10-Q

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

FORM 10-Q

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended March 31, 2002
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-31227

COGENT COMMUNICATIONS GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State of Incorporation) 52-2337274
(I.R.S. Employer
Identification Number)

1015 31^st Street N.W.
Washington, D.C. 20007
(Address of Principal Executive Offices and Zip Code)

(202) 295-4200
(Registrant's Telephone Number, Including Area Code)

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

        Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

        Common Stock, $.001 par value, 3,419,634 Shares Outstanding as of May 7, 2002

INDEX

		Page No.
PART I
FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets of Cogent Communications Group, Inc., and Subsidiaries as of December 31, 2001 and March 31, 2002	1
	Consolidated Statements of Operations of Cogent Communications Group, Inc., and Subsidiaries for the Three Months Ended March 31, 2001 and March 31, 2002	1
	Consolidated Statements of Cash Flows of Cogent Communications Group, Inc., and Subsidiaries for the Three Months Ended March 31, 2001 and March 31, 2002	1
	Notes to Consolidated Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1
PART II OTHER INFORMATION
Item 1.	Legal Proceedings	1
Item 2.	Changes in Securities and Use of Proceeds	1
Item 3.	Defaults Upon Senior Securities	1
Item 4.	Submission of Matters to a Vote of Security Holders	1
Item 5.	Other Information	1
Item 6.	Exhibits and Reports on Form 8-K	1
SIGNATURES		1

COGENT COMMUNICATIONS GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2001 AND MARCH 31, 2002
(IN THOUSANDS, EXCEPT SHARE DATA)

		December 31, 2001			March 31, 2002 (Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	49,017		$	98,109
Short term investments			1,746			3,959
Prepaid expenses and other current assets			2,171			6,145
Accounts receivable, net of allowance for doubtful accounts of $112, and $230, respectively			1,156			2,178
Total current assets			54,090			110,391
Property and equipment:
	Property and equipment		249,057			271,190
	Accumulated depreciation and amortization		(13,275	)		(19,569	)
Total property and equipment, net			235,782			251,621
Intangible assets:
	Intangible assets		11,740			11,740
	Accumulated amortization		(1,304	)		(2,283	)
Total intangible assets, net			10,436			9,457
Other assets			19,461			22,713
Total assets		$	319,769		$	394,182
Liabilities and stockholders' equity
Current liabilities:
Accounts payable		$	3,623		$	4,506
Accrued liabilities			3,462			25,030
Current maturities, capital lease obligations			426			2,398
Total current liabilities			7,511			31,934
Cisco credit facility			181,312			191,919
Convertible subordinated notes, net of discount of $82,986			—			33,994
Capital lease obligations, net of current			20,732			31,267
Other long-term liabilities			—			1,150
Total liabilities			209,555			290,264
Commitments and contingencies:
Stockholders' equity:
Convertible preferred stock, Series A, $0.001 par value; 26,000,000 shares authorized, issued, and outstanding; liquidation preference of $29,640			25,892			25,892
Convertible preferred stock, Series B, $0.001 par value; 20,000,000 shares authorized; 19,809,783 shares issued and outstanding; liquidation preference of $99,787			90,009			90,009
Convertible preferred stock, Series C, $0.001 par value; 52,173,463 shares authorized; 49,773,402 shares issued and outstanding; liquidation preference of $100,000			61,345			61,345
Common stock, $0.001 par value; 21,100,000 shares authorized; 1,409,814 and 3,419,492 shares issued and outstanding, respectively			1			4
Additional paid-in capital			38,724			48,432
Deferred compensation			(11,081	)		(9,892	)
Stock purchase warrants			8,248			9,013
Accumulated other comprehensive income (loss)			—			(2	)
Accumulated deficit			(102,924	)		(120,883	)
Total stockholders' equity			110,214			103,918
Total liabilities and stockholders' equity		$	319,769		$	394,182

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

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COGENT COMMUNICATIONS GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2002
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

		Three Months Ended March 31, 2001 (Unaudited)			Three Months Ended March 31, 2002 (Unaudited)
Service revenue		$	—		$	3,542
Operating expenses:
Network operations (including $60 of amortization of deferred compensation in 2002)			4,699			6,908
Selling, general, and administrative (including $637 of amortization of deferred compensation in 2002)			7,322			6,641
Depreciation and amortization			954			6,677
Total operating expenses			12,975			20,226
Operating loss			(12,975	)		(16,684	)
Interest income and other			900			1,257
Interest expense			(719	)		(7,060	)
Loss before extraordinary item		$	(12,794	)	$	(22,487	)
Extraordinary gain — Allied Riser merger			—			4,528
Net loss applicable to common stock		$	(12,794	)	$	(17,959	)
Net loss per common share:
	Loss before extraordinary item	$	(9.12	)	$	(8.52	)
	Extraordinary gain		—			1.72
Basic and diluted net loss per common share		$	(9.12	)	$	(6.81	)
Weighted-average common shares (basic and diluted)			1,402,798			2,637,951

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

2

COGENT COMMUNICATIONS GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2002
(IN THOUSANDS)

		Three Months Ended March 31, 2001 (Unaudited)			Three Months Ended March 31, 2002 (Unaudited)
Cash flows from operating activities:
Net loss		$	(12,794	)	$	(17,959	)
Adjustments to reconcile net loss to net cash used in operating activities —
Extraordinary gain — Allied Riser merger			—			(4,528	)
Depreciation and amortization, including debt costs			954			7,495
Amortization of debt discount — convertible notes			—			1,240
Amortization of deferred compensation			—			697
Changes in assets and liabilities:
Accounts receivable			—			(456	)
Prepaid expenses and other current assets			1,827			678
Other assets			(1,009	)		(788	)
Accounts payable, accrued and other liabilities			3,476			3,924
Net cash used in operating activities			(7,546	)		(9,697	)
Cash flows from investing activities:
Purchases of property and equipment			(19,202	)		(13,572	)
Purchases of short term investments			—			(2,213	)
Deposit — PSINet acquisition			—			(3,000	)
Acquired cash and cash equivalents — Allied Riser merger			—			70,431
Net cash (used in) provided by investing activities			(19,202	)		51,646
Cash flows from financing activities:
Borrowings under Cisco credit facility			7,416			7,699
Proceeds from option exercises			3			—
Repayment of capital lease obligations			—			(554	)
Net cash provided by financing activities			7,419			7,145
Effect of exchange rate changes on cash			—			(2	)
Net increase (decrease) in cash and cash equivalents			(19,329	)		49,092
Cash and cash equivalents, beginning of period			65,593			49,017
Cash and cash equivalents, end of period		$	46,264		$	98,109
Supplemental disclosures of cash flow information:
Cash paid for interest		$	1,791		$	973
Cash paid for income taxes			—			—
Non-cash financing activities —
	Capital lease obligations incurred		2,246			8,898
	Borrowing under credit facility for payment of loan costs and interest		—			2,908
Allied Riser Merger
Fair value of assets acquired					$	74,535
Less: valuation of common stock, options & warrants issued						(10,967	)
Less: extraordinary gain						(4,528	)
Fair value of liabilities assumed					$	59,040

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

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COGENT COMMUNICATIONS GROUP, INC., AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001, and 2002

1.    Organization:

Description of business and acquisitions

        Cogent Communications, Inc. ("Cogent") was formed on August 9, 1999, as a Delaware corporation and is located in Washington, D.C. Cogent is a facilities-based Internet Services Provider ("ISP"), providing Internet access to multi-tenanted office buildings in approximately 20 major metropolitan areas in the United States and in Toronto, Canada. In 2001, Cogent formed Cogent Communications Group, Inc., (the "Company"), a Delaware corporation. Effective on March 14, 2001, Cogent's stockholders exchanged all of their outstanding common and preferred shares for an equal number of shares of the Company, and Cogent became a wholly owned subsidiary of the Company. The common and preferred shares of the Company include rights and privileges identical to the common and preferred shares of Cogent. This was a tax-free exchange that was accounted for by the Company at Cogent's historical cost. All of Cogent's options for shares of common stock were also converted to options of the Company.

        The Company's high-speed Internet access service is delivered to the Company's customers over a nationwide fiber-optic network. The Company's network is dedicated solely to Internet Protocol data traffic. The Company's network includes 30-year indefeasible rights of use ("IRU's") to a nationwide fiber-optic intercity network of approximately 12,500 route miles (25,000 fiber miles) of dark fiber from Williams Communications Group, Inc. These IRU's are configured in two rings that connect many of the major metropolitan markets in the United States. In order to extend the Company's national backbone into local markets, the Company has entered into leased fiber agreements for intra-city dark fiber from several providers. These agreements are primarily under 15-25 year IRU's.

Merger Agreement—Allied Riser Communications Corporation

        On August 28, 2001, the Company entered into an agreement to merge with Allied Riser Communications Corporation ("Allied Riser"). Allied Riser is a facilities-based provider of broadband data and video communication services to small- and medium-sized businesses located in selected buildings in North America, including Canada. Upon the closing of the merger on February 4, 2002, Cogent issued approximately 2.0 million shares, or 13.4% of its common stock, on a fully diluted basis, to the existing Allied Riser stockholders and became a public company listed on the American Stock Exchange. The acquisition of Allied Riser is expected to provide the Company with necessary in-building networks as well as pre-negotiated building access rights with building owners and real estate investment trusts across the United States and in Toronto Canada. The acquisition is expected to enable the Company to accelerate its business plan and increase its footprint in the markets it serves.

NetRail Inc.

        On September 6, 2001, the Company paid approximately $12.0 million for certain assets of NetRail, Inc, ("NetRail") a Tier-1 Internet service provider, in a sale conducted under Chapter 11 of the United States Bankruptcy Code. The purchased assets included certain customer contracts and the related accounts receivable, network equipment, and settlement-free peering arrangements with other Tier-1 Internet service providers.

Asset Purchase Agreement—PSINet, Inc.

        In January 2002, the Company entered into a due diligence agreement with PSINet, Inc. ("PSINet"). This agreement allowed the Company to undertake due diligence related to certain of

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PSINet's network operations in the United States. The Company paid a $3.0 million fee in January 2002 to PSINet in connection with this arrangement recorded as other assets in the accompanying March 31, 2002 balance sheet. In February 2002, the Company and PSINet entered into an Asset Purchase Agreement ("APA"). Pursuant to the APA, approved on March 27, 2002 by the bankruptcy court overseeing the PSINet bankruptcy, the Company acquired certain of PSINet's assets and certain liabilities related to its operations in the United States for a total of $10.0 million. The acquisition closed on April 2, 2002. The $3.0 million payment under the due diligence agreement was applied toward this amount resulting in a $7.0 million payment at closing. The acquired assets include certain of PSINet's customer contracts, accounts receivable, rights to 10,000 route miles pursuant to indefeasible rights of use, telecommunications and computer equipment, three web hosting data centers, and certain intangibles, including settlement-free peering rights and the PSINet trade name. Assumed liabilities include certain leased circuit commitments and collocation arrangements. This acquisition added a new element to the Company's operations in that in addition to the Company's current high-speed Internet access business, the Company will begin operating a more traditional Internet service provider business, with lower speed connections provided by leased circuits obtained from telecommunications carriers (primarily local telephone companies).

        The Company expects the PSINet acquisition to enable the Company to immediately incorporate a revenue stream from a set of products that the Company believes complement its core offering of 100 Mbps Internet connectivity for $1,000 per month. The Company plans to support and build on the PSINet brand name which, the Company believes, is one of the most recognizable ISPs in the country. Under the PSINet label, Cogent will continue offering PSINet services, including Internet connectivity.

Basis of presentation

        The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments that the Company considers necessary for the fair presentation of the results of operations and cash flows for the interim periods covered, and of the financial position of the Company at the date of the interim consolidated balance sheet. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. While, the Company believes that the disclosures made are adequate to not make the information misleading, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes in the Company's Annual Report on Form 10-K.

        The accompanying unaudited consolidated financial statements include all wholly owned subsidiaries and a 68% owned subsidiary, Shared Technologies of Canada ("STOC"). STOC is owned by the Company's wholly owned subsidiary, ARC Canada. All inter-company accounts and activity have been eliminated. In March 2002, the shareholders representing the minority interest of STOC notified the Company that they had elected to exercise their rights to put their shares to the Company as provided under their shareholders agreements. The Company paid approximately $3.5 million in April 2002 to purchase these minority interests. This $3.5 million acquired liability is reflected as an accrued liability in the accompanying March 31, 2002 balance sheet.

        The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

5

Business risk, and liquidity

        The Company operates in the rapidly evolving Internet services industry, which is subject to intense competition and rapid technological change, among other factors. The successful execution of the Company's business plan is dependent upon the availability of and access to intra-city dark fiber and multi-tenant office buildings, the availability and performance of the Company's network equipment, the availability of additional capital, the ability to meet the financial and operating covenants under its credit facility, the Company's ability to integrate acquired businesses and purchased assets into its operations and realize planned synergies, the extent to which acquired businesses and assets are able to meet the Company's expectations and projections, the Company's ability to successfully market its products and services, the Company's ability to retain and attract key employees, and the Company's ability to manage its growth, among other factors. Although management believes that the Company will successfully mitigate these risks, management cannot give assurances that it will be able to do so or that the Company will ever operate profitably.

        One of the Company's suppliers of metropolitan fiber optic facilities, Metromedia Fiber Networks (MFN), has announced that it may file for bankruptcy. This could impact the Company's operations by decreasing our ability to add new metropolitan fiber rings from MFN and the Company's ability to add new buildings to existing MFN rings. However, as the Company has other providers of metropolitan fiber optic facilities the Company does not anticipate a significant impact from this event.

        On April 22, 2002 Williams Communications Group, Inc. filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. Williams Communications LLC, a wholly owned subsidiary of Williams Communications Group, has provided the Company with its national backbone fiber rings and provides maintenance services to the Company. Williams Communications LLC did not file a bankruptcy petition and Williams Communications Group has stated that the bankruptcy filing is part of a negotiated plan to restructure its debt. The Company does not expect the Williams bankruptcy filing to impact it as Williams has completed delivery of the Company's national fiber backbone and the Company believes that Williams will be able to continue to provide maintenance services.

        MFN's and Williams' financial difficulties are characteristic of the telecommunications industry today. The Company's solution for metropolitan networks is to have a large number of providers and to develop the ability to construct its own fiber optic connections to the buildings the Company serves.

        The Company has obtained $178 million in venture-backed funding through the issuance of preferred stock. The Company has secured a $409 million credit facility (the "Facility") from Cisco Systems Capital Corporation ("Cisco Capital"). In connection with the Allied Riser merger, the Company acquired $70.4 million of cash and cash equivalents and assumed the obligations of Allied Riser including its convertible subordinated notes due in June 2007 totaling $117.0 million. Substantial time may pass before significant revenues are realized, and additional funds may be required to implement the Company's business plan. However, management expects that the proceeds from the issuance of preferred stock, the availability under the Facility (subject to continued covenant compliance) and the funds acquired in the Allied Riser merger, will be sufficient to fund the Company's current business plan through fiscal 2002.

Financial instruments

        The Company is party to letters of credit totaling $4.6 million as of March 31, 2002. These letters of credit are secured by a certificate of deposit and commercial paper investments that are restricted and included in short-term investments and deposits and other assets. No claims have been made against these financial instruments. Management does not expect any losses from the resolution of these financial instruments and is of the opinion that the fair value is zero since performance is not likely to be required.

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        At March 31, 2001 and 2002, the carrying amount of cash and cash equivalents, short-term investments, accounts receivable, accounts payable, and accrued expenses approximated fair value because of the short maturity of these instruments. The interest rate on the Company's credit facility resets on a quarterly basis; accordingly, as of March 31, 2001 and 2002, the fair value of the Company's credit facility approximated its carrying amount. The Allied Riser convertible subordinated notes due in June 2007 have a face value of $117.0 million. The notes were recorded at their fair value of approximately $32.7 million at the merger date. The fair value of the notes at March 31, 2002, was approximately $31.5 million.

Reclassifications

        Certain amounts in the December 31, 2001 financial statements have been reclassified in order to conform to the 2002 financial statement presentation.

Comprehensive Income

        Statement of Financial Accounting Standard ("SFAS") No. 130, "Reporting of Comprehensive Income" requires "comprehensive income" and the components of "other comprehensive income" to be reported in the financial statements and/or notes thereto. Since the Company does not have any significant components of "other comprehensive income", reported net loss is the same as "comprehensive loss" for the periods presented.

Foreign Currency

        The functional currency of ARC Canada is the Canadian dollar. The financial statements of ARC Canada, and its subsidiary, STOC, are translated into U.S. dollars using the period-end rates of exchange for assets and liabilities and average rates of exchange for revenues and expenses. Gains and losses on translation of the accounts of the Company's non-U.S. operations are accumulated and reported as a component of other comprehensive income in stockholders equity.

Basic and Diluted Net Loss Per Common Share

        Net income (loss) per share is presented in accordance with the provisions of SFAS No. 128 "Earnings per Share". SFAS No. 128 requires a presentation of basic EPS and diluted EPS. Basic EPS excludes dilution for common stock equivalents and is computed by dividing income or loss available to common stockholders by the weighted-average number of common shares outstanding for the period, adjusted, using the if-converted method, for the effect of common stock equivalents arising from the assumed conversion of participating convertible securities, if dilutive. Diluted net loss per common share is based on the weighted-average number of shares of common stock outstanding during each period, adjusted for the effect of common stock equivalents arising from the assumed exercise of stock options, warrants, the conversion of preferred stock, conversion of participating convertible securities, if dilutive. Common stock equivalents have been excluded from the net loss per share calculation because their effect would be anti-dilutive.

        For the three months ended March 31, 2001 and March 31, 2002, options to purchase 640,307 and 1,137,482 shares of common stock at weighted-average exercise prices of $10.43 and $5.09 per share, respectively, are not included in the computation of diluted earnings per share as they are anti-dilutive. For the three months ended March 31, 2001 and March 31, 2002, 45,809,783, and 95,583,185 shares of preferred stock, which were convertible into 4,580,978 and 10,148,309 shares of common stock, were not included in the computation of diluted earnings per share as a result of their anti-dilutive effect. For the three months ended March 31, 2001 and March 31, 2002, warrants for 222,750 and 854,941 shares of common stock, were not included in the computation of diluted earnings per share as a result of their anti-dilutive effect. For the three months ended March 31, 2002, 94,164 weighted average

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shares of common stock issuable on the conversion of the Allied Riser convertible subordinated notes, were not included in the computation of diluted earnings per share as a result of their anti-dilutive effect.

International Operations

        The Company began recognizing revenue from operations in Canada through its wholly owned subsidiary, ARC Canada effective with the closing of the Allied Riser merger on February 4, 2002. All revenue is reported in United States dollars. Revenue for ARC Canada for the period from February 4, 2002 to March 31, 2002 was approximately $814,000.

2.    Pro Forma Amounts

        The acquisition of the assets of NetRail, Inc. and the merger with Allied riser were recorded in the accompanying financial statements under the purchase method of accounting. The NetRail purchase price was primarily allocated to the settlement-free peering agreements, which had an estimated fair value of approximately $11.0 million. These contracts are being amortized over their average estimated contractual life of 3 years. The remainder of the purchase price was allocated to other current and non-current assets. The purchase price of Allied Riser was approximately $12.5 million and included the issuance of 13.4% of the Company's common stock, or approximately 2.0 million shares of common stock, valued at approximately $10.2 million, the issuance of warrants and options for the Company's common stock valued at approximately $814,000 and transaction expenses of approximately $1.6 million. The fair value of net assets acquired was approximately $48.6 million resulting in negative goodwill of approximately $36.0 million. Negative goodwill was allocated to long-lived assets of approximately $31.5 million with the remaining $4.5 million recorded as an extraordinary gain.

