**EXHIBIT 99.1**

 

**RISK FACTORS**

 

Statements inthis Form 10-Q that are not historical facts are “forward-lookingstatements” (as defined in the Private Securities Litigation Reform Act of1995). Forward-looking statements include, but by way of example only, statementsregarding the Company’s Strategic Plan, and projections regarding financialimpacts of planned organizational re-alignment, outsourcing projects, newproduct roll-out and cost reductions in general. These statements, when made,are intended to reflect VIA management’s then current views with respect tofuture events and expectations and are subject to a number of risks,assumptions and uncertainties, including those discussed below, which couldcause our actual results to differ materially from those projected in suchstatements.

 

***WEHAVE A HISTORY OF NEGATIVE CASH FLOW AND WE MAY NEVER ACHIEVE POSITIVECASH FLOW.***

 

For the three months ended March 31, 2003, we had a net loss fromcontinuing operations of $5,475.  Inorder to provide continuing global support to our operations, enable them todeliver quality customer service, and in order to develop an adequate financialreporting infrastructure, we will continue to make significant ongoingexpenditures for systems and staff. While we have significantly reduced ournegative cash flow from 2001 to 2002 on a year over year basis, and from thefirst quarter of 2002 to the first quarter of 2003, we may reach a point wherewe cannot further reduce our net use of cash from investing and operatingactivities without material increases in revenues. If we are unable to increaseour revenue or otherwise scale down our costs and investment expenditures, wewill continue to experience negative cash flow.

 

***WEARE IMPLEMENTING A NEW BUSINESS PLAN, WHICH MAY NOT BE SUCCESSFUL.***

 

We have begun several significant new business initiatives in 2003 as apart of our 2003-2005 Strategic Plan to improve operational effectiveness,reduce costs and promote growth. This plan may not be successful and may causethe Company to incur additional costs. Our Strategic Plan builds on theprogress we made in 2002 during which we focused heavily on reducing costs,rationalizing our operations and generally stabilizing the financial conditionof the Company. Hence, in 2002 we significantly reduced headcount, implementedstrong spending controls, sold our operations in Mexico, Argentina, Brazil,Austria and Ireland and closed our office in Belgium. Our Strategic Plancontinues the focus of 2002 to returning to a path towards profitability butnow calls for organizational-wide change. The planned changes, objectives andthe risks associated with those objectives are noted below:

 

•                                          We are reorganizing our operations alongfunctional lines away from the previous country orientation and focus. Webelieve that this functional re-alignment will in the long term enable VIA topermit the more efficient sharing of best practices and the use of commonplatforms throughout the enterprise as well as reduce our overall operatingcosts. The reorganization will also permit VIA to take better advantage ofcross–border sales and marketing opportunities in our selected markets.However, this reorganization of our operations to a functional matrixorganization may increase costs in the near term. We may incur additional costsas functional teams across all the countries may require increased travel tocoordinate their efforts and share core values. We will also incur significantone-time severance payments as we pursue our plan to streamline theorganization. We plan to engage in further significant headcount reductions in2003, which may result in employment-related litigation claims and relatedincreased costs. These additional costs may materially affect our operatingresults. In addition, the reorganization efforts may create significantdistraction for our executive team, which may negatively affect our operatingresults.

 

•                                          We are currently engaged in negotiations withvendors relating to the outsourcing of certain network, IT, finance andadministration systems and processes. While our goals in these actions are toreduce costs, create organizational efficiencies, enhance the standardizationof processes and improve internal controls, we may experience differingoutcomes. We cannot be assured that the outsourcing provider will be able todeliver the desired results. Our outsourcing providers’ systems may not proveto provide the level of service and functionality that we anticipated and mayhave unanticipated and substantial technological or operational weaknesses. Ouruse of outsource providers for certain key operational functions will requireus to rely on the contractual relationships we maintain with the third partyproviders and we will not be able to control directly the quality of service orlevel of cooperation we receive in connection with these functions. As aresult, we may lose a certain degree of day-to-day control over these functionsand we will be dependant on the continued adherence to contractual servicedescriptions and service level agreements. We may experience disputes withoutsourcing providers to secure our rights or address service issues. Any oneor more of these issues may affect negatively our ability to deliver qualityservice to our customers or deliver accurate financial reporting on ouroperations and may increase our costs, which will negatively affect our resultsof operations.

