<PAGE>
 
                                                                      Exhibit 99
                                   EXHIBIT 99

                          CAUTIONARY FACTORS UNDER THE
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
                                        

VirtualFund.com, Inc. desires to take advantage of the "safe harbor" provisions
contained in the Private Securities Litigation Reform Act of 1995 (the "Act").
Contained in this Form 10-K are statements which are intended as "forward-
looking statements" within the meaning of the Act. The words or phrases
"expects", "will continue", "is anticipated", "management believes", "estimate",
"projects", "hope" or expressions of a similar nature denote forward-looking
statements. Those statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from historical results or from
those results presently anticipated or projected. The Company wishes to caution
readers not to place undue reliance on forward-looking statements. Readers
should also be advised that the factors listed below have affected the Company's
performance in the past and could affect future performance. Those factors
include, but are not limited to, the risk that a product may not ship when
expected or may contain technical difficulties; uncertain demand for new or
existing products; the impact of competitor's advertising, products or pricing;
availability or reliability of component parts, including sole source parts;
manufacturing limitations; availability of sources of financing; economic
developments, both domestically and internationally; new accounting standards;
and, the impact of the initiation, defense and resolution of litigation.

Other factors include the following:

     Cash Needs.  The Company has a credit agreement with a commercial finance
company that has adequately financed its cash requirements in the past.
Previously, net operating losses in fiscal 1996 of $10,461,534 and fiscal 1997
of $17,199,688 resulted in a need for additional financing.  In September 1996,
projected cash requirements in excess of available sources required the issuance
of private placements of common stock and warrants to purchase common stock in
the Company. There can be no assurances that cash availability under the credit
agreement will be adequate to meet future needs, or that other sources of
financing would be available to the Company on favorable terms, or at all, if
the Company's operations are further affected by declining revenue from a lack
of sales or significant returns of existing products, introduction difficulties
with new product lines, competitive product introductions, or by market
conditions in general. In addition, there can be no assurance that the Company
can achieve or maintain profitability on a quarterly or annual basis in the
future.

     Potential Acceleration of Senior Debt.  The Company's Senior Debt Agreement
includes financial covenants, which the Company must meet.  Currently, the
Company is in compliance with all of the financial covenants required by its
Senior Lender.  For further information, refer to Form 10-K, Item 14(a)1.
Financial Statements, Note #5 of the Notes to Consolidated Financial Statements.
The financial performance of the Company in the past has made it necessary for
the Company to renegotiate the financial covenants to avoid being declared in
violation of the covenants by General Electric Capital Corporation. If future
financial performance were to cause covenant violations and the Company is
unable to renegotiate its loan covenants at that time, it could be forced to
seek replacement financing at prices which may not be favorable to the Company.
If adequate sources of financing are not available, the Company may be required
to sell certain product lines or technologies on less than favorable terms.   As
of June 30, 1998, no amounts were owed to the Company's Senior Debt Lender.
However, the Company anticipates additional borrowings under the agreement in
the future.

                                       1
<PAGE>
 
     Technology and Industry Pressures/Reliance on New Technology.  The pre-
press and wide-format color printing industries are highly competitive and are
characterized by frequent technological advances and new product introductions
and enhancements.  As product life cycles get shorter, the resulting consumable
stream generated by the installed base may be negatively impacted.  Accordingly,
the Company believes that its future success depends upon its ability to enhance
current products, to develop and introduce new and superior products on a timely
basis and at acceptable pricing, to respond to evolving customer requirements,
and to design and build products which achieve general market acceptance.

     New Product Design and Development.   The process of developing new
products involves adopting new and emerging technologies and components which
may not have product histories or long term use testing to establish expected
life cycles in the field or to assure long term field use.

     Product Quality Issues.  Any quality, durability or reliability problems
with existing or new products, regardless of materiality, or any other actual or
perceived problems with the Company's products could have a material adverse
effect on market acceptance of such new products.  Any quality problems with
components could result in "epidemic" or wide-spread failures of the products in
the field causing return and refund requests that would likely have a material
effect on the financial results of the Company and future sales potential.
There can be no assurance that such problems or perceived problems will not
arise with respect to any existing products.

     Product Acceptance/Market Anticipation.  There is no assurance the
Company's products will achieve market acceptance.  In addition, the market
anticipation or the announcement of new products and technologies, whether
offered by the Company or its competitors, could cause customers to defer
purchases of the Company's existing products, which could have a material
adverse effect on the Company's business and financial condition.

