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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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



For the period ended December 31, 2003



OR



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



For the transition period from
 to



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Commission File Number: 001-11747



VIE FINANCIAL GROUP, INC.



|                         |  |                                    
|------------------------ |  | -----------------------------------
|Delaware                 |  | 22-6650372                         
|(State of incorporation) |  | (I.R.S. EmployerIdentification 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 February 17, 2004)



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VIE FINANCIAL GROUP, INC.



INDEX



|                               |  |                                                                                                        |  |     
|------------------------------ |  | ------------------------------------------------------------------------------------------------------ |  | ----
|                               |  |                                                                                                        |  | PAGE
|                               | 
|PART I  FINANCIAL INFORMATION |  |                                                                                                       
|                               |  |                                                                                                       
|Item 1.                        |  | Financial Statements (Unaudited)                                                                       |  |     
|                               |  |                                                                                                       
|                               |  | Consolidated Balance Sheets - December 31, 2003 and March 31, 2003                                     |  | 4   
|                               |  |                                                                                                       
|                               |  | Consolidated Statements of Operations - For the Three and Nine Months Ended December 31, 2003 and 2002 |  | 5   
|                               |  |                                                                                                       
|                               |  | Consolidated Statements of Cash Flows - For the Nine Months Ended December 31, 2003 and 2002           |  | 6   
|                               |  |                                                                                                       
|                               |  | Notes to Consolidated Financial Statements                                                             |  | 7   
|                               |  |                                                                                                       
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                  |  | 21  
|                               |  |                                                                                                       
|                               |  | Additional Factors that may Affect Future Results                                                      |  | 27  
|                               |  |                                                                                                       
|Item 3.                        |  | Quantitative and Qualitative Disclosures about Market Risk                                             |  | 36  
|                               |  |                                                                                                       
|Item 4.                        |  | Controls and Procedures                                                                                |  | 36  
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                                       
|                               |  |                                                                                                       
|Item 1.                        |  | Legal Proceedings                                                                                      |  | 36  
|                               |  |                                                                                                       
|Item 2.                        |  | Changes in Securities and Use of Proceeds                                                              |  | 37  
|                               |  |                                                                                                       
|Item 5.                        |  | Other Information                                                                                      |  | 37  
|                               |  |                                                                                                       
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                                       |  | 38  
|                               | 
|Signatures                     |  | 39                                                                                                    



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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 sources, execution venues and self-regulatory organizations;
| | - | --------------------------------------------------------------------------------------------------------------------------------------



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



| |  | our dependence on proprietary and third-party 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.



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



VIE FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



|                                                                                                                             |  |                  |              |   |               |   |             |  
|---------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------------ | - | ------------- | - | ----------- | -
|                                                                                                                             |  | December 31,2003 |              |   | March 31,2003 |  
|                                                                                                                             |  | (Unaudited)      |              |   | (Audited)     |  
|Assets                                                                                                                       |  |                  |              |   |               |   |             |  
|Cash and cash equivalents                                                                                                    |  | $                | 3,333,035    |   |               | $ | 2,250,601   |  
|Securities owned, at fair value                                                                                              |  |                  |             |   |               |   | 7,114       |  
|Receivables from brokers, dealers and other                                                                                  |  |                  | 595,056      |   |               |   | 736,306     |  
|Prepaid expenses and other current assets                                                                                    |  |                  | 231,711      |   |               |   | 128,703     |  
|                                                                                                                             |  |                  |              |   |               |   |             |  
|Total current assets                                                                                                         |  |                  | 4,159,802    |   |               |   | 3,122,724   |  
|Property and equipment, net of accumulated depreciation                                                                      |  |                  | 118,696      |   |               |   | 811,339     |  
|Exchange memberships                                                                                                         |  |                  | 12,000       |   |               |   | 159,752     |  
|Debt issuance costs                                                                                                          |  |                  |             |   |               |   | 40,960      |  
|Other assets                                                                                                                 |  |                  | 393,674      |   |               |   | 465,290     |  
|                                                                                                                             |  |                  |              |   |               |   |             |  
|Total assets                                                                                                                 |  | $                | 4,684,172    |   |               | $ | 4,600,065   |  
|                                                                                                                             |  |                  |              |   |               |   |             |  
|Liabilities and Stockholders Deficiency                                                                                     |  |                  |              |   |               |   |             |  
|Accounts payable and accrued expenses                                                                                        |  | $                | 1,181,035    |   |               | $ | 1,068,386   |  
|Payables to brokers, dealers and others                                                                                      |  |                  |             |   |               |   | 97,374      |  
|Securities sold, not yet purchased, at fair value                                                                            |  |                  |             |   |               |   | 353,604     |  
|Accrued severance and current portion of lease termination liability                                                         |  |                  | 321,409      |   |               |   |            |  
|Net liabilities of discontinued operations                                                                                   |  |                  | 61,251       |   |               |   | 60,841      |  
|                                                                                                                             |  |                  |              |   |               |   |             |  
|Total current liabilities                                                                                                    |  |                  | 1,563,695    |   |               |   | 1,580,205   |  
|Secured note                                                                                                                 |  |                  | 4,640,413    |   |               |   | 4,150,370   |  
|Secured convertible note                                                                                                     |  |                  | 1,031,019    |   |               |   | 673,064     |  
|Subordinated convertible notes                                                                                               |  |                  |             |   |               |   | 2,130,772   |  
|Lease termination liability, net of current portion                                                                          |  |                  | 543,592      |   |               |   | 0           |  
|Other liabilities                                                                                                            |  |                  | 28,306       |   |               |   | 105,449     |  
|                                                                                                                             |  |                  |              |   |               |   |             |  
|Total liabilities                                                                                                            |  |                  | 7,807,025    |   |               |   | 8,639,860   |  
|                                                                                                                             |  |                  |              |   |               |   |             |  
|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      |   |               |   | 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: 75,562                              |  |                  | 756          |   |               |   |            |  
|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    |   |               |   | 6,916,749   |  
|Additional paid-in capital                                                                                                   |  |                  | 97,162,434   |   |               |   | 85,357,668  |  
|Accumulated deficit                                                                                                          |  |                  | (107,445,162 | ) |               |   | (96,513,500 | )
|Accumulated other comprehensive loss                                                                                         |  |                  | (40,712      | ) |               |   | (40,712     | )
|                                                                                                                             |  |                  |              |   |               |   |             |  
|Total stockholders deficiency                                                                                               |  |                  | (3,122,853   | ) |               |   | (4,039,795  | )
|                                                                                                                             |  |                  |              |   |               |   |             |  
|Total liabilities and stockholders deficiency                                                                               |  | $                | 4,684,172    |   |               | $ | 4,600,065   |  
|                                                                                                                             |  |                  |              |   |               |   |             |  