 

•                                          Our product development plans call for theintroduction of more sophisticated products and services such as IP VPN

 

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service as well as products that will add to our ability of providing asingle-source communications solution to our customers, such as voice service.We intend to rollout these new products and services by partnering withtechnology vendors and other third party providers. The development and rolloutof these new products and services will depend on our ability to identifyvendors and providers who can provide a quality and dependable service andsuccessfully negotiate agreements with these vendors and providers that enableVIA to deliver the products and services profitability to our customers. Ournew product development plan will also depend on our ability to integrate thesale, provisioning and billing of the new products and services into our salesforce training and into our systems and processes. Our target of reaching netcash flow break-even during the course of 2004 depends, in part, onsuccessfully introducing these new products and services.  If we are unsuccessful in these efforts orif we encounter any significant delay in introducing the new products andservices, our ability to reach our goal of reaching the break-even point at thenet cash flow level and profitability during the course of 2004 may benegatively impacted.

 

•                                          We are pursuing a strategy of channeling our baseproducts such as access and shared web-hosting to our indirect channels,enabling our sales force to focus on selling the more sophisticated, highermargin, value-added services we offer and plan to offer. In order to addressthis strategy, we must upgrade our direct sales force through the hiring of newsales professionals, talent development and training programs and the resettingof compensation plans. The termination of sales staff, efforts to recruit newsales professionals and the training of our sales force may distract us fromgenerating or impair our ability to generate new revenues. As a result, ouroperating results may suffer. As we reorganize our sales force to meet therequirements of the new sales model, we may experience higher turnover and theloss of more key salespersons than anticipated. If this occurs, our operatingresults will suffer.

 

•                                          While our management is focused on implementingour new business plan, technological evolution will continue. If we do not keeppace with these changes, we may fail to attract and retain customers, whichwould reduce our revenues. The Internet services market has been characterizedby changing customer needs, frequent new service and product introductions,evolving industry standards and rapidly changing technology. Our success willdepend, in part, on our ability to recognize and respond to these changes in atimely and cost-effective manner.

 

***THERESTRUCTURING OF OUR ORGANIZATION MAY RESULT IN AN INABILITY TO RETAINKEY PERSONNEL.***

 

As a part of our Strategic Plan, we plan to shift from our currentgeographical focused organization to a functional matrix organization. Theimplementation of our plan may result in greater organizational uncertainty,low morale and a resulting higher than anticipated turnover of staff. Theannouncement of this re-orientation of the organization has led and maycontinue to lead to the departure of key employees. The loss of key employeesmay result in the loss of institutional knowledge and experience that could bedifficult to replace. If we are unable to find suitable replacements for anyone or more of these key employees, our ability to execute on our StrategicPlan may be negatively impacted.

 

***WEMAY NOT REALIZE THE ANTICIPATED FINANCIAL OR COMMERCIAL BENEFITS AND MAY SUFFERMATERIAL LOSS AS A RESULT OF OUR DECISION TO OUTSOURCE CERTAIN SYSTEMS ANDPROCESSES RELATED TO FINANCE AND ADMINISTRATION FUNCTIONS.***

 

We have experienced operational difficulties in the past in our effortsto upgrade or deploy new back office systems. Our decision to outsource certainfinance and administration systems and processes may result in unanticipateddifficulties. We have experienced customer and billing data integrity issues inthe past; we have developed both automated and manual additional processes andcontrols to address these issues and reduce the possibility of future dataintegrity problems. However, the process of transitioning our control overthese functions may result in the loss of data or new data integrity issuesassociated with transferring data to third–party providers systems.Establishing proper systems and system interfaces to enable a successfultransition to the shared service center may prove time consuming and requireadditional costs. We believe we have taken into consideration all costsassociated with outsourcing; however, we cannot be assured that we haveaccounted for all hidden costs, transition costs and management costs; this mayall lead to increased costs of services rather than a reduction in the costs ofservices.

 

Our outsourcing providers will provide their own personnel to manageour services. This will result in a reduction of our own organizationalcompetencies, specifically certain IT expertise and finance functions. Ourability to maintain an alignment between the outsourced IT and financefunctions with our strategy as that may change from time to time might also bereduced. If this occurs, we will be less able to successfully serve ourcustomers and compete effectively in our market space.

