**Exhibit 99.1**

 

**RISK FACTORS**

** **

Statements in this Form10-Q that are not historical facts are “forward-looking statements” (as definedin the Private Securities Litigation Reform Act of 1995). Forward-lookingstatements include, but by way of example only, statements regarding theCompany’s Strategic Plan, and projections regarding financial impacts ofplanned organizational re-alignment, outsourcing projects, new product roll-outand cost reductions in general. These statements, when made, are intended to reflectVIA management’s then current views with respect to future events andexpectations and are subject to a number of risks, assumptions anduncertainties, including those discussed below, which could cause our actualresults to differ materially from those projected in such statements.

 

***WE HAVE A HISTORY OFNEGATIVE CASH FLOW AND WE MAY NEVER ACHIEVE POSITIVE CASH FLOW***

 

For the three months ended March 31, 2004, we experienced a netloss from continuing operations of ($9.8) million. While we have reduced ournet loss from continuing operations, we will not be able to continue to supportour operations, deliver quality customer service, and improve our financialreporting infrastructure without material increases in revenues. Our immediategoal is to generate recurring and positive cash flows on a consolidated basis.This goal, however, is predicated on the assumption that we can increaserevenues and continue to reduce costs. If we are unable to increase ourrevenues or otherwise reduce our costs and investment expenditures, we willcontinue to experience negative cash flow.

 

***WE ARE IMPLEMENTINGA NEW BUSINESS PLAN, WHICH MAY NOT BE SUCCESSFUL***

 

In March 2003, we adopted a new business plan for 2003-2005. Wehave implemented many initiatives in 2003 and 2004 from the Strategic Plan andwill continue to do so in 2004-2005. This Strategic Plan calls for afundamental shift in our business model from a focus on dial-up and leased lineInternet access services to web-hosting and Internet security services. It alsoinvolves a fundamental shift in our operational approach through outsourcing anumber of administrative functions. The Strategic Plan may not succeed, mayresult in increased costs, and may not provide anticipated increased revenues.

 

***We have outsourced certainfunctions, and our providers may not deliver the anticipated level of serviceand functionality and may have substantial technological or operationalweaknesses.***

 

We have outsourced certain key network, IT, finance and administrationsystems and processes to third party vendors. We cannot be assured that thesethird parties will be able to deliver the anticipated and desired results.These third parties may not provide the anticipated level of service andfunctionality and may have substantial technological or operational weaknesses.This may increase our costs, which will negatively affect our results ofoperations. Our use of these outsource providers requires us to rely on thecontractual relationships we maintain with them and we will not be able tocontrol directly their quality of service or level of cooperation. As a result,we may lose a certain degree of day-to-day control over the outsourcedfunctions and we will be dependant on continued adherence to contractualservice descriptions and service level agreements. We may experience disputeswith outsourcing providers to enforce our rights or address service issues.These issues may affect negatively our ability to deliver quality service toour customers and deliver accurate financial reporting on our operations.

 

***The success of ourproduct development plans depends on our ability to identify vendors and otherswho can provide quality and dependable service and to successfully negotiateagreements with these vendors and providers so that we can deliver the productsand services profitably to our customers.***

 

Our product development plans call for the introduction of moresophisticated products and services as well as products that will enhance ourability to serve as a single-source provider of communications solutions. Whenwe launch new products and services, we typically partner with technologyvendors and other third party providers. The development and success of our newproducts and services depends on our ability to identify vendors and providerswho can provide quality and dependable service. In addition, we mustsuccessfully negotiate satisfactory agreements with these vendors and providersso that we can deliver the products and services profitably to our customers.Our success with new products and services and existing products and servicesalso depends on our ability to integrate sale, provisioning and billing forthese products and services into our sales force training and into our othersystems and processes. Our goal of generating recurring and positive cash flowson a consolidated basis depends, in part, on successfully introducing newproducts and services. Once products and services are launched we mustaggressively build market share in order to achieve the anticipated revenue forecastedfor the new products and services. If we are unsuccessful in our marketingefforts, encounter any significant delays in introducing new products andservices, or are unable to successfully sell new products and services oncethey have been introduced, our financial performance will be negativelyimpacted.

