##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



FORM 10-Q



---



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the period ended September 30, 2003



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from  to



Commission File Number: 001-11747



---



VIE FINANCIAL GROUP, INC.



---



|Delaware                 |  | 22-6650372                          
|------------------------ |  | ------------------------------------
|(State of incorporation) |  | (I.R.S. Employer Identification No.)



1114 AVENUE OF THE
AMERICAS, 22NDFLOOR

NEW YORK, NEW YORK 10036

(212) 575-8200



---



1835 MARKET STREET, SUITE 420

PHILADELPHIA, PENNSYLVANIA 19103

(215) 789-3300

(Former address of principal executive offices)



---



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  x    No ̈



Indicate by check mark
whether the registrant is an accelerated filer (as defined by Exchange Act Rule 12b-2)    Yes ̈No  x



APPLICABLE ONLY TO CORPORATE ISSUERS:



Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the last practical date:



|Common Stock $.01 par value |  | 695,971,046                            
|--------------------------- |  | ---------------------------------------
|(Title of Class)            |  | (No. of shares as of November 14, 2003)



---



---

##### Table of Contents

VIE FINANCIAL GROUP, INC.



INDEX



|                                                                                              |  |                                                                                                        |  | PAGE
|--------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------ |  | ----
|PART I  FINANCIAL INFORMATION                                                                |  |                                                                                                       
|                                                                                              | 
|Item 1. Financial Statements (Unaudited)                                                      |  |                                                                                                       
|                                                                                              |  |                                                                                                       
|                                                                                              |  | Consolidated Balance Sheets - September 30, 2003 and March 31, 2003                                    |  | 4   
|                                                                                              |  |                                                                                                       
|                                                                                              |  | Consolidated Statements of Operations - For the Three and Six Months Ended September 30, 2003 and 2002 |  | 5   
|                                                                                              |  |                                                                                                       
|                                                                                              |  | Consolidated Statements of Cash Flows - For the Six Months Ended September 30, 2003 and 2002           |  | 6   
|                                                                                              |  |                                                                                                       
|                                                                                              |  | Notes to Consolidated Financial Statements                                                             |  | 7   
|                                                                                              | 
|Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 19                                                                                                    
|                                                                                              | 
|Additional Factors that may Affect Future Results                                             |  | 25                                                                                                    
|                                                                                              | 
|Item 3.
Quantitative and Qualitative Disclosures about Market Risk                            |  | 34                                                                                                    
|                                                                                              | 
|Item 4.
Controls and Procedures                                                               |  | 34                                                                                                    
|                                                                                              | 
|PART II  OTHER INFORMATION                                                                   |  |                                                                                                       
|                                                                                              | 
|Item 1.
Legal Proceedings                                                                     |  | 34                                                                                                    
|                                                                                              | 
|Item 2.
Changes in Securities and Use of Proceeds                                             |  | 35                                                                                                    
|                                                                                              | 
|Item 4.
Submission of Matters to a Vote of Security Holders                                   |  | 35                                                                                                    
|                                                                                              | 
|Item 6.
Exhibits and Reports on Form 8-K                                                      |  | 36                                                                                                    
|                                                                                              | 
|Signatures                                                                                    |  | 37                                                                                                    



2



---

##### Table of Contents

PART I - FINANCIAL INFORMATION



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS



Certain statements included in this document constitute forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties
and other important factors that could cause our actual results, performance, or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks,
uncertainties and other important factors include, among others:



| | our ability to become profitable and continue as a going concern;
|- | -------------------------------------------------------------------



| | availability and terms of debt and/ or equity capital to fund our operations;
|- | -----------------------------------------------------------------------------



| | our dependence on arrangements with our clearing firm, external liquidity providers, execution venues and self-regulatory organizations;
|- | ----------------------------------------------------------------------------------------------------------------------------------------



| | changes in business strategy or development plans;
|- | --------------------------------------------------



| | our dependence on proprietary technology and demand for such technology;
|- | ------------------------------------------------------------------------



| | fluctuations in securities trading volumes, prices and market liquidity;
|- | ------------------------------------------------------------------------



| | industry trends;
|- | ----------------



| | our ability to broaden our customer mix;
|- | ----------------------------------------



| | competition;
|- | ------------



| | our ability to expand existing and develop new markets for our products;
|- | ------------------------------------------------------------------------



| | our ability to develop intended future products;
|- | ------------------------------------------------



| | availability and retention of qualified personnel;
|- | --------------------------------------------------



| | changes in government regulation;
|- | ---------------------------------



| | general economic and business conditions; and
|- | ---------------------------------------------



| | other risk factors referred to in this Form 10-Q under the heading Additional Factors That May Affect Future Results.
|- | -----------------------------------------------------------------------------------------------------------------------



In some cases, you can identify forward-looking statements by terms such as
may, will, should, could, would, expects, plans, anticipates, believes, estimates, projects, predicts,
potential or continue or other forms of or the negative of those terms or other comparable terms.



Although we believe that the expectations reflected in the forward-looking statements are based on reasonable assumptions, we cannot guarantee future
results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. We do not have a duty to update any of the forward-looking statements
after the date of this filing.



3



---

##### Table of Contents

|ITEM 1. |  | FINANCIAL STATEMENTS
|------- |  | --------------------



VIE FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



|                                                                                                                             |  | September 30,2003(Unaudited) |              |   | March 31, 2003 (Audited) |  
|---------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------------ | - | ------------------------ | -
|Assets                                                                                                                       |  |                              |              |   |                          |  
|                                                                                                                             |  |                             
|Cash and cash equivalents                                                                                                    |  | $                            | 4,116,215    |   |                          | $
|Securities owned, at fair value                                                                                              |  |                              |             |   |                          |  
|Receivables from brokers, dealers and other                                                                                  |  |                              | 270,830      |   |                          |  
|Prepaid expenses and other current assets                                                                                    |  |                              | 169,140      |   |                          |  
|                                                                                                                             |  |                              |              |   |                          |  
|Total current assets                                                                                                         |  |                              | 4,556,185    |   |                          |  
|Property and equipment, net of accumulated depreciation                                                                      |  |                              | 525,293      |   |                          |  
|Exchange memberships                                                                                                         |  |                              | 159,752      |   |                          |  
|Debt issuance costs                                                                                                          |  |                              | 34,318       |   |                          |  
|Other assets                                                                                                                 |  |                              | 408,409      |   |                          |  
|                                                                                                                             |  |                              |              |   |                          |  
|Total assets                                                                                                                 |  | $                            | 5,683,957    |   |                          | $
|                                                                                                                             |  |                              |              |   |                          |  
|Liabilities and Stockholders Deficiency                                                                                     |  |                              |              |   |                          |  
|                                                                                                                             |  |                             
|Accounts payable and accrued expenses                                                                                        |  | $                            | 2,052,065    |   |                          | $
|Payables to brokers, dealers and others                                                                                      |  |                              | 6,218        |   |                          |  
|Securities sold, not yet purchased, at fair value                                                                            |  |                              |             |   |                          |  
|Net liabilities of discontinued operations                                                                                   |  |                              | 60,861       |   |                          |  
|                                                                                                                             |  |                              |              |   |                          |  
|Total current liabilities                                                                                                    |  |                              | 2,119,144    |   |                          |  
|Secured note                                                                                                                 |  |                              | 4,477,066    |   |                          |  
|Secured convertible note                                                                                                     |  |                              | 843,519      |   |                          |  
|Subordinated convertible notes                                                                                               |  |                              | 2,278,029    |   |                          |  
|Other liabilities                                                                                                            |  |                              | 95,148       |   |                          |  
|                                                                                                                             |  |                              |              |   |                          |  
|Total liabilities                                                                                                            |  |                              | 9,812,906    |   |                          |  
|                                                                                                                             |  |                              |              |   |                          |  
|Commitments and contingencies                                                                                                |  |                              |              |   |                          |  
|                                                                                                                             |  |                             
|Preferred Stock  shares authorized: 3,000,000                                                                               |  |                              |              |   |                          |  
|590,000 shares designated as Series B  (liquidation preference equals $240,000); shares issued and outstanding;
24,000      |  |                              | 240,000      |   |                          |  
|                                                                                                                             |  |                             
|100,000 shares designated as Series G  par value: $0.01; shares issued and outstanding: 12,013                              |  |                              | 120          |   |                          |  
|                                                                                                                             |  |                             
|100,000 shares designated as Series H  par value: $0.01; shares issued and outstanding: 35,000                              |  |                              | 350          |   |                          |  
|                                                                                                                             |  |                             
|Common stock - par value: $.01; shares authorized: 1,000,000,000; shares issued and outstanding: 695,971,046 and
691,674,817 |  |                              | 6,959,711    |   |                          |  
|                                                                                                                             |  |                             
|Additional paid-in capital                                                                                                   |  |                              | 91,404,926   |   |                          |  
|Accumulated deficit                                                                                                          |  |                              | (102,693,344 | ) |                          |  
|Accumulated other comprehensive loss                                                                                         |  |                              | (40,712      | ) |                          |  
|                                                                                                                             |  |                              |              |   |                          |  
|Total stockholders deficiency                                                                                               |  |                              | (4,128,949   | ) |                          |  
|                                                                                                                             |  |                              |              |   |                          |  
|Total liabilities and stockholders deficiency                                                                               |  | $                            | 5,683,957    |   |                          | $
|                                                                                                                             |  |                              |              |   |                          |  



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



4



---

##### Table of Contents

VIE FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)



|                                                                           |  | Three Months Ended September 30, |             |   | Six Months Ended September 30, |  
|-------------------------------------------------------------------------- |  | -------------------------------- | ----------- | - | ------------------------------ | -
|                                                                           |  | 2003                             |             |   | 2002                           |  
|Revenues                                                                   |  | $                                | 2,503,429   |   |                                | $
|                                                                           |  |                                  |             |   |                                |  
|Expenses:                                                                  |  |                                  |             |   |                                |  
|Salaries and employee benefits                                             |  |                                  | 1,201,470   |   |                                |  
|Professional fees                                                          |  |                                  | 191,074     |   |                                |  
|Brokerage, clearing and exchange fees                                      |  |                                  | 1,599,346   |   |                                |  
|Depreciation and amortization                                              |  |                                  | 102,307     |   |                                |  
|Non-cash compensation charges                                              |  |                                  |            |   |                                |  
|Loss on trading activities                                                 |  |                                  | 382,749     |   |                                |  
|Selling, general and administrative                                        |  |                                  | 672,635     |   |                                |  
|                                                                           |  |                                  |             |   |                                |  
|Total costs and expenses                                                   |  |                                  | 4,149,581   |   |                                |  
|                                                                           |  |                                  |             |   |                                |  
|Loss from operations                                                       |  |                                  | (1,646,152  | ) |                                |  
|                                                                           |  |                                  |             |   |                                |  
|Interest income                                                            |  |                                  | 2,393       |   |                                |  
|Interest expense                                                           |  |                                  | (426,682    | ) |                                |  
|Debt issue costs                                                           |  |                                  | (3,321      | ) |                                |  
|Other income (expense)                                                     |  |                                  |            |   |                                |  
|Equity in loss of affiliates                                               |  |                                  | (656        | ) |                                |  
|                                                                           |  |                                  |             |   |                                |  
|Net loss from continuing operations                                        |  | $                                | (2,074,418  | ) |                                | $
|                                                                           |  |                                  |             |   |                                |  
|Loss from discontinued operations of eMC                                   |  |                                  |            |   |                                |  
|                                                                           |  |                                  |             |   |                                |  
|Net loss                                                                   |  | $                                | (2,074,418  | ) |                                | $
|                                                                           |  |                                  |             |   |                                |  
|Dividends attributed to preferred stock                                    |  |                                  | (953,473    | ) |                                |  
|Dividends in arrears on preferred stock                                    |  |                                  | (5,443      | ) |                                |  
|                                                                           |  |                                  |             |   |                                |  
|Net loss applicable to common stock                                        |  | $                                | (3,033,334  | ) |                                | $
|                                                                           |  |                                  |             |   |                                |  
|Basic and diluted net loss per common share from continuing operations     |  | $                                | (0.00       | ) |                                | $
|                                                                           |  |                                  |             |  
|Basic and diluted net income per common share from discontinued operations |  | $                                | 0.00        |   |                                | $
|                                                                           |  |                                  |             |  
|Basic and diluted net loss per common share                                |  | $                                | (0.00       | ) |                                | $
|                                                                           |  |                                  |             |   |                                |  
|Weighted average number of common shares outstanding, basic and diluted    |  |                                  | 695,971,046 |   |                                |  
|                                                                           |  |                                  |             |   |                                |  



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



5



---

##### Table of Contents

VIE FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)



|                                                                             |  | Six Months Ended September 30, |           
|---------------------------------------------------------------------------- |  | ------------------------------ | ----------
|                                                                             |  | 2003                           |           
|Cash Flows from Operating Activities                                         |  |                                |           
|                                                                             |  |                               
|Net loss from continuing operations                                          |  | $                              | (4,967,646
|Adjustments to reconcile net loss to net cash used in operating activities:  |  |                                |           
|Depreciation and amortization                                                |  |                                | 266,364   
|Common stock issued in connection with consulting agreement                  |  |                                |          
|Common stock issued in connection with separation agreement                  |  |                                |          
|Non-cash interest expense                                                    |  |                                | 848,954   
|Equity in loss of affiliates                                                 |  |                                | 1,619     
|Debt issuance costs                                                          |  |                                | 6,642     
|Loss on disposition of assets                                                |  |                                | 47,793    
|Changes in operating assets and liabilities:                                 |  |                                |           
|Securities owned, at fair value                                              |  |                                | 7,114     
|Receivables from brokers, dealers and others                                 |  |                                | 465,476   
|Advances to affiliates                                                       |  |                                | (1,619    
|Prepaid expenses and other current assets                                    |  |                                | (40,437   
|Other assets                                                                 |  |                                | 56,876    
|Accounts payable and accrued expenses                                        |  |                                | 972,851   
|Payables to brokers, dealers and others                                      |  |                                | (91,156   
|Securities sold, not yet purchased                                           |  |                                | (353,604  
|Secured convertible note interest payment                                    |  |                                | (50,000   
|Other liabilities                                                            |  |                                | (10,301   
|                                                                             |  |                                |           
|Net cash used in continuing operations                                       |  |                                | (2,841,074
|                                                                             |  |                                |           
|Cash Flows from Investing Activities                                         |  |                                |           
|                                                                             |  |                               
|Proceeds from issuance of note receivable                                    |  |                                |          
|Cash received from notes receivable                                          |  |                                |          
|Purchase of property and equipment                                           |  |                                | (28,111   
|                                                                             |  |                                |           
|Net cash used in investing activities                                        |  |                                | (28,111   
|                                                                             |  |                                |           
|Cash Flows from Financing Activities                                         |  |                                |           
|                                                                             |  |                               
|Proceeds from issuance of preferred stock                                    |  |                                | 4,701,346 
|Proceeds from exercise of common stock purchase warrants                     |  |                                | 58,240    
|Proceeds from issuance of short term note                                    |  |                                |          
|Repayment of short term notes                                                |  |                                |          
|Proceeds from issuance of secured convertible note                           |  |                                |          
|Issuance costs on common and preferred stock                                 |  |                                | (24,787   
|Proceeds from issuance of common stock                                       |  |                                |          
|                                                                             |  |                                |           
|Net cash provided by financing activities                                    |  |                                | 4,734,799 
|                                                                             |  |                                |           
|Net increase in cash and cash equivalents                                    |  |                                | 1,865,614 
|Cash and cash equivalents, beginning of period                               |  |                                | 2,250,601 
|                                                                             |  |                                |           
|Cash and cash equivalents, end of period                                     |  | $                              | 4,116,215 
|                                                                             |  |                                |           
|Supplemental disclosure of non-cash activities:                              |  |                                |           
|Conversion of interest payment on secured convertible note into common stock |  | $                              | 154,545   
|                                                                             |  |                                |           
|Common stock issued in connection with consulting agreement                  |  | $                              |          
|                                                                             |  |                                |           
|Common stock issued in final arbitration settlement                          |  | $                              |          
|                                                                             |  |                                |           
|Warrants issued in connection with exchange agreement                        |  | $                              |          
|                                                                             |  |                                |           
|Beneficial conversion feature of secured convertible note                    |  | $                              |          
|                                                                             |  |                                |           
|Common stock issued in connection with separation agreement                  |  | $                              |          
|                                                                             |  |                                |           
|Conversion of short-term note into common stock                              |  | $                              |          
|                                                                             |  |                                |           
|Non-cash and accrued dividends on preferred stock                            |  | $                              | 1,212,174 
|                                                                             |  |                                |           