 

Unanticipated degradation of service quality and increased overallservice costs are two major issues relating to outsourcing. We may experience adegradation of service levels such as poor response time, poor turnaround timeor a failure to maintain software and system upgrades. We may discover thatvendor applications do not meet our requirements and vendor personnel may failto provide quality service due to low compensation schemes and a lack of adirect interest in our success. As a consequence of service degradation, ouroverall service costs may rise. Any such degradation of service may lead to adeterioration of our relationship with the vendor, which could

 

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distract our senior management,increase our costs and impact our operations.

 

In the event we experience service degradation we may wish torepatriate the outsourced services or terminate our relationship with theprovider and procure a different provider. As the number of providers islimited, it may be difficult or even impossible to transfer to anotherprovider. Further, because our outsourcing plans call for a significantreduction in staff we may lack the ability in the short term to repatriate theservices. This may create a situation where we are in essence locked-into anailing relationship with the outsourcing provider. Contractual difficulties mayalso impede our ability to terminate the outsourcing relationship. This maylead to disputes and litigation, which will be costly and will distract ourmanagement team.

 

***OUTSOURCINGAND OTHER COST CUTTING MEASURES MAY IMPACT OUR ABILITY TO ATTRACT AND RETAINEMPLOYEES AND CUSTOMERS.***

 

We have and will continue to take steps to reduce our costs, includingthe outsourcing of certain network, IT and finance and administrationfunctions. We reduced our combined employee count to 546 by March 31, 2003and will further reduce staff as a result of outsourcing and the functionalre-alignment of our organization.  Weanticipate that by the end of 2003, we will have reduced our headcount to lessthan 400.  These measures may impair ourability to attract and retain key employees. As a result of staff reduction, wemay lose valuable institutional knowledge and thereby have internal andoutsourced staff that are less experienced and attuned to our business. As wecontinue these cost cutting measures, we may also impair our ability to providequality service, attract new customers and implement integrated operating,administrative and financial controls.

 

***IFDEMAND FOR INTERNET SERVICES IN OUR MARKETS DOES NOT GROW AS WE EXPECT, OURABILITY TO GROW OUR REVENUES WILL BE NEGATIVELY AFFECTED.***

 

We are focusing our sales and marketing efforts on more sophisticatedvalue–added services in the Internet market. If the market opportunitiesfor our current and planned Internet services fail to develop, or develop moreslowly than expected, we may not be able to increase our revenues at the ratewe have projected. Obstacles to the development of Internet services in ourmarkets include:

 

•                                          concern by customers of economic viability ofservice providers and the Internet industry in general,

 

•                                          failure of regulators to take adequate steps toprevent incumbent telecommunications providers from abusing their economicpower,

 

•                                          lack of developed infrastructure to supportInternet applications and access to broadband services,

 

•                                          limited access to Internet services.

 

In particular, we depend on increasing demand for Internet services bysmall to mid-sized businesses in our markets. Demand for Internet services bythese businesses will depend partly on the degree to which these businesses’customers and suppliers adopt the Internet as a means of doing business, andpartly to the extent by which these businesses adopt Internet technologies todeal with internal business processes, such as internal communications. Demandwill also depend on whether there is a continuing economic downturn in thesemarkets, which may result in a cutback of expenditures for the services weoffer. Furthermore, as competitive pressures drive down customer prices forInternet access in many of our markets, we depend increasingly in such marketson our ability to sell to our customers higher margin, value added servicessuch as security services, web hosting, and ecommerce solutions. Due to anincreasing number of business failures in the Internet services industry in ourcore markets, an increase in customer reluctance to rely on third party serviceproviders in the Internet services industry for critical business functions mayalso reduce our revenue growth and increase our cost of sales by lengtheningsales cycles.

 

***COMPETITIONFOR CUSTOMERS IN OUR MARKETS MAY CAUSE US TO REDUCE OUR PRICES OR INCREASESPENDING, WHICH MAY NEGATIVELY AFFECT OUR REVENUES AND OPERATING RESULTS.***

 

There are competitors in our markets with more significant marketpresence and brand recognition and greater financial, technical and personnelresources than we have. Although the competitors we face vary depending on themarket and the country, these competitors may include local and regionalInternet services providers, telecommunication companies and cable companies.Some of our competitors, especially the telecommunications companies, havelarge networks in place as well as a significant existing customer base. As aresult of this competition, we may face significant pressure to reduce ourprices, particularly with respect to Internet access services, and to improvethe products and services we offer.