     The Company is currently undertaking a number of development projects and
has introduced a new family of printers, the DisplayMaker(R) 4000, 5000 and 6000
or HiRes 8-Color series, during September 1997. Two new versions of these
printers have been introduced since February 1998.  The DisplayMaker 7000 was
introduced in August 1998.  Sales of these and the related products comprise
approximately 43% of the Company's total revenues for fiscal 1998.
Additionally, in August 1998 the Company introduced the Giclee PrintMakerFA, an
8-Color HiRes drum-based printer.  Although the Company has had successes
introducing new products in the past, some earlier products have experienced
limited market acceptance, the introductions of some products have been delayed,
and the quality and reliability reputation of certain products may unfavorably
affect new products.  There can be no assurance that the Company will be
successful with the new DisplayMaker series or future product introductions,
that future market introductions will be timely and competitive, that future
products will be priced appropriately, or that future products will achieve
market acceptance.  The Company's inability to achieve market acceptance, for
technological or other reasons, could have a material adverse effect on the
Company's financial condition.

     Product Malfunction.  The Company is aware of intermittent customer issues
with the performance and formulation of certain inks used in the Company's
printers.  The Company has taken steps to address the ink issues with its
supplier.  However, failure to address ink functionality issues, or some other
failure of the product to perform as expected by the customer may result in
customer requests for compensatory supplies or other requests which could have a
material adverse effect on the Company's financial performance.

     Dependence on Suppliers.  The Company is dependent on sole source suppliers
for the heads for PressMate-FS(R) and DisplayMaker Express (DME).  Over the time
that the Company has worked with its 

                                       2
<PAGE>
 
supplier for the PressMate printheads, there have been quality and consistency
issues with the printheads supplied. The Company does not have a written
agreement with this supplier and cannot purchase the supplies from another
source. Currently, the Company does not sell significant numbers of the
PressMate-FS printers which utilize the sole-sourced component. However, the
Company has an installed base of printers who purchase consumables from the
Company and could experience head failure or need a replacement. Overall, the
percentage of the Company's revenues related to the product utilizing this head
is less than 7% of fiscal 1998 revenue. The Company is also dependent upon a
sole source supplier for the heads for the DME printer. Quality and consistency
of the printheads delivered by this supplier have also been a problem. Although
the Company currently sells very few new DME printers, there is an installed
base of printers who purchase consumables from the Company and could experience
printhead failure or require replacement. The Company has a written agreement
with the sole source supplier of the DME heads. The written agreement includes
the manufacturing specifications and directions which would allow a second
supplier to produce the printheads should the current supplier be unable to cure
any defaults under the manufacturing and supply agreement. The adverse effect
upon the Company if the Company were unable to resolve an issue with the
supplier, may be considered material if the effect were a significant increase
in the returns of the DME printer based on the inability to supply replacement
printheads. Overall, the percentage of the Company's revenues related to the
product utilizing this head is less than 9% of fiscal 1998 revenue.

     The Company's aqueous inkjet printers are based on a printhead supplied
pursuant to a written contract with Hewlett-Packard Company. The Company does
not anticipate availability or quality issues which would affect the supply of
printheads supplied by Hewlett-Packard Company (HP). The revenues of the Company
associated with sales of this product or products including those components
represent approximately 67% of the Company's fiscal 1998 revenue. If the Company
is unable to resolve a potential future availability or quality issue, the
Company's production, support of its installed base, and quality requirements
will be materially adversely affected.

     Competitive Pricing/Product Introductions.  Various potential actions by
any of the Company's competitors, especially those with a substantial market
presence, could have a material adverse effect on the Company's business,
financial condition and results of operations.  Such actions may include
reduction of product price, increased promotion, announcement or accelerated
introduction of new or enhanced products, product giveaways, product bundling or
other competitive actions.  Additionally, a competitor's entry into the wide-
format market in such ways as to compete more directly and effectively with the
Company's products could adversely affect operational results.

     Uncertainty Regarding Development of Wide-Format Market; Uncertainty
Regarding Market Acceptance of New Products. The Wide-Format market is
relatively new and evolving.  The Company's future financial performance will
depend in large part on the continued growth of this market and the continuation
of present Wide-Format printing trends such as use and customization of large-
format advertisements, use of color, transferring of color images onto a variety
of substrates, point-of-purchase printing, in-house graphics design and
production and the demand for limited printing runs of less than 200 copies.
The failure of the Wide-Format market to achieve anticipated growth levels or a
substantial change in Wide-Format printing customer preferences could have a
material adverse effect on the Company's business, financial condition and
results of operations.  Additionally, in a new market, customer preferences can
change rapidly and new technology can quickly render existing technology
obsolete.  Failure by the Company to respond effectively to changes in the Wide-
Format market, to develop or acquire new technology or to successfully conform
to industry standards could have a material adverse effect on the business and
financial condition and results of operations of the Company.