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



6



---

##### Table of Contents

VIE FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



1. BASIS OF PRESENTATION



The consolidated financial statements included herein have been prepared
without audit pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules and regulations. The accompanying consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to a fair statement of the results for the
interim periods presented. Such adjustments are of a normal recurring nature. Certain amounts in prior periods have been reclassified for comparative purposes.



The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make
estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the period. Actual results could differ from those
estimates.



These consolidated financial statements should be
read in conjunction with the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2003. The results for the six months ended September 30, 2003 are not necessarily indicative of
the results that may be expected for the year ending March 31, 2004.



During the six months ended September 30, 2003, we operated our business through the following principal subsidiaries:



| | Vie Securities, LLC
|- | -------------------



| | Universal Trading Technologies Corporation (UTTC), and its subsidiary:
|- | ----------------------------------------------------------------------



| |  | Vie Institutional Services, Inc.
| | - | --------------------------------



We are a subsidiary of OptiMark Innovations, Inc. (Innovations), a Delaware corporation. As of September 30, 2003, Innovations owned approximately 88% of
our outstanding shares of common stock. Assuming conversion of the note issued to Innovations on May 7, 2002 (see Note 4), Innovations would own approximately 89% of our common stock.



We raised an aggregate of $5 million in funding upon the issuance of our series H convertible preferred stock to SOFTBANK
Capital Partners LP, SOFTBANK Capital Advisors Fund LP and SOFTBANK Capital LP, each a Delaware limited partnership (SOFTBANK), in September 2003, and to Draper Fisher Jurvetson ePlanet Ventures L.P., a Cayman Islands limited partnership, Draper
Fisher Jurvetson ePlanet Partners Fund, LLC, a California limited liability company, and Draper Fisher Jurvetson ePlanet Ventures GmbH & Co. KG, a German partnership (DFJ ePlanet), in October 2003 (see Note 3). As a result of these transactions
and the conversion of our subordinated convertible notes in October 2003 (see Note 4), Innovations, SOFTBANK and DFJ ePlanet are entitled to 26%, 40% and 21%, respectively, of the aggregate voting rights with respect to all classes of our
outstanding common and preferred stock. SOFTBANK and DFJ ePlanet are also investors in Innovations.



To date, we have recognized recurring operating losses and have financed our operations primarily through the issuance of equity securities. As of
September 30, 2003, we had an accumulated deficit of $102,693,344 and stockholders deficiency of $4,128,949, which raises substantial doubt as to our ability to continue as a going concern. While we believe the series H preferred funding and
changes we have made to reduce our cost structure will enable us to continue operating until we are able to generate sufficient revenues to fund our operations, there is no assurance that we will be successful. If we are unable to attain
profitability within the next 12 months, we may be unable to continue operating. The consolidated financial statements have been prepared assuming that we will continue as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.



The
accounts of each of our majority-owned subsidiaries, Vie Securities, UTTC, and Ashton Technology Canada, Inc., are consolidated with those of Vie Financial Group in our consolidated financial statements. All



7



---

##### Table of Contents

significant intercompany accounts and transactions between Vie Financial Group and its subsidiaries are eliminated in consolidation. We generally account for
investments in businesses that we own between 20% and 50% of the outstanding equity using the equity method. Under this method, the investment balance, originally recorded at cost, is adjusted to recognize our share of net earnings or losses of the
affiliate as they occur, limited to the extent of our investment in and advances to the investee. These adjustments are included in equity in loss of affiliates in our consolidated statements of operations. We used the equity method to
account for our investment in Kingsway-ATG Asia, Ltd. (KAA).



On October 9, 2002, we changed our name to Vie Financial Group, Inc. from The Ashton Technology Group, Inc. We also changed the name of our subsidiaries, Croix Securities, Inc. and ATG Trading, LLC to Vie Institutional Services, Inc. and
Vie Securities, LLC, respectively.



Other Affiliates



Ashton Technology Canada, Inc.



Ashton Technology Canada, Inc. is one of our majority-owned subsidiaries. On
December 20, 1999, we entered into an agreement to create Ashton Canada to develop, market and operate intelligent matching, online transaction systems and distribution systems for use by U.S. and Canadian financial intermediaries. On June 8, 2000,
Ashton Canada entered into an agreement with the Toronto Stock Exchange to market, deploy, and operate our proprietary eVWAP, as a facility of the Toronto Stock Exchange for Canadian securities. On January 12, 2001, the Ontario Securities Commission
approved an amendment to the Rules and Policies of the Toronto Stock Exchange, allowing the implementation of eVWAP as a facility of the Toronto Stock Exchange and allowing participating organizations and eligible institutional clients access to the
eVWAP facility. The Toronto Stock Exchange deferred implementing eVWAP in 2002, and Ashton Canada reduced its expenses and staffing to address the reduced prospects for near-term revenues from such a facility.



On June 11, 2003, Ashton Canada filed an arbitration claim against the
Toronto Stock Exchange for breach of contract under the June 7, 2000 agreement to introduce the eVWAP trading system. The arbitration claim states that Ashton Canada designed, developed and was prepared to deploy eVWAP as a facility of the primary
Canadian exchange when the Toronto Stock Exchange circumvented the deployment of eVWAP without proper excuse. The Ashton Canada arbitration claim was filed in Toronto, Ontario and seeks substantial damages. On August 22, 2003, the Toronto Stock
Exchange filed a counterclaim against Ashton Canada seeking specific performance of the integration agreement, or in the alternative, a declaration that it is entitled to terminate the agreement without penalty. Ashton Canada is no longer
operational, has no employees, and currently has the sole objective of focusing on the arbitration claim with the Toronto Stock Exchange.



Electronic Market Center, Inc. (Discontinued Operations)



We formed Electronic Market Center, Inc. (eMC) as a wholly owned subsidiary in June 1998 to develop, operate and market a global electronic distribution
channel for financial products and services. In April 2000, Vies board of directors agreed to fund eMCs initial development efforts. After being unable to find other funding sources or consummate a sale of eMC to a third party,
eMCs board of directors voted on March 29, 2001 to begin the orderly winding down of its operations, including terminating all of its employees, selling its assets, and negotiating the settlement of its outstanding liabilities. eMCs
results are reflected as discontinued operations in the consolidated financial statements for all periods presented.



8



---

##### Table of Contents

2. SIGNIFICANT ACCOUNTING POLICIES



Stock-Based Compensation



We use the intrinsic value-based method to account for stock options issued to employees and have adopted the disclosure-only alternative of SFAS No. 123
Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation. We are required to disclose the pro forma effects on operating results as if we had elected to use the fair value
approach to account for all our stock-based employee compensation plans.If compensation had been determined based on the fair value at the grant date for awards in the three and six month periods ended September 30, 2003 and 2002, respectively,
consistent with the provisions of SFAS No. 123, our net loss and net loss per share would have been as follows:



|                                          |  | Three Months Ended September 30, |            |   | Six Months Ended September 30, |  
|----------------------------------------- |  | -------------------------------- | ---------- | - | ------------------------------ | -
|                                          |  | 2003                             |            |   | 2002                           |  
|Net loss  as reported                    |  | $                                | (2,074,418 | ) |                                | $
|Stock based employee compensation expense |  |                                  | (855,262   | ) |                                |  
|                                          |  |                                  |            |   |                                |  
|Net loss  pro forma                      |  | $                                | (2,929,680 | ) |                                | $
|                                          |  |                                  |            |   |                                |  
|PER SHARE DATA                            |  |                                  |            |   |                                |  
|Basic and diluted                         |  |                                  |            |   |                                |  
|Net loss per common share  as reported   |  | $                                | (0.00      | ) |                                | $
|Net loss per common share  pro forma     |  | $                                | (0.00      | ) |                                | $



Such pro forma
disclosures may not be representative of future compensation costs because options vest over several years and additional grants are made each year.



The fair value of each option grant is estimated on the date of grant using the Black-Scholes valuation model with the following weighted average
assumptions:



|                        |  | Three Months EndedSeptember 30, |   |  | Six Months Ended September 30, |  
|----------------------- |  | ------------------------------- | - |  | ------------------------------ | -
|                        |  | 2003                            |   |  | 2002                           |  
|Risk-free interest rate |  |                                 | * |  | 1.41                           | %
|Volatility              |  |                                 | * |  | 100                            | %
|Expected life           |  |                                 | * |  | 6.7 years                      |  
|Expected dividends      |  |                                 | * |  | None                           |  
|Average turnover rate   |  |                                 | * |  | 1.28                           | %

---

|* | No options were granted during the three months ended September 30, 2003.
|- | -------------------------------------------------------------------------



Recent Accounting Pronouncements



In July 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities. SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring). The principal difference between SFAS 146 and EITF 94-3 relates to SFAS 146s timing for recognition of a liability for a cost associated with an exit or disposal activity.
SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3, a liability for an exit cost as generally defined in EITF 94-3 was recognized at the date of an
entitys commitment to an exit plan. The requirements of SFAS 146 were effective prospectively for exit or disposal activities initiated after December 31, 2002. Adoption of SFAS 146 did not have a significant effect our financial position,
results of operations, or cash flows.



In December 2002, the
FASB issued Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure (SFAS 148). SFAS 148 amends SFAS 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation. SFAS 148 also amends the disclosures in both annual and interim financial statements about the method used to
account for stock-based employee compensation and the effect of the method used on reported results. We will continue to apply Accounting Principles Board Opinion No. 25 as the method used to account for stock-based compensation, where applicable,
but have adopted the disclosure requirements of SFAS 148. This adoption had no impact on our financial condition or results of operations.



In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities. This interpretation provides
guidance on how to identify a variable interest entity and determine



9



---

##### Table of Contents

when the assets, liabilities, non-controlling interests, and results of operations of a variable interest entity need to be included in a companys
consolidated financial statements. The new accounting provisions of this interpretation became effective upon issuance for all new variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise
obtains an interest after that date. It applies to the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The
adoption of FIN 46 will have no impact on our results of operations or financial position.



3. RECENT DEVELOPMENTS



Issuance of
Series H Convertible Preferred Stock



On September 30,
2003, we issued 35,000 shares of our series H convertible preferred stock, par value $0.01, to SOFTBANK Capital Partners LP, SOFTBANK Capital Advisors Fund LP and SOFTBANK Capital LP, each a Delaware limited partnership (SOFTBANK) for an aggregate
of $3.5 million. SOFTBANK is an investor in Innovations, which controls approximately 88% of our outstanding common stock and 26% of the aggregate voting rights with respect to all classes of our common and preferred stock.



Each share of series H preferred is convertible at our election at any time
into such number of shares of common stock that is determined by dividing the series H preferred purchase price per share ($100) by the conversion price, which is initially $.005329 per share, subject to adjustment. Assuming conversion in full of
the shares of series H preferred held by SOFTBANK at the initial conversion price, we would be required to issue 656,783,637 shares of common stock. In the event that we do not elect to convert the series H preferred shares within one year, SOFTBANK
shall have the right to convert on the same terms as us at any time thereafter. The conversion price for the series H preferred is subject to anti-dilution adjustment in the event of stock dividends, stock splits and combinations, and to full
anti-dilution adjustment with respect to any equity issuance for consideration per share less than the series H preferred conversion price in effect on the date of such issue.



Upon issuance, the conversion price per share of the series H preferred was below the prevailing market price of the
underlying common stock. Therefore, we are recording the beneficial conversion feature of the series H preferred as a return to the preferred stockholders in accordance with EITF 98-5, Accounting for Convertible Securities with Beneficial
Conversion Features or Contingency Adjustable Conversion Ratios. The beneficial conversion feature of the series H preferred, represented by the intrinsic value, is calculated as the difference between the conversion price and the market price
of the underlying common stock, multiplied by the number of shares to be issued upon conversion, and is limited to the amount of gross proceeds received in the transaction. The beneficial conversion feature on the series H preferred of $3,500,000
will be recognized as a dividend to the preferred stockholders over the one-year period beginning October 1, 2003 and ending on September 30, 2004, the date the series H preferred holders will have the right to convert the series H preferred into
common stock.



The holders of series H preferred are entitled
to cumulative cash dividends at an annual rate of 8%; provided, however, that if we make the initial required filings with the SEC by January 1, 2004 to effect a reverse stock split to create sufficient authorized shares of common stock available
for issuance upon conversion of the outstanding series H preferred, then no dividends will accrue or become payable for the six-month period following the closing date.



Each share of series H preferred has such number of votes equal to the number of common shares then issuable upon conversion
into common stock. Additionally, the purchasers have pre-emptive rights to participate in all future issuances of equity securities by the Company at the same price and on the same terms and conditions as we offer to other investors.