 

***SOMECOMPANIES WITH WHICH WE DO BUSINESS MAY HAVE FINANCIAL DIFFICULTIES THAT WOULDPREVENT THEM FROM PROVIDING THE SERVICES THEY HAVE AGREED TO PROVIDE US.***

 

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In January 2002, Global Crossing and certain other affiliatedsubsidiaries filed for U.S. bankruptcy protection and in August, SingaporeTechnologies Telemedia Pte. Ltd. and Hutchison Whampoa Ltd. enteredinto an agreement to have a controlling interest of Global Crossing, atransaction that is currently undergoing U.S. regulatory review. InDecember 2002, the Global Crossing restructuring plan was confirmed by thebankruptcy court and the company expects to emerge from bankruptcy protectionas a reorganized Company in the first half of 2003. Global Crossing hascontinued to maintain service on the trans– Atlantic rings on which wehave acquired IRU capacity and we have not experienced degradation of serviceor performance since the bankruptcy announcement. Global Crossing has publiclystated its intention to continue most or all of its network services uponreorganization; however, in light of the pending acquisition there is noguarantee that the new owners will honor Global Crossing’s representations. Ifservice on our trans-Atlantic IRU is interrupted or terminated because ofcurrent or future financial difficulties or decisions made in the course of thebankruptcy proceedings of Global Crossing, peering and transit relationships wehave in place from our pan-European backbone network will provide contingencyand quality backup capabilities for our Internet traffic to reach U.S.destinations. However, if we are required to rely on these peering and transitrelationship for all of our trans-Atlantic traffic, we may incur additionalcosts and experience a lesser quality of service in reaching non-Europeandestinations. There can be no assurances that Global Crossing will continue toprovide service on the facilities on which we acquired trans-Atlantic capacity,and in such an event, our ability to provide quality levels of IP service maybe impacted.

 

***OURBRAND NAMES AND TRADEMARKS ARE DIFFICULT TO PROTECT.***

 

We are aware of other companies using or claiming to have rights to usetrademarks that are similar to our marks and variations of those marks, includingthe VIA NET.WORKS mark. We have received from time to time demands from thirdparties to cease and desist using one or more of our trademarks. The users ofthese or similar marks may be found to have senior rights if they were ever toassert a claim against us for trademark infringement. If an infringement suitwere instituted against us, even if groundless, it could result in substantiallitigation expenses in defending the suit. We are currently engaged inlitigation with a third party in Portugal, who claims that the corporate nameand trademark used in Portugal infringes upon their mark and corporate name. Ifthis suit were to be successful, we could be forced to cease using the mark orcorporate name and perhaps pay damages. Moreover, if we are forced to stopusing any of our trademarks, we may have to expend significant resources toestablish new brands and our operating results may be materially impacted.

 

***WEHAVE BEEN NAMED AS A DEFENDANT IN A SECURITIES CLASS ACTION LAWSUIT, WHICHCOULD DISTRACT OUR MANAGEMENT AND IMPACT OUR CASH POSITION.***

 

On November 5, 2001, we were named as a defendant in a classaction lawsuit in the District Court for the Southern District of New Yorkagainst VIA NET.WORKS, Inc., certain of the underwriters who supported ourinitial public offering (“IPO”) and certain of our officers, under the titleO’Leary v. Via Net.works [sic] et al [01-CV-9720] (the “Complaint”). An amendedcomplaint was filed in April 2002. The Complaint alleges that theprospectus we filed with our registration statement in connection with our IPOwas materially false and misleading because it failed to disclose, among otherthings, that: (i) the named underwriters had solicited and receivedexcessive and undisclosed commissions from certain investors in exchange forthe right to purchase large blocks of VIA IPO shares; and (ii) the namedUnderwriters had entered into agreements with certain of their customers toallocate VIA IPO shares in exchange for which the customers agreed to purchaseadditional VIA shares in the aftermarket at pre-determined prices (“Tie-inArrangements”), thereby artificially inflating the Company’s stock price. TheComplaint further alleges violations of Sections 11, 12(a)(2) and 15 of theSecurities Act of 1933 and Section 10(b) of the Securities Exchange Act of1934 and Rule 10b-5 promulgated thereunder arising out of the allegedfailure to disclose and the alleged materially misleading disclosures made withrespect to the commissions and the Tie-in Arrangements in the prospectus. Theplaintiffs in this action seek monetary damages in an unspecified amount.Approximately 300 other issuers and their underwriters have had similar suitsfiled against them, all of which are included in a single coordinatedproceeding in the Southern District of New York (the “IPO Litigation”).