        The purchase prices are preliminary and further refinements may be made. The operating results related to the acquired assets of NetRail, Inc. and the merger with Allied Riser have been included in the consolidated statements of operations from the dates of acquisition. The NetRail acquisition closed in September 2001. The Allied Riser merger closed on February 4, 2002.

        If the Allied Riser and NetRail acquisitions had taken place at the beginning of 2001 and 2002 the unaudited pro forma combined results of the Company for the three months ended March 31, 2001 and 2002 would have been as follows (amounts in thousands, except per share amounts).

	Three Months Ended March 31, 2001			Three Months Ended March 31, 2002
Revenue	$	8,251		$	3,932
Net loss applicable to common stock		(49,622	)		(30,567	)
Net loss per share — basic and diluted	$	(14.13	)	$	(8.84	)

        In management's opinion, these unaudited pro forma amounts are not necessarily indicative of what the actual results of the combined results of operations might have been if the NetRail, and Allied Riser acquisitions had been effective at the beginning of 2001 and 2002.

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3.    Property and equipment:

        Property and equipment consisted of the following (in thousands):

		March 31, 2002
Owned assets:
	Network equipment	$	135,259
	Software		4,781
	Office and other equipment		2,285
	Leasehold improvements		18,365
	System infrastructure		23,663
	Construction in progress		5,369
			189,722
Less — Accumulated depreciation and amortization			(16,565	)
			173,157
Assets under capital leases:
	IRUs		81,468
Less — Accumulated depreciation and amortization			(3,004	)
			78,464
Property and equipment, net		$	251,621

Capitalized interest

        For the three months ended March 31, 2001 and 2002, the Company capitalized interest of $1,733,000 and $224,000, respectively.

4.    Accrued Liabilities:

        Accrued liabilities consist of the following (in thousands):

	March 31, 2002
General operating expenditures	$	17,597
Payroll and benefits		1,054
Taxes		173
Interest		2,415
Deferred revenue		557
STOC minority shareholder put liability		3,234
Total	$	25,030

5.    Intangible Assets:

        Intangible assets consist of the following (in thousands):

	March 31, 2002
Peering arrangements	$	11,036
Customer contracts		704
Total		11,740
Less — accumulated amortization		(2,283	)
Intangible assets, net	$	9,457

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        Intangible assets are being amortized over 36 months. Amortization expense for the three months ended March 31, 2002 was approximately $978,000. Future amortization expense related to intangible assets is $3.9 million, $3.9 million and $1.6 million for the twelve-month periods ending March 31, 2003, 2004 and 2005, respectively.

6.    Other assets:

        Other assets consist of the following (in thousands):

	March 31, 2002
Prepaid expenses	$	709
Deposits		4,119
PSINet acquisition deposit		3,000
Deferred financing costs		14,885
Total	$	22,713

7.    Long-term debt:

        In March 2000, Cogent entered into a $280 million credit facility with Cisco Capital. In March 2001, the credit facility was increased to $310 million. In October 2001, Cogent entered into a new agreement for $409 million (the "Facility"). This credit facility replaced the existing $310 million credit facility between Cisco Capital and Cogent. The October 2001 agreement is available to finance the purchases of Cisco network equipment, software and related services, to fund working capital, and to fund interest and fees related to the Facility. On January 31, 2002, the Facility was amended to modify certain covenants in connection with the Company's merger with Allied Riser. On April 17, 2002, the Facility was again amended to modify certain covenants in connection with the Company's acquisition of certain assets of PSINet.

        Borrowings may be prepaid at any time without penalty and are subject to mandatory prepayment based upon excess cash flow or upon the receipt of a specified amount from the sale of the Company's securities, each as defined. Principal payments begin in March 2005. Borrowings accrue interest at the three-month LIBOR rate, established at the beginning of each calendar quarter, plus a stated margin. The margin is dependent upon the Company's leverage ratio, as defined, and may be reduced. Interest payments are deferred and begin in March 2006. The weighted-average interest rate on all borrowings for the three months ending March 31, 2001 and 2002 was approximately 10.9% and 6.6%, respectively. Borrowings are secured by a pledge of all of Cogent's assets and common stock. The Facility includes restrictions on Cogent's ability to transfer assets to the Company, except for certain operating liabilities. The Company has guaranteed Cogent's obligations under the Facility.

        Borrowings under the Facility are available in increments subject to Cogent's satisfaction of certain operational and financial covenants over time. Up to $40 million is available for additional equipment loans through September 30, 2002, of which $9.0 million was borrowed as of March 31, 2002. An additional $85 million of equipment loans becomes available on October 1, 2002. Up to $20 million is available to fund interest and fees related to the Facility through September 30, 2002 of which $9.3 million was borrowed as of March 31, 2002. An additional $55 million for funding interest and fees related to the Facility becomes available on October 1, 2002. An additional $35 million in working capital loans becomes available on October 1, 2002. The aggregate balance of working capital loans is limited to 35 percent of outstanding equipment loans. Additional borrowings under the Facility for the purchase of products and working capital are available until December 31, 2004. Additional borrowings under the Facility for the funding of interest and fees are available until December 31, 2005. The Facility matures on December 31, 2008.

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        At March 31, 2002, there were $153.6 million of equipment loans, $29.0 million of working capital loans and $9.3 million of interest and fee loans outstanding.

        Maturities of borrowings under the Facility are as follows (in thousands):

For the twelve months ending March 31,
2003	$	—
2004		—
2005		750
2006		18,243
2007		63,973
Thereafter		108,953
	$	191,919

Allied Riser Convertible Subordinated Notes

        On June 28, 2000, Allied Riser completed the issuance and sale in a private placement of an aggregate of $150.0 million in principal amount of its 7.50% convertible subordinated notes due June 15, 2007 (the "Notes"). At the closing of the merger between Allied Riser and the Company approximately $117.0 million of the Notes were outstanding. The Notes were convertible at the option of the holders into shares of Allied Riser's common stock at an initial conversion price of approximately 65.06 shares of Allied Riser common stock per $1,000 principal amount. The conversion ratio is adjusted upon the occurrence of certain events. The conversion rate was adjusted to approximately 2.09 shares of the Company's common stock in connection with the merger. Interest is payable semiannually on June 15 and December 15, and is payable, at the election of the Company, in either cash or registered shares of the Company's common stock. The Notes are redeemable at the Company's option at any time on or after the third business day after June 15, 2004, at specified redemption prices plus accrued interest.

        The indenture related to the Notes (the "Indenture") includes a provision requiring the repurchase of the Notes at the option of the holders upon a change in control as defined in the Indenture. Management does not believe that the merger, as set forth in the Agreement and Plan of Merger dated August 28, 2001, as amended, represented a change in control as defined in the Indenture.

        Maturities of the Notes are as follows (in thousands):

For the twelve months ending March 31,
2003	$	—
2004		—
2005		—
2006		—
2007		—
Thereafter		116,980
	$	116,980

8.    Commitments and contingencies:

Capital leases

        The Company has entered into lease agreements with several providers for intra-city and inter—city dark fiber primarily under 15-25 year IRU's. These IRU's connect the Company's national backbone fiber with the multi-tenant office buildings and the customers served by the Company. Once

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the Company has accepted the related fiber route, leases of intra-city and inter-city fiber-optic rings that meet the criteria for treatment as capital leases are recorded as a capital lease obligation and IRU asset. The Company acquired certain capital lease agreements related to equipment purchases in connection with the Allied Riser merger. The future minimum commitments under these agreements are as follows (in thousands):

For the twelve months ending March 31,
2003	$	4,831
2004		4,803
2005		3,903
2006		3,269
2007		3,204
Thereafter		45,758
Total minimum lease obligations		65,768
Less — amounts representing interest		(32,103	)
Present value of minimum lease obligations		33,665
Current maturities		2,398
Capital lease obligations, net of current maturities	$	31,267

Metromedia Fiber Networks ("MFN")

        In February 2000, the Company entered into an agreement with MFN to lease fiber-optic cable for its intra-city fiber-optic rings and to provide the Company access to provide its service to certain multi-tenant office buildings. Each product order includes a lease of an intra-city fiber-optic ring for a period of up to 25 years and access to certain specified buildings in exchange for monthly payments. The agreement provides for a minimum commitment of 2,500 leased fiber miles and 500 connected buildings within five years from the effective date and penalties for early termination. Under the agreement, MFN also provides installation, maintenance, restoration, and network monitoring services. Each lease of an intra-city fiber-optic ring is treated as a capital lease and recorded once the Company has accepted the related fiber route.

Other Fiber Leases and Construction Commitments

        The Company has agreements with several fiber providers for the construction of laterals to connect office buildings to metro fiber rings and for the leasing of these metro fiber rings and the lateral fiber. These leases are generally for a period of 15-20 years and include renewal periods. The future commitments under these arrangements was approximately $61.5 million at March 31, 2002.

Equipment purchase commitment

        In March 2000, the Company entered into a five-year agreement to purchase from Cisco, minimum annual amounts of equipment, professional services, and software. In June 2000, the agreement was amended to increase the Company's previous commitment to purchase $150.1 million over four years to $212.2 million over five years. In October 2001, the commitment was increased to purchase $270 million until December 2004. As of March 31, 2002, the Company has purchased approximately $154 million towards this commitment.

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Litigation

Trademark

        In October 2000, the Company was notified that the use of the trade name Cogent Communications may conflict with pre-existing trademark rights. Management believes that this issue will be resolved without a material effect on the Company's financial position or results of operations.

Vendor Claims

        On July 26, 2001, in a case titled Hewlett-Packard Company v. Allied Riser Operations Corporation a/k/a Allied Riser Communications, Inc., Hewlett-Packard Company filed a complaint against a subsidiary of Allied Riser, Allied Riser Operations Corporation, in the 95th Judicial District Court, Dallas County, Texas, seeking damages of $18.8 million, attorneys' fees, interest, and punitive damages relating to various types of equipment allegedly ordered from Hewlett-Packard Company by Allied Riser Operations Corporation. Management believes that this suit is without merit and Allied Riser has filed its answer generally denying Hewlett-Packard's claims. The Company intends to continue to vigorously contest this lawsuit.

        On January 16, 2002, Allied Riser received a letter from Hewlett-Packard Company alleging that certain unspecified contracts are in arrears, and demanding payment in the amount of $10.0 million. The letter does not discuss the basis for the claims or whether the funds sought are different from or in addition to the funds sought in the July 26, 2001 lawsuit. Allied Riser, through its legal counsel, has made an inquiry of Hewlett-Packard's counsel to determine the basis for the claims in the letter. Management believes this claim is without merit and intends to vigorously contest this claim.

        One of the Company's subsidiaries, Allied Riser Operations Corporation, is involved in a dispute with its former landlord in Dallas, Texas. Allied Riser terminated the lease in March 2002 and the dispute is over whether it had the right to do so.    The landlord has alleged that a default under the lease has occurred. Allied Riser Operations Corporation has informed the landlord that the lease was terminated as provided by its terms.

Note Holders

        The three matters discussed below are, management believes, related to an effort by a group of bondholders to pressure the Company into buying back the notes they hold. The bondholders involved are a group of hedge funds that own (we believe) more than 40% of the 7.50% convertible subordinated notes due 2007 that were issued by Allied Riser Communications Corporation in June 2000. Allied Riser is now a subsidiary of the Company and the Company has become a co-obligor on the bonds. Beginning in August 2001 these hedge funds have attempted to force the repurchase of the notes they hold.

        On December 12, 2001, Allied Riser announced that certain holders of its 7.50% convertible subordinated notes due 2007 filed notices as a group with the Securities and Exchange Commission (SEC) on Schedule 13D including copies of documents indicating that such group had filed suit in Delaware Chancery Court on December 6, 2001 against Allied Riser and its board of directors. The suit alleges, among other things, breaches of fiduciary duties and default by Allied Riser under the indenture related to the notes, and requested injunctive relief to prohibit Allied Riser's merger with the Company. The plaintiffs amended their complaint on January 11, 2002 and subsequently served it on Allied Riser. On January 28, 2002, the Court held a hearing on a motion by the plaintiffs to preliminarily enjoin the merger. On January 31, 2002, the Court issued a Memorandum Opinion denying that motion. Since then the plaintiffs have taken no action to prosecute this suit. On April 6, 2002 the Company filed a motion with the court that, management

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believes, will expeditiously bring this suit to a conclusion. Management believes that the suit is without merit, and intends to continue to vigorously contest it.

        On February 21, 2002, the Division of Enforcement of the SEC requested that the Company voluntarily provide it certain documents related to the fairness opinion delivered to the Allied Riser board of directors by Allied Riser's financial advisor, Houlihan Lokey Howard & Zukin on August 28, 2001, and the Company's Series C preferred stock financing. The Company has complied with the request. The SEC has not informed the Company as to the reason for its request. However, management believes that the SEC inquiry was caused by the submission of a letter to the SEC by counsel to the hedge fund plaintiffs in the Delaware Chancery Court case described above questioning the disclosure in the registration statement and prospectus filed in conjunction with the merger of Allied Riser into a subsidiary of the Company.

        On March 27, 2002, certain holders of Allied Riser's notes filed an involuntary bankruptcy petition under Chapter 7 of the United States Bankruptcy Code against Allied Riser in United States Bankruptcy Court for the Northern District of Texas, Dallas Division. Three of the four petitioners are plaintiffs in the Delaware Chancery Court case described above and the fourth is also a hedge fund. Petitioners contend that the acquisition of Allied Riser was a change of control that entitled them to declare the 7.5% convertible subordinated notes were accelerated and are now due and payable. The petition does not name the Company as a party. Management notes, however, that pursuant to the terms of the supplemental indenture related to the notes, the Company is a co-obligor of the notes. Management believes that the claim is without merit and the Company has filed a motion to dismiss it and otherwise vigorously contest it. Management does not believe that the outcome of this claim will have a material adverse effect on the Company.

Operating leases and license agreements

        The Company leases office space, network equipment sites, and facilities under operating leases. The Company also enters into building access agreements with the landlords of its targeted multi- tenant office buildings. The Company acquired building access agreements and operating leases for facilities in connection with the Allied Riser merger. Future minimum annual commitments under these arrangements are as follows (in thousands):

Twelve months ending March 31,
2003	$	16,422
2004		16,547
2005		15,186
2006		11,951
2007		9,164
Thereafter		40,319
	$	109,589

        Rent expense was $775,000 and $827,000 for the three months ended March 31, 2001 and 2002, respectively.

Connectivity, maintenance and transit agreements

        In order to provide service, the Company has commitments with service providers to connect to the Internet. The Company also pays Williams a monthly fee per route mile over a minimum of 20 years for the maintenance of its two national backbone fibers. In certain cases, the Company connects its customers and the buildings it serves to its national fiber-optic backbone using intra-city and inter-city fiber under operating lease commitments from various providers under contracts that range from month-to-month charges to 36-month terms.

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        Future minimum obligations related to these arrangements are as follows (in thousands):

Twelve months ending March 31,
2003	$	5,585
2004		4,725
2005		3,600
2006		3,648
2007		3,721
Thereafter		60,636
	$	81,915

9.    Stockholders' equity:

Stock Split

        All common share amounts, including the number of authorized, issued and outstanding shares, the conversion ratio of the Company's preferred stock, the exercise price and number of shares subject to stock options and warrants, and loss per share have been adjusted to reflect the 10 for 1 reverse stock split effected January 31, 2002.

Allied Riser Merger

        On February 4, 2002, the Company issued approximately 2.0 million shares of its common stock to Allied Riser shareholders in connection with the merger. This represented approximately 0.0321679 shares of the Company's common stock in exchange for each share of Allied Riser's common stock, or approximately 13.4% of the Company's common stock, on a fully diluted basis. The Company also assumed Allied Risers outstanding warrants and options for approximately 150,000 and 5,000 shares, of the Company's common stock, respectively, on an as-converted basis.

10.  Related party:

        The Company's headquarters is located in an office building owned by an entity controlled by the Company's Chief Executive Officer. The Company paid $81,000 and $92,000 for the three months ended March 31, 2001 and 2002, respectively, in rent to this entity.

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ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        You should read the following discussion together with the financial statements and related notes included elsewhere in this report. The results discussed below are not necessarily indicative of the results to be expected in any future periods. Certain matters discussed herein are forward-looking statements. This report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words "may," "will," "estimate," "intend," "continue," "believe," "expect" or "anticipate" and other similar words. Such forward-looking statements may be contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations," among other places.

        Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties. Key risks to our company are described in our annual report on Form 10-K filed with the Securities and Exchange Commission. We do not intend, and undertake no obligation, to update any forward-looking statement.

General Overview

        Cogent was formed on August 9, 1999 as a Delaware corporation. Our primary activities to date have included recruiting employees, obtaining financing, branding and marketing our products, obtaining customer orders and building access rights, designing and constructing our fiber-optic network and facilities, integrating acquired assets and systems, and providing customer support.

        We began invoicing our customers for our services in April 2001. We provide our high-speed Internet access service to our customers for a fixed monthly fee. We recognize service revenue in the month in which the service is provided. Customer cash receipts for service received in advance of revenue earned is recorded as deferred revenue and recognized over the service period or, in the case of installation charges, over the estimated customer life.

        As Cogent began to serve customers, we began to incur additional elements of network operations costs, including building access agreement fees, network maintenance costs and transit costs. Transit costs include the costs of transporting our customers' Internet traffic to and from networks that compose the Internet and with which we do not have a direct settlement-free peering agreement.

        Merger with Allied Riser Communications Corporation.    On August 28, 2001, we entered into an agreement to merge with Allied Riser Communications Corporation. Allied Riser is a facilities-based provider of broadband data and video communication services to small- and medium-sized businesses located in selected buildings in North America, including Canada. Upon the closing of the merger on February 4, 2002, Cogent issued approximately 2.0 million shares, or 13.4% of its common stock, on a fully diluted basis, to the existing Allied Riser stockholders. The merger agreement required Cogent to assume the outstanding obligations of Allied Riser as of the closing date. At closing these obligations included, among other amounts, approximately $117.0 million of Allied Riser's convertible subordinated notes and approximately $33.7 million in future minimum commitments for operating leases related to facilities and building access agreements. At closing, Allied Riser had cash and cash equivalents of approximately $70.4 million. We believe the acquisition of Allied Riser will provide us with necessary

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in-building networks as well as pre-negotiated building access rights with building owners and real estate investment trusts across the United States and in Toronto, Canada. We anticipate that the acquisition will enable us to accelerate our business plan and increase our footprint in the markets we serve.

        Acquisition of NetRail Inc. Assets.    On September 6, 2001, Cogent acquired for approximately $12.0 million the major assets of NetRail, Inc. through a sale conducted under Chapter 11 of the United States Bankruptcy Code. The assets include certain customer contracts and the related accounts receivable, customer circuits, network equipment, and settlement-free peering arrangements with Tier-1 Internet service providers. NetRail's facilities and traffic have been integrated with our network. Cogent anticipates reduced costs of network operations from the availability of NetRail's Tier-1 settlement-free peering arrangements and an increase in our revenues derived from the customers obtained in the acquisition.

        Acquisition of PSINet assets.    On April 2, 2002, we closed our transaction to purchase certain assets of PSINet, Inc. Pursuant to the asset purchase agreement approved on March 27, 2002 by the bankruptcy court overseeing the PSINet bankruptcy, we acquired certain of PSINet's assets and certain liabilities related to its operations in the United States for a total of $10.0 million. The assets include certain of PSINet's customer contracts, accounts receivable, rights to 10,000 route miles pursuant to indefeasible rights of use, telecommunications and computer equipment, three web hosting data centers, and certain intangibles, including settlement-free peering rights and the PSINet trade name. Settlement-free peering rights permit the transfer of data traffic to and from other carriers without payment between the carriers. Assumed liabilities include certain leased circuit commitments and collocation arrangements. This acquisition added a new element to our operations in that in addition to our current high-speed Internet access business, we will begin operating a more traditional Internet service provider business, with lower speed connections provided by leased circuits obtained from telecommunications carriers (primarily local telephone companies). We expect the PSINet acquisition to provide us with a revenue stream from a set of products that we believe complement our core offering of 100 Mbps Internet connectivity for $1,000 per month. We plan to support and build the PSINet brand name, one of the most recognizable ISPs in the country. Under the PSINet label, we will continue offering PSINet services, including Internet connectivity.