If any liquidation, dissolution or winding up of the Company occurs, each
holder of series H preferred will be entitled to an amount equal to 500% of the series H preferred purchase price, plus accrued dividends. If, by the later of September 15, 2004 or five business days after our 2004 annual meeting of stockholders, we
do not have sufficient authorized shares of common stock available to permit the conversion in full of the outstanding series H preferred, then the series H preferred will become participating preferred stock and the holders of series H preferred
will be entitled to receive the 500% liquidation preference described above and, in the case of any liquidation, dissolution or winding up of the Company, any assets not otherwise distributed would be distributed pro rata among the holders of the
common stock and the holders of series H preferred on an as-converted basis.



10



---

##### Table of Contents

On October 9, 2003, we issued 15,000 shares of series H preferred for an aggregate of $1.5 million to
Draper Fisher Jurvetson ePlanet Ventures L.P., a Cayman Islands limited partnership, Draper Fisher Jurvetson ePlanet Partners Fund, LLC, a California limited liability company, and Draper Fisher Jurvetson ePlanet Ventures GmbH & Co. KG, a German
partnership (DFJ ePlanet), on the same terms as the series H preferred shares issued to SOFTBANK. Assuming conversion in full of the $1.5 million of series H preferred held by DFJ ePlanet at the initial conversion price, we would be required to
issue 281,478,701 shares of common stock. DFJ ePlanet is an investor in Innovations, which controls approximately 88% of our outstanding common stock and 26% of the aggregate voting rights with respect to all classes of our common and preferred
stock.



Also in connection with the issuance of series H
preferred, we granted two demand registration rights with respect to the resale of the common shares issuable upon conversion of the series H preferred to SOFTBANK and DFJ ePlanet.



Issuance of Series G Convertible Preferred Stock



Between May 29, 2003 and August 11, 2003, we sold 12,013 shares of our series G convertible preferred stock, par value
$0.01, to an individual investor and an investment partnership for an aggregate of $1,201,346. The series G preferred, with respect to dividend rights or rights upon liquidation, ranks junior to all other series of preferred stock and pari
passu with shares of our common stock.



Each share of
series G preferred is convertible at the option of the holder into such number of shares of common stock that is determined by dividing the series G preferred original issue price per share ($100) by the series G conversion price, which was
initially $0.05. The series G conversion price was adjusted to $0.005329, in accordance with the terms of the amended series G preferred transaction documents, to reflect the same conversion price per share as the series H preferred issued on
September 30, 2003. The conversion price is also subject to anti-dilution adjustment at any time in the event of stock dividends, stock splits, reverse stock splits, mergers, consolidations, recapitalizations or other similar transactions affecting
the capitalization of the company.



Upon issuance and
subsequent adjustment to the series G preferred conversion price, the conversion price was below the prevailing market price of the underlying common stock. Therefore, we recorded the beneficial conversion feature of the series H preferred as a
return to the preferred stockholders in accordance with EITF 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingency Adjustable Conversion Ratios.The beneficial conversion feature of the
preferred stock, represented by the intrinsic value, is calculated as the difference between the conversion price and the market price of the underlying common stock on the dates of issuance, multiplied by the number of shares to be issued upon
conversion, and is limited to the amount of gross proceeds received in the transaction. A beneficial conversion feature of $247,873 was recognized as a dividend to the preferred stockholders during the three months ended June 30, 2003 upon issuance
of the shares, and a subsequent beneficial conversion feature of $953,473 was recognized as a dividend to the preferred stockholders during the three months ended September 30, 2003 upon adjustment to the conversion price.



Investors in the series G preferred also received warrants to purchase an
aggregate of 15,016,827 shares of our common stock at an exercise price of $0.08. The warrants have a three-year term and are fully exercisable six months after their dates of issuance. If a sufficient number of authorized shares of common stock are
not available upon exercise of the warrants, then the holders will be entitled to receive a number of shares of a new series of preferred stock (which we agreed to use our best efforts to create) less the number of shares of common stock available
for issuance upon exercise of the warrants. The new series of preferred stock will have, in the aggregate, rights, privileges and preferences (including without limitation with respect to dividends, voting and rights upon liquidation or dissolution
of Vie) at least as favorable to the holder as our common stock.



Each share of series G preferred has such number of votes equal to the number of common shares then issuable upon conversion into common stock.



We will be required to file a registration statement, registering the shares issuable upon conversion of the series G preferred and exercise of the
related warrants within thirty (30) days after receiving a written request by the holder or holders of a majority of the shares, however we will have no such obligation at any time before we have a sufficient number of authorized shares of common
stock to effect the requested registration.



11



---

##### Table of Contents

Operational Developments



In May 2003, we began implementing a plan to streamline our corporate organizational structure, reduce our operating expenses and reduce the cost of
providing liquidity to our customers.



On September 15, 2003 we
withdrew our broker-dealer registration with the Securities and Exchange Commission for Vie Institutional Services, Inc., and we withdrew its memberships with the NASD and the Philadelphia Stock Exchange. We have retained the customers of Vie
Institutional Services, Inc. by establishing account relationships with those customers through our other broker-dealer subsidiary, Vie Securities LLC, which is now our sole operating entity. The decision to concentrate all of our broker-dealer
operations in one entity has enabled us to concentrate our capital resources and eliminate infrastructure redundancies that existed in our prior organizational structure. We plan to merge Vie Institutional Services into its parent company, Universal
Trading Technologies Corporation to further simplify our corporate organizational structure.



Effective as of October 1, 2003, we consolidated our Philadelphia and New York offices by relocating our corporate headquarters and all operations to offices in the Grace Building, 1114 Avenue of the Americas,
22ndFloor, New York, New York, which we have occupied since June 2002. Our prior headquarters at 1835 Market
Street, Suite 420 Philadelphia, Pennsylvania remains under lease while we seek potential parties to sublease the space. Additionally, in September 2003, we instituted salary reductions for all executives and a majority of non-executive employees. We
also reduced our headcount by 21% to 27 employees during the three months ended September 30, 2003.



We continue to lower the cost of providing liquidity to our customers, which includes both commissions paid to third party liquidity providers and trading
losses resulting from the use of our proprietary trading algorithm. Since May 2003, we have primarily utilized third party liquidity providers as an alternative to using our proprietary trading algorithm with the objective of reducing the
variability in these costs. By lowering the cost of liquidity, we have been able to be more competitive in the pricing we offer our customers, facilitating both new account acquisition and increasing the trading volumes from our existing customers
during the five-month period ended September 30, 2003.



4. SHORT-TERM AND
LONG-TERM OBLIGATIONS



Investment by SOFTBANK and DFJ ePlanet 
Subordinated Convertible Notes



On December 30, 2002, we
entered into a loan agreement that provided $2.4 million in principal amount to us and required us to issue notes and warrants to the lenders. The loan agreement was executed by and between Vie and SOFTBANK Capital Partners LP, SOFTBANK Capital
Advisors Fund LP and SOFTBANK Capital LP, and Draper Fisher Jurvetson ePlanet Ventures L.P., Draper Fisher Jurvetson ePlanet Partners Fund, LLC, and Draper Fisher Jurvetson ePlanet Ventures GmbH & Co. KG.



In accordance with the loan agreement, we issued SOFTBANK notes with an
aggregate principal loan amount of $1.4 million, and issued notes to DFJ ePlanet with an aggregate principal loan amount of $1 million. Each lenders note was due and payable on May 4, 2006 and accrued simple interest at 8% per annum. We had
the ability to prepay the loan at any time without penalty on 30 days prior written notice to the lenders. The notes were subordinate and junior in all respects to the promissory note, dated as of May 3, 2002, to RGC International Investors, LDC
(RGC) to the extent required by the terms of the RGC note. The lenders had the ability to convert all or any portion of the outstanding loan amount into shares of our common stock at an initial conversion price of $0.0448 per share.



The lenders also had the right to convert the outstanding principal amount
and accrued and unpaid interest, in whole or in part, into securities of the same class as those issued and sold in any subsequent financing completed during the term of the loan. During October 2003, SOFTBANK and DFJ ePlanet each converted the
outstanding principal balance and accrued interest on their notes into 14,933 and 10,629 shares, respectively, of series H preferred.



In connection with the loan agreement, we also issued warrants to purchase 8,928,571 shares of common stock, which number is equal to $400,000 divided by
the exercise price of the warrants. The exercise price of the warrants is initially $0.0448 per share. The warrants will expire on December 30, 2005. We recorded the fair value



12



---

##### Table of Contents

of the warrants, or $342,857, as an initial discount on the notes. We amortized $25,629 and $51,258 of the discount as interest expense and recorded interest
expense of $48,000 and $96,000 at the contractual rate of 8% during the three- and six-month periods, respectively, ended September 30, 2003. The notes are reflected on the September 30, 2003 consolidated balance sheet net of the remaining
unamortized discount of $265,971, plus accrued interest of $144,000.



Investment by OptiMark Innovations Inc. and Secured Convertible Note



On May 7, 2002, we closed the transactions contemplated by the securities purchase agreement with OptiMark Innovations dated as of February 4, 2002, and as amended. Pursuant to the purchase agreement, we issued
608,707,567 shares of common stock to Innovations in consideration for $7,272,727 in cash, and certain intellectual property and other non-cash assets. In addition, Innovations loaned us $2,727,273 in cash, evidenced by a senior secured convertible
note in favor of Innovations. The note accrues interest at a rate of 7.5% per annum, matures in May 2007, and is convertible at any time into 52,870,757 shares of our common stock, subject to customary anti-dilution adjustments. The note is secured
by a pledge and security agreement pursuant to which Innovations received a blanket lien on our assets, subject to the terms and conditions of the intercreditor, subordination and standstill agreement by and among RGC International Investors, LDC,
Innovations and us.



Since the Innovations note was convertible
into shares of our common stock at a rate of $0.05158 per share, and the market price of our common stock was $0.17 per share on the date of the agreement, we recorded the beneficial conversion feature of the note in accordance with EITF 98-5,
Accounting for Convertible Securities with Beneficial Conversion Features or Contingency Adjustable Conversion Ratios. We recorded the beneficial conversion feature as an initial discount of $2,727,273 on the note, and have amortized $136,364
and $272,727 as interest expense during the three- and six-month periods, respectively, ended September 30, 2003. Also during the three- and six-month periods ended September 30, 2003, we accrued the contractual interest at a rate of 7.5%, or
$51,136 and $102,272, respectively, on the Innovations note.



On June 18, 2003, Innovations converted $154,545 of the first year interest payment due and outstanding as of May 7, 2003 into 2,996,229 shares of Vie common stock, and we paid the $50,000 balance of the interest payment in cash. The note
is reflected on the September 30, 2003 consolidated balance sheet net of the remaining unamortized discount of $1,965,152, plus the accrued interest of $81,398.



On April 30, 2002, Innovations agreed to lend us $300,000 to be credited against the purchase price of the common stock to be purchased by Innovations.
Additionally, on April 30, 2002, we agreed to lend OptiMark, Inc., the parent company of Innovations, $200,000 to be credited at the closing against reimbursable expenses we owed to OptiMark, Inc. pursuant to the securities purchase agreement with
Innovations. Each of the notes was satisfied on May 7, 2002 at the closing of the securities purchase agreement with Innovations.



RGC Bridge Loan and Exchange Agreement  Secured Note



On April 11, 2002, we entered into a securities exchange agreement with RGC International Investors, LDC (RGC) pursuant to which RGC exchanged its 9%
secured convertible note (see Note 8 Exchange of Series F Redeemable Convertible Preferred Stock) for a four-year, 7.5% non-convertible zero-coupon senior secured note in the principal amount of $4,751,876 and a five-year warrant to purchase 9
million shares of our common stock at an exercise price of $0.0448 per share, subject to customary anti-dilution adjustments. The exchange note is secured by a blanket, first priority lien on our assets (except for certain intellectual property
assets received by us as consideration in the transaction with Innovations). We recorded the fair value of the warrant, or $1,188,000, as an initial discount on the exchange note, and we amortized $74,250 and $148,500 of the discount as interest
expense during the three- and six-month periods, respectively, ended September 30, 2003. Also during the three- and six- month periods ended September 30, 2003, we recorded contractual interest of $89,098 and $178,196, respectively, on the 9% note.
During the six months ended September 30, 2002, we amortized $43,725 of the discount as interest expense and contractual interest expense of $40,477 on the 9% note prior to the exchange, and $216,224 on the 7.5% note after the exchange. The note is
reflected on the September 30, 2003 consolidated balance sheet net of the remaining unamortized discount of $773,025, plus the accrued interest of $498,215.



The exchange agreement allows us to redeem the exchange note at any time, in whole but not in part, for an amount equal to: 30% of the principal amount
thereof plus all accrued and unpaid interest in year one; 53.3% of the principal amount thereof plus all accrued and unpaid interest in year two; 76.6% of the principal amount thereof plus all accrued and unpaid interest in year three; or 100% of
the principal amount thereof plus all accrued and unpaid interest thereafter.



13



---

##### Table of Contents

The warrant was immediately exercisable as to 2,250,000 shares of common stock, and becomes exercisable
in quarterly installments of 2,250,000 shares each, beginning October 11, 2002. In addition, the warrant becomes immediately exercisable in full in the event of a change of control of Vie, as such term is defined in the warrant agreement. In no
event, however, is RGC entitled to exercise and purchase shares of our common stock in excess of the number of shares of common stock that would result in RGCs beneficially owning more than 4.9% of our outstanding shares of common stock. On
April 15, 2003 and April 16, 2003, RGC exercised warrants to purchase 300,000 and 1,000,000 shares of our common stock, respectively. We issued an aggregate of 1,300,000 shares of our common stock and received proceeds of $58,240.



Also on April 11, 2002, RGC agreed to lend us up to $250,000, repayable upon
the closing of the securities purchase agreement with Innovations. The loan accrued interest at a rate of 15% and was secured by a blanket, first priority lien on all of our assets. We borrowed the entire $250,000 in April 2002, and repaid it on May
7, 2002.



5. RELATED PARTY TRANSACTIONS



Relationship with Innovations



On May 7, 2002, we closed the transactions contemplated by the securities
purchase agreement with Innovations dated as of February 4, 2002, as amended. Pursuant to the purchase agreement, we issued 608,707,567 shares of our common stock to Innovations in consideration for $7,272,727 in cash, certain intellectual property
and other non-cash assets. In addition, Innovations loaned us $2,727,273 in cash, evidenced by a senior secured convertible note in favor of Innovations. The note accrues interest at a rate of 7.5% per annum, matures in May 2007, and is convertible
at any time into 52,870,757 shares of our common stock, subject to customary anti-dilution adjustments. The note is secured by a pledge and security agreement pursuant to which Innovations received a blanket lien on our assets, subject to the terms
and conditions of the intercreditor, subordination and standstill agreement by and among RGC, Innovations and Vie Financial Group. On June 18, 2003, Innovations converted $154,545 of the first year interest payment due and outstanding as of May 7,
2003 into 2,996,229 shares of Vie common stock, and we paid the $50,000 balance of the interest payment in cash.



