock related expense relates to the granting of
certain stock options to our employees. We grant stock options to our employees
as a form of equity-based compensation to attract, retain and incentivize
qualified personnel. These costs are non-cash charges that are amortized over
the vesting term of each employee's option agreement. Certain options granted to
employees are accounted for using variable plan accounting. Under variable plan
accounting, the stock related expense is adjusted for changes in the market
price of the underlying common stock.

     Depreciation and Amortization. Depreciation and amortization expense
includes the depreciation of our network equipment and infrastructure, computer
hardware and software, furniture and fixtures, and leasehold improvements, as
well as the amortization of goodwill and certain deferred charges. We commence
the depreciation of network related fixed assets when they are placed into
service and depreciate those assets over periods ranging from three to 20 years.
We review the carrying value of its assets for impairment whenever events and
circumstances indicate the carrying value of an asset may not be recoverable
from the estimated future cash flows expected to result from its use and
eventual disposition.

Restatement of Financial Statements

         We restated our consolidated financial statements for the quarter ended
March 31, 2001 to record a beneficial conversion feature of $21.0 million in
connection with the reduction of the conversion price on our series H and I
preferred stock on February 9, 2001. The conversion price of the series H and
series I was reduced to $4.38, in accordance with the original terms of the
issuance transactions. The certificates of designation of the series H and
series I include provisions requiring the conversion prices to be lowered to the
per share price at which we issue any shares of common stock, subject to certain
exceptions, subsequent to the initial issuance of the series H and series I. In
February 2001, we issued shares of common stock in a directed public offering at
a price of $4.38 per share, resulting in the reduction of the conversion price.
As a result, we recorded a beneficial conversion charge of $21.0 million as a
result of the reduction of the conversion price. Other than with respect to the
consolidated financial statements for the quarter ended March 31, 2001, this
restatement has no impact on our assets or total stockholders' equity, and it
resulted in an increase in additional paid-in-capital and an increase in net
loss. The change increased net loss by $21.0 million and increased net loss
applicable to common stockholders per share by $0.56. The change has no impact
on our cash flows. This change was already reflected in our annual report on
Form 10-K for the fiscal year ended December 31, 2001, as amended.

Results of Operations

  Three Months Ended March 31, 2001 Compared to Three Months Ended March 31,
2000

         Revenues. Revenues for the three months ended March 31, 2001 were $7.4
million compared to $0.1 million for the three months ended March 31, 2000, a
$7.3 million increase. We generated revenues by providing transport, colocation
and communications access management services to our customers. For the three
months ended March 31, 2001 and March 31, 2000, we

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recognized $5.1 million and approximately $35,000 in transport services, $0.8
million and approximately $44,000 in colocation services and $1.5 million and
approximately $32,000 in communications access management and other services,
respectively. During the three-month period ending March 31, 2001, two of our
customers 360networks and Qwest, accounted for approximately 50.7% of our
revenues. We expect such customer concentration to diminish as we further expand
our operations and diversify our customer base. We entered into certain
reciprocal agreements which accounted for $1.2 million, or 16.3%, of our
revenues in the first quarter of 2001. No such agreements were in place for the
first quarter of 2000.

         Cost of Services. Cost of services for the three months ended March 31,
2001 and March 31, 2000 were $2.9 and $0.2 million, respectively. The increase
of $2.7 million was due to expenses associated with the expansion of our network
facilities. These costs included on-net building license fees, maintenance and
repair costs, rent expense at carrier hotel facilities and on-net and off-net
buildings, and related utility costs. Reciprocal agreements accounted for $1.2
million of our cost of services in the first quarter of 2001. No such agreements
were in place for the first quarter of 2000.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended March 31, 2001 were $9.9
million compared to $4.3 million for the three months ended March 31, 2000. This
increase is consistent with the rapid expansion of our operations. We have
experienced significant growth in personnel costs, marketing and advertising
expenses, and network construction overhead to support our business strategy.

         Stock Related Expense. Stock related expense for the three months ended
March 31, 2001 was ($0.1) million compared to $1.7 million for the three months
ended March 31, 2000. This non-cash expense relates to the granting of stock
options to our employees. The amount recorded for the three months ended March
31, 2001 was a reversal of an expense incurred during 2000 due to a decline in
the public market price of our common stock since the end of 2000.

         Depreciation and Amortization. Depreciation and amortization expense
for the three months ended March 31, 2001 was $3.1 million compared to $1.2
million of depreciation and amortization expense for the three months ended
March 31, 2000. The increase resulted from commencement of the depreciation of
network related fixed assets that were placed into service.

         Interest Expense, Net. Interest expense, net for the three months ended
March 31, 2001 was $2.1 million compared to $49,000 of interest income, net for
the three months ended March 31, 2000. Interest expense was generated as a
result of borrowings under our senior secured credit facility and our
outstanding capital lease obligations.