 

----

 

***Our sales forcereorganization into VIA Express and Industry Solutions requires us to upgradeour direct sales force, recruit reseller candidates and provide them withnecessary back-office solutions, and build or acquire end-to-end automatedcustomer acquisition, order entry, provisioning and billing solutions.***

 

Our new sales strategy requires that we focus our direct sales force onselling more sophisticated, high margin, value-added services and channel ourmore basic products such as access and shared web-hosting to indirect andweb-based sales. As a part of the new emphasis on our VIA Express channel, wemay reduce our direct sales force in certain country operations. Thetermination of sales staff, efforts to recruit new sales professionals and thetraining of our sales force may distract us from generating or impair ourability to generate new revenues. As a result, our operating results maysuffer. As we reorganize our sales force, we may experience higher turnover andthe loss of more key salespersons than anticipated. Our sales strategy alsocalls for enhancing our indirect and automated web sales capabilities. Thiscomponent of our strategy depends on successfully identifying and recruitingcapable reseller candidates and delivering back-office solutions enabling themto maximize sales opportunities, as well as address customer support issues.For web-based sales, our strategy depends on building or acquiring end-to-endautomated customer acquisition, order entry, provisioning and billingsolutions. If we fail to successfully implement and execute any one or more ofthese components, our sales strategy may not succeed and our operating resultswill be negatively impacted.

 

***We may not be ableto keep up with rapid technological and other competitive changes affecting ourindustry.***

 

The markets in which we compete are characterized by rapidconsolidation of competitors, changing technology, evolving industry standards,frequent enhancements to existing services and products, the introduction ofnew services and products and changing customer demands. These marketcharacteristics are heightened by the emerging nature of the Internet and thetrend for companies from many industries to offer Internet-based products andservices. In addition, the widespread adoption of new Internet, networking, ortelecommunications technologies or other technological changes could require usto incur substantial expenditures to modify or adapt our services or infrastructure.Our future success will depend on our ability to respond to changingtechnologies on a timely and cost-effective basis. Our operating results may beadversely affected if we cannot successfully develop, introduce, or market newservices and products. In addition, if we fail to anticipate or respondadequately to changes in technology and customer preferences, or anysignificant delays in other product development efforts, such failure couldhave a material adverse effect on our business, financial condition andoperating results.

 

***RESTRUCTURING OF OURORGANIZATION, CONSOLIDATION OF EXISTING FUNCTIONS AND ADDITIONAL EMPLOYEERESPONSIBILITIES MAY RESULT IN OUR INABILITY TO RETAIN OR RECRUIT KEY PERSONNEL***

 

In 2004, we plan to continue our efforts to reduce costs. These effortsinclude, but are not limited to, continuing initiatives to reduce customerchurn through standardization of churn measurements, programmed communicationsand new customer retention sales incentives, replacing non-performing salesprofessionals and refocusing our sales force, and refining our web sales toolto automate and standardize orders, pricing and other system data related toaccess services. Many of these measures will consolidate existing functions andrequire employees to take on additional responsibilities. In addition, thesemeasures may result in greater organizational uncertainty, low morale and ahigher than anticipated employee turnover. Over the past two years, we haveexperienced significant management turnover. Our success also depends onattracting and retaining key management, many of whom may be difficult toreplace. If we are unable to find suitable replacements for any one or more ofthese key employees, our ability to implement these measures and the success ofour Strategic Plan may be negatively impacted. There can be no assurances thatour operations will not suffer from unanticipated employee departures or fromour inability to quickly engage qualified replacements.

 

***OUR ACQUISITIONSTRATEGY MAY NOT ACHIEVE THE FAVORABLE RESULTS WE ARE SEEKING***

 

With significant improvements achieved in operations, we now seek toenhance our product portfolio and sales efforts by exploring the opportunityfor acquisitions. A proactive acquisition program brings with it certain risks,including the following:

 

•                                          Whilewe have established a small team of internal resources, we expect that broaderparticipation from management will be required in the course of the duediligence, negotiation and post-closing activities as suitable targets areidentified. Senior management may be distracted from normal executiveresponsibilities and implementation of the Strategic Plan. This may slow thepace of operational improvements and other, revenue generating, activities;

 

•                                          Wemay face significant integration issues in connection with acquisitions. Thismay distract senior management, create unanticipated costs and may cause thequality of our services to suffer, resulting in the loss of customers andrevenue; and

 

•                                          Wewill seek to build legal protections into acquisition agreements. However, wemay purchase undisclosed liabilities or experience lower than projectedoperating results in newly acquired companies, which could adversely affect ourfuture

 

----

 

operating results.