 

On July 1, 2002, the underwriter defendants in the consolidatedactions moved to dismiss all of the IPO Litigations, including the actioninvolving the Company. On July 15, 2002 the Company, along with other non-underwriterdefendants in the coordinated cases also moved to dismiss the litigation. OnFebruary 19, 2003, the court ruled on the motions. The Court granted theCompany’s motion to dismiss the claims against it under Rule 10b-5 forlack of the required specificity, yet granted plaintiffs leave to replead theirRule 10b-5 claims. Plaintiffs have informed our counsel of their intent toreplead these claims against the Company. The motions to dismiss the claimsunder Section 11 of the Securities Act were denied as to virtually all ofthe defendants in the consolidated cases, including the Company. The individualdefendants in the IPO Litigation signed a tolling agreement and were dismissedfrom the action without prejudice on October 9, 2002.

 

The defense of this action may distract our senior management from thenormal operation of business and may cause us to incur substantial defensecosts. We continue to believe the court will find no wrongdoing on the part ofVIA or our officers; however, if we are determined to be liable or if weconclude that a settlement is in our best interests, we may incur substantialcosts.

 

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***FLUCTUATIONSIN THE EXCHANGE RATE BETWEEN THE U.S. DOLLAR AND THE VARIOUS CURRENCIES IN WHICHWE CONDUCT BUSINESS MAY AFFECT OUR OPERATING RESULTS.***

 

We record the revenues and expenses of our local operations in theirhome currencies and translate these amounts into U.S. dollars for purposes ofreporting our consolidated results. As a result, fluctuations in foreigncurrency exchange rates may adversely affect our revenues, expenses and resultsof operations as well as the value of our assets and liabilities. Fluctuationsmay adversely affect the comparability of period-to-period results. For example,if the average value of the Euro decreases in relation to the U.S dollar duringa quarterly period as compared to the prior period, each Euro will convert tofewer U.S dollars during that quarterly period than the prior period and wewill report lower revenue growth than what would have been calculated in localcurrencies for that period. In addition, we hold foreign currency balances thatwill create foreign exchange gains or losses, depending upon the relativevalues of the foreign currency at the beginning and end of the reportingperiod, affecting our net income and earnings per share. In projecting futureoperating results, we make certain assumptions about the fluctuation of thehome currencies of our operations. If these assumptions turn out to bematerially inaccurate, our actual operating results may be materially differentfrom our projections.

 

***REGULATORYAND ECONOMIC CONDITIONS OF THE COUNTRIES WHERE OUR OPERATING COMPANIES ARELOCATED ARE UNCERTAIN AND MAY DECREASE DEMAND FOR OUR SERVICES, INCREASE OURCOST OF DOING BUSINESS OR OTHERWISE REDUCE OUR BUSINESS PROSPECTS.***

 

Our operating companies are located in countries with rapidly changingregulatory and economic conditions that may affect the Internet servicesindustry. Any new law or regulation pertaining to the Internet ortelecommunications, or the application or interpretation of existing laws,could decrease demand for our services, increase our costs, or otherwise reduceour profitability or business prospects. Specific examples of the types of lawsor regulations that could adversely affect us include laws that

 

•                                          impose taxes on transactions made over theInternet,

 

•                                          impose telecommunications access fees on Internetservices providers,

 

•                                          directly or indirectly affect telecommunicationscosts generally or the costs of Internet telecommunications specifically,

 

•                                          prohibit the transmission over the Internet ofvarious types of information and content,

 

**•**                                          impose requirements on Internet services providersto protect Internet users’ privacy, monitor content, or to permit governmentinterception of data traffic and

 

•                                          increase the likelihood or scope of competitionfrom telecommunications or cable companies.

 

For example, a number of European countries have enacted legislationthat requires Internet services providers to establish technical means topermit national authorities to intercept data traffic of identified customers.The application of these laws to Internet services providers has been subjectto significant opposition from Internet services providers industry groups inGermany, the U.K. and the Netherlands, among others, because of the substantialcost service providers would incur in order to comply with the law. Ultimately,these requirements may impose significant costs on our European operations inthese countries, which would negatively impact our operating results. Theselaws could require us to incur costs to comply with them or to incur newliability. They could also increase our competition or change our competitiveenvironment so that customer demand for our products and services is affected.