                                       3
<PAGE>
 
     Technological Advancements. The digital color inkjet printing market is
rapidly moving to two distinct technologies for the placement of ink on a
substrate: thermal inkjet cartridges and piezo-electric printheads. Any company
without a secure, economical source of one or both of these products will face
serious competitive pricing and margin pressures going forward.  The Company
currently has a license to remanufacture specific HP 300 dpi inkjet cartridges
for use in its wide-format, roll-fed color inkjet printers. HP has introduced a
new inkjet cartridge with a capability of producing output resolution of 600
dpi.  The Company has secured the use of this product in non-roll fed devices
and has introduced a product based on this cartridge.  However, the market for
non-roll fed devices is considered a low volume market niche by Company
management.  In addition, Lexmark has developed a 600 dpi inkjet cartridge.
Both companies are competitors in the wide-format color market.  At this time
the Company does not have a source of 600 dpi printheads for use on roll fed
printers.  The Company is considering several component suppliers in its search
for a dependable, manufacturable piezo-electric printhead.  No one source has
been identified for use in a future product as of this time.  Should the market
for wide-format color demand the increased resolution provided by these new
products and the Company be unable to secure adequate supplies at reasonable
prices or develop a reasonably priced substitute from other sources, the
Company's sales of printer engines and the related gross margins could be
negatively impacted.

     The Company's products target the market for high quality printing output.
Hardware and software technological advances have enhanced actual and perceived
resolution.  There is no assurance that other companies will not achieve actual
or apparent resolution with less expensive printers and supplies and therefore
capture the market held by higher cost printers.

     Expansion and Diversification to Software and Services Outside of the Core
Printer Business. The Company's continuing efforts to expand sales and increase
profits and desire to reposition itself as a diversified technology company is
stimulating a series of new product development activities.  Currently the focus
of these new business opportunities is primarily internet based software and
service businesses.  During this past year, the Company launched an electronic
commerce (e-commerce) initiative for selling specialty media for wide-format
printers under the brand name of Supplies.By.Air(TM).  Internet based software
and service activities represent an extension of many of the printing and
publishing tools which are integral to the core technology of the Company.  The
Company is currently developing a commercialization of its internet software and
has not generated any revenue from sales of this product.

     Expansion into technologies outside of the core hard-copy base printer
business involves significant risk.  Such risk includes, but is not limited to,
the following factors: New products may not meet customer needs or may face
significant competition from companies with lower overhead and product costs
and/or greater marketing and promotional budgets.  In addition, the Company may
not be able to attract and retain key personnel and it may not be able to
develop the products in the time needed to gain market acceptance.  Due to the
early stage development, the Company may not be able to predict product features
needed to gain market acceptance, development may require more time and
resources than anticipated for the development, or it may turn out that the
product can not be feasibly developed.  Diversification also carries the risk
that the new activity will distract management time and resources from focusing
on the core hard-copy based printer business.  In addition, diversification may
involve risks related to the resources required to participate in this new
business including, but not limited to, risks related to raising cash or
obtaining cash investments, doing business with one or more "partners" as a
partnership or joint venture, and risks related to acquisitions or other
combinations of businesses.

                                       4
<PAGE>
 
     Intense Competition. The computer printer industry is intensely competitive
and rapidly changing.  Some of the Company's existing competitors, as well as a
number of potential new competitors, have longer operating histories, greater
technical resources, more established and larger sales and marketing
organizations, greater name recognition, larger customer bases and significantly
greater financial resources than the Company, which may result in a competitive
advantage.  Suppliers of wide-format print engines and systems compete on the
basis of print quality, color, print time, print size, product features,
including ease of use, service, and price.  Competitive product sales practices
such as price reductions, increased promotion, product giveaways and bundling,
or announcement or accelerated introduction of new or enhanced products could
have a material adverse effect on the sales and financial condition of the
Company.  New product introductions and changes in pricing structure by
competitors have had, and can be expected to continue to have, a significant
impact on the demand for the Company's products.  Currently, Hewlett-Packard has
announced and is supplying a new 54-inch wide-format inkjet printer.  ENCAD has
announced and is shipping a new version of its printer line with 600 dpi
cartridges.  These products are expected to compete for market share with the
Company's current DisplayMaker 5000, 6000 and 7000 series of printers.  It is
possible that the Company's sales of certain products will compete with, or
displace sales of, other products sold by the Company.

     The Company's DisplayMaker HiRes 8-Color series and DesignWinder product
platforms products are based on relatively new technology, are complex and must
be reliable and durable to achieve market acceptance and enhance revenue
opportunities. Development and production of new, complex technologies and
products often have associated difficulties and delays. Consequently, customers
may experience unanticipated reliability and durability problems that arise only
as the product is subjected to extended use over a prolonged period of time.
There can be no assurance that the Company has completely resolved operational
problems that have occurred in the past or that the Company will successfully
resolve any future problems in the manufacture or operation of the Company's
existing printers or any new product. Failure by the Company to resolve
manufacturing or operational problems with its existing printers or any new
product in a timely manner could have a material adverse effect on the Company's
business, financial condition and results of operations.