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



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VIE FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)



|                                                                           |  |                                 |             |   |                                |   |             |      |  |   |             |   |  |   |             |  
|-------------------------------------------------------------------------- |  | ------------------------------- | ----------- | - | ------------------------------ | - | ----------- | ---- |  | - | ----------- | - |  | - | ----------- | -
|                                                                           |  | Three Months Ended December 31, |             |   | Nine Months Ended December 31, |  
|                                                                           |  | 2003                            |             |   | 2002                           |   |             | 2003 |  |   | 2002        |  
|Revenues                                                                   |  | $                               | 2,208,800   |   |                                | $ | 830,119     |      |  | $ | 6,937,589   |   |  | $ | 1,668,061   |  
|                                                                           |  |                                 |             |   |                                |   |             |      |  |   |             |   |  |   |             |  
|Expenses:                                                                  |  |                                 |             |   |                                |   |             |      |  |   |             |   |  |   |             |  
|Salaries and employee benefits                                             |  |                                 | 863,004     |   |                                |   | 1,423,891   |      |  |   | 3,347,881   |   |  |   | 4,137,918   |  
|Professional fees                                                          |  |                                 | 278,947     |   |                                |   | 368,678     |      |  |   | 717,749     |   |  |   | 1,074,525   |  
|Brokerage, clearing and exchange fees                                      |  |                                 | 1,256,986   |   |                                |   | 403,900     |      |  |   | 3,898,539   |   |  |   | 1,151,915   |  
|Depreciation and amortization                                              |  |                                 | 68,698      |   |                                |   | 208,750     |      |  |   | 335,062     |   |  |   | 636,578     |  
|Non-cash compensation charges                                              |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   | 720,000     |  
|Loss on trading activities                                                 |  |                                 | 165,939     |   |                                |   | 114,522     |      |  |   | 1,782,513   |   |  |   | 265,866     |  
|Selling, general and administrative                                        |  |                                 | 613,309     |   |                                |   | 789,751     |      |  |   | 1,959,559   |   |  |   | 2,250,351   |  
|Restructuring charges                                                      |  |                                 | 1,342,341   |   |                                |   |            |      |  |   | 1,342,341   |   |  |   |            |  
|                                                                           |  |                                 |             |   |                                |   |             |      |  |   |             |   |  |   |             |  
|Total costs and expenses                                                   |  |                                 | 4,589,224   |   |                                |   | 3,309,492   |      |  |   | 13,383,644  |   |  |   | 10,237,153  |  
|                                                                           |  |                                 |             |   |                                |   |             |      |  |   |             |   |  |   |             |  
|Loss from operations                                                       |  |                                 | (2,380,424  | ) |                                |   | (2,479,373  | )    |  |   | (6,446,055  | ) |  |   | (8,569,092  | )
|                                                                           |  |                                 |             |   |                                |   |             |      |  |   |             |   |  |   |             |  
|Interest income                                                            |  |                                 | 1,749       |   |                                |   | 8,380       |      |  |   | 9,630       |   |  |   | 44,717      |  
|Interest expense                                                           |  |                                 | (631,305    | ) |                                |   | (351,972    | )    |  |   | (1,485,147  | ) |  |   | (1,132,668  | )
|Debt issue costs                                                           |  |                                 |            |   |                                |   |            |      |  |   | (6,642      | ) |  |   |            |  
|Other income (expense)                                                     |  |                                 |            |   |                                |   |            |      |  |   | (47,793     | ) |  |   | 1,087       |  
|Equity in loss of affiliates                                               |  |                                 |            |   |                                |   | (974        | )    |  |   | (1,619      | ) |  |   | (233,852    | )
|                                                                           |  |                                 |             |   |                                |   |             |      |  |   |             |   |  |   |             |  
|Net loss from continuing operations                                        |  | $                               | (3,009,980  | ) |                                | $ | (2,823,939  | )    |  | $ | (7,977,626  | ) |  | $ | (9,889,808  | )
|                                                                           |  |                                 |             |   |                                |   |             |      |  |   |             |   |  |   |             |  
|Loss from discontinued operations of eMC                                   |  |                                 | (390        | ) |                                |   | (121        | )    |  |   | (410        | ) |  |   | (840        | )
|                                                                           |  |                                 |             |   |                                |   |             |      |  |   |             |   |  |   |             |  
|Net loss                                                                   |  | $                               | (3,010,370  | ) |                                | $ | (2,824,060  | )    |  | $ | (7,978,036  | ) |  | $ | (9,890,648  | )
|                                                                           |  |                                 |             |   |                                |   |             |      |  |   |             |   |  |   |             |  
|Dividends attributed to preferred stock                                    |  |                                 | (1,736,009  | ) |                                |   |            |      |  |   | (2,937,355  | ) |  |   |            |  
|Dividends in arrears on preferred stock                                    |  |                                 | (5,444      | ) |                                |   | (5,444      | )    |  |   | (16,272     | ) |  |   | (16,272     | )
|                                                                           |  |                                 |             |   |                                |   |             |      |  |   |             |   |  |   |             |  
|Net loss applicable to common stock                                        |  | $                               | (4,751,823  | ) |                                | $ | (2,829,504  | )    |  | $ | (10,931,663 | ) |  | $ | (9,906,920  | )
|                                                                           |  |                                 |             |   |                                |   |             |      |  |   |             |   |  |   |             |  
|Basic and diluted net loss per common share from continuing operations     |  | $                               | (0.01       | ) |                                | $ | (0.00       | )    |  | $ | (0.02       | ) |  | $ | (0.02       | )
|Basic and diluted net income per common share from discontinued operations |  | $                               | 0.00        |   |                                | $ | 0.00        |      |  | $ | 0.00        |   |  | $ | 0.00        |  
|Basic and diluted net loss per common share                                |  | $                               | (0.01       | ) |                                | $ | (0.00       | )    |  | $ | (0.02       | ) |  | $ | (0.02       | )
|                                                                           |  |                                 |             |   |                                |   |             |      |  |   |             |   |  |   |             |  
|Weighted average number of common shares outstanding, basic and diluted    |  |                                 | 695,971,046 |   |                                |   | 691,674,817 |      |  |   | 695,023,260 |   |  |   | 606,197,039 |  
|                                                                           |  |                                 |             |   |                                |   |             |      |  |   |             |   |  |   |             |  



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



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VIE FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)