 

In addition to risks we face from new laws or regulations, we faceuncertainties in connection with the application of existing laws to theInternet. It may take years to determine the manner in which existing lawsgoverning issues like property ownership, libel, negligence and personalprivacy will be applied to communications and commerce over the Internet.

 

***WERELY ON TELECOMMUNICATIONS PROVIDERS IN OUR MARKETS TO PROVIDE OUR CUSTOMERSWITH RELIABLE ACCESS TO OUR SERVICES, AND FAILURES OR DELAYS IN PROVIDINGACCESS COULD LIMIT OUR ABILITY TO SERVICE OUR CUSTOMERS AND IMPACT OUR REVENUESAND OPERATING RESULTS.***

 

Our customers typically access our services either through their normaltelephone lines or dedicated lines provided by local telecommunicationsproviders specifically for the purposes of accessing the Internet. In some ofour markets, we experience delays in delivery of new telephone or dedicatedlines that prevent our customers from accessing our services. These delaysresult in lost revenues. Additionally, some local telecommunications providersthat provide Internet services provide delivery of telephone or dedicated linesto their own Internet customers on a preferential basis, which may cause us tolose current and potential customers. We also lease network capacity fromtelecommunications providers and rely on the quality and availability of theirservice. These companies may experience disruptions of service, which could disruptour services to, or limit Internet access for, our customers. We may not beable to replace or supplement these services on a timely basis or in acost-effective manner, which may result in customer dissatisfaction and lostrevenues. In

 

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addition, to the extent thatalternative local access providers fail in any particular market, the incumbenttelecommunications providers will experience less competitive price pressurefor access, which could increase our cost structures and impair our profitmargins.

 

***WEDEPEND ON THE RELIABILITY OF OUR NETWORK, AND A SYSTEM FAILURE OR A BREACH OFOUR SECURITY MEASURES COULD RESULT IN A LOSS OF CUSTOMERS AND REDUCED REVENUES.***

 

We are able to deliver services only to the extent that we can protectour network systems against damages from telecommunication failures, computerviruses, natural disasters and unauthorized access. Any system failure,accident or security breach that causes interruptions in our operations couldimpair our ability to provide Internet services to our customers and negativelyimpact our revenues and results of operations. To the extent that anydisruption or security breach results in a loss or damage to our customers’data or applications, or inappropriate disclosure of confidential information,we may incur liability as a result. In addition, we may incur additional coststo remedy the damages caused by these disruptions or security breaches.Although we currently possess errors and omissions insurance and businessinterruption insurance these policies may not provide effective coverage uponthe occurrence of all events.

 

***WEMAY BE LIABLE FOR INFORMATION DISSEMINATED OVER OUR NETWORK.***

 

We may face liability for information carried on or disseminatedthrough our network. Alternatively, we may incur costs associated with effortsto prevent access to certain information from our network as required bygovernmental authorities. Some types of laws that may result in our liabilityfor information disseminated over our network include:

 

•                                          laws designed to protect intellectual property,including trademark and copyright laws,

 

•                                          laws relating to publicity and privacy rights andlaws prohibiting defamation,

 

•                                          laws restricting the collection, use and processingof personal data and

 

•                                          laws prohibiting the sale, dissemination orpossession of offensive or pornographic material.

 

The laws governing these matters vary from jurisdiction tojurisdiction.

 

***WECANNOT ASSURE YOU OF THE CONTINUED LISTING OF OUR COMMON STOCK ON THE NASDAQSMALLCAP MARKET.***

 

On March 21, 2002, we received a letter from The Nasdaq StockMarket, Inc. indicating that our common stock had failed to meet Nasdaq’scontinued listing requirement that the common stock trade above $1.00 per sharebecause it traded below $1.00 per share for the preceding 30 consecutivetrading days. Nasdaq informed us that, if the bid price of shares of our commonstock did not close at or above $1.00 for at least 10 consecutive trading daysprior to June 19, 2002, we would be notified that our common stock wouldbe delisted from the Nasdaq National Market. Nasdaq also notified us that wecould apply to list our common stock on the Nasdaq SmallCap Market, on which wewould be afforded up to an additional 270 days to regain compliance withNasdaq’s minimum bid price and other continued listing requirements.