         Preferred Stock Dividends. For the three months ended March 31, 2001,
we accrued $0.7 million in non-cash dividends on our preferred stock, payable in
the form of additional shares of each respective series of preferred stock,
based on the closing price per share at the end of the period. For the three
months ended March 31, 2000 we accrued $2.9 million in non-cash dividends on our
preferred stock, payable in the form of additional shares of each respective
series of preferred stock, based on the closing price per share at the end of
the period. For the period ending March 31, 2001 the liquidation value of all of
the dividends accrued was $1.4 million. All of the series of preferred stock are
convertible into shares of common stock.

         Preferred Stock - Beneficial Conversion. In February 2001, the
conversion price of the series H and series I was reduced to $4.38, in
accordance with the original terms of the issuance transactions. The
certificates of designation of the series H and series I include provisions
requiring the conversion prices to be lowered to the per share price at which we
issue any shares of common stock, subject to certain exceptions, subsequent to
the initial issuance of the series H and series I. In February 2001, we issued
shares of common stock in a directed public offering at a price of $4.38 per
share, resulting in the reduction of the conversion price. We recorded a
beneficial conversion charge of $21.0 million as a result of the reduction of
the conversion price. The amounts of the charge assume the market price per
share of the underlying common stock, as of the date the charge is incurred, in
accordance with EITF Issue 98-05, "Accounting for Convertible Securities with
Beneficial Conversion Features or Contingently Adjustable Conversion Ratio." No
beneficial conversion feature was recorded in March 31, 2000.

         Net Loss Applicable to Common Stockholders. We reported a net loss
applicable to common stockholders of $39.7 million for the three months ended
March 31, 2001, compared to a loss of $10.1 million for the three months ended
March 31, 2000. The increase is a result of the aforementioned changes in our
operations, a non-cash charge of $7.4 million related to an early extinguishment
of debt from the modification of our credit facility on February 9, 2001, and a
beneficial conversion feature of $21.0 million recorded in February 2001.

Liquidity and Capital Resources

         As a result of our developmental activities and the deployment of our
networks and facilities, we have incurred significant losses from inception to
date. We expect such losses to continue, as we further execute our business plan
and expand our operations. Consequently, we have been dependent upon external
sources of capital to fund our operations. Prospectively, we will continue to
incur losses and will not be able to fund our operations with internally
generated funds. Therefore we will require additional, external capital.
Additionally, we have no relevant operating history upon which an evaluation of
our performance and prospects can be made. We are subject to unforeseen capital
requirements, failure of market acceptance, failure to establish and maintain
business

                                       6

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relationships, and competitive disadvantages against larger and more established
companies.

         To date, we have financed our operations through direct equity
investments from our stockholders, the issuance of additional debt and equity
securities in private transactions and by arranging a senior secured credit
facility with a group of lenders. We incurred an EBITDA (as defined) loss and a
net loss applicable to common stockholders for the three months ended March 31,
2001 of $5.4 million and $39.7 million, respectively, compared to $4.4 million
and $10.1 million, respectively, for the three months ended March 31, 2000.
During the three months ended March 31, 2001, cash used to fund operating
activities was $6.9 million, and cash purchases of property, plant and equipment
were $18.0 million, compared to $4.7 million and $5.7 million, respectively, for
the three months ended March 31, 2000.

         During the three months ended March 31, 2001, we received $24.6 million
in net cash proceeds from financing activities. On February 2, 2001, we
completed a $28.2 million directed public offering of our common stock under our
existing shelf registration statement. We issued 6,440,000 shares of common
stock at a purchase price of $4.375 per share as well as warrants to purchase an
additional 1,288,000 shares at an exercise price of $6.56 per share. We may
redeem the warrants when the stock trades at $11.48 or above for 20 consecutive
trading days. As of May 14, 2001, we were eligible to sell an additional $121.8
million of common stock, preferred stock, debt securities and warrants under our
existing shelf registration statement. Net proceeds from the issuance of equity
securities during the three months ended March 31, 2001 were $26.0 million.

         On February 9, 2001, we increased our existing credit facility with
Deutsche AG New York Branch, Deutsche Banc Alex. Brown Inc., First Union
Investors, Inc., First Union Securities, Inc., Toronto Dominion (USA) Securities
Inc. and other lenders from $75.0 million to $105.0 million. The maturity of the
credit facility was extended to six years from four and one-half years, and the
initial interest rate was lowered to LIBOR + 4.5% from LIBOR + 6.0%. In
connection with this amended credit facility, we issued warrants to purchase an
additional 454,409 shares of our common stock at a purchase price of $8.00 per
share. In addition, as part of the amendment of our credit facility, all
warrants issued under the original credit agreement were replaced with new
warrants to purchase an equivalent amount of our common stock at a purchase
price of $8.00 per share.