        Williams Communications Bankruptcy.    On April 22, 2002, Williams Communications Group, Inc. filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. Williams Communications LLC, a wholly owned subsidiary of Williams Communications Group, has provided us with our national backbone fiber rings and provides maintenance services to us. Williams Communications LLC did not file a bankruptcy petition and Williams Communications Group has stated that the bankruptcy filing is part of a negotiated plan to restructure its debt. We do not expect the Williams bankruptcy filing to impact us as Williams has completed delivery of our national fiber backbone and we believe it will be able to continue to provide maintenance services to us.

        Metromedia Fiber Networks (MFN) and Other Telecommunications Companies.    One of our suppliers of metropolitan fiber optic facilities, MFN, has announced that it may file for bankruptcy. This would impact our operations mostly by decreasing our ability to add new metropolitan fiber rings from MFN and our ability to add new buildings to existing MFN rings. However, as we have other providers of metropolitan fiber optic facilities we do not anticipate a significant impact on our operations from MFN's bankruptcy. MFN's financial difficulties are characteristic of the telecommunications industry today. Several of our vendors, including Williams Communications, Level 3 and Qwest, have been reported in the financial press to be experiencing financial difficulties. Williams has filed a bankruptcy petition under Chapter 11 of the bankruptcy code. The impact of the Williams' bankruptcy is discussed above.

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        MFN's financial difficulties are characteristic of the telecommunications industry today. Our solution for metropolitan networks is to have a large number of providers and to develop the ability to construct our own fiber optic connections to the buildings we serve.

        On March 27, 2002, certain holders of Allied Riser's convertible subordinated notes filed an involuntary bankruptcy petition under Chapter 7 of the United States Bankruptcy Code against Allied Riser in United States Bankruptcy Court for the Northern District of Texas, Dallas Division. This development is discussed in greater detail in "Legal Proceedings" and elsewhere in this section.

Results of Operations

Three months ended March 31, 2001 compared to the three months ended March 31, 2002

        Revenue.    Revenue for the three months ending March 31, 2002 was $3.5 million compared to no revenue for the three months ending March 31, 2001. Revenue related to the customer contracts acquired in the NetRail acquisition was $0.5 million for the three months ending March 31, 2002. Revenue related to the Allied Riser acquisition was approximately $0.9 million for the three months ending March 31, 2002.

        Network Operations.    Network operations costs are primarily comprised of five elements:

•

for the three months ended March 31, 2001, temporary leased transmission capacity incurred for certain network segments until the nationwide fiber-optic intercity network was placed in service;



•

the cost of leased network equipment sites and facilities;



•

salaries and related expenses of employees directly involved with Cogent's network activities;



•

transit charges—amounts paid to service providers for connecting to the Internet



•

building access agreement fees paid to landlords; and



•

maintenance charges related to Cogent's nationwide fiber-optic intercity network and metro rings.

        The cost of network operations was $6.9 million for the three months ended March 31, 2002 compared to $4.7 million for the three months ended March 31, 2001 The increase was due to an increase in the cost of leased network facilities, transit charges and building access agreement fees offset by the elimination of temporary leased transmission capacity charges. The cost of temporary leased transmission capacity was $1.7 million for the three months ended March 31, 2001. There were no such costs for the three months ended March 31, 2002. These costs were incurred until the remaining segments of Cogent's nationwide fiber-optic intercity network were placed in service. As this leased capacity of the network was replaced with Cogent's dark fiber IRUs, the related cost of network operations decreased and depreciation and amortization expense increased. Allied Riser contributed approximately $0.9 million to the cost of network operations for the three months ended March 31, 2002. We believe that the cost of network operations will increase as Cogent continues to construct its network, acquire additional office building access agreements, and service an increasing number of customers.

        Selling, General, and Administrative Expenses.    Selling, general and administrative expenses, or SG&A, primarily include salaries and related administrative costs. SG&A decreased to $6.6 million for the three months ended March 31, 2002 from $7.3 million for the three months ended March 31, 2001. SG&A for the three months ended March 31, 2002 includes approximately $0.6 million of amortization of deferred compensation. SG&A expenses decreased primarily from a decrease in employees and costs associated with branding the Company's product. We had 136 employees at March 31, 2002 versus 206 employees at March 31, 2001. In October 2001, the Company reduced its staff by about 50 employees and re-aligned portions of its organizational structure to streamline its operations and better focus its

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activities. Cogent capitalizes the salaries and related benefits of employees directly involved with its construction activities. Cogent began capitalizing these costs in July 2000 and will continue to capitalize these costs while its network is under construction. Cogent believes that SG&A expenses will continue to increase primarily due to the expected growth in the number of employees and related costs required to support its operations and customers.

        Depreciation and Amortization.    Depreciation and amortization expense increased to $6.7 million for the three months ended March 31, 2002 from $1.0 million for the three months ended March 31, 2001. These expenses represent the depreciation of the capital equipment required to support Cogent's network and the amortization of the Company's IRU's. Depreciation and amortization for the three months ended March 31, 2002 includes approximately $1.0 million of amortization expense related to the amortization of intangible assets from the September 2001 acquisition of certain assets of NetRail, Inc. These amounts increased because Cogent had more capital equipment and IRU's in service in 2002 than in the same period in 2001 and from the amortization of the NetRail intangible assets. Cogent begins the depreciation and amortization of its capital assets once the related assets are placed in service. Cogent believes that future depreciation and amortization expense will continue to increase due to the acquisition of additional network equipment, existing equipment being placed in service, and the amortization of Cogent's capital lease IRUs.

        Interest Income and Expense.    Interest income increased to $1.3 million for the three months ended March 31, 2002 from $0.9 million for the three months ended March 31, 2001. Interest income relates to interest earned on Cogent's marketable securities. Cogent's marketable securities consisted of money market accounts and commercial paper.

        Interest expense increased to $7.0 million for the three months ended March 31, 2002 from $0.7 million for the three months ended March 31, 2001. The increase in interest expense results from an increase in borrowings in 2002 partially offset by a reduction in interest rates and the interest expense associated with the Allied Riser convertible subordinated notes. Interest expense relates to interest charged on Cogent's borrowing on its vendor financing facility, capital lease agreements, the Allied Riser convertible subordinated notes and amortization of deferred financing costs. Cogent began borrowing under its credit facility with Cisco Capital in August 2000 and had borrowed $191.9 million at March 31, 2002 and $74.7 million at March 31, 2001. Cogent capitalized $0.2 million of interest expense for the three months ended March 31, 2002 and $1.7 million for the three months ended March 31, 2001. The reduction in capitalized interest resulted from a reduction in the dollar value of the Company's network under construction during the period and a reduction in interest rates. Cogent began capitalizing interest in July 2000 and will continue to capitalize interest expense while its network is under construction. Borrowings accrue interest at the three-month LIBOR rate, established at the beginning of each calendar quarter, plus a stated margin.

        Income Taxes.    Cogent recorded no income tax expense or benefit for the three months ended March 31, 2002 or the three months ended March 31, 2001. Due to the uncertainty surrounding the realization of the Company's net operating losses and its other deferred tax assets, Cogent has recorded a valuation allowance for the full amount of its net deferred tax asset. For federal and state tax purposes, Cogent's net operating loss carry-forwards could be subject to certain limitations on annual utilization if certain changes in ownership were to occur as defined by federal and state tax laws. For federal and state tax purposes, Cogent's net operating loss carry-forwards acquired in the Allied Riser merger could be subject to certain limitations on annual utilization due to the change in ownership as defined by federal and state tax laws. Should Cogent achieve profitability, its net deferred tax assets may be available to offset future income tax liabilities.

        Earnings Per Share.    Basic and diluted net loss per common share applicable to common stock decreased to $(6.81) for the three months ended March 31, 2002 from $(9.12) for the three months ended March 31, 2001. The weighted-average shares of common stock outstanding increased to

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2,637,951 shares at March 31, 2002 from 1,402,798 shares at March 31, 2001, due to the issuance of approximately 2.0 million shares of common stock to the Allied Riser shareholders on February 4, 2002 and exercises of options for Cogent's common stock. The Allied Riser merger resulted in an extraordinary gain of $4.5 million, or $1.72 per common share for the three months ended March 31, 2002. The loss per common share, excluding the impact of the extraordinary gain, was ($8.52) for the three months ended March 31, 2002.

        For the three months ended March 31, 2001 and March 31, 2002, options to purchase 640,307 and 1,137,482 shares of common stock at weighted-average exercise prices of $10.43 and $5.09 per share, respectively, are not included in the computation of diluted earnings per share as they are anti-dilutive. For the three months ended March 31, 2001 and March 31, 2002, 45,809,783 and 95,583,185 shares of preferred stock, which were convertible into 4,580,978 and 10,148,309 shares of common stock, respectively, were not included in the computation of diluted earnings per share as a result of their anti-dilutive effect. For the three months ended March 31, 2001 and March 31, 2002, warrants for 222,750 and 854,941 shares of common stock, were not included in the computation of diluted earnings per share as a result of their anti-dilutive effect. For the three months ended March 31, 2002, 94,164 weighted average shares of common stock issuable on the conversion of the Allied Riser convertible subordinated notes, were not included in the computation of diluted earnings per share as a result of their anti-dilutive effect.

Liquidity and Capital Resources

        Since inception, we have primarily funded our operations and capital expenditures through private equity financing, long-term debt, and equipment financing arrangements. As of March 31, 2002, we have raised $178 million of private equity funding, obtained a credit facility for borrowings of up to $409.0 million, of which $191.1 million was outstanding at March 31, 2002 and have capital lease obligations outstanding at March 31, 2002 of approximately $33.7 million. Our current cash and cash equivalents position and short-term investments totaling $102.1 million, of which $70.4 million was acquired in the Allied Riser merger, are an additional source of our liquidity.

        Net Cash Used in Operating Activities.    Net cash used in operating activities increased to $9.7 million for the three months ended March 31, 2002 as compared to a use of $7.5 million for the three months ended March 31, 2001. This increase is primarily due to an increase in the net loss to $18.0 million for the three months ended March 31, 2002 from a net loss of $12.8 million for the three months ended March 31, 2001. These net losses are offset by depreciation and amortization and changes in assets and liabilities of a positive $12.8 million and positive $5.2 million for the three months ended March 31, 2002 and March 31, 2001, respectively and an extraordinary gain of $4.5 million for the three months ended March 31, 2002.

        Net Cash Provided by (Used in) Investing Activities.    Net cash from investing activities increased to a positive $51.6 million for the three months ended March 31, 2002 as compared to a negative $19.2 million for the three months ended March 31, 2001. Purchases of network equipment under the Cisco credit facility were $7.7 million for the three months ended March 31, 2002 and $7.4 million for the three months ended March 31, 2001. Investing activities for the three months ended March 31, 2002 included purchases of short-term investments of $2.2 million, the January 2002 payment of $3.0 million under the due diligence agreement related to the April 2002 acquisition of certain assets of PSINet, and $70.4 million of cash and cash equivalents acquired in the February 4, 2002 Allied Riser merger.

        Net Cash Provided by (Used in) Financing Activities.    Financing activities provided $7.1 million for the three months ended March 31, 2002 compared to $7.4million for the three months ended March 31, 2001. We received proceeds from borrowing $7.7 million in equipment loans for the three months ended March 31, 2002 and $7.4 million for the three months ended March 31, 2001. For the

20

three months ended March 31, 2002, we also entered into $2.9 million in loans to fund interest and fees related to the credit facility. The liquidation preference at March 31, 2002, of all classes of our preferred stock was $229.4 million. Principal repayments of capital lease obligations were $0.5 million for the three months ended March 31, 2002.

        Credit Facility.    In October 2001, we entered into an agreement with Cisco Systems Capital Corporation (Cisco Capital) under which Cisco Capital agreed to enter into a $409.0 million credit facility with us. This credit facility replaced our previous $310.0 million credit facility with Cisco Capital. As of March 31, 2002, approximately $191.9 million was outstanding under the credit facility.

        Additional borrowings under the Facility are available in increments subject to Cogent's satisfaction of certain operational and financial covenants over time. Up to $40 million is available for additional equipment loans through September 30, 2002, of which $9.0 million of this amount was borrowed as of March 31, 2002. An additional $85 million of equipment loans becomes available on October 1, 2002. Up to $20 million is available to fund interest and fees related to the Facility through September 30, 2002 of which $9.3 million of this amount was borrowed as of March 31, 2002. An additional $55 million for funding interest and fees related to the Facility becomes available on October 1, 2002. An additional $35 million in working capital loans becomes available on October 1, 2002. The aggregate balance of working capital loans is limited to 35 percent of outstanding equipment loans. Additional borrowings under the Facility for the purchase of products and working capital are available until December 31, 2004. Additional borrowings under the Facility for the funding of interest and fees are available until December 31, 2005. The Facility matures on December 31, 2008.

        In connection with the merger with Allied Riser and the acquisition of certain assets of PSINet, certain of the facility's covenants were renegotiated. The current covenants include the following:

•

Beginning on December 31, 2003, our ratio of consolidated funded debt to EBITDA must not exceed a maximum threshold. This maximum ratio begins at 11.6:1 on December 31, 2003 and declines by March 31, 2008 to 0.6:1.



•

We must meet minimum revenue thresholds. From March 31, 2002 to September 30, 2002, Cogent must meet monthly consolidated revenue thresholds beginning at $1.2 million, and increasing to $3.7 million. There are additional monthly revenue thresholds associated with the customers acquired in the PSINet acquisition beginning at $2.9 million for April 30, 2002 and decreasing to $1.9 million for September 30, 2002. Beginning with the quarterly period ending December 31, 2002, Cogent must meet quarterly consolidated thresholds of annualized revenue. These targets begin at $90.5 million and gradually increase to $654.9 million by March 31, 2008, and $654.9 million thereafter.



•

Beginning March 31, 2002, we must meet monthly minimum EBITDA thresholds and in the quarter ended December 31, 2002 quarterly minimum EBITDA thresholds for the trailing four quarters. These thresholds begin at $(4.1) million as of March 31, 2002, peaking at $251.7 million as of June 30, 2005, before decreasing to $176.0 million as of March 31, 2008 and thereafter.



•

Beginning September 30, 2003, our ratio of EBITDA to interest expense, measured as described in the agreement, must meet a minimum threshold for each quarter. This minimum ratio begins at 0.3:1 on September 30, 2003 and increases to 4.2:1 by December 31, 2004, before decreasing to 1.2:1 by June 30, 2006. After June 30, 2006, this threshold varies between 1.2:1 and 1.0:1.



•

Beginning September 30, 2002, our ratio of consolidated funded debt to capitalization must not exceed a maximum percentage, which starts at 71% as of September 30, 2002, and decreases to 50% as of September 30, 2007 and thereafter.

21

•

We must meet minimum thresholds for customers—counting as separate customers offices of any individual customers that are located in separate buildings. This threshold is 392 as of March 31, 2002, increasing to 25,168 by March 31, 2008 and thereafter.



•

We must maintain a minimum amount of cash and short-term investments, starting with $68.2 million as of March 31, 2002. This minimum threshold varies each quarter until March 31,2004, when it begins to increase gradually from $42.3 million to $244.7 million by December 31, 2007 and $280.6 million thereafter.



•

We must meet minimum requirement for nodes connected to its network. This threshold is 207 as of March 31, 2002, increasing to 2,356 by March 31, 2008.



•

We may not make capital expenditures on an annualized basis in excess of a maximum amount that varies for each year. This maximum amount is $72.1 million for the year ending December 31, 2002, increasing to $115.2 million by the year ending December 31, 2005, before decreasing to $77.6 million for the year ended December 31, 2007 and thereafter.

        For loans outstanding prior to entering into the October 2001 facility, the applicable interest rate is LIBOR, or the London Interbank Offer Rate, plus 4.5% per annum. For loans issued after entering into the October 2001 facility, the applicable interest rate is LIBOR plus a margin ranging from 6.5% currently, down to 2.0%, depending upon our EBITDA—or earnings before interest, taxes, depreciation and amortization—and leverage ratio—or its ratio or consolidated funded debt to EBITDA.

        In connection with this agreement, we granted to Cisco Capital rights that, together with the warrants issued to Cisco Capital under the previous credit agreement, will permit Cisco Capital to acquire up to 5% of the fully diluted common stock of Cogent. These warrants for 710,216 common shares are exercisable for eight years from the grant date at exercise prices ranging from $12.47 to $30.44 per share, with the weighted-average exercise price of $18.10.

        The credit facility is secured by the pledge of all of our assets. The credit facility also includes a closing fee, facility fee and a quarterly commitment fee on the underlying commitment. Borrowings are permitted to be prepaid at any time without penalty and are subject to mandatory prepayment based upon excess cash flow or, in certain circumstances, upon the receipt of proceeds from the sale of our debt or equity securities, and other events, such as asset sales. Principal payments on the credit facility begin in March 2005 and will be completed by December 2008.

        We are currently in compliance with all conditions, restrictions, and covenants contained in the Cisco credit facility. The facility is only partially available until September 30, 2002 and, assuming we remain in compliance with the covenants on that date, the entire facility will be available at that time, enabling us to fund our anticipated level of operations through the end of 2002. If the Cisco facility becomes unavailable, at any point in time, we may not have sufficient funds to fund current or anticipated levels of operation through December 2002.

        Product and Service Agreement with Cisco Systems.    We have entered into an agreement with Cisco Systems, Inc. for the purchase of a total of $270.0 million of networking equipment for our network. Under this Cisco supply agreement, we are obligated to purchase all of our networking equipment from Cisco until September 2003 and specified amounts through December 2004 unless Cisco cannot offer a competitive product at a reasonable price and on reasonable terms. If another supplier offers such products with material functionality or features that are not available from Cisco at a comparable price, we may purchase those products from the other supplier, and such purchases will not be included in determining our compliance with Cisco minimum purchase obligations. The majority of our network equipment has been obtained from Cisco.

        The Cisco supply agreement provides for certain discounts against the list prices for Cisco equipment. The agreement also requires us to meet certain minimum purchase requirements each year

22

during the four-year initial term of the agreement, provided that Cisco is not in default under the credit facility between Cisco and us. We have satisfied the minimum requirement through December 31, 2001. For 2002, 2003 and 2004, we must meet minimum purchase requirements of $29.5 million, $42.4 million and $45.5 million, respectively. In addition, we purchase from Cisco technical support and assistance with respect to the Cisco hardware and software purchased under the supply agreement. As of March 31, 2002, we had purchased approximately $154 million towards this commitment.

        Our contractual cash obligations are as follows:

		Payments due by period
(in thousands)		Total		Less than 1 year	1-3 years	4-5 years	After 5 years
Contractual Cash Obligations
	Long term debt	$	357,154	8,774	18,297	99,763	230,320
	Capital lease obligations		65,769	4,831	8,707	6,474	45,757
	Operating leases		191,503	22,007	40,058	28,483	100,955
	Unconditional purchase obligations		178,707	33,201	95,303	7,403	42,800
	Total contractual cash obligations		793,133	68,813	162,365	142,123	419,832

        Future Capital Requirements.    Our future capital requirements will depend on a number of factors, including our success in increasing the number of customers using our services and the number of buildings we serve, the expenses associated with the build-out of our network, regulatory changes, competition, technological developments, potential merger and acquisition activity and the economy's ability to recover from the recent downturn. We believe our available liquidity resources, assuming the availability of our Cisco credit facility, will be sufficient to fund our operating needs at least through the end of this fiscal year. We have based this estimate on assumptions that may prove to be wrong. For example, future capital requirements will change from current estimates to the extent to which we acquire or invest in businesses, assets, products and technologies. Our forecast of the period of time through which our financial resources will be adequate to support our operations and capital expenditures is a forward-looking statement that involves risks and uncertainties, and actual results could vary. Until we can generate sufficient levels of cash from our operations, which we do not expect to achieve for several years, we will continue to rely on equity financing and our credit facility to provide us with our cash needs. We cannot assure you that this financing will be available on terms favorable to us or our stockholders, or at all. Insufficient funds may require us to delay or scale back the build-out of our network or to restructure our business. If additional funds are raised by issuing equity securities, substantial dilution to existing stockholders may result.