 

***WE MAY NOT REALIZETHE ANTICIPATED FINANCIAL OR COMMERCIAL BENEFITS FROM THE ACQUISITION OF THEAMEN GROUP***

 

In January of 2004, we acquired a group of European-basedweb-hosting companies with operations in France, Italy, Spain and the UnitedKingdom, the “Amen Group.” We may experience difficulties associated withintegrating the Amen Group’s businesses and systems that would result ingreater than anticipated costs. There may be delays in transitioning internaland industry knowledge from the Amen Group to our personnel, which coulddistract management, increase costs and restrict revenue opportunities. TheAmen Group business model may be subject to unforeseen price reductions inresponse to competition, which could reduce revenue without a correspondingreduction in cost.

 

***WE MAY NOT REALIZETHE ANTICIPATED FINANCIAL AND COMMERCIAL BENEFITS OF OUTSOURCING SOME OF OURFINANCIAL AND ADMINISTRATIVE FUNCTIONS AND AS A RESULT MAY SUFFER MATERIAL LOSS***

 

In the past, we have experienced operational difficulties with efforts toupgrade or deploy new back office systems. Our decision to outsource certainnetwork, IT, finance and administration systems to a shared service center mayresult in unanticipated difficulties such as loss or impairment of dataintegrity.

 

Our outsourcing providers provide their own personnel to manage theoutsourced functions. This results in a reduction of our own organizationalcompetencies and may create problems in coordinating these functions with thecontinued implementation of our Strategic Plan. We may also experience delaysin response or failure to maintain software and system upgrades. Outsourcingproviders may not meet our requirements and their personnel may fail to providequality service. As a consequence, our overall costs may rise. If we experiencedifficulties with a provider, we may wish to bring the outsourced services backin-house or terminate our relationship with the provider and procure adifferent provider. As the number of providers is limited, it may be difficultor even impossible to transfer to another provider. Further, because ouroutsourcing plans call for a significant reduction in staff we may lack theability in the short term to return the services in-house. Contractualdifficulties may also impede our ability to terminate the outsourcingrelationship. This may lead to costly and distracting disputes and litigation.

 

***FAILURE TO ATTRACTAND RETAIN SENIOR MANAGEMENT AND CERTAIN OTHER KEY EMPLOYEES MAY ADVERSELYAFFECT OUR ABILITY TO CONDUCT OUR BUSINESS***

 

Our future success depends on the continued service and performance ofour senior management and certain other key employees. In the past, we havebeen dependent on certain specialized systems personnel to operate, maintainand upgrade our systems. In an effort to reduce our costs, we have outsourcedmany of these responsibilities to outside personnel, who may be lessexperienced and less knowledgeable than our former employees. In the past wehave made significant headcount reductions and expect to make furtherreductions in the future. These reductions and our reliance on outsidepersonnel may impair our ability to attract and retain senior management andcertain other key employees. Our inability to attract and retain seniormanagement and certain other key employees could adversely affect our business,financial condition and operating results.

 

***IF DEMAND FOR OURPRODUCTS AND SERVICES DOES NOT INCREASE AS WE EXPECT, OUR ABILITY TO INCREASEOUR REVENUES WILL BE NEGATIVELY AFFECTED***

 

If the demand for our current and planned Internet services fails todevelop, or develops more slowly than we anticipate, we may not be able toincrease our revenues at the rate we have projected. Obstacles to demand forour products and services include:

 

•                                          publicconcern about the economic viability of Internet services providers and theInternet industry in general;

 

•                                          failureof regulators to take adequate steps to prevent incumbent and largertelecommunications providers from monopolizing the market;

 

•                                          lackof developed infrastructure to support Internet applications and access tobroadband services; and

 

•                                          limitedaccess to Internet services.