         As of March 31, 2001, the outstanding borrowings under our credit
facility were $52.0 million. For the three months ended March 31, 2000, we
received $3.3 million in net cash proceeds from the exercise of outstanding
options to purchase shares of equity securities.

         We anticipate spending $55.0 million to $75.0 million during the fiscal
year 2001 for the deployment of our FINs, expansion of our metropolitan
transport networks, the development of additional carrier hotel facilities and
other network programs and management systems.

         Our planned operations may require significant additional capital to
fund equipment purchases, engineering and construction costs, marketing costs,
administrative expenses and other operating activities. We continue to have on-
going discussions with sources of additional financing. From time to time, we
may consider private or public sales of additional equity or debt securities and
other financings, depending upon market conditions, in order to finance the
continued operations of our business. There can be no assurance that we will be
able to successfully consummate any such financing on acceptable terms, or at
all.

         EBITDA (as defined), as discussed above, is defined as net loss before
income taxes and minority interest, interest expense, interest income,
depreciation and amortization, stock related expense and other non-cash,
non-recurring charges. EBITDA (as defined) is commonly used in the
communications industry and by financial analysts, and others who follow the
industry, to measure operating performance. EBITDA (as defined) should not be
construed as an alternative to operating income or cash flows from operating
activities, both of which are determined in accordance with generally accepted
accounting principles, or as a measure of liquidity. Because it is not
calculated under generally accepted accounting principles, our EBITDA (as
defined) may not be comparable to similarly titled measures used by other
companies.

                                       7

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                                                 Consolidated Financial Data
                                                        (in thousands)
                                                         (unaudited)

                                                       Three Months Ended
                                                          March 31,
                                               -------------------------------
                                                   2001                2000
                                               ------------        -----------
                                               Restated (1)
    Calculation of EBITDA (as defined):

    Net loss ................................    $(17,934)          $ (7,205)

    Plus:
    Operating expenses:
    Stock related expense for selling,
      general, and administrative matters ...        (137)             1,696
    Depreciation and amortization ...........       3,105              1,175
    Extraordinary loss on early
      extinguishments of debt ...............       7,398                 --
    Interest expense (income), net ..........       2,126                (49)
                                                 --------           --------
    EBITDA (as defined) .....................    $ (5,442)          $ (4,383)

    (1) See Footnote 5 to the notes of the consolidated financial statements
    for a discussion of the restatement of our financial results for the first
    quarter ended March 31, 2001.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

         Our exposure to financial market risk, including changes in interest
rates, relates primarily to our senior secured credit facility and marketable
security investments. Borrowings under our senior secured credit facility bear
interest at floating rates. As a result, we are subject to fluctuations in
interest rates. We generally place our marketable security investments in high
credit quality instruments, primarily U.S. government obligations and corporate
obligations with contractual maturities of less than one year. We do not believe
that a 100 basis point increase or decrease in interest rates would
significantly impact our business. We do not have any derivative instruments. We
operate only in the United States and all sales have been made in U.S. dollars.
We do not have any material exposure to changes in foreign currency exchange
rates.

                                       8

<PAGE>

                                     PART II

                                OTHER INFORMATION

Item 1.  Legal Proceedings

         None.

Item 2.  Changes in Securities and Use of Proceeds

         On January 31, 2001, a stockholders agreement by and among us and the
stockholders listed therein was amended and restated to incorporate prior
amendments and to modify certain other provisions. Such amended and restated
stockholders agreement was filed as part of a current report on Form 8-K, filed
on February 2, 2001.

Item 3.  Defaults Upon Senior Securities

         None.

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

         None.

Item 5.  Other Information

         None.

Item 6.  Exhibits and Reports on Form 8-K

         (a) The following documents are filed herewith as part of this Form
             10-Q:

             None.

         (b) The following reports were filed on Form 8-K, under Item 5, during
             the quarter ended March 31, 2001:

         1.   Two reports were filed on February 2, 2001, regarding the
              amendment and restatement of the stockholders agreement, dated as
              of January 31, 2001, by and among us and the stockholders listed
              therein.

         2.   A report was filed on February 5, 2001, regarding our entering
              into a commitment agreement to amend and restate our credit
              agreement with the parties listed therein and our sale of
              6,440,000 shares of common stock and warrants to purchase
              1,288,000 shares of common stock.

         3.   A report was filed on February 15, 2001, regarding the amendment
              and restatement of the credit agreement, dated February 9, 2001,
              by and among us and the parties listed therein.

         4.   A report was filed on March 19, 2001, regarding the date of our
              annual meeting and the deadlines for submitting stockholder
              proposals.

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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 thereunto duly authorized.

