UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A

/x/     Annual report pursuant to section 13 or 15(d) of the Securities Exchange
        Act of 1934

                   For the fiscal year ended December 31, 2001
                                       or

/ /     Transition report pursuant to section 13 or 15(d) of the Securities
        Exchange Act of 1934

          For the transition period from              to
                                         ------------    -------------

                        Commission File Number 000-30527


                             OPTIMARK HOLDINGS, INC.

             (Exact name of registrant as specified in its charter)

         DELAWARE                                        22-3730995
(State or Other Jurisdiction of                          (I.R.S.-Employer
Incorporation or Organization)                           Identification No.)

10 Exchange Place Centre,                                     07302
24th Floor, Jersey City, NJ
(Address of Principal Executive Offices)                      (Zip Code)


                                 (201) 536-7000
              (Registrant's telephone number, including area code)


           Securities Registered Pursuant to Section 12(b) of the Act:

                                      None

           Securities Registered Pursuant to Section 12(g) of the Act:

                     Common Stock, Par Value $.01 Per Share

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.
Yes / /  No /X/

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  registrant's  knowledge,  in definitive  proxy or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /



<PAGE>



     No sales of the  common  equity of the  Registrant  have  been  consummated
within  sixty days of this  filing  and the  Registrant's  common  equity is not
publicly traded on an exchange for purposes of establishing  bid and ask prices.
Therefore,  the Registrant is unable to state the aggregate  market value of the
voting and non-voting common equity held by non-affiliates of the Registrant.

     As of June 28,  2002,  there  were  33,369,913  shares of the  Registrant's
common stock outstanding.

                       Documents Incorporated by Reference

     None.




                                       2
<PAGE>


                                EXPLANATORY NOTE

In our  previous  filings  of Form 10-K on April 1 and April 30,  2002,  certain
items were  omitted.  This  filing  amends and  restates  the former  filing and
includes the following items that were omitted: Part II, Items 6, 7, 7A, and 8.



                                       3
<PAGE>


                             OPTIMARK HOLDINGS, INC.
                                    FORM 10-K
                                DECEMBER 31, 2001

                                TABLE OF CONTENTS


                                                                        Page No.
                                     PART I
Item 1.  Business                                                           6
Item 2.  Properties                                                         14
Item 3.  Legal Proceedings                                                  14
Item 4.  Submission of Matters to a Vote of Security Holders                16

                                     PART II
Item 5.  Market for Registrant's Common Equity and Related Stockholder
         Matters
                                                                            17
Item 6.  Selected Financial Data                                            19
Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                          20
Item 7A. Quantitative and Qualitative Disclosure About Market Risk          29
Item 8.  Financial Statements                                               30
Item 9.  Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure                                           30

                                    PART III
Item 10. Directors and Executive Officers of the Registrant                 31
Item 11. Executive Compensation                                             32
Item 12. Security Ownership of Certain Beneficial Owners and Management     36
Item 13. Certain Relationships and Related Transactions                     40

                                     PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
         on Form 8-K                                                        42

Signatures                                                                  50


                                       4
<PAGE>


FORWARD LOOKING STATEMENTS

         This Annual  Report on Form 10-K  includes  forward-looking  statements
within the meaning of Section 21E of the  Securities  Exchange  Act of 1934,  as
amended.  These  statements  are based on our  beliefs and  assumptions,  and on
information  currently available to us.  Forward-looking  statements include the
information  concerning our possible or assumed future results of operations set
forth in Part II, Item 7 - "  Management's  Discussion and Analysis of Financial
Condition and Results of  Operations."  Forward-looking  statements also include
statements  in  which  words  such  as  "expect",  "anticipate",  "contemplate",
"intend", "plan", "believe",  "estimate",  "consider" or similar expressions are
used.

         Forward-looking  statements are not  guarantees of future  performance.
They involve risks, uncertainties and assumptions, including the risks discussed
under the heading,  "Management's Discussion and Analysis of Financial Condition
and  Results  of  Operations"  and  elsewhere  in this Form  10-K.  Such  risks,
uncertainties  and  assumptions  include,  but are not limited to, those factors
described in Part II, Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations,"  under the  sub-heading  "Factors that may
affect future  results." The factors  described in that section are incorporated
herein by reference.

         Our future results and  stockholder  values may differ  materially from
those expressed in these  forward-looking  statements.  Many of the factors that
will  determine  these  results  and values are beyond our ability to control or
predict.   Investors   are   cautioned   not  to  put  undue   reliance  on  any
forward-looking statements. In addition, we disclaim any intention or obligation
to update  forward-looking  statements  after the filing of this Annual  Report,
even if new  information,  future events or other  circumstances  have made them
incorrect or misleading.  For these  statements,  we claim the protection of the
safe  harbor for  forward-looking  statements  contained  in Section  21E of the
Exchange Act.

         Statements  made in this Annual  Report on Form 10-K as to the contents
of any contract,  agreement or other  document  referred to are not  necessarily
complete. With respect to each such contract,  agreement or other document filed
as an exhibit to this Annual Report on Form 10-K, we refer you to the exhibit to
this  Annual  Report  on Form  10-K  referencing  the item  for a more  complete
description of the matter involved,  and each such statement is qualified in its
entirety by such reference.


                                       5
<PAGE>


                                     PART I

ITEM 1.  BUSINESS

         OptiMark  Holdings,  Inc.  ("Holdings")  was  established  as a holding
company  on June 12,  2000 as the  result  of a  reorganization  of the  company
formerly known as OptiMark Technologies,  Inc. OptiMark  Technologies,  Inc. was
the successor to the company  founded in 1996 to begin  development  of software
for  use  in an  electronic  system  for  trading  stocks  and  other  financial
instruments, goods and services.

         Holdings  has  two  wholly-owned   subsidiaries:   (1)  OptiMark,  Inc.
("OptiMark") and (2) OptiMark US Equities,  Inc.  ("Equities").  On December 28,
2001,  OptiMark formed a majority-owned  subsidiary,  OptiMark  Innovations Inc.
(formerly  known  as  OTSH,  Inc.  and  referred  to  below  as  "Innovations").
Innovations was  capitalized on December 31, 2001, and OptiMark  currently holds
44% of the voting interests in Innovations as more fully described below.

         In this  report,  Holdings,  OptiMark  and  Equities  are  referred  to
collectively as the "Company," "our," and/or "we."

HOLDINGS

         Holdings' principal business is to hold the securities of OptiMark and,
through OptiMark,  Innovations.  Until September 19, 2000,  Holdings operated in
two  segments,  the  Exchange  Solutions  Services  Business and the US Equities
Business.  The Exchange  Solutions  Services  Business  operated by OptiMark was
formerly referred to as the Electronic  Markets Business and developed  software
and  provided  design,  development  and  maintenance  services for building and
operating  electronic  markets and  exchanges.  On or about  January  30,  2002,
OptiMark effectively suspended development,  sales and marketing efforts related
to its Exchange Solutions Services Business.

         The second segment, the US Equities Business, was operated by Equities.
Prior to  September  19,  2000,  the US  Equities  Business  owned and  operated
exchanges or exchange  facilities which used the OptiMark software and services.
This business was discontinued on September 19, 2000 due to high fixed costs and
lack of  revenue  resulting  from  the  failure  of these  proprietary  exchange
facilities to attract users or liquidity.

         As a  result  of the  suspension  of the  Exchange  Solutions  Services
Business and the  discontinuation of the US Equities Business,  the future value
of Holdings' common stock will depend principally on the value of the investment
that Innovations made in The Ashton Technology Group, Inc.  ("Ashton") on May 7,
2002 and on other transactions that the Company may consummate.

         OptiMark continues to attempt to solicit interest from or opportunities
with third  parties  concerning  possible  additional  investments  or strategic
alliances. However, no binding or definitive arrangements have been reached with
any third parties and there can be no assurances that any such transactions will
be consummated.

         In the event that the Company  cannot  obtain  additional  financing or
capital  contributions  by  October  2002,  Holdings  would  not have  access to
sufficient   financial   capital  to  permit  continued   business   operations.
Accordingly,   Holdings  would  face  the  imminent  and  likely  potential  for
bankruptcy or liquidation. If Holdings is forced to declare bankruptcy or pursue
liquidation,  the value of  Holdings'  assets may not be  sufficient  to pay its
creditors in full and,  accordingly,  Holdings' common and preferred stock would
have no value.


                                       6
<PAGE>


INNOVATIONS

Formation of Innovations
------------------------

         Innovations  was   incorporated  in  Delaware  on  December  28,  2001.
Innovations  has authorized  capital stock of 7,000 shares of common stock,  par
value $.01 per share  (the  "Innovations  Common  Stock"),  and 3,000  shares of
preferred stock, par value $.01 per share (the "Innovations  Preferred  Stock").
Innovations has designated  2,000 shares of the  Innovations  Preferred Stock as
"Non-Qualified Preferred Stock," which has a cumulative preferred dividend at an
annual  rate of $500 per share,  payable  when and if  declared  by the Board of
Directors  of  Innovations.  The  liquidation  preference  of the  Non-Qualified
Preferred  Stock is equal to  $10,000  per share  plus the  aggregate  amount of
accrued and unpaid dividends or distributions. The Non-Qualified Preferred Stock
is also subject to a mandatory  redemption,  at a price equal to the liquidation
preference  amount,  in four equal quarterly  installments on December 31, 2016,
March 31, 2017, June 30, 2017 and September 30, 2017.

         Innovations has designated  1,000 shares of the  Innovations  Preferred
Stock as "Series B Preferred Stock," which has a cumulative  preferred  dividend
at an annual  rate of $519.21  per share,  payable  when and if  declared by the
Board of Directors of Innovations. The liquidation preference of the Innovations
Series B Preferred  Stock is equal to  $10,389.61  per share plus the  aggregate
amount of accrued and unpaid dividends or distributions.

         All of the Innovations Preferred Stock is non-voting.

Investment Structure
--------------------

         On December  31,  2001,  OptiMark  received  200 shares of  Innovations
Common  Stock in exchange  for a cash  payment of $500,000  and 2,000  shares of
Non-Qualified  Preferred  Stock in exchange for the transfer to  Innovations  of
certain intangible assets consisting of software, a patent application and other
assets relating to a securities  trading  technology which is under  development
(the "Assets").  The stated value of the  Non-Qualified  Preferred Stock was the
result of the  evaluation by the board of directors of  Innovations of the value
of the Assets based,  in part, upon  preliminary  discussions  with  independent
parties regarding an approximate $10,000,000 investment for a one-third interest
in Innovations  (see below).  SOFTBANK  Capital Partners LP, SOFTBANK Capital LP
and SOFTBANK Capital Advisors Fund LP  (collectively,  "SOFTBANK")  received 100
shares of Innovations  Common Stock (the  "SOFTBANK  Shares") for $250,000 cash.
Simultaneously,  SOFTBANK's  remaining obligation to purchase shares of Series E
Cumulative  Preferred Stock ("Series E Preferred  Stock") from Holdings pursuant
to that certain Series E Preferred  Stock Purchase  Agreement,  dated as of June
29, 2001 (as amended on August 16, 2001 and  November  16,  2001),  by and among
Holdings and SOFTBANK was reduced by $250,000.  Upon its  formation  and initial
capitalization,  Innovations'  aggregate  assets  consisted  of the  Assets  and
$750,000 in cash.

         On April 30, 2002,  Draper Fisher  Jurvetson  ePlanet  Ventures,  L.P.,
Draper  Fisher  Jurvetson  ePlanet  Partners  Fund,  L.L.C.  and  Draper  Fisher
Jurvetson ePlanet Ventures GmbH & Co. KG (collectively,  "Draper") purchased 150
shares of the  Innovations  Common Stock for an aggregate cash purchase price of
$375,000.  On May 7, 2002, Draper purchased 963 shares of the Innovations Series
B Preferred Stock for an aggregate cash purchase price of $9,630,000.

         In connection with the Series B Preferred Stock subscription, Holdings,
OptiMark,  Innovations, Draper and SOFTBANK entered into an amended and restated
Investors' Rights Agreement (the "Innovations  Rights  Agreement").  Pursuant to
the terms of the Innovations  Rights  Agreement,  Draper received (i) preemptive
rights to  subscribe  for  future  sales by  Innovations  of any  shares  of, or
securities  convertible  into or  exercisable  for any  shares  of, any class of
Innovations  capital  stock,  (ii)  registration  rights  and (iii) the right to
designate two (2) directors to Innovations' board of directors.

         Through the  subscription  for  Innovations  Common  Stock and Series B
Preferred Stock by Draper,  Innovations obtained the cash financing necessary to
(a) pay the approximately $7.3 million each portion of


                                       7
<PAGE>


the  purchase  price for  Ashton's  common  stock and (b) provide the  principal
amount of approximately $2.7 million for the senior secured convertible note.

         Put and Call Rights of SOFTBANK and Holdings
         --------------------------------------------

         Pursuant to the terms of the Innovations Rights Agreement, SOFTBANK and
Holdings agreed to certain put and call rights applicable to the SOFTBANK Shares
as follows:

             First Call Right of Holdings on SOFTBANK Shares
             -----------------------------------------------

         The Independent  Committee (the  "Independent  Committee") of Holdings'
Board of  Directors  has the right  commencing  October 1, 2002 and  exercisable
until  September 30, 2003, to recommend to the Board of Directors  that Holdings
purchase all, but not less than all, of the SOFTBANK Shares for $125,000 in cash
and  16,667  shares of Series E  Preferred  Stock of  Holdings.  If the Board of
Directors accepts such  recommendation,  SOFTBANK would be obligated to sell the
SOFTBANK shares for that consideration.

             Liquidity Event Discretionary Call of Holdings on SOFTBANK Shares
             -----------------------------------------------------------------

         Upon the occurrence of a Liquidity  Event (defined  below) on or before
September  30,  2003,  the  SOFTBANK  Shares will be  purchased  by Holdings for
$125,000 in cash and 16,667  shares of Series E Preferred  Stock of Holdings.  A
"Liquidity Event" means any of the following:  (i) Innovations' sale, conveyance
or  other  disposition  of all or  substantially  all of its  assets;  (ii)  the
acquisition of Innovations by another entity by means of merger or consolidation
resulting  in  the  exchange  of  the  outstanding  shares  of  Innovations  for
securities  or other  consideration  issued,  or  caused  to be  issued,  by the
acquiring  entity or its  subsidiary,  unless the  stockholders  of  Innovations
immediately  prior to the  consummation of such transaction hold at least 50% of
the voting power of the surviving  corporation as a result of such  transaction;
(iii) the  consummation  by  Innovations  of a transaction  or series of related
transactions,  including  the  issuance  or sale of  voting  securities,  if the
stockholders of Innovations  immediately  prior to such  transaction (or, in the
case of a series of transactions, the first of such transactions) hold less than
50% of the voting power of Innovations  immediately  after the  consummation  of
such transaction (or, in the case of a series of transactions,  the last of such
transactions);  or (iv) any initial  underwritten public offering of Innovations
Common Stock.  Notwithstanding  the  foregoing,  Holdings will not exercise this
call option in the event that the Independent Committee recommends that Holdings
not purchase the SOFTBANK Shares.

             Mandatory Call of Holdings on SOFTBANK Shares
             ---------------------------------------------

         In the event that: (i) the call rights of Holdings described above have
not been  exercised  on or  before  September  30,  2003,  (ii) the  Independent
Committee  no longer  exists  and (iii) no  independent  directors  serve on the
Holdings  Board of Directors  and,  after  reasonable  good faith efforts by the
remaining  members of the Holdings Board of Directors,  no  independent  persons
qualified  to serve on the Holdings  Board of  Directors  have been found or, if
found,  are not willing to serve on the Holdings  Board of  Directors,  then the
Holdings  Board of  Directors  will engage an  independent  investment  banking,
accounting or third party valuation firm to evaluate whether or not it is in the
best interests of Holdings that it purchase the SOFTBANK  Shares.  If such third
party  determines  it is in the best  interests  of  Holdings  to  purchase  the
SOFTBANK Shares, Holdings will be obligated to purchase such shares on or before
December 31, 2003 for  $125,000 in cash and 16,667  shares of Series E Preferred
Stock of Holdings.

             First Put Right to Holdings of SOFTBANK Shares
             ----------------------------------------------

         SOFTBANK has the right,  commencing  on October 1, 2002 and  continuing
until  September  30,  2003,  to put all, but not less than all, of the SOFTBANK
Shares to Holdings in exchange for 16,667 shares of Series E Preferred  Stock of
Holdings.


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<PAGE>


         Second Put Right to Holdings of SOFTBANK Shares
         -----------------------------------------------

         In the event that no put of, or call on, the  SOFTBANK  Shares has been
exercised  by  October  31,  2003,  then  commencing  on  November  1,  2003 and
continuing  until November 30, 2003,  SOFTBANK has the right to require Holdings
to purchase all, but not less than all, of the SOFTBANK Shares for 16,667 shares
of Series E Preferred Stock of Holdings.

Business of Innovations
-----------------------

         The principal  business of Innovations is to hold Ashton's common stock
for the  benefit of the  shareholders  of  Holdings  and  Innovations.  Holdings
believes that the future value of its stock will depend principally on the value
of Ashton's  common  stock held by  Innovations  and its  ability to  consummate
financing and strategic transactions with other parties.

         On February 4, 2002,  Innovations  entered into a  securities  purchase
agreement with Ashton.  The agreement was subsequently  amended on March 6, 2002
and May 3, 2002 (as amended,  the "Securities  Purchase  Agreement").  Under the
Securities  Purchase  Agreement,  Ashton sold  608,707,567  shares of its common
stock,  par value $.01 per share (the "Ashton  Common  Stock"),  in exchange for
approximately $7.3 million in cash and the Assets.

         On May 7, 2002 (the "Closing Date"),  Innovations and Ashton closed the
transactions contemplated by the Securities Purchase Agreement.

         In  addition,   pursuant  to  the  terms  of  the  Securities  Purchase
Agreement,  Innovations  loaned  approximately $2.7 million in cash to Ashton in
exchange  for a senior  secured  convertible  note (the  "Note").  The Note will
mature in five years,  may, at the option of  Innovations,  be convertible  into
shares of Ashton  Common  Stock at a rate of  $.0515838  per share  (subject  to
customary anti-dilution  adjustments after the closing) and will accrue interest
at a rate of 7.5% per annum. Currently,  the Note is convertible into 52,870,757
shares of Ashton  Common  Stock.  The Note is secured  by a pledge and  security
agreement  pursuant to which Innovations has received a blanket lien on Ashton's
assets,  including,  without  limitation,  the pledge of the equity interests of
Ashton and Universal Trading  Technologies  Corporation,  a Delaware corporation
and  majority-owned  subsidiary of Ashton ("UTTC"),  in each of ATG Trading LLC,
wholly-owned  subsidiary of Ashton ("ATG  Trading"),  Electronic  Market Center,
Inc., a majority-owned  subsidiary of Ashton,  Ashton Technology Canada, Inc., a
majority-owned  subsidiary of Ashton,  Croix  Securities,  Inc., a  wholly-owned
subsidiary of UTTC ("Croix"),  REB Securities Inc., a wholly-owned subsidiary of
UTTC; and NextExchange, Inc., a wholly-owned subsidiary of UTTC .

         As of the Closing  Date,  Innovations  owned  approximately  80% of the
fully-diluted  outstanding shares of Ashton Common Stock calculated as of May 3,
2002. Fully-diluted shares include the outstanding shares of Ashton Common Stock
and (i) shares of any series of capital stock of Ashton or its subsidiaries that
vote together with the Ashton Common Stock, (ii) any outstanding  options issued
to employees and third  parties and (iii) shares of the Ashton Common Stock,  or
any  securities  described  in clause (i) above,  issuable  pursuant  to or upon
conversion or exercise of all rights granted to any party.  Assuming  conversion
of the  Note,  Innovations  would  own  approximately  an  additional  7% of the
fully-diluted shares of the Ashton Common Stock, calculated as of May 3, 2002.