As of September 30, 2003, Innovations owned approximately 88% of our outstanding shares of common stock. Assuming conversion of the note issued to
Innovations, Innovations would own approximately 89% of our common stock. Innovations is currently entitled to 26% of the aggregate voting rights with respect to all classes of our outstanding common and preferred stock.



Robert J. Warshaw was our interim Chief Executive Officer for the period May
8, 2002 through October 9, 2002. Mr. Warshaw is also the Chief Executive Officer of OptiMark, Inc. (OptiMark), a stockholder of Innovations and a wholly-owned subsidiary of OptiMark Holdings, Inc. (Holdings), and is paid a base salary and a
guaranteed bonus by OptiMark. We reimbursed OptiMark for the portion of Mr. Warshaws base salary and guaranteed bonus that was attributable to his performance as our acting Chief Executive Officer. From May 8, 2002 through September 30, 2002,
we reimbursed OptiMark $125,156 related to Mr. Warshaws compensation. We entered into an employment agreement with Mr. Warshaw effective September 15, 2002, whereby we also granted him 4,755,528 stock options at an exercise price of $0.08. The
options became fully vested upon the employment of Dean Stamos, our current Chief Executive Officer, on October 9, 2002.



In December 2002, we purchased computer equipment and consulting services related to development of the VWAP trading system software from OptiMark for a
total price of $241,126. We also entered into a services agreement with OptiMark on January 1, 2003, whereby we provide office space and certain technology and communications support personnel to OptiMark, and OptiMark provides to us certain
administrative support personnel. We owed a balance of $65,012 to OptiMark for the computer equipment, consulting services and the net amount payable to OptiMark under the services agreement as of September 30, 2003.



Investors Rights Agreement



On May 7, 2002, we also entered into an Investors Rights Agreement
(the Rights Agreement) with Innovations. Pursuant to the Rights Agreement, Innovations acquired certain rights, including but not limited to: (i)



14



---

##### Table of Contents

preemptive rights to subscribe to future sales of our common stock, (ii) registration rights and (iii) the right to designate a number of directors to our
board of directors proportionate to Innovations ownership of our common stock. In addition, so long as Innovations holds at least 20% of our common stock, we have agreed that we will not take certain actions without Innovations prior
approval, including, among other things, (i) the issuance of additional common stock (with certain exceptions), (ii) the repurchase or redemption of our securities, (iii) a merger, consolidation or sale of substantially all of our assets or (iv)
engaging in any business other than the business we currently engage in. So long as Innovations has the right to appoint at least one director, certain actions by our board of directors cannot be taken without the approval of at least one of the
directors appointed by Innovations. Such actions include, among other things, making capital expenditures in excess of certain limits, acquisitions or sales of assets with a value in excess of $50,000 within any fiscal year, incurring debt in excess
of $100,000 (with certain exceptions) and repurchasing or redeeming our securities.



Non-Competition Agreement



We executed a
non-competition agreement with Innovations and Holdings upon the closing of the transaction. The parties currently do not compete. This agreement precludes Innovations, OptiMark, Holdings or any entity that they control from competing with us on a
worldwide basis in designing, implementing or operating volume-weighted average pricing trading systems or related services in U.S. and Canadian securities for themselves or any third party. The agreement expires in May 2007.



Relationships with SOFTBANK and DFJ ePlanet



Relationship with SOFTBANK



On September 30, 2003, we issued 35,000 shares of our series H convertible
preferred stock for an aggregate of $3.5 million to SOFTBANK Capital Partners LP, SOFTBANK Capital Advisors Fund LP and SOFTBANK Capital LP, each a Delaware limited partnership (SOFTBANK). Additionally, during October 2003, SOFTBANK converted the
$1,493,333 of outstanding principal and accrued interest on their subordinated convertible notes into 14,933 shares of series H preferred.



As of October 31, 2003, SOFTBANKs series H preferred holdings entitle it to 40% of the aggregate voting rights with respect to all classes of our
outstanding common and preferred stock. SOFTBANK also invests in Innovations, which controls 88% our outstanding common stock and 26% of the aggregate voting rights with respect to all classes of our common and preferred stock.



Ronald D. Fisher, the Chairman of our Board of Directors, is also a director
of SOFTBANK Corporation, and is the Managing Member of the general partner in each of the SOFTBANK entities listed above that invested in our series H preferred. Directors designated by SOFTBANK, Innovations, these entities or their affiliates
recused themselves from consideration of the series H preferred transaction. The series H preferred transaction was approved by a special committee of disinterested directors.



Relationship with DFJ ePlanet



On October 9, 2003, we issued 15,000 shares of series H preferred for an aggregate of $1.5 million to Draper Fisher Jurvetson ePlanet Ventures L.P., a
Cayman Islands limited partnership, Draper Fisher Jurvetson ePlanet Partners Fund, LLC, a California limited liability company, and Draper Fisher Jurvetson ePlanet Ventures GmbH & Co. KG, a German partnership (DFJ ePlanet), on the same terms as
the series H preferred shares issued to SOFTBANK. Additionally, during October 2003, DFJ ePlanet converted the $1,062,889 of outstanding principal and accrued interest on their subordinated convertible notes into 10,629 shares of series H preferred.



As of October 31, 2003, DFJ ePlanets series H preferred
holdings entitle it to 21% of the aggregate voting rights with respect to all classes of our outstanding common and preferred stock. DFJ ePlanet also invests in Innovations, which controls 88% of our outstanding common stock and 26% of the aggregate
voting rights with respect to all classes of our common and preferred stock.



Series H Convertible Preferred Stock



On
September 30, 2003, we issued 35,000 shares of series H preferred at a purchase price of $3.5 million to SOFTBANK. Each share of series H preferred is convertible at our election at any time into a number of shares of common stock as is determined
by dividing the series H preferred purchase price per share ($100) by the



15



---

##### Table of Contents

conversion price, which is initially $.005329 per share. In the event that we do not elect to convert the series H preferred shares within one year, SOFTBANK
shall have the right to convert on the same terms as us at any time thereafter. Upon full conversion of the shares of series H preferred held by SOFTBANK at the initial conversion price, we would be required to issue 656,783,637 shares of common
stock.



On October 9, 2003, we issued 15,000 shares of series H
preferred to DFJ ePlanet for an aggregate of $1.5 million on the same terms as the series H preferred shares issued to SOFTBANK. Upon full conversion of the $1.5 million of series H preferred held by DFJ ePlanet at the initial conversion price, we
would be required to issue 281,478,701 shares of common stock.



The holders of series H preferred are entitled to cumulative cash dividends at an annual rate of 8%, provided, however, that if we make the initial required filings with the SEC by January 1, 2004 to effect a reverse stock split to create
sufficient authorized shares of common stock available for issuance upon conversion of the outstanding series H preferred, then no dividends will accrue or become payable for the six-month period following the closing date.



Each share of series H preferred has such number of votes equal to the number
of common shares then issuable upon conversion into common stock. Additionally, the purchasers have pre-emptive rights to participate in all future issuances of equity securities by the Company at the same price and on the same terms and conditions
as we offer to other investors.



If any liquidation,
dissolution or winding up of the Company occurs, each holder of series H preferred will be entitled to 500% of the series H preferred purchase price, plus accrued dividends. If, by the later of September 15, 2004 or five business days after our 2004
annual meeting of stockholders, we do not have sufficient authorized shares available to permit the conversion in full of the outstanding series H preferred, then the series H preferred will become participating preferred stock and the holders of
series H preferred will be entitled to receive the 500% liquidation preference described above and, in the case of any liquidation, dissolution or winding up of the Company, any assets not otherwise distributed would be distributed pro rata among
the holders of the common stock and the holders of series H preferred on an as-converted basis.



Also in connection with the issuance of series H preferred, we granted two demand registration rights with respect to the resale of the common shares
issuable upon conversion of the series H preferred to SOFTBANK and DFJ ePlanet.



Subordinated Convertible Notes



On December
30, 2002, we entered into a loan agreement that provided $2.4 million in principal amount to us and required us to issue convertible notes and warrants to purchase shares of our common stock. The loan agreement was executed by and between Vie and
SOFTBANK Capital Partners LP, SOFTBANK Capital Advisors Fund LP and SOFTBANK Capital LP, and Draper Fisher Jurvetson ePlanet Ventures L.P., Draper Fisher Jurvetson ePlanet Partners Fund, LLC, and Draper Fisher Jurvetson ePlanet Ventures GmbH &
Co. KG.



In accordance with the loan agreement, we issued notes
to SOFTBANK with an aggregate principal loan amount of $1.4 million, and issued notes to DFJ ePlanet with an aggregate principal loan amount of $1 million. Each lenders note was due and payable on May 4, 2006 and accrued simple interest at 8%
per annum. We had the ability to prepay the loan at any time without penalty on 30 days prior written notice to the lenders. The notes were subordinate and junior in all respects to the promissory note, dated as of May 3, 2002, to RGC International
Investors, LDC (RGC) to the extent required by the terms of the RGC note. The lenders had the ability to convert all or any portion of the outstanding loan amount into shares of our common stock at an initial conversion price of $0.0448 per share.



The lenders also had the right to convert the outstanding
principal amount and accrued and unpaid interest, in whole or in part, into securities of the same class as those issued and sold in any subsequent financing completed during the term of the loan. During October 2003, SOFTBANK and DFJ ePlanet each
converted the outstanding principal balance and accrued interest on their notes into 14,933 and 10,629 shares, respectively, of series H preferred as described above.



16



---

##### Table of Contents

Separation Agreement with Fred S. Weingard



We entered into a separation agreement with Fred S. Weingard, effective July 18, 2003. As consideration for Mr.
Weingards release of claims and certain non-solicitation, non-competition and non-disclosure obligations, Mr. Weingard is entitled to severance payments totaling $110,000, healthcare insurance paid for by us for the three months ending October
31, 2003, and accelerated vesting with respect to 2,377,764 of the options held by Mr. Weingard. We paid $55,000 of Mr. Weingards severance on July 31, 2003, and we paid an additional $55,000 in six equal semi-monthly installments from August
15, 2003 through October 31, 2003. Also in accordance with the agreement, the expiration date of his vested options, totaling 7,133,292, was extended from July 15, 2004 to July 15, 2005. The separation agreement releases us from claims related to a
March 4, 2003 employment agreement with Mr. Weingard, effective May 18, 2002, which entitled him to (i) an annual salary of no less than $220,000 per year; (ii) the potential for discretionary cash bonuses; (iii) a grant of options to purchase
14,266,584 shares of our common stock under the 2002 Option Plan at an exercise price of $0.08; and (iv) upon termination without cause or his resignation upon constructive termination, accelerated vesting with respect to 1,585,176 of his options,
$110,000 in severance pay, and the ability to exercise his vested options for a period of one year after the date of termination.



Separation Agreement with Frederic W. Rittereiser



On April 15, 2002, we entered into a separation agreement with our former Chief Executive Officer, Fredric W. Rittereiser, which became effective on May
7, 2002. As consideration for Mr. Rittereisers resignation, release of claims and on-going non-solicitation, non-competition and non-disclosure obligations, Mr. Rittereiser received: (i) a $150,000 cash payment, (ii) reimbursement of expenses
incurred by Mr. Rittereiser from January 18, 2002 through May 7, 2002 totaling $6,000 and (iii) 4 million shares of our common stock. According to the terms of the separation agreement, Mr. Rittereiser also received healthcare insurance paid by us
through May 7, 2003. During the six months ended September 30, 2002, we recorded a non-cash compensation charge of $720,000 for the value of the shares issued.



Consulting Agreement with Arthur J. Bacci



On January 7, 2002, we entered into a consulting agreement with Mr. Bacci, our former President and Chief Operating Officer, and a former director. In
consideration for his services in the negotiation of definitive agreements with Innovations, Mr. Bacci received a cash payment of $10,000, and payment of his medical coverage through April 1, 2002. Further, on June 13, 2002, we agreed to issue
275,000 shares of our common stock to Mr. Bacci in connection with his services in the Innovations transaction. We included a charge of $41,250 in professional fees during the six months ended September 30, 2002 for the issuance of these shares.



6. NET LOSS PER SHARE



Net loss per share is computed in accordance with SFAS No 128, Earnings
per Share. SFAS 128 requires companies to present basic and diluted earnings per share. Basic earnings per share excludes the dilutive effect of outstanding stock options, warrants and convertible securities, whereas diluted earnings per share
includes the effect of such items. The effect of potential common stock is not included in diluted earnings per share for the three- or six-month periods ended September 30, 2003 and 2002 because we have incurred net losses; therefore, the effect of
our dilutive securities is anti-dilutive in those periods.



7. COMPREHENSIVE
LOSS



Total comprehensive loss, which includes net loss,
unrealized gains and losses on available-for-sale securities, and foreign currency translation adjustments, amounted to $2,074,418 and $3,651,876, respectively, for the three months ended September 30, 2003 and 2002, and $4,967,666 and $7,066,593,
respectively, for the six months ended September 30, 003 and 2002.



8.
SUBSEQUENT EVENTS



Issuance of Series H Convertible Preferred Stock



On October 9, 2003, we agreed to issue 15,000 shares of
series H preferred for an aggregate of $1.5 million to Draper Fisher Jurvetson ePlanet Ventures L.P., a Cayman Islands limited partnership, Draper Fisher Jurvetson



17



---

##### Table of Contents

ePlanet Partners Fund, LLC, a California limited liability company, and Draper Fisher Jurvetson ePlanet Ventures GmbH & Co. KG, a German partnership (DFJ
ePlanet), on the same terms as the series H preferred shares issued to SOFTBANK on September 30, 2003.



Conversion of Subordinated Convertible Notes



On October 9, 2003, DFJ ePlanet converted the $1,062,889 of outstanding principal and accrued interest on their subordinated convertible notes issued in December 2002 into 10,629 shares of series H preferred.
Additionally, on October 29, 2003, SOFTBANK converted the $1,493,333 of outstanding principal and accrued interest on their subordinated convertible notes issued in December 2002 into 14,933 shares of series H preferred.



Reverse Stock Split



On July 16, 2003 the Board of Directors approved an amendment to the Companys Certificate of Incorporation to effect a
one-for-two reverse stock split, whereby two pre-split shares would have been exchanged for one post-split share. Stockholders approved the reverse split at our Annual Meeting of Stockholders on September 18, 2003. The 1-for-2 reverse
stock split was never effectuated. The 1-for-2 reverse stock split would not have generated a sufficient number of shares of common stock available for issuance in connection with our issuance of series H convertible preferred stock on September 30,
2003 and October 9, 2003.