Date: June 28, 2002                         Fibernet Telecom Group, Inc.

                                            By: /s/ Jon A. Deluca
                                                -----------------------------
                                            Name:  Jon A. DeLuca
                                            Title: Chief Financial Officer*


* The Chief Financial Officer is signing this quarterly report on Form 10-Q as
  both the principal financial officer and authorized officer.

                                       10

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                          FIBERNET TELECOM GROUP, INC.

                           CONSOLIDATED BALANCE SHEETS
                               (DOLLARS IN 000'S)

<TABLE>
<CAPTION>
                                                                                           March 31,    December 31,
                                                                                             2001           2000
                                                                                          -----------   ------------
                                                                                          (Unaudited)
                                                                                          As Restated -
                                                                                          See Note 5
                                     ASSETS
<S>                                                                                       <C>           <C>
Current assets:
  Cash and cash equivalents ...........................................................     $   1,231    $   1,582
  Accounts receivable, net of allowance of $1,332 and $482 at
      March 31, 2001 and December 31, 2000, respectively ..............................         9,845       14,030
  Prepaid expenses and other ..........................................................           465          960
                                                                                            ---------    ---------
     Total current assets .............................................................        11,541       16,572
Property, plant and equipment, net ....................................................       142,399      126,114
Goodwill and intangibles, net of accumulated amortization of $3,899 and $2,696 at
      March 31, 2001 and December 31, 2000, respectively ..............................        67,854       69,057
Deferred charges, net of accumulated amortization of $1,026 and $749 at
      March 31, 2001 and December 31, 2000, respectively ..............................        12,977       14,293
Other assets ..........................................................................         1,741        1,129
                                                                                            ---------    ---------
TOTAL ASSETS ..........................................................................     $ 236,512    $ 227,165
                                                                                            =========    =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable ....................................................................     $  13,643    $  11,119
  Accrued expenses ....................................................................         6,707       10,590
  Deferred revenues ...................................................................        12,467       14,381
  Capital lease obligation--current portion ...........................................           241          233
                                                                                            ---------    ---------
     Total current liabilities ........................................................        33,058       36,323
Notes payable, less original issue discount of $6,965 and $4,164 at March 31, 2001
and December 31, 2000, respectively ...................................................        45,035       45,836
Capital lease obligation ..............................................................           660          723
                                                                                            ---------    ---------
     Total liabilities ................................................................        78,753       82,882
                                                                                            ---------    ---------

Stockholders' equity:
  Common Stock, $.001 par value, 150,000,000 shares authorized
    and 39,680,077 and 33,238,346 shares issued and outstanding, respectively .........            40           33
  Series C Voting Preferred Stock $.001 par value 83,688 issued and
    outstanding, respectively. (Preference in involuntary liquidation value, $1.50
    per share) ........................................................................           126          126
  Series D Preferred Stock $.001 par value, 322,704 shares issued
    and outstanding, respectively. (Preference in involuntary liquidation value,
    $15.00 per share) .................................................................        23,971       23,971
  Series E Preferred Stock $.001 par value, 317,853 shares issued
    and outstanding, respectively. (Preference in involuntary liquidation value,
    $15.00 per share) .................................................................        24,130       24,130
  Series F Preferred Stock $.001 par value, 376,202 shares issued
    and outstanding, respectively. (Preference in involuntary liquidation value,
    $30.00 per share) .................................................................        28,559       28,559
  Series H Preferred Stock $.001 par value, 440,544 shares issued and
    outstanding (Preference in involuntary liquidation value, $100.00 per share) ......        64,568       64,568
  Series I Preferred Stock $.001 par value, 64,431 shares issued and
    outstanding (Preference in involuntary liquidation value, $120.00 per share) ......        12,577        8,969
  Additional paid in capital and other ................................................       196,264      146,719
  Accumulated deficit .................................................................      (192,476)    (152,792)
                                                                                            ---------    ---------
     Total stockholders' equity .......................................................       157,759      144,283
                                                                                            ---------    ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............................................     $ 236,512    $ 227,165
                                                                                            =========    =========
</TABLE>

