SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549FORM 10-K/A
(Amendment No. 2)

|ý |  | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended  December 31, 2003                              
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |  |                                                                                                                                                               
| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________





|Commission File No. 0-17020                             
|--------------------------------------------------------
|                                                        
|VITALSTREAM HOLDINGS, INC.                              
|                                                        
|(Exact name of registrant as specified in charter)      
|                                                        
|Nevada                                                  
|                                                        
|(State or other jurisdiction of
Company or organization)
|                                                        
|                                                        
|                                                        
|                                                        



Securities registered pursuant to Section 12(b) of the Act: N/A



Securities registered pursuant to Section 12(g) of the Act: N/A



Title of Class

Common Stock, $.001 par value



Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
YES  ý

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    
YES   ̈

Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Act).      YES   ̈

As of March 15, 2004, there were 32,263,746 shares of the Registrant's common stock, par value $0.001 per share, issued and outstanding.  The aggregate market value of the Registrant's common stock held by nonaffiliates of the Registrant as of June 30, 2003 was approximately $4,656,183, computed using the closing sale price of $0.25 per share for the Registrant's common stock on June 30, 2003

DOCUMENTS INCORPORATED BY REFERENCE



None



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VitalStream Holdings, Inc. ("VitalStream" or the "Company") is filing this Amendment No. 2 on Form 10-K/A (this "Amendment") to its Annual Report on Form 10-K  for the year ended December 31, 2003  filed with the SEC on March 30, 2004 as amended by Amendment No. 1 on Form 10-K/A filed with the SEC on April 29, 2004  (the "Form 10-K") for the purpose of supplementing the disclosure included in Part II, Item 5 of Form 10-K.  VitalStream issued warrants to purchase an aggregate of 75,000 shares of common stock to service providers in two separate transactions during the fourth quarter of 2003.  Although these transactions were reflected in the notes to the financial statements, they were not previously described in the "Recent Sale of Unregistered Securities" subsection of Item 5. VitalStream is also amending and restating the information required by Part IV Item 15 of Form 10-K in order to reflect the filing of related warrants and required certifications.  All subsequent references to "Form 10-K" shall refer to the initial Form 10-K, as amended by Amendment No. 1 and this Amendment.





















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ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS



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Our common stock was traded on the Nasdaq SmallCap Market until April 11, 2001 under the trading symbol "SCII," at which time it was delisted.  Our common stock began trading through the OTC Bulletin Board on April 26, 2001, and on July 26, 2002, our trading symbol changed to "VSTH." The following table sets forth high and low closing prices for our common stock for the periods indicated as reported by the OTC Bulletin Board.







|Quarter Ended      |   | High |  |   | Low 
|------------------ | - | ---- |  | - | ----
|                   |   |      |  |   |     
|March 31, 2002     | $ | 0.67 |  | $ | 0.41
|June 30, 2002      | $ | 0.65 |  | $ | 0.25
|September 30, 2002 | $ | 0.52 |  | $ | 0.16
|December 31, 2002  | $ | 0.50 |  | $ | 0.23
|                   |   |      |  |   |     
|March 31, 2003     | $ | 0.29 |  | $ | 0.15
|June 30, 2003      | $ | 0.40 |  | $ | 0.16
|September 30, 2003 | $ | 0.54 |  | $ | 0.25
|December 31, 2003  | $ | 0.76 |  | $ | 0.31





Outstanding Shares and Number of Shareholders

As of March 15, 2004, the number of shares of our common stock outstanding was 32,263,746 held by approximately 419 holders of record.  The outstanding shares do not include up to 4,039,612 shares of common stock authorized for issuance upon exercise of outstanding options granted pursuant to our stock option plans, 3,940,388 shares of our common stock reserved for the future grant of stock options under such plans, 3,075,827 shares of common stock subject to outstanding warrants to purchase common stock and approximately 9,338,450 shares of our common stock issuable upon conversion of an outstanding convertible promissory note and outstanding convertible preferred stock.