     The Company's HiRes 8-Color DisplayMaker series of printers and the
DesignWinder product platforms utilize HP licensed inkjet technology.  The
Company also purchases licensed inkjet cartridges from HP who is a sole source
of the cartridge component for the Company's aqueous ink consumable offerings.
The Company also competes with HP in the wide-format digital color printing
market.  Both Companies design and market wide-format printing devices.
Currently, the Company has been granted access to these and selected new
technologies for use in its products and pays a royalty for those rights.
Revenues associated with the sale of these products or products including those
components represented approximately 67% of the Company's fiscal 1998 revenues.
As new technologies are developed, there can be no assurance the Company will be
able to negotiate additional licenses for newly developed technologies or that
the new terms are equal to the terms currently in place.

     Certain companies that supply the Company with consumable products such as
ink and media compete with the Company by selling directly to users or selling
to competitors who may offer the products to the users. Additionally, OEM
private label ink products that may be used in the Company's own products may
compete with ColorSpan(R) products.  Further, a number of competitors have
introduced consumables which they allege to be compatible with the Company's
products and have priced the consumables below the ColorSpan-branded
consumables.

     Although the Company believes that its Big Color(R) products possess
certain advantages over the competitors' products, the increased competition has
impacted sales volumes and margins and may continue to impact volumes and
margins in the future.  The Company has generally competed in these markets by

                                       5
<PAGE>
 
introducing technologically advanced products that create new market demand and
products which offer optimum performance characteristics.  There can be no
assurance that the Company will be able to continue to innovate to the extent
necessary to maintain a competitive advantage in these markets or that other
competitors will not achieve sufficient product performance to achieve customer
satisfaction with their products offering better pricing or other competitive
features.

     Industry Consolidation. As a growth industry, the wide-format digital
printing market has generated many new entrants into the fragmented market with
new products and new technologies.  As the market matures, and the industry's
growth rate slows, companies with technological or manufacturing efficiency
advantages will emerge as the market leaders maintaining or increasing their
market share.  Those companies with less marketable advantages will face
significant pressure on revenue growth and gross margins.  In order to remain
competitive, the smaller companies within this sector may have to seek merger or
consolidation opportunities with other companies.

     If the Company were to merge with another company within the printer
industry, short-term financial results and the market price of the Company's
stock may be negatively impacted.  Merger or consolidation of competitors may
enhance the financial strength and competitive abilities of such competitor(s)
which could adversely affect the Company's sales and financial performance.

     Dependence on Component Availability and Costs. Certain components used in
the Company's current and planned products, including printer marking engines
and other printer components, are currently available from sole sources, and
certain other components are available from only a limited number of sources.
Substantially all of the Company's revenue is subject to these risks. The
Company has in the past experienced delays as a result of the failure of certain
suppliers to meet requested delivery schedules and standards of product
performance and quality. In addition, losses from operations of the Company have
in the past restricted cash availability and the ability to keep supplier debt
current or within the established credit limits. The potential requirement to
bring certain component suppliers' debt obligations current, or other
restrictions in credit terms of such component suppliers, could result in an
inability to manufacture certain product lines and thereby adversely affect the
financial performance of the Company. The Company's inability to obtain
sufficient supply of components, or to develop alternative sources, could result
in delays in product introductions, interruptions in product shipments, the need
to redesign products to accommodate substitute components or the need to
substitute alternative components which may not have the same performance
capabilities, any of which could have a material adverse effect on the Company's
operating results. A portion of the total manufacturing cost of the Company's
typesetting and Big Color products is represented by certain components whose
prices have fluctuated significantly in recent years. Significant increases or
decreases in the price or reductions in the availability of certain components
could have a material affect on the Company's operating results.

     The Company is dependent on a sole-source supplier for the printheads and
hot melt ink used in DisplayMaker Express.  The Company has experienced
availability and quality issues with this supplier that have affected shipping
schedules and customer satisfaction and have negatively impacted operating
results in the past.  While the Company has taken strong corrective measures in
dealing with this supplier, there can be no assurance that this supplier will be
able to meet the Company's production requirements in the future or that the
quality of on-going product supply will be acceptable.

     The Company sells consumable print media and inks for use with its Big
Color product line, and film used with the PressMate-FS.  The Company depends on
the availability of consumable products to support its installed base of print
engines.  There is no assurance that the suppliers of these consumables will
continue 

                                       6
<PAGE>
 
to offer their products to the Company, or that the consumable products will
continue to be available to the Company at the same quantity, pricing and terms.
The unavailability of consumable products or negative changes in quality could
adversely impact the market acceptance of the Company's new and existing
products, and may adversely affect sales of consumables.