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

                                       11

<PAGE>

                          FIBERNET TELECOM GROUP, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                  (DOLLARS IN 000'S, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                               Three Months Ended March 31,
                                                                               ----------------------------
                                                                                   2001            2000
                                                                               ------------    ------------
                                                                                As Restated-
                                                                                See Note 5
<S>                                                                            <C>             <C>
Revenues ....................................................................   $      7,374    $        111
Operating expenses:
 Cost of services (exclusive of items shown separately below) ...............          2,921             203
 Selling, general and administrative expense
   excluding stock related expense ..........................................          9,895           4,291
 Stock related expense for selling, general,
   and administrative matters ...............................................           (137)          1,696
 Depreciation and amortization ..............................................          3,105           1,175
                                                                                ------------    ------------
Total operating expenses ....................................................         15,784           7,365
                                                                                ------------    ------------
Loss from operations ........................................................         (8,410)         (7,254)
Interest (expense) / income, net ............................................         (2,126)             49
                                                                                ------------    ------------
Net loss before extraordinary item ..........................................        (10,536)         (7,205)
Extraordinary loss on early extinguishment of debt ..........................         (7,398)             --
                                                                                ------------    ------------
Net loss ....................................................................        (17,934)         (7,205)
Preferred stock dividends ...................................................           (731)         (2,851)
Preferred stock - beneficial conversion .....................................        (21,019)             --
                                                                                ------------    ------------
Net loss applicable to common stockholders ..................................   $    (39,684)   $    (10,056)
                                                                                ============    ============
Net loss applicable to common stockholders per share - basic and diluted ....   $      (1.06)   $      (0.38)
Weighted average shares outstanding .........................................     37,460,720      26,813,099
</TABLE>

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

                                       12

<PAGE>

                          FIBERNET TELECOM GROUP, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                               (DOLLARS IN 000'S)

<TABLE>
<CAPTION>
                                                                                    Three Months Ended March 31,
                                                                                    ----------------------------
                                                                                           2001        2000
                                                                                         --------    --------
                                                                                      As Restated-
                                                                                        See Note 5
<S>                                                                                  <C>            <C>
Cash flows from operating activities:
  Net loss applicable to common stockholders ........................................    $(39,684)   $(10,056)
  Adjustments to reconcile net loss to net cash used in operating activities:
     Extraordinary item .............................................................       7,398          --
     Depreciation and amortization ..................................................       3,105       1,175
     Preferred stock dividends ......................................................         731       2,851
     Preferred stock - beneficial conversion ........................................      21,019          --
     Stock related expense ..........................................................        (137)      1,696
     Other non-cash items ...........................................................         744          --
     Change in assets and liabilities:
        (Increase) decrease in accounts receivable, prepaid expenses and other
          assets ....................................................................       3,218        (435)
        Increase (decrease) in accounts payable, accrued expenses and deferred
          revenues ..................................................................      (3,292)         90
                                                                                         --------    --------
Cash used in operating activities ...................................................      (6,898)     (4,679)
Cash flows from investing activities:
  Capital expenditures ..............................................................     (18,005)     (5,717)
                                                                                         --------    --------
Cash used in investing activities ...................................................     (18,005)     (5,717)
Cash flows from financing activities:
  Net repayments of debt financings .................................................      (1,404)         --
  Net proceeds from issuance of equity securities ...................................      26,011       3,300
  Repayment of capital lease obligation .............................................         (55)        (48)
                                                                                         --------    --------
Cash provided by financing activities ...............................................      24,552       3,252
                                                                                         --------    --------
Net decrease in cash ................................................................        (351)     (7,144)
Cash at beginning of period .........................................................       1,582       9,512
                                                                                         --------    --------
Cash at end of period ...............................................................    $  1,231    $  2,368
                                                                                         ========    ========
Supplemental disclosures of cash flow information:
  Interest paid .....................................................................    $  1,160    $     44
  Income taxes paid .................................................................          --          --
</TABLE>

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

                                       13

<PAGE>

                          FIBERNET TELECOM GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. ORGANIZATION AND OPERATIONS

         FiberNet Telecom, Inc. ("Original FiberNet") was organized under the
laws of the State of Delaware on August 10, 1994. On November 24, 1997, an
existing public company, Desert Native Design, Inc. ("DND"), acquired Original
FiberNet, pursuant to an agreement and plan of merger dated that date (the
"Original Merger"). To effect the Original Merger, DND effectuated a 3.5 for 1
forward stock split, which entitled DND shareholders to 3.5 shares of DND stock
for every one share held by them and issued 11,500,000 shares of common stock
and 80,000 Series B Preferred Stock in exchange for all of the outstanding
shares of Original FiberNet. Upon consummation of the Original Merger, Original
FiberNet became a wholly-owned subsidiary of DND, which subsequently changed its
name to FiberNet Telecom Group, Inc., a Nevada corporation ("FiberNet Nevada").
For accounting purposes, the acquisition was treated as a recapitalization of
DND with Original FiberNet as the acquirer (reverse acquisition). On December 9,
1999, FiberNet Nevada changed its state of incorporation to Delaware
(hereinafter referred to as "FiberNet" or the "Company").

         FiberNet is an all-optical facilities-based communications provider
focused on providing wholesale broadband connectivity for data, voice and video
transmission on its state-of-the-art fiber optic networks in major metropolitan
areas. The Company offers an advanced high bandwidth, fiber-optic solution to
support the growing demand for network capacity in the intra-city market, or
local loop. The Company has established operations in the New York, Chicago and
Los Angeles metropolitan areas.