Dividends



VitalStream Holdings has never declared or paid cash dividends on its common stock.  We currently intend to retain any future earnings for use in our business and, therefore, do not anticipate paying any dividends on our common shares in the foreseeable future.  In addition, pursuant to the terms of our outstanding convertible promissory notes and Series A Preferred Stock, VitalStream Holdings is prohibited from paying any dividends until the beneficial ownership of Dolphin is reduced to less than 10% of our outstanding common stock or all such securities are converted to common stock.

Securities Authorized for Issuance Under Equity Compensation Plans

Set forth below is certain information about the number of shares of our common stock subject to options, warrants and other rights granted, or that may be granted, under our compensation plans as of December 31, 2003.







|Equity Compensation Plan Information                                                                                                                           
|---------------------------------------------------------------------------------------------------------------------------------------------------------------
|Plan category                                                                                                                                                  
|                                                                                                                                                               
|                                                                                                                                                               
|Equity compensation plans approved by security holders                                                                                                         
|                                                                                                                                                               
|Equity compensation plans not approved by security holders                                                                                                     
|                                                                                                                                                               
|Total                                                                                                                                                          
|                                                                                                                                                               
|                                                                                                                                                               
|(1)   Represents shares of common stock of VitalStream Holdings subject to outstanding options granted under our 2001 Stock Incentive Plan (the "Option Plan").
|                                                                                                                                                               
|(2)   Represents shares of common stock of VitalStream Holdings available for future grant under the Option Plan.                                              





Recent Sales of Unregistered Securities.



On October 21, 2003, the Company issued to one of its vendors a warrant to purchase 25,000 shares of common stock at an exercise price of $0.36 per share in conjunction with an amendment to a prior revolving lease line of credit agreement.  The warrant became exercisable on the grant date and expires on October 21, 2006.



On November 3, 2003, the Company issued to one of its vendors a warrant to purchase 50,000 shares of common stock at an exercise price of $0.48 per share in conjunction with an agreement to provide investor relations services to the Company.  The warrant vests in equal quarterly installments over a one-year period and expires on November 3, 2006.



The above-described issuances of warrants to purchase common stock were effected in reliance upon the exemptions for sales of securities not involving a public offering set forth in Rule 506 promulgated under the Securities Act and Section 4(2) of the Securities Act, based upon the following:  (a) the vendors represented to us that they were "accredited investors," as defined in Rule 501 of Regulation D promulgated under the Securities Act, and had such background, sophistication, education, and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities; (b) there was no public offering or general solicitation with respect to the offering, and the vendors represented and warranted that they were acquiring the securities for their own account and not with an intent to distribute such securities; (c) the vendors were provided certain disclosure materials regarding the Company and any and all other information requested with respect to the Company, (d) the vendors were informed that all securities being purchased were "restricted securities" for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered with the SEC under the Securities Act or  exempt from registration under the Securities Act; and (e) a legend was placed on the documents representing the warrants stating that the warrants, and any shares issued thereunder, were restricted and could only be transferred if subsequently registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.







PART IV



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ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K



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Financial Statements And Schedules



The financial statements, including the index to the financial statements, are included immediately following the signatures and certifications of the Company's Annual Report on Form 10-K filed with the SEC on March 30, 2004.