     Fluctuations in Quarterly Operating Results. The Company's quarterly
results of operations have fluctuated and are expected to continue to fluctuate
significantly.  These fluctuations have been caused by various factors,
including, but not limited to: the timing of new product announcements; product
introductions and price reductions by the Company and its competitors; the
availability and cost of key components and materials for the Company's
products; fluctuations and availability in customer financing; the relative
percentages of sales of consumables and printer architectures; risks related to
international sales and trade; and general economic conditions.  In addition,
the Company's operating results are influenced by the seasonal buying patterns
of its customers, which have in the past generally resulted in reduced revenues
and earnings during the Company's first fiscal quarter.  Further, the Company's
customers typically order products on an as-needed basis, and, as a result,
virtually all of the Company's sales in any given quarter result from orders
received in that quarter.  The Company rarely operates with a backlog of orders
from quarter to quarter.  Certain products require significant capital
expenditures, causing some customers to delay their purchasing decision.  Delays
in purchases of low-volume, high-cost printers may cause significant
fluctuations in the sales volume for a given period.  Also, the Company's
manufacturing plans, sales staffing levels and marketing expenditures are
primarily based on sales forecasts.  Accordingly, deviations from these sales
forecasts may cause significant fluctuations in operating results from quarter
to quarter and may result in unanticipated quarterly earnings shortfalls or
losses.  Historically, a large percentage of orders have been received and
shipped near the end of each month.  If anticipated sales and shipments do not
occur, expenditure and inventory levels may be disproportionately high and
operating results could be adversely affected.

     Returns Reserves. The Company has established reserves for the return of
merchandise.  The amount of the returns reserve is based on historical data
regarding returns of products.  For new products there may be insufficient
information to accurately predict return rate and therefore the required reserve
may not be sufficient.  Additionally, there is no assurance that there will not
be an unknown or unanticipated problem with a product or any component thereof,
or a defect or shortage of repair components or the consumable media or inks
that are needed to use the product which could cause the actual returns to
exceed the reserves.  Returns of a product which exceed reserves could have an
adverse effect on the financial operations and results of the Company.

     Dependence on Consumables Revenues. The Company anticipates it will derive
an increasing component of its revenues and operating income from the sale of
ink, paper, film and other consumables to its customers.  During fiscal 1998,
consumables revenue was 59% of total revenue.  To the extent sales of the
Company's consumables are reduced because its customers are unsuccessful in
marketing their own printing services, product iterations by competitors and the
Company make the Company's products obsolete or customers substitute third-party
or private label consumables for those of the Company, the Company's results of
operations could be adversely affected.  Reduced life cycles of hardware
products are expected to negatively impact consumable revenues.  Further,
although the Company's consumables are manufactured specifically to operate with
its printing products to produce optimum results, there can be no assurances
that other manufacturers of printing inks and papers will not develop products
that can be sold and compete with the Company's printing products, or that other
products will not produce results which are satisfactory to the customer at a
lower cost.  The Company alleges that at least one manufacturer has improperly
used the Company's trade secrets to commence such competition.  Although the
Company is involved in legal action against such manufacturer for
misappropriation of trade secrets, there can be no assurances that other

                                       7
<PAGE>
 
manufacturers will not independently and legitimately develop competing
consumable products.  In addition, product quality issues, limitations in the
availability of sole source consumables or changes in credit or trade terms from
sole sources could adversely affect the sales of consumables.

     Intellectual Property and Proprietary Rights. The Company's ability to
compete effectively will depend, in part, on its ability to maintain the
proprietary nature of its technologies through patents, copyrights and trade
secrets.  Important features of the Company's products are incorporated in
proprietary software, some of which is licensed from others and some of which is
owned by the Company.  The Company attempts to protect its proprietary software
with a combination of patents, copyrights, trademarks and trade secrets,
employee and third-party nondisclosure agreements and other methods of
protection.  Despite these precautions, it may be possible for unauthorized
third parties to copy certain portions of the Company's products or to reverse-
engineer or obtain and use information that the Company regards as proprietary.
Further, the Company's intellectual property may not be subject to the same
level of protection in all countries where the products are sold.  There can be
no assurance that the measures taken by the Company will be adequate to protect
the intellectual property or that others will not independently develop or
patent products similar or superior to those developed, patented or planned by
the Company, or that others will not be able to design products which circumvent
any patents relied upon by the Company.

     The Company has been granted various United States patents for inventions
related to resolution of conventional laser printer engines, high-resolution
imaging and image enhancement and wide-format printing technologies and
techniques, the Company's Big Ink(TM) Delivery System, product patents, and
consumable formulations.  Additional patent applications are pending.  There can
be no assurance that patents will be issued from any of these pending
applications.  With regard to current patents or patents that may be issued,
there can be no assurance that the claims allowed will be sufficiently broad to
protect the Company's technology or that issued patents will not be challenged,
invalidated or violated, requiring expenditures of cash to pursue and enforce
the Company's rights in the patented technology.  Applications to patent the
basic TurboRes(R), ThermalRes(R) and Big Ink Delivery System approaches and
related technologies have been filed in selected foreign countries.  Patent
applications filed in foreign countries are subject to laws, rules and
procedures which differ from those of the United States, and there can be no
assurance that foreign patents will be granted as a result of these
applications.  Furthermore, even if these patent applications result in the
issuance of foreign patents, some foreign countries provide significantly less
patent protection than the United States.