 

On June 18, 2002, the Company applied to transfer listing of itscommon stock to the Nasdaq SmallCap Market. On June 25, 2002, Nasdaqnotified the Company that its application to transfer from the National Marketto the SmallCap Market was approved and effective at the opening of the marketon June 27, 2002. On September 18, 2002, Nasdaq notified us that wehad been provided an additional 180 days, until March 17, 2003 toregain compliance by meeting all continued listing standards.

 

On March 7, 2003, Nasdaq filed with the Securities and ExchangeCommission a proposed rule changes that would, among other things, extend untilDecember 31, 2004 its pilot program relating to compliance periods for bidprice criteria for all Nasdaq National Market and Nasdaq SmallCap Marketissuers. Nasdaq designated the proposed rule as “non-controversial” under SECrules, which renders the rule effective immediately upon filing. The proposalwould allow Nasdaq SmallCap issuers who demonstrate compliance with the threecore SmallCap initial listing criteria, to benefit from an extended compliancegrace period in order to satisfy the minimum bid price requirements. The bidprice grace period would be immediately extended for an additional90 days. In a separate rule filing, Nasdaq will propose further extensionsto the bid price compliance periods to increase the current 180 day graceperiod to up to 540 days (approximately 18 months) in total. As ofMay 9, 2003, VIA’s common stock had not traded above the minimum bid price forten (10) consecutive trading days. On March 18, 2003, we received aletter from the Nasdaq Stock Market indicating that as of March 17, 2003,we had failed to regain compliance with the minimum bid price requirement.Nasdaq noted that VIA met the initial listing requirement for minimumstockholders’ equity. It further stated that under the new rule, VIA would beprovided 90 days, until June 16, 2003, in order to regain compliancewith the minimum bid price requirements.

 

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In order tomaintain its listing on the Nasdaq SmallCap Market, VIA must maintaincompliance with the continuing listing standards for the SmallCap Market, whichinclude: minimum stockholders’ equity of $2.5 million, a public float of500,000 shares, market value of publicly held shares of $1 million, atleast two market makers and a minimum bid price of at least $1.00 per share.VIA currently meets all of the standards other than the $1.00 per share bidprice.

 

In connection with our upcoming 2003 Annual Meeting of Shareholders, tobe held May 22, 2003, we have filed with the Securities and ExchangeCommission  and distributed to ourshareholders a proxy statement seeking approval by our shareholders of a numberof proposals, including among other items, to provide VIA’s board of directorsthe authority to amend the Articles of Incorporation of the Company to effect areverse split of its shares.  A reversestock split would reduce the number of issued and outstanding shares of ourcommon stock and therefore, may have the effect of increasing the trading priceof such shares. However, although we believe that implementation of a reversestock split is a satisfactory mechanism to achieve compliance with The NasdaqSmallCap Market’s maintenance requirements, there can be no assurance that,even if the bid price for our common stock exceeds the $1.00 minimum thresholdfor the mandated period as a result of a reverse stock split, The NasdaqSmallCap Market will deem us to be in compliance with the listing rules andwill not de-list our common stock.  Inaddition, we cannot assure you that even if we satisfied Nasdaq’s minimum bidprice maintenance standard, our common stock would not be de-listed by Nasdaqfor other reasons.

 

There can be no assurance that VIA’s common stock will come intocompliance with Nasdaq’s minimum bid price requirement before June 16,2003. Nor can we assure you that we will be able to maintain compliance withNasdaq’s other requirements for listing on Nasdaq’s SmallCap Market. If ourcommon stock is delisted from the Nasdaq SmallCap Market, we could trade on theOTC Bulletin Board, which is substantially less liquid than either the NasdaqNational Market or the SmallCap Market. If VIA’s common stock is delisted fromthe Nasdaq markets, the trading market for our common stock could be disrupted,which could make it difficult for investors to trade in our common stock andmay result in a reduction in the market price of shares of our common stock.This lack of liquidity would also make it more difficult for us to raisecapital.

 

***REACTIONBY INVESTORS OR REGULATORS TO RESTATEMENTS OF OUR FINANCIAL RESULTS MAYADVERSELY IMPACT OUR REVENUES AND EXPENSES.***

 

During 2001, we restated our financial results for 2000 and for thefirst and second quarters of 2001. In August 2002, we restated ourfinancial results for the first quarter of 2002. Adverse investor reaction andinquiries by regulators may divert management’s attention from core businessneeds or strategic opportunities, reduce revenue opportunities or increasecosts.

 

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