Exhibits





|Exhibit No. |  | Exhibit                                                                                                                                                                                                                                       |  | Incorporated by Reference/ Filed Herewith                                                                                                               
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                         
|2.1         |  | Agreement and Plan of Merger dated February 13, 2002 among the Company, VitalStream and VitalStream Operating Corporation                                                                                                                     |  | Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on April 30, 2002, File No. 001-10013                          
|2.2         |  | Amended and Restated Asset Purchase Agreement dated January 15, 2003                                                                                                                                                                          |  | Incorporated by reference to the Amendment No. 1 to Current Report on Form 8-K/A filed with the SEC on January 31, 2003, File No. 0-17020               
|3.1         |  | Articles of Incorporation, as amended to date                                                                                                                                                                                                 |  | Incorporated by reference to the Current Report on Form 8-K filed with the SEC on October 14, 2003, File No. 0-17020                                    
|3.2         |  | Bylaws                                                                                                                                                                                                                                        |  | Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2002, filed with the SEC on March 31, 2003, File No. 0-17020
|4.1         |  | Form of Certificate representing shares of VitalStream Holdings Common Stock                                                                                                                                                                  |  | Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2002, filed with the SEC on March 31, 2003, File No. 0-17020
|4.2         |  | Articles of Incorporation, as amended to include the Certificate of Designation Establishing the Series A Preferred Stock and Series B Preferred Stock                                                                                        |  | Incorporated by reference to the Current Report on Form 8-K filed with the SEC on October 14, 2003, File No. 0-17020                                    
|4.3         |  | Form of Warrant (Amended and Restated)                                                                                                                                                                                                        |  | Incorporated by reference to the Current Report on Form 8-K filed with the SEC on October 14, 2003, File No. 0-17020                                    
|4.4         |  | Form of Warrant (Additional Warrant)                                                                                                                                                                                                          |  | Incorporated by reference to the Current Report on Form 8-K filed with the SEC on October 14, 2003, File No. 0-17020                                    
|4.5         |  | Form of Amended and Restated Convertible Promissory Note                                                                                                                                                                                      |  | Incorporated by reference to the Current Report on Form 8-K filed with the SEC on October 14, 2003, File No. 0-17020                                    
|            |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                         
|4.6         |  | Form of Warrant (25,000 Shares)                                                                                                                                                                                                               |  | Filed herewith                                                                                                                                          
|4.7         |  | Form of Warrant (50,000 Shares)                                                                                                                                                                                                               |  | Filed herewith                                                                                                                                          
|10.1        |  | Sublease dated as of November 15, 1999, by and between Charter Holdings, Inc. and VitalStream Broadcasting Corporation (as successor to Epoch Networks, Inc.), as amended                                                                     |  | Incorporated by reference to the Amendment No. 1 to Current Report on Form 8-K/A filed with the SEC on January 31, 2003, File No. 0-17020               
|10.2        |  | Industrial Lease Between The Irvine Company and ReceiveTV, Inc., as amended                                                                                                                                                                   |  | Incorporated by reference to the Amendment No. 1 to Current Report on Form 8-K/A filed with the SEC on May 16, 2002, File No. 0-17020                   
|10.3        |  | Third Amendment to Industrial Lease Between The Irvine Company and Receive TV, Inc.                                                                                                                                                           |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on November 14, 2003                                        
|10.4        |  | Master Access Agreement dated as of January 1, 2003                                                                                                                                                                                           |  | Incorporated by reference to the Amendment No. 1 to Current Report on Form 8-K/A filed with the SEC on January 31, 2003, File No. 0-17020               
|10.5        |  | 2001 Stock Incentive Plan (Amended and Restated)                                                                                                                                                                                              |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on April 23, 2002                                           
|10.6        |  | Stock Purchase Warrant dated April 23, 2002 issued to Brookstreet Securities Corporation                                                                                                                                                      |  | Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on April 30, 2002                                              
|10.7        |  | Stock Purchase Warrant dated April 23, 2002 issued to Gary T. Madrid                                                                                                                                                                          |  | Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on April 30, 2002                                              
|10.8        |  | Amendment to Stock Purchase Warrant issued to Brookstreet Securities Corporation dated October 23, 2003                                                                                                                                       |  | Incorporated by reference to the Company's Annual Report on Form 10-K filed with the SEC on March 30, 2004, File No. 001-10013                          
|10.9        |  | Amendment to Stock Purchase Warrant issued to  Gary Madrid  dated October 23, 2003                                                                                                                                                            |  | Incorporated by reference to the Company's Annual Report on Form 10-K filed with the SEC on March 30, 2004, File No. 001-10013                          
|10.10       |  | Stock Purchase Warrant dated April 23, 2002 issued to Joe Kowal                                                                                                                                                                               |  | Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on April 30, 2002                                              
|10.11       |  | Registration Rights Agreement dated April 23, 2002, among the Company, Brookstreet Securities Corporation and Gary T. Madrid                                                                                                                  |  | Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on April 30, 2002                                              
|            |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                         
|            |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                         
|10.12       |  | Stock Option Agreement executed as of February 12, 2002 between the Company and Andrew Bebbington.                                                                                                                                            |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on April 23, 2002                                           
|10.13       |  | Stock Option Agreement executed as of February 12, 2002 between the Company and Steven Strasser.                                                                                                                                              |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on April 23, 2002                                           
|10.14       |  | Amendment to Stock Option and Release Agreement, dated August 28, 2003 with Andrew Bebbington                                                                                                                                                 |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on November 14, 2003                                        
|10.15       |  | Amendment to Stock Option and Release Agreement, dated August 28, 2003 with Steven Strasser                                                                                                                                                   |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on November 14, 2003                                        
|10.16       |  | Telecommunications Services Agreement dated June 12, 2002, between Williams Communications, LLC and the Company                                                                                                                               |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 13, 2002                                          
|10.17       |  | Service Order Form with Wiltel Communications                                                                                                                                                                                                 |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on November 14, 2003                                        