         FiberNet is a holding company that owns all of the outstanding common
stock of FiberNet Operations Inc., a Delaware corporation and an intermediate
level holding company, and Devnet L.L.C. ("Devnet"), a Delaware limited
liability company. FiberNet Operations, Inc. owns all of the outstanding common
stock of FiberNet Telecom Inc., a Delaware corporation. FiberNet Telecom, Inc.
owns all of the outstanding membership interests of Local Fiber, LLC ("Local
Fiber"), a New York limited liability company, and all of the outstanding
membership interests of FiberNet Equal Access, LLC ("Equal Access"), also a New
York limited liability company. The Company conducts its primary business
operations through its operating subsidiaries, Devnet, Local Fiber and Equal
Access.

         The Company was a development stage enterprise through December 31,
1999. During the fiscal quarter ended March 31, 2000, the Company began offering
its services to customers and recognizing revenues.

         The Company is materially dependant on certain existing agreements with
other entities, including telecommunications license agreements with building
landlords, interconnection agreements with other telecommunications service
providers and leases with carrier hotel property owners. FiberNet also has
entered into material contracts with suppliers for the components of its
telecommunications networks. These contracts and agreements are critical to the
Company's ability to execute its business strategy and operating plan.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

         The interim unaudited consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, FiberNet Operations,
Inc., Devnet L.L.C., FiberNet Telecom, Inc., FiberNet Equal Access, LLC and
Local Fiber, LLC and have been prepared in accordance with generally accepted
accounting principles in the United States. All significant intercompany
balances and transactions have been eliminated.

Use of Estimates

         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 assets and liabilities as of the date of the financial
statements and the reported amounts of expenses during the reporting period.
Actual results could differ from those estimates.

         The Company's operations and ability to grow may be affected by
numerous factors, including the fact that the Company is an early-stage company
operating in a new and rapidly evolving market; has experienced and will
continue to experience operating losses, net losses and cash flow deficits; must
make significant capital expenditures before generating operating profits, which
may prove insufficient to justify those expenditures; must obtain additional
carrier hotel lease agreements and maintain existing agreements in major carrier
hotels; must obtain additional license agreements and leases with building
owners for the installation of in-building

                                       14

<PAGE>

network infrastructure; may require additional capital to complete the build-out
of networks and fund other needs; and depends heavily on a limited number of
real estate owners and developers. The Company cannot assure the successful
completion of network construction; must increase the volume of traffic on the
network; may need to expand or adapt its networks in the future in order to
remain competitive; may be unable to obtain licenses for key third party
software on commercially acceptable terms in the future; is dependent on key
personnel; must attract and retain qualified professionals in a tight labor
market; may not be able to compete effectively in its highly competitive sector;
and has outstanding debt which may limit its ability to borrow additional funds,
restrict the use of cash flows, constrain its business strategy and cause the
Company to be unable to meet its debt obligations.

         Additionally, there might not be sufficient demand for the Company's
services. If the Company cannot maintain the scalability, reliability and speed
of the network, potential customers may not use FiberNet's services. Service
interruptions on networks could expose the Company to liability, or cause it to
lose customers. The Company's failure to manage the growth of its operations or
development of its information support systems could harm its business.
Alternative technologies pose competitive threats. Continued competition or
excess network capacity could cause prices for FiberNet's services to decline,
and legislation and government regulation could adversely affect the Company.

Cash and Cash Equivalents

         Cash and cash equivalents include highly liquid investments with an
original maturity of three months or less. The carrying amount approximates fair
value because of the short maturity of the instruments.

Property, Plant and Equipment

         Property, plant and equipment are stated at cost less accumulated
depreciation. Depreciation is provided using the straight-line method over the
estimated useful lives of the assets, once placed in service. The estimated
lives are as follows:

            Computer software....................................   3-5 Years
            Computer equipment...................................   3-5 Years
            Office equipment and fixtures........................   5-10 Years
            Leasehold improvements...............................   9-15 Years
            Network equipment....................................   5-10 Years
            Network infrastructure...............................   5-20 Years


         Maintenance and repairs are expensed as incurred. Long-term
improvements are capitalized as additions to property, plant and equipment.

Impairment of Long-Lived Assets

         The Company reviews the carrying value of long-lived assets including
goodwill, deferred charges and property, plant and equipment for impairment
whenever events and circumstances indicate the carrying value of an asset may
not be recoverable from the estimated future cash flows expected to result from
its use and eventual disposition. In cases where undiscounted expected future
cash flows are less than the carrying value, an impairment loss would be
recognized equal to an amount by which the carrying value exceeds the fair value
of the assets.