         As the owner of  approximately  80% of Ashton's  fully-diluted  equity,
Innovations  is  Ashton's  majority  stockholder,  and is  able to  control  the
election of directors,  appointment of senior management,  and any other matters
submitted to the stockholders for a vote.  Innovations  intends to have Ashton's
wholly-owned  broker-dealer  subsidiary,  ATG  Trading,  offer a new service for
trading  United States equity  securities at the volume  weighted  average price
("VWAP"). This service is referred to below as the "New VWAP Service."

         The New VWAP Service will be a service for sell-side  brokerage  firms,
enabling them to  cost-effectively  guarantee VWAP orders for their clients.  To
provide these guaranteed VWAP orders, ATG


                                       9
<PAGE>


Trading will become a principal trading firm using electronic trading algorithms
that over the past five years have  demonstrated  the viability of this approach
by achieving returns approximating the VWAP.

         Based  on  preliminary  discussions  with a number  of major  brokerage
firms,  it is believed that such firms would pay a mutually  acceptable rate per
share for a guaranteed  VWAP  execution in large cap stocks.  This would benefit
these firms in that the New VWAP  Service  would tend to  minimize  the risk and
administrative  burdens associated with the firms guaranteeing the VWAP directly
to their customers.

         It is  intended  that  Ashton  will  continue  to operate  its  primary
business, which is providing (a) a business/technology  approach for filling, as
an   agency   broker,   customer   equity   orders   at  the   VWAP  and  (b)  a
business/technology  approach for crossing equity orders within the Philadelphia
Stock Exchange (PHLX) VWAP crossing facility, known as the eVWAP(R) System.

         The intellectual  property and non-cash assets transferred to Ashton by
Innovations as partial consideration to purchase the Ashton Common Stock are:

         -        U.S.  provisional patent application (No.  60/323,940 entitled
                  "Volume  Weighted  Average  Price System and Method"  filed on
                  September  1,  2001)  that  relates  to  VWAP   trading.   The
                  provisional  patent  application  relates to processing orders
                  for trading equity securities at the VWAP and guaranteeing the
                  price and quantity of trades to users who submit  orders.  The
                  patent  application  will not provide any exclusive  rights to
                  Ashton  until such time as it issues into a patent.  There can
                  be no assurance that the patent  application will issue into a
                  patent.

         -        Trade secrets and know how relating to VWAP trading.

         -        An assignment to Ashton of a license for technology for use in
                  a system for VWAP trading (the "VWAP License").

         -        An assignment to Ashton of all rights, duties, and obligations
                  under a bilateral nondisclosure agreement between the licensor
                  of the technology described above and Innovations.

         -        Software  developed to implement  critical  components  of the
                  VWAP  trading  system,  including  certain  tools for testing,
                  de-bugging and building source code.

         The intellectual property and non-cash assets described above, with the
exception of the VWAP License,  constitute the Assets  transferred from OptiMark
to Innovations on December 31, 2001.

         The intellectual  property and non-cash assets provided to Ashton under
the  Securities  Purchase  Agreement  relate to the services  that are currently
provided or under development by Ashton and, together with the New VWAP Service,
have the potential to:

         -        Provide increased VWAP liquidity in a cost-efficient manner to
                  the agency broker VWAP  operation of Ashton,  which  currently
                  depends on  non-affiliated  VWAP dealers who require Ashton to
                  pay for their VWAP liquidity.

         -        Provide a dealer  operation for delivering VWAP liquidity that
                  diversifies the current broker operation and exchange facility
                  operation.  In particular,  the assets may assist in expanding
                  Ashton's  customer base to the broker market segment since the
                  agency VWAP operation  focuses on the buy-side  market segment
                  and the  exchange  eVWAP(R)  operation  focuses  on the market
                  segment interested in low cost, anonymous,  crossing of equity
                  orders at the VWAP but not necessarily filling those orders.


                                       10
<PAGE>


         -        Provide  a   technology   and  system   software   to  perform
                  proprietary dealer trading within a profit center.  This would
                  help  enable  Ashton to expand,  with  current  designs  under
                  development,  into  more  diverse  VWAP-related  products  and
                  services  driven by customer  feedback  from the three diverse
                  business   operations   that  Ashton  will  then  be  able  to
                  prosecute; namely:

                  -    filling,  as a proprietary dealer, customer equity orders
                       at the VWAP;

                  -    filling,  as an agency broker,  customer equity orders at
                       the VWAP; and

                  -    crossing equity orders within the PHLX eVWAP(R) facility.

         While Innovations  expects Ashton to benefit from the cash and non-cash
assets  transferred,  Innovations  cannot  predict  the  extent  to which  those
benefits will occur. Specifically, there can be no assurance that:

         -        the performance characteristics of the software and technology
                  that is the  subject  of the VWAP  License  will  scale to the
                  increased  level  of  operations  anticipated  in the New VWAP
                  Service;

         -        the intellectual  property can achieve the desired operational
                  benchmarks; or

         -        integration   of  the   existing   Ashton   technologies   and
                  VWAP-related  business  models with the acquired  technologies
                  and associated business models will be feasible or possible.

         As a result of obtaining the $10 million  financing in connection  with
the transactions  contemplated by the Securities Purchase Agreement,  OptiMark's
ownership  percent of Innovations was reduced to less than 50%. As a result,  we
will not be able to include Innovations as a consolidated  subsidiary,  but will
account for our investment using the equity method of accounting.

         Ashton
         ------

         Because  the  future  value of  Holdings  common  stock is  principally
dependent on the value of Innovations'  investment in transaction with Ashton, a
brief description of the current business of Ashton is provided.

         The following  description  of Ashton's  business has been adapted from
the information  contained in Ashton's  Definitive  Proxy Statement on Form 14A,
filed with the SEC on March 19, 2002. We conducted  limited due  diligence  with
respect to Ashton's  business.  Based solely on that limited review,  we have no
reason to believe that Ashton's  description of its business is incorrect in any
material respect. The following  description is not intended to amend, modify or
supplement  Ashton's  disclosure  regarding its business contained in its public
filings.

         Ashton is an e-commerce  company that develops and operates  electronic
trading and intelligent  matching  systems for the global  financial  securities
industry.  Ashton provides equity trading  services to exchanges,  institutional
investors and  broker-dealers  in the U.S. and  internationally.  Ashton enables
these market  participants to trade in an electronic global trading  environment
that provides  large order size,  absolute  anonymity,  no market impact and low
transaction  fees. The services  offered by Ashton compete with services offered
by  brokerage  firms and with  providers of  electronic  trading and trade order
management  systems.  Ashton's  eVWAP(R)  Trading  System,  or eVWAP System also
competes with various national and regional  securities  exchanges and execution
facilities  such  as  alternative   trading  systems,  or  ATSs  and  electronic
communication  networks, or ECNs. Ashton,  through its Croix subsidiary,  is now
able to guarantee up to 200 million  shares of liquidity  daily,  in most of the
S&P 500,  NASDAQ 100 and Russell 1000 stocks.  This  liquidity is available each
trading day in 10 matching  sessions,  every  half-hour  between 9:30 a.m. and 2
p.m.  All trades  received  for a specific  matching  session  are priced at the
Volume  Weighted  Average Price for the  remainder of the day.  eVWAP is a fully
automated system that permits market  participants to trade eligible  securities
before the market opens at the VWAP for the day.


                                       11
<PAGE>


Ashton's  eVWAP is the  average  price for a stock,  weighted  by the  volume of
shares of that stock traded during the day on all U.S.  securities  exchanges as
reported to the Consolidated  Tape. Ashton operates the pre-opening eVWAP System
as a facility of the  Philadelphia  Stock Exchange,  Inc.  through Ashton's UTTC
subsidiary.

OPTIMARK

         On  or  about  January  30,  2002,   OptiMark   effectively   suspended
development,  sales and  marketing  efforts  related to its  Exchange  Solutions
Services  Business.  As of that date,  OptiMark  became a company  whose primary
purpose is to hold the securities of Innovations and to consummate financing and
strategic transactions with other parties.

         Prior  to  and  since  January  30,  2002,   OptiMark  has  engaged  in
discussions  with  a  number  of  potential  investors  and  strategic  partners
concerning  possible  investments  and/or  alliances  relative  to the  Exchange
Solutions Services Business.  To date, none of these discussions has resulted in
any such  investment or alliance.  OptiMark  continues to engage in  discussions
with third  parties in an effort to secure  funding for the  Exchange  Solutions
Services  Business;   however,   there  can  be  no  assurances  that  any  such
transactions will be consummated.  OptiMark's VWAP assets utilized in the Ashton
transaction  were  part  of a  general  effort  to  determine  ways  to  utilize
OptiMark's  technology  for trading venues to be owned and operated by OptiMark.
OptiMark has continued to develop additional  concepts with a very limited team.
There is no assurance that these limited  development efforts will result in new
products or receive the funding necessary for them to continue.

Clients of OptiMark
-------------------

         As of December 31, 2001,  OptiMark had definitive  agreements  with two
clients -- Asset  International,  Inc.  ("Asset  International")  and The Nasdaq
Stock Market,  Inc.  ("Nasdaq").  Under an agreement dated November 3, 2000 with
Asset International,  OptiMark has not received any revenues.  For approximately
the past twelve months, OptiMark has not performed,  nor has Asset International
requested  that any  services  be  performed  under the  agreement.  The  Nasdaq
contract,  as amended on April 27, 2001, expired on December 31, 2001.  OptiMark
does  not  anticipate  receiving  any  additional  revenues  from  either  Asset
International or Nasdaq.  The agreement with Asset  International was terminated
on May 24, 2002.

Competition
-----------

         Ashton,  Innovations,  OptiMark and Holdings executed a non-competition
agreement as of the Closing  Date.  The parties  currently  do not compete.  The
Agreement  precludes  Innovations,  OptiMark,  Holdings  or any entity that they
control from competing on a worldwide basis with Ashton in offering VWAP trading
systems or related services in U.S. and Canadian securities. The agreement has a
five-year term from the date of its execution.

         As  holding  companies,  Holdings,  OptiMark  and  Innovations  face no
clearly  defined  competition,  however,  as a  result  of  the  closing  of the
transactions  contemplated by the Securities  Purchase  Agreement,  the value of
Innovations'  investment  in  Ashton  is,  in  part,  contingent  upon  Ashton's
competing effectively in its industry and marketplace.

         The  following  description  relating  to the  competitive  aspects  of
Ashton's  business has been adapted from the  information  contained in Ashton's
Annual  Report  on Form  10-K,  filed  with  the SEC on July 16,  2001.  We have
conducted limited due diligence with respect to Ashton's business.  Based solely
on that limited review,  we have no reason to believe that Ashton's  description
of the competitive aspects of its business is incorrect in any material respect.
The  following  description  is not  intended  to amend,  modify  or  supplement
Ashton's disclosure regarding competition contained in its public filings.

         The  SEC's  regulations  governing  alternative  trading  systems  have
lowered the  barriers to  entering  the  securities  trading  markets.  Ashton's
products and services, including the New VWAP Service, will face


                                       12
<PAGE>


competition from traditional securities exchanges, which could establish similar
trading  systems in an attempt to retain  their  transaction  volumes.  Ashton's
products and services will also face competition from other alternative  trading
systems and leading  brokerage firms offering similar trade execution  services.
Many of  these  competitors  have  substantially  greater  financial,  research,
development,  sales,  marketing and other  resources  than Ashton will have, and
many  of  the  products  of  Ashton's  competitors  have  substantial  operating
histories.

         While we  believe  that the Ashton  products  and  services  will offer
certain  competitive  advantages,  the ability to maintain these advantages will
require  continued  investment  in the  development  of products and  additional
marketing and customer  support  activities.  Innovations  and/or Ashton may not
have sufficient resources to continue to make this investment, while competitors
may continue to devote significantly more resources to competing services.

         Ashton's  products  and services  will  compete  with other  electronic
trading systems,  including Instinet Corporation's crossing network,  Investment
Technology Group Inc.'s POSIT system,  Bloomberg,  L.P.'s Bloomberg Professional
and Bloomberg Tradebook,  Liquidnet and other companies that develop proprietary
electronic  trading  systems.  Ashton's  products and services will also compete
with services offered by leading  brokerage firms offering various forms of VWAP
trade execution.  Ashton's  products and services will also compete with various
national,   regional  and  foreign  securities  exchanges  for  trade  execution
services.

         We believe that Ashton's  products and services will compete  favorably
on the basis of quality of trade  execution,  pricing and  reliability  of trade
processing and settlement  operations.  While we believe that Ashton's  products
and services will offer benefits not offered by any other service,  there can be
no assurance that Ashton's products and services will be accepted by an extended
customer  base.  Nor can we be sure that  Ashton's  products and  services  will
adequately address all of the competitive criteria in a manner that results in a
competitive advantage.

Intellectual property and proprietary rights
--------------------------------------------

         As of December 31, 2001,  the Company owned or controlled  seven issued
United States patents and twelve pending United States patent applications.  One
of the pending United States patent  applications  was  transferred to Ashton as
part of the  consideration  for the purchase of the Ashton Common  Stock.  As of
that date,  the Company also owned or controlled  sixteen  issued  international
patents and forty-five pending  international patent  applications.  The Company
plans  to file  one  additional  patent  application  domestically  and may file
related  patent  applications  internationally.  The  Company  has  discontinued
prosecution of patent  applications  and maintenance of patents that were deemed
to be strategically unimportant, either because of geography or subject matter.

         The  Company  seeks  to  protect  its  trade  secrets,  service  marks,
trademarks  and  copyrights  through  a  combination  of  laws  and  contractual
restrictions,  such as  confidentiality  and  license  agreements.  The  Company
attempts to register our  trademarks  and service marks in the United States and
internationally.  The  Company  has  registered  a  corporate  logo and the mark
"OPTIMARK,"  among others, in the United States and  internationally  in several
countries.  However,  effective  trademark,  service  mark,  trade  secret,  and
copyright protection may not be available in all countries. The Company also has
discontinued prosecution of trademark applications and maintenance of trademarks
that were deemed to be strategically unimportant, either because of geography or
subject matter.

Employees
---------

         As of December 31, 2001, the Company had eighty  full-time and one part
time employee, forty one of whom were engaged in technology development,  twenty
four in quality assurance and support,  five in sales and marketing,  and eleven
in executive, finance, administration and personnel.

         In connection  with OptiMark  suspending its  development,  sales,  and
marketing  efforts  related to the building and operation of electronic  markets
and exchanges, on January 30, 2002 and periodically


                                       13
<PAGE>


thereafter,  the Company has undertaken to reduce its  workforce.  As of May 31,
2002, the Company had twelve full-time and one part time employees, four of whom
were engaged in technology development,  three in quality assurance and support,
one in research and development and five in executive,  finance,  administration
and personnel.

         The foregoing  numbers of employees do not include  three  employees on
leaves of absence  from the Company.  The Company has never had a work  stoppage
and our employees are not represented by any collective bargaining unit.

         The  Company  plans to continue  to retain  personnel  to carry out its
duties and obligations as a holding company,  including its  administration  and
financial reporting obligations.

Financial information about industry segments
---------------------------------------------

         Please refer to the  financial  statements  for  financial  information
about our industry segments.

Discontinued operations
-----------------------

         Until  September  19,  2000,  Holdings  operated in two  segments,  the
Exchange  Solutions  Services Business and the US Equities  Business.  The first
segment,  the Exchange Solutions Services Business,  was formerly referred to as
the  Electronic  Markets  Business.  On or  about  January  30,  2002,  OptiMark
effectively  suspended  development,  sales and marketing efforts related to its
Exchange  Solutions  Services  Business,  which developed  software and provided
design,   development  and  maintenance  services  for  building  and  operating
electronic markets and exchanges.  The second segment, the US Equities Business,
was  operated  by  Equities.  Holdings  discontinued  the  operations  of the US
Equities  Business on September  19, 2000.  As of that date all criteria for the
measurement  date per APB 30,  "Reporting the Results of Operations -- Reporting
the Effects of Disposal of a Segment of a Business,  and Extraordinary,  Unusual
and Infrequently  Occurring Events and  Transactions," had been met. The Company
expects the process of  disposing  of the net  liabilities  of the  discontinued
business  to be  completed  by December  31, 2002 as a result of the  continuing
settlement  negotiations  with certain  companies  from which we had  previously
leased  equipment.  Disposition  includes  negotiated  payments to be made after
December 31, 2002.

ITEM 2.  PROPERTIES

         The Company's  headquarters are located in Jersey City, New Jersey.  We
sublease  approximately  32,000  square  feet under a sublease  that  expires in
February  2014 and  approximately  3,300  square feet with a  remaining  term to
September 30, 2008. The foregoing space consists of standard  commercial  office
premises  in  a  metropolitan  area.  The  Company  believes  that  our  present
facilities exceed our current needs and is attempting to reduce our office space
commitments.

ITEM 3.  LEGAL PROCEEDINGS

         Holdings  and/or its  subsidiaries  are subject to the following  legal
proceedings:

      1. Finova Capital Corporation (Plaintiff) v. OptiMark Technologies,  Inc.,
         OptiMark, Inc. and OptiMark Holdings, Inc. (Defendants), Superior Court
         of New Jersey - Hudson County.  Plaintiff filed this action on June 15,
         2001,  asserting  claims that allegedly arise out of an equipment lease
         agreement  pursuant to which it is alleged that OptiMark  Technologies,
         Inc. (now known as OptiMark US Equities,  Inc.) agreed to lease certain
         equipment. Plaintiff contends that OptiMark Technologies, Inc. breached
         the equipment lease by, among other things,  failing to pay the amounts
         due under the equipment lease.  Based on these  allegations,  Plaintiff
         has  made  claims  for  breach  of  contract,   tortuous  interference,
         fraudulent  conveyance of such  equipment  lease  agreement  and/or the
         related equipment and/or other assets from OptiMark Technologies,  Inc.
         to  OptiMark,  Inc.  and/or  OptiMark  Holdings,  Inc.  and  damages in
         unspecified amounts exceeding $6,000,000,  plus interest, late charges,
         litigation  costs and  expenses,  and  reasonable  counsel fees. In the
         fourth quarter of 2001, most, if not all, of the equipment that was the
         subject of the


                                       14
<PAGE>


         equipment  lease was returned  consensually  to Plaintiff.  The parties
         currently  are engaged in  exchanging  responses  to written  discovery
         requests.  On  February  14,  2002,  Plaintiff  made  a  motion  to add
         Innovations  as a  defendant  in the  case.  In the  motion,  Plaintiff
         alleges  that  the  transfer  of  certain   assets  from   OptiMark  to
         Innovations on December 31, 2001 constituted a fraudulent conveyance of
         such assets.  On March 25, 2002, the court granted Finova permission to
         amend its complaint to include  Innovations.  The amended complaint was
         served on  Innovations  on April  22,  2002 and  Innovations  has until
         approximately  late June 2002 to file a response to the  complaint.  On
         June 13, 2002,  Finova  amended the  complaint to include  Ashton.  The
         Defendants  Innovations and Ashton intend to defend this action and the
         motion  vigorously.  The outcome of this litigation cannot be predicted
         at this time,  although it may have a material  affect on the Company's
         financial condition and results of operations.