A special committee of our board of
directors, comprised of independent directors who are disinterested for purposes of such a transaction, is in the process of contemplating a reverse stock split or similar transaction that would create sufficient authorized shares of common stock
available for issuance in connection with the series H preferred and other existing convertible securities, and for future issuances of common stock or other convertible securities. We plan to make the initial required filings with the SEC by
January 1, 2004 to effect such a reverse stock split, as is contemplated by the series H preferred transaction documents.



Merger of REB Securities, Inc.



On November 7, 2003, we merged REB Securities into our majority-owned subsidiary Universal Trading Technologies Corporation (UTTC). Prior to the merger,
REB was wholly-owned by UTTC. REB previously operated as the facilities manager for our eVWAP trading system, which we ceased operating in 2002, and has not conducted any other business since then.



18



---

##### Table of Contents

|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- |  | -------------------------------------------------------------------------------------



Overview



Vie Financial Group, Inc. was formed as a Delaware corporation in 1994. We provide electronic trading services to institutional investors and
broker-dealers. We strive to remove the human element from the trading and order execution process in order to eliminate information leakage. Our objective is to provide our clients with high-performance electronic trading that is fast, efficient
and nearly invisible to the market.



Our current product
offering consists of volume-weighted average price (VWAP) and other trade execution services which we provided during the six months ended September 30, 2003 primarily through our broker-dealer subsidiaries Vie Institutional Services, Inc. and Vie
Securities, LLC.



We currently conduct all of our business
through our subsidiary, Vie Securities LLC. On September 15, 2003 we withdrew our broker-dealer registration with the Securities and Exchange Commission for our broker-dealer subsidiary, Vie Institutional Services, Inc., and we withdrew its
memberships with the NASD and the Philadelphia Stock Exchange. We have retained the customers of Vie Institutional Services by establishing account relationships with those customers through Vie Securities LLC, which is now our sole operating
entity. The decision to concentrate all of our broker-dealer operations in one entity has enabled us to concentrate our capital resources and eliminate infrastructure redundancies that existed in our prior organizational structure. We plan to merge
Vie Institutional Services into its parent company, Universal Trading Technologies Corporation, to further simplify our corporate organizational structure.



Vie Securities began operating in July 2000 as broker-dealer registered with the Philadelphia Stock Exchange. In September 2002, Vie Securities received
approval to operate as a member of the NASD. Vie Securities provides liquidity for block trades to our buy-side institutional clients and broker-dealer customers. We anonymously match customers orders with liquidity from various providers,
thereby protecting our client trade information. Our trading products include Limit VWAP, Point-to-Point VWAP, Best Efforts VWAP and Market on Close trade executions. We collect commissions from our customers and pay fees to our liquidity providers
on a per share basis.



In May 2003, we began implementing a
plan to streamline our corporate structure, reduce our operating expenses and reduce the cost of providing liquidity to our customers. We continued to make substantial changes to our business operations during the three months ended September 30,
2003, including consolidating our broker-dealer operations into one entity effective September 15, 2003. Effective as of October 1, 2003, we consolidated our Philadelphia and New York offices by relocating our corporate headquarters and all
operations to offices in the Grace Building, 1114 Avenue of the Americas, in New York, New York. Additionally, in September 2003, we instituted salary reductions for all executives and a majority of non-executive employees. We also reduced our
headcount by 21% to 27 employees during the three months ended September 30, 2003. We have secured additional third party liquidity providers and substantially reduced the use of our proprietary trading algorithm, resulting in lower costs, more
competitive pricing in our product offering, and increased trading volumes from both existing and new customers during the three months ended September 30, 2003.



In September and October 2003, we raised an aggregate of $5 million through the issuance of our series H convertible
preferred stock.On September 30, 2003, we issued shares of our series H preferred for an aggregate of $3.5 million to SOFTBANK Capital Partners LP, SOFTBANK Capital Advisors Fund LP and SOFTBANK Capital LP, each a Delaware limited
partnership (SOFTBANK). On October 9, 2003, we issued additional shares of series H preferred for an aggregate of $1.5 million to Draper Fisher Jurvetson ePlanet Ventures L.P., a Cayman Islands limited partnership, Draper Fisher Jurvetson ePlanet
Partners Fund, LLC, a California limited liability company, and Draper Fisher Jurvetson ePlanet Ventures GmbH & Co. KG, a German partnership (DFJ ePlanet), on the same terms as the series H preferred shares issued to SOFTBANK. Also on October 9,
2003, DFJ ePlanet converted the $1,062,889 of outstanding principal and accrued interest on their subordinated convertible notes issued in December 2002 into shares of series H preferred, and on October 29, 2003, SOFTBANK converted the $1,493,333 of
outstanding principal and accrued interest on their subordinated convertible notes issued in December 2002 into shares of series H preferred. As a result of these transactions, SOFTBANK and DFJ ePlanet are entitled to 40% and 21%, respectively, of
the aggregate voting rights with respect to all classes of our outstanding common and preferred stock. SOFTBANK and DFJ ePlanet are also investors in Innovations, which controls approximately 88% of our outstanding common stock and 26% of the
aggregate voting rights with respect to all classes of our common and preferred stock.



19



---

##### Table of Contents

We are a subsidiary of OptiMark Innovations Inc., a Delaware corporation. On May 7, 2002, Innovations
acquired approximately 88% of our outstanding shares of common stock, and we issued a senior secured convertible note to Innovations for $2,727,273, which is convertible into 52,870,757 shares of our common stock. Assuming conversion of this note,
Innovations would own approximately 89% of our common stock.



Critical
Accounting Policies



Revenue Recognition



Revenues earned during the six months ended September 30, 2003 consist of
commissions earned on a per share basis from our customers use of our trading services. Our products were offered during the three months ended September 30, 2003 primarily through our subsidiaries Vie Institutional Services and Vie
Securities, and only through Vie Securities effective September 15, 2003. Transactions in securities, including commission revenues and related expenses, are recorded on a trade-date basis.



Stock-Based Compensation



We have elected to apply APB Opinion No. 25 and related interpretations in
accounting for stock options issued to employees. If we had elected to recognize compensation cost based on the fair value of the options granted to directors and employees at the grant date as prescribed by SFAS No. 123, our net loss for the three
and six months ended September 30, 2003 would have been increased by $855,262 and $1,828,749, respectively.



Results of Operations



For the
Three Months Ended September 30, 2003 Compared to the Three Months Ended September 30, 2002



We incurred a net loss from continuing operations totaling $2,074,418, or $0.00 per share, for the three months ended September 30, 2003, compared to
$3,650,849, or $0.01 per share, for the three months ended September 30, 2002. The decrease in net loss is a result of a $1,667,790 decrease in the loss from operations and an aggregate increase in non-operating expenses of $91,359.



Revenues totaled $2,503,429 for the three months ended September 30, 2003,
and $583,961 for the three months ended September 30, 2002. The increase in revenues is primarily a result of an increase in the aggregate number of shares executed on behalf of customers during the three months ended September 30, 2003.Our
top two customers generated approximately 34%, and 10%, respectively, of the revenues during the three-month period ended September 30, 2003. Approximately 70% and 12%, respectively, of the revenues during the three-month period ended September 30,
2002 were from transactions with two customers. The increase in the number of shares traded during the three months ended September 30, 2003 compared to the same period last year is a result of new customer acquisitions, increased volume from
existing customers, and the fact that our business was limited in the last year period while we focused on the May 7, 2002 close of the Innovations transaction and the resulting integration of the technology, marketing, and product strategy.



Salaries and employee benefits decreased 19.2% to $1,201,470
for the three-month period ended September 30, 2003 from $1,487,828 for the three-month period ended September 30, 2002. The decrease is primarily due to salary reductions, a decrease in the number of employees, and the furlough program that was in
effect from May through July 2003. During the three-month periods ended September 30, 2003 and 2002, we employed an average of 32 and 41 employees, respectively, including those participating in the furlough programs.



Professional fees decreased 62.8% to $191,074 during the three months ended
September 30, 2003 from $513,036 during the three months ended September 30, 2002. The decrease was a result of lower legal and accounting fees, and the elimination of recruiting expenses during the current year period. We incurred approximately
$114,000 in legal fees during the three months ended September 30, 2003 compared to approximately $339,000 in legal fees during the three months ended September 30, 2002 as a result of efforts during the current year period to reduce such costs.
Further, recruiting fees of approximately $80,000 incurred during the three months ended September 30, 2002 related to the hiring of our Chief Executive Officer were not incurred this year.



20



---

##### Table of Contents

Brokerage, clearing and exchange fees increased to $1,599,346 for the three months ended September 30,
2003 from $562,538 for the three months ended September 30, 2002. This increase in transaction costs reflects the increase in shares executed on behalf of our customers during the three months ended September 30, 2003 as compared to the three months
ended September 30, 2002. We did substantially less business last year as a result of the focus on the close of the Innovations transaction in May 2002 and preparations for the re-launch of our business at that time. A significant component of
brokerage, clearing and exchange fees are the fees we pay to third parties to provide liquidity for our customers orders. We used a combination of these third party liquidity providers and our trading algorithm to provide liquidity for our
customers orders during the three months ended September 30, 2003. Although we have negotiated lower transaction fees with these liquidity providers and with other vendors for clearing and execution services, we have also begun to increase the
portion of our order flow we send to our liquidity providers while we focus on improving our algorithm. As a result, we expect these variable fees to increase as our revenues increase.



Depreciation for the three-month period ended September 30, 2003 decreased 57.3% to $102,307 from $239,362 for the
three-month period ended September 30, 2002, primarily as a result of a portion of our assets becoming fully depreciated during the current period. Capital expenditures were $23,133and $67,109 for the three months ended September 30, 2003 and 2002,
respectively.



We recorded a loss on principal trading
activities of $382,749 and $151,345 during the three months ended September 30, 2003 and 2002, respectively. The increase in the trading loss during the three months ended September 30, 2003 reflects the use of our trading algorithm to provide
liquidity to our customers. We provided liquidity at the VWAP to our customers during the period by using a combination of third party liquidity providers and our proprietary trading algorithm. The variable cost of providing this liquidity is
reflected in the loss on trading activities and in the fees we pay to the third party liquidity providers, which is a component of brokerage, clearing and exchange fees on our statements of operations. We realize trading gains or losses from the
difference between the prices we achieve when trading through our algorithm and the prices we guarantee our customers. In an effort to reduce our cost of providing liquidity, including these trading losses, we began sending a substantial portion of
our order flow to third party liquidity providers in June 2003. We expect to rely primarily on these liquidity provider relationships during the current fiscal year while we continue to improve our algorithm. The trading loss during the three months
ended September 30, 2002 resulted primarily from the testing of our proprietary trading algorithm and also from providing liquidity to our customers on a limited basis.



Selling, general and administrative expenses totaled $672,635 and $943,794 for the three months ended September 30, 2003 and
2002, respectively. The 28.7% decrease is primarily a result of a decrease in insurance premiums and marketing and advertising expenses. Insurance premiums decreased approximately $142,900 or 46% as a result of an additional one-year directors
and offers run-off policy that was purchased last year to cover the directors who resigned from the board of directors pursuant to the agreement with Innovations on May 7, 2002. No such policy was purchased in the current year period.
Marketing and advertising expenses of approximately $144,000 for the launch of our name change and branding initiative were incurred during the three months ended September 30, 2002, and no such costs were incurred during the three months ended
September 30, 2003.



Interest income decreased to $2,393 for
the three months ended September 30, 2003 from $16,036 for the three months ended September 30, 2002, as a result of the lower average cash and cash equivalents balances.



Interest expense of $426,682 for the three months ended September 30, 2003 was comprised primarily of $187,500 related to
the secured convertible note that we executed with Innovations on May 7, 2002, $163,348 related to the secured note with RGC, and $73,629 related to the subordinated convertible notes with the SOFTBANK and DFJ ePlanet entities. Interest expense of
$351,969 for the three months ended September 30, 2002 was comprised primarily of $187,500 related to the secured convertible note that we executed with Innovations, and $163,348 related to the secured note with RGC (see Notes to Unaudited
Consolidated Financial Statements).



For the Six Months Ended
September 30, 2003 Compared to the Six Months Ended September 30, 2002



We incurred a net loss from continuing operations totaling $4,967,646, or $0.01 per share, for the six months ended September 30, 2003, compared to $7,065,874, or $0.01 per share, for the six months ended September
30, 2002. The decrease in net loss is a result of a $2,024,097 decrease in the loss from operations and an aggregate decrease in non-operating expenses of $74,131.



21



---

##### Table of Contents

Revenues totaled $4,728,789 for the six months ended September 30, 2003, and $837,942 for the six months
ended September 30, 2002. The increase in revenues is primarily a result of an increase in the aggregate number of shares executed on behalf of customers during the six months ended September 30, 2003.Our top three customers generated
approximately 34%, 11%, and 10%, respectively, of the revenues during the six-month period ended September 30, 2003. Approximately 75% and 9%, respectively, of the revenues during the six-month period ended September 30, 2002 were from transactions
with two customers. The increase in the number of shares traded during the six months ended September 30, 2003 compared to the same period last year is a result of new customer acquisitions, increased volume from existing customers, and the fact
that our business was limited in the last year period while we focused on the May 7, 2002 close of the Innovations transaction and the resulting integration of the technology, marketing, and product strategy.



Salaries and employee benefits decreased 8.5% to $2,484,877 for the six-month
period ended September 30, 2003 from $2,715,430 for the six-month period ended September 30, 2002. The decrease is primarily due to salary reductions, a decrease in the number of employees and the furlough program that was in effect from May through
July 2003. During the six-month periods ended September 30, 2003 and 2002, we employed an average of 35 and 41 employees, respectively, including those participating in the furlough programs.



Professional fees decreased 37.8% to $438,801 during the six months ended
September 30, 2003 from $705,848 during the six months ended September 30, 2002. The decrease was primarily a result of a decrease in legal fees of approximately $60,000, a decrease in outsourced labor and temporary personnel costs of approximately
$97,000, and a decrease in recruiting expenses of approximately $80,000. Consulting expenses of $96,833 during the six months ended September 30, 2002 for outsourced labor and temporary personnel working on the development of our trading systems,
and recruiting fees of $80,305 related to the hiring of our Chief Executive Officer, were not incurred this year.



Brokerage, clearing and exchange fees increased to $2,641,553 for the six months ended September 30, 2003 from $748,015 for the six months ended September
30, 2002. This increase in transaction costs reflects the increase in shares executed on behalf of our customers during the six months ended September 30, 2003 as compared to the six months ended September 30, 2002. We did substantially less
business last year as a result of the focus on the close of the Innovations transaction in May 2002 and preparations for the re-launch of our business at that time. A significant component of brokerage, clearing and exchange fees are the fees we pay
to third parties to provide liquidity for our customers orders. We used a combination of these third party liquidity providers and our trading algorithm to provide liquidity for our customers orders during the six months ended September
30, 2003. Although we have negotiated lower transaction fees with these liquidity providers and with other vendors for clearing and execution services, we have also begun to increase the portion of our order flow we send to our liquidity providers
while we focus on improving our algorithm. As a result, we expect these variable fees to increase further as revenues increase.