 

In particular, we depend on increasing demand for Internet services bySMEs. Demand by SMEs is dependent on the extent to which they and theircustomers and suppliers adopt the Internet as a means of doing business, andthey utilize Internet technologies to deal with internal business processes.Demand will also depend on whether there is a continuing economic downturn,which may result in reduced spending by SMEs on Internet products and services.Furthermore, as competition reduces prices for Internet access in many of

 

----

 

our markets, we are increasingly dependent on our ability to sellhigher profit margin services such as security services, web-hosting, andecommerce solutions. Finally, an increasing number of Internet servicesproviders are going out of business in our key markets. This results incustomer reluctance to rely on businesses such as ours for critical businessfunctions.

 

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

 

Some of our competitors have greater market presence, brand recognitionand financial, technical and personnel resources than we have. Although ourcompetitors and their resources vary depending on the market and the country,these competitors may include local and regional Internet services providers,telecommunications companies and cable companies. Some of our competitors, inparticular the telecommunications companies, have large existing networks andcustomer bases. Increasing competition may create pressure to reduce our priceswhile at the same time improving our products and services. There is no assurancethat the price and performance of our services and products will be superiorrelative to the services and products of our competitors. As a result, we mayexperience a loss of competitive position that could result in lower prices,fewer customer orders, reduced revenues, reduced profit margins and loss ofmarket share.

 

***OUR BRAND NAMES ANDTRADEMARKS ARE DIFFICULT AND COSTLY TO PROTECT AND AS A RESULT WE MAY BECOMEINVOLVED IN TRADEMARK INFRINGEMENT LITIGATION***

 

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,including the VIA NET.WORKS mark. The protective steps we have taken may beinadequate to deter misappropriation of our proprietary information. We may beunable to detect the unauthorized use of, or take appropriate steps to enforce,our intellectual property rights. The users of these or similar marks may befound to have senior rights if they were ever to assert a claim against us fortrademark infringement. If an infringement suit were instituted against us,even if groundless, it could result in substantial litigation expenses. Failureto protect our intellectual property adequately could harm our brand and affectour ability to compete effectively. Further, defending our intellectualproperty rights could result in the expenditure of significant financial andmanagerial resources, which could adversely affect our business, financialcondition and operating results.

 

We are currently engaged in litigation with a third partytelecommunications provider in Spain, who opposed the Spanish Trademarks andPatents Official Agency’s granting the Spanish Amen Group company the trademark“Amen.” The Spanish Trademarks and Patents Official Agency granted and authorizedthe Spanish Amen Group company the use of the trademark “Amen” within Spain.Nevertheless, the third-party telecommunications provider has appealed thisdecision. If this appeal were to be successful, we could be forced to ceaseusing the Amen mark and may be required to pay damages, although we believethat any such damages would be immaterial.

 

***FLUCTUATIONS IN THEEXCHANGE RATE BETWEEN THE U.S. DOLLAR AND THE VARIOUS CURRENCIES IN WHICH WECONDUCT BUSINESS MAY AFFECT OUR OPERATING RESULTS***

 

We record the revenues and expenses of our local operations in theirlocal 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. Fluctuationsin foreign currency exchange rates may also adversely affect the comparabilityof period-to-period results. For example, if the average value of the Eurodecreases in relation to the U.S dollar during a quarterly period as comparedto the prior period, each Euro will convert to fewer U.S dollars during thatquarterly period than the prior period and we will report lower revenue growththan what would have been calculated in local currencies for that period. Inaddition, we hold foreign currency balances that will create foreign exchangegains or losses, depending upon the relative values of the foreign currency atthe beginning and end of the reporting period, affecting our net income andearnings per share. In projecting future operating results, we make certainassumptions about the fluctuation of the home currencies of our operations. Ifthese assumptions turn out to be materially inaccurate, our actual operatingresults may be materially different from our projections.