|                                                                             |  |                               |            |   |      |   |            |  
|---------------------------------------------------------------------------- |  | ----------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                             |  | Nine Months EndedDecember 31, |           
|                                                                             |  | 2003                          |            |   | 2002 |  
|Cash Flows from Operating Activities                                         |  |                               |            |   |      |   |            |  
|Net loss from continuing operations                                          |  | $                             | (7,977,626 | ) |      | $ | (9,889,808 | )
|Adjustments to reconcile net loss to net cash used in operating activities:  |  |                               |            |   |      |   |            |  
|Depreciation and amortization                                                |  |                               | 335,062    |   |      |   | 636,578    |  
|Common stock issued in connection with consulting agreement                  |  |                               |           |   |      |   | 41,250     |  
|Common stock issued in connection with separation agreement                  |  |                               |           |   |      |   | 720,000    |  
|Non-cash interest expense                                                    |  |                               | 1,477,995  |   |      |   | 1,129,981  |  
|Equity in loss of affiliates                                                 |  |                               | 1,619      |   |      |   | 233,853    |  
|Debt issuance costs                                                          |  |                               | 6,642      |   |      |   |           |  
|Loss on disposition and impairment of assets                                 |  |                               | 559,622    |   |      |   |           |  
|Changes in operating assets and liabilities:                                 |  |                               |            |   |      |   |            |  
|Securities owned, at fair value                                              |  |                               | 7,114      |   |      |   |           |  
|Receivables from brokers, dealers and others                                 |  |                               | 141,250    |   |      |   | (18,078    | )
|Advances to affiliates                                                       |  |                               | (1,619     | ) |      |   | (9,097     | )
|Prepaid expenses and other current assets                                    |  |                               | (103,008   | ) |      |   | (282,061   | )
|Other assets                                                                 |  |                               | 71,616     |   |      |   | (24,591    | )
|Accounts payable and accrued expenses                                        |  |                               | 96,377     |   |      |   | (784,540   | )
|Payables to brokers, dealers and others                                      |  |                               | (97,374    | ) |      |   |           |  
|Accrued severance and current portion of lease termination liability         |  |                               | 321,409    |   |      |   |           |  
|Securities sold, not yet purchased                                           |  |                               | (353,604   | ) |      |   |           |  
|Secured convertible note interest payment                                    |  |                               | (50,000    | ) |      |   |           |  
|Lease termination liability                                                  |  |                               | 543,592    |   |      |   |           |  
|Other liabilities                                                            |  |                               | (77,143    | ) |      |   | 45,976     |  
|                                                                             |  |                               |            |   |      |   |            |  
|Net cash used in continuing operations                                       |  |                               | (5,098,076 | ) |      |   | (8,200,537 | )
|                                                                             |  |                               |            |   |      |   |            |  
|Cash Flows from Investing Activities                                         |  |                               |            |   |      |   |            |  
|Proceeds from issuance of note receivable                                    |  |                               |           |   |      |   | (200,000   | )
|Cash received from notes receivable                                          |  |                               |           |   |      |   | 200,000    |  
|Purchase of property and equipment                                           |  |                               | (54,289    | ) |      |   | (177,849   | )
|                                                                             |  |                               |            |   |      |   |            |  
|Net cash used in investing activities                                        |  |                               | (54,289    | ) |      |   | (177,849   | )
|                                                                             |  |                               |            |   |      |   |            |  
|Cash Flows from Financing Activities                                         |  |                               |            |   |      |   |            |  
|Proceeds from issuance of preferred stock                                    |  |                               | 6,201,346  |   |      |   |           |  
|Proceeds from exercise of common stock purchase warrants                     |  |                               | 58,240     |   |      |   |           |  
|Proceeds from issuance of short term note                                    |  |                               |           |   |      |   | 550,000    |  
|Repayment of short term notes                                                |  |                               |           |   |      |   | (550,000   | )
|Proceeds from issuance of secured convertible note                           |  |                               |           |   |      |   | 2,727,273  |  
|Proceeds from issuance of subordinated convertible notes                     |  |                               |           |   |      |   | 2,400,000  |  
|Debt issuance costs                                                          |  |                               |            |   |      |   | (29,000    | )
|Issuance costs on common and preferred stock                                 |  |                               | (24,787    | ) |      |   | (534,137   | )
|Proceeds from issuance of common stock                                       |  |                               |           |   |      |   | 7,272,727  |  
|                                                                             |  |                               |            |   |      |   |            |  
|Net cash provided by financing activities                                    |  |                               | 6,234,799  |   |      |   | 11,836,863 |  
|                                                                             |  |                               |            |   |      |   |            |  
|Net increase in cash and cash equivalents                                    |  |                               | 1,082,434  |   |      |   | 3,458,477  |  
|Cash and cash equivalents, beginning of period                               |  |                               | 2,250,601  |   |      |   | 635,087    |  
|                                                                             |  |                               |            |   |      |   |            |  
|Cash and cash equivalents, end of period                                     |  | $                             | 3,333,035  |   |      | $ | 4,093,564  |  
|                                                                             |  |                               |            |   |      |   |            |  
|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                  |  | $                             |           |   |      | $ | 41,250     |  
|                                                                             |  |                               |            |   |      |   |            |  
|Common stock issued in final arbitration settlement                          |  | $                             |           |   |      | $ | 116,000    |  
|                                                                             |  |                               |            |   |      |   |            |  
|Warrants issued in connection with exchange agreement                        |  | $                             |           |   |      | $ | 1,188,000  |  
|                                                                             |  |                               |            |   |      |   |            |  
|Beneficial conversion feature of secured convertible note                    |  | $                             |           |   |      | $ | 2,727,273  |  
|                                                                             |  |                               |            |   |      |   |            |  
|Discount on subordinated convertible notes                                   |  | $                             |           |   |      | $ | 342,857    |  
|                                                                             |  |                               |            |   |      |   |            |  
|Common stock issued in connection with separation agreement                  |  | $                             |           |   |      | $ | 720,000    |  
|                                                                             |  |                               |            |   |      |   |            |  
|Conversion of short-term note into common stock                              |  | $                             |           |   |      | $ | 500,000    |  
|                                                                             |  |                               |            |   |      |   |            |  
|Conversion of subordinated convertible notes into preferred stock            |  | $                             | 2,556,223  |   |      | $ |           |  
|                                                                             |  |                               |            |   |      |   |            |  
|Non-cash and accrued dividends on preferred stock                            |  | $                             | 2,953,627  |   |      | $ | 16,272     |  
|                                                                             |  |                               |            |   |      |   |            |  



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



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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.



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 nine months ended December 31, 2003 are not necessarily indicative of the results that may be expected for the year ending March 31, 2004.



We are a subsidiary of OptiMark Innovations, Inc. (Innovations), a Delaware
corporation. As of December 31, 2003, Innovations owned approximately 88% of our outstanding shares of common stock, and approximately 26% of our outstanding shares of voting stock. Assuming conversion of the note issued to Innovations on May 7,
2002 (see Note 5), Innovations would own approximately 89% of our outstanding common stock.



In September and October 2003, 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), 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) (see Note 4). As a result of these transactions and the conversion of our subordinated convertible notes in October 2003 (see Note 5),
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 December 31, 2003, we had an accumulated deficit of $107,445,162 and stockholders deficiency of $3,122,853, 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 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).



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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.



|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 nine month periods ended December 31, 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 EndedDecember 31, |            |   | Nine Months EndedDecember, |  
|                                          |  | 2003                           |            |   | 2002                       |   |            | 2003 |  |   | 2002        |  
|Net loss  as reported                    |  | $                              | (3,010,370 | ) |                            | $ | (2,824,060 | )    |  | $ | (7,978,036  | ) |  | $ | (9,890,648  | )
|Stock based employee compensation expense |  |                                | (610,891   | ) |                            |   | (1,425,179 | )    |  |   | (2,439,639  | ) |  |   | (3,280,673  | )
|                                          |  |                                |            |   |                            |   |            |      |  |   |             |   |  |   |             |  
|Net loss  pro forma                      |  | $                              | (3,621,261 | ) |                            | $ | (4,249,239 | )    |  | $ | (10,417,675 | ) |  | $ | (13,171,321 | )
|                                          |  |                                |            |   |                            |   |            |      |  |   |             |   |  |   |             |  
|PER SHARE DATA                            |  |                                |            |   |                            |   |            |      |  |   |             |   |  |   |             |  
|Basic and diluted                         |  |                                |            |   |                            |   |            |      |  |   |             |   |  |   |             |  
|Net loss per common share  as reported   |  | $                              | (0.01      | ) |                            | $ | (0.00      | )    |  | $ | (0.02       | ) |  | $ | (0.02       | )
|Net loss per common share  pro forma     |  | $                              | (0.01      | ) |                            | $ | (0.01      | )    |  | $ | (0.02       | ) |  | $ | (0.02       | )



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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 Ended December 31, |  | Nine Months Ended December 31,
|                        |  | 2003                            |  | 2002                           |  | 2003      |  | 2002     
|Risk-free interest rate |  | *                               |  | 1.41%                          |  | 1.41%     |  | 1.41%    
|Volatility              |  | *                               |  | 100%                           |  | 100%      |  | 100%     
|Expected life           |  | *                               |  | 6.7 years                      |  | 6.7 years |  | 6.7 years
|Expected dividends      |  | *                               |  | None                           |  | None      |  | None     
|Average turnover rate   |  | *                               |  | 1.28%                          |  | 1.28%     |  | 1.28%    



|* | No options were granted during the three months ended December 31, 2003.
|- | ------------------------------------------------------------------------



Recent Accounting Pronouncements



In December 2002, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable
Interest Entities (FIN 46R), which clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the characteristics of a controlling
financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support and replaces FASB Interpretation No. 46. FIN 46 provides guidance on the identification of
entities for which control is achieved through means other than through voting rights (variable interest entities) and how to determine when and which business enterprise should consolidate the variable interest entity. In addition, FIN 46 requires
that both the primary beneficiary and all other enterprises with a significant variable interest in a variable interest entity make additional disclosures. This interpretation is effective in financial statements of public entities that have
interests in variable interest entities or potential variable interest entities commonly referred to as special-purpose entities for periods ending after December 15, 2003. Application of this pronouncement by public entities for all other types of
entities, subject to FIN 46R, is required in financial statements for periods ending after March 15, 2004. The adoption of FIN 46R is not expected to have a material impact on our financial position or results of operations.