|10.18       |  | Master Services Agreement dated June 7, 2002, between Equinix Operating Co., Inc. and the Company                                                                                                                                             |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 13, 2002                                          
|10.19       |  | Internet Access Agreement dated August 30, 2002, between Verio, Inc. (d/b/a NTT/VERIO) and VitalStream                                                                                                                                        |  | Incorporated by reference to the Company's Amendment No. 1 to Quarterly Report on Form 10-Q/A filed with the SEC on March 25, 2003.                     
|10.20       |  | Service Order Form with Verio, Inc.                                                                                                                                                                                                           |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on November 14, 2003                                        
|10.21       |  | Employment Agreement dated October 18, 2002 between the Company and Paul Summers, as amended                                                                                                                                                  |  | Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2002, filed with the SEC on March 31, 2003, File No. 0-17020
|10.22       |  | Employment Agreement dated October 18, 2002 between the Company and Philip N. Kaplan                                                                                                                                                          |  | Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2002, filed with the SEC on March 31, 2003, File No. 0-17020
|10.23       |  | Employment Agreement dated October 18, 2002 between the Company and Kevin D. Herzog                                                                                                                                                           |  | Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2002, filed with the SEC on March 31, 2003, File No. 0-17020
|            |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                         
|10.24       |  | Employment Agreement dated October 18, 2002 between the Company and Steve Smith                                                                                                                                                               |  | Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2002, filed with the SEC on March 31, 2003, File No. 0-17020
|10.25       |  | Employment Agreement dated October 18, 2002 between the Company and David Williams                                                                                                                                                            |  | Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2002, filed with the SEC on March 31, 2003, File No. 0-17020
|10.26       |  | Master Access Agreement dated as of January 1, 2003                                                                                                                                                                                           |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on May 15, 2003                                             
|10.27       |  | Master Equipment Lease dated March 6, 2003                                                                                                                                                                                                    |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on May 15, 2003                                             
|10.28       |  | Letter agreement dated January 27, 2003                                                                                                                                                                                                       |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on May 15, 2003                                             
|10.29       |  | Factoring and Security Agreement dated June 30, 2003 with Alliance Bank                                                                                                                                                                       |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 12, 2003                                          
|10.30       |  | Letter agreement dated May 13, 2003 with Netifice Communications Inc.                                                                                                                                                                         |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 12, 2003                                          
|10.31       |  | Letter agreement dated with Verio, Inc.                                                                                                                                                                                                       |  | Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 12, 2003                                          
|10.32       |  | Securities Exchange and Purchase Agreement dated as of September 30, 2003                                                                                                                                                                     |  | Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on October 14, 2003, File No. 0-17020                          
|10.33       |  | Amended and Restated Investor Rights Agreement                                                                                                                                                                                                |  | Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on October 14, 2003, File No. 0-17020                          
|10.34       |  | Amended and Restated Registration Agreement                                                                                                                                                                                                   |  | Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on October 14, 2003, File No. 0-17020                          
|10.35       |  | Amended and Restated Security Agreement                                                                                                                                                                                                       |  | Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on October 14, 2003, File No. 0-17020                          
|10.36       |  | Amended and Restated Guaranty                                                                                                                                                                                                                 |  | Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on October 14, 2003, File No. 0-17020                          
|            |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                         
|10.37       |  | Bandwidth Redundancy and Cooperative Purchasing Agreement dated December 23, 2003
[Portions of this Exhibit have been omitted pursuant to Rule 24b-2, are filed separately with the SEC and are subject to a confidential treatment request.] |  | Incorporated by reference to the Company's Annual Report on Form 10-K filed with the SEC on March 30, 2004, File No. 001-10013                          
|10.38       |  | Amendment No. 1 to Revolving Equipment Lease dated October 21, 2003                                                                                                                                                                           |  | Incorporated by reference to the Company's Annual Report on Form 10-K filed with the SEC on March 30, 2004, File No. 001-10013                          
|10.39       |  | Second Lease Line Agreement with Boston Financial & Equity Corporation dated
December 11, 2003                                                                                                                                                |  | Incorporated by reference to the Company's Annual Report on Form 10-K filed with the SEC on March 30, 2004, File No. 001-10013                          
|21          |  | Subsidiaries of the Company                                                                                                                                                                                                                   |  | Incorporated by reference to the Company's Annual Report on Form 10-K filed with the SEC on March 30, 2004, File No. 001-10013                          
|23.1        |  | Consent of Rose, Snyder & Jacobs                                                                                                                                                                                                              |  | Incorporated by reference to the Company's Annual Report on Form 10-K filed with the SEC on March 30, 2004, File No. 001-10013                          
|24          |  | Power of Attorney                                                                                                                                                                                                                             |  | Incorporated by reference to the Company's Annual Report on Form 10-K filed with the SEC on March 30, 2004, File No. 001-10013                          
|31.1        |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer                                                                                                                                                                             |  | Filed herewith                                                                                                                                          
|31.2        |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Operating Officer (Principal Financial Officer)                                                                                                                                               |  | Filed herewith                                                                                                                                          
|31.3        |  | Rule 13a-14(a)/15d-14(a) Certification of Principal Accounting Officer                                                                                                                                                                        |  | Filed herewith                                                                                                                                          
|32.1        |  | Section 1350 Certification of Chief Executive Officer                                                                                                                                                                                         |  | Filed herewith                                                                                                                                          
|32.2        |  | Section 1350 Certification of Principal Financial Officer                                                                                                                                                                                     |  | Filed herewith                                                                                                                                          