        The February 4, 2002 merger with Allied Riser required us to assume the outstanding obligations of Allied Riser as of the closing date. As of the closing date, these obligations included, among other amounts, $117.0 million of Allied Riser's convertible subordinated notes and approximately $33.7 million in commitments for operating and capital lease obligations. On the closing date, Allied Riser had cash and cash equivalents of approximately $70.4 million.

        Allied Riser's notes may become immediately due if the merger is deemed to be a "change in control," as defined by the related indenture. On March 25, 2002, certain of the holders of the notes asserted to us that the merger constituted a change of control, and that as a result an event of default had occurred under the indenture. On March 27, 2002, the Trustee under the indenture notified us that an event of default had occurred based on such noteholder's assertions and that the principal amount of the notes and accrued interest was immediately due and payable. We do not believe that the merger would qualify as a change in control as defined in the indenture and are vigorously disputing the noteholders' assertion. However, in the event that the merger is deemed to be a change in control, we

23

could be deemed to be in default under the indenture and obligated to pay the principal amount of the notes and accured interest or to repurchase the notes at their full face value. We cannot assure you that we will have the ability to do this if we are required to do so. If we are unable to repurchase the notes and pay the accrued interest, we will be in default of the indenture and our obligations under our credit facility could become due and payable.

        Additionally, on March 27, 2002, certain holders of Allied Riser's notes filed an involuntary bankruptcy petition under Chapter 7 of the United States Bankruptcy Code against Allied Riser in United States Bankruptcy Court for the Northern District of Texas, Dallas Division. Three of the four petitioners are plaintiffs in the Delaware Chancery Court case described above and the fourth is also a hedge fund. Petitioners contend that the acquisition of Allied Riser was a change of control that entitled them to declare the 7.5% convertible subordinated notes were accelerated and are now due and payable. The petition does not name Cogent as a party. We note, however, that pursuant to the terms of the supplemental indenture related to the notes, Cogent is a co-obligor of the notes. We believe that the claim is without merit and have filed a motion to dismiss it and otherwise vigorously contest it. We do not believe that the outcome of this claim will have a material adverse effect on our business.

Recent Accounting Pronouncements

        In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supersedes FASB No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," but retains that statement's fundamental provisions for recognition and measurement of impairment of long-lived assets to be held and used and measurement of long-lived assets to be disposed of by sale. SFAS No. 144 also supersedes the accounting/reporting provisions of APB Opinion No. 30 for segments of a business to be disposed of, but retains APB 30's requirement to report discontinued operations separately from continuing operations and extends that reporting to a component of an entity that either has been disposed of or is classified as held for sale. The Company is in the process of evaluating the financial statement impact of adoption of SFAS No. 144.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

        All of our financial interests that are sensitive to market risk are entered into for purposes other than trading. Cogent's primary market risk exposure is related to its marketable securities and credit facility. Cogent places its marketable securities investments in instruments that meet high credit quality standards as specified in Cogent's investment policy guidelines. Marketable securities were approximately $102.1 million at March 31, 2002, $98.1 million of which are considered cash equivalents and mature in 90 days or less and $4.0 million are short-term investments consisting of commercial paper.

        Cogent's credit facility provides for secured borrowings at the 90-day LIBOR rate plus a specified margin based upon Cogent's leverage ratio, as defined in the agreement. The interest rate resets on a quarterly basis and was a weighted-average of 6.6% as of March 31, 2002. Interest payments are deferred and begin in 2005. Borrowings are secured by a pledge of all of Cogent's assets. The credit facility matures on December 31, 2008. Borrowings may be repaid at any time without penalty subject to minimum payment amounts.

        If market rates were to increase immediately and uniformly by 10% from the level at March 31, 2002, the change to Cogent's interest sensitive assets and liabilities would have an immaterial effect on Cogent's financial position, results of operations and cash flows over the next fiscal year. A 10% increase in the weighted-average interest rate for three month period ended March 31, 2002 would increase interest expense for the period by approximately $0.3 million.

24

PART II OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS.

        On July 26, 2001, in a case titled Hewlett-Packard Company v. Allied Riser Operations Corporation a/k/a Allied Riser Communications, Inc., Hewlett-Packard Company filed a complaint against a subsidiary of Allied Riser, Allied Riser Operations Corporation, in the 95th Judicial District Court, Dallas County, Texas, seeking damages of $18.8 million, attorneys' fees, interest, and punitive damages relating to various types of equipment allegedly ordered from Hewlett-Packard Company by Allied Riser Operations Corporation. We believe that this suit is without merit and Allied Riser has filed its answer generally denying Hewlett-Packard's claims. We intend to continue to vigorously contest this lawsuit.

        On January 16, 2002, Allied Riser received a letter from Hewlett-Packard Company alleging that certain unspecified contracts are in arrears, and demanding payment in the amount of $10.0 million. The letter does not discuss the basis for the claims or whether the funds sought are different from or in addition to the funds sought in the July 26, 2001 lawsuit. Allied Riser, through its legal counsel, has made an inquiry of Hewlett-Packard's counsel to determine the basis for the claims in the letter. We believe this claim is without merit and intend to vigorously contest this claim.

        One of the Company's subsidiaries, Allied Riser Operations Corporation, is involved in a dispute with its former landlord in Dallas, Texas. Allied Riser terminated the lease in March 2002 and the dispute is over whether it had the right to do so. The landlord has alleged that a default under the lease has occurred. Allied Riser Operations Corporation has informed the landlord that the lease was terminated as provided by its terms.

        The three matters discussed below are, we believe, related to an effort by a group of bondholders to pressure us into buying back the notes they hold. The bondholders involved are a group of hedge funds that own (we believe) more than 40% of the 7.50% convertible subordinated notes due 2007 that were issued by Allied Riser Communications Corporation in June 2000. Allied Riser is now a subsidiary of the Company and the Company has become a co-obligor on the bonds. Beginning in August 2001 these hedge funds have attempted to force the repurchase of the notes they hold.

        On December 12, 2001 Allied Riser announced that certain holders of its 7.50% convertible subordinated notes due 2007 filed notices as a group with the Securities and Exchange Commission (SEC) on Schedule 13D including copies of documents indicating that such group had filed suit in Delaware Chancery Court on December 6, 2001 against Allied Riser and its board of directors. The suit alleges, among other things, breaches of fiduciary duties and default by Allied Riser under the indenture related to the notes, and requested injunctive relief to prohibit Allied Riser's merger with Cogent. The plaintiffs amended their complaint on January 11, 2002 and subsequently served it on Allied Riser. On January 28, 2002 the Court held a hearing on a motion by the plaintiffs to preliminarily enjoin the merger. On January 31, 2002 the Court issued a Memorandum Opinion denying that motion. Since then the plaintiffs have taken no action to prosecute this suit. On April 16, 2002 we filed a motion with the court which, we hope, will expeditiously bring this suit to a conclusion. We believe that the suit is without merit, and intend to continue to vigorously contest it.

        On February 21, 2002, the Division of Enforcement of the SEC requested that we voluntarily provide it certain documents related to the fairness opinion delivered to the Allied Riser board of directors by Allied Riser's financial advisor, Houlihan Lokey Howard & Zukin on August 28, 2001, and our Series C preferred stock financing. We have complied with the request. The SEC has not informed us as to the reason for its request. However, we believe that the SEC inquiry was caused by the submission of a letter to the SEC by counsel to the hedge fund plaintiffs in the Delaware

25

Chancery Court case described above questioning the disclosure in the registration statement and prospectus filed in conjunction with the merger of Allied Riser into a subsidiary of Cogent.

        On March 27, 2002, certain holders of Allied Riser's notes filed an involuntary bankruptcy petition under Chapter 7 of the United States Bankruptcy Code against Allied Riser in United States Bankruptcy Court for the Northern District of Texas, Dallas Division. Three of the four petitioners are plaintiffs in the Delaware Chancery Court case described above and the fourth is also a hedge fund. Petitioners contend that the acquisition of Allied Riser was a change of control that entitled them to declare the 7.5% convertible subordinated notes were accelerated and are now due and payable. The petition does not name Cogent as a party. We note, however, that pursuant to the terms of the supplemental indenture related to the notes, Cogent is a co-obligor of the notes. We believe that the claim is without merit and have filed a motion to dismiss it and otherwise vigorously contest it. We do not believe that the outcome of this claim will have a material adverse effect on our business.

ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS.

        At various times during the three months ended March 31, 2002, the Company granted to employees and directors options to purchase an aggregate of 12,700 shares of Common Stock with a weighted average exercise price of $2.12 per share.

        All awards of options were made for compensatory or incentive purposes only, and did not involve any sale under the Securities Act.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES.

        As discussed in Part I, Item 2—"Management's Discussion and Analysis of Financial Condition and Results of Operations—Future Capital Requirements" and in Part II, Item 1—"Legal Proceedings," certain holders of the Company's 7.5% convertible subordinated notes have filed claims alleging that the Company's merger with Allied Riser resulted in a default under the governing indenture. The Company does not believe that it is in default under the indenture and is vigoriously contesting any assertion that an event of default has occurred.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

        During the first quarter, prior to becoming a reporting company, our security holders acted by written consent on one occasion (January 24, 2002) to approve the agreement and plan of merger with Allied Riser Communications Corporation and in conjunction approve a reverse stock split, charter amendment, and revised bylaws.

ITEM 5.    OTHER INFORMATION.

        Not applicable.

26

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K.

(a)

Exhibits

Exhibit Number	Description
2.1	Asset Purchase Agreement, dated as of February 26, 2002, by and among Cogent Communications Group, Inc., PSINet, Inc. et al.(1)
3.1	Second Amended and Restated Certificate of Incorporation of Cogent Communications Group, Inc.(2)
3.2	Amended Bylaws of Cogent Communications Group, Inc.(3)
4.1	Indenture, dated as of July 28, 2000, by and between Allied Riser Communications Corporation, as issuer, and Wilmington Trust Company, as trustee.(4)
4.2	First Supplemental Indenture, dated as of February 4, 2002, by and among Allied Riser Communications Corporation, as issuer, Cogent Communications Group, Inc., as co-obligor, and Wilmington Trust Company, as trustee.(5)
10.1	Amendment No. 1 to Credit Agreement, dated as of January 31, 2002, by and among Cisco Systems Capital Corporation, Cogent Communications Group, Inc., Cogent Communications, Inc. and Cogent Internet, Inc.
10.2	Amendment No. 2 to Credit Agreement, dated as of April 17, 2002, by and among Cisco Systems Capital Corporation, Cogent Communications Group, Inc., Cogent Communications, Inc. and Cogent Internet, Inc.

(1)

Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K dated February 26, 2002.

(2)

Incorporated by reference to Exhibit 3.1 to our Registration Statement on Form S-4/A (Amendment No. 4) (333-71684) filed January 7, 2002.

(3)

Incorporated by reference to Exhibit 3.2 to our Registration Statement on Form S-4/A (Amendment No. 4) (333-71684) filed January 7, 2002.

(4)

Incorporated by reference to Exhibit 4.5 to our Registration Statement on Form S-4/A (Post-Effective Amendment No. 1) (333-71684) filed January 25, 2002.

(5)

Incorporated by reference to Exhibit 4.4 to our Registration Statement on Form S-4/A (Post-Effective Amendment No. 2) (333-71684) filed February 4, 2002.

(b)

Reports on Form 8-K

        During the three months ended March 31, 2002, the Company filed three reports on Form 8-K containing the following information and filed on the following dates:

Date	Description
February 5, 2002	This report announced the consummation of the Merger of Allied Riser Communications Corporation with a subsidiary of the Company.
February 13, 2002	This report amended the Form 8-K filed February 5, 2002 to include the financial statements and pro forma financial information required by items 7(a) and (b) of Form 8-K.
February 27, 2002	This report announced the signing of an agreement pursuant to which the Company would acquire certain assets of PSINet, Inc.

27

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: May 15, 2002	COGENT COMMUNICATIONS GROUP, INC.
	By:
		Name: David Schaeffer Title: Chairman of the Board and Chief Executive Officer
Date: May 15, 2002	By:
		Name: Helen Lee Title: Chief Financial Officer
Date: May 15, 2002	By:
		Name: Thaddeus G. Weed Title: Vice President and Controller

28

EX-10.1

                                                                    EXHIBIT 10.1

                                                                [EXECUTION COPY]

                                 AMENDMENT NO. 1

                 TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT

          THIS AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment") dated as of January 31, 2002, is made among Cogent
Communications, Inc., a Delaware corporation ("Borrower"), Cogent Internet,
Inc., a Delaware corporation ("Additional Borrower"), Cogent Communications
Group, Inc., a Delaware corporation ("Holdings"), and Cisco Systems Capital
Corporation, a Nevada corporation ("Lender" or "Agent").

          WHEREAS, the parties hereto entered into a Second Amended and Restated
Credit Agreement dated as of October 24, 2001 (the "Credit Agreement") among
Borrower, Additional Borrower, the several financial institutions from time to
time party thereto ("Lenders") and Agent;

          WHEREAS, Borrower intends to consummate a merger with Allied Riser
Communications Corporation ("Allied Riser") pursuant to that certain Agreement
and Plan of Merger dated August 28, 2001 (and as amended as of October 13, 2001)
(the "AR Merger Agreement"), among Allied Riser, Borrower and Augustus Caesar
Merger Sub, Inc.; and

          WHEREAS, in connection with the consummation of the transactions
contemplated by the AR Merger Agreement, Borrower, Additional Borrower, Holdings
and Agent desire, in accordance with Section 8.1 of the Credit Agreement, to
amend the Credit Agreement.

          NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows

          SECTION 1 DEFINITIONS; INTERPRETATION.

          (a) TERMS DEFINED IN CREDIT AGREEMENT. All capitalized terms used in
this Amendment (including in the recitals hereof) and not otherwise defined
herein shall have the meanings assigned to them in the Credit Agreement.

          (b) INTERPRETATION. The rules of interpretation set forth in Section
1.2 of the Credit Agreement shall be applicable to this Amendment and are
incorporated herein by this reference.

          SECTION 2 AMENDMENTS TO THE CREDIT AGREEMENT.

          (a) AMENDMENTS. The Credit Agreement and the Schedule shall be amended
as follows, effective as of the date of satisfaction of the conditions set forth
in Section 3 (the "Effective Date"):

                                       1.


          (i)    Section 1.1 of the Credit Agreement is hereby amended as
                 follows:

          (A)    The following new definitions are added to this Section:

          "FCC LICENSE" means any license granted by the FCC to
          Holdings, Borrower or any Subsidiary of Holdings or
          Borrower.

          "LICENSE SUBSIDIARY" has the meaning set forth in Section
          5.1(z).

          (B)    The definition of "Permitted Liens" is hereby amended by adding
the following to the end of the last sentence:

          ; and PROVIDED FURTHER that neither Holdings nor Borrower
          shall, nor shall either permit any of its respective
          Subsidiaries to, create any Lien on any FCC License or on
          any capital stock of or other ownership interest in or
          assets of any License Subsidiary.

          (C)    The definition of "Permitted Transactions" is hereby amended by
adding the following sentence to the end of such definition:

          Notwithstanding anything to the contrary contained herein,
          the transactions (collectively, the "Transactions")
          described in the Plan of Merger, dated August 28, 2001 (the
          "AR Merger Agreement"), among Allied Riser Communications
          Corporation ("Allied Riser"), Borrower and Augustus Caesar
          Merger Sub, Inc. shall be Permitted Transactions hereunder.

          (D)    The definition of "Subordinated Debt" is hereby deleted in its
entirety and replaced by the following:

          "Subordinated Debt" means (i) the Indebtedness of Allied
          Riser under the Indenture dated as of June 28, 2000, as
          amended, by and between Allied Riser Communications
          Corporation and Wilmington Trust Company, as trustee,
          assumed by Holdings in connection with the AR Merger
          Agreement, and (ii) unsecured Indebtedness of Holdings in an
          amount not to exceed $200,000,000 complying with each of the
          following requirements: (A) Holdings shall, in a certificate
          provided on or immediately prior to the date of the receipt
          of proceeds of any such unsecured Indebtedness, demonstrate
          its pro forma compliance with the applicable financial
          covenants set forth herein (after giving effect to the
          incurrence of any such unsecured Indebtedness); (B) the
          final maturity date of such unsecured Indebtedness shall be
          after the first anniversary of the final maturity date of
          the last Loans advanced to Borrower hereunder (the "Maturity
          Date"); (C) the terms of such Indebtedness shall specify
          that no principal

                                       2.


          repayments in respect thereof are required until the
          Maturity Date; (D) any such unsecured Indebtedness shall
          contain no covenants or provisions materially more
          restrictive on Holdings and its Subsidiaries than those
          contained herein; and (E) such unsecured Indebtedness shall
          be subordinated to the payment of the Obligations on terms
          that are usual and customary for unsecured Indebtedness
          issued under similar circumstances and for similar amounts
          in the high yield subordinated debt market.

          (ii)   Section 5.1(g) of the Credit Agreement is hereby amended by
adding the following to the end of the last sentence of such Section:

          ; provided, however, that any change in the nature of
          Holding's, Borrower's and their respective Subsidiaries'
          business resulting directly from the merger transaction
          contemplated by the AR Merger Agreement, shall not be a
          violation of this Section 5.1(g).

          (iii)  Section 5.1(h) of the Credit Agreement is hereby amended by
adding the following to the end of the last sentence of such Section:

          Notwithstanding the foregoing, no License Subsidiary may be
          merged into Holdings or Borrower, and no License Subsidiary
          may merge with or into any other Subsidiary except another
          License Subsidiary.

          (iv)   Section 5.1(i) of the Credit Agreement is hereby amended by
adding the following to the end of such Section:

          Notwithstanding the foregoing, neither Holdings nor Borrower
          nor any License Subsidiary shall enter into or consummate
          any Transfer involving any FCC Licenses or License
          Subsidiaries, except a Transfer of FCC Licenses to another
          License Subsidiary. Furthermore, notwithstanding anything to
          the contrary contained herein, sales of assets acquired
          pursuant to the AR Merger Agreement shall not be a violation
          of the covenants set forth in this Section 5.1(i).

          (v)    Section 5.1(k) of the Credit Agreement is hereby amended by
adding the following to the end of such Section:

          Notwithstanding the foregoing, neither Holdings nor Borrower
          shall permit any License Subsidiary to create, incur, assume
          or otherwise become liable for or suffer to exist any
          Indebtedness, other than Indebtedness in favor of Agent or
          any Lender arising under the Loan Documents.

                                       3.


          (vi)   Section 5.1(q) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:

          (q)    [Intentionally omitted.]

          (vii)  Section 5.1(r) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:

          (r)    FINANCIAL COVENANTS.