In December 2003, the Staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 104 (SAB 104), Revenue Recognition, which supercedes SAB 101, Revenue Recognition in Financial Statements. The primary purpose of SAB 104 is to rescind accounting guidance contained in SAB 101 related to
multiple element revenue arrangements, superceded as a result of the issuance of EITF 00-21, Accounting for Revenue Arrangements with Multiple Deliverables. Additionally, SAB 104 rescinds the SECs Revenue Recognition in Financial
Statements Frequently Asked Questions and Answers (the FAQ) issued with SAB 101 that had been codified in SEC Topic 13, Revenue Recognition. Selected portions of the FAQ have been incorporated into SAB 104. While the wording
of SAB 104 has changed to reflect the issuance of EITF 00-21, the revenue recognition



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principles of SAB 101 remain largely unchanged by the issuance of SAB 104. The adoption of SAB 104 had no impact on our financial position or results of
operations



|3. | RECENT DEVELOPMENTS
|-- | -------------------



Resignation of Independent Directors



By letter dated February 9, 2004, Messrs. Carmine F. Adimando, Jonathan F. Foster, Roy S. Neff and Howard J. Schwartz delivered to the Companys Board of Directors their resignation as directors (and, in the case
of Messrs. Foster and Adimando, their further resignation as members of the Companys audit committee (the Audit Committee), and in the case of each of Messrs. Adimando, Foster, Neff and Schwartz, their further resignation as
members of the Companys special committee of independent directors (the Special Committee)) effective as of 5:00 p.m., New York City time, on February 17, 2004. Messrs. Adimando, Foster, Neff and Schwartz comprised all of the
Companys independent directors, as that term is defined in Rule 4200 of the Nasdaq Marketplace Rules (the Independent Directors), and Messrs. Adimando and Foster comprised all of the members of the Audit Committee. As a
result of such resignations, the Companys Board of Directors will have no Independent Directors and the Audit Committee will have no members. The Company does not presently intend to fill all the vacancies on its Board of Directors, as the
Company believes that a smaller board will be more appropriately aligned with the size of the Company. In view of the Companys OTC bulletin board and supermajority controlled status, and its consequent assessment of corporate governance
practices and requirements, the Company is evaluating the appropriate size and composition of its board, specifically with respect to the requisite number of Independent Directors, if any, and the composition of the Audit Committee. The resignations
are intended to take effect after the Audit Committee has reviewed and approved for filing with the Securities and Exchange Commission this Quarterly Report on Form 10-Q for its fiscal quarter ended December 31, 2003.



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 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. Further, during the three months ended December 31, 2003, we merged Vie Institutional Services and REB Securities, Inc. into their 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. We are in the process of negotiating an agreement to sublease our prior headquarters space
at 1835 Market Street, Philadelphia, Pennsylvania. Additionally, in September 2003, we instituted salary reductions for executives and a majority of non-executive employees. We also reduced our headcount by 50% to 21 employees during the nine months
ended December 31, 2003. In connection with this restructuring, we recorded charges of $1,342,341 during the three and nine months ended December 31, 2003 (see Note 4).



We continue to lower the cost of providing liquidity to our customers, which includes both commissions paid to liquidity
partners and trading losses resulting from the use of our proprietary trading algorithms. Since May 2003, we have primarily utilized liquidity partners as an alternative to using our proprietary trading algorithms 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 eight-month period ended December 31, 2003.



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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 for
gross proceeds of $3.5 million, and on October 9, 2003, we issued an additional 15,000 shares of our series H preferred to DFJ ePlanet for gross proceeds of $1.5 million. Additionally, in October 2003, we issued an additional 25,562 shares of our
series H preferred to SOFTBANK and DFJ ePlanet upon their conversion of our subordinated convertible notes in the aggregate amount $2,581,784 (see Note 5).



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 at the initial conversion price, we would be
required to issue 937,011,322 shares of common stock to SOFTBANK and 480,932,424 shares of common stock to DFJ ePlanet. In the event that we do not elect to convert the series H preferred shares within one year, SOFTBANK and DFJ ePlanet would 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.



The conversion price per share of the series H preferred was below the prevailing market prices of the underlying common
stock on the dates of issuance. 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 $7,556,222
will be recognized as a dividend to the preferred stockholders over the period beginning on the dates of issuance 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 first valid filing of relevant documentation with the Securities and Exchange Commission by February 29, 2004 to effect a reverse stock split or take such
other corporate action, in each case to create a sufficient number of authorized shares of our common stock to permit the full conversion of all outstanding shares of Series H Preferred, then the 8% cumulative cash dividend on the Series H Preferred
will not accrue or cumulate, and the holders of the Series H Preferred will have no right or entitlement thereto, for the period from September 30, 2003 until but not including June 1, 2004. If we do not have a sufficient number of authorized but
unissued shares of our common stock to permit the full conversion of the Series H Preferred on or prior to September 15, 2004, the Series H Preferred will become participating preferred stock, entitling the holders upon a liquidation of the Company
to receive the liquidation preference of such stock and to share ratably in any distributions received by our common stockholders on an as-converted basis.



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.



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 investment partnerships for an aggregate of $1,201,346. The



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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 to SOFTBANK 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 G 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. During the nine months ended December 31, 2003, a beneficial conversion feature of $247,873 was recognized as a dividend to the preferred stockholders upon issuance of the shares,
and a subsequent beneficial conversion feature of $953,473 was recognized as a dividend to the preferred stockholders 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 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.



|4. | RESTRUCTURING CHARGES AND RELATED LIABILITIES
|-- | ---------------------------------------------



During the first quarter of this fiscal year, 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. Since then, we have made substantial progress by merging a number of our wholly-owned subsidiaries and consolidating our physical locations, resulting in ongoing operating cost
reductions. 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. We are in the process of negotiating an agreement to
sublease our prior headquarters space at 1835 Market Street, Philadelphia, Pennsylvania. Additionally, in September 2003, we instituted salary reductions for executives and a majority of non-executive employees. We also reduced our headcount by 50%
to 21 employees during the nine months ended December 31, 2003.