Depreciation for the six-month period ended September 30, 2003 decreased 37.7% to $266,364 from $427,830 for the six-month period ended September 30,
2002, primarily as a result of a portion of our assets becoming fully depreciated during the current period. Capital expenditures were $28,111 and $70,117 for the six months ended September 30, 2003 and 2002, respectively.



We recorded a non-cash compensation charge of $720,000 during the six months
ended September 30, 2002 for the cost of shares issued to Frederic W. Ritterieser, our former Chief Executive Officer, in connection with his separation agreement on April 15, 2002.



We recorded a loss on principal trading activities of $1,616,574 and $151,345 during the six months ended September 30, 2003
and 2002, respectively. The increase in the trading loss during the six months ended September 30, 2003 reflects the use of our trading algorithm to provide liquidity to our customers. We provided liquidity at the VWAP to our customers during the
period by using a combination of third party liquidity providers and our proprietary trading algorithm. The variable cost of providing this liquidity is reflected in the loss on trading activities and in the fees we pay to the third party liquidity
providers, which is a component of brokerage, clearing and exchange fees on our statements of operations. We realize trading gains or losses from the difference between the prices we achieve when trading through our algorithm and the prices we
guarantee our customers. A combination of factors, including market fluctuations, trading errors and technical and operational issues, resulted in higher than expected trading losses during the first three months of the six-month period ended
September 30, 2003.



22



---

##### Table of Contents

In an effort to reduce our cost of providing liquidity, including these trading losses, we began sending a substantial portion of our order flow to third
party liquidity providers in June 2003. We expect to rely primarily on these liquidity provider relationships during the current fiscal year while we continue to improve our algorithm. We engaged in limited principal trading during the six months
ended September 30, 2002 to test our proprietary trading algorithm and provide limited liquidity to our customers.



Selling, general and administrative expenses totaled $1,346,250 and $1,459,201 for the six months ended September 30, 2003 and 2002, respectively. The
7.7% decrease is primarily a result of an decrease in insurance premiums and marketing and advertising expenses, partially offset by a gain on the sale of furniture in the prior period and an increase in occupancy expenses. The $85,000 decrease in
insurance premiums resulted from an additional one-year directors and offers run-off policy that was purchased last year to cover the directors who resigned from the board of directors pursuant to the agreement with Innovations on May 7,
200. No such run-off policy was purchased in the current year period. The decrease in insurance premiums related to the run-off policy was partially offset by an increase in the directors and officers coverage and higher premiums.
Marketing and advertising expenses of approximately $144,000 for the launch of our name change and branding initiative were incurred during the six months ended September 30, 2002, and no such costs were incurred during the three months ended
September 30, 2003. Occupancy expenses increased $31,413 due to the opening of our office in New York at the end of June 2002. Additionally, included in the selling, general and administrative expenses for the period last year was a credit of
$50,000 for furniture we sold during the six months ended September 30, 2002.



Interest income decreased to $7,881 for the six months ended September 30, 2003 from $36,337 for the six months ended September 30, 2002, as a result of the lower average cash and cash equivalents balances.



Interest expense of $853,843 for the six months ended
September 30, 2003 was comprised primarily of $375,000 related to the secured convertible note that we executed with Innovations on May 7, 2002, $326,696 related to the secured note with RGC, and $147,258 related to the subordinated convertible
notes with SOFTBANK and DFJ ePlanet. Interest expense of $780,692 for the six months ended September 30, 2002 was comprised primarily of $298,065 related to the secured convertible note that we executed with Innovations, $300,426 related to the
secured notes with RGC and $177,419 related to the short-term note with HK Weaver (see Notes to Unaudited Consolidated Financial Statements).



Other expense of $47,793 for the six months ended September 30, 2003 represents a loss on the disposal of computer equipment in our majority-owned
subsidiary, Ashton Technology Canada, Inc. On June 11, 2003, Ashton Canada filed an arbitration claim against the Toronto Stock Exchange for breach of contract under our agreement to introduce a VWAP trading system as a facility of the exchange.
Ashton Canada is no longer operational, has no employees, and currently has the sole objective of focusing on the arbitration claim with the Toronto Stock Exchange. (see Part II, Item 1. Legal Proceedings.)



Equity in loss of affiliates amounted to $1,619 and $232,879 for the
six-month period ended September 30, 2003 and 2002, respectively. The prior year amount is comprised primarily of the write off of our equity investment in Kingsway-ATG Asia, Ltd. $189,653 and the write-down of our equity investment in Gomez, Inc.
$42,252.



Liquidity and Capital Resources



At September 30, 2003, we had total assets of $5,683,957 compared to
$4,600,065 at March 31, 2003. Current assets at September 30, 2003 totaled $4,556,185 and current liabilities from continuing operations were $2,058,283. To date, we have recognized recurring operating losses and have financed our operations
primarily through the issuance of equity securities. As of September 30, 2003, we had an accumulated deficit of $102,693,344 and stockholders deficiency of $4,128,949, which raises doubt as to our ability to continue as a going concern. We
have developed a plan that we believe will enable us to continue operating until we are able to generate sufficient revenues to fund our operations, although there can be no assurance that we will be able to achieve profitability.Our
primary initiatives, in addition to the affiliate funding we raised in September and October 2003, have included streamlining our corporate organizational structure, reducing our current operating expenses, and reducing the cost of providing
liquidity to our customers.



At September 30, 2003, our
principal source of liquidity was cash and cash equivalents of $4,116,215 and receivables from brokers, dealers and other of $270,830, compared to cash and cash equivalents of $2,250,601 and receivables from brokers, dealers and other of $736,306 at
March 31, 2003.



23



---

##### Table of Contents

On September 30, 2003, we issued 35,000 shares of our series H convertible preferred stock for gross
proceeds of $3.5 million to SOFTBANK. Each share of series H preferred is convertible at our election at any time into such number of shares of common stock that is determined by dividing the series H preferred purchase price per share ($100) by the
conversion price, which is initially $.005329 per share. In the event that we do not elect to convert the series H preferred shares within one year, SOFTBANK shall have the right to convert on the same terms as us at any time thereafter. Upon full
conversion of the shares of series H preferred held by SOFTBANK at the initial conversion price, we would be required to issue 656,783,637 shares of common stock. The proceeds from the series H preferred we issued to SOFTBANK are included in the
cash and cash equivalents balance at September 30, 2003.



On
October 9, 2003, we issued 15,000 shares of series H preferred for an aggregate of $1.5 million to DFJ ePlanet on the same terms as the series H preferred shares issued to SOFTBANK. Upon full conversion of the $1.5 million of series H preferred
held by DFJ ePlanet at the initial conversion price, we would be required to issue a minimum of 281,478,701 shares of common stock.



During the six months ended September 30, 2003, we also sold 12,013 shares of our series G convertible preferred stock, par value $0.01, and warrants to
purchase an aggregate of 15,016,825 shares of our common stock at an exercise price of $0.08 to certain investors for gross proceeds of $1,201,346. The series G preferred stock, with respect to dividend rights or rights upon liquidation, ranks
junior to all other series of preferred stock and pari passu with shares of Vie common stock. Each share of series G preferred stock is convertible at the option of the holder into a number of shares of common stock as is determined by
dividing the series G preferred original issue price ($100) by the series G conversion price, which is currently $0.005329.



We believe we can fund our operating expenses without generating any revenues for the next 12 months with our current cash position, including the
proceeds from the series H preferred we sold in October 2003. In May 2003, we began implementing a plan to streamline our corporate organizational structure, reduce our operating expenses and reduce the cost of providing liquidity to our customers.
While we believe the combination of current cash and receivables, cash flows from operations and cost savings from planned expense reductions should enable us to continue operating for the foreseeable near term until we are able to grow revenues to
a level that is sufficient to fund our operations, there can be no assurance that our plan will be successful or that our operations will continue.



The Company is also presently exploring alternatives to further reduce its administrative costs and public reporting and compliance costs, and to simplify
its equity capital structure. Potential alternatives could include the purchase of all or a substantial portion of our outstanding common stock not owned by our controlling stockholder and other affiliates, or a transaction designed to reduce the
number of record holders of our outstanding common stock below 300 holders. There are no definitive plans, commitments, proposals or other arrangements to engage in any particular transaction at this time.



Included in our cash and receivables balances at September 30, 2003 is
approximately $3 million that is invested in the net capital of our broker-dealer operations. We believe that planned reductions to our cost structure and the current level of net capital are sufficient to allow us to expand our business as planned
and to achieve our targeted revenues, however there is no assurance that we will be able to do so. We expect to use a portion of our excess net capital to fund our operations, which may limit our broker-dealer business operations. We may therefore
be unable to grow and increase revenues at the rate we anticipate, which could adversely affect our financial condition and operating results.



We may seek to raise additional financing which could take the form of equity or debt offerings, spin-offs, joint ventures, or other collaborative
relationships that may require us to issue shares or share revenue. Any such financing strategies would likely impose operating restrictions on us and be dilutive to holders of our common stock, and may not be available on attractive terms or at
all. Further, any additional financing we enter into would be subject to approval by Innovations pursuant to the Investors Rights Agreement. We currently have outstanding convertible securities including debt, preferred stock, options and
warrants, all of which may be dilutive to our stockholders, as more fully described below in Additional Factors That May Affect Future Results.



24



---

##### Table of Contents

Related Party Transactions



We have a number of business relationships, and have entered into a significant number of transactions with related parties,
including our controlling stockholders. For more information with respect to these transactions, see Note 5 to the Consolidated Financial Statements.



Additional Factors That May Affect Future Results



Forward-looking statements in this document and those made from time to time by members of our senior management are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements concerning the expected future financial results or concerning expected financing, business plans, product development, as well as other estimates are only estimates, and there can be no assurance that actual results will
not materially differ from our expectations. Factors that could cause actual results to differ materially from results anticipated in forward-looking statements include, but are not limited to, the following:



Risks Related to Our Financial Condition



We may be unable to continue operating as a going concern



We have not realized an operating profit and have experienced significant
net operating losses since our inception in 1994. As of September 30, 2003, we have accumulated losses of approximately $103 million. The opinion of our independent auditors on our March 31, 2003 financial statements is subject to a going
concern qualification and states that our recurring losses from operations and stockholders deficiency raise substantial doubt about our ability to continue as a going concern. In May 2003, we began to reduce the cost of providing
liquidity to our customers, reduce our operating expenses and streamline our corporate structure. While we believe our operating plan will enable us to fund our operations using our current cash on hand until we are able to generate sufficient
revenues to fund our operations, there is no assurance that the plan will be successful. If we are unable to attain profitability or obtain additional funding in the near term, we may be unable to continue operating.



The going concern opinion from our independent auditors could make it
difficult for us to maintain our existing customers and to gain new customers



The opinion of our independent auditors on our March 31, 2003 financial statements is subject to a going concern qualification and states that our recurring losses from operations and stockholders
deficiency raise substantial doubt about our ability to continue as a going concern. Our existing customers may be unwilling to continue to do business with a company the financial statements of which are subject to a going concern qualification.
Potential new customers may also be unwilling to even discuss doing business with a company the financial statements of which are subject to a going concern qualification. For these reasons, the going concern qualification may have a material
adverse effect on our existing business and overall prospects for the future.



Most of our revenues were derived from only a few customers



Although our revenues have historically been concentrated among a small number of customers, our customer mix is susceptible to frequent change. Approximately 55% of the revenues earned during the six months ended
September 30, 2003 were from transactions with three customers that each individually comprised greater than 10% of the total revenues for the period. We can give no assurance that any of these customers will continue to do business with us, or that
we will successfully obtain additional customers. Our arrangements with customers are not contractual, so our customers are free to trade with multiple service providers. Our future success will depend on continued growth in demand for our
electronic trade execution services, and our ability to maintain customers. Further, if we are unable to achieve and maintain a diversified customer base, then the loss of individual customers may materially and adversely affect our business,
financial condition and operating results.



Our business is highly volatile
and our quarterly results may fluctuate significantly



During the past year, the financial markets in the US have experienced increased volatility and many worldwide financial indices have continued to decline. The demand for our trade execution services is directly



25



---

##### Table of Contents

affected by factors such as economic and political conditions that may lead to decreased trading activity and prices in the securities markets generally. The
future economic environment may be subject to periodic economic downturns, such as recessions, which could also result in reduced trading volumes and prices, and could materially harm our business, financial condition and operating results.
Additionally, these economic factors have resulted in intense price competition in the trade execution business. We expect to experience decreasing margins on our guaranteed VWAP business as this competition continues to increase. Any decline in
securities trading volumes, market liquidity and the resulting compression of commission rates could have a material adverse effect on our operating results.



Problems in our relationships with third parties could have an adverse effect on our business and our operating results



We place substantial reliance on our relationships with third parties
including liquidity providers, clearing agents, exchanges and other financial intermediaries. Any disagreements with or disruptions in service from these third parties could have a material adverse effect on our business and operating results. We
are also exposed to credit risk from third parties that owe us money, securities, or other obligations. Any failure by these third parties to discharge adequately their obligations in a timely manner or any event adversely affecting these third
parties could have a material adverse effect on our financial condition and results of operations.



We are subject to net capital requirements that could limit our operations



A significant operating loss or any unusually large charge against our net capital could adversely affect our ability to expand as planned or to maintain
our present levels of business, which could have a material adverse effect on our operating results. The SEC and the NASD have strict rules that require each of our broker-dealer affiliates to maintain sufficient net capital. If we fail to maintain
the required net capital, the SEC or the NASD may impose sanctions, including suspending or revoking our broker-dealers registrations or memberships. Also, a change in the net capital rules, the imposition of new rules, a change in
interpretation of the rules, or any unusually large charge against our net capital could limit our operations. In addition, the net capital requirements limit our ability to transfer funds from our broker-dealer affiliates to the parent company,
which may affect our ability to repay our debts or fund our operations.



We
may be subject to lawsuits that could seriously harm our operating results and financial condition



We may be subject to claims as a result of one or more legal matters, as more fully described in Legal Proceedings in Part II, Item 1. Any of
these matters could give rise to claims or litigation that could subject us to liability for damages. We have limited liquidity and financial resources to satisfy any such claims. Moreover, any lawsuits, regardless of their merits, could be
time-consuming, require us to incur significant legal expenses and divert management time and attention.