          (i)    LEVERAGE RATIO. On a consolidated basis, Holdings and
          its Subsidiaries shall not, as of the last day of any fiscal
          quarter, permit its ratio of Consolidated Funded Debt to
          EBITDA (measured on a rolling four quarter basis for the
          four fiscal quarters ended as of each quarterly period set
          forth below) to be greater than the ratios indicated below:



                 QUARTERLY PERIOD ENDING                       REQUIRED RATIO
                                                                
                 March 31, 2002                                      N/A
                 June 30, 2002                                       N/A
                 September 30, 2002                                  N/A
                 December 31, 2002                                   N/A
                 March 31, 2003                                      N/A
                 June 30, 2003                                       N/A
                 September 30, 2003                                  N/A
                 December 31, 2003                                 11.6:1
                 March 31, 2004                                     6.5:1
                 June 30, 2004                                      4.4:1
                 September 30, 2004                                 3.3:1
                 December 31, 2004                                  2.6:1
                 March 31, 2005                                     2.2:1
                 June 30, 2005                                      2.0:1
                 September 30, 2005                                 2.2:1
                 December 31, 2005                                  2.4:1
                 March 31, 2006                                     2.7:1
                 June 30, 2006                                      2.7:1
                 September 30, 2006                                 2.5:1
                 December 31, 2006                                  2.2:1
                 March 31, 2007                                     2.0:1
                 June 30, 2007                                      1.8:1
                 September 30, 2007                                 0.9:1


                                       4.




                 QUARTERLY PERIOD ENDING                       REQUIRED RATIO
                                                                 
                 December 31, 2007                                  0.8:1
                 March 31, 2008                                     0.6:1
                 Thereafter                                         0.6:1


          (ii)   MINIMUM TOTAL REVENUES. On a consolidated basis,
          Holdings and its Subsidiaries shall not fail to maintain
          total monthly or total annualized quarterly revenues of
          Holdings and its Subsidiaries, for each monthly or quarterly
          period, as applicable, set forth below, of not less than the
          correlative amount indicated (it being understood that with
          respect to any quarterly period, annualized revenues shall
          be equal to revenues for such quarterly period, multiplied
          by four):



                 MONTHLY PERIOD ENDING                    REQUIRED AMOUNT
                                                          
                 January 31, 2002                            $   755,000
                 February 28, 2002                           $   985,000
                 March 31, 2002                              $ 1,215,000
                 April 30, 2002                              $ 1,510,000
                 May 31, 2002                                $ 1,855,000


                 QUARTERLY PERIOD ENDING             REQUIRED ANNUALIZED AMOUNT
                                                          
                 June 30, 2002                               $  26,700,000
                 September 30, 2002                          $  42,500,000
                 December 31, 2002                           $  66,100,000
                 March 31, 2003                              $  82,800,000
                 June 30, 2003                               $ 115,200,000
                 September 30, 2003                          $ 152,300,000
                 December 31, 2003                           $ 196,900,000
                 March 31, 2004                              $ 248,800,000
                 June 30, 2004                               $ 304,800,000
                 September 30, 2004                          $ 361,200,000
                 December 31, 2004                           $ 420,000,000
                 March 31, 2005                              $ 409,500,000
                 June 30, 2005                               $ 461,700,000
                 September 30, 2005                          $ 514,600,000
                 December 31, 2005                           $ 570,000,000
                 March 31, 2006                              $ 528,300,000
                 June 30, 2006                               $ 565,400,000
                 September 30, 2006                          $ 603,200,000
                 December 31, 2006                           $ 641,600,000
                 March 31, 2007                              $ 579,500,000
                 June 30, 2007                               $ 613,100,000


                                       5.


                                         
                 September 30, 2007                          $ 647,200,000
                 December 31, 2007                           $ 681,700,000
                 March 31, 2008                              $ 609,900,000
                 Thereafter                                  $ 609,900,000

                 

          (iii)  MINIMUM EBITDA. On a consolidated basis, Holdings and
          its Subsidiaries shall not fail to maintain EBITDA for each
          period of four quarters ended as of the last day of each
          quarterly period set forth below of not less than the
          correlative amount indicated (bracketed amounts (<  >) are
          negative):



                 QUARTERLY PERIOD ENDING                    REQUIRED AMOUNT
                                                          
                 March 31, 2002                                   N/A
                 June 30, 2002                               $ (45,200,000)
                 September 30, 2002                          $ (38,800,000)
                 December 31, 2002                           $ (35,800,000)
                 March 31, 2003                              $ (23,000,000)
                 June 30, 2003                               $  (7,000,000)
                 September 30, 2003                          $  11,200,000
                 December 31, 2003                           $  36,700,000
                 March 31, 2004                              $  69,200,000
                 June 30, 2004                               $ 107,700,000
                 September 30, 2004                          $ 149,400,000
                 December 31, 2004                           $ 196,000,000
                 March 31, 2005                              $ 228,700,000
                 June 30, 2005                               $ 238,500,000
                 September 30, 2005                          $ 216,600,000
                 December 31, 2005                           $ 195,300,000
                 March 31, 2006                              $ 161,900,000
                 June 30, 2006                               $ 152,700,000
                 September 30, 2006                          $ 156,200,000
                 December 31, 2006                           $ 161,300,000
                 March 31, 2007                              $ 162,400,000
                 June 30, 2007                               $ 166,400,000
                 September 30, 2007                          $ 166,800,000
                 December 31, 2007                           $ 154,600,000
                 March 31, 2008                              $ 155,000,000
                 Thereafter                                  $ 155,000,000


                                       6.


          (iv)   INTEREST COVERAGE RATIO. On a consolidated basis,
          Holdings and its Subsidiaries shall not permit the ratio of
          EBITDA to Interest Expense (measured on a rolling four
          quarter basis for the four fiscal quarters ended on the last
          day of each quarterly period set forth below) for each
          quarterly period set forth below to be less than the ratio
          set forth below (determined as of the end of the quarterly
          period set forth below):



                 QUARTERLY PERIOD ENDING                    REQUIRED RATIO
                                                             
                 March 31, 2002                                  N/A
                 June 30, 2002                                   N/A
                 September 30, 2002                              N/A
                 December 31, 2002                               N/A
                 March 31, 2003                                  N/A
                 June 30, 2003                                   N/A
                 September 30, 2003                             0.3:1
                 December 31, 2003                              0.9:1
                 March 31, 2004                                 1.6:1
                 June 30, 2004                                  2.4:1
                 September 30, 2004                             3.3:1
                 December 31, 2004                              4.2:1
                 March 31, 2005                                 3.9:1
                 June 30, 2005                                  3.2:1
                 September 30, 2005                             2.5:1
                 December 31, 2005                              1.9:1
                 March 31, 2006                                 1.4:1
                 June 30, 2006                                  1.2:1
                 September 30, 2006                             1.1:1
                 December 31, 2006                              1.0:1
                 March 31, 2007                                 1.0:1
                 June 30, 2007                                  1.0:1
                 September 30, 2007                             1.0:1
                 December 31, 2007                              1.1:1
                 March 31, 2008                                 1.2:1
                 Thereafter                                     1.2:1


          (v)    MAXIMUM FUNDED DEBT TO CAPITALIZATION. On a consolidated
          basis, Holdings and its Subsidiaries shall not permit the
          ratio of Consolidated Funded Debt to Capitalization to
          exceed

                                       7.


          the percentage amount set forth below (determined as of the
          end of the quarterly period set forth below):



                 QUARTERLY PERIOD ENDING                         PERCENTAGE
                                                                 
                 March 30, 2002                                     N/A
                 June 30, 2002                                      71%
                 September 30, 2002                                 71%
                 December 31, 2002                                  71%
                 March 31, 2003                                     71%
                 June 30, 2003                                      71%
                 September 30, 2003                                 71%
                 December 31, 2003                                  71%
                 March 31, 2004                                     71%
                 June 30, 2004                                      72%
                 September 30, 2004                                 73%
                 December 31, 2004                                  73%
                 March 31, 2005                                     73%
                 June 30, 2005                                      73%
                 September 30, 2005                                 73%
                 December 31, 2005                                  72%
                 March 31, 2006                                     71%
                 June 30, 2006                                      70%
                 September 30, 2006                                 68%
                 December 31, 2006                                  68%
                 March 31, 2007                                     65%
                 June 30, 2007                                      62%
                 September 30, 2007                                 50%
                 December 31, 2007                                  50%
                 March 31, 2008                                     50%
                 Thereafter                                         50%


          (vi)   MINIMUM CUSTOMERS. The number of revenue generating
          customers of Holdings and its Subsidiaries (treating each
          office location of a Person purchasing services from
          Holdings or any Subsidiary to be a separate customer to the
          extent such office locations are in separate buildings) as
          of the end of the monthly or quarterly period set forth
          below shall not be less than the number listed opposite such
          period:

                                       8.




                 MONTHLY PERIOD                                       NUMBER
                                                                    
                 January 31, 2002                                      231
                 February 28, 2002                                     300
                 March 31, 2002                                        392
                 April 30, 2002                                        498
                 May 31, 2002                                          614


                 QUARTERLY PERIOD                                     NUMBER
                                                                   
                 June 30, 2002                                           745
                 September 30, 2002                                    1,311
                 December 31, 2002                                     1,970
                 March 31, 2003                                        2,809
                 June 30, 2003                                         3,674
                 September 30, 2003                                    4,615
                 December 31, 2003                                     5,682
                 March 31, 2004                                        7,054
                 June 30, 2004                                         8,322
                 September 30, 2004                                    9,578
                 December 31, 2004                                    10,806
                 March 31, 2005                                       11,977
                 June 30, 2005                                        13,058
                 September 30, 2005                                   14,113
                 December 31, 2005                                    15,174
                 March 31, 2006                                       16,245
                 June 30, 2006                                        17,326
                 September 30, 2006                                   18,418
                 December 31, 2006                                    19,515
                 March 31, 2007                                       20,635
                 June 30, 2007                                        21,757
                 September 30, 2007                                   22,889
                 December 31, 2007                                    24,022
                 March 31, 2008                                       25,168
                 Thereafter                                           25,168


          (vii)  MINIMUM CASH RESERVES. On a consolidated basis,
          Holdings and its Subsidiaries shall maintain as of the last
          day of each quarterly period Minimum Cash Reserves not less
          than the amount listed opposite such date below:



                 DATE                                         NUMBER
                                                            
                 March 31, 2002                                N/A


                                       9.




                 DATE                                           NUMBER
                                                         
                 June 30, 2002                              $  53,900,000
                 September 30, 2002                         $  61,100,000
                 December 31, 2002                          $  45,300,000
                 March 31, 2003                             $  35,400,000
                 June 30, 2003                              $  25,300,000
                 September 30, 2003                         $  24,600,000
                 December 31, 2003                          $  27,100,000
                 March 31, 2004                             $  39,800,000
                 June 30, 2004                              $  64,100,000
                 September 30, 2004                         $ 112,100,000
                 December 31, 2004                          $ 146,200,000
                 March 31, 2005                             $ 164,700,000
                 June 30, 2005                              $ 174,400,000
                 September 30, 2005                         $ 193,200,000
                 December 31, 2005                          $ 218,400,000
                 March 31, 2006                             $ 229,500,000
                 June 30, 2006                              $ 237,300,000
                 September 30, 2006                         $ 248,300,000
                 December 31, 2006                          $ 265,700,000
                 March 31, 2007                             $ 284,500,000
                 June 30, 2007                              $ 187,200,000
                 September 30, 2007                         $ 201,900,000
                 December 31, 2007                          $ 220,200,000
                 Thereafter                                 $ 252,700,000


          (viii) MINIMUM NODES ON NET. The number of nodes connected
          to the network maintained by Holdings and its Subsidiaries
          as of any date listed below shall not be less than the
          number listed opposite such monthly or quarterly period set
          forth below:



                 MONTHLY PERIOD                                NUMBER
                                                              
                 January 31, 2002                                162
                 February 28, 2002                               185
                 March 31, 2002                                  207
                 April 30, 2002                                  230
                 May 31, 2002                                    252

                 QUARTERLY PERIOD                              NUMBER
                                                              
                 June 30, 2002                                   275


                                       10.


                                           
                 September 30, 2002                              316
                 December 31, 2002                               388
                 March 31, 2003                                  472
                 June 30, 2003                                   556
                 September 30, 2003                              640
                 December 31, 2003                               724
                 March 31, 2004                                  820
                 June 30, 2004                                   916
                 September 30, 2004                            1,012
                 December 31, 2004                             1,108
                 March 31, 2005                                1,204
                 June 30, 2005                                 1,300
                 September 30, 2005                            1,396
                 December 31, 2005                             1,492
                 March 31, 2006                                1,588
                 June 30, 2006                                 1,684
                 September 30, 2006                            1,780
                 December 31, 2006                             1,876
                 March 31, 2007                                1,972
                 June 30, 2007                                 2,068
                 September 30, 2007                            2,164
                 December 31, 2007                             2,260
                 March 31, 2008                                2,356
                 Thereafter                                    2,356

                 

          (ix)   MAXIMUM CAPITAL EXPENDITURES. On a consolidated basis,
          Holdings and its Subsidiaries shall not make any
          expenditures for fixed or capital assets on an annual basis
          in excess of the amount listed below (determined as of the
          end of the annual period set forth below):



                 DATE                                         ANNUAL AMOUNT
                                                           
                 December 31, 2002                            $  66,600,000
                 December 31, 2003                            $  94,700,000
                 December 31, 2004                            $ 108,300,000
                 December 31, 2005                            $ 115,200,000
                 December 31, 2006                            $  83,400,000
                 December 31, 2007                            $  77,600,000


                                       11.




                 DATE                                         ANNUAL AMOUNT
                                                           
                 Thereafter                                   $  77,600,000


          As used in this subsection (r), the following terms shall
          have the following meanings: "Capitalization" means, on any
          date, the sum of (i) Consolidated Funded Debt, and (ii) the
          sum of common and preferred equity, including without
          duplication capital stock plus paid in capital of Holdings
          and its Subsidiaries on such date, on a consolidated basis
          and as determined in accordance with, GAAP; "Consolidated
          Funded Debt" means, as of any date of determination, all
          Indebtedness of Holdings and its Subsidiaries on such date,
          on a consolidated basis and as determined in accordance with
          GAAP; "EBITDA" means, for any period with respect to
          Holdings and its Subsidiaries, net income (excluding
          extraordinary items), plus (except to the extent
          attributable to extraordinary items) the amount of any
          interest, taxes, depreciation, amortization and other
          non-cash charges deducted in determining such net income,
          all of the foregoing as determined on a consolidated basis
          for Holdings and its Subsidiaries, determined in conformity
          with GAAP; "Interest Expense" means, for any period with
          respect to Holdings and its Subsidiaries, the amount of
          interest expense, both expensed and capitalized (including
          the portion of any payments in respect of any capital leases
          allocable to interest expense), on a consolidated basis, as
          determined in accordance with GAAP, paid or payable during
          such period in respect of any Indebtedness of Holdings and
          its Subsidiaries; and "Minimum Cash Reserves" means
          unrestricted cash and cash equivalents of Borrower and its
          wholly-owned Subsidiaries. Notwithstanding anything in this
          Section 5.1(r) to the contrary, any Indebtedness or any
          Interest Expense thereon accruing or becoming due during the
          Permitted Period resulting from Permitted Purchases shall
          not be included by Holdings in determining compliance with
          the financial covenants set forth in this Section 5.1(r).
          Notwithstanding any provision to the contrary contained
          herein, if Holdings and its Subsidiaries fail to comply with
          any of the financial covenants set forth in this Section
          5.1(r) prior to the period ending June 30, 2002, such
          non-compliance shall not constitute an Event of Default
          hereunder, but neither Agent nor any other Lender shall have
          any obligation to make any Loans to Borrower (other than
          Tranche X Loans (as defined in the Schedule), which shall
          continue to be available to Borrower), until Holdings and
          its Subsidiaries shall have complied with all of the monthly
          financial covenants set forth in this Section 5.1(r) for a
          subsequent month during the period prior to and including
          the period ending June 30, 2002. On and after June 30, 2002,
          any

                                       12.


          non-compliance with any of the financial covenants shall
          constitute an Event of Default hereunder.

          (viii) The following is added as a new Section 5.1(z) to the Credit
Agreement:

          (z)    FCC LICENSES AND LICENSE SUBSIDIARIES. Neither Holdings
          nor Borrower shall permit any FCC License to be owned or
          acquired by any Person other than a Subsidiary that (i) is
          wholly owned directly or indirectly by Borrower, (ii) does
          not engage in any business or activity other than the
          ownership of FCC Licenses and activities directly incidental
          thereto, (iii) does not own or acquire any assets other than
          FCC Licenses, and (iv) does not have or incur any
          Indebtedness or other liabilities other than liabilities
          imposed by law, including tax liabilities, other liabilities
          directly incidental to its existence and permitted business
          and activities, and any liabilities to Agent and Lenders
          arising pursuant to the Loan Documents (any Subsidiary
          satisfying the foregoing requirements, a "License
          Subsidiary").

          (ix)   The following is added as a new Section 6.3 to the Credit
Agreement:

          6.3    CERTAIN AGREEMENTS REGARDING THE COLLATERAL. Any
          provision contained herein or in any Collateral Document to
          the contrary notwithstanding, no action shall be taken
          hereunder or under any of the Collateral Documents by Agent
          or Lenders with respect to any Collateral in the form of FCC
          Licenses or the pledged stock of any License Subsidiary
          unless and until all applicable requirements of the FCC, if
          any, under the Communications Act of 1934, applicable state
          laws and the respective rules and regulations thereunder and
          thereof, as well as any other laws, rules and regulations of
          any other Governmental Authority applicable to or having
          jurisdiction over Holdings, Borrower or the relevant
          Subsidiary, have in the reasonable judgment of Agent been
          fully satisfied to the extent necessary to take such action
          and there have been obtained such consents, approvals and
          authorizations, as may be required to be obtained from the
          FCC, applicable state and local regulatory authorities and
          municipalities and any other Governmental Authority under
          the terms of any franchise, license or similar operating
          right held by Holdings, Borrower or the relevant Subsidiary
          in order to take such action. It is the intention of the
          parties hereto that the pledge in favor of Agent (on behalf
          of Lenders) of the stock of any License Subsidiary, and the
          creation of a Lien (to the extent permitted by law) in favor
          of Agent (on behalf of Lenders) in FCC Licenses, and all
          rights and remedies by Agent and Lenders with respect to
          such pledged stock and FCC Licenses, shall in all relevant
          aspects be subject to and governed by said statutes, rules

                                       13.


          and regulations and that nothing in this Agreement shall be
          construed to diminish the control exercised by Holdings,
          Borrower or the relevant Subsidiary, except in accordance
          with the provisions of such statutory requirements and rules
          and regulations. By its acceptance of this Agreement, Agent
          and each Lender agrees that it will not take any action
          pursuant to this Agreement or any other Collateral Document
          which constitutes or results in any assignment of a license
          or franchise or any change of control over the
          communications properties owned and operated by Holdings,
          Borrower or any Subsidiary, if such assignment of license or
          franchise or change of control would, under then existing
          law or under any franchise, require the prior approval of a
          Governmental Authority, without first obtaining such
          approval. Upon the exercise by Agent or any Lender of any
          power, right, privilege or remedy pursuant to this Agreement
          or any Collateral Document which requires any consent,
          approval, recording, qualification or authorization of any
          Governmental Authority, Holdings or Borrower shall, or shall
          cause the relevant Subsidiary to, execute and deliver all
          applications, certificates, instruments and other documents
          and papers that Agent may reasonably require in order for
          such governmental consent, approval, recording,
          qualification or authorization to be obtained. Holdings and
          Borrower each agrees to use its best efforts to cause such
          governmental consents, approvals, recordings, qualifications
          and authorizations to be forthcoming.