      2. Comdisco, Inc. (Plaintiff) v. OptiMark Technologies, Inc. (now known as
         OptiMark  US  Equities,  Inc.)  (Defendant)  and Avnet,  Inc.  State of
         Connecticut   Superior  Court,   Judicial   District  of  Fairfield  at
         Bridgeport.  Plaintiff  filed a Complaint  on December  18,  2000.  The
         action seeks possession of leased equipment,  proceeds from the sale of
         leased equipment,  a deficiency  judgment in an unspecified amount, and
         fees and costs and interest.  Since the  complaint was filed,  most, if
         not all, of the equipment was returned consensually to Plaintiff. Based
         on the  complaint  filed in a related  action in New Jersey  (described
         below) and on other information received from Comdisco,  it is believed
         that amount of damages claimed is  approximately  $6,500,000.  On March
         30, 2001,  the parties  agreed to  consolidate a related case captioned
         Comdisco,  Inc. v. OptiMark  Technologies,  Inc., Superior Court of New
         Jersey Law Division  Hudson County (filed on January 23, 2001) with the
         Connecticut proceeding. To effect the consolidation,  on or about April
         2, 2001, the parties filed a stipulation withdrawing Defendant's motion
         to dismiss  Comdisco's  Complaint  filed in the  Superior  Court of New
         Jersey. That motion had sought dismissal principally on grounds that an
         identical  action alleging breach of contract had previously been filed
         by Comdisco in  Connecticut  State Court.  In exchange for  Defendant's
         agreement to withdraw its motion,  Comdisco  agreed to withdraw its New
         Jersey  Complaint  without  prejudice.  In June 2001,  Comdisco  made a
         motion for  summary  judgment  with  respect to a claim  against  Avnet
         relating  to a guaranty  by Avnet of  Defendant's  obligations  under a
         Master Lease  Agreement for computer  equipment  leased from  Comdisco.
         Avnet  responded to Comdisco's  motion by denying  liability  under the
         guaranty  and  asserting a variety of special  defenses.  In  addition,
         Avnet filed a cross claim  against  Defendant.  The cross claim alleges
         that if Avnet is found liable under the  guaranty,  then Avnet  becomes
         subrogated to Comdisco's rights under the Master Lease Agreement to the
         extent of the  payments  Avnet makes to Comdisco  and that  OptiMark is
         liable to Avnet for any such  payments.  Defendant has responded to the
         cross-claim by denying its material allegations. The Company intends to
         defend this action vigorously.  On February 12, 2002, Plaintiff filed a
         motion  for  default  for  failure  to plead,  alleging  that  OptiMark
         Technologies,  Inc. did not file a pleading  responsive to  Plaintiff's
         second  amended  complaint.  This default will be set aside if OptiMark
         Technologies,  Inc. files an answer before a judgment after default has
         been  rendered.  OptiMark  Technologies,  Inc.  intends  to file such a
         responsive pleading. The outcome of this litigation cannot be predicted
         at this time,  although it may have a material  affect on the Company's
         financial condition and results of operations.

         The Company  believes  that each of the  foregoing  pending  actions or
threatened  proceedings is derived from the  discontinuation  of the business of
Equities in September 2000 and each seeks monetary damages for an alleged breach
of a payment obligation. If the Company is ultimately found to be liable for any
loss  or  impairment  resulting  from  any of  these  suits,  any  such  loss or
impairment  will  have a  material  adverse  impact on the  Company's  financial
position, results of operations and cash flows.

         The Company  currently is in  discussions  with the  plaintiffs  in the
Comdisco  and  Finova  litigations  concerning  a possible  settlement  of their
respective  claims  in these  actions.  There  can be no  assurances  that  such
settlements will be consummated on terms acceptable to the Company or at all.

                                       15
<PAGE>


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

         A  special  meeting  of the  stockholders  of the  Company  was held on
November 13,  2001.  The  stockholders  voted on whether to approve the OptiMark
Holdings,  Inc. 2001 Series F Preferred Stock Plan pursuant to which the Company
can authorize  options to purchase shares of our Series F Preferred  Stock,  par
value $.01 per share (the "Series F Preferred  Stock").  The stockholders  voted
45,022,603  shares in favor of the proposal  and  1,019,723  shares  against the
proposal.  The number of votes that  abstained  from voting on the  proposal was
225,188.



                                       16
<PAGE>


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         There is no established  public trading market for the shares of common
stock and we do not currently  intend to seek  inclusion of the shares of common
stock in any  established  public  trading  market.  As of May 31, 2002,  we had
33,369,913  outstanding  shares of common  stock,  including  740,000  shares of
non-voting common stock, owned by approximately 1,100 holders.

         There  are  56,392,645  outstanding  shares  of  common  stock on an as
converted  basis that can be sold currently  pursuant to Rule 144. As of May 31,
2002, we have

         -    issued  options  to purchase an aggregate  of 2,898,960  shares of
              common stock  and 3,597,699  shares of Series F Preferred Stock to
              our directors, officers and current and former employees;
         -    issued  warrants to purchase an aggregate of 12,710,900  shares of
              common stock  to investors,  consultants  and strategic  partners;
              and
         -    granted   registration   rights   to  holders   of   approximately
              40,113,000 of common stock, on an as converted basis.

         Since  our  inception,  we have not  declared  any  dividends  or other
distributions  on our shares of common stock.  We do not  anticipate  paying any
other cash  dividends  in the  foreseeable  future and  anticipate  that  future
earnings would be retained to finance operations.

         On June 29,  2001,  Holdings  and certain  stockholders  entered into a
Preferred Stock Purchase  Agreement whereby the stockholders  agreed to purchase
up to an  aggregate  of  1,000,000  shares of the Series E Preferred  Stock at a
price of $15.00 per share.  The  purchase of shares took place at  approximately
one-month intervals from June 2001 through January 2002.

         In monthly  closings  from June 2001 through  January  2002,  investors
purchased 983,333 shares of the Series E Preferred Stock for an aggregate amount
of approximately $14,750,000.

         The Series E Preferred  Stock is entitled to certain  preferences  over
existing  classes of the Company's  stock in the event of  liquidation,  sale of
assets or merger  involving the Company  equal to twice its purchase  price plus
80% of proceeds  above that amount up to $200  million,  plus 76.56% of proceeds
above $200 million up to and including  $304.5  million,  plus 56% of amounts in
excess of $304.5  million.  The Series E Preferred Stock will vote together with
the  Company's  common  stock and have 32 votes per share.  Calculated  based on
shares  outstanding  as of  December  31,  2001,  the Series E  Preferred  Stock
represents  34.6% of the  votes of the  outstanding  common  stock  (and  shares
entitled  to vote  with  the  common  stock)  and,  in the  aggregate,  if fully
subscribed  to,  could  represent  up to 36.4% of the  votes of the  outstanding
common stock (and shares entitled to vote with the common stock). Holders of the
Series E Preferred are entitled to preemptive and registration rights.

         In 2001,  the  Company  adopted a new stock  option  plan  under  which
employees  and others may  receive  options to acquire  the  Company's  Series F
Preferred Stock. The Series F Preferred Stock is entitled to certain preferences
over existing  classes of the Company's stock in the event of liquidation,  sale
of assets or merger involving the Company, equal to 20% of proceeds greater than
$30 million up to and including  $200  million,  19.14% of proceeds in excess of
$200 million up to and including $304.5 million and 14% of proceeds in excess of
$304.5 million. Holders of Series F Preferred Stock will be entitled to one vote
per share. No options on the Series F Preferred Stock have been exercised.

         In connection with the settlement of litigation of the action captioned
"Transamerica Business Credit Corporation,  Wells Fargo Equipment Finance, Inc.,
Diamond Lease  (U.S.A.),  Inc. and Linc  Capital,  Inc. v. OptiMark US Equities,
Inc. f/k/a OptiMark  Technologies,  Inc., OptiMark,  Inc. and OptiMark Holdings,
Inc.", Holdings authorized and issued 300,000 shares of a new Series G Preferred
Stock of the


                                       17
<PAGE>


Company,  par value  $.01 per share  (the  "Series G  Preferred  Stock")  to the
plaintiffs that ranks junior to the existing Series E Preferred Stock and Series
F  Preferred  Stock but senior to all other  classes or series of capital  stock
with respect to  liquidation.  In  particular,  the Series G Preferred  Stock is
entitled to receive an amount, in the event of a liquidation,  sale of assets or
merger involving the Company,  equal to 4.30% of the total amount distributed in
excess of $200,000,000 up to and including $304,500,000.

         The issuance of the Series E Preferred Stock and the Series G Preferred
Stock was solely to accredited  investors and exempt from registration  pursuant
to Rule 506 of Regulation D of the Securities Act of 1933, as amended.



                                       18
<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

         Our selected  financial data for and as of the end of each of the years
ended December 31, 2001,  2000,  1999,  1998 and 1997 have been derived from our
audited  consolidated   financial  statements,   including  notes  thereto.  The
information  set forth below is qualified  in its entirety by reference  to, and
should be read in  conjunction  with,  "Management's  Discussion and Analysis of
Financial  Condition and Results of Operations" and the  consolidated  financial
statements and notes thereto included elsewhere in this Form 10-K.


<TABLE>
<CAPTION>
                                                                    Years Ended December 31,
                                           2001             2000              1999             1998             1997
                                           ----             ----              ----             ----             ----

<S>                                   <C>              <C>              <C>              <C>              <C>
Revenue ...........................   $  11,425,722    $  15,234,063    $   1,620,454             --               --

Operating expenses ................      28,615,352       53,285,111       63,811,183    $   9,924,040    $   5,132,371

Other expense (income), net .......          40,335       (1,206,432)      (3,497,459)      (2,159,512)        (562,366)

Loss from continuing operations ...     (17,229,965)     (36,844,616)     (58,693,270)      (7,764,528)      (4,570,005)
Loss from continuing operations per
share (basic and diluted) .........   $       (0.49)   $       (1.00)   $       (1.67)   $       (0.25)   $       (0.17)
Weighted average common shares
outstanding (basic and diluted) ...      35,004,561       36,603,854       35,193,208       31,067,059       27,199,563


Cash and cash equivalents .........   $   1,624,017    $   2,919,548    $  62,637,410    $  63,839,270    $   7,416,760

Working (deficit) capital .........     (13,671,141)      (2,942,555)      59,127,384       61,803,570        6,356,581

Property and equipment - net ......       1,381,435        5,845,760       12,881,116        6,085,506        1,438,266

Intangible assets - net ...........          59,347          120,748       26,733,541             --               --

Total assets ......................       5,122,962       13,841,498      114,511,939       63,806,571        7,549,417
Redeemable preferred stock ........      13,633,854             --               --               --               --

Stockholders' (deficiency) equity .     (25,027,141)       4,561,688      106,524,760       59,318,827        6,016,090
</TABLE>


                                       19
<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The  following  discussion  should  be read  in  conjunction  with  the
accompanying audited financial  statements and related footnotes.  This document
contains, in addition to historical information, forward-looking statements that
involve risk and uncertainties.  Our actual results could differ materially from
the results  discussed  in the  forward-looking  statements.  Factors that could
cause or contribute to such  differences  include those discussed below, as well
as those discussed elsewhere in this document. See "Item 1 - Business."

Discontinued and Suspended Operations
-------------------------------------

         On  September  19,  2000,  the  Company  discontinued  its US  Equities
Business.  The Company has  discontinued  all operations of the equities trading
system for the US Equities Business and terminated all  communications  networks
and other  related  systems  that  were  necessary  to  support  that  business.
Accordingly,  results of this  operation  have been  classified as  discontinued
operations in the consolidated  financial statements and prior periods have been
reclassified  to  conform to this  presentation.  The  discussion  of results of
operations  in this section  relates only to the  Company's  Exchange  Solutions
Services  Business,  its only business  segment in 2001. The Company expects the
process of disposing of the net liabilities of the  discontinued  business to be
completed  by  December  31,  2002  as a  result  of the  continuing  settlement
negotiations  with  certain  companies  from  which  we  had  previously  leased
equipment.  This  disposition  includes  negotiated  payments  to be made  after
December 31, 2002.

         In January 2002, the Company effectively suspended  development,  sales
and marketing efforts related to its Exchange Solutions Services Business. As of
that  date,  OptiMark  became a company  whose  primary  purpose  is to hold the
securities of Innovations and to consummate financing and strategic transactions
with other parties.  OptiMark  continues to attempt to solicit  interest from or
opportunities with third parties concerning possible  additional  investments or
strategic  alliances.  However, no binding or definitive  arrangements have been
reached  with any third  parties  and there can be no  assurances  that any such
transactions will be consummated.  OptiMark's VWAP assets utilized in the Ashton
transaction  were  part  of a  general  effort  to  determine  ways  to  utilize
OptiMark's  technology  for trading venues to be owned and operated by OptiMark.
OptiMark has continued to develop additional  concepts with a very limited team.
There is no assurance that these limited  development efforts will result in new
products or receive the funding necessary for them to continue.

Continuation as a Going Concern
-------------------------------

         The  accompanying  financial  statements  have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of  liabilities  in the normal course of business.  The Company has realized net
losses from operations each year since inception. The Company's current cash and
cash equivalents,  plus the expected cash flows for 2002, are not expected to be
sufficient to meet its 2002 operating and financial commitments. Accordingly, if
the Company is unable to raise  additional  cash either directly or through sale
or borrowing  against  Innovations'  holdings of Ashton stock, the Company would
face the imminent and likely  potential for  bankruptcy or  liquidation.  If the
Company is forced to declare bankruptcy or pursue liquidation,  the value of the
Company's  assets  may not be  sufficient  to pay  its  creditors  in full  and,
accordingly, the Company's common and preferred stock would have no value.

Critical Accounting Policies
----------------------------

         As a  result  of the  Company's  having  discontinued  its US  Equities
Business and suspended its Exchange  Solutions  Services  Business,  the Company
considers the two critical policies  described below to be most important to the
portrayal  of its  financial  condition  and that  require  the most  subjective
judgment  and, as a result  decrease  the  inherent  level of  precision  in our
financial statements.


                                       20
<PAGE>


         Reserve Related to Contract  Renegotiations  and  Terminations.  At the
time we  discontinued  the US Equities  Business,  this  reserve was recorded to
reflect the contingent liability to those companies from which we had previously
contracted for leased  equipment and related  services.  The reserve  balance is
substantially  less than the  gross  claims  made by the  former  suppliers  and
management  must  use  substantial  judgment  based  on,  among  other  factors,
disputing  the  size  of the  gross  claims  based  on  contractual  provisions,
asserting counterclaims and affirmative defenses,  mitigating the claims through
returns or sales of leased equipment and negotiating  substantial  reductions in
the net amounts claimed after mitigation.

         Impairment of Property and Equipment. As a result of the Company having
discontinued its US Equities Business in September 2000 and having suspended its
Exchange  Solutions  Services  Business in January  2002,  certain  property and
equipment  is no longer in use and must be  considered  impaired.  Some of these
assets may be directly identifiable to the discontinued  business;  however many
others are shared  and/or  non-specific  and  careful  judgment  is  required to
determine the appropriate impairment reserve.

History of Losses
-----------------

         We have experienced  losses each quarter since our inception.  Although
we have  restructured  our business  and  discontinued  one segment,  losses are
likely to continue for the  foreseeable  future.  As of December  31, 2001,  our
accumulated deficit was approximately $362,907,000.

Results of Operations
---------------------

Year ended December 31, 2001 compared to year ended December 31, 2000

         Revenue.  Total  revenue  for the  year  ended  December  31,  2001 was
approximately  $11,426,000 as compared to approximately $15,234,000 for the year
ended  December  31,  2000.  Of  these  amounts,  approximately  $2,818,000  and
$11,684,000  were derived from development  services  provided to our affiliate,
Japan OptiMark Systems,  Inc. ("JOS"), for the years ended December 31, 2001 and
2000, respectively.  The balance in 2001 was derived from services to The Nasdaq
Stock  Market,  Inc.  ("Nasdaq")  and  the  recognition  of  revenue  previously
deferred.  The  reduction in services to JOS  resulted  from  completion  of the
development  phase and initiation of an enhancement and maintenance phase with a
lower level of monthly billing.  Billings for enhancement and maintenance ceased
as of August 31,  2001.  The  development  contract  with Nasdaq and the related
billings terminated on December 31, 2001.

         Of the  approximately  $11,426,000  in revenue  that was earned for the
twelve months ended December 31, 2001, $9,287,000 was from development services,
$2,139,000  was  from  maintenance  and  support  fees.  Of  the   approximately
$15,234,000  in revenue that was earned for the twelve months ended December 31,
2000,  $15,033,000 was from development services,  $201,000 was from maintenance
and support fees.

         Operating  Expenses.  Operating  expenses  for the twelve  months ended
December 31, 2001 totaled approximately $28,615,000 as compared to approximately
$53,285,000  for the twelve months ended  December 31, 2000.  The following is a
discussion of the decrease as it relates to each of the expense components:

         Cost of Sales.  Cost of sales  includes  expenses  incurred in order to
develop and implement  our  products.  Cost of Sales for the twelve months ended
December 31, 2001 totaled approximately  $6,417,000 as compared to approximately
$8,256,000  for the twelve  months  ended  December  31,  2000.  The decrease of
$1,839,000  was primarily  due to the decrease in resources  utilized in the JOS
project.  The decrease consisted of lower personnel related expenses incurred in
connection  with JOS and equipment  lease expense due to the  termination of the
majority of the Company's  operating leases in the third quarter of 2000, offset
by  increases  in  warranty  expense,  communication  expense  and rent  expense
allocated to the Nasdaq project.

         Sales and Marketing.  Sales and marketing expense for the twelve months
ended  December  31,  2001  totaled  approximately  $1,738,000  as  compared  to
approximately $1,893,000 for the twelve months


                                       21
<PAGE>


ended December 31, 2000. The decrease of $155,000 was attributable to a decrease
in costs  associated  with JOS.  The decrease  consisted  primarily of personnel
related  expenses and travel and  entertainment  expenses offset by increases in
public relations  expenses and communication  expense  associated with marketing
the Company's new product offerings.

         Research and  Development.  Research and  development  expense  totaled
approximately  $5,842,000 for the twelve months ended December 31, 2001 compared
to  approximately  $3,460,000 for the twelve months ended December 31, 2000. The
increase of  $2,382,000  was  primarily  due to  expenditures  to customize  and
develop   OptiMark's   proprietary   matching   technology  for  use  in  future
applications. The increase consisted primarily of personnel related expenses.

         General and Administrative.  General and administrative expense totaled
approximately  $9,122,000  for the twelve  months  ended  December  31,  2001 as
compared to  approximately  $9,601,000  for the twelve months ended December 31,
2000.  The decrease of $479,000 was primarily due to a decrease in  professional
fees,  personnel related expenses,  travel and entertainment  expenses and other
general office  expenses offset by an increase in corporate  insurance  expense,
recruiting  expense,  communication  expense  and rent  expense.  In addition to
general and  administrative  expenses,  OptiMark also includes the total cost of
its employee bonus program in this cost classification. The cost of this program
was  approximately  $2,216,000 for the twelve months ended December 31, 2001 and
approximately $2,169,000 for the twelve months ended December 31, 2000.

         Depreciation and  Amortization.  Depreciation and amortization  expense
totaled  approximately  $4,035,000 for the twelve months ended December 31, 2001
as compared to approximately $3,950,000 for the twelve months ended December 31,
2000.  The increase of $85,000 was primarily  due to the  Company's  decision to
identify assets, chiefly computer equipment, previously used in the discontinued
business, and redeploy them in the continuing business, offset by the absence in
2001 of amortization from certain  non-securities  industries rights, which were
written  off in the  fourth  quarter  of  2000 as  well  as  lower  depreciation
resulting from certain property and equipment, written off in the second half of
2000.

         Impairment  of  Fixed   Assets.   The  Company   recorded   charges  of
approximately   $1,147,000  and  $1,879,000  in  2001  and  2000,  respectively,
representing  an impairment of various  property and equipment in its continuing
operations for items that no longer provided economic value.

         Write-off  of  Intangible  Asset.  The  Company  recorded  a charge  of
$23,940,000 in 2000 to write off the net book value of an intangible  asset. The
write off was based on the Company's  analysis,  which  indicated that the asset
presented no future economic value.