     The Company relies on a variety of trademarks in the promotion and
identification of its products.  The Company has a variety of trademarks which
are registered, and others that are not registered, or cannot be registered.
There is no assurance that there will not be some challenge to the rights of the
Company to use one or more trademarks, or an allegation that the use or display
of one or more trademark violates the trademark rights of another party, which
could subject the Company to damages and losses related to the inability to use
recognized marks in the promotion of its products.

     Additionally, patent, copyright and trademark protection has not been
sought, or may not be available in all foreign countries.  Although the Company
has not received any notices from third parties alleging intellectual or
proprietary property infringement, there can be no assurance that third parties
will not assert infringement claims against the Company in the future or that
any such assertion will not require the Company to expend funds defending such
claims or requiring the Company to enter into royalty arrangements on such terms
as may be available, which may adversely affect financial performance of the
Company.  Any claim that the Company's current or future products or
manufacturing processes infringes on the proprietary rights of others, with or
without merit, could result in costly litigation which could adversely affect
the financial performance of the Company.

                                       8
<PAGE>
 
     The Company is actively pursuing development of new and unique print
solutions and processes, media and inks.  There are a significant number of
patents which are already filed relating to printing cartridges, printing
methods and processes, mechanical printer features, medias and inks.  Many of
these patents are held by companies which are larger and have greater resources
to pursue violation of intellectual property.  Although the research and
development process involves an analysis of protected proprietary rights in any
technology that is being pursued, there is no assurance that all applicable
patents have been completely reviewed and analyzed, or that competitors or
others will not interpret any such products or processes developed by the
Company as violating protected intellectual rights and pursue legal action,
which could be costly and may affect the financial performance of the Company.
In addition, although the Company does not have any knowledge of violations of
its intellectual property rights, there can be no assurance that the Company
will not be forced to take action to protect its intellectual property
portfolio.  Such enforcement activity could require the expenditure of
significant cash resources and could affect the financial performance of the
Company.

     Although the Company has not received notices from third parties alleging
infringement claims that the Company believes would have a material adverse
effect on the Company's business, there can be no assurance that third parties
will not claim that the Company's current or future products or manufacturing
processes infringe the proprietary rights of others.  Any such claim, with or
without merit, could result in costly litigation or might require the Company to
enter into a royalty or licensing agreement.  Such royalty or licensing
agreements, if required, may not be available on terms acceptable to the
Company, or at all, which could have a material adverse effect upon the
Company's business, financial condition and results of operations.  If the
Company does not obtain such licenses, it could encounter delays in product
introductions while it attempts to design around such patents, or it could find
that the development, manufacture or sale of products requiring such licenses
could be enjoined.  In addition, the Company could incur substantial costs in
defending itself in suits brought against the Company on such patents or in
bringing suits to protect the Company's patents against infringement, which
could adversely affect the Company's financial condition or results.  If the
outcome of any such litigation is adverse to the Company, the Company's business
and financial results could be adversely affected.

     Litigation and Litigation Costs. The Company has instituted action against
a competitor for copyright violation and other causes of action.  The competitor
has counter-claimed for copyright misuse by the Company. Although the Company
does not believe any of its practices violate applicable copyright laws, there
is no assurance that claims or actions will not be commenced by customers,
competitors or governmental authorities based on copyright, trade or anti-trust
claims which could affect the Company's operations and cash position.

     The Company is also engaged in various actions related to transactional
matters, employee matters, customers' credit and product quality and/or warranty
issues.  Some of these actions include claims against the Company for punitive,
exemplary or multiple damages.  An award of punitive damages may not bear a
direct relationship to the actual or compensatory damages claimed from the
Company.  Although the Company does not believe there are any actions pending or
threatened against the Company which would have a material adverse impact on the
financial position of the Company, there is no assurance that there will not be
an adverse award of multiple punitive or exemplary damages which could adversely
affect the cash position of the Company.

                                       9
<PAGE>
 
     Any litigation which the Company is involved in may have an adverse impact
on the Company's operations and may result in a distraction or diversion of
management's attention, thereby adversely affecting the operations of the
Company.

     International Operations. The Company expects that international revenues
will continue to represent a substantial portion of its total revenues.  (In
fiscal 1998, international operations composed 42% of total sales.)
International operations are subject to various risks, including exposure to
currency fluctuations, political and economic instability, differing economic
conditions and trends, differing trade and business laws, unexpected changes in
applicable laws, rules, regulatory requirements or tariffs, difficulty in
staffing and managing foreign operations, longer customer payment cycles,
greater difficulty in accounts receivable collection, potentially adverse tax
consequences and varying degrees of intellectual property protection.
Fluctuations in currency exchange rates could result in lower sales volume
reported in U.S. Dollars.  Fluctuations in foreign exchange rates are
unpredictable and may be substantial.  From time to time the Company has engaged
in limited foreign currency hedging transactions. The Company's European
subsidiary extends credit in the normal course of business in five relatively
stable European currencies.  In addition, the financing agreement in place
allows the subsidiary to factor those receivables and receive Dutch guilders in
which it pays its expenses.  The impact of this is to effectively hedge the
Company's exposure to foreign currency risk. Substantially all other
transactions are in U.S. dollars.  There can be no assurance that the Company
will be successful if it engages in such practices to a significant degree in
the future.