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In connection with this restructuring, we recorded charges of $1,342,341 during the three and nine months
ended December 31, 2003. The charges include severance to be paid to terminated employees, a charge for our remaining lease obligations on the Philadelphia office location, and losses on the disposition and impairment of assets, including furniture
and fixtures, computer equipment and our Philadelphia Stock Exchange memberships. The charges are as follows:



|                                             |  |                      |          
|-------------------------------------------- |  | -------------------- | ---------
|                                             |  | RestructuringCharges
|Severance costs                              |  | $                    | 197,083  
|Lease termination costs                      |  |                      | 645,917  
|Loss on disposition and impairment of assets |  |                      | 499,340  
|                                             |  |                      |          
|Total                                        |  | $                    | 1,342,340
|                                             |  |                      |          



The activity for the
three months ended December 31, 2003 in the restructuring liabilities is as follows:



|                        |  |                                     |   |           |   |            |  |   |                                  |   |  |   |        
|----------------------- |  | ----------------------------------- | - | --------- | - | ---------- |  | - | -------------------------------- | - |  | - | -------
|                        |  | Beginning Restructuring Liabilities |   | Additions |   | Reductions |  |   | Ending Restructuring Liabilities
|Severance costs         |  | $                                   |  |           | $ | 197,083    |  | $ | (45,291                          | ) |  | $ | 151,792
|Lease termination costs |  |                                     |  |           |   | 713,209    |  |   |                                 |   |  |   | 713,209
|                        |  |                                     |   |           |   |            |  |   |                                  |   |  |   |        
|Total                   |  | $                                   |  |           | $ | 910,292    |  | $ | (45,291                          | ) |  | $ | 865,001
|                        |  |                                     |   |           |   |            |  |   |                                  |   |  |   |        



We expect to pay the
remaining severance costs within the next six months. The expected lease termination costs will be paid over the remaining lease term expiring in July 2010. In accordance with SFAS No. 146 Accounting for costs Associated with Exit or Disposal
Activities, we recorded the lease termination liability at its fair value, based on the present value of expected future cash flows, net of estimated sub-rental income. The $67,292 balance of deferred rent on December 31, 2003 that was related
to the Philadelphia lease was recorded as a reduction in the lease termination charge.



|5. | 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, SOFTBANK and DFJ ePlanet.



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, or $1,493,333
and $1,062,889, respectively, 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



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of the warrants, or $342,857, as an initial discount on the notes. The remaining unamortized discount of $265,971 was charged to interest expense upon
conversion of the notes during the three months ended December 31, 2003. Additionally, we amortized $51,258 of the discount as interest expense during the nine months ended December 31, 2003 prior to the conversions, and we recorded interest expense
of $12,222 and $108,222 at the contractual rate of 8% during the three- and nine-month periods, respectively, ended December 31, 2003.



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 $409,092 as interest expense during the three- and nine-month periods, respectively, ended December 31, 2003. Also during the three- and nine-month periods ended December
31, 2003, we accrued the contractual interest at a rate of 7.5%, or $51,136 and $153,408, 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 December 31, 2003 consolidated balance sheet net of the remaining unamortized discount of $1,828,788, plus the accrued interest of $132,534.



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 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 $222,750 of the discount as interest
expense during the three- and nine-month periods, respectively, ended December 31, 2003. Also during the three- and nine- month periods ended December 31, 2003, we recorded contractual interest of $89,098 and $267,294, respectively, on the 9% note.
During the nine months ended December 31, 2002, we amortized $192,225 of the discount as interest expense and contractual interest expense of $40,477 on the 9% note prior to the exchange, and $230,922 on the 7.5% note after the exchange. The note is
reflected on the December 31, 2003 consolidated balance sheet net of the remaining unamortized discount of $698,775, plus the accrued interest of $587,312.



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



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all accrued and unpaid interest in year three; or 100% of the principal amount thereof plus all accrued and unpaid interest thereafter.



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.



|6. | RELATED PARTY TRANSACTIONS
|-- | --------------------------



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 voting 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 voting 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 voting 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 voting
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 conversion



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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 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 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 first valid filing of relevant documentation with the Securities and Exchange Commission by February
29, 2004 to effect a reverse stock split or take such other corporate action, in each case to create a sufficient number of authorized shares of our common stock to permit the full conversion of all outstanding shares of Series H Preferred, then the
8% cumulative cash dividend on the Series H Preferred will not accrue or cumulate, and the holders of the Series H Preferred will have no right or entitlement thereto, for the period from September 30, 2003 until but not including June 1, 2004. If
we do not have a sufficient number of authorized but unissued shares of our common stock to permit the full conversion of the Series H Preferred on or prior to September 15, 2004, the Series H Preferred will become participating preferred stock,
entitling the holders upon a liquidation of the Company to receive the liquidation preference of such stock and to share ratably in any distributions received by our common stockholders on an as-converted basis.



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.



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 subordinated
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 (SOFTBANK), and Draper Fisher
Jurvetson ePlanet Ventures L.P., Draper Fisher Jurvetson ePlanet Partners Fund, LLC, and Draper Fisher Jurvetson ePlanet Ventures GmbH & Co. KG (DFJ ePlanet).



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.



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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 December 31, 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 voting 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 Holdings, Inc. and OptiMark, Inc. OptiMark, Inc. is a wholly-owned subsidiary of OptiMark Holdings, Inc. and is also the parent company of OptiMark Innovations, Inc. Mr. Warshaw is paid a base salary and a guaranteed bonus by
OptiMark, Inc. We reimbursed OptiMark, Inc. 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 December 31, 2002, we
reimbursed OptiMark, Inc. $137,261 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, Inc.
for a total price of $241,126. We also entered into a services agreement with OptiMark, Inc. on January 1, 2003, whereby we provide office space and certain technology and communications support personnel to OptiMark, Inc. and OptiMark, Inc.
provides to us certain administrative support personnel. We owed a balance of $34,529 to OptiMark, Inc. for the computer equipment, consulting services and the net amount payable to OptiMark, Inc. under the services agreement as of
December 31, 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) 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



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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.



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 was 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 nine months ended December 31, 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 nine months ended December 31, 2002 for the issuance of these shares.



|7. | 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 nine-month periods ended December 31, 2003 and 2002 because we have incurred net losses; therefore, the effect of our dilutive securities is anti-dilutive in those periods.



|8. | 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 $3,010,370 and $2,824,060, respectively, for the three months ended December 31, 2003 and 2002, and $7,978,036 and $9,890,648, respectively, for the nine months ended December 31, 003 and 2002.



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|9. | SUBSEQUENT EVENTS
|-- | -----------------



Stock Option Grants



On
January 30, 2004, in recognition of past services in their capacity as directors of Vie, the Board of Directors approved the grant of 3,509,026 stock options to each of the following directors:



Carmine F. Adimando

Jonathan F. Foster

William A. Lupien

Roy S. Neff

Howard J.
Schwartz

Robert J. Warshaw



These options were granted on February 3, 2004 and will remain exercisable for a period of ten years in the case of Messrs. Lupien and Warshaw, and until
February 17, 2005 in the case of Messrs. Adimando, Foster, Neff and Schwartz, who resigned from the Board of Directors effective February 17, 2004. Such options constitute the sole compensation provided by the Company to the directors for their
service to the Company in 2003 as directors and Audit Committee and Special Committee members.



Reverse Stock Split



We
filed a preliminary proxy statement with the Securities and Exchange Commission on February 17, 2004 in connection with the proposed amendment of our Certificate of Incorporation to effect a 1-for-100 reverse stock split of our common stock. The
terms of our Series H preferred require that by February 29, 2004 we either (i) file a proxy statement with the Securities and Exchange Commission to enable us to effect a reverse stock split of our common stock or (ii) take other corporate action,
in each case to create a sufficient number of authorized shares of our common stock to permit the full conversion of all outstanding shares of Series H convertible preferred stock. If we accomplish either, dividends in respect of the Series H
preferred will neither accrue nor cumulate for the period from September 30, 2003 until but not including June 1, 2004. If we do not have a sufficient number of authorized but unissued shares of our common stock to permit the full conversion of the
Series H preferred on or prior to September 15, 2004, the Series H preferred will become participating preferred stock, entitling the holders upon a liquidation of the Company to receive the liquidation preference of such stock and to share ratably
in any distributions received by our common stockholders on an as-converted basis.