         Restructuring   Expense.   We  recorded  a   restructuring   charge  of
approximately   $316,000  for  the  twelve  months  ended   December  31,  2001,
representing  severance  costs  associated  with a workforce  reduction of forty
employees. We had taken a restructuring charge of approximately $292,000 for the
twelve months ended December 31, 2000. Included in this amount was approximately
$1,890,000  representing  charges  associated  with the  revaluation of employee
options,  $750,000  related to a settlement  payment to a vendor,  approximately
$4,000  related  to the  write  off  of  security  deposits  and  the  remaining
approximately   $268,000   included  notice  period  salaries  of  approximately
$167,000,  severance of approximately $68,000 and vacation pay and other related
employee costs of approximately  $33,000. The restructuring charges were reduced
by approximately $2,620,000 from a net reduction in vendor obligations.

         Warrant   Compensation   Expense.   We  incurred  a  non-cash   warrant
compensation   expense  for  the  twelve  months  ended  December  31,  2000  of
approximately  $15,000.  This amount was  attributable to certain warrants being
charged to expense in  accordance  with the  Emerging  Issues Task Force  96-18,
"Accounting for Equity  Instruments  That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with, Selling Goods or Services."

         Other Income and Expense.  Other income and expense  includes  interest
income  on cash  and cash  equivalents,  interest  expense  on  capital  leases,
corporate insurance vendor financing and stockholder notes,


                                       22
<PAGE>


writedown of an  investment  and gain  realized by the recovery of an investment
previously  written off. Other expense,  net, was approximately  $40,000 for the
twelve  months  ended  December  31, 2001 as compared to other  income,  net, of
approximately  $1,206,000  for the twelve  months ended  December 31, 2000.  The
decrease of $1,246,000 was due to (a) a reduction in interest  bearing  deposits
over the course of the prior twelve months,  (b) payments on capital leases over
the same period of time,  which reduced the interest portion of current payments
(c) interest  incurred on financing  provided by a vendor in connection with the
Company's   corporate   insurance  policy  and  (d)  interest  incurred  on  the
stockholder  notes.  In  addition,  the Company  wrote off its  investment  in a
customer.  These were offset by a gain realized by the recovery of an investment
written off in a prior year.

Year ended December 31, 2000 compared to year ended December 31, 1999

         Revenue.  Total  revenue  for the  year  ended  December  31,  2000 was
approximately  $15,234,000 as compared to approximately  $1,620,000 for the year
ended  December  31,  1999.  Of these  amounts,  approximately  $11,684,000  and
$1,620,000  were derived from  development  services  provided to our affiliate,
JOS, for the years ended December 31, 2000 and 1999,  respectively.  We began to
recognize revenue for development services to JOS in July 1999.

         Of the  approximately  $15,234,000  in revenue  that was earned for the
twelve  months  ended  December  31,  2000,  $15,033,000  was  from  development
services,  $201,000 was from  maintenance  and support fees.  All of the revenue
earned for the twelve  months  ended  December  31,  1999 came from  development
services.

         Operating  Expenses.  Operating  expenses  for the twelve  months ended
December 31, 2000 totaled  approximately  $53,285,000 as compared to $63,811,000
for the twelve months ended  December 31, 1999. The following is a discussion of
the decrease as it relates to each of the expense components:

         Cost of Sales.  Cost of sales  includes  expenses  incurred in order to
develop and implement  our  products.  Cost of Sales for the twelve months ended
December 31, 2000 totaled approximately  $8,256,000 as compared to approximately
$896,000  for the twelve  months  ended  December  31,  1999.  The  increase  of
$7,360,000  is primarily  due to the  increase in resources  utilized in the JOS
project  as well as the  addition  of the NASDAQ  project in the year 2000.  The
increase  primarily  consists of personnel related  expenses,  equipment rental,
travel and entertainment expense and other general operating expenses.

         Sales and Marketing.  Sales and marketing expense for the twelve months
ended December 31, 2000 totaled approximately $1,893,000 as compared to $618,000
for the twelve months ended  December 31, 1999.  The increase of $1,275,000  was
primarily  due  to  costs   associated   with   developing   existing   customer
relationships and in attracting new business.  The increase primarily  consisted
of  personnel  related  expenses,  travel and  entertainment  expenses and other
general operating expenses.

         Research and  Development.  Research and  development  expense  totaled
approximately  $3,460,000 for the twelve months ended December 31, 2000 compared
to  $1,030,000  for the twelve months ended  December 31, 1999.  The increase of
$2,430,000  was  primarily  due to an  increase in the  development  of our core
platforms  and  capabilities  for  use  in  future  applications.  The  increase
primarily  consisted of personnel  related  expenses,  travel and  entertainment
expense and other expenses.

         General and Administrative.  General and administrative expense totaled
approximately  $9,601,000  for the twelve  months  ended  December  31,  2000 as
compared to  $11,229,000  for the twelve  months ended  December  31, 1999.  The
decrease of $1,628,000  was primarily  due to a decrease in  professional  fees,
travel and entertainment expenses and other general office expenses offset by an
increase in the loss on disposal of assets in 2000.

         Depreciation and  Amortization.  Depreciation and amortization  expense
totaled  approximately  $3,950,000 for the twelve months ended December 31, 2000
as compared to  $1,728,000  for the twelve months ended  December 31, 1999.  The
increase of  $2,222,000  was  primarily  due to the  amortization  of a software
license, acquired in March of 1999, over a full year in 2000 as compared to only
three quarters in


                                       23
<PAGE>


1999,  as well as the  acceleration  of the  amortization  of this  asset in the
fourth  quarter of 2000 due to a change in its  estimated  useful life,  and the
full year  depreciation of approximately  $11,000,000 in additional fixed assets
that were acquired in 1999.

         Impairment  of  Fixed  Assets.   The  Company   recorded  a  charge  of
approximately  $1,879,000 in 2000 representing an impairment of various property
and equipment in its  continuing  operations  for items that no longer  provided
economic value.

         Write-off  of  Intangible  Asset.  The  Company  recorded  a charge  of
$23,940,000 in 2000 to write off the net book value of an intangible  asset. The
write off was based on the  Company's  analysis  that  indicated  that the asset
presented no future economic value.

         Restructuring   Expense.   We  recorded  a   restructuring   charge  of
approximately  $292,000 for the twelve months ended December 31, 2000.  Included
in this amount was approximately $1,890,000 representing charges associated with
the revaluation of employee options, $750,000 related to a settlement payment to
a vendor, approximately $4,000 related to the write off of security deposits and
the  remaining   approximately  $268,000  included  notice  period  salaries  of
approximately $167,000,  severance of approximately $68,000 and vacation pay and
other related employee costs of approximately $33,000. The restructuring charges
were  reduced  by  approximately  $2,620,000  from  a net  reduction  in  vendor
obligations. We had taken a restructuring charge of approximately $7,693,000 for
the twelve  months ended  December 31, 1999 related to a workforce  reduction in
our continuing operations of seventy-two employees.  Included in this amount was
approximately   $5,811,000,   representing   the  charge   associated  with  the
revaluation  of employee  options  and the  remaining  balance of  approximately
$1,882,000 includes notice period salaries of approximately $876,000,  severance
of  approximately  $706,000 and vacation pay and other related employee costs of
approximately $300,000.

         Warrant   Compensation   Expense.   We  incurred  a  non-cash   warrant
compensation   expense  for  the  twelve  months  ended  December  31,  2000  of
approximately  $15,000 as compared to  approximately  $40,617,000 for the twelve
months ended  December  31, 1999.  These  amounts were  attributable  to certain
warrants  being charged to expense in accordance  with the Emerging  Issues Task
Force 96-18,  "Accounting for Equity  Instruments  That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with, Selling Goods or Services."

         Other Income and Expense.  Other income and expense  includes  interest
income on cash and cash equivalents,  interest expense on capital leases, equity
in loss of affiliate and gain on recovery of bad debt.  Other  income,  net, was
approximately  $1,206,000  for the twelve  months  ended  December  31,  2000 as
compared to  approximately  $3,497,000  for the twelve months ended December 31,
1999.  The decrease of  $2,291,000  was primarily due to a reduction in interest
bearing  deposits over the course of the prior twelve  months,  the absence of a
$700,000 gain recognized in 1999  associated with the partial  recovery of a bad
debt that had previously  written off, offset by equity  participation in a loss
from an investee of approximately $69,000 in 1999.

Liquidity and Capital Resources
-------------------------------

         As of December 31, 2001, our principal  sources of liquidity  consisted
of  approximately  $1,624,000  of cash  and  cash  equivalents  as  compared  to
approximately $2,920,000 of cash and cash equivalents as of December 31, 2000.

         Net cash used in  continuing  operating  activities  was  approximately
$11,061,000  and  approximately  $6,601,000 for the twelve months ended December
31,  2001 and 2000,  respectively.  The change in net  operating  cash flows was
attributable  to net  losses in both  periods,  partially  reduced  by  non-cash
charges  including  depreciation  and  amortization,  write-offs  of  assets  in
connection with the restructuring, values assigned to options in connection with
restructurings  and values  assigned to  warrants  issued as  compensation.  The
fluctuation between periods was also affected by net changes in working capital.


                                       24
<PAGE>


         Net cash used in investing  activities was  approximately  $696,000 and
$1,094,000 for the twelve months ended December 31, 2001 and 2000, respectively.
The uses of cash in 2001 for  investing  activities  primarily  consisted of the
purchase of a mainframe  computer as part of a settlement of all amounts owed to
a company from which OptiMark had previously leased equipment.  The uses of cash
in 2000 for investing  activities  primarily  consisted of purchases of computer
equipment  and  leasehold  improvements.   Other  uses  of  cash  for  investing
activities in each period consisted of purchases of software licenses reduced in
each period by proceeds from the disposal of equipment.

         Net cash provided by financing  activities  for the twelve months ended
December 31, 2001 was  approximately  $14,161,000 and net cash used in financing
activities  for the twelve  months  ended  December  31, 2000 was  approximately
$1,197,000.  In 2001,  cash was  provided  from the sale of  Series E  Preferred
Stock,  stockholder loans, the recovery of an investment  previously written off
and the issuance of a minority  interest in a subsidiary of the Company  reduced
by principal  payments on capital  leases.  On June 29, 2001,  the obligation to
repay the  stockholder  loans was  cancelled  in exchange for shares of Series E
Preferred Stock. The use of cash in 2000 was primarily for principal payments on
capital  leases  reduced by proceeds  from the  issuance of common stock for the
exercise of options.

         During 2001, the Company raised additional  capital and settled certain
liabilities  through the sale or issuance of its Series E and Series G Preferred
Stock. These issuances contained certain provisions and rights for the preferred
stockholder  that required  that they be  classified as redeemable  stock on our
balance  sheet.  These  terms were part of the  negotiated  provisions  of these
preferred stock financings.

         On March 21,  2002,  the Company  entered  into a loan  agreement  with
certain of its shareholders.  Under the agreement, the Company borrowed $500,000
for a  period  of 180  days at an  interest  rate of 10% per  annum.  In lieu of
repayment  in cash,  the lenders may require the Company to repay the  principal
amount of the loan by causing OptiMark to transfer eight shares of common stock,
valued  at  $2,500  per  share,  and  forty-eight  shares  of the  Non-Qualified
Preferred  Stock,  valued at  $10,000  per  share,  of  Innovations,  subject to
adjustment as provided in the loan  agreement with accrued  interest  payable in
cash at maturity

         On April 11, 2002,  the Company  entered  into a second loan  agreement
with certain of its shareholders.  Under this second loan agreement, the Company
borrowed $570,000 for a period of 180 days at an interest rate of 10% per annum.
In lieu of repayment  in cash,  the lenders may require the Company to repay the
principal  amount of the loan by causing  OptiMark to transfer  twelve shares of
common  stock,  valued  at  $2,500  per  share,  and  fifty  four  shares of the
Non-Qualified  Preferred  Stock,  valued at $10,000 per share,  of  Innovations,
subject to  adjustment  as provided in the second loan  agreement  with  accrued
interest payable in cash at maturity.

         On May 31, 2002,  the Company  entered into a third loan agreement with
certain  of its  shareholders.  Under this third  loan  agreement,  the  Company
borrowed  $1,650,000  for a period  of 180 days at an  interest  rate of 10% per
annum.  The third  loan is  secured  by  substantially  all of the assets of the
Company.  In lieu of repayment of principal in cash, the lenders may require the
Company  to repay  the  principal  amount  of the loan by  causing  OptiMark  to
transfer  twenty-eight  shares of common stock,  valued at $2,500 per share, and
one hundred  fifty-eight shares of the Non-Qualified  Preferred Stock, valued at
$10,000 per share, of Innovations subject to adjustment as provided in the third
loan agreement with accrued interest payable in cash at maturity.

         Pursuant to the  Innovations  Rights  Agreement,  Holdings and SOFTBANK
have certain call and put rights described  below. The Independent  Committee of
the  Board has the  right  commencing  October  1,  2002 and  exercisable  until
September 30, 2003,  to recommend to the Board that  Holdings  purchase all, but
not less than all, of the SOFTBANK Shares for $125,000 in cash and 16,667 shares
of Series E Preferred Stock of Holdings.  If the Board of Directors accepts such
recommendation, SOFTBANK would be obligated to sell the SOFTBANK shares for that
consideration.

         Upon the occurrence of a Liquidity  Event (defined  below) on or before
September  30,  2003,  the  SOFTBANK  Shares will be  purchased  by Holdings for
$125,000 in cash and 16,667 shares of Series E


                                       25
<PAGE>


Preferred Stock of Holdings. A "Liquidity Event" means any of the following: (i)
Innovations'  sale,  conveyance or other disposition of all or substantially all
of its assets; (ii) the acquisition of Innovations by another entity by means of
merger or consolidation  resulting in the exchange of the outstanding  shares of
Innovations  for  securities  or other  consideration  issued,  or  caused to be
issued,  by the acquiring  entity or its subsidiary,  unless the stockholders of
Innovations  immediately  prior to the  consummation of such transaction hold at
least 50% of the voting power of the surviving  corporation  as a result of such
transaction; (iii) the consummation by Innovations of a transaction or series of
related  transactions,  including the issuance or sale of voting securities,  if
the  stockholders of Innovations  immediately  prior to such transaction (or, in
the case of a series of transactions,  the first of such transactions) hold less
than 50% of the voting power of Innovations  immediately  after the consummation
of such transaction  (or, in the case of a series of  transactions,  the last of
such  transactions);  or  (iv)  any  initial  underwritten  public  offering  of
Innovations  Common  Stock.  Notwithstanding  the  foregoing,  Holdings will not
exercise this call option in the event that the Independent Committee recommends
that Holdings not purchase the SOFTBANK Shares.

         In the event that: (i) the call rights of Holdings described above have
not been  exercised  on or  before  September  30,  2003,  (ii) the  Independent
Committee  no longer  exists  and (iii) no  independent  directors  serve on the
Holdings  Board of Directors  and,  after  reasonable  good faith efforts by the
remaining  members of the Holdings Board of Directors,  no  independent  persons
qualified  to serve on the Holdings  Board of  Directors  have been found or, if
found,  are not willing to serve on the Holdings  Board of  Directors,  then the
Holdings  Board of  Directors  will engage an  independent  investment  banking,
accounting or third party valuation firm to evaluate whether or not it is in the
best interests of Holdings that it purchase the SOFTBANK  Shares.  If such third
party  determines  it is in the best  interests  of  Holdings  to  purchase  the
SOFTBANK Shares, Holdings will be obligated to purchase such shares on or before
December 31, 2003 for  $125,000 in cash and 16,667  shares of Series E Preferred
Stock of Holdings.

         SOFTBANK has the right,  commencing  on October 1, 2002 and  continuing
until  September  30,  2003,  to put all, but not less than all, of the SOFTBANK
Shares to Holdings in exchange for 16,667 shares of Series E Preferred  Stock of
Holdings.

        In the event  that no put of, or call on, the  SOFTBANK  Shares has been
exercised  by  October  31,  2003,  then  commencing  on  November  1,  2003 and
continuing  until November 30, 2003,  SOFTBANK has the right to require Holdings
to purchase all, but not less than all, of the SOFTBANK Shares for 16,667 shares
of Series E Preferred Stock of Holdings.

         The results  indicated for  continuing  operations in our  Consolidated
Statement of Operations for the year ended December 31, 2001 are not necessarily
indicative of the expense  spending  rates for the  continuing  operations.  The
results from  operations in future periods may differ  materially as we continue
to focus our resources on the Ashton  acquisition  and, if that  transaction  is
consummated, the management of our investment in that company.

Factors that may affect future results
--------------------------------------

         The following factors may affect our future results:

WE ARE DEPENDENT ON THE SUCCESS OF ASHTON AND/OR FUTURE TRANSACTIONS

         Holdings,  OptiMark  and  Innovations  do not have  revenue  generating
operations.  The business of Equities was  discontinued  in September  2000.  As
such, the Company  believes that the future value of Holdings' stock will depend
principally  on the value of the Ashton Common Stock held by  Innovations  or on
other transactions that the Company can consummate.

         The  Company's  investment  in Ashton is  subject to  additional  risks
including the risks  attendant to Ashton's  business.  Innovations has conducted
limited due diligence  with respect to Ashton's  business.  Based solely on that
limited review,  Innovations has no reason to believe that Ashton's  description
of its business is incorrect in any material respect.


                                       26
<PAGE>


         There  may be  additional  risks  of  which  we  and/or  Ashton  do not
currently know or of which are deemed to be immaterial  based on the information
available. All of these risks may impair business operations.

         There are no assurances  that the value of the Ashton Common Stock will
appreciate or other transactions will occur.

         The  Company   continues  to  attempt  to  solicit   interest  from  or
opportunities with third parties concerning possible  additional  investments or
strategic  alliances.  However, no binding or definitive  arrangements have been
reached  with any third  parties  and there can be no  assurances  that any such
transactions will be consummated.  OptiMark's VWAP assets utilized in the Ashton
transaction  were  part  of a  general  effort  to  determine  ways  to  utilize
OptiMark's  technology  for trading venues to be owned and operated by OptiMark.
OptiMark has continued to develop additional  concepts with a very limited team.
There is no assurance that these limited  development efforts will result in new
products or receive the funding necessary for them to continue.

WE DO NOT HAVE SUFFICIENT WORKING CAPITAL TO CONTINUE AS A GOING CONCERN

     The  Company's  current cash and cash  equivalents,  plus the expected cash
flows for 2002, are not expected to be sufficient to meet its 2002 operating and
financial commitments. Accordingly, if the Company is unable to raise additional
cash either directly or through sale or borrowing against Innovations'  holdings
of shares of the Ashton  Common  Stocks or the Note,  the Company would face the
imminent and likely  potential for bankruptcy or liquidation.  If the Company is
forced to declare bankruptcy or pursue  liquidation,  the value of the Company's
assets may not be sufficient to pay its creditors in full and, accordingly,  the
Company's common stock and preferred stock would have no value. The Company will
continue to seek  additional  funding both to support its operation as a holding
company as well as its very limited  efforts  related to  potential  new product
development.  While the Company hopes to be able to obtain additional  financing
for these limited product development activities,  continue to borrow money from
SOFTBANK or raise  capital  through the sale or borrowing  against the shares of
Innovations related to its holdings of shares of the Ashton Common Stock and the
Note,  the Company may not be able to raise this  capital  before it runs out of
cash.  In  addition,  the Company has pledged a portion of its shares of Capital
Stock in  Innovations  to SOFTBANK as payment for loans that have  already  been
provided.  In the event that the  Company  does not have  enough cash to pay the
principal and interest on these loans as they come due, the  Company's  holdings
in  Innovations  would be reduced  accordingly.  This would reduce the Company's
ability to utilize these assets to raise additional  capital necessary to ensure
continuation  as a going  concern.  There is no  assurance  that  the  Company's
holdings in Innovations,  as represented by  Innovations'  holdings of shares of
the Ashton Common Stock, will have any value useable as collateral for a loan or
sellable to raise cash at any time or in a time frame that would let the Company
continue as a going concern.