 

***REGULATORY ANDECONOMIC CONDITIONS IN THE COUNTRIES WHERE WE OPERATE ARE UNCERTAIN, AND MAYDECREASE DEMAND FOR OUR SERVICES, INCREASE OUR COSTS, OR OTHERWISE REDUCE OURBUSINESS PROSPECTS***

 

Our operating companies are located in countries with rapidly changingregulatory and economic conditions that may affect the Internet servicesindustry. New laws or regulations pertaining to the Internet ortelecommunications, or the application or interpretation of existing laws andregulations, could decrease demand for our services, increase our costs, orotherwise reduce our profitability or business prospects. Examples of the typesof laws and regulations that could adversely affect us include laws that:

 

•                                          imposetaxes on transactions made over the Internet;

 

----

 

•                                          imposetelecommunications access fees on Internet services providers or otherincreases in access, transit or general telecommunications costs

 

•                                          prohibitthe transmission of various types of information and content over the Internet;

 

•                                          imposerequirements that Internet services providers protect users’ privacy, monitorcontent, or permit government interception of data traffic; and

 

•                                          increasethe likelihood or scope of competition from telecommunications or cablecompanies.

 

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 United Kingdom and the Netherlands, among others, because of thesubstantial cost Internet services providers would incur in order to complywith these laws. Ultimately, these requirements may impose significant costs onour operations in these countries, which would negatively impact our operatingresults. These laws could also increase our competition or change ourcompetitive environment so that customer demand for our products and servicesis affected adversely.

 

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.

 

***WE RELY ONTELECOMMUNICATIONS PROVIDERS IN OUR MARKETS TO PROVIDE OUR CUSTOMERS WITHRELIABLE ACCESS TO OUR SERVICES, AND FAILURES OR DELAYS IN PROVIDING ACCESSCOULD LIMIT OUR ABILITY TO SERVICE OUR CUSTOMERS AND IMPACT OUR REVENUES ANDOPERATING 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 and utilizing theInternet. Our customers are usually required to maintain their telephone lineto utilize certain of our resold voice services or must have a preexistingvoice service prior to switching to our voice service, depending on the resoldvoice service we offer. In some of our markets, we experience delays indelivery of new telephone or dedicated lines that prevent our customers fromutilizing our services. These delays result in lost revenues. Additionally,some local telecommunications providers that provide Internet services providedelivery of telephone or dedicated lines to their own Internet customers on apreferential basis, which may cause us to lose current and potential customers.We also lease network capacity and VPNs from telecommunications providers andrely on the quality and availability of their service. These companies mayexperience disruptions of service, which could disrupt our services to, orlimit Internet access for, our customers. We may not be able to replace orsupplement these services on a timely basis or in a cost-effective manner,which may result in customer dissatisfaction and lost revenues. In addition, tothe extent that alternative local access providers fail in any particularmarket, the incumbent telecommunications providers will experience lesscompetitive price pressure for access, which could increase our cost structuresand impair our profit margins.

 

***WE DEPEND ON THERELIABILITY OF OUR NETWORK AND SYSTEMS, AND A FAILURE OR A BREACH OF OURSECURITY MEASURES COULD RESULT IN A LOSS OF CUSTOMERS AND REDUCED REVENUES***

 

We are able to deliver services only to the extent that our network andsystems are protected against damages from technical, network or systemfailures, computer viruses, natural disasters and unauthorized access orintentional acts or omissions caused by third parties. Any failure, accident orsecurity breach that causes interruptions in our operations could impair ourability to provide services to our customers and negatively impact our revenuesand results of operations. To the extent that any disruption or security breachresults in a loss or damage to our customers’ data or applications, orinappropriate disclosure of confidential information, we may incur liability asa result. In addition, we may incur additional costs to remedy the damagescaused by these disruptions or security breaches. Although we currently possesserrors and omissions insurance and business interruption insurance, thesepolicies may not provide effective coverage upon the occurrence of a materialevent or a combination of events.

 

***WE MAY BE LIABLE FORINFORMATION 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. The laws governing these matters vary fromjurisdiction to jurisdiction. Some types of laws that may result in ourliability for information disseminated over our network include:

 

•                                          lawsdesigned to protect intellectual property, including trademark and copyrightlaws;

 

----

 

•                                          lawsrelating to publicity and privacy rights and laws prohibiting defamation;

 

•                                          lawsrestricting the collection, use and processing of personal data; and

 

•                                          lawsprohibiting the sale, dissemination or possession of offensive or pornographicmaterial.

 

----