Under Delaware law, adoption of the reverse stock split amendment requires the affirmative vote of the holders of a majority of the outstanding common and preferred voting stock. Under the certificates of designations
for our Series G preferred and our Series H preferred, holders of our Series G preferred and our Series H preferred vote together as a single class with holders of our common stock on an as-converted basis. The Series H preferred stock constitutes
60.6% of the aggregate voting stock. Holders of the Series H preferred have entered into an agreement under which they have agreed to vote all of their voting stock in favor of either a reverse stock split or an increase in the number of authorized
shares of our common stock sufficient to permit the full conversion of the Series H preferred.



Upon the recommendation of the Companys special committee of independent directors, adoption of the reverse stock split amendment is conditioned upon the requirement that the holders of a majority of the
Minority Shares do not vote against such amendment (the reverse majority-of-the-minority condition). Minority Shares means outstanding shares of our common stock owned other than by OptiMark Innovations Inc., holders of
outstanding shares of our Series G preferred (and the common stock into which such shares are convertible) and holders of outstanding shares of our Series H preferred (and the common stock into which such shares are convertible). This voting
condition was imposed upon the recommendation of the special committee to permit the holders of a majority of the Minority Shares to determine whether the reverse stock split will occur by enabling them to affirmatively vote against such
transaction. These devices were imposed at the request of the special committee to provide holders of the Minority Shares with rights to which they would not otherwise have been entitled.



Upon the further recommendation of the special committee, even if the holders of a majority of the Minority Shares do not
affirmatively vote against the reverse stock split amendment and such amendment otherwise is approved by the vote of a majority of the voting stock, all fractional shares resulting therefrom will be rounded up to the nearest whole share and,
accordingly, all holders of record of our common stock immediately prior to the



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effective date of the reverse stock split will remain holders of record of at least one whole share immediately following the reverse stock split. In other
words, if the reverse stock split amendment is adopted, every stockholder of record immediately prior to the effective date of the reverse stock split will continue to be a stockholder in the Company.



Holders of our Series H preferred stock have agreed that if the reverse stock
split amendment is not approved for any reason, they will take action by written consent to amend our Certificate of Incorporation to increase our authorized shares of common stock to a number that is at least sufficient to permit the conversion of
our Series H preferred and the conversion or exercise of all other currently outstanding shares of preferred stock, options, warrants and notes convertible for, or entitling their holders to purchase, shares of our common stock.



At the Annual Meeting of Stockholders of the Company held on September 18,
2003, stockholders approved a one-for-two reverse stock split of our common stock. The one-for-two reverse stock split was never effectuated. The one-for-two reverse stock split would not have generated a sufficient number of shares of common stock
available for issuance in connection with the Companys issuance of Series H Preferred on September 30, 2003 and October 9, 2003, which funding was not contemplated at the time the one-for-two reverse stock split was approved and recommended by
the Board of Directors. The 1-for-100 Reverse Stock Split is in lieu of, and not in addition to, the one-for-two reverse stock split.



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|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 provide through our broker-dealer 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 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. Further, during the three months ended December 31, 2003, we merged Vie Institutional Services and REB Securities, Inc. into their 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 sources, thereby protecting our client trade information. Our trading products include Limit VWAP, Point-to-Point
VWAP, Best Efforts VWAP and other program trade execution products, including our Execution through Statistical Prediction (Vie ESP). We expect the added value of our intelligent systematic program trading tools will become an attractive addition to
our flagship VWAP products, and we anticipate a larger percentage of our revenues to be derived from these offerings as we continue to grow. We collect commissions from our customers and pay fees to our liquidity partners and trade
execution venues 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
December 31, 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 executives and a majority of non-executive employees. We also reduced our
headcount by 50% to 21 employees during the nine months ended December 31, 2003. We have secured additional liquidity partners, 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 December 31, 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 voting stock. SOFTBANK and DFJ ePlanet are also investors in Innovations, which controls approximately 88% of



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our outstanding common stock and 26% of the aggregate voting rights with respect to all classes of our common and preferred voting stock.



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 nine months ended December
31, 2003 consist of commissions earned on a per share basis from our customers use of our trading services. 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 nine months ended December 31, 2003 would have been increased by $610,891 and $2,439,639, respectively.



Results of Operations



For the
Three Months Ended December 31, 2003 Compared to the Three Months Ended December 31, 2002



We incurred a net loss from continuing operations totaling $3,009,980, or $0.00 per share, for the three months ended December 31, 2003, compared to
$2,823,939, or $0.00 per share, for the three months ended December 31, 2002. The increase in net loss is a result of a $98,949 decrease in the loss from operations, despite a $1,342,341 restructuring charge in the current period, and an aggregate
increase in non-operating expenses of $284,990.



Revenues
totaled $2,208,800 for the three months ended December 31, 2003, and $830,119 for the three months ended December 31, 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 December 31, 2003, partially offset by a decrease in the average commission rate. Our top customer generated approximately 15% of the revenues during the three-month period ended December 31, 2003.
Approximately 55% and 13%, respectively, of the revenues during the three-month period ended December 31, 2002 were from transactions with two customers. The increase in the number of shares traded during the three months ended December 31, 2003
compared to the same period last year is a result of new customer acquisitions and additional product offerings during the current year period.



Salaries and employee benefits decreased 39.4% to $863,004 for the three-month period ended December 31, 2003 from $1,423,891 for the three-month period
ended December 31, 2002. The decrease is primarily due to salary reductions and a decrease in the number of employees. During the three-month periods ended December 31, 2003 and 2002, we employed an average of 23 and 42 employees, respectively,
including those participating in the furlough programs. This decrease in the number of employees was part of our plan to reduce operating expenses, and was a result of our view that employee head count and related costs were too high in relation to
the level of revenues that were being generated. It should be expected that we will add employees in the near term as necessary in response to the growth of our business, in terms of customer acquisitions and revenues.



Professional fees decreased 24.3% to $278,947 during the three months ended
December 31, 2003 from $368,678 during the three months ended December 31, 2002. The decrease was a result of consulting and recruiting expenses incurred in the period last year that were not incurred during the current year period, partially offset
by an increase in legal fees in the current period. During the three months ended December 31, 2002, we paid $122,622 in consulting fees to OptiMark for development of software related to our VWAP trading system and we paid recruiting costs of
$31,286 related to the hiring of our CEO. We incurred approximately $196,000 in legal fees during the



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three months ended December 31, 2003 compared to approximately $96,000 in legal fees during the three months ended December 31, 2002 as a result of funding
transactions and the proposed reverse stock split in the current period.



Brokerage, clearing and exchange fees increased to $1,256,986 for the three months ended December 31, 2003 from $403,900 for the three months ended December 31, 2002. This increase in transaction costs reflects the
increase in shares executed on behalf of our customers during the three months ended December 31, 2003 as compared to the three months ended December 31, 2002. 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 liquidity partners and our trading algorithms to provide liquidity for our customers orders during the three months ended December 31, 2003.
Although we have negotiated lower transaction fees with these liquidity partners and with other vendors for clearing and execution services, we have also begun to increase the portion of our risk-based order flow we send to our liquidity partners.
As a result, we expect these variable fees to increase as our revenues derived from risk-based trading increase.