     Dependence on Key Personnel. The Company's success depends to a significant
extent upon certain key personnel, including Mr. Masters, its Chief Executive
Officer and President, Lawrence Lukis, Chief Engineer, and key research and
development staff.  The loss of key management or technical personnel could
adversely affect the Company's business.  The Company maintains key person life
insurance in the amount of $2,000,000, payable to the Company, on each of Mr.
Masters and Mr.  Lukis.  In addition, the Company has certain non-compete and
continuation contracts with key personnel.  The Company also depends on its
ability to attract and retain highly skilled personnel.  Competition for
employees in technology related markets is high and there can be no assurance
that the Company will be able to attract and retain the employees needed. In
addition, past financial performance of the Company may limit the ability to
hire and retain management professionals.

     The Year 2000 Issue. The Company is currently working to resolve the
potential impact of the Year 2000 on the processing of time-sensitive
information by its computerized information systems.  Year 2000 issues may arise
if computer programs have been written using two digits (rather than four) to
define the applicable year.  In such case, programs that have time-sensitive
logic may recognize a date using "00" as the year 1900 rather than the year
2000, which could result in miscalculations or system failures.  The Company
utilizes a number of computer programs across its entire operation.  Year 2000
issues could impact the Company's information systems as well as computer
hardware and equipment that is part of its telephone network such as switches,
termination devices and SONET rings that contain embedded software or
"firmware."

     The Company's exposure to potential Year 2000 problems exists in two
general areas: technological operations in the sole control of the Company, and
technological operations dependent in some way on one or more third parties.
The majority of the Company's exposure in potential Year 2000 problems is in the
latter area where the situation is much less within the Company's ability to
predict or control.  The Company's business is heavily dependent on third
parties, many of whom are themselves heavily dependent on technology.  The
Company cannot control the Year 2000 readiness of those parties.  In some cases,
the Company's third-party dependence is on vendors of technology who are
themselves 

                                      10
<PAGE>
 
working towards solutions to Year 2000 problems. The Company has initiated
projects to identify and correct the potential problem in all of its enterprise
systems. The costs incurred to date total less than $30,000 and have been
expensed in the financial statements. The Company is using internal resources to
test the software modifications. Funding for this area is expected to, and has
come from, cash flow from operations. Management expects that additional costs
for this issue will not be material.

     The Company's Products.  The Company designs and sells products which are
heavily reliant on software. While the Company has taken appropriate steps to
ensure the readiness of this software and believes it to be Year 2000 compliant,
the Company cannot be certain that the software will operate error free, or that
the Company will not be subject to litigation, whether the software operates
error free or not.  However, the Company believes that based on its efforts to
ensure compliance and the fact that the calculations needed in and by its
products are not date dependent, it is not reasonably likely that the Company
will be subject to such litigation.

     Contingency Plans.  The Company has not yet completed its planning and
preparations to handle the most reasonably likely worst case Year 2000 scenarios
described above.  The Company intends to develop contingency plans for these
scenarios during fiscal 1999.  The Company believes that this is the appropriate
timeframe for developing such plans and that efforts prior to that time should
be focused on renovation, testing and verification of its system modifications.

     Environmental. The Company is subject to local and federal laws and
regulations regarding the use, storage and disposition of inks used with the
Company's print products.  Although the Company believes it is in compliance
with all such laws and regulations, and the Company is not aware of any notice
or complaint alleging any violation of such laws or regulations, there can be no
assurance that there will not be some accidental contamination, disposal or
injury from the use, storage, or disposition of inks or other materials used in
the Company's operations.  In the event of such accident, the Company could be
held liable for any damages that result and any such liability could have a
material adverse effect on the Company's financial condition. In addition, there
can be no assurance that the Company will not be required to comply with
environmental claims, laws, or regulations in the future which could result in
significant costs which could materially adversely affect the Company's
financial condition.

     Tax Liability.  The Company sells its products from its offices in Eden
Prairie, Minnesota and reports sales and income tax liability based on sales
occurring at that location.  It is possible that one or more state or local
taxing authorities could determine that there have been taxable transactions
occurring within their jurisdiction and seek recovery of taxes for current
and/or past periods.  In addition, it is possible that local, state or federal
taxing authorities will take issue with the reporting or determination of tax
liability and seek additional taxes for current and/or past periods.  The
Company currently has a net operating loss ("NOL") carryforward that may be used
to offset future federal taxable income.  However, there is no assurance that
the NOL will continue to be available as an offset against future federal
taxable income or that there will be sufficient taxable income to fully utilize
the NOL.