          (x)    Section 2(c)(ii) of the Schedule to the Credit Agreement is
hereby deleted in its entirety and replaced by the following:

          (ii)   The Tranche B Loans and the Tranche X Loans shall be
          subject to mandatory prepayment on or before the later of
          (A) the third Banking Day after any date Holdings receives
          the net proceeds from the sale of any of its equity
          securities or debt instruments or securities (the "Holdings
          Prepayment Date") (other than issuances of equity securities
          to officers, directors, employees or consultants in the
          ordinary course of business); PROVIDED, that Holdings shall
          not be required to make any such mandatory prepayment if it
          contributes such proceeds to Borrower as common equity prior
          to the Holdings Prepayment Date and, in such case, any
          mandatory prepayment required by this subsection 2(c)(ii)
          shall be made according to the provisions of the immediately
          succeeding clause (B) and (B) the next Banking Day after
          Borrower receives from Holdings the net proceeds from the
          sale of any of Holdings' equity securities or debt
          instruments or securities (other than issuances of equity
          securities to officers, directors, employees or consultants
          in the ordinary course of business), in each case, whether
          in one transaction or a series of

                                       14.


          transactions and in the amount of such proceeds; PROVIDED,
          however, that Holdings or Borrower may retain (A) the first
          $300,000,000 of proceeds of equity offerings of Holdings or
          Borrower measured from the date of the Borrower's
          incorporation and (B) up to $200,000,000 of proceeds of
          Subordinated Debt offerings of Holdings (excluding proceeds
          of Subordinated Debt issued or assumed by Holdings or the
          Borrower in connection with the transactions contemplated by
          the AR Merger Agreement, which Borrower shall be permitted
          to retain in its entirety) without being required to make
          such prepayment; PROVIDED that any retained proceeds
          retained by Holdings shall be contributed by Holdings to
          Borrower as common equity pursuant to the terms of this
          Agreement and the Guaranty executed by Holdings in
          connection herewith.

          (b) REFERENCES WITHIN CREDIT AGREEMENT. Each reference in the
Credit Agreement to "this Agreement" and the words "hereof," "herein,"
"hereunder," or words of like import, shall mean and be a reference to the
Credit Agreement as amended by this Amendment.

          SECTION 3 CONDITIONS OF EFFECTIVENESS. The effectiveness of Section 2
of this Amendment shall be subject to the satisfaction of each of the following
conditions precedent:

          (a) FEES AND EXPENSES. Borrower shall have paid all invoiced costs and
expenses then due in accordance with Section 5(c) below.

          (b) LOAN DOCUMENTS. Agent shall have received the following documents,
in form and substance satisfactory to it:

          (i)    the Guaranty by Allied Riser in favor of Agent (on behalf of
each Lender) in substantially the form of EXHIBIT A attached hereto;

          (ii)   the Security Agreement between Allied Riser and Agent (on
behalf of each Lender) in substantially the form of EXHIBIT B attached hereto
(the "AR Security Agreement");

          (iii)  the Copyright Security Agreement between Allied Riser and Agent
(on behalf of each Lender) in substantially the form of EXHIBIT C attached
hereto;

          (iv)   the Patent and Trademark Security Agreement between Allied
Riser and Agent (on behalf of each Lender) in substantially the form of EXHIBIT
D attached hereto;

          (v)    the Stock Pledge Agreement between Allied Riser and Agent (on
behalf of each Lender) in substantially the form of EXHIBIT E attached hereto;

                                       15.


          (vi)   the Guaranty by each of the Subsidiaries of Allied Riser
identified on ANNEX A attached hereto (each an "AR Subsidiary" and,
collectively, the "AR Subsidiaries") in favor of Agent (on behalf of each
Lender) in substantially the form of EXHIBIT F attached hereto;

          (vii)  the Security Agreement among each AR Subsidiary and Agent (on
behalf of each Lender) in substantially the form of EXHIBIT G attached hereto
(the "AR Subsidiary Security Agreement");

          (viii) within thirty (30) days after the Effective Date, the Guaranty
by Allied Riser Communications Corporation of Canada, Inc. ("AR Canada") in
favor of Agent (on behalf of each Lender), in form and substance satisfactory to
Agent, in accordance with Canadian law;

          (ix)   Within thirty (30) days after the Effective Date, the Personal
Property Security Agreement between AR Canada and Agent (on behalf of each
Lender), in form and substance satisfactory to Agent, in accordance with
Canadian law (the "AR Canada PPSA");

          (x)    the Amendment to Amended and Restated Stock Pledge Agreement
between Borrower and Agent (on behalf of each Lender) in substantially the form
of EXHIBIT H attached hereto (the "Amended Borrower Stock Pledge"); and

          (xi)   the consent of each Guarantor, in substantially the form of
EXHIBIT I (the "Guarantor Consent"), to the amendments contemplated by this
Amendment.

          (c) DOCUMENTS AND ACTION RELATING TO COLLATERAL. On or before the
Effective Date (except as expressly provided below), Agent shall have received
the following, in form and substance satisfactory to it:

          (i)    UCC Financing Statements for Allied Riser and each AR
Subsidiary as required under the AR Security Agreement, the AR Subsidiary
Security Agreement and the other Collateral Documents;

          (ii)   Original stock certificates of Allied Riser pledged to Agent
(on behalf of Lenders) pursuant to the Amended Borrower Stock Pledge (together
with applicable Stock Power);

          (iii)  Within thirty (30) days after the Effective Date, Collateral
Access Agreements as required under the AR Security Agreement, the AR Subsidiary
Security Agreement and the other Collateral Documents;

          (iv)   Within thirty (30) days after the Effective Date, Account
Control Agreements as required under the AR Security Agreement, the AR
Subsidiary Security Agreement and the other Collateral Documents;

          (v)    Representations and Warranties Certificate with all requested
information completed by Borrower;

          (vi)   Within thirty (30) days after the Effective Date, such other
searches, certificates, filings, and other documents and instruments, in form
reasonably satisfactory to

                                       16.


Agent, as Agent may reasonably require to effectuate the purposes of the AR
Canada PPSA and the other Loan Documents; and

          (vii)  Such other financing statements, searches, certificates,
filings, and other documents and instruments, in form reasonably satisfactory to
Agent, as Agent may reasonably require to effectuate the purposes of the Loan
Documents.

          (d) ADDITIONAL CLOSING DOCUMENTS AND ACTIONS. On or before the
Effective Date (except as expressly provided below), Agent shall have received
the following, in form and substance satisfactory to it:

          (i)    within ten (10) days after the Effective Date, the certificate
of merger with respect to the Allied Riser merger transaction filed with the
Secretary of State of Delaware;

          (ii)   a certificate from Borrower and Holdings confirming the
capitalization of Holdings and Borrower and the total per share consideration
paid by Holdings to Allied Riser in connection with the consummation of the
Allied Riser merger transaction;

          (iii)  evidence that all (A) authorizations or approvals of any
Governmental Authority, and (B) approvals or consents of any other Person,
required in connection with the Allied Riser merger transaction and the
execution, delivery and performance of this Amendment shall have been obtained;

          (iv)   a certificate of a senior officer of Borrower, stating that (A)
the representations and warranties contained in Section 4 and in the amendments
to the other Loan Documents are true and correct in all material respects on and
as of the date of such certificate as though made on and as of the Effective
Date and (B) on and as of the Effective Date, after and giving effect to the
amendment of the Credit Agreement contemplated hereby, no Default shall have
occurred and be continuing;

          (v)    a certificate of a senior officer of Holdings, stating that the
representations and warranties contained in the Stock Pledge Agreement, the
Holdings Guaranty, and the other Guarantor Documents are true and correct in all
material respects on and as of the Effective Date as though made on and as of
such date;

          (vi)   a certificate of a senior officer of Allied Riser, stating that
the representations and warranties contained in the Allied Riser Guaranty and in
the other Guarantor Documents are true and correct in all material respects on
and as of the Effective Date as though made on and as of such date; and

          (vii)  such additional financial information with respect to Allied
Riser, Borrower or any Guarantor (e.g. financial statements, forecasts,
pro-formas, budgets, etc.), as Agent may reasonably request.

          (e) CORPORATE DOCUMENTS. Agent shall have received the following, in
form and substance satisfactory to it:

                                       17.


          (i)    a certificate of the Secretary or Assistant Secretary of
Borrower, dated the Effective Date, certifying (A) copies of the resolutions of
the Board of Directors of Borrower authorizing the execution, delivery and
performance of this Amendment and the amendments to the other Loan Documents and
(B) the incumbency, authority and signatures of each officer of Borrower
authorized to execute and deliver this Amendment and the amendments to the other
Loan Documents;

          (ii)   a certificate of the Secretary or Assistant Secretary of
Holdings, dated the Effective Date, certifying (A) copies of the resolutions of
the Board of Directors of the Holdings authorizing the execution, delivery and
performance of the Stock Pledge Agreement, the Guarantor Consent and related
documents, and (B) copies of the amended and restated certificate of
incorporation and amended and restated bylaws of Holdings; and

          (iii)  a certificate of the Secretary or Assistant Secretary of Allied
Riser and each of the AR Subsidiaries, dated the Effective Date, certifying (A)
copies of the resolutions of the Board of Directors of Allied Riser and each AR
Subsidiary authorizing the execution, delivery and performance of this Amendment
and each of the other documents described herein or related thereto to which it
is a party, (B) the incumbency, authority and signatures of each officer of
Allied Riser and each AR Subsidiary authorized to execute and deliver such
documents, and (C) copies of the certificate of incorporation and bylaws of
Allied Riser and each AR Subsidiary.

          (f) LEGAL OPINIONS. Agent shall have received (i) the opinion of
Friedman, Kaplan, Seiler & Adelman, LLP, counsel to Borrower, Additional
Borrower, Allied Riser and each Guarantor, dated the Effective Date, in
substantially the form of EXHIBIT J; and (ii) if requested by Agent, an opinion
of special FCC counsel to Borrower, Holdings and Allied Riser, within thirty
(30) days after the Effective Date.

          (g) MATERIAL ADVERSE CHANGE. On and as of the Effective Date, there
shall have occurred no Material Adverse Change since the date of this Amendment.

          (h) REPRESENTATIONS AND WARRANTIES; NO DEFAULT. On the Effective Date,
after giving effect to the amendment of the Credit Agreement contemplated
hereby:

          (i)    except as otherwise disclosed in writing to Agent and Lenders
under that certain disclosure schedule delivered to Lender prior to the
Effective Date, the representations and warranties contained in Section 4 and in
the other Loan Documents shall be true and correct on and as of the Effective
Date as though made on and as of such date; and

          (ii)   no Default shall have occurred and be continuing.

          (i) ADDITIONAL DOCUMENTS. Agent shall have received, in form and
substance satisfactory to it, such additional approvals, opinions, documents and
other information as Lender may reasonably request.

          SECTION 4 REPRESENTATIONS AND WARRANTIES. To induce Agent to enter
into this Amendment, Borrower hereby confirms and restates, as of the date
hereof, the representations and warranties made by it in Section 4.1 of the
Credit Agreement and in the

                                       18.


other Loan Documents (except as otherwise disclosed in writing to Agent and
Lenders under that certain disclosure schedule delivered to Lender prior to the
Effective Date). For the purposes of this Section 4, (i) each reference in
Section 4.1 of the Credit Agreement to "this Agreement," and the words "hereof,"
"herein," "hereunder," or words of like import in such Section, shall mean and
be a reference to the Credit Agreement as amended by this Amendment, and each
reference in such Section to "the Loan Documents" shall mean and be a reference
to the Loan Documents as amended as contemplated hereby, and (ii) , clause (i)
shall take into account any amendments to any disclosures made in writing by
Borrower and any Guarantor to Agent and each Lender after the Closing Date and
approved by Agent (on behalf of each Lender).

          SECTION 5 MISCELLANEOUS.

          (a) CREDIT AGREEMENT OTHERWISE NOT AFFECTED. Except as expressly
amended pursuant hereto, the Credit Agreement shall remain unchanged and in full
force and effect and is hereby ratified and confirmed in all respects. Agent's
execution and delivery of, or acceptance of, this Amendment and any other
documents and instruments in connection herewith (collectively, the "Amendment
Documents") shall not be deemed to create a course of dealing or otherwise
create any express or implied duty by it to provide any other or further
amendments, consents or waivers in the future.

          (b) NO RELIANCE. Borrower hereby acknowledges and confirms to Agent
that Borrower is executing this Amendment and the other Amendment Documents on
the basis of its own investigation and for its own reasons without reliance upon
any agreement, representation, understanding or communication by or on behalf of
any other Person.

          (c) COSTS AND EXPENSES. Borrower agrees to pay to Agent on demand the
reasonable out-of-pocket costs and expenses of Agent, and the reasonable fees
and disbursements of counsel to Lender, in connection with the negotiation,
preparation, execution and delivery of this Amendment and any other documents to
be delivered in connection herewith.

          (d) BINDING EFFECT. This Amendment shall be binding upon, inure to the
benefit of and be enforceable by Borrower, Agent, Additional Borrower, Holdings
and their respective successors and assigns.

          (e) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

          (f) COMPLETE AGREEMENT; AMENDMENTS. This Amendment, together with the
other Amendment Documents and the other Loan Documents, contains the entire and
exclusive agreement of the parties hereto and thereto with reference to the
matters discussed herein and therein. This Amendment supersedes all prior
commitments, drafts, communications, discussions and understandings, oral or
written, with respect thereto. This Amendment may not be modified, amended or
otherwise altered except in accordance with the terms of Section 8.1 of the
Credit Agreement.

                                       19.


          (g) SEVERABILITY. Whenever possible, each provision of this Amendment
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If, however, any provision of this Amendment
shall be prohibited by or invalid under any such law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform
to the minimum requirements of such law or regulation, or, if for any reason it
is not deemed so modified, it shall be ineffective and invalid only to the
extent of such prohibition or invalidity without affecting the remaining
provisions of this Amendment, or the validity or effectiveness of such provision
in any other jurisdiction.

          (h) COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.

          (i) INTERPRETATION. This Amendment and the other Amendment Documents
are the result of negotiations between and have been reviewed by counsel to
Agent, Borrower and other parties, and are the product of all parties hereto.
Accordingly, this Amendment and the other Amendment Documents shall not be
construed against Agent or any Lender merely because of Agent's involvement in
the preparation thereof.

          (j) LOAN DOCUMENTS. This Amendment and the other Amendment Documents
shall constitute Loan Documents.

          (k) DESIGNATED SENIOR DEBT. Each of the parties hereto acknowledges
and agrees that the Indebtedness owing to Agent and Lenders under the Credit
Agreement and any other Loan Document constitutes "Designated Senior Debt" for
purposes of the Indenture between Allied Riser Communications Corporation and
Wilmington Trust Company dated June 28, 2000, as the same may be amended from
time to time by any amendment or supplemental indenture.

          [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

                                       20.


          IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment, as of the date first above written.

                                              Cogent Communications, Inc.

                                              By
                                                 -------------------------------
                                                 Title:


                                              Cogent Communications Group, Inc.

                                              By
                                                 -------------------------------
                                                 Title:


                                              Cogent Internet, Inc.

                                              By
                                                 -------------------------------
                                                 Title:


                                              Cisco Systems Capital Corporation

                                              By
                                                 -------------------------------
                                                 Title:

                                       21.


                                    EXHIBIT A
       to Amendment No. 1 to Second Amended and Restated Credit Agreement


                              ALLIED RISER GUARANTY

                                [TO BE PROVIDED]

                                       A-1


                                    EXHIBIT B
       to Amendment No. 1 to Second Amended and Restated Credit Agreement


                         ALLIED RISER SECURITY AGREEMENT

                                [TO BE PROVIDED]

                                       B-1


                                    EXHIBIT C
       to Amendment No. 1 to Second Amended and Restated Credit Agreement


                    ALLIED RISER COPYRIGHT SECURITY AGREEMENT

                                [TO BE PROVIDED]

                                       C-1


                                    EXHIBIT D
       to Amendment No. 1 to Second Amended and Restated Credit Agreement


              ALLIED RISER PATENT AND TRADEMARK SECURITY AGREEMENT

                                [TO BE PROVIDED]

                                       D-1


                                    EXHIBIT E
       to Amendment No. 1 to Second Amended and Restated Credit Agreement


                       ALLIED RISER STOCK PLEDGE AGREEMENT

                                [TO BE PROVIDED]

                                       E-1


                                    EXHIBIT F
       to Amendment No. 1 to Second Amended and Restated Credit Agreement


                             AR SUBSIDIARY GUARANTY

                                [TO BE PROVIDED]

                                       F-1


                                    EXHIBIT G
       to Amendment No. 1 to Second Amended and Restated Credit Agreement


                        AR SUBSIDIARY SECURITY AGREEMENT

                                [TO BE PROVIDED]

                                       G-1


                                    EXHIBIT H
       to Amendment No. 1 to Second Amended and Restated Credit Agreement

        AMENDMENT TO AMENDED AND RESTATED BORROWER STOCK PLEDGE AGREEMENT


                                [TO BE PROVIDED]

                                       H-1


                                    EXHIBIT I
       to Amendment No. 1 to Second Amended and Restated Credit Agreement


                       CONSENT AND AGREEMENT OF GUARANTORS

          Each of the undersigned, in its capacity as guarantor, acknowledges
that its consent to the foregoing Amendment is not required, but the undersigned
nevertheless does hereby consent to the foregoing Amendment and to any documents
and agreements referred to therein and to all future modifications and
amendments thereto (subject to the terms of the Guaranty ("Guaranty"), executed
by each of the undersigned in favor of Cisco Systems Capital Corporation
("CSCC") (as such Continuing Guaranty may be amended from time to time)), and
any termination thereof, and to any and all other present and future documents
and agreements by or between Cogent Communications, Inc. and CSCC. Nothing
herein shall in any way limit any of the terms or provisions of such Guaranty of
the undersigned or any other document or agreement executed by the undersigned
in CSCC's favor (as the same may be amended from time to time), all of which are
hereby ratified and affirmed in all respects.

                                              GUARANTORS:

                                              Cogent Communications, Inc.

                                              By
                                                 -------------------------------
                                                 Title:

                                              Cogent Communications Group, Inc.

                                              By
                                                 -------------------------------
                                                 Title:

                                              Cogent Internet, Inc.

                                              By
                                                 -------------------------------
                                                 Title:

                                       I-1


                                    EXHIBIT J
       to Amendment No. 1 to Second Amended and Restated Credit Agreement

                             FORM OF OPINION LETTER

                                [TO BE PROVIDED]

                                       J-1


                                     ANNEX A
       to Amendment No. 1 to Second Amended and Restated Credit Agreement

                          SUBSIDIARIES OF ALLIED RISER



 SUBSIDIARY                                        JURISDICTION OF       CORPORATE ID NO.
                                                    INCORPORATION
                                                                        
 Allied Riser Operations Corporation                      DE                  2957686
 ARC Construction, Inc.                                   DE                  3298728
 ARC Long Distance, Inc.                                  DE                  3026797
 ARC Worldwide, Inc.                                      DE                  3202763
 Allied Riser of Alabama                                  DE                  3095135
 Allied Riser of Arizona                                  DE                  3095138
 Allied Riser of California                               DE                  3004262
 Allied Riser of Colorado                                 DE                  3004261
 Allied Riser of Connecticut                              DE                  3004281
 Allied Riser of D.C.                                     DE                  3010019
 Allied Riser of Florida                                  DE                  3093421
 Allied Riser of Georgia                                  DE                  3004263
 Allied Riser of Illinois                                 DE                  3004265
 Allied Riser of Indiana                                  DE                  3095141
 Allied Riser of Kentucky                                 DE                  3095149
 Allied Riser of Louisiana                                DE                  3093427
 Allied Riser of Maryland                                 DE                  3095156
 Allied Riser of Massachusetts                            DE                  3004268
 Allied Riser of Michigan                                 DE                  3095360
 Allied Riser of Minnesota                                DE                  3095361
 Allied Riser of Missouri                                 DE                  3095365
 Allied Riser of Nevada                                   DE                  3095366
 Allied Riser of New Jersey                               DE                  3093429
 Allied Riser of New Mexico                               DE                  3095368
 Allied Riser of New York                                 DE                  3004270
 Allied Riser of North Carolina                           DE                  3095452
 Allied Riser of Ohio                                     DE                  3004273
 Allied Riser of Oklahoma                                 DE                  3093433
 Allied Riser of Pennsylvania                             DE                  3004272
 Allied Riser of Rhode Island                             DE                  3095456
 Allied Riser of South Carolina                           DE                  3095463
 Allied Riser of Tennessee                                DE                  3095465
 Allied Riser of Texas                                    DE                  2988683
 Allied Riser of Utah                                     DE                  3095467
 Allied Riser of Virginia                                 VA                   524192
 Allied Riser of Washington                               DE                  3004277
 Allied Riser of Wisconsin                                DE                  3095469


                                       A-1


                                                                    
Allied Riser of Tennessee, Inc.                            DE             75-2841263
Allied Riser of Texas, Inc.                                DE             75-2820271
Allied Riser of Utah, Inc.                                 DE             75-2841260
Allied Riser of Virginia, Inc.                             VA             75-2862729
Allied Riser of Washington, Inc.                           DE             75-2818768
Allied Riser of Wisconsin, Inc.                            DE             75-2841269



                                       A-2

EX-10.2

                                                                    EXHIBIT:10.2

                                                                [EXECUTION COPY]

                                 AMENDMENT NO. 2

                 TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT

          THIS AMENDMENT NO. 2 TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment") dated as of April 17, 2002, is made among Cogent
Communications, Inc., a Delaware corporation ("Borrower"), Cogent Internet,
Inc., a Delaware corporation ("Additional Borrower"), Cogent Communications
Group, Inc., a Delaware corporation ("Holdings"), and Cisco Systems Capital
Corporation, a Nevada corporation ("Lender" or "Agent").