Depreciation for the three-month period ended December 31, 2003 decreased 67.1% to $68,698 from $208,750 for the three-month period ended December 31,
2002, primarily as a result of the write-off of assets in connection with our restructuring as well as a portion of our assets becoming fully depreciated during the current period. Capital expenditures were $26,178 and $107,732 for the three months
ended December 31, 2003 and 2002, respectively.



We recorded a
loss on principal trading activities of $165,939 and $114,522 during the three months ended December 31, 2003 and 2002, respectively. The increase in the trading loss during the three months ended December 31, 2003 reflects the use of our trading
algorithms to provide liquidity to our customers. We provided liquidity at the VWAP to our customers during the period by using a combination of liquidity partners and our proprietary trading algorithms. The variable cost of providing this liquidity
is reflected in the loss on trading activities and in the fees we pay to the liquidity partners, 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 algorithms 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 liquidity partners in June 2003. We expect to continue to utilize a mix of liquidity partners and proprietary or licensed trading algorithms over the next fiscal year. This mix allows us to have a greater degree of control over risk and,
consequently, have more consistent profit margins than experienced in the past.



Selling, general and administrative expenses totaled $613,309 and $789,751 for the three months ended December 31, 2003 and 2002, respectively. The 22.3% decrease is primarily a result of a decrease in insurance
premiums and rent and occupancy costs. Insurance premiums decreased approximately $88,600 or 35% 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. Rent and occupancy costs decreased approximately $26,000 and telephone and related communications costs
decreased approximately $38,000 in the current period as a result of consolidating our Philadelphia and New York offices.



In connection with the relocation of our offices from Philadelphia to New York, we recorded restructuring charges of $1,342,341 during the three months
ended December 31, 2003. The charges include $197,083 in severance to be paid to terminated employees, $645,917 related to our lease obligations on the Philadelphia office location, and $499,340 related to the disposition and impairment of assets,
including furniture and fixtures, computer equipment and our Philadelphia Stock Exchange memberships.



Interest income decreased to $1,749 for the three months ended December 31, 2003 from $8,380 for the three months ended December 31, 2002, as a result of
the lower average cash and cash equivalents balances.



Interest
expense of $631,305 for the three months ended December 31, 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
$278,193 related to the subordinated convertible notes with the SOFTBANK and DFJ ePlanet entities. Interest expense of $351,972 for the three months ended December 31, 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).



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For the Nine months Ended December 31, 2003 Compared to the Nine months Ended December 31, 2002



We incurred a net loss from continuing operations totaling $7,977,626, or
$0.01 per share, for the nine months ended December 31, 2003, compared to $9,890,648, or $0.02 per share, for the nine months ended December 31, 2002. The decrease in net loss is a result of a $2,123,037 decrease in the loss from operations,
partially offset by an aggregate increase in non-operating expenses of $210,855.



Revenues totaled $6,937,589 for the nine months ended December 31, 2003, and $1,668,061 for the nine months ended December 31, 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 nine months ended December 31, 2003.Our top three customers generated approximately 25% and 10%, respectively, of the revenues during the nine-month period ended December 31, 2003.
Approximately 66% and 11%, respectively, of the revenues during the nine-month period ended December 31, 2002 were from transactions with two customers. The increase in the number of shares traded during the nine months ended December 31, 2003
compared to the same period last year is a result of new customer acquisitions and additional product offerings during the current year.



Salaries and employee benefits decreased 19.1% to $3,347,881 for the nine-month period ended December 31, 2003 from $4,137,918 for the nine-month period
ended December 31, 2002. The decrease is primarily due to salary reductions and a decrease in the number of employees. During the six-month periods ended December 31, 2003 and 2002, we employed an average of 30 and 42 employees, respectively,
including those participating in the furlough programs. This decrease in the number of employees was part of our plan to reduce operating expenses, and was a result of our view that employee head count and related costs were too high in relation to
the level of revenues that were being generated. It should be expected that we will add employees in the near term as necessary in response to the growth of our business, in terms of customer acquisitions and revenues



Professional fees decreased 33.2% to $717,749 during the nine months ended
December 31, 2003 from $1,074,525 during the nine months ended December 31, 2002. The decrease was primarily a result of a decrease in outsourced labor and temporary personnel costs of approximately $178,000, and a decrease in recruiting expenses of
approximately $150,000. Outsourced labor and temporary personnel costs for work on the development of our trading systems, and recruiting fees related to the hiring of our CEO were not incurred this year.



Brokerage, clearing and exchange fees increased to $3,898,539 for the nine
months ended December 31, 2003 from $1,151,915 for the nine months ended December 31, 2002. This increase in transaction costs reflects the increase in shares executed on behalf of our customers during the nine months ended December 31, 2003 as
compared to the nine months ended December 31, 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 liquidity partners and our trading algorithms to provide
liquidity for our customers orders during the nine months ended December 31, 2003. Although we have negotiated lower transaction fees with these liquidity partners and with other vendors for clearing and execution services, we have also begun
to increase the portion of our risk-based order flow we send to our liquidity partners while we focus on continuing to improve our algorithms. As a result, we expect these variable fees to increase further as revenues from risk-based trading
increase.



Depreciation for the nine-month period ended
December 31, 2003 decreased 47.4% to $335,062 from $636,578 for the nine-month period ended December 31, 2002, primarily as a result of the write-off of assets in connection with our restructuring as well as a portion of our assets becoming fully
depreciated during the current period. Capital expenditures were $54,289 and $177,849 for the nine months ended December 31, 2003 and 2002, respectively.



We recorded a non-cash compensation charge of $720,000 during the nine months ended December 31, 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 $1,782,513 and $265,866 during the nine months ended December 31, 2003 and 2002, respectively. The
increase in the trading loss during the nine months ended December 31, 2003 reflects the use of our trading algorithms to provide liquidity to our customers. We provided



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liquidity at the VWAP to our customers during the period by using a combination of liquidity partners and our proprietary trading algorithms. The variable
cost of providing this liquidity is reflected in the loss on trading activities and in the fees we pay to the liquidity partners, 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 algorithms 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 nine-month period ended December 31, 2003. 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 liquidity partners in June 2003. We expect to continue to utilize a mix of liquidity partners and proprietary or licensed trading algorithms over the next fiscal year. This mix allows us to have a greater degree of
control over risk and, consequently, have more consistent profit margins than experienced in the past We engaged in limited principal trading during the nine months ended December 31, 2002 to test our proprietary trading algorithms and provide
limited liquidity to our customers.



Selling, general and
administrative expenses totaled $1,959,559 and $2,250,351 for the nine months ended December 31, 2003 and 2002, respectively. The 12.9% decrease is primarily a result of an decrease in insurance premiums and marketing and advertising expenses. The
$173,000 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. Marketing and advertising expenses increased approximately $140,000 as a result of the launch of our name change and branding initiative during the nine
months ended December 31, 2002. No such costs were incurred during the nine months ended December 31, 2003.



In connection with the relocation of our offices from Philadelphia to New York, we recorded restructuring charges of $1,342,341 during the nine months
ended December 31, 2003. The charges include $197,083 in severance to be paid to terminated employees, $645,917 related to our lease obligations on the Philadelphia office location, and $499,340 related to the disposition and impairment of assets,
including furniture and fixtures, computer equipment and our Philadelphia Stock Exchange memberships.



Interest income decreased to $9,630 for the nine months ended December 31, 2003 from $44,717 for the nine months ended December 31, 2002, as a result of
the lower average cash and cash equivalents balances.