Revenue Recognition

         FiberNet generates revenues from selling network capacity and related
services to other communications service providers. The Company recognizes
revenues when earned as services are provided throughout the life of each
contract with a customer. The majority of the Company's revenues are generated
on a monthly recurring basis under contracts of various lengths, ranging from
one month to five years. Revenue is recognized over the service contract period
for all general services. Deferred revenues consist primarily of payments
received in advance of revenue being earned under the service contracts. Most of
its customers are obligated to make minimum payments for the utilization of its
networks and facilities. Customers may elect to purchase additional services in
excess of minimum contractual requirements.

         Revenues are derived from three general types of services:

         Transport services. FiberNet's transport services include the offering
of broadband circuits on its metropolitan transport networks and in-building
networks. Over its metropolitan transport networks, the Company can provision
circuits from one of its carrier hotel facilities to another carrier hotel
facility or to an on-net building via an interconnection with its in-building
network in

                                       15

<PAGE>

that building. The Company can also provision circuits vertically between floors
in a carrier hotel or an on-net building.

         Colocation services. FiberNet's colocation services include providing
customers with the ability to locate their communications and networking
equipment at its carrier point facilities in a secure technical operating
environment. The Company also can provide its customers with colocation services
in the central equipment rooms of certain of its on-net buildings. If a customer
purchases colocation services, the Company may require the customer to make a
minimum commitment for transport services, as well.

         Communications access management services. FiberNet's access management
services include providing its customers with the non-exclusive right to market
and provide their retail services to tenants in its on-net and off-net
buildings. Customers typically enter into an agreement with the Company to gain
access to all or a significant number of its properties. For certain of its
on-net and off-net buildings, the Company has the exclusive right to manage
communications access. Once a customer has entered into an agreement with the
Company for access services, FiberNet typically requires that customer to
utilize its in-building network infrastructure for connectivity to end-user
tenants, if such networking infrastructure is available.

         As of March 31, 2001 the Company had four reciprocal agreements. The
services provided and obtained through these agreements were priced at fair
market value as of the date of the agreements and are included in revenues and
cost of services in the accompanying consolidated statements of operations. The
Company recorded revenues for transport services and colocation services of
approximately $1.2 million for the three months ended March 31, 2001 from these
reciprocal agreements. The Company leased colocation facilities under these
agreements, and the total amounts expensed for services rendered under the
reciprocal agreements for the three months ended March 31, 2001, were
approximately $1.2 million. The company did not have any reciprocal agreements
in the first quarter of 2000.

         In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin 101 ("SAB 101"), which addresses accounting policies
to be applied in the recognition, presentation and disclosure of revenues from
contract partnerships, in financial statements filed with the SEC. The net
effect of SAB 101, when applicable, could defer revenue recognition for certain
payments previously received into future accounting periods. On June 26, 2000,
the SEC deferred the implementation of SAB 101 from the second calendar quarter
of 2000 until no later than the fourth calendar quarter of 2000, to provide
companies with additional time to determine the effect that a change in
accounting policy under SAB 101 has on their revenue recognition practices. The
implementation of SAB 101 requires companies to report any changes in accounting
principle at the time of implementation in accordance with Accounting Principles
Board Opinion No. 20, "Accounting Changes". The Company's financial statements
reflect the accounting guidance in SAB 101 for all periods presented.

Fair Value of Financial Instruments

         The Company estimates that the carrying value of its financial
instruments approximates fair value.

Goodwill and Intangibles

         Cost in excess of net assets of acquired businesses, principally
goodwill, is amortized on the straight-line method over 15 years. Other
intangible assets include the cost to access buildings and deferred financing
costs.

         Costs to access buildings are amortized over 15 years, which represents
the term of the related contracts. Deferred financing costs are amortized over
the term of the associated debt obligation.

Earnings Per Share

         Basic earnings per share have been computed using the weighted average
number of shares during the period. Diluted earnings per share are computed by
including the dilutive effect on common stock that would be issued assuming
conversion of stock options, warrants and other dilutive securities. Dilutive
options, warrants and other securities did not have an effect on the computation
of diluted earnings per share in 2001 and 2000, as they were anti-dilutive.

Concentration of Credit Risk

         The Company has some concentration of credit risk among its customer
base. The Company performs ongoing credit evaluations of the financial condition
of its customers. As of March 31, 2001, two customers in the aggregate accounted
for 20.7% of the Company's total accounts receivable. For the three months ended
March 31, 2001, two customers in the aggregate accounted for 50.7% of the
Company's total revenues. The Company recorded an allowance for doubtful
accounts of $1.3 million as of March 31, 2001.