WE MAY NOT GENERATE  REVENUES FROM FUTURE OPERATIONS AND MAY BE WHOLLY DEPENDENT
ON ADDITIONAL FINANCIAL INVESTMENTS

         We will need working capital to fund the relatively  limited operations
necessary  to  carry  out our  duties  and  obligations  as a  holding  company,
including the administration and financial reporting  obligations.  We currently
do not generate any revenues from continuing operations in order to provide this
working capital.  We will need to raise additional capital to meet our operating
requirements.  If we raise  additional funds through the issuance of securities,
these securities may have rights,  preferences or privileges  senior to those of
our common stock and existing series of preferred  stock,  and our stock holders
may experience dilution to their equity ownership.

WE DO NOT GENERATE REVENUES FROM CLIENTS

         We  currently  do not have any clients who  generate  revenues  for the
Company.  We may not seek to re-start  the  development,  sales,  and  marketing
efforts related to our Exchange Solutions Services


                                       27
<PAGE>


Business and therefore  may not have clients from whom we can generate  revenues
in the future. As such, there are no assurances that we can generate revenues to
support operations.

WORKOUT AND DEBT RESTRUCTURING

         We are currently engaged in litigation  and/or settlement  negotiations
with, or may face unasserted  claims from,  certain large creditors of Equities.
The aggregate gross claims of these creditors are approximately $14,500,000. The
Company is attempting to conclude the  negotiations in a manner which allows the
Company  as  a  whole  to  continue  to  pursue  its  business.  The  negotiated
settlements are attempting to be achieved through a combination of disputing the
size  of  the  gross  claims   based  on   contractual   provisions,   asserting
counterclaims and affirmative defenses, mitigating the claims through returns or
sales of leased equipment, negotiating substantial reductions in the net amounts
claimed  after  mitigation,  agreeing on deferred  payment of the net claims and
converting some of the debt into equity. To the extent that we can and do settle
with these creditors,  the ability to make payments to them under any settlement
agreement  would  depend upon  securing  additional  financing.  There can be no
assurance that these  negotiations will be successful or that the creditors will
not seek to put Equities or the Company into  bankruptcy  in the near future.  A
bankruptcy  proceeding will materially and negatively  affect the ability of the
Company to continue operations.

         On January 25, 2002,  OptiMark  Holdings,  Inc.  and its  subsidiaries,
OptiMark US Equities,  Inc.  (f/k/a OptiMark  Technologies,  Inc.) and OptiMark,
Inc.  (collectively,  "OptiMark  Parties"),  settled,  without any  admission of
liability,  the arbitration  captioned  International  Exchange  Networks,  Ltd.
("IXNET")  against  OptiMark  Technologies,   Inc.,  OptiMark  Holdings,   Inc.,
OptiMark, Inc. and OptiMark US Equities, Inc., (American Arbitration Association
Case No. 131170016601).  Under the terms of the settlement, the OptiMark Parties
agreed to pay IXNET,  on or before eleven (11) business days after  December 31,
2006, the amount of $6,000,000.  However,  if the OptiMark  Parties have paid to
IXNET (a) $500,000  immediately upon execution of a settlement  agreement (which
it did on January 30, 2002),  and pay (b)  $1,000,000 on or before  December 31,
2003 and (c)  $1,000,000  on or before  December 31,  2004,  then in that event,
IXNET has agreed to accept such  payments as full and complete  satisfaction  of
the OptiMark Parties'  obligations under the settlement and to forgo and forgive
irrevocably  any and all  other  sums due to IXNET  under  the  settlement.  The
OptiMark Parties  currently intends to make payments to IXNET in accordance with
this  payment  schedule.  However,  our  ability to make the two  payments of $1
million  dollars on or before  December  31, 2003 and 2004,  respectively,  will
depend on the Company  securing  additional  financing or  realizing  additional
value from our current assets.

Recent Accounting Pronouncements
--------------------------------

         During 2001, the Company  adopted SFAS 133,  "Accounting for Derivative
Instruments  and  Hedging  Activities"  ("SFAS  133"),  as  amended by SFAS 137,
"Accounting  for  Derivative  Instruments  and Hedging  Activities - Deferral of
effective date of SFAS 133" ("SFAS 137") and SFAS 138,  "Accounting  for Certain
Derivative  Instruments and Certain Hedging  Activities" ("SFAS 138"). SFAS 133,
as  amended  by SFAS 137 and SFAS 138,  requires  that an entity  recognize  all
derivatives  as  either  assets  or  liabilities  measured  at fair  value.  The
accounting  for changes in the fair value of a derivative  depends on the use of
the  derivative.  The adoption of SFAS 133, as amended by SFAS 137 and SFAS 138,
did not result in any impact in net loss or in accumulated  other  comprehensive
loss during 2001.

         In July 2001, the Financial  Accounting Standards Board ("FASB") issued
SFAS 141, "Business Combinations" ("SFAS 141"). SFAS 141 requires the use of the
purchase method of accounting for all business combinations initiated after June
30, 2001 and eliminates the  pooling-of-interests  method.  The adoption of SFAS
141 by the  Company  during  2001 did not result in any impact in net loss or in
accumulated other comprehensive loss.

         In July 2001, the FASB issued SFAS 142,  "Goodwill and Other Intangible
Assets"  ("SFAS  142").  SFAS 142 requires  that  goodwill and other  intangible
assets with  indefinite  lives no longer be  amortized,  but instead  tested for
impairment at least annually. In addition,  the standard includes provisions for
the   reclassification   of  certain   existing   intangibles  as  goodwill  and
reassessment of the useful lives of existing


                                       28
<PAGE>


recognized  intangibles.  SFAS 142 is effective for fiscal years beginning after
December 15, 2001. The Company has not determined the impact,  if any, that this
statement will have on its financial statements.

         In July 2001 the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations"  ("SFAS 143") which requires the  recognition of a liability for an
asset  retirement  obligation  in the period in which it is  incurred.  When the
liability is initially  recorded,  the carrying amount of the related long-lived
asset is correspondingly  increased. Over time, the liability is accreted to its
present value and the related  capitalized charge is depreciated over the useful
life of the asset.  SFAS 143 is effective for fiscal years  beginning after June
15,  2002.  The  Company is  currently  reviewing  the impact of SFAS 143 on the
Company.

         In  August  2001,  the  FASB  issued  SFAS  144,  "Accounting  for  the
Impairment or Disposal of Long-Lived  Assets"  ("SFAS 144").  SFAS 144 addresses
financial  accounting and reporting for the impairment or disposal of long-lived
assets.  SFAS 144 supersedes FASB Statement 121,  "Accounting for the Impairment
of  Long-Lived  Assets and for  Long-Lived  Assets to be Disposed  of",  and the
accounting and reporting provisions of APB Opinion 30, "Reporting the Results of
Operations - Reporting  the Effects of Disposal of a Segment of a Business,  and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions", for
the  disposal of a segment of a  business.  This  Statement  also amends ARB 51,
"Consolidated Financial Statements", to eliminate the exception to consolidation
for a subsidiary for which control is likely to be temporary.  The provisions of
this Statement are required to be applied  starting with fiscal years  beginning
after December 15, 2001.  The Company is currently  evaluating the impact of the
new accounting standard on existing long-lived assets and plans to adopt the new
accounting standard in its financial statements for the year ending December 31,
2002.

         During  1998,  the  Accounting  Standards  Executive  Committee  of the
American  Institute  of  Certified  Public  Accountants  issued  SOP  No.  98-1,
"Accounting  for the  Costs of  Computer  Software  Developed  or  Obtained  for
Internal Use." This statement requires the Company to capitalize certain payroll
and  payroll   related  costs  and  has  been  adopted  in  the  Company's  1999
consolidated  financial  statements.  At  December  31,  1999,  net  capitalized
software costs were approximately  $10,816,000.  These costs were written off in
2000 and are included as part of discontinued operations. In 2001, there were no
such costs capitalized.

         The  FASB  has  issued   Interpretation  44,  "Accounting  for  Certain
Transactions  Involving Stock  Compensation",  which was effective as of July 1,
2000. Interpretation 44 has had no material effect on the consolidated financial
statements. Options repriced in 2000 are subject to variable plan accounting.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         Our only  exposure  to market  risk is related  to changes in  interest
rates and foreign  currency  exchange rates. As of December 31, 2001, we did and
do  not  consider  these  risks  to  be  material.   This  discussion   contains
forward-looking  statements that are subject to risks and uncertainties.  Actual
results could vary materially as a result of a number of factors including those
mentioned in Part I above.

         Interest  Rate Risk.  As of  December  31,  2001,  we had cash and cash
equivalents of $1,624,017  that  consisted of cash and highly liquid  short-term
investments.  These  investments  may be subject to interest rate risk and would
decrease in value if interest rates increased in the marketplace. A hypothetical
increase  or  decrease of 10 percent  from  market  interest  rates in effect at
December  31,  2001  would  have  caused  the fair  value  of  these  short-term
investments to change by an immaterial  amount.  Declines in interest rates over
time  would,  however,  reduce our  interest  income.  At March 21,  2002 we had
substantially no cash balance and, as a result, had no interest rate risk.

         Equity  Price Risk.  As of December  31,  2001,  we were not subject to
equity price risk.


                                       29
<PAGE>



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See the accompanying consolidated financial statements.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

         Not applicable.



                                       30
<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The following list sets forth certain biographical  information  concerning
the Board of Directors of the Company as of May 31, 2002.

          WILLIAM A. LUPIEN (60), Chairman of the Board of Directors since 2000.
Mr.  Lupien was the founder and  co-inventor  of the  OptiMark  matching  engine
technology.  Mr.  Lupien has served as  Chairman  of the Board of  Directors  of
OptiMark Technologies,  Inc. and its predecessor,  MJT Holdings, Inc., since its
formation in 1988.  From inception  through  November 1998, Mr. Lupien served as
the Chief  Executive  Officer of OptiMark  Technologies,  Inc.  Mr.  Lupien also
serves as a Director of Broker Tec Futures Exchange,  L.L.C. Mr. Lupien received
his Bachelor of Science degree from San Diego State University.

          RONALD D. FISHER (54), Director since November 1999. Mr. Fisher is the
Vice Chairman of SOFTBANK  Holdings Inc. and a Director of SOFTBANK CORP, Japan.
Mr. Fisher also serves as the CEO of SOFTBANK Global  Ventures.  Mr. Fisher also
serves as a member of the boards of directors of SOFTBANK Corp.,  E*Trade Group,
Key3Media, Global Sports and InsWeb Corporation.  Mr. Fisher received his M.B.A.
from  Columbia  University,  New York and  Bachelor of Commerce  degree from the
University of Witwatersand in South Africa.

          ROBERT J. WARSHAW (48), Chief Executive  Officer since March 2001. Mr.
Warshaw also serves as Chief  Executive  Officer of OptiMark,  Inc. Mr.  Warshaw
previously served as Co-Chief  Executive  Officer,  Executive Vice President and
Chief Technology Officer of OptiMark,  Inc. From November 1999 to June 2000, Mr.
Warshaw  served as Executive  Vice  President  and Chief  Technology  Officer of
OptiMark  Technologies,  Inc. From October 1993 to October 1999, Mr. Warshaw was
Chief  Information  Officer  at  Lazard  Freres  & Co.  LLC.,  an  international
investment  banking firm. Mr. Warshaw received his bachelor's  degree in English
from  the  University  of   Pennsylvania   and  a  Masters  in  Management  from
Northwestern University's Kellogg School of Management.

          PHILLIP J. RIESE (51),  Director  since  November  1998.  Mr. Riese is
Chief Executive  Officer and a director of AirClic,  Inc., which  specializes in
simplifying  wireless  access  to the web using bar code  symbology.  Mr.  Riese
served as Chief  Executive  Officer of OptiMark  Holdings,  Inc.  from June 2000
until  September  2000.  From  November  1998 to June  2000,  he served as Chief
Executive Officer of OptiMark Technologies, Inc. From 1994 to November 1998, Mr.
Riese was  President of the Consumer  Card Group of American  Express,  a credit
card company,  and Chairman of American  Express  Centurion  Bank.  From 1980 to
1994,  he served in a variety of executive  positions at American  Express.  Mr.
Riese received a B. Comm. degree from Leeds University in the United Kingdom. He
received an M.B.A.  from the  University  of Cape Town in South Africa and an SM
degree in Management from MIT.

     The executive  officers  serve at the discretion of the Board of Directors.
The following  table sets forth  certain  information  concerning  the executive
officers  of the  Company  as of  May  31,  2002  (none  of  whom  has a  family
relationship with another executive officer).


Name                     Age     Position
----                     ---     --------

Robert J. Warshaw        48      President, Chief Executive Officer and Director

Matthew L. Morgan        31      Secretary




     Information  regarding the business  experience of Mr. Warshaw is set forth
above.

                                       31
<PAGE>


         MATTHEW L.  MORGAN  (31),  Controller  and  Corporate  Secretary  since
July10, 2002. Prior to joining OptiMark, Mr. Morgan was an auditor with Deloitte
& Touche  LLP from 1998 to 2000 and  Richard  A.  Eisner  LLP from 1997 to 1998.
While  at  these  firms,   Mr.  Morgan   concentrated   on  the  technology  and
service-related industries. Mr. Morgan has an undergraduate degree from the City
University of New York, Queens College and is a certified public accountant.

Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------

         The   Company's   executive   officers,   directors   and  ten  percent
shareholders are required under Section 16(a) of the Securities  Exchange Act of
1934 as amended (the "Exchange  Act"),  to file reports of ownership and changes
in ownership on Forms 3, 4 and 5 with the  Commission.  Copies of these  reports
must also be furnished  to the Company.  Based upon its review of copies of such
reports   furnished  to  the  Company  through  the  date  hereof,   or  written
representations  that no reports were required to be filed, the Company believes
that during the year ended December 31, 2001, all filing requirements applicable
to its officers,  directors and ten percent  shareholders were complied within a
timely  manner,  with the  exception  of the Form 3 for Mr. James S. Pak and six
Forms 4 for the SOFTBANK  Affiliates (as  hereinafter  defined),  which were not
filed in a timely manner.

ITEM 11. EXECUTIVE COMPENSATION

Compensation of Directors
-------------------------

         Upon  initial  election to the Board of  Directors,  each  non-employee
Director was granted an option to purchase  50,000 shares of common  stock,  par
value $.01 per share (the "Common  Stock"),  pursuant to the OptiMark  Holdings,
Inc.  1999 Stock Plan (the  "Common  Stock  Plan").  In  addition,  on the first
business day  following  each annual  meeting of OptiMark's  shareholders,  each
non-employee  Director was granted an option to purchase 10,000 shares of Common
Stock pursuant to the Common Stock Plan.  Options granted under the Common Stock
Plan to  non-employee  Directors  vest  ratably  over  five  years,  subject  to
continuing service on the Board of Directors, and have a term of ten years.

         In November  2001, the Company  adopted  OptiMark  Holdings,  Inc. 2001
Series F  Preferred  Stock Plan (the  "Series F Stock  Plan")  pursuant to which
certain  individuals  would  receive  grants of  options  to  purchase  Series F
Preferred  Stock.  Following the adoption of the Series F Stock Plan in November
2001, no further options have been or will be granted to non-employee  Directors
under the Common  Stock  Plan.  In  November  2001,  each  current  non-employee
Director  (Messrs.  Fisher,  Lupien and Riese) was granted an option to purchase
25,000 shares of Series F Preferred  Stock  pursuant to the Series F Stock Plan,
which vested immediately  following  stockholder  approval of the Series F Stock
Plan and has a term of ten years. Thereafter, upon initial election to the Board
of Directors  and on the first  business day  following  each annual  meeting of
OptiMark's shareholders, each non-employee Director will be granted an option to
purchase  10,000  shares of Series F  Preferred  Stock  pursuant to the Series F
Stock  Plan.  Options  granted  under the  Series F Stock  Plan to  non-employee
Directors in  accordance  with the  preceding  sentence  shall fully vest on the
first  anniversary  of the date of grant,  subject to continuing  service on the
Board of Directors, and have a term of ten years. In addition, each non-employee
Director  shall have one year from  resignation  or  expiration of his term as a
Director to exercise vested options granted under the Series F Stock Plan.

         Directors  do not receive cash  compensation  for service as members of
the Board of Directors or committees  thereof.  All Directors are reimbursed for
out-of-pocket expenses.

Executive Summary Compensation Table
------------------------------------

         The following  table provides a summary of  compensation  earned by the
named  executive  officers of the Company,  which  include the  Company's  Chief
Executive  Officer,  its former Co-Chief  Executive Officer and the other former
executives  whose total salary and bonus for 2001 exceeded  $100,000  (including
those  executives for whom disclosure  would have been required but for the fact
that they


                                       32
<PAGE>


resigned in 2001),  for services  rendered in all  capacities to the Company and
its subsidiaries for each of the last three fiscal years:

<TABLE>
<CAPTION>
                                                                                                    Long-Term
                                                                                                    Long Term
                                                                                                  Compensations
                                                  Annual Compensation                                 Awards
                                        -------------------------------------------               -------------
                                                                                                    Securities
                                                                                  Other             Underlying
                                    Fiscal      Salary           Bonus        Compensation           Options
Name and Principal Position         Year         ($)              ($)              ($)                 (#)
---------------------------         ----         ---              ---              ---                 ---

<S>                                 <C>        <C>              <C>                 <C>           <C>
Robert J. Warshaw .............     2001       257,291          175,000                           1,950,000(1)
President and Chief Executive..     2000       225,000          175,000                             250,000(3,4)
Officer
                                    1999        28,990             --               --              500,000(3,4)

Neil G. Cohen .................     2001       200,000           38,374             --              185,000(1)
Former Secretary & General ....     2000       162,500           21,875             --               55,000(3,4)
Counsel(8)
                                    1999        63,942             --               --               20,000(3,4)

David C. Johnson, Jr ..........     2001       100,841(2)       100,000(5)          --               25,000(1)
Former Co-Chief Executive......     2000       168,750            4,270             --              150,000(3)
Officer(5)
                                    1999        98,383             --               --              100,000(3)

Gary B. Meshell ...............     2001       144,952(2)        33,333             --                 --
Former Executive Vice President     2000          --               --               --                 --
of OptiMark, Inc.(6)
                                    1999          --               --               --

Trevor B. Price ...............     2001       123,958(2)          --               --              277,398(1)
Former Executive Vice President                                                                     525,000(3)
of OptiMark, Inc.(7)
                                    2000          --               --               --
                                    1999          --               --               --
</TABLE>

(1)    Options to purchase shares of Series F Preferred Stock.

(2)    Executive Officer was an employee with the Company only for part of 2001.

(3)    Options to purchase shares of Common Stock.

(4)    All  outstanding  options  on  Common  Stock of  Executive  Officer  were
repriced  to an  exercise  price of $0.50  per share in  December  2000 upon the
execution of Amendment No. 1 to Stock Option Agreements.

(5)    Mr.  Johnson  resigned  as Co-Chief Executive Officer in March 2001.  Mr.
Johnson  received in the year 2001 a bonus in the amount of $100,000,  earned in
the year 2000, for his sales-related  activities that occurred prior to assuming
the position as Co-Chief Executive Officer.

(6)    Mr. Meshell was not employed by OptiMark, Inc. in  1999  or  2000 and he
resigned as Executive Vice President in January 2002.



                                       33
<PAGE>


(7) Mr. Price was not employed by the Company in 1999 or 2000 and he resigned as
Executive Vice President on May 3, 2002.

(8) Mr. Cohen resigned as Secretary and General Counsel effective May 31, 2002.

Option Grants
-------------

     In November 2001,  options to purchase  Series F Preferred Stock and Common
Stock were granted to various individuals  pursuant to the terms of the Series F
Stock Plan and the Common Stock Plan,  respectively.  The  following  table sets
forth the awards made to the named executive officers.