          WHEREAS, Borrower, Additional Borrower, Agent and the several
financial institutions from time to time party thereto ("Lenders") entered into
a Second Amended and Restated Credit Agreement dated as of October 24, 2001, as
amended by that certain Amendment No. 1 to Second Amended and Restated Credit
Agreement dated as of February 4, 2002 (as amended, the "Credit Agreement");

          WHEREAS, PN Acquisition Corp., a Delaware corporation ("PN
Acquisition"), a wholly owned subsidiary of Borrower, proposes to acquire
certain assets of PSINet, Inc. ("PSINet") pursuant to an asset sale under
Section 363 of the Bankruptcy Code (the "Asset Purchase Transaction"); and

          WHEREAS, in connection with the proposed Asset Purchase Transaction,
Borrower, Additional Borrower, Holdings and Agent desire, in accordance with
Section 8.1 of the Credit Agreement, to amend the Credit Agreement.

          NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows

          SECTION 1  DEFINITIONS; INTERPRETATION.

          (a) TERMS DEFINED IN CREDIT AGREEMENT. All capitalized terms used in
this Amendment (including in the recitals hereof) and not otherwise defined
herein shall have the meanings assigned to them in the Credit Agreement.

          (b) INTERPRETATION. The rules of interpretation set forth in Section
1.2 of the Credit Agreement shall be applicable to this Amendment and are
incorporated herein by this reference.

          SECTION 2  AMENDMENTS TO THE CREDIT AGREEMENT.

          (a) AMENDMENTS. The Credit Agreement and the Schedule shall be amended
as follows, effective as of the date of satisfaction of the conditions set forth
in Section 4 (the "Effective Date"):

                                       1.


          (i) Section 1.1 of the Credit Agreement is hereby amended as follows:

          (A) The definition of "Permitted Transactions" is hereby amended by
adding the following after the end of the last sentence:

          Notwithstanding anything to the contrary contained herein,
          the transactions (the "Asset Purchase Transaction")
          described in the PSINet Asset Purchase Documents shall
          constitute Permitted Transactions hereunder.

          (B) The following new definitions are added to this Section:

          "PN ACQUISITION" means PN Acquisition Corp., a Delaware
          corporation, and a wholly owned subsidiary of Holdings.

          "PSINET" means PSINet, Inc., a New York corporation.

          "PSINET ASSET PURCHASE AGREEMENT" means the Asset Purchase
          Agreement dated as of February 26, 2002, among PSINet, PN
          Acquisition, and the other parties named thereto.

          "PSINET ASSET PURCHASE DOCUMENTS" means the PSINet Purchase
          Agreement and all documents and agreements entered into in
          connection therewith.

          (ii)  Section 5.1(r) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:

          (r)   FINANCIAL COVENANTS.

          (i)   LEVERAGE RATIO. On a consolidated basis, Holdings and
          its Subsidiaries shall not, as of the last day of any fiscal
          quarter, permit its ratio of Consolidated Funded Debt to
          EBITDA (measured on a rolling four quarter basis for the
          four fiscal quarters ended as of each quarterly period set
          forth below) to be greater than the ratios indicated below:



               QUARTERLY PERIOD ENDING                   REQUIRED RATIO
                                                           
               March 31, 2002                                  N/A
               June 30, 2002                                   N/A
               September 30, 2002                              N/A
               December 31, 2002                               N/A
               March 31, 2003                                  N/A
               June 30, 2003                                   N/A
               September 30, 2003                              N/A
               December 31, 2003                              11.6:1


                                       2.




               QUARTERLY PERIOD ENDING                    REQUIRED RATIO
                                                           
               March 31, 2004                                 6.5:1
               June 30, 2004                                  4.3:1
               September 30, 2004                             3.2:1
               December 31, 2004                              2.6:1
               March 31, 2005                                 2.2:1
               June 30, 2005                                  2.0:1
               September 30, 2005                             2.2:1
               December 31, 2005                              2.4:1
               March 31, 2006                                 2.7:1
               June 30, 2006                                  2.7:1
               September 30, 2006                             2.5:1
               December 31, 2006                              2.2:1
               March 31, 2007                                 2.0:1
               June 30, 2007                                  1.8:1
               September 30, 2007                             0.9:1
               December 31, 2007                              0.8:1
               March 31, 2008                                 0.6:1
               Thereafter                                     0.6:1


          (ii)   MINIMUM TOTAL REVENUES. On a consolidated basis,
          Holdings and its Subsidiaries shall not fail to maintain
          total monthly or total annualized quarterly revenues of
          Holdings and its Subsidiaries, for each monthly or quarterly
          period, as applicable, set forth below, of not less than the
          correlative amount indicated (it being understood that with
          respect to any quarterly period, annualized revenues shall
          be equal to revenues for such quarterly period, multiplied
          by four):



               MONTHLY PERIOD ENDING
               (EXCLUDING REVENUE
               FROM PSINET RELATED ASSETS)               REQUIRED AMOUNT
                                                       
               March 31, 2002                             $   1,200,000
               April 30, 2002                             $   1,500,000
               May 31, 2002                               $   1,900,000
               June 30. 2002                              $   2,200,000
               July 31, 2002                              $   2,600,000
               August 31. 2002                            $   3,100,000
               September 30, 2002                         $   3,700,000


                                       3.





               MONTHLY PERIOD ENDING
               (INCLUDING REVENUE FROM
               PSINET RELATED ASSETS)                    REQUIRED AMOUNT
                                                       
               March 31, 2002                             $   1,200,000
               April 30, 2002                             $   4,400,000
               May 31, 2002                               $   4,500,000
               June 30, 2002                              $   4,400,000
               July 31, 2002                              $   4,700,000
               August 31, 2002                            $   5,200,000
               September 30, 2002                         $   5,600,000


               QUARTERLY PERIOD ENDING             REQUIRED ANNUALIZED AMOUNT
                                                       
               December 31, 2002                          $  90,500,000
               March 31, 2003                             $ 109,300,000
               June 30, 2003                              $ 142,700,000
               September 30, 2003                         $ 182,000,000
               December 31, 2003                          $ 228,000,000
               March 31, 2004                             $ 280,300,000
               June 30, 2004                              $ 335,400,000
               September 30, 2004                         $ 393,200,000
               December 31, 2004                          $ 453,500,000
               March 31, 2005                             $ 443,300,000
               June 30, 2005                              $ 494,600,000
               September 30, 2005                         $ 549,000,000
               December 31, 2005                          $ 606,100,000
               March 31, 2006                             $ 564,900,000
               June 30, 2006                              $ 601,300,000
               September 30, 2006                         $ 641,000,000
               December 31, 2006                          $ 681,400,000
               March 31, 2007                             $ 620,100,000
               June 30, 2007                              $ 652,900,000
               September 30, 2007                         $ 689,100,000
               December 31, 2007                          $ 725,800,000
               March 31, 2008                             $ 654,900,000
               Thereafter                                 $ 654,900,000


          (iii)  MINIMUM EBITDA. On a consolidated basis, Holdings and
          its Subsidiaries shall not fail to maintain EBITDA for each
          monthly or annualized quarterly period, as applicable, ended
          as of the last day of each monthly or quarterly period, as
          applicable, set forth below of not less than the correlative
          amount indicated (bracketed amounts (LESS THAN GREATER THAN)
          are negative), it being understood that with respect to any
          quarterly period, annualized revenues shall be equal to
          revenues for such quarterly period, multiplied by four:

                                       4.




               MONTHLY PERIOD ENDING                      REQUIRED AMOUNT
                                                       
               March 31, 2002                             $   (4,100,000)
               April 30, 2002                             $   (5,000,000)
               May 31, 2002                               $   (7,100,000)
               June 30, 2002                              $   (4,200,000)
               July 31, 2002                              $   (3,200,000)
               August 31, 2002                            $   (2,600,000)
               September 30, 2002                         $   (2,300,000)


               QUARTERLY PERIOD ENDING                    REQUIRED AMOUNT
                                                       
               December 31, 2002                          $  (40,800,000)
               March 31, 2003                             $  (26,300,000)
               June 30, 2003                              $   (3,700,000)
               September 30, 2003                         $   17,300,000
               December 31, 2003                          $   45,100,000
               March 31, 2004                             $   79,500,000
               June 30, 2004                              $  119,200,000
               September 30, 2004                         $  161,300,000
               December 31, 2004                          $  208,400,000
               March 31, 2005                             $  241,500,000
               June 30, 2005                              $  251,700,000
               September 30, 2005                         $  230,200,000
               December 31, 2005                          $  209,400,000
               March 31, 2006                             $  176,500,000
               June 30, 2006                              $  167,900,000
               September 30, 2006                         $  172,100,000
               December 31, 2006                          $  178,000,000
               March 31, 2007                             $  179,900,000
               June 30, 2007                              $  184,700,000
               September 30, 2007                         $  186,000,000
               December 31, 2007                          $  174,700,000
               March 31, 2008                             $  176,000,000
               Thereafter                                 $  176,000,000


          (iv)   INTEREST COVERAGE RATIO. On a consolidated basis,
          Holdings and its Subsidiaries shall not permit the ratio of
          EBITDA to Interest Expense (measured on a rolling four
          quarter basis for the four fiscal quarters ended on the last
          day of each quarterly period set forth below) for each
          quarterly period set forth below to be less than the ratio
          set forth below (determined as of the end of the quarterly
          period set forth below):

                                       5.




               QUARTERLY PERIOD ENDING                     REQUIRED RATIO
                                                            
               March 31, 2002                                   N/A
               June 30, 2002                                    N/A
               September 30, 2002                               N/A
               December 31, 2002                                N/A
               March 31, 2003                                   N/A
               June 30, 2003                                    N/A
               September 30, 2003                              0.3:1
               December 31, 2003                               0.9:1
               March 31, 2004                                  1.6:1
               June 30, 2004                                   2.4:1
               September 30, 2004                              3.3:1
               December 31, 2004                               4.2:1
               March 31, 2005                                  3.9:1
               June 30, 2005                                   3.2:1
               September 30, 2005                              2.5:1
               December 31, 2005                               1.9:1
               March 31, 2006                                  1.4:1
               June 30, 2006                                   1.2:1
               September 30, 2006                              1.1:1
               December 31, 2006                               1.0:1
               March 31, 2007                                  1.0:1
               June 30, 2007                                   1.0:1
               September 30, 2007                              1.0:1
               December 31, 2007                               1.1:1
               March 31, 2008                                  1.2:1
               Thereafter                                      1.2:1


          (v)    MAXIMUM FUNDED DEBT TO CAPITALIZATION. On a consolidated
          basis, Holdings and its Subsidiaries shall not permit the
          ratio of Consolidated Funded Debt to Capitalization to
          exceed the percentage amount set forth below (determined as
          of the end of the quarterly period set forth below):



               QUARTERLY PERIOD ENDING                       PERCENTAGE
                                                             
               March 30, 2002                                   N/A
               June 30, 2002                                    N/A
               September 30, 2002                               71%
               December 31, 2002                                71%
               March 31, 2003                                   71%


                                       6.




               QUARTERLY PERIOD ENDING                       PERCENTAGE
                                                             
               June 30, 2003                                    71%
               September 30, 2003                               71%
               December 31, 2003                                71%
               March 31, 2004                                   71%
               June 30, 2004                                    72%
               September 30, 2004                               73%
               December 31, 2004                                73%
               March 31, 2005                                   73%
               June 30, 2005                                    73%
               September 30, 2005                               73%
               December 31, 2005                                72%
               March 31, 2006                                   71%
               June 30, 2006                                    70%
               September 30, 2006                               68%
               December 31, 2006                                68%
               March 31, 2007                                   65%
               June 30, 2007                                    62%
               September 30, 2007                               50%
               December 31, 2007                                50%
               March 31, 2008                                   50%
               Thereafter                                       50%


          (vi)   MINIMUM CUSTOMERS. The number of revenue generating
          customers of Holdings and its Subsidiaries (treating each
          office location of a Person purchasing services from
          Holdings or any Subsidiary to be a separate customer to the
          extent such office locations are in separate buildings) as
          of the end of the monthly or quarterly period set forth
          below shall not be less than the number listed opposite such
          period:



               MONTHLY PERIOD                                  NUMBER
                                                            
               March 31, 2002                                    392
               April 30, 2002                                    498
               May 31, 2002                                      614
               June 30, 2002                                     745
               July 31, 2002                                     920
               August 31, 2002                                 1,107
               September 30, 2002                              1,311


                                       7.




               QUARTERLY PERIOD                               NUMBER
                                                           
               December 31, 2002                               1,970
               March 31, 2003                                  2,809
               June 30, 2003                                   3,674
               September 30, 2003                              4,615
               December 31, 2003                               5,682
               March 31, 2004                                  7,054
               June 30, 2004                                   8,322
               September 30, 2004                              9,578
               December 31, 2004                              10,806
               March 31, 2005                                 11,977
               June 30, 2005                                  13,058
               September 30, 2005                             14,113
               December 31, 2005                              15,174
               March 31, 2006                                 16,245
               June 30, 2006                                  17,326
               September 30, 2006                             18,418
               December 31, 2006                              19,515
               March 31, 2007                                 20,635
               June 30, 2007                                  21,757
               September 30, 2007                             22,889
               December 31, 2007                              24,022
               March 31, 2008                                 25,168
               Thereafter                                     25,168


          (vii)  MINIMUM CASH RESERVES. On a consolidated basis,
          Holdings and its Subsidiaries shall maintain as of the last
          day of each monthly or quarterly period, as applicable,
          Minimum Cash Reserves not less than the amount listed
          opposite such date below:



               DATE                                           NUMBER
                                                       
               March 31, 2002                             $  68,200,000
               April 30, 2002                             $  55,800,000
               May 31, 2002                               $  42,000,000
               June 30, 2002                              $  35,800,000
               July 31, 2002                              $  30,700,000
               August 31, 2002                            $  26,400,000
               September 30, 2002                         $  22,400,000
               December 31, 2002                          $  37,200,000
               March 31, 2003                             $  26,700,000


                                       8.




               DATE                                           NUMBER
                                                       
               June 30, 2003                              $  17,900,000
               September 30, 2003                         $  20,400,000
               December 31, 2003                          $  26,300,000
               March 31, 2004                             $  42,300,000
               June 30, 2004                              $  69,600,000
               September 30, 2004                         $ 112,000,000
               December 31, 2004                          $ 144,500,000
               March 31, 2005                             $ 164,600,000
               June 30, 2005                              $ 171,300,000
               September 30, 2005                         $ 192,400,000
               December 31, 2005                          $ 220,000,000
               March 31, 2006                             $ 233,500,000
               June 30, 2006                              $ 243,700,000
               September 30, 2006                         $ 257,400,000
               December 31, 2006                          $ 277,700,000
               March 31, 2007                             $ 299,400,000
               June 30, 2007                              $ 205,000,000
               September 30, 2007                         $ 222,900,000
               December 31, 2007                          $ 244,700,000
               Thereafter                                 $ 280,600,000


          (viii) MINIMUM NODES ON NET. The number of nodes connected
          to the network maintained by Holdings and its Subsidiaries
          as of any date listed below shall not be less than the
          number listed opposite such monthly or quarterly period set
          forth below:



               MONTHLY PERIOD                                 NUMBER
                                                             
               March 31, 2002                                   207
               April 30, 2002                                   230
               May 31, 2002                                     252
               June 30, 2002                                    275
               July 31, 2002                                    288
               August 31, 2002                                  302
               September 30, 2002                               316

               QUARTERLY PERIOD                               NUMBER
                                                             
               December 31, 2002                                388
               March 31, 2003                                   472
               June 30, 2003                                    556
               September 30, 2003                               640


                                       9.


                                            
               December 31, 2003                                724
               March 31, 2004                                   820
               June 30, 2004                                    916
               September 30, 2004                             1,012
               December 31, 2004                              1,108
               March 31, 2005                                 1,204
               June 30, 2005                                  1,300
               September 30, 2005                             1,396
               December 31, 2005                              1,492
               March 31, 2006                                 1,588
               June 30, 2006                                  1,684
               September 30, 2006                             1,780
               December 31, 2006                              1,876
               March 31, 2007                                 1,972
               June 30, 2007                                  2,068
               September 30, 2007                             2,164
               December 31, 2007                              2,260
               March 31, 2008                                 2,356
               Thereafter                                     2,356

               

          (ix)   MAXIMUM CAPITAL EXPENDITURES. On a consolidated basis,
          Holdings and its Subsidiaries shall not make any
          expenditures for fixed or capital assets on an annual basis
          in excess of the amount listed below (determined as of the
          end of the annual period set forth below):



               DATE                                       ANNUAL AMOUNT
                                                       
               December 31, 2002                          $  72,100,000
               December 31, 2003                          $  94,700,000
               December 31, 2004                          $ 108,300,000
               December 31, 2005                          $ 115,200,000
               December 31, 2006                          $  83,400,000
               December 31, 2007                          $  77,600,000
               Thereafter                                 $  77,600,000


          As used in this subsection (r), the following terms shall
          have the following meanings: "Capitalization" means, on any
          date, the sum of (i) Consolidated Funded Debt, and (ii) the
          sum of common and preferred equity, including without
          duplication capital stock plus paid in capital of Holdings
          and its Subsidiaries on such date, on a

                                       10.


          consolidated basis and as determined in accordance with,
          GAAP; "Consolidated Funded Debt" means, as of any date of
          determination, all Indebtedness of Holdings and its
          Subsidiaries on such date, on a consolidated basis and as
          determined in accordance with GAAP; "EBITDA" means, for any
          period with respect to Holdings and its Subsidiaries, net
          income (excluding extraordinary items), plus (except to the
          extent attributable to extraordinary items) the amount of
          any interest, taxes, depreciation, amortization and other
          non-cash charges deducted in determining such net income,
          all of the foregoing as determined on a consolidated basis
          for Holdings and its Subsidiaries, determined in conformity
          with GAAP; "Interest Expense" means, for any period with
          respect to Holdings and its Subsidiaries, the amount of
          interest expense, both expensed and capitalized (including
          the portion of any payments in respect of any capital leases
          allocable to interest expense), on a consolidated basis, as
          determined in accordance with GAAP, paid or payable during
          such period in respect of any Indebtedness of Holdings and
          its Subsidiaries; and "Minimum Cash Reserves" means
          unrestricted (i) cash, (ii) marketable, direct obligations
          of the United States of America, its agencies and
          instrumentalities maturing within three hundred sixty-five
          (365) days of the date of purchase, (iii) commercial paper
          issued by corporations, each of which shall have a combined
          net worth of at least $100,000,000 and each of which
          conducts a substantial part of its business in the United
          States of America, maturing within two hundred seventy (270)
          days from the date of the original issue thereof, and rated
          "P-1" or better by Moody's Investors Service, Inc., or "A-1"
          or better by Standard and Poor's Ratings Group, and (iv)
          repurchase agreements, bankers' acceptances, and
          certificates of deposit maturing within three hundred
          sixty-five (365) days of the date of purchase which are
          issued by, or time deposits maintained with, a United States
          national bank the deposits of which are insured by the
          Federal Deposit Insurance Corporation and having capital,
          surplus and undivided profits totaling more than
          $100,000,000 and rated "A" or better by Moody's Investors
          Service, Inc. or Standard and Poor's Ratings Group, of
          Borrower and its wholly-owned Subsidiaries. Notwithstanding
          anything in this Section 5.1(r) to the contrary, any
          Indebtedness or any Interest Expense thereon accruing or
          becoming due during the Permitted Period resulting from
          Permitted Purchases shall not be included by Holdings in
          determining compliance with the financial covenants set
          forth in this Section 5.1(r). Notwithstanding any provision
          to the contrary contained herein, if Holdings and its
          Subsidiaries fail to comply with any of the financial
          covenants set forth in this Section 5.1(r) prior to the
          period ending September 30, 2002, such non-compliance shall
          not constitute an Event of Default

                                       11.


          hereunder, but neither Agent nor any other Lender shall have
          any obligation to make any Loans to Borrower (other than
          Tranche X Loans (as defined in the Schedule), which shall
          continue to be available to Borrower), until Holdings and
          its Subsidiaries shall have complied with all of the monthly
          financial covenants set forth in this Section 5.1(r) for a
          subsequent month during the period prior to and including
          the period ending September 30, 2002. On and after September
          30, 2002, any non-compliance with any of the financial
          covenants shall constitute an Event of Default hereunder.