REPORTS ON FORM 8-K

On October 14, 2003, we filed a Current Report on Form 8-K reporting execution of a Securities Exchange and Purchase Agreement dated September 30, 2003 that involved cancellation, amendment and restatement of $1.1 million in convertible promissory notes and related warrants and the issuance of 900 shares of the Company's 2003 Series A Preferred Stock and warrants in exchange for $900,000 in additional capital.



On November 14, 2003, we filed a Current Report on Form 8-K containing an earnings release related to the fiscal quarter ended Septmber 30, 2003.





















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SIGNATURES



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Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Company has caused this Amendment No. 2 on Form 10-K/A to be signed on its behalf by the undersigned, hereunto duly authorized.







|             |  | VITALSTREAM HOLDINGS, INC.                       
|------------ |  | -------------------------------------------------
|             |  |                                                  
|             |  |                                                  
|June 5, 2004 |  | /s/ Paul Summers                                 
|             |  |                                                  
|             |  | Paul Summers, President & Chief Executive Officer
|             |  |                                                  
|             |  |                                                  
|June 5, 2004 |  | /s/ Philip N. Kaplan                             
|             |  |                                                  
|             |  | Philip N. Kaplan, Chief Operating Officer        
|             |  |                                                  
|             |  |                                                  
|June 5, 2004 |  | /s/ Patrick Deane                                
|             |  |                                                  
|             |  | Patrick Deane, Vice President of Finance         
|             |  |                                                  
|             |  |