We may need additional financing to fund our operations and strategic initiatives



We believe that our cash position should be sufficient to allow us to continue to operate until we are able to generate sufficient revenues to fund our
operations. Our cash position as of September 30, 2003 was $4,116,215 and receivables from brokers, dealers and others was $270,830. Included in our cash and receivables balances was approximately $3 million which was invested in the net capital of
our broker-dealer operations. We believe the current level of net capital is sufficient to allow us to expand our business as planned and to achieve our targeted revenues. We expect to use a portion of our excess net capital to fund our operations
which may limit our broker-dealer business operations. We may therefore be unable to grow and increase revenues at the rate we anticipate, which could adversely affect our financial condition and operating results.



We may seek to raise additional financing which may take the form of equity
or debt offerings, spin-offs, joint ventures, or other collaborative relationships that may require us to issue shares or share revenue. These financing strategies would likely impose operating restrictions on us and be dilutive to holders of our
common stock, and may not be available on attractive terms or at all. Further, any additional financing we enter into would be subject to approval by Innovations pursuant to the Investors Rights Agreement.



26



---

##### Table of Contents

Risks Related to Your Investment in Our Common Stock



Sales of our shares by our principal stockholders or others may depress our stock price



Our principal stockholder, Innovations owns 611,703,796
shares of our common stock and has rights to acquire an additional 52,870,757 shares upon conversion of a note. Pursuant to an agreement with Innovations, we may be obligated to register the resale of these shares of common stock under certain
conditions. SOFTBANK and DFJ ePlanet also have rights to acquire 1,417,943,746 shares of our common stock upon conversion of the series H preferred and an additional 8,928,571 shares of our common stock upon exercise of warrants. The series G
preferred investors also have rights to acquire 225,685,570 shares of our common stock up conversion of the series G preferred. We have certain contractual obligations to register the resale of the shares of common stock issuable upon conversion of
the series H preferred and the series G preferred. The future public sale of our common stock by Innovations, SOFTBANK or DFJ ePlanet could dilute our common stock and depress its market value. These factors could also make it more difficult for us
to raise funds through future offerings of common stock.



If we issue
additional shares of our common stock upon the exercise of options or warrants or the conversion of our convertible preferred stock, or if we raise additional capital through the issuance of new securities, you will incur dilution and our stock
price may decline



SOFTBANK and DFJ ePlanet hold series H
preferred that entitles them to acquire an aggregate of 1,417,943,746 shares upon conversion of their preferred stock, the series G preferred investors are entitled to acquire an aggregate of 225,435,570 shares upon conversion of their preferred
stock, and Innovations currently holds a note that entitles it to acquire an additional 52,870,757 shares of common stock upon conversion of the note. In addition, as of September 30, 2003, we have outstanding options and warrants that may be
exercised for an aggregate of 226,326,287 shares of common stock. If Innovations, SOFTBANK, DFJ ePlanet or the series G preferred investors exercise their conversion rights to acquire shares of common stock, our option and warrant holders exercise
their securities, or if we raise additional capital through the issuance of new securities, the number of outstanding shares of our common stock will increase. To the extent that the number of outstanding shares of our common stock increases without
a corresponding increase in the number of shares of common stock that you hold, you will incur dilution.



We will not pay common stock dividends in the foreseeable future



You will not receive payment of any dividends in the foreseeable future and the return on your investment may be lower than anticipated. We have never
paid or declared any cash dividends upon our common stock, nor do we intend to. Our board of directors has discretion to declare cash dividends on our common stock and on our Series B preferred stock. While there are no contractual limitations on
our ability to pay cash dividends on our common stock, based on our present financial status and contemplated future financial requirements, we do not anticipate declaring any cash dividends on the common stock. In determining whether to pay
dividends, our board of directors considers many factors, including our earnings, capital requirements and financial condition.



Risks Related to Our Management



Recent board and senior management changes will impact our business direction



Our future success depends upon the experience, skills and working relationship of our new board and management team. Since
May 7, 2002, we experienced a complete change in the members of our board of directors and a substantial change in the member of our management team. On October 9, 2002, we hired Dean Stamos to be our new Chief Executive Officer. We have also
experienced turnover in the roles of President, Chief Operating Officer and Chief Financial Officer since May 2002. The near-term success of our business will depend on the successful integration and reputation of these members of our management
team. The longer-term success of our operations will depend in large part upon the hiring and retention of key personnel, which may require, among other things, execution of acceptable employment agreements with these individuals. Our ability to
operate successfully may be jeopardized if we are unable to attract and retain skilled management and personnel to conduct our business.



27



---

##### Table of Contents

Sales or grants of stock to our employees and key individuals will reduce your ownership percentage



We seek to attract and retain officers, directors, employees and other key
individuals in part by offering them stock options and other rights to purchase shares of common stock. The exercise of these options, the grant of additional options, and the exercise thereof, could have a dilutive effect on our existing
stockholders and may adversely affect the market price of our common stock. The exercise of options granted under our stock option plans will reduce the percentage ownership of our then-existing stockholders. We have reserved 190,221,115 shares of
common stock for issuance pursuant to our 2002 Option Plan, 6,450,000 shares of common stock for issuance pursuant to our 1998 Stock Option Plan, 2,550,000 shares of common stock for issuance pursuant to our 1999 Stock Option Plan and 3,000,000
shares of common stock for issuance pursuant to our 2000 Incentive Plan.



Our principal stockholders may exercise control over all matters submitted to a vote of stockholders and may not act in the interests of our other stockholders



Innovations, SOFTBANK and DFJ ePlanet are entitled to 26%, 40% and 21%, respectively, of the aggregate voting rights with
respect to all classes of our outstanding common and preferred stock. SOFTBANK and DFJ ePlanet are also investors in Innovations. As long as SOFTBANK, DFJ ePlanet and Innovations own a majority of our outstanding common and preferred stock, these
entities will collectively be able to elect a majority of our board of directors and control the outcome of any other matter submitted to a vote of our stockholders. Such matters could include:



| |  | the composition of our board of directors and, through it, decisions with respect to our business direction and policies, including the appointment and removal of officers;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | any determinations with respect to mergers or other business combinations;
| | - | --------------------------------------------------------------------------



| |  | acquisition or disposition of assets;
| | - | -------------------------------------



| |  | our capital structure;
| | - | ----------------------



| |  | payment of dividends on our common stock; and
| | - | ---------------------------------------------



| |  | other aspects of our business direction and policies.
| | - | -----------------------------------------------------



As a result of our principal stockholders control, potential acquirers may be discouraged from seeking to acquire control through the purchase of
our common stock, which could have a depressive effect on the price of our securities and would make it less likely that stockholders receive a premium for their shares as a result of any such attempt.



In addition, as long as Innovations owns at least 20% of our common stock,
Innovations will retain control over certain corporate decisions affecting us, including:



| |  | the issuance of shares of our common stock (with certain exceptions);
| | - | ---------------------------------------------------------------------



| |  | the repurchase or redemption of our securities;
| | - | -----------------------------------------------



| |  | a merger, consolidation or sale of substantially all of our assets; and
| | - | -----------------------------------------------------------------------



| |  | any changes in our business direction.
| | - | --------------------------------------



As disclosed in a Schedule 13D filed by OptiMark Holdings, Inc. on May 17, 2002, OptiMark, Inc., a subsidiary of OptiMark Holdings, Inc., and the other
stockholders of Innovations have entered into an agreement whereby the parties agreed to use their best efforts to consummate a merger of Innovations with and into Vie Financial Group. Pursuant to the agreement, upon consummation of the merger, each
stockholder of Innovations would receive the number of shares of our common stock proportionate to such stockholders interest in Innovations prior to the merger. The agreement contemplates that the merger shall take place any time after
December 31, 2003, but not later than December 31, 2008.



28



---

##### Table of Contents

We are planning to implement a reverse stock split which could adversely affect the market price and liquidity in our
common stock and could dilute your ownership



We plan to
make the initial filings with the SEC by January 1, 2004 to effect a reverse stock split that would create sufficient authorized shares of common stock to allow for conversion of the outstanding series H preferred and other existing convertible
securities, and for future issuances of common stock or convertible securities. SOFTBANK, DFJ ePlanet and Innovations will control the outcome of a stockholder vote to approve a reverse stock split.



We cannot predict the effect of a reverse stock split upon the market price
for our common stock, and the history of reverse stock splits for companies in similar circumstances is varied. We cannot assure you that the market price of our common stock after the reverse stock split will rise in proportion to the reduction in
the number of shares of our common stock outstanding as a result of the reverse stock split. In fact, the stock prices of some companies that have recently effected reverse stock splits have subsequently declined back to pre-reverse split levels.
Moreover, over the long term, the trading price of our common stock is likely to be a function of fundamental business factors, such as our overall financial condition, revenues, earnings, cash flows and prospects, and overall economic conditions,
as opposed to capital restructuring measures.



The possibility
exists that liquidity in the market price of our common stock could be adversely affected by the reduced number of shares that will be outstanding after the reverse stock split. In addition, the reverse stock split may increase the number of
stockholders who own odd lots (i.e., a number of shares of our common stock not divisible by 100). Stockholders who hold odd lots may experience difficulty selling their shares and may experience an increase in the cost of selling their
shares.



We may have a significant number of additional
authorized but unissued shares of common stock as a result of a reverse stock split. If we issue additional shares subsequent to a reverse stock split, the dilution to the ownership interest of our existing stockholders may be greater than would
otherwise occur had a reverse stock split not been effectuated because the board of directors will have more authorized shares available for issuance.



The increase in the authorized shares of common stock available for issuance also could have an anti-takeover effect. Future issuances of additional
shares of common stock could dilute the voting power of a person seeking control of the Company, thereby making it more difficult for a takeover attempt opposed by the Company to succeed, and thus limiting the opportunity for the stockholders to
realize a higher price for their shares than that generally available in the public markets. The board of directors is unaware of any attempt, whether potential or actual, to take over the Company.



Risks Related to Our Operations



Our growth may place strains on our managerial, operational and financial resources



Our business is characterized by rapid technological
change, changing customer demands and evolving industry standards. Our future success depends, in part, on how we respond to these demands. These demands will require us to introduce new products and services, enhance existing products and services
and adapt our technology in a timely fashion. There can be no assurance that we will be capable of introducing new products and services, enhancing products and services or adapting our technology.



Our current trading, communications and information systems have been
designed to perform within finite capacity parameters. Although we believe we can accommodate a substantial increase in activity, our growth may require implementation of new and improved trading, communications and information systems. There can be
no assurance that a significant increase in trading volumes or the introduction of new or multiple products will not result in systems failures or have a material adverse effect on our operating results.



29



---

##### Table of Contents

Our trading activities expose our capital to potential losses



We engage in securities trading activities, predominantly through our
subsidiary Vie Securities acting as principal. These activities include the purchase, sale or short sale of securities and derivative securities for our own account in order to provide liquidity to our customers at the VWAP. We guarantee our
customers the VWAP for specified intervals of time at the time customer orders are executed, or at the beginning of the intervals. We then trade the orders through our proprietary trading algorithm with the intention of achieving the same price we
have guaranteed the customer. We realize trading gains or losses to the extent of the difference between the prices we achieve and the prices we guaranteed our customers. These activities are subject to a number of risks including price
fluctuations, rapid changes in the liquidity of markets, and trading errors, all of which subjects our capital and our financial condition to substantial risks on a daily basis.



Our compliance and risk management methods might not be fully effective in reducing our exposure to losses



There can be no assurance that our risk management and compliance procedures
will be adequate or effective to detect and deter compliance systems failures. Nor can we assure you that we will be able to manage our systems, technology and regulatory compliance growth successfully. Our inability to do so could have a material
adverse effect on our business and our financial condition. The scope of procedures for assuring compliance with applicable rules and regulations has changed as the size and complexity of our business has increased. We plan to continue to revise
formal compliance procedures for the proprietary trading system we are operating through our subsidiary Vie Securities.



Our brokerage operations expose us to liability for errors in handling customer orders



Errors in performing clearing services or execution services, including clerical and other errors related to the handling
customer orders could lead to regulatory sanctions and civil penalties imposed by applicable authorities as well as potential trading losses and potential liability resulting from lawsuits brought by customers or others. We provide execution
services to each of our trading system customers and execute orders on behalf of each of our broker-dealer affiliates. In conjunction with our clearing brokers, we provide clearing services, which include the confirmation, receipt, settlement and
delivery functions, involved in securities transactions.



Our clearing
agents may fail to provide our customers or us with accurate information about securities transactions



We rely on our clearing brokers to discharge their obligations to our customers and us on a timely basis. If they fail to do so, our trading operations
may suffer. Our trading and information systems are coordinated with the clearing and information systems of our clearing brokers. We rely on these systems to furnish us with certain information necessary to run our business, including transaction
summaries, data feeds for compliance and risk management, execution reports and trade confirmations. These systems may experience systems failure, interruptions, capacity constraints, or other errors.



Conditions beyond our control could adversely affect our business and operating results



Our business and operating results are very dependent
upon equity trading volumes. Many conditions beyond our control can adversely effect such trading volumes, including national and international economic, political and market conditions, investor sentiment, the availability of funding and capital,
the level and volatility of interest rates, legislative and regulatory changes, inflation, and similar broad trends. With reduced trading volumes, we may expect to receive fewer transactions and thus earn fewer commissions from our broker-dealer
operations.



Risks Related to Our Technology and Products



We are dependent on new and existing transaction products to generate
revenues



Our future revenues will depend primarily on the
volume of securities traded on our systems and generated by our transaction-related products. The success of these systems and products is heavily dependent upon their acceptance by broker-dealers, institutional investors and other market
participants. Failure to obtain such acceptance could result in lower volumes and a lack of liquidity in these systems and products. While we continue to solicit customers to use our systems and products, there can be no assurance that we will
attract a sufficient number of such customers.



30



---

##### Table of Contents

We may receive a substantial portion of our order flow through electronic communications gateways,
including a variety of computer-to-computer interfaces and the Internet. Our electronic brokerage services involve alternative forms of order execution. Accordingly, substantial marketing, sales efforts and strategic relationships may be necessary
to educate and acquire prospective customers regarding our electronic brokerage services and products. There can be no assurance that our marketing, sales efforts and strategic initiatives will be successful in educating and attracting new
customers.



If any of our computer and communications systems fail, our
business will be adversely affected



Any computer or
communications system failure or decrease in computer systems performance that causes interruptions in our operations could have a material adverse effect on our business, financial condition and operating results. We currently do not provide our
customers with backup trading systems or complete disaster recovery systems.



Our trading systems and proprietary trading activities depend on the integrity and performance of the computer and communications systems supporting them. Extraordinary trading volumes or other events could cause our
computer systems to operate at an unacceptably low speed or even fail. We cannot assure you that our network protections will work. Any significant degradation or failure of our computer systems or any other systems in the trading process could
cause customers to suffer delays or errors in trading. These problems could cause substantial losses for customers and could subject us to claims from customers.