<TABLE>
<CAPTION>
                                                                                          Potential Realizable
                                                                                          Value at Assumed Annual
                                                                                          Rates of Stock
                                                                                          Price Appreciation for
Individual Grants                                                                         Option Term
------------------------------------------------------------------------------------      -----------------------
                                           Percent of
                                           Total Options
                           Number of       Granted to
                           Securities      Employees        Exercise or
                           Underlying      In Fiscal        Base Price    Expiration
                            Options           Year          Per Share        Date         5%($)     10%($)
                           ----------      ------------    -----------    ----------      -----     ------

NAME
<S>                        <C>               <C>           <C>            <C>             <C>       <C>
Robert J. Warshaw.....     1,950,000(1)      30.1          $0.10          11/15/2011      117,000   292,500

Neil G. Cohen.........     185,000(1)         2.9          $0.10          11/15/2011      11,100    27,750

David C. Johnson, Jr..     25,000(1)          0.4          $0.10          11/15/2011      15,000    3,750



Trevor B. Price.......     277,398(1)         4.3          $0.10          11/15/2011      16,644    41,610
                           525,000(2)                      $0.50          05/09/2011      162,750   420,000
</TABLE>

----------

(1)  Options to purchase shares of Series F Preferred Stock.

(2)  Options to purchase shares of Common Stock.

Fiscal 2001 Year End Option Values
----------------------------------

         No  options  were  exercised  during  fiscal  year  2001  by the  named
executive officers.  The following table describes the named executive officers'
exercisable and  unexercisable  options held as of December 31, 2001. The "Value
of  Unexercised  In-the-Money  Options  at  Fiscal  Year End" is the value as of
December 31, 2001, in each case as  determined  by the Board of Directors,  less
the exercise  price.  All options  were granted  under either the Series F Stock
Plan or the Common Stock Plan as indicated.


                                       34
<PAGE>


<TABLE>
<CAPTION>
                                 Number of Securities                Value of Unexercised
                           Underlying Unexercised Options at       In-the-Money Options at
                                  Fiscal Year End (#)                Fiscal Year End ($)
                                  -------------------                -------------------
Name                        Exercisable      Unexercisable       Exercisable     Unexercisable
----                        -----------      -------------       -----------     -------------

<S>                           <C>                <C>                  <C>              <C>
Robert J. Warshaw........     195,000(1)         1,755,000            -0-              -0-
                              340,000(2)           410,000            -0-              -0-

Neil G. Cohen............      18,500(1)           166,500            -0-              -0-
                               19,000(2)            56,000            -0-              -0-

David C. Johnson, Jr.....       2,500(1)            22,500            -0-              -0-

Gary B. Meshell..........          -0-                  -0-           -0-              -0-

Trevor B. Price..........      27,739(1)           249,659            -0-              -0-
                                   -0-(2)         525,000             -0-              -0-
</TABLE>

(1)    Options to purchase shares of Series F Preferred Stock.

(2)    Options to purchase Common Stock.

Repricing Discussion
--------------------

         On September 19, 2000,  the Company's  Board of Directors  authorized a
repricing of options on Common Stock.  The repricing  reduced the exercise price
of all  outstanding  options  on Common  Stock  that had been  granted  to those
employees, officers, and directors who remained with the Company after that date
from exercise prices ranging from $1.50-$14.00 per share to $0.50 per share.

         The options on Common  Stock were  intended to provide  incentives  for
option holders to continue as employees,  officers, and directors of the Company
based on the potential for  appreciation  of the stock price of the Company to a
level in excess of the  exercise  price of the  options.  The Board of Directors
determined  that the fair market  value as of  September  19, 2000 of a share of
Common Stock of the Company was $0.50 per share,  which was significantly  below
the prices at which options on Common Stock had  originally  been  granted.  The
Board of  Directors  further  determined  that the fair market  value caused the
stock  options to lose much of their  intended  motivating  effect on employees,
officers,  and  directors.  The repricing was intended to reinstate the original
intent of the options on Common Stock.

         Options to purchase 500,000 shares of Common Stock at an exercise price
of $12.00 per share and options to purchase 250,000 shares of Common Stock at an
exercise  price of $10.00  per share held by Mr.  Warshaw  were  repriced  to an
exercise  price of $0.50  per share  and have  remaining  terms of two years and
three years, respectively.

Management Contracts
--------------------

         On  August  16,  2001,  OptiMark  entered  into  a  written  employment
agreement with Robert J. Warshaw that replaced an earlier oral agreement reached
on September 19, 2000.  Under the terms of the written  agreement,  Mr.  Warshaw
retained the position of Chief Executive Officer of the Company, received a base
salary of $250,000  per year,  and was granted a bonus in the amount of not less
than $200,000,  subject to increase at the discretion of the Board of Directors,
which is to be paid bi-monthly through August, 2002. In addition, the employment
agreement  provided Mr. Warshaw with the right to receive  1,950,000  options to
purchase  Series F Preferred  Stock as of the date options to purchase  Series F
Preferred  Stock are granted to senior  executives of the Company.  Mr.  Warshaw
also received a right to borrow a principal  amount of $150,000 from OptiMark of
which he has  drawn  $150,000.  Interest  on the  principal  amount  of the loan
accrued at the  applicable  federal  rate,  as  defined  in Section  1274 of the
Internal  Revenue  Code,  per annum from the date the loan was drawn and will be
due in full, along with accrued


                                       35
<PAGE>


interest, on the termination of Mr. Warshaw's employment with OptiMark for cause
(as defined in the employment agreement).  Under the terms of the agreement, the
Company has forgiven the loan, and all accrued interest  thereon,  as of January
31,  2002.  On October 12,  2001,  Mr.  Warshaw  borrowed a principal  amount of
$90,000 from OptiMark,  Inc. Under the terms and conditions of a promissory note
executed by Mr. Warshaw  governing this loan,  interest on the principal  amount
accrued  at 6% per  annum  from the date of the loan and was due in full,  along
with accrued  interest on December 31, 2001. In 2002, Mr. Warshaw executed first
and second amended and restated  promissory  notes,  which set the due dates for
repayment to February 28 and March 31, 2002,  respectively.  Mr.  Warshaw repaid
the principal and interest of this loan in March 2002.

         On June 19, 2001,  OptiMark,  Inc. entered into an employment agreement
with Neil G. Cohen.  Under the terms of the  agreement,  Mr.  Cohen served as an
executive vice president and general  counsel of OptiMark,  Inc. and the general
counsel and corporate secretary of OptiMark Holdings, Inc. Mr. Cohen received an
annual salary of $200,000.  In addition,  the employment  agreement provided Mr.
Cohen with the right to receive a certain  percentage  of options  under  option
plans  adopted by OptiMark  subsequent  to the entering  into of the  employment
agreement.

         On April 9, 2001,  OptiMark,  Inc. entered into an employment agreement
with Trevor B. Price.  Under the terms of the agreement,  Mr. Price served as an
executive vice president of product strategy at an annual salary of $175,000. In
addition,  the employment agreement provided Mr. Price with the right to receive
a certain  percentage of options under option plans  existing as of the date Mr.
Price and OptiMark entered into the employment  agreement and under future plans
adopted by OptiMark.

         On April 17, 2001, OptiMark,  Inc. entered into an employment agreement
with Gary B. Meshell. Under the terms of the agreement, Mr. Meshell served as an
executive  vice  president of sales,  marketing and business  development  at an
annual salary of $225,000 and received a $50,000 bonus,  which was to be paid to
him in equal  monthly  installments  over a  twelve-month  period.  Mr.  Meshell
received bonus payments  totaling $37,500 through his resignation from OptiMark,
Inc. in January 2002. Under the agreement, Mr. Meshell was to receive options to
acquire a certain  percentage of options  under option plans  existing as of the
date Mr. Meshell and OptiMark  entered into the  employment  agreement and under
future plans adopted by OptiMark. However, these options were not granted to him
because he did not execute the required  paperwork prior to his resignation.  In
connection with Mr. Meshell's resignation,  he and OptiMark, Inc. entered into a
separation  agreement.  Under the terms of the separation  agreement,  OptiMark,
Inc.  paid to Mr.  Meshell  an amount  equal to  $22,500 in return for a general
release and other consideration.

         On  January  16,  2002,  OptiMark,  Inc.  entered  into  an  employment
agreement with James S. Pak. Under the terms of the agreement, Mr. Pak served as
executive  vice  president  of  strategic  development  at an  annual  salary of
$175,000.  Mr.  Pak  received  options  to  acquire  277,398  shares of Series F
Preferred  Stock,  exercisable  with respect to not less than 69,349 shares each
year for four years.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT

        The following tables sets forth, as of May 31, 2002, certain information
regarding the  beneficial  ownership of the Common  Stock,  Series A Convertible
Participating  Preferred Stock, $.01 par value (the "Series A Preferred Stock"),
Series B Convertible  Participating Preferred Stock, $.01 par value (the "Series
B Preferred Stock"),  Series C Convertible  Preferred Stock, $.01 par value (the
"Series C Preferred  Stock"),  Series D Convertible  Preferred  Stock,  $.01 par
value (the  "Series D Preferred  Stock"),  the Series E Preferred  Stock and the
Series G Preferred Stock (collectively, the Series A Preferred Stock, the Series
B Preferred  Stock,  the Series C Preferred Stock, the Series D Preferred Stock,
the Series E  Preferred  Stock,  the Series F  Preferred  Stock and the Series G
Preferred Stock are referred to herein as the "Preferred Stock") for (i) each of
the Company's  executive  officers named in the Executive  Summary  Compensation
Table in Item 11; (ii) each current  Director of the Company;  (iii) each person
who is known to the  Company  to own  beneficially  more  than 5% of the  voting
securities of the Company of any class; and (iv)


                                       36
<PAGE>


all executive officers and Directors of the Company as a group. Such information
is based, in part, upon the information  provided by certain shareholders of the
Company.  In the case of persons other than executive  officers and Directors of
the  Company,  such  information  is based  solely on an internal  review of the
Company's files, the filings made by such shareholders  pursuant to the Exchange
Act and information received from the Company's transfer agent.

         Except as  indicated  in the  footnotes  to these  tables,  all persons
listed  have  sole  voting  and  investment   power  for  all  shares  shown  as
beneficially  owned.  With respect to each series of Preferred Stock, only those
executive  officers and Directors who beneficially own shares of that series are
named in the  tables.  Unless  otherwise  indicated,  the address of each person
named in the following tables is c/o OptiMark Holdings, Inc., 10 Exchange Place,
24th Floor, Jersey City, New Jersey 07302.

COMMON STOCK

                                                 Number of
                                                 ---------
      Name and Address of Beneficial Owners      Shares              Percent
      -------------------------------------      ------              -------

      The Nasdaq Stock Market, Inc.                 11,250,000(1)       25.6
      Ronald D. Fisher                               8,270,000(2)       20.2
      SOFTBANK Affiliates                            8,250,000(2)       20.2
      William A. Lupien                              5,624,914(3)       17.2
      Dow Jones & Company, Inc.                      5,459,592(4)       15.3
      Richard W. Jones                               4,767,427(5)       14.6
      American Century Companies, Inc.               2,800,000(6)        8.4
      Virginia Surety Company, Inc.                  2,500,000(7)        7.1
      Robert J. Warshaw                                390,000(8)        1.2
      Phillip J. Riese                                 200,000(9)          *
      Trevor B. Price                                  105,000(10)         *
      Neil G. Cohen                                     30,000(11)         *


      All current directors and executive officers
      as a group (6 persons)                        14,619,914(12)      35.1

-------

*   Less than one percent

(1)  Represents  shares  of  Common  Stock  issuable  on  exercise  of  warrants
exercisable  within 60 days of May 31,  2002.  The  address of The Nasdaq  Stock
Market, Inc. is 1735 K Street, N.W., Washington, D.C. 20006.

(2) Represents 4,101,264, 4,030,761, and 117,975 shares of Common Stock issuable
currently on conversion of 4,101,264,  4,030,761, and 117,975 shares of Series C
Preferred Stock held by SOFTBANK  Capital Partners L.P.  ("SOFTBANK  Partners"),
SOFTBANK  Capital L.P.  ("SOFTBANK  Capital") and SOFTBANK Capital Advisors Fund
L.P. ("SOFTBANK Advisors"),  respectively.  SOFTBANK Partners,  SOFTBANK Capital
and  SOFTBANK  Advisors  are referred to  collectively  herein as the  "Softbank
Affiliates."  In addition,  Mr. Fisher's amount includes 20,000 shares of Common
Stock which could be acquired upon exercise of options within 60 days of May 31,
2002 held by him. Mr. Fisher, a Director of the Company,  is a managing director
of the general partner of each of the SOFTBANK Affiliates.  Mr. Fisher disclaims
beneficial  ownership  of these  shares,  except to the extent of his  pecuniary
interest.  The address of the SOFTBANK Affiliates is 1188 Centre Street,  Newton
Center, MA 02459.

(3) Includes 4,725,676 shares held jointly by Mr. Lupien and his spouse, 792,400
shares held by a family  partnership  controlled by Mr. Lupien and 52,419 shares
held by Mr. Lupien's spouse.  Mr. Lupien disclaims  beneficial  ownership of the
shares held by his spouse.

                                       37
<PAGE>


(4) Includes  3,157,028 shares of Common Stock issuable  currently on conversion
of  789,257  shares of Series A  Preferred  Stock.  The  address  of Dow Jones &
Company, Inc. is 200 Liberty Street, New York, NY 10281.

(5) Includes  3,772,047 shares held by a trust of which Mr. Jones is the trustee
and 90,004  shares  held in an IRA of which Mr.  Jones is the  beneficiary.  Mr.
Jones' term as a Director of the Company expired on May 21, 2001. The address of
Mr. Jones is 442 S. Marengo Avenue, Pasadena, CA 91101.

(6) Includes 740,000 shares of Common Stock issuable  currently on conversion of
740,000  shares of  non-voting  Common  Stock.  The address of American  Century
Companies, Inc. is 4500 Main Street, Kansas City, MO 64141.

(7) Represents 2,000,000 shares of Common Stock issuable currently on conversion
of  2,000,000  shares of Series B Preferred  Stock and 500,000  shares of Common
Stock issuable on exercise of a warrant  exercisable within 60 days of April 29,
2002. The address of Virginia  Surety  Company,  Inc. is 123 North Wacker Drive,
29th Floor, Chicago, IL 60606.

(8)  Represents  390,000  shares of Common Stock issuable on exercise of options
exercisable within 60 days of May 31, 2002.

(9) Mr. Riese  resigned as Chief  Executive  Officer of the Company in September
2000.  Mr. Riese  currently is a Director of the Company but is not standing for
re-election.

(10)  Represents  105,000 shares of Common Stock issuable on exercise of options
exercisable within 60 days of May 31, 2002.

(11)  Represents  30,000 shares of Common Stock  issuable on exercise of options
exercisable within 60 days of May 31, 2002.

(12) Includes  545,000  shares of Common Stock issuable upon exercise of options
exercisable within 60 days of May 31, 2002.

SERIES A CONVERTIBLE PARTICIPATING PREFERRED STOCK

                                                 Number of
                                                 ---------
      Name and Address of Beneficial Owners       Shares          Percent
      -------------------------------------       ------          -------

      Alice L. Walton                               136,426(1)       14.7
      Dow Jones & Company, Inc.                     789,257          85.3


----------

(1)  Represents  shares held by Alice L. Walton,  whose address is 10587 Highway
281, South Mineral Wells, TX 76067.

SERIES B CONVERTIBLE PARTICIPATING PREFERRED STOCK

                                                 Number of
                                                 ---------
      Name and Address of Beneficial Owners       Shares          Percent
      -------------------------------------       ------          -------

      Virginia Surety Company, Inc.             2,000,000            18.2
      Merrill Lynch affiliates                  1,500,000(1)         13.6
      PaineWebber Capital, Inc.                 1,060,000(2)          9.6
      Credit Suisse First Boston                1,000,000(3)          9.1


                                       38
<PAGE>



      The Goldman Sachs Group, Inc.             1,000,000(4)          9.1
      CIBC Wood Gundy Capital Corp.               850,000(5)          7.7
      Nihon Keizai Shimbun, Inc.                  800,000(6)          7.3

----------

(1)    Represents 750,000 shares held by ML IBK Positions,  Inc., 562,500 shares
held by Merrill Lynch KECALP L.P. 1997 and 187,500  shares held by Merrill Lynch
KEKALP International L.P. 1997. The address of the Merrill Lynch entities is 250
Vesey Street, 5th Floor, New York, NY 10281.

(2)    The address of PaineWebber Capital, Inc., is 1285 Avenue of the Americas,
14th Floor, New York, NY 10019.

(3)    The address of Credit Suisse First Boston is c/o OptiMark Investors, Inc.
11 Madison Avenue, 3rd Floor, New York, NY 10004.

(4)    The  address of  The  Goldman  Sachs Group, Inc. is 85 Broad Street, 12th
Floor, New York, NY  10004.

(5)    The address of CIBC Wood Gundy Capital Corp. is 425 Lexington Avenue, 9th
Floor, New York, NY  10017.

(6)    The  address  of  Nihon  Keizai  Shimbun, Inc. is 9-5, Ohtemachi 1-chome,
Chiyoda-ku Tokyo 100-0004, Japan.

SERIES C CONVERTIBLE PREFERRED STOCK

                                                 Number of
                                                 ---------
      Name and Address of Beneficial Owners       Shares          Percent
      -------------------------------------       ------          -------

      SOFTBANK Affiliates                       8,250,000(1)          100
      Ronald D. Fisher                          8,250,000(1)          100
      All directors and executive officers
      as a group (1 person)                     8,250,000             100

----------

(1)    Represents  4,101,264,  4,030,761,  and  117,975 shares  held by SOFTBANK
Partners,  SOFTBANK Capital and SOFTBANK Advisors,  respectively.  Each share of
Series C Preferred  Stock is  convertible  into one share of Common  Stock.  Mr.
Fisher, a Director of the Company, is a managing director of the general partner
of each of these SOFTBANK Affiliates.  Mr. Fisher disclaims beneficial ownership
of these shares, except to the extent of his pecuniary interest.

SERIES D CONVERTIBLE PREFERRED STOCK

                                                 Number of
                                                 ---------
      Name and Address of Beneficial Owners       Shares          Percent
      -------------------------------------       ------          -------

      BancBoston Capital                          250,000(1)          100

----------

(1)    Represents  shares  held by BancBoston Capital Inc., whose address is 175
Federal Street, Boston, MA 02110.


                                       39
<PAGE>



SERIES E CUMULATIVE PREFERRED STOCK

                                                 Number of
                                                 ---------
      Name and Address of Beneficial Owners       Shares          Percent
      -------------------------------------       ------          -------

      SOFTBANK  Affiliates                        973,333(1)         99.0
      Ronald D. Fisher                            973,333(1)         99.0

      All directors and executive officers
      as a group (1 person)                       983,333           100.0

----------

(1) Represents 486,647 shares held by SOFTBANK Partners,  478,286 shares held by
SOFTBANK Capital and 8,400 shares held by SOFTBANK Advisors. Ronald D. Fisher, a
Director of the Company,  is a managing  director of the general partner of each
of the SOFTBANK  Affiliates.  Mr. Fisher disclaims beneficial ownership of these
shares, except to the extent of his pecuniary interest.

SERIES G PREFERRED STOCK

                                                 Number of
                                                 ---------
      Name and Address of Beneficial Owners       Shares          Percent
      -------------------------------------       ------          -------

      Transamerica Technology Finance Co.       249,330(1)           83.1
      Linc Equipment Receivables Trust 1999-1    20,820(2)            6.9
      Diamond Lease (U.S.A.), Inc.               17,040(3)            5.7

----------

(1) Represents shares held by Transamerica Technology Finance Co., whose address
is 76 Batterson Park Road, Farmington, CT 06032.