Interest
expense of $1,485,147 for the nine months ended December 31, 2003 was comprised primarily of $562,500 related to the secured convertible note that we executed with Innovations on May 7, 2002, $490,044 related to the secured note with RGC, and
$425,451 related to the subordinated convertible notes with SOFTBANK and DFJ ePlanet. Interest expense of $1,132,668 for the nine months ended December 31, 2002 was comprised primarily of $485,565 related to the secured convertible note that we
executed with Innovations, $423,147 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 nine months ended December 31, 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 $233,852 for the nine-month period ended December 31, 2003 and 2002, respectively. The prior year amount is comprised primarily of the $189,653 write off of our equity investment in Kingsway-ATG Asia, Ltd.
and the $44,200 write-down of our equity investment in Gomez, Inc.



Liquidity and Capital Resources



At December
31, 2003, we had total assets of $4,684,172 compared to $4,600,065 at March 31, 2003. Current assets at December 31, 2003 totaled $4,159,802 and current liabilities from continuing operations were $1,502,444. To date, we have recognized recurring
operating losses and have financed our operations primarily through the issuance of equity securities. As of December 31, 2003, we had an accumulated deficit of $107,445,162 and stockholders deficiency of $3,122,853, which raises doubt as to
our ability to continue as a going concern. Our



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plan is to align our ongoing operating costs with expected revenues over the near term to enable us to continue operating until we are able to generate
sufficient revenues to fund our operations. There is no assurance however 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 with the objective of allowing us greater pricing flexibility and increased
revenues.



At December 31, 2003, our principal source of
liquidity was cash and cash equivalents of $3,333,035 and receivables from brokers, dealers and other of $595,056, compared to cash and cash equivalents of $2,250,601 and receivables from brokers, dealers and other of $736,306 at March 31, 2003.



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. On October 9, 2003, we issued an additional 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. 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, the holders would 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 and DFJ ePlanet at the initial conversion price, we would be required to issue 656,783,637 and 281,478,701 shares of common stock, respectively.



During the nine months ended December 31, 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 15,016,827 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 for at least the next 12 months
with our current cash position, including the proceeds from the series G preferred and the series H preferred we sold in the current fiscal year, and cash flows from operations. 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 we will be able 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.



Included in our cash and receivables balances at December 31, 2003 is approximately $3.1 million that is invested in the net capital of our broker-dealer
operations. We believe that our current cost structure and 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 through strategic relationships, which financing 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.



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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 6 to the Unaudited 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 December 31, 2003, we have accumulated losses of approximately $107 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 the combination of current cash and receivables, cash flows from operations and cost savings from 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 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 35% of the revenues earned during the nine months ended
December 31, 2003 were from transactions with two customers that each individually comprised greater than 10% of the total revenues for the period. During the three months ended December 31, 2003, neither one of those customers individually
comprised greater than 10% of our revenues, yet a third customer comprised approximately 15% of the 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.



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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 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 partners, 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 December 31, 2003 was $3,333,035 and receivables from brokers, dealers and others was $595,056. Included in our cash and receivables balances was approximately $3.1 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.



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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 common 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 and an additional 15,016,827 shares of our common stock upon exercise of warrants. 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, DFJ ePlanet or the series G
preferred holders 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.



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 filed a preliminary proxy statement with the Securities and Exchange Commission on February 17, 2004 in connection with the proposed amendment of our Certificate of Incorporation to effect a 1-for-100 reverse stock
split of our common stock. The purposes of the reverse stock split are to create a sufficient number of authorized but unissued shares of our common stock to permit the full conversion of the series H preferred and the conversion or exercise of all
other existing convertible securities, for future issuances of common stock or convertible securities, and to reduce the number of outstanding shares of common stock to a number that is more comparable with the market capitalization of similar
companies in our industry. Upon the recommendation of the Companys special committee of independent directors, our minority stockholders have been provided rights in connection with the reverse stock split with respect to voting and fractional
shares, to which they would not otherwise have been entitled (see Note 9 to the Unaudited Consolidated Financial Statements).



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.



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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 December 31, 2003, we have outstanding options and warrants that may be exercised for an aggregate of 225,716,536 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 senior management changes will impact our business direction



Our future success depends upon the experience, skills and working
relationship of our management team. Since May 7, 2002, we experienced a complete change in the members 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 during the current fiscal year. 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.



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 voting 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



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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.



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.



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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 algorithms 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.



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.



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



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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 our trading support system 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 algorithmss, 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.



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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.



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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.



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|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 if the DOL has not
issued a final decision within 180 days of the filing of the complaint. On January 30, 2004, the former employees filed a complaint in the United States District Court for the Eastern District of Pennsylvania. Although we believe the allegations are
without merit, the outcome of these proceedings 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



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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 October 9, 2003, we sold 15,000 shares of our series H convertible preferred stock, par value $0.01, to certain investors for gross proceeds of
$1,500,000 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 5 to the Consolidated Financial
Statements.



On October 9, 2003, DFJ ePlanet converted the
outstanding principal balance and accrued interest on its existing subordinated convertible notes, or $1,062,889, into 10,629 shares of our series H convertible preferred stock. On October 29, 2003, SOFTBANK converted the outstanding principal
balance and accrued interest on their notes, or $1,493,333, into 14,933 shares of our series H convertible preferred stock. We did not receive any proceeds as a result of either conversion transaction.



|ITEM 5. | OTHER INFORMATION
|------- | -----------------



By letter dated February 9, 2004, Messrs. Carmine F. Adimando, Jonathan F. Foster, Roy S. Neff and Howard J. Schwartz delivered to the Companys
Board of Directors their resignation as directors (and, in the case of Messrs. Foster and Adimando, their further resignation as members of the Companys audit committee (the Audit Committee), and in the case of each of Messrs.
Adimando, Foster, Neff and Schwartz, their further resignation as members of the Companys special committee of independent directors (the Special Committee)) effective as of 5:00 p.m., New York City time, on February 17, 2004.
Messrs. Adimando, Foster, Neff and Schwartz comprised all of the Companys independent directors, as that term is defined in Rule 4200 of the Nasdaq Marketplace Rules (the Independent Directors), and Messrs. Adimando and
Foster comprised all of the members of the Audit Committee. As a result of such resignations, the Companys Board of Directors will have no Independent Directors and the Audit Committee will have no members. In view of the Companys OTC
bulletin board and supermajority controlled status, and its consequent assessment of corporate governance practices and requirements at this time, the Company does not presently intend to fill the director vacancies or nominate for election
replacement directors following the resignations of Messrs. Adimando, Foster, Neff and Schwartz. The resignations are intended to take effect after the Audit Committee has reviewed and approved for filing with the Securities and Exchange Commission
this Quarterly Report on Form 10-Q for its fiscal quarter ended December 31, 2003.



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



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



|          |  |                                                                                                              
|--------- |  | -------------------------------------------------------------------------------------------------------------
|Exhibit # |  | Description*                                                                                                 
|          | 
|4.1       |  | Third Certificate of Amendment of the Certificate of Designations 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
| | --- | -------------------



On January 6, 2004, we filed a Current Report on Form 8-K to disclose the appointment of Daniel A. Nole and the resignation of James S. Pak, each as Chief
Financial Officer of the Company, and to disclose the filing of the Second Certificate of Amendment of the Certificate of Designations of the Series H Convertible Preferred Stock.



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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: February 17, 2004 |  |  |  | By:                       |  | /s/    DANIEL A. NOLE
|                        |  |  |  |                           |  |                       | 
|                        |  |  |  |                           |  |                       |  | Daniel A. Nole         
|                        |  |  |  |                           |  |                       |  | Chief Financial Officer



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