Stock Option Plan

         The Company accounts for stock option grants in accordance with
Accounting Principles Board Opinion No. 25,

                                       16

<PAGE>

"Accounting for Stock Issued to Employees" ("APB 25"), and, accordingly,
recognizes expense for stock option grants to the extent that the estimated fair
value of the stock exceeds the exercise price of the option at the measurement
date. Stock option grants to non-employees are accounted in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation". The compensation expense is charged against
operations ratably over the vesting period of the options.

Accounting for Income Taxes

     The Company follows Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS 109"), which requires the use of the
liability method of accounting for deferred income taxes. Under this method,
deferred income taxes represent the net tax effect of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amount used for income tax purposes. Additionally, if it is
more likely than not that some portion or all of a deferred tax asset will not
be realized, a valuation allowance is required to be recognized.

Reclassifications

     Certain balances have been reclassified in the consolidated financial
statements to conform to current presentation.

Segment Reporting

     The Company is a single segment operating company providing
telecommunications services.

Recent Accounting Pronouncements

     In June 1999, the Financial Accounting Standards Board ("FASB") issued SFAS
137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Statement No. 133", which deferred SFAS 133's
effective date to January 2001. SFAS 133 establishes new standards of accounting
and reporting for derivatives instruments and hedging activities and requires
that all derivatives be recognized on the balance sheet at fair value. Changes
in the fair value of derivatives that do not meet the hedge accounting criteria
are to be reported in earnings. The adoption of SFAS 133 did not have a material
impact on the Company's consolidated financial statements, as the Company has
not entered into any derivative instrument contracts.

     The accompanying financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in FiberNet's
annual report on Form 10-K for the fiscal year ended December 31, 2000.

3.  PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment consist of the following (dollars in
thousands):

                                                    March 31,   December 31,
                                                       2001         2000
                                                    ---------    ---------
Computer software ..............................    $   3,402    $   2,963
Computer equipment .............................        2,863        1,926
Leasehold improvements .........................        1,279        1,111
Office equipment and furniture .................          928          810
Construction in progress .......................       56,118       52,876
Network equipment and infrastructure ...........       84,424       71,322
                                                    ---------    ---------
                                                      149,014      131,008
Accumulated depreciation .......................       (6,615)      (4,894)
                                                    ---------    ---------
Property, plant and equipment, net .............    $ 142,399    $ 126,114
                                                    =========    =========



4. SIGNIFICANT EVENTS


                                       17

<PAGE>

     On February 2, 2001, FiberNet completed a $28.2 million direct public
offering of its common stock. FiberNet issued 6,440,000 shares of common stock
at $4.375 per share as well as warrants to purchase an additional 1,288,000
shares at an exercise price of $6.56 per share. The Company may redeem the
warrants when the stock trades at $11.48 or above for 20 consecutive trading
days.

     On February 9, 2001, FiberNet increased its existing credit facility from
$75 million to $105 million. In connection with this amended credit facility,
the Company issued warrants to purchase an additional 454,409 shares of its
common stock at an exercise price of $8.00 per share. In addition, as part of
the amendment of its credit facility, all warrants issued under the original
credit agreement were replaced with new warrants to purchase an equivalent
amount of its common stock at an exercise price of $8.00 per share. The Company
incurred an extraordinary loss from the early extinguishment of debt of $7.4
million, or $0.20 per share, as a result of the modification of the credit
facility.

     In February 2001, the conversion price of the Series H and Series I was
reduced to $4.38, in accordance with the original terms of the issuance
transactions. The certificates of designation of the Series H and Series I
include provisions requiring the conversion prices to be lowered to the per
share price at which the Company issues any shares of common stock, subject to
certain exceptions, subsequent to the initial issuance of the Series H and
Series I. In February 2001, the Company issued shares of common stock in a
directed public offering at a price of $4.38 per share, resulting in the
reduction of the conversion price. The Company recorded a beneficial conversion
charge of $21.0 million as a result of the reduction of the conversion price.
The amounts of the charge assume the market price per share of the underlying
common stock, as of the date the charge is incurred, in accordance with EITF
Issue 98-05, "Accounting for Convertible Securities with Beneficial Conversion
Features or Contingently Adjustable Conversion Ratio."

5. RESTATEMENT

     The Company restated its consolidated financial statements for the quarter
ended March 31, 2001 to record a beneficial conversion feature of $21.0 million
in connection with the reduction of the conversion price on Series H and I
preferred stock on February 9, 2001, as discussed in Note 4. Other than with
respect to the consolidated financial statements for the quarter ended March 31,
2001, this restatement has no impact the Company's assets or total stockholders'
equity, and it resulted in an increase in additional paid-in-capital and an
increase in net loss. The change increased net loss by $21.0 million and
increased net loss applicable to common stockholders per share by $0.56. The
change has no impact on the Company's cash flows. This change was previously
reflected in the Company's annual report on Form 10-K for the fiscal year ended
December 31, 2001, as amended.


                                       18