(2) Represents  shares held by Linc Equipment  Receivables  Trust 1999-1,  whose
address is c/o Cash Recovery LLC, 180 N. LaSalle #3120, Chicago, IL 60601.

(3) Represents shares held by Diamond Lease (U.S.A.), Inc., whose address is 350
5th Ave., Empire State Building, Suite 616, New York, NY 10118.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On June 29,  2001,  OptiMark  and the  SOFTBANK  Affiliates  entered into a
Preferred Stock Purchase  Agreement  whereby the SOFTBANK  Affiliates  agreed to
purchase up to an aggregate of 1,000,000 shares of Series E Preferred Stock at a
price of $15.00 per share (as amended on August 16, 2001 and  November 16, 2001,
the "Series E Preferred Stock Purchase Agreement").  The purchase of shares took
place at approximately  one-month intervals from June 2001 through January 2002.
The SOFTBANK Affiliates purchased 983,333 shares of Series E Preferred Stock for
an aggregate amount of approximately $14,750,000.

     On December 31, 2001,  OptiMark,  Inc.  received 200 shares of  Innovations
Common  Stock in exchange  for a cash  payment of $500,000  and 2,000  shares of
Innovations  Preferred Stock, in exchange for the transfer to Innovations of the
Assets.  The stated value of the  Innovations  Preferred Stock was the result of
the  evaluation  by the board of  directors of  Innovations  of the value of the
Assets based, in part, upon preliminary  discussions  with  independent  parties
regarding a $10,000,000 investment for a one-third interest in Innovations.  The
SOFTBANK Affiliates received 100 shares of Innovations Common Stock for $250,000
cash. Simultaneously,  the SOFTBANK Affiliates' remaining obligation to purchase
shares of Series E  Preferred  Stock  from  OptiMark  pursuant  to the  Series E
Preferred Stock Purchase Agreement was


                                       40
<PAGE>


reduced by $250,000. Upon completion of the transaction,  Innovations' aggregate
assets consisted of the Assets and $750,000 in cash.

     The  Company  and the  SOFTBANK  Affiliates  agreed to certain put and call
rights  applicable to the SOFTBANK  Shares as more fully  described in "Item 1 -
Business."

     On April 30, 2002,  Draper  purchased 150 shares of the Innovations  Common
Stock for an aggregate cash purchase price of $375,000.  On May 3, 2002,  Draper
purchased  963  shares  of the  Innovations  Series  B  Preferred  Stock  for an
aggregate cash purchase price of $9,630,000.




                                       41
<PAGE>


                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a)  The following documents are filed as part of this report:

     1.   FINANCIAL STATEMENTS

     Consolidated  Financial  Statements and Financial  Statement  Schedules are
     contained in the financial statements and accompanying notes.

     2.   REPORTS ON FORM 8-K

     The  Company  filed a Current  Report  on Form 8-K on  December  26,  2001,
     reporting the settlement of litigation  with  Transamerica  Business Credit
     Corporation and others under Item 5.

     3.   EXHIBITS

          The exhibits listed on the accompanying index to exhibits  immediately
following are filed as part of, or  incorporated  by reference  into,  this Form
10-K  and are  numbered  in  accordance  with the  Exhibit  Table of Item 601 of
regulation S-K:

EXHIBIT NO.                      DESCRIPTION
-----------                      -----------

2.1          Agreement and Plan of Merger dated June 12, 2000  (incorporated  by
             reference to Exhibit 2.1 to Registrant's  Registration Statement on
             Form 10/A-1 (No. 000-30527)).

2.2          Subscription  Agreement  dated  December 31, 2001 between  SOFTBANK
             Capital Partners LP, SOFTBANK Capital LP, SOFTBANK Capital Advisors
             Fund  LP  and  OptiMark   Innovations   Inc.  (f/k/a  OTSH,   Inc.)
             (incorporated  by reference to Exhibit 2.1 to Registrant's  Current
             Report on Form 8-K dated  December  31, 2001  (Commission  File No.
             000-30527).

2.3          Subscription  Agreement  dated December 31, 2001 between  OptiMark,
             Inc. and OptiMark Innovations Inc. (f/k/a OTSH, Inc.) (incorporated
             by reference to Exhibit 2.2 to Registrant's  Current Report on Form
             8-K dated December 31, 2001 (Commission File No. 000-30527)).

2.4          Investors'  Rights  Agreement  dated December 31, 2001 by and among
             OptiMark  Innovations Inc. (f/k/a OTSH, Inc.),  OptiMark  Holdings,
             Inc.,  OptiMark,  Inc.,  SOFTBANK  Capital  Partners  LP,  SOFTBANK
             Capital LP and SOFTBANK  Capital  Advisors Fund LP (incorporated by
             reference to Exhibit 2.3 to Registrant's Current Report on Form 8-K
             dated December 31, 2001 (Commission File No. 000-30527)).

2.5          Novation to Series E Preferred Stock Purchase Agreement dated as of
             June 29,  2001 (as  amended on August  16,  2001 and  November  16,
             2001),  dated  December 31, 2001, by and among  OptiMark  Holdings,
             Inc.,  SOFTBANK  Capital  Partners  LP,  SOFTBANK  Capital  LP  and
             SOFTBANK  Capital  Advisors Fund LP  (incorporated  by reference to
             Exhibit  2.4 to  Registrant's  Current  Report  on Form  8-K  dated
             December 31, 2001 (Commission File No. 000-30527)).

2.6          Securities Purchase Agreement, dated as of February 4, 2002, by and
             between The Ashton Technology Group, Inc. and OptiMark  Innovations
             Inc. (f/k/a OTSH, Inc.)


                                       42
<PAGE>


             (incorporated  by reference to Exhibit 2.1 to Registrant's  Current
             Report on Form 8-K dated  February  4,  2002  (Commission  File No.
             000-30527)).

2.7          Amendment No. 1 to Securities Purchase Agreement, dated as of March
             6, 2002,  by and  between The Ashton  Technology  Group,  Inc.  and
             OptiMark  Innovations  Inc.  (f/k/a OTSH,  Inc.)  (incorporated  by
             reference to Exhibit 2.2 to Registrant's Current Report on Form 8-K
             filed May 23, 2002 (Commission File No, 000-30527)).

2.8          Amendment No. 2 to Securities Purchase  Agreement,  dated as of May
             3, 2002,  by and  between The Ashton  Technology  Group,  Inc.  and
             OptiMark  Innovations  Inc.  (f/k/a OTSH,  Inc.)  (incorporated  by
             reference to Exhibit 2.3 to Registrant's Current Report on Form 8-K
             filed May 23, 2002 (Commission File No, 000-30527)).

3.1          Certificate of Incorporation of OptiMark Holdings,  Inc. as amended
             to December 14, 2001  (incorporated by reference to Exhibit 3(i) to
             Registrant's  Current  Report on Form 8-K dated  December  20, 2001
             (Commission File No. 000-300527)).

3.2          By-Laws of OptiMark  Holdings,  Inc.  (incorporated by reference to
             Exhibit 3.2 to Registrant's  Registration  Statement on Form 10/A-1
             (No. 000-30527)).

4.1          Specimen  Common Stock  Certificate  (incorporated  by reference to
             Exhibit 4.1 to Registrant's  Registration Statement on Form 10 (No.
             000-30527)).

4.2          Specimen Preferred Stock Certificate  (incorporated by reference to
             Exhibit 4.2 to Registrant's  Registration Statement on Form 10 (No.
             000-30527)).

4.3          Series A Preferred Stock Purchase Agreement, dated August 27, 1996,
             by and among  OptiMark and the parties named therein  (incorporated
             by reference to Exhibit 4.3 to Registrant's  Registration Statement
             on Form 10 (No. 000-30527)).

4.4          Registration Rights Agreement,  dated August 27, 1996, by and among
             OptiMark and the parties names therein  (incorporated  by reference
             to Exhibit 4.4 to  Registrant's  Registration  Statement on Form 10
             (No. 000-30527)).

4.5          Amendment  to Stock  Purchase  Agreement  and  Registration  Rights
             Agreement,  dated March 19,  1997,  by and among  OptiMark  and the
             parties named therein  (incorporated by reference to Exhibit 4.5 to
             Registrant's Registration Statement on Form 10 (No. 000-30527)).

4.6          Amendment to Stock Purchase Agreement,  Stockholders  Agreement and
             Registration  Rights  Agreement,  dated May 29, 1997,  by and among
             OptiMark and the parties named therein  (incorporated  by reference
             to Exhibit 4.6 to  Registrant's  Registration  Statement on Form 10
             (No. 000-30527)).

4.7          Amendment to Series A Registration Rights Agreement,  dated January
             1999,  by  and  among   OptiMark  and  the  parties  named  therein
             (incorporated   by  reference   to  Exhibit  4.7  to   Registrant's
             Registration Statement on Form 10 (No. 000-30527)).

4.8          Series B Preferred  Stock  Purchase  Agreement,  dated December 22,
             1998, by and among OptiMark and parties named therein (incorporated
             by reference to Exhibit 4.8 to Registrant's  Registration Statement
             on Form 10 (No. 000-30527)).

4.9          Registration  Rights Agreement,  dated April 23, 1998, by and among
             OptiMark and the parties named therein  (incorporated  by reference
             to Exhibit 4.9 to  Registrant's  Registration  Statement on Form 10
             (No. 000-30527)).

                                       43
<PAGE>


4.10         Series C Preferred Stock Purchase  Agreement,  dated June 11, 1999,
             by and among  OptiMark and the parties named therein  (incorporated
             by reference to Exhibit 4.10 to Registrant's Registration Statement
             on Form 10 (No. 000-30527)).

4.11         Registration  Rights  Agreement,  dated July 26, 1999, by and among
             OptiMark and the parties named therein  (incorporated  by reference
             to Exhibit 4.11 to Registrant's  Registration  Statement on Form 10
             (No. 000-30527)).

4.12         Series D Preferred Stock Purchase  Agreement,  dated July 30, 1999,
             by and between OptiMark and BancBoston  Capital Inc.  (incorporated
             by reference to Exhibit 4.12 to Registrant's Registration Statement
             on Form 10 (No. 000-30527)).

4.13         Registration  Rights Agreement dated, July 30, 1999, by and between
             OptiMark and BancBoston Capital Inc.  (incorporated by reference to
             Exhibit 4.13 to Registrant's Registration Statement on Form 10 (No.
             000-30527)).

4.14         Registration  Rights  Agreement,  dated  September 19, 1998, by and
             between OptiMark and The NASDAQ Stock Market, Inc. (incorporated by
             reference to Exhibit 4.14 to Registrant's Registration Statement on
             Form 10 (No. 000-30527)).

4.15         Amended and Restated Stockholders Agreement,  dated April 23, 1998,
             by and among  OptiMark and the parties named therein  (incorporated
             by reference to Exhibit 4.15 to Registrant's Registration Statement
             on Form 10 (No. 000-30527)).

4.16         Series E Preferred Stock Purchase  Agreement,  dated as of June 29,
             2001,  by and among  OptiMark  Holdings,  Inc. and the entities set
             forth  in the  Schedule  of  Purchasers  thereto  (incorporated  by
             reference to Exhibit 4.1 to Registrant's  Quarterly  Report on Form
             10-Q for the  period  ended  June  30,  2001  (Commission  File No.
             000-30527)).

4.17         Registration  Rights  Agreement,  dated as of June 29, 2001, by and
             among  OptiMark  Holdings,   Inc.  and  the  holders  of  Series  E
             Cumulative  Preferred Stock  (incorporated  by reference to Exhibit
             4.2 to  Registrant's  Quarterly  Report on Form 10-Q for the period
             ended June 30, 2001 (Commission File No. 000-30527)).

4.18         Amendment to the Series E Preferred Stock Purchase Agreement, dated
             as of August 16, 2001, by and among OptiMark Holdings, Inc. and the
             entities   set  forth  in  the  Schedule  of   Purchasers   thereto
             (incorporated by reference to Exhibit 4.1 to Registrant's Quarterly
             Report  on Form  10-Q  for the  period  ended  September  30,  2001
             (Commission File No. 000-30527)).

4.19         Amendment to the Registration Rights Agreement,  dated as of August
             16, 2001, by and among OptiMark  Holdings,  Inc. and the holders of
             Series E Cumulative  Preferred Stock  (incorporated by reference to
             Exhibit 4.2 to Registrant's  Quarterly  Report on Form 10-Q for the
             period ended September 30, 2001 (Commission File No. 000-30527)).

4.20         Loan  Agreement,  dated as of March 21, 2002, by and among OptiMark
             Holdings,  Inc.,  SOFTBANK Capital Partners LP, SOFTBANK Capital LP
             and SOFTBANK Capital Advisors Fund LP (incorporated by reference to
             Exhibit 4.1 to Registrant's  Current Report on Form 8-K filed April
             30, 2002 (Commission File No. 000-30527)).

4.21         Promissory Note, dated March 21, 2002, of OptiMark  Holdings,  Inc.
             in favor of SOFTBANK Capital Partners LP in the principal amount of
             $249,990  (incorporated by reference to Exhibit 4.2 to Registrant's
             Current  Report on Form 8-K filed April 30, 2002  (Commission  File
             No. 000-30527)).


                                       44
<PAGE>


4.22         Promissory Note, dated March 21, 2002, of OptiMark  Holdings,  Inc.
             in favor of SOFTBANK Capital LP in the principal amount of $245,695
             (incorporated  by reference to Exhibit 4.3 to Registrant's  Current
             Report  on Form 8-K  filed  April  30,  2002  (Commission  File No.
             000-30527)).

4.23         Promissory Note, dated March 21, 2002, of OptiMark  Holdings,  Inc.
             in favor of  SOFTBANK  Capital  Advisors  Fund LP in the  principal
             amount of $4,315  (incorporated  by  reference  to  Exhibit  4.4 to
             Registrant's  Current  Report  on Form 8-K  filed  April  30,  2002
             (Commission File No. 000-30527)).

4.24         Loan  Agreement,  dated as of April 11, 2002, by and among OptiMark
             Holdings,  Inc.,  SOFTBANK Capital Partners LP, SOFTBANK Capital LP
             and SOFTBANK Capital Advisors Fund LP (incorporated by reference to
             Exhibit 4.5 to Registrant's  Current Report on Form 8-K filed April
             30, 2002 (Commission File No. 000-30527)).

4.25         Promissory Note, dated April 11, 2002, of OptiMark  Holdings,  Inc.
             in favor of SOFTBANK Capital Partners LP in the principal amount of
             $284,989  (incorporated by reference to Exhibit 4.6 to Registrant's
             Current  Report on Form 8-K filed April 30, 2002  (Commission  File
             No. 000-30527)).

4.26         Promissory Note, dated April 11, 2002, of OptiMark  Holdings,  Inc.
             in favor of SOFTBANK Capital LP in the principal amount of $280,092
             (incorporated  by reference to Exhibit 4.7 to Registrant's  Current
             Report  on Form 8-K  filed  April  30,  2002  (Commission  File No.
             000-30527)).

4.27         Promissory Note, dated April 11, 2002, of OptiMark  Holdings,  Inc.
             in favor of  SOFTBANK  Capital  Advisors  Fund LP in the  principal
             amount of $4,919  (incorporated  by  reference  to  Exhibit  4.8 to
             Registrant's  Current  Report  on Form 8-K  filed  April  30,  2002
             (Commission File No. 000-30527)).

4.28         Investors'  Rights  Agreement,  dated  as of  May 3,  2002,  by and
             between The Ashton Technology Group, Inc. and OptiMark  Innovations
             Inc.  (incorporated  by  reference  to Exhibit 4.1 to  Registrant's
             Current Report on Form 8-K filed May 23, 2002  (Commission File No,
             000-30527)).

4.29         Amended and  Restated  Investors'  Rights  Agreement,  dated May 3,
             2002,  by and between  OptiMark  Innovations  Inc.,  Draper  Fisher
             Jurvetson ePlanet  Ventures,  L.P., Draper Fisher Jurvetson ePlanet
             Partners Fund,  L.L.C.,  Draper Fisher  Jurvetson  ePlanet Ventures
             GmbH & Co. KG, SOFTBANK  Capital  Partners LP, SOFTBANK  Capital LP
             and SOFTBANK Capital Advisors Fund LP (incorporated by reference to
             Exhibit 4.2 to  Registrant's  Current  Report on Form 8-K filed May
             23, 2002 (Commission File No, 000-30527)).

4.30         Senior Secured  Convertible  Note of The Ashton  Technology  Group,
             Inc.  in favor of  OptiMark  Innovations  Inc.,  dated  May 3, 2002
             (incorporated  by reference to Exhibit 4.3 to Registrant's  Current
             Report  on  Form  8-K  filed  May 23,  2002  (Commission  File  No,
             000-30527)).

10.1         OptiMark 1999 Stock Plan (adopted November 29, 1999)  (incorporated
             by  reference  to  Exhibit  10.5(a)  to  Registrant's  Registration
             Statement on Form 10 (No. 000-30527)).

10.2         Amendment  No. 1 to  OptiMark  1999  Stock  Plan  (incorporated  by
             reference to Exhibit 10.5(b) to Registrant's Registration Statement
             on Form 10/A-1 (No. 000-30527)).


                                       45
<PAGE>


10.3         Amendment  No. 2 to  OptiMark  1999  Stock  Plan  (incorporated  by
             reference to Exhibit  10.5(c) to  Registrant's  Amendment  No. 2 to
             Annual  Report on Form 10-K for the year ended  December  31,  2000
             (Commission File No. 000-30527)).

10.4         OptiMark  Stock Option Plan  (Amended & Restated  January 27, 1999)
             (incorporated   by  reference  to  Exhibit  10.6  to   Registrant's
             Registration Statement on Form 10 (No. 000-30527)).

10.5         Form of Stock Option  Agreement (1999 Stock Plan)  (incorporated by
             reference to Exhibit 10.7 to Registrant's Registration Statement on
             Form 10 (No. 000-30527)).

10.6         Form of Stock Option  Agreement  (Amended and Restated Stock Option
             Plan)  (incorporated  by reference to Exhibit 10.8 to  Registrant's
             Registration Statement on Form 10 (No. 000-30527)).

10.7         Form of Amendment No. 1 to Stock Option Agreements (incorporated by
             reference to Exhibit  10.8(b) to  Registrant's  Amendment  No. 2 to
             Annual  Report on Form 10-K for the year ended  December  31,  2000
             (Commission File No. 000-30527)).

10.8         Form of  Non-Employee  Director  Option  Agreement(incorporated  by
             reference to Exhibit 10.9 to Registrant's Registration Statement on
             Form 10 (No. 000-30527)).

10.9         Employment,  Trade  Secret  and  Non-Competition  Agreement,  dated
             August 27,  1996,  by and  between  OptiMark  and William A. Lupien
             (incorporated   by  reference  to  Exhibit  10.11  to  Registrant's
             Registration Statement on Form 10 (No. 000-30527)).

10.10        Severance  Agreement  dated  January 5, 2001 by and between John T.
             Rickard and OptiMark,  Inc.  (incorporated  by reference to Exhibit
             10.12(b) to  Registrant's  Amendment No. 2 to Annual Report on Form
             10-K for the year ended  December  31,  2000  (Commission  File No.
             000-30527)).

10.11        Consulting  Agreement  dated  January 15, 2001 by and among Orincon
             Industries,  Inc., John T. Rickard and OptiMark, Inc. (incorporated
             by reference to Exhibit 10.12(c) to Registrant's Amendment No. 2 to
             Annual  Report on Form 10-K for the year ended  December  31,  2000
             (Commission File No. 000-30527)).

10.12        Restricted Stock Purchase Agreement, dated December 1, 1998, by and
             between OptiMark and Phillip J. Riese (incorporated by reference to
             Exhibit  10.14 to  Registrant's  Registration  Statement on Form 10
             (No. 000-30527)).