Software bugs, errors and malfunctions may expose us to losses



Complex software such as ours often contains undetected errors, defects or
imperfections. These bugs could result in service interruptions or other problems for us and our customers. Despite rigorous testing, the software used in our products could still be subject to various risks associated with systems errors,
malfunctions and employee errors. In addition, because our products often work with software developed by others, including vendors and customers, bugs in others software could damage the marketability and reputation of our products. Given the
competitive environment for electronic equity trading execution, investors could elect to use our competitors products on a temporary or permanent basis to complete their trades. Prolonged service interruptions resulting from natural disasters
could also result in decreased trading volumes and the loss of customers. Problems regarding our VWAP trading algorithms, which we use to provide proprietary trading commitments, could result in material tracking errors and in significant
proprietary trading losses.



Our networks may be vulnerable to security
breaches



Our networks may be vulnerable to unauthorized
access, computer viruses and other security problems. Persons who circumvent security measures could wrongfully use our confidential information or our customers confidential information or cause interruptions or malfunctions in our
operations. The secure transmission of confidential information over public networks is a critical element of our operations. We have not in the past experienced network security problems. We may be required to expend significant additional
resources to protect against the threat of security breaches or to alleviate problems caused by any breaches. We can provide no assurance that our current or future security measures will protect against all security risks in the future.



We may not receive accurate and timely financial data from our third-party suppliers,
which may cause us to lose customers and be subject to litigation



We receive consolidated New York Stock Exchange listed trading information, including real-time quotes, last sale reporting, volume and price information and error reports from a number of third parties, including the New York Stock
Exchange, the Consolidated Tape Association and the Securities Industry Automation Corporation. We then calculate the volume weighted average price information for the listed securities traded in our systems and distribute this information to our
customers. We also use this information for pricing matched orders executed in our systems.



If these suppliers fail to supply accurate or timely information, our customers may develop an adverse perception of our trading systems and cease doing business with us. We may also be subject to claims for
negligence or other theories based on the nature and content of information we provide our customers. Any liability arising from third party supplied data could have a material adverse effect on our financial condition and operating results.



31



---

##### Table of Contents

Our competitive position may be adversely affected by others unauthorized use of our intellectual property



Although we believe our services and products do not
infringe on the intellectual property rights of others, there can be no assurance that third parties will not assert infringement claims against us in the future. Our competitive position may also be adversely affected by the unauthorized use of our
proprietary information. Any such assertions by third parties could result in costly litigation, in which we may not prevail. Also, in such event, we may be unable to license any patents or other intellectual property rights from third parties on
commercially reasonable terms, if at all. Litigation, regardless of its outcome, could also result in substantial cost and diversion of our already limited resources. Any infringement claims or other litigation against us could materially impact our
operating results and financial condition.



We regard our
products and the research and development that went into developing them as our property. Unauthorized third parties could copy or reverse engineer certain portions of our products or obtain or use information that we regard as proprietary. In
addition, our trade secrets could become known to or be independently developed by our competitors. We rely primarily on a combination of trademark and trade secret protection, employee and third party confidentiality and non-disclosure agreements,
license agreements, and other intellectual property protection methods to protect these property rights. However, we have not received any patent awards, nor have we filed for federal copyright protection relating to current product lines.



Risks Related to Our Industry



We are subject to risks associated with the securities industry generally



The securities business is subject to various risks, including customer
default, employees misconduct, errors and omissions by traders and order takers, and litigation. These risks are often difficult to detect beforehand or to deter. Losses associated with these risks could have a material adverse effect on our
business, financial condition and operating results.



We derive
most of our revenue from trading in existing equity securities, including most of the securities in the S&P 500, Russell 1000, and Nasdaq 100 indices. Any reduction in revenues resulting from a decline in the secondary market trading volume for
these equity securities could have a material adverse effect on our business and operating results. Additionally, further declines in cash flows into the U.S. equity markets or a slowdown in equity trading activity by broker-dealers and other
institutional investors may have an adverse effect on the securities markets generally, and could result in lower revenues from our trading systems.



Our business could be adversely affected by extensive government regulation



The regulatory environment in which we operate is subject to change. New or revised legislation or regulations imposed by
the SEC, other United States or foreign governmental regulatory authorities, self-regulatory organizations or the NASD could have a material adverse effect on our business. Changes in the interpretation or enforcement of existing laws and rules by
these governmental authorities, self-regulatory organizations and the NASD could also have a material adverse effect on our business, financial condition and operating results. The SEC, the NASD, other self-regulatory organizations and state
securities commissions require strict compliance with their rules and regulations.



Failure to comply with any of these laws, rules or regulations could result in adverse consequences. An adverse ruling against us and/or our officers and other employees could result in us and/or our officers and
other employees being required to pay a substantial fine or settlement and could result in suspension or expulsion. This could have a material adverse effect on our business and results of operations.



Additional regulation, changes in existing laws and rules, or changes in
interpretations or enforcement of existing laws and rules often directly affect securities firms. We cannot predict what effect any such changes might have. Our business, financial condition and operating results may be materially affected by both
regulations that are directly applicable to us and regulations of general application. Our levels of trading system activity and proprietary trading can be affected not only by such legislation or regulations of general applicability, but also by
industry-specific legislation or regulations.



32



---

##### Table of Contents

Our industry is highly competitive



We face competition from traditional broker-dealers, proprietary trading firms, and alternative trading systems offering
similar trade execution services, including companies such as Investment Technology Group, Instinet, Bloomberg and LiquidNet. The marketplace for VWAP execution products and services has become highly competitive with the increasing customer demand
for VWAP executions. Customers demand guaranteed VWAP pricing, confidentiality, and competitive commission rates. Recently, our key customer mix is susceptible to constant change as a result of customers sensitivity to commission rates and
willingness to engage multiple VWAP service providers. As our customer relationships are not contractual, there is no guarantee that our customers will continue to do business with us. Because our customer base has historically been concentrated
among a few firms, there is no guarantee that the loss of individual firms will not have a material adverse effect on our business, results of operations or financial condition.



We believe the factors that distinguish our products from those of our competitors include high fill rates, minimal market
impact, anonymity, quality of trade execution and pricing, and client service. Although we feel our products offer benefits over those of our competitors, there is no assurance that our products will adequately address all the competitive criteria
in a manner that results in a competitive advantage.



Many of
our competitors have substantially greater financial, research, development, sales, marketing and other resources than we have and many of their products have established operating histories. While we believe that our products and services offer
certain competitive advantages, our ability to maintain these advantages will require continued investment in product development, additional marketing, and customer support activities. We may not have sufficient resources to continue to make these
investments, while our competitors may continue to devote significantly more resources to their services.



33



---

##### Table of Contents

|ITEM 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- |  | ----------------------------------------------------------



We use various management tools to monitor our exposure to market risks. Our exposure to market risk has not changed materially from that described in our
Annual Report on Form 10-K, as amended, for the fiscal year ended March 31, 2003. For a further discussion of our market risks and risk management policy, refer to Item 7AQuantitative and Qualitative Disclosure About Market Riskof
our Annual Report on Form 10-K, as amended, for the fiscal year ended March 31, 2003.



|ITEM 4. |  | CONTROLS AND PROCEDURES
|------- |  | -----------------------



(a) Within 90 days prior to the date of the filing of this report, our Chief Executive Officer and Chief Financial Officer reviewed and evaluated the
effectiveness of the design and operation of our disclosure controls and procedures, with the participation of our management. Disclosure controls and procedures are controls and procedures that are designed to ensure that information
required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and
forms.Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have each concluded that our disclosure controls and procedures are effective and sufficient to ensure that we record, process, summarize and timely
report information required to be disclosed by the Company under the Securities Exchange Act of 1934.



(b) There have not been any significant changes in our internal controls or in other factors that could significantly affect these controls, including any
corrective actions with regard to significant deficiencies and material weaknesses subsequent to the date of our most recent evaluation of our internal controls. Internal controls and procedures are designed with the objective of providing
reasonable assurance that (1) our transactions are properly authorized; (2) our assets are safeguarded against unauthorized or improper use; and (3) our transactions are properly recorded and reported, all to permit the preparation of our financial
statements in conformity with generally accepted accounting principles.



PART II - OTHER INFORMATION



|ITEM 1. |  | LEGAL PROCEEDINGS
|------- |  | -----------------



In May 2003, two former employees filed separate claims against us with the U.S. Department of Labor/Occupational Safety & Health Administration
(DOL). The claims both allege employment practice issues under the Sarbanes-Oxley Act of 2002. On June 12, 2003, we responded to both claims and denied all allegations. Under the Sarbanes-Oxley Act, claimants can file a civil suit after exhausting
administrative remedies before the DOL. Although we believe the allegations are without merit, the outcome of the administrative and court proceeding, if filed, is uncertain. We do not expect a material adverse impact on our financial condition and
results of operations as a result of these claims.



On June 7,
2000, our subsidiary, Ashton Canada, entered into a written agreement with the Toronto Stock Exchange Inc. for the integration of Ashton Canadas eVWAP trade match software, equipment and communications facilities with the Toronto Stock
Exchanges continuous auction market for securities. After Ashton Canada had designed and implemented the eVWAP software and assisted the Toronto Stock Exchange in securing all necessary approvals of the Ontario Securities Commission, the
Toronto Stock Exchange, without proper justification or excuse, suspended the integration of eVWAP. Thereafter, following failure by the parties to resolve this matter, on June 11, 2003, Ashton Canada filed an arbitration claim against the Toronto
Stock Exchange seeking damages of US $30 million for breach of contract, interest in the amount for a period as may be determined by the arbitrator, and costs of the arbitration. The arbitration was filed under the Ontario Arbitrations Act. On
August 22, 2003, the Toronto Stock Exchange filed a counterclaim against Ashton Canada seeking specific performance of the integration agreement, or in the alternative, a declaration that it is entitled to terminate the agreement without penalty.
The outcome of these claims is uncertain at this time.



On May
20, 2002, Finova added us as a defendant in the case Finova Capital Corporation v. OptiMark Technologies, Inc., OptiMark, Inc and OptiMark Holdings, Inc., Docket No.: HUD-L-3884-01, Superior Court of New Jersey-Hudson County. Finova asserted claims
arising out of an equipment lease agreement pursuant to which Finova alleged that OptiMark Technologies, Inc (now known as OptiMark US Equities, Inc.) agreed to lease certain



34



---

##### Table of Contents

equipment from Finova. Finova made claims in unspecified amounts exceeding $6 million (plus interest, late charges, litigation costs and expenses) for, among
other things, fraudulent conveyance of certain assets comprised, at least in part, of the intellectual property and non-cash assets acquired by us from Innovations on May 7, 2002. Pursuant to an indemnification agreement, OptiMark US Equities, Inc.
will indemnify Vie from any claims relating to the alleged fraudulent conveyance. The parties entered into a settlement agreement and mutual release, effective as of June 19, 2003, whereby OptiMark Technologies, Inc., OptiMark, Inc., OptiMark
Holdings, Inc. and OptiMark US Equities, Inc. (the OptiMark Payees) agreed to pay Finova $1,000,000 over three installment payments. In accordance with the agreement, we and our parent, OptiMark Innovations Inc., are not required to make any cash
contribution or otherwise to the settlement and are unconditionally released from any claims by Finova once the OptiMark Payees have paid Finova the first $200,000 installment. Thereafter, Finovas sole remedy under the agreement would be to
enter judgment only against the OptiMark Payees by way of a Consent Judgment. The first installment was paid on July 28, 2003, thus, we and OptiMark Innovations are relieved of any future liability related to this matter. Additionally, related to
the first installment having been paid, a Stipulation of Dismissal with Prejudice executed by the parties was filed with and accepted by the Court on August 1, 2003.



|ITEM 2. |  | CHANGES IN SECURITIES AND USE OF PROCEEDS
|------- |  | -----------------------------------------



On September 30, 2003, we sold 35,000 shares of our series H convertible preferred stock, par value $0.01, to certain investors for gross proceeds of
$3,500,000 in a private placement pursuant to Section 4(2) of the Securities Act of 1933. The proceeds from this transaction will be used to fund our operations. For more information on this transaction, see Note 3 to the Consolidate Financial
Statements.



On August 11, 2003, we sold 1,619 shares of our
series G convertible preferred stock, par value $0.01, to certain investors for gross proceeds of $161,980 in a private placement pursuant to Section 4(2) of the Securities Act of 1933.The proceeds from this transaction will be used to fund
our operations. For more information on this transaction, see Note 3 to the Consolidated Financial Statements.



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



At our annual meeting of stockholders held on September 18, 2003, our stockholders approved proposals to (i) elect eight directors to serve until the next
annual meeting and until their successors have been duly elected and qualified; and (ii) amend our certificate of incorporation to authorize a one-for-two reverse stock split. The number of votes cast for, against or withheld, as well as the number
of abstentions was as follows:



| | (i) | Election of directors:
| | --- | ----------------------



|Name of Nominee     |     | (Withhold Authority)
|------------------- | --- | --------------------
|                    | For |                     
|Ronald D. Fisher    |     | 657,224,291         
|Carmine F. Adimando |     | 657,220,834         
|Jonathan F. Foster  |     | 657,224,334         
|William A. Lupien   |     | 657,224,334         
|Roy S. Neff         |     | 657,220,834         
|Howard J. Schwartz  |     | 657,221,334         
|Dean G. Stamos      |     | 657,224,034         
|Robert J. Warshaw   |     | 657,215,134         



| | (ii) | Amend our certificate of incorporation to authorize a one-for-two reverse stock split:
| | ---- | --------------------------------------------------------------------------------------



|For         |  | Against   |  | Abstain
|----------- |  | --------- |  | -------
|655,825,575 |  | 2,062,555 |  | 54,394 



35



---

##### Table of Contents

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



| | (A) | Exhibits
| | --- | --------



|Exhibit # |  | Description*                                                                                          
|--------- |  | ------------------------------------------------------------------------------------------------------
|4.1       |  | Certificate of Correction of the Certificate of Designation for Series G Convertible Preferred Stock  
|          | 
|4.2       |  | Certificate of Amendment of the Certificate of Designation of the Series H Convertible Preferred Stock
|          | 
|31.1      |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002    
|          | 
|31.2      |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002    
|          | 
|32.1      |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002    
|          | 
|32.2      |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002    



| | (B) | Reports on Form 8-K
| | --- | -------------------



None.



36



---

##### Table of Contents

SIGNATURES



In accordance with the requirements of
the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                        |  |  |  | Vie Financial Group, Inc.
|----------------------- |  |  |  | -------------------------
|                        |  |  |  | (Registrant)             
|                        |  |  | 
|Date: November 14, 2003 |  |  |  | By:                      
|                        |  |  |  |                          
|                        |  |  |  |                          



37