     Volatility of Stock Price.  The trading price of the Company's common stock
is subject to wide fluctuations in response to variations in operating results,
changes in the laws or regulations to which the Company may be subject,
announcements of new products or technological innovations by the Company or its
competitors, overall economic conditions and indicators, market conditions
unrelated to Company performance, and general conditions in the industry.
Factors such as quarterly variation in actual or anticipated operating results,
changes in earnings estimates by analysts, and analysts' reactions to Company
statements and actions also contribute to stock price fluctuations.  In
addition, the prices of securities of many high 

                                      11
<PAGE>
 
technology companies have experienced significant volatility in recent years for
reasons frequently unrelated to the operating performance of the specific
companies. These fluctuations may materially affect the market price of the
Company's common stock.

     One time in the past, following fluctuations in the market price of the
Company's stock, a securities action was commenced alleging that the Company and
certain insiders had knowledge of certain material, adverse information about
the Company prior to the time that such information allegedly caused a drop in
the market price of the stock.  Because the Company's stock has historically
fluctuated significantly, it is possible that following a significant change in
the market price of the stock another securities action could be commenced
against the Company.  Such action, whether commenced by one or more individuals
or by a class of securities holders, could result in substantial costs and
diversion of management's attention and resources and thereby cause an adverse
affect on the business and financial performance of the Company.

     Brand Awareness. The Company is currently in the process of changing its
name to VirtualFund.com, Inc. and has changed the name of its principal
operating subsidiary from LaserMaster Corporation to ColorSpan Corporation.  The
Company has significant brand awareness associated with its LaserMaster trade
names.  If the market is unable to accept or delays the acceptance of the name
change, the Company's financial performance and sales may be negatively
impacted.

     Control of the Company's Stock. As of August 31, 1998, officers and
directors as a group beneficially owned 21.3% of the outstanding shares of the
Company's stock.  One of the Company's suppliers owns 14.7% of the Company's
outstanding shares.  Although the impact of the holdings of the officers and
directors and the supplier is not believed to be material.  Such control may
have the effect of reducing liquidity of the stock which may affect shareholder
value.

     The Company's Board has considered, but has not yet adopted, a shareholder
rights plan.  The Company's Board of Directors has authorized issuance of
preferred shares of stock which may be utilized in undertaking a shareholder
rights plan. Minnesota Statutes govern "control share acquisitions" and require
potential acquirers of at least 20% of the Company's stock to provide notice and
information to the Company about the proposed acquisition of stock and limits
voting rights in acquired stock unless such voting rights are approved by an
affirmative vote of shareholders and the control share acquisition is
consummated within 180 days after shareholder approval. The effect of the
statute is to limit the opportunity for a hostile takeover of control of the
Company unless there is a majority of shareholders consenting to the acquirer's
control.  There is no assurance that the control share acquisition statute will
not adversely affect shareholder value.

     Dilution.  The Company has outstanding a large number of stock options and
warrants to purchase the Company's Common Stock.  To the extent such options or
warrants are exercised, there will be further dilution.  The Company expects to
seek additional acquisitions in pursuing its strategies and intends to grant
additional stock options and stock bonuses to the employees of the acquired
companies.  For these reasons, the Company's acquisition program will result in
further substantial ownership dilution to investors.

     Risks Related to Acquisitions.  A key component of the Company's growth
strategy is the acquisition of Information Technology professional service firms
that meet the Company's criteria for revenues, profitability, growth potential
and operating strategy.  The successful implementation of this strategy depends
on the Company's ability to identify suitable acquisition candidates, acquire
such companies on acceptable terms and integrate their operations successfully
with those of the Company.  There can be no assurance that the Company will be
able to identify suitable acquisition candidates or that the Company will be
able to acquire such candidates on acceptable terms.  Moreover, in pursuing
acquisition opportunities the Company 

                                      12
<PAGE>
 
may compete with other companies with similar growth strategies, certain of
which competitors may be larger and have greater financial and other resources
than the Company. Competition for these acquisition targets likely could also
result in increased prices of acquisition targets and a diminished pool of
companies available for acquisition. Acquisitions also involve a number of other
risks, including adverse effects on the Company's reported operating results
from increases in goodwill amortization, acquired in-process technology, stock
compensation expense and increased compensation expense resulting from newly
hired employees, the diversion of management attention, potential disputes with
the sellers of one or more acquired entities and the possible failure to retain
key acquired personnel. Client satisfaction or performance problems with an
acquired firm could also have a material adverse impact on the reputation of the
Company as a whole, and any acquired subsidiary could significantly underperform
relative to the Company's expectations. The Company's pursuit of an overall
acquisition strategy or any individual pending or future acquisition may have a
material adverse effect on the Company's business, results of operations and
financial condition. To the extent the Company chooses to use cash consideration
for acquisitions in the future, the Company may be required to obtain additional
financing, and there can be no assurance that such financing will be available
on favorable terms, if at all. As the Company issues stock to complete future
acquisitions, existing stockholders will experience further ownership dilution.

                                      13