          (iii) Subsections (i), (ii) and (iii) of Section 1(a) of the Schedule
to the Credit Agreement are hereby deleted in their entirety and replaced with
the following:

          (i) (A) Up to $145,000,000 ("Tranche Al") shall be available
          from the Original Closing Date to the Closing Date, (B) up
          to $40,000,000, ("Tranche A2"), shall be available from the
          Closing Date until September 30, 2002 (the "Tranche 2
          Availability Termination Date"), and (C) up to $85,000,000,
          PLUS any unused portion of Tranche A2 (the aggregate of such
          amounts, "Tranche A3"), shall be available from the first
          Banking Day following the Tranche 2 Availability Termination
          Date (the "Tranche A3 Commencement Date") until December 31,
          2004 (the "Tranche 3 Availability Termination Date"); and

          (ii) (A) Up to $29,000,000 ("Tranche B1") shall be available
          from the Original Closing Date to the Closing Date, and (B)
          up to $35,000,000, ("Tranche B3"), shall be available from
          the first Banking Day following the Tranche 2 Availability
          Termination Date to the Tranche 3 Availability Termination
          Date; and

          (iii) (A) Up to $20,000,000 ("Tranche X2") shall be
          available from the Closing Date until the Tranche 2
          Availability Termination Date, and (B) up to $55,000,000
          ("Tranche X3") shall be available from the Tranche A3
          Commencement Date until December 31, 2005 (the "Tranche X
          Availability Termination Date"); PROVIDED, however, that in
          the event that after the Closing Date one or more investors
          shall have made cash equity contributions to Borrower and
          Holdings in an aggregate amount together in excess of
          $300,000,000, the then unused portion of Tranche X shall be
          reduced by fifty percent (50%) of the amount by which the
          aggregate amount of such cash equity contributions exceeds
          $250,000,000.

          (iv) Subsection (iii) of Section 1(i) of the Schedule to the Credit
Agreement is hereby deleted in its entirety and replaced with the following:

                                       12.



          (iii) CONDITIONS PRECEDENT TO TRANCHE 3: Loans under Tranche
          3 shall not be available unless Borrower has provided Agent
          with reasonably satisfactory evidence that the business plan
          of Borrower is "fully funded" (as described below). For
          purposes of this Agreement, Borrower's business plan shall
          be deemed "fully funded" if, on September 30, 2002, Borrower
          maintains (x) Minimum Cash Reserves equal to or greater than
          $22,400,000, and (y) minimum annualized EBITDA equal to or
          greater than ($44,700,000).

          (b) REFERENCES WITHIN CREDIT AGREEMENT. Each reference in the Credit
Agreement to "this Agreement" and the words "hereof," "herein," "hereunder," or
words of like import, shall mean and be a reference to the Credit Agreement as
amended by this Amendment.

          SECTION 3  CONDITIONS OF EFFECTIVENESS. The effectiveness of Section 2
of this Amendment shall be subject to the satisfaction of each of the following
conditions precedent:

          (a) FEES AND EXPENSES. Borrower shall have paid all invoiced costs and
expenses then due in accordance with Section 5(c) below.

          (b) LOAN DOCUMENTS. On or before the Effective Date (except as
otherwise provided below), Agent shall have received the following documents, in
form and substance satisfactory to it:

          (i)   the Guaranty by PN Acquisition in favor of Agent (on behalf of
each Lender) in substantially the form of EXHIBIT A attached hereto; -

          (ii)  the Security Agreement between PN Acquisition and Agent (on
behalf of each Lender) in substantially the form of EXHIBIT B attached hereto
(the "PN Acquisition Security Agreement");

          (iii) within ten (10) days after the Effective Date, the Copyright
Security Agreement between PN Acquisition and Agent (on behalf of each Lender)
in substantially the form of EXHIBIT C attached hereto;

          (iv)  within ten (10) days after the Effective Date, the Patent and
Trademark Security Agreement between PN Acquisition and Agent (on behalf of each
Lender) in substantially the form of EXHIBIT D attached hereto;

          (v)   the Amendment to Amended and Restated Stock Pledge Agreement
between Holdings and Agent (on behalf of each Lender) in substantially the form
of EXHIBIT E attached hereto (the "Amended Holdings Stock Pledge");

          (vi)  the consent of each Guarantor, in substantially the form of
EXHIBIT F (the "Guarantor Consent"), to the amendments contemplated by this
Amendment; and

                                       13.


          (vii) within ten (10) days after the Effective Date, each of the
documents required under Section 5.1(o) of the Credit Agreement with respect to
the new Subsidiaries of Borrower, Cogent Fiber Services of Georgia and Cogent
Communications of California, Inc.

          (c) DOCUMENTS AND ACTION RELATING TO COLLATERAL. On or before the
Effective Date (except as otherwise provided below), Agent shall have received
the following, in form and substance satisfactory to it:

          (i)   UCC Financing Statements for PN Acquisition as required under
the PN Acquisition Security Agreement and the other Collateral Documents;

          (ii)  Original stock certificates of PN Acquisition pledged to Agent
(on behalf of Lenders) pursuant to the Amended Holdings Stock Pledge (together
with applicable Stock Power);

          (iii) Within thirty (30) days after the Effective Date, Collateral
Access Agreements as required under the PN Acquisition Security Agreement and
the other Collateral Documents;

          (iv)  Within thirty (30) days after the Effective Date, Account
Control Agreements as required under the PN Acquisition Security Agreement and
the other Collateral Documents;

          (v)   A Representations and Warranties Certificate with all requested
information completed by Borrower; and

          (vi)  Such other financing statements, searches, certificates,
filings, and other documents and instruments, in form reasonably satisfactory to
Agent, as Agent may reasonably require to effectuate the purposes of the Loan
Documents.

          (d) ADDITIONAL CLOSING DOCUMENTS AND ACTIONS. On or before the
Effective Date (except as expressly provided below), Agent shall have received
the following, in form and substance satisfactory to it:

          (i)   a fully executed copy (or copies) of the PSINet Asset Purchase
Documents with respect to the Asset Purchase Transaction, together with the
order of the applicable Bankruptcy Court approving such Asset Purchase
Transaction;

          (ii)  evidence that all (A) authorizations or approvals of any
Governmental Authority, and (B) approvals or consents of any other Person,
required in connection with the Asset Purchase Transaction and the execution,
delivery and performance of this Amendment shall have been obtained;

          (iii) a certificate of a senior officer of Borrower, stating that (A)
the representations and warranties contained in Section 4 and in the amendments
to the other Loan Documents are true and correct in all material respects on and
as of the date of such certificate as though made on and as of the Effective
Date and (B) on and as of the Effective Date, after

                                       14.


and giving effect to the amendment of the Credit Agreement contemplated hereby,
no Default shall have occurred and be continuing;

          (iv)  a certificate of a senior officer of Borrower (i) attaching a
true and complete copy of the PSINet Asset Purchase Agreement, (ii) certifying
that none of the PSINet Asset Purchase Documents have been altered, amended or
otherwise changed or supplemented and that no condition therein or provision
thereof has been waived, (iii) certifying that there does not exist (A) any law,
order, decree, judgment, ruling or injunction which could restrain or prevent
the consummation of the Asset Purchase Transaction in the manner contemplated by
the PSINet Asset Purchase Agreement, and (B) any pending or, to the best
knowledge of such senior officers, threatened action, suit, investigation or
proceeding relating to the Asset Purchase Transaction which seeks or threatens
any of the foregoing and (iv) certifying that on the Effective Date the Asset
Purchase Transaction will be consummated in accordance with the terms of the
PSINet Asset Purchase Documents and in compliance with any applicable
Requirement of Law;

          (v)   all conditions precedent to the effectiveness of Amendment No. 1
to the Second Amended and Restated Credit Agreement shall have been satisfied in
full, as reasonably determined by Agent; and

          (vi)  such additional information with respect to the Asset Purchase
Transaction as Agent may reasonably request.

          (e) CORPORATE DOCUMENTS. Agent shall have received, in form and
substance satisfactory to it:

          (i)   a certificate of the Secretary or Assistant Secretary of
Borrower, dated the Effective Date, certifying (i) copies of the resolutions of
the Board of Directors of Borrower authorizing the execution, delivery and
performance of this Amendment and the amendments to the other Loan Documents and
(ii) the incumbency, authority and signatures of each officer of Borrower
authorized to execute and deliver this Amendment and the amendments to the other
Loan Documents; and

          (ii)  a certificate of the Secretary or Assistant Secretary of PN
Acquisition, dated the Effective Date, certifying (A) copies of the resolutions
of the Board of Directors of PN Acquisition authorizing the execution, delivery
and performance of the Guaranty and each of the other documents described herein
or related thereto to which it is a party, (B) the incumbency, authority and
signatures of each officer of PN Acquisition authorized to execute and deliver
such documents, and (C) copies of the certificate of incorporation and bylaws of
PN Acquisition.

          (f) LEGAL OPINIONS. Agent shall have received (i) the opinion of
Friedman, Kaplan, Seiler & Adelman, LLP, counsel to Borrower, Additional
Borrower, PN Acquisition and each Guarantor, dated the Effective Date, and (ii)
the opinion of Latham & Watkins, special counsel to Holdings, each in form and
substance satisfactory to Agent.

          (g) MATERIAL ADVERSE CHANGE. On and as of the Effective Date, there
shall have occurred no Material Adverse Change since the date of this Amendment.

                                       15.


          (h) REPRESENTATIONS AND WARRANTIES; NO DEFAULT. On the Effective Date,
after giving effect to the amendment of the Credit Agreement contemplated
hereby:

          (i)   except as otherwise disclosed in writing to Agent and Lenders
under that certain disclosure schedule delivered to Lender prior to the
Effective Date, the representations and warranties contained in Section 4 and in
the other Loan Documents shall be true and correct on and as of the Effective
Date as though made on and as of such date; and

          (ii)  no Default shall have occurred and be continuing.

          (i) ADDITIONAL DOCUMENTS. Agent shall have received, in form and
substance satisfactory to it, such additional approvals, opinions, documents and
other information as Lender may reasonably request.

          SECTION 4  REPRESENTATIONS AND WARRANTIES.

          (a) To induce Agent to enter into this Amendment, Borrower hereby
confirms and restates, as of the date hereof, the representations and warranties
made by it in Section 4.1 of the Credit Agreement and in the other Loan
Documents (except as otherwise disclosed in writing to Agent and Lenders under
that certain disclosure schedule delivered to Lender prior to the Effective
Date). For the purposes of this Section 4, (i) each reference in Section 4.1 of
the Credit Agreement to "this Agreement," and the words "hereof," "herein,"
"hereunder," or words of like import in such Section, shall mean and be a
reference to the Credit Agreement as amended by this Amendment, and each
reference in such Section to "the Loan Documents" shall mean and be a reference
to the Loan Documents as amended as contemplated hereby, and (ii), clause (i)
shall take into account any amendments to any disclosures made in writing by
Borrower and any Guarantor to Agent and each Lender after the Effective Date and
approved by Agent (on behalf of each Lender).

          (b) Borrower further represents and warrants to Agent and Lenders that
as of the date hereof: (A) the PSINet Asset Purchase Documents have not been
altered, amended or otherwise changed or supplemented in any material respect
and no material condition therein or material provision thereof has been waived;
(B) the PSINet Asset Purchase Documents are in full force and effect and are
legal, valid and binding obligations of each party thereto enforceable against
each such party in accordance with their respective terms, except to the extent
that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting creditor's
rights generally and by equitable principles (regardless of whether enforcement
is sought in equity or at law); (C) all representations and warranties of the
Borrower in the PSINet Asset Purchase Documents are true and correct in all
material respects as of each date made or deemed made; (D) to the Borrower's
knowledge, all representations and warranties of PSINet in the PSINet Asset
Purchase Documents are true and correct in all material respects as of each date
made or deemed made; and (E) the assets purchased under the PSINet Asset
Purchase Agreement are free and clear of any and all liens, security interests,
encumbrance and other interests.

                                       16.


          SECTION 5 MISCELLANEOUS.

          (a) CREDIT AGREEMENT OTHERWISE NOT AFFECTED. Except as expressly
amended pursuant hereto, the Credit Agreement shall remain unchanged and in full
force and effect and is hereby ratified and confirmed in all respects. Agent's
execution and delivery of, or acceptance of, this Amendment and any other
documents and instruments in connection herewith (collectively, the "Amendment
Documents") shall not be deemed to create a course of dealing or otherwise
create any express or implied duty by it to provide any other or further
amendments, consents or waivers in the future.

          (b) NO RELIANCE. Borrower hereby acknowledges and confirms to Agent
that Borrower is executing this Amendment and the other Amendment Documents on
the basis of its own investigation and for its own reasons without reliance upon
any agreement, representation, understanding or communication by or on behalf of
any other Person.

          (c) COSTS AND EXPENSES. Borrower agrees to pay to Agent on demand the
reasonable out-of-pocket costs and expenses of Agent, and the reasonable fees
and disbursements of counsel to Lender, in connection with the negotiation,
preparation, execution and delivery of this Amendment and any other documents to
be delivered in connection herewith.

          (d) BINDING EFFECT. This Amendment shall be binding upon, inure to the
benefit of and be enforceable by Borrower, Agent, Additional Borrower, Holdings
and their respective successors and assigns.

          (e) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

          (f) COMPLETE AGREEMENT; AMENDMENTS. This Amendment, together with the
other Amendment Documents and the other Loan Documents, contains the entire and
exclusive agreement of the parties hereto and thereto with reference to the
matters discussed herein and therein. This Amendment supersedes all prior
commitments, drafts, communications, discussions and understandings, oral or
written, with respect thereto. This Amendment may not be modified, amended or
otherwise altered except in accordance with the terms of Section 8.1 of the
Credit Agreement.

          (g) SEVERABILITY. Whenever possible, each provision of this Amendment
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If, however, any provision of this Amendment
shall be prohibited by or invalid under any such law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform
to the minimum requirements of such law or regulation, or, if for any reason it
is not deemed so modified, it shall be ineffective and invalid only to the
extent of such prohibition or invalidity without affecting the remaining
provisions of this Amendment, or the validity or effectiveness of such provision
in any other jurisdiction.

          (h) COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so

                                       17.


executed shall be deemed to be an original and all of which taken together shall
constitute but one and the same agreement.

          (i) INTERPRETATION. This Amendment and the other Amendment Documents
are the result of negotiations between and have been reviewed by counsel to
Agent, Borrower and other parties, and are the product of all parties hereto.
Accordingly, this Amendment and the other Amendment Documents shall not be
construed against Agent or any Lender merely because of Agent's involvement in
the preparation thereof.

          (j) LOAN DOCUMENTS. This Amendment and the other Amendment Documents
shall constitute Loan Documents.

          [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

                                       18.


          IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment, as of the date first above written.

                                   Cogent Communications, Inc.

                                   By
                                       ----------------------------------
                                       Title:


                                   Cogent Communications Group, Inc.

                                   By
                                       ----------------------------------
                                       Title:


                                   Cogent Internet, Inc.

                                   By
                                       ----------------------------------
                                       Title:



                                   Cisco Systems Capital Corporation

                                   By
                                       ----------------------------------
                                       Title:

                                       19.


                                    EXHIBIT A
       to Amendment No. 2 to Second Amended and Restated Credit Agreement

                             PN ACQUISITION GUARANTY

                                [TO BE PROVIDED]

                                       A-1



                                    EXHIBIT B
       to Amendment No. 2 to Second Amended and Restated Credit Agreement

                        PN ACQUISITION SECURITY AGREEMENT

                                [TO BE PROVIDED]

                                      B-1


                                    EXHIBIT C
       to Amendment No. 2 to Second Amended and Restated Credit Agreement

                   PN ACQUISITION COPYRIGHT SECURITY AGREEMENT

                                [TO BE PROVIDED]

                                      C-1


                                    EXHIBIT D
       to Amendment No. 2 to Second Amended and Restated Credit Agreement

             PN ACQUISITION PATENT AND TRADEMARK SECURITY AGREEMENT

                                [TO BE PROVIDED]

                                      D-1


                                    EXHIBIT E
       to Amendment No. 2 to Second Amended and Restated Credit Agreement

                 AMENDMENT TO AMENDED AND RESTATED STOCK PLEDGE

                                [TO BE PROVIDED]

                                      E-1


                                    EXHIBIT F
       to Amendment No. 2 to Second Amended and Restated Credit Agreement

                       CONSENT AND AGREEMENT OF GUARANTORS

          Each of the undersigned, in its capacity as guarantor, acknowledges
that its consent to the foregoing Amendment is not required, but the undersigned
nevertheless does hereby consent to the foregoing Amendment and to any documents
and agreements referred to therein and to all future modifications and
amendments thereto (subject to the terms of the Guaranty ("Guaranty"), executed
by each of the undersigned in favor of Cisco Systems Capital Corporation
("CSCC") (as such Continuing Guaranty may be amended from time to time)), and
any termination thereof, and to any and all other present and future documents
and agreements by or between Cogent Communications, Inc. and CSCC. Nothing
herein shall in any way limit any of the terms or provisions of such Guaranty of
the undersigned or any other document or agreement executed by the undersigned
in CSCC's favor (as the same may be amended from time to time), all of which are
hereby ratified and affirmed in all respects. Each Guarantor further
acknowledges and agrees that all of the obligations guaranteed under its
Guaranty constitute "Designated Senior Debt" for purposes of the Indenture
between Allied Riser Communications Corporation and Wilmington Trust Company
dated June 28, 2000, as the same may be amended from time to time by any
amendment or supplemental indenture, and each Guaranty is hereby amended to
reflect such acknowledgment and agreement.

                                       GUARANTORS:

                                       Cogent Communications, Inc.

                                       By
                                             -----------------------------------
                                             Title:


                                       Cogent Communications Group, Inc.

                                       By
                                             -----------------------------------
                                             Title:


                                       Cogent Internet, Inc.

                                       By

                                             -----------------------------------
                                             Title:


                                       Allied Riser Communications Corporation

                                       By
                                             -----------------------------------
                                             Title:

                                      F-1