10.13        Stock Purchase  Agreement,  dated December 18, 1998, by and between
             OptiMark and Phillip J. Riese (incorporated by reference to Exhibit
             10.15  to  Registrant's  Registration  Statement  on  Form  10 (No.
             000-30527)).

10.14+       Services Agreement,  dated January 1, 1999, by and between OptiMark
             and ISM Information Systems Management Corporation (incorporated by
             reference to Exhibit 10.18 to Registrant's  Registration  Statement
             on Form 10/A-1 (No. 000-30527)).

10.15+       OptiMark/IBM Ops Agreement,  dated February 2, 1999, by and between
             OptiMark and the parties named therein  (incorporated  by reference
             to Exhibit  10.19 to  Registrant's  Registration  Statement on Form
             10/A-1 (No. 000-30527)).

10.16        License Termination Agreement, dated March 19, 1999, by and between
             OptiMark  and  High  Performance  Markets,  Ltd.  (incorporated  by
             reference to Exhibit 10.21 to Registrant's  Registration  Statement
             on Form 10 (No. 000-30527)).


                                       46
<PAGE>


10.17        Common Stock Purchase  Warrant,  dated August 27, 1996, in favor of
             The Pacific  Exchange,  Inc.  (incorporated by reference to Exhibit
             10.22  to  Registrant's  Registration  Statement  on  Form  10 (No.
             000-30527)).

10.18        Common Stock Purchase Warrant, dated December 31, 1996, in favor of
             The Chicago Board Options Exchange, Inc. (incorporated by reference
             to Exhibit 10.23 to Registrant's  Registration Statement on Form 10
             (No. 000-30527)).

10.19        Common Stock  Purchase  Warrant,  dated April 23, 1998, in favor of
             Virginia Surety Company, Inc. (incorporated by reference to Exhibit
             10.24  to  Registrant's  Registration  Statement  on  Form  10 (No.
             000-30527)).

10.20        Common Stock  Purchase  Warrant,  dated June 19, 1998,  in favor of
             Transamerica Business Credit Corporation (incorporated by reference
             to Exhibit 10.25 to Registrant's  Registration Statement on Form 10
             (No. 000-30527)).

10.21        Common  Stock  Purchase  Warrant,  dated  August 24,  1998,  by and
             between OptiMark and Francis X. Egan  (incorporated by reference to
             Exhibit  10.26 to  Registrant's  Registration  Statement on Form 10
             (No. 000-30527)).

10.22        NASDAQ Warrant  Agreement,  dated September 1, 1998, by and between
             OptiMark  and  The  NASDAQ  Stock  Market,  Inc.  (incorporated  by
             reference to Exhibit 10.27 to Registrant's  Registration  Statement
             on Form 10 (No. 000-30527)).

10.23        Common Stock  Purchase  Warrant,  dated  January 27,  1999,  by and
             between  OptiMark and BIOS Group LP  (incorporated  by reference to
             Exhibit  10.28 to  Registrant's  Registration  Statement on Form 10
             (No. 000-30527)).

10.24        Warrant Agreement,  dated October 27, 1999, by and between OptiMark
             and  Knight/Trimark  Group,  Inc.  (incorporated  by  reference  to
             Exhibit  10.29 to  Registrant's  Registration  Statement on Form 10
             (No. 000-30527)).

10.25+       Development,  Subcontract,  and Operations Agreement, dated May 17,
             1999, by and among OptiMark, Inc. and Japan OptiMark Systems, Inc.,
             as  amended   (incorporated  by  reference  to  Exhibit  10.31)  to
             Registrant's  Amendment No. 2 to Annual Report on Form 10-K for the
             year ended December 31, 2000 (Commission File No. 000-30527)).

10.26        Letters,  dated May 23, 2001,  amending OptiMark,  Inc.'s agreement
             with Japan OptiMark  Systems,  Inc.  (incorporated  by reference to
             Exhibit 9.1 to Registrant's  Quarterly  Report on Form 10-Q for the
             period ended June 30, 2001 (Commission File No. 000-30527)).

10.27        Employment  Agreement,  dated  August  16,  2001,  by  and  between
             OptiMark  Holdings,  Inc.  and Robert J. Warshaw  (incorporated  by
             reference to Exhibit 10.1 to Registrant's  Quarterly Report on Form
             10-Q for the period ended September 30, 2001  (Commission  File No.
             000-30527)).

10.28        Amendment No.1 to Employment  Agreement,  dated August 16, 2001, by
             and  between  OptiMark   Holdings,   Inc.  and  Robert  J.  Warshaw
             (incorporated   by  reference  to  Exhibit  10.2  to   Registrant's
             Quarterly  Report on Form 10-Q for the period ended  September  30,
             2001 (Commission File No. 000-30527)).

10.29        Separation  Agreement,  dated  August  15,  2001,  by  and  between
             OptiMark,  Inc. and James G. Rickard  (incorporated by reference to
             Exhibit 10.3 to Registrant's  Quarterly Report on Form 10-Q for the
             period ended September 30, 2001 (Commission File No. 000-30527)).


                                       47
<PAGE>


10.30        OptiMark  Holdings,   Inc.  2001  Series  F  Preferred  Stock  Plan
             (incorporated by reference to Registrant's  Registration  Statement
             on Form S-8 (No. 333-73356)).

10.31        Second  Amended and Restated  Promissory  Note,  dated  October 12,
             2002,  executed  by OptiMark  Holdings,  Inc. in favor of Robert J.
             Warshaw (incorporated by reference to Exhibit 10.31 to Registrant's
             Annual  Report on Form 10-K for the year ended  December  31,  2001
             (Commission File No. 000-30527)).

10.32        Employment Letter, dated June 19, 2001, from OptiMark, Inc. to Neil
             G.  Cohen   (incorporated   by  reference   to  Exhibit   10.32  to
             Registrant's Annual Report on Form 10-K for the year ended December
             31, 2001 (Commission File No. 000-30527)).

10.33        Employee  Agreement,   dated  December  1,  2002,  by  and  between
             OptiMark,  Inc. and James Pak (incorporated by reference to Exhibit
             10.33 to Registrant's Annual Report on Form 10-K for the year ended
             December 31, 2001 (Commission File No. 000-30527)).

10.34        Employment  Letter,  dated April 9, 2001,  from  OptiMark,  Inc. to
             Trevor B. Price  (incorporated  by  reference  to Exhibit  10.34 to
             Registrant's Annual Report on Form 10-K for the year ended December
             31, 2001 (Commission File No. 000-30527)).

10.35        Employee  Agreement,  dated May 16, 2001, by and between  OptiMark,
             Inc.  and Trevor B. Price  (incorporated  by  reference  to Exhibit
             10.35 to Registrant's Annual Report on Form 10-K for the year ended
             December 31, 2001 (Commission File No. 000-30527)).

10.36        Amendment  to  Employee  Agreement,  dated  June 19,  2001,  by and
             between  OptiMark,  Inc.  and  Trevor  B.  Price  (incorporated  by
             reference to Exhibit  10.36 to  Registrant's  Annual Report on Form
             10-K for the year ended  December  31,  2001  (Commission  File No.
             000-30527)).

10.37        Employment  Letter,  dated April 17, 2001, by and between OptiMark,
             Inc. and Gary Meshell  (incorporated  by reference to Exhibit 10.37
             to  Registrant's  Annual  Report  on Form  10-K for the year  ended
             December 31, 2001 (Commission File No. 000-30527)).

10.38        Employee  Agreement,  dated May 15, 2001, by and between  OptiMark,
             Inc.  and Gary B.  Meshell  (incorporated  by  reference to Exhibit
             10.38 to Registrant's Annual Report on Form 10-K for the year ended
             December 31, 2001 (Commission File No. 000-30527)).

10.39        Amendment  to  Employee  Agreement,  dated  June 19,  2001,  by and
             between  OptiMark,  Inc.  and  Gary  B.  Meshell  (incorporated  by
             reference to Exhibit  10.39 to  Registrant's  Annual Report on Form
             10-K for the year ended  December  31,  2001  (Commission  File No.
             000-30527)).

10.40        Separation  Agreement,  dated  February  16,  2002,  by and between
             OptiMark,  Inc. and Gary B. Meshell  (incorporated  by reference to
             Exhibit  10.40 to  Registrant's  Annual Report on Form 10-K for the
             year ended December 31, 2001 (Commission File No. 000-30527)).

10.41        Employment Letter,  dated January 16, 2002, from OptiMark,  Inc. to
             James  Pak   (incorporated   by  reference  to  Exhibit   10.41  to
             Registrant's Annual Report on Form 10-K for the year ended December
             31, 2001 (Commission File No. 000-30527)).

21.1         Subsidiaries of OptiMark Holdings,  Inc. (incorporated by reference
             to Exhibit 21.1 to Registrant's  Annual Report on Form 10-K for the
             year ended December 31, 2001 (Commission File No. 000-30527)).

23.1         Consent of the Independent Auditors.


                                       48
<PAGE>



     +  Confidential  treatment  has been  requested  for  certain  confidential
portions  of this  exhibit  pursuant to Rule 24b-2  under the  Exchange  Act. In
accordance with Rule 24b-2, these  confidential  portions have been omitted from
this exhibit and filed separately with the Commission.






                                       49
<PAGE>


                                   SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                        OPTIMARK HOLDINGS, INC.

Dated July 18, 2002


                                        By:    /s/ William A. Lupien
                                          ---------------------------
                                          Name:  William A. Lupien
                                          Title: Chairman

                                          By:  /s/ Phillip J. Riese
                                          ---------------------------
                                          Name:  Phillip J. Riese
                                          Title: Director

                                          By:  /s/ Ronald D. Fisher
                                          -------------------------
                                          Name:  Ronald D. Fisher
                                          Title: Director

                                        By:    /s/ Robert J. Warshaw
                                          ---------------------------
                                          Name:  Robert J. Warshaw
                                          Title: Chief Executive Officer,
                                               Director, and Principal
                                               Financial and Accounting Officer




                                       50
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
OptiMark Holdings, Inc.
New York, New York

We have  audited  the  accompanying  consolidated  balance  sheets  of  OptiMark
Holdings,  Inc. and  subsidiaries  (the  "Company")  as of December 31, 2001 and
2000, and the related  consolidated  statements of operations and  comprehensive
loss,  stockholders' equity  (deficiency),  and cash flows for each of the three
years in the period ended December 31, 2001. These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2001
and 2000,  and the results of its  operations and its cash flows for each of the
three years in the period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial  statements,  the  Company's  recurring  losses  from  operations  and
stockholders'  capital  deficiency raise  substantial doubt about its ability to
continue as a going concern.  Management's  plans  concerning  these matters are
also  described  in  Note  2.  The  financial  statements  do  not  include  any
adjustments that might result from the outcome of this uncertainty.

/s/ DELOITTE & TOUCHE LLP

New York, New York
 May 31, 2002




                                       51
<PAGE>



<TABLE>
OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


<CAPTION>
                                                                       December 31, 2001    December 31, 2000
                                                                       -----------------    -----------------
<S>                                                                      <C>                  <C>
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents ......................................       $   1,624,017        $   2,919,548
  Receivable from affiliate ......................................                --              1,616,413
  Accounts receivable, less allowance for doubtful accounts of
    $73,002 at 2001 and $0 at 2000 ...............................             774,180              750,000
  Other current assets ...........................................             446,911            1,050,294
                                                                         -------------        -------------
          Total current assets ...................................           2,845,108            6,336,255

PROPERTY AND EQUIPMENT - NET .....................................           1,381,435            5,845,760

SOFTWARE LICENSES - NET ..........................................              59,347              120,748
OTHER ASSETS .....................................................             837,072            1,538,735
                                                                         -------------        -------------

TOTAL ASSETS .....................................................       $   5,122,962        $  13,841,498
                                                                         =============        =============


LIABILITIES,  REDEEMABLE STOCK
AND STOCKHOLDERS' (DEFICIENCY) EQUITY

LIABILITIES:
  CURRENT LIABILITIES:
    Accounts payable and accrued liabilities .....................       $     678,901        $   2,225,434
    Accrued compensation .........................................           1,141,246              784,466
    Net liabilities of discontinued operations (Note 4) ..........          13,816,260            5,209,756
    Other current liabilities ....................................             879,842            1,059,154
                                                                         -------------        -------------
          Total current liabilities ..............................          16,516,249            9,278,810

COMMITMENTS AND CONTINGENCIES (Notes 10 and 14)


REDEEMABLE PREFERRED STOCK
  Series E  preferred  stock,  convertible,  $0.01 par value;
    1,000,000 shares authorized; 926,665 issued and outstanding at
    December 31, 2001 ............................................          13,630,854                 --
                                                                         -------------        -------------
  Series F preferred stock, $0.01 par value; 7,400,000 shares
    authorized and no shares issued and outstanding at
    December 31, 2001 ............................................                --                   --
  Series G preferred stock, $0.01 par value; 300,000 shares
    authorized, issued and outstanding at December 31, 2001 ......               3,000                 --
                                                                         -------------        -------------

TOTAL REDEEMABLE STOCK ...........................................          13,633,854                 --
                                                                         -------------        -------------
</TABLE>

                                       52
<PAGE>


<TABLE>
<S>                                                                      <C>                  <C>
STOCKHOLDERS' (DEFICIENCY) EQUITY:
  Preferred stock, authorized and unissued 8,577,932
    at December 31, 2001 and 17,277,932 at December 31, 2000
  Series A preferred stock, convertible and participating,
    $0.01 par value; 3,222,068 shares authorized; 925,683 and
    3,222,068 shares issued and outstanding at December 31, 2001
    and December 31, 2000, respectively ..........................               9,257               32,221
  Series B preferred stock, convertible,  $0.01 par value;
    11,000,000 shares authorized; 10,820,000 and 11,000,000 shares
    issued and outstanding at December 31, 2001 and
    December 31, 2000, respectively ..............................             108,200              110,000
  Series C preferred stock, convertible, $0.01 par value;
    8,250,000 shares authorized, issued and outstanding
    at December 31, 2001 and December 31, 2000 ...................              82,500               82,500
  Series D preferred stock, convertible, $0.01 par value;
    250,000 shares authorized, issued and outstanding
    at December 31, 2001 and December 31, 2000 ...................               2,500                2,500
  Common stock, $0.01 par value; 150,000,000 shares
    authorized; issued 36,612,557 shares at December 31, 2001
    and December 31, 2000, respectively, of which 3,242,644 and
    no shares are held as treasury stock at December 31, 2001 and
    December 31, 2000, respectively ..............................             366,126              366,126
  Warrants, common stock .........................................          35,686,523           35,686,523
  Additional paid-in capital .....................................         301,687,065          301,662,303
  Accumulated deficit ............................................        (362,906,807)        (333,370,391)
  Accumulated other comprehensive loss ...........................             (62,504)              (9,094)
  Treasury stock, at cost ........................................                  (1)                --
                                                                         -------------        -------------
          TOTAL STOCKHOLDERS' (DEFICIENCY) EQUITY ................         (25,027,141)           4,562,688
                                                                         -------------        -------------

TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS'
(DEFICIENCY) EQUITY ..............................................       $   5,122,962        $  13,841,498
                                                                         =============        =============
</TABLE>

See notes to consolidated financial statements



                                       53
<PAGE>



<TABLE>
OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999

<CAPTION>
                                                       2001               2000               1999
                                                  ---------------------------------------------------

<S>                                               <C>                <C>                <C>
REVENUE:
  Revenue ...................................     $   8,607,881      $   3,549,999      $        --
  Revenue from affiliate ....................         2,817,841         11,684,064          1,620,454
                                                  -------------      -------------      -------------
          Total revenue .....................        11,425,722         15,234,063          1,620,454
                                                  -------------      -------------      -------------

EXPENSES:
  Cost of sales .............................         6,416,634          8,255,553            896,321
  Sales and marketing .......................         1,738,235          1,893,389            617,778
  Research and development ..................         5,841,592          3,459,558          1,030,417
  General and administrative ................         9,121,735          9,600,923         11,228,711
  Depreciation and amortization .............         4,034,887          3,949,551          1,728,108
  Impairment of fixed assets ................         1,146,656          1,878,961               --
  Write off of intangible asset .............              --           23,940,000               --
  Restructuring expense .....................           315,613            292,634          7,693,026
  Warrant compensation expense ..............              --               14,542         40,616,822
                                                  -------------      -------------      -------------
          Total operating expenses ..........        28,615,352         53,285,111         63,811,183
                                                  -------------      -------------      -------------

OTHER (INCOME) EXPENSE:
  Interest income ...........................           (51,024)        (1,518,932)        (3,315,664)
  Interest expense ..........................           121,368            312,500            449,093
  Writedown of investment ...................           499,991               --                 --
  Gain on recovery of investment ............          (530,000)              --                 --
  Gain on recovery of bad debts .............              --                 --             (700,000)
  Equity in loss of affiliate ...............              --                 --               69,112
                                                  -------------      -------------      -------------
          Total other expense (income), net .            40,335         (1,206,432)        (3,497,459)
                                                  -------------      -------------      -------------

LOSS FROM CONTINUING OPERATIONS .............       (17,229,965)       (36,844,616)       (58,693,270)

DISCONTINUED OPERATIONS:
  Loss from discontinued operations .........              --          (51,205,297)       (76,385,239)
  Loss on disposal of discontinued operations       (12,306,451)       (16,036,155)              --
                                                  -------------      -------------      -------------
  Loss from discontinued operations .........       (12,306,451)       (67,241,452)       (76,385,239)
                                                  -------------      -------------      -------------


NET LOSS ....................................       (29,536,416)      (104,086,068)      (135,078,509)

OTHER COMPREHENSIVE INCOME (LOSS):
  Foreign currency translation adjustments ..           (53,410)            27,817            (36,911)
                                                  -------------      -------------      -------------

COMPREHENSIVE LOSS ..........................     $ (29,589,826)     $(104,058,251)     $(135,115,420)
                                                  =============      =============      =============
</TABLE>


                                       54
<PAGE>


<TABLE>
<S>                                               <C>                <C>                <C>
LOSS PER SHARE - BASIC AND DILUTED:
  Continuing operations .....................     $       (0.49)     $       (1.00)     $       (1.67)
  Discontinued operations ...................             (0.36)             (1.84)             (2.17)
                                                  -------------      -------------      -------------
  Basic and diluted loss per share ..........     $       (0.85)     $       (2.84)     $       (3.84)
                                                  =============      =============      =============

  Weighted average number of common
     shares outstanding - basic and diluted .        35,004,561         36,603,854         35,193,208
</TABLE>


See notes to consolidated financial statements



                                       55
<PAGE>

<TABLE>
OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999


<CAPTION>
                                                                               2001               2000              1999
                                                                          ----------------------------------------------------

<S>                                                                       <C>                <C>                <C>
CASH FLOWS FROM CONTINUING OPERATING ACTIVITIES
  Net loss ..........................................................     $ (29,536,416)     $(104,086,068)     $(135,078,509)
  Deduct loss from discontinued operations ..........................       (12,306,451)       (67,241,452)       (76,385,239)
                                                                          -------------      -------------      -------------
  Loss from continuing operations ...................................       (17,229,965)       (36,844,616)       (58,693,270)
  Adjustments to reconcile net loss from continuing operations
    to net cash used in
  continuing operations:
    Interest on note receivable .....................................              --                 --              (36,064)
    Value assigned to warrants issued as compensation ...............              --               14,542         40,616,822
    Value assigned to options in connection with restructuring ......              --            1,890,315          5,810,840
    Value assigned to preferred shares issued in connection with ....             3,000               --                 --
    settlement
    Depreciation and amortization ...................................         4,034,887          3,949,551          1,728,108
    Write off of intangible asset ...................................              --           23,940,000               --
    Write-down of investment ........................................           499,991               --                 --
    Gain on recovery of investment ..................................          (530,000)              --                 --
    Allowance for doubtful accounts .................................            73,002               --                 --
    Gain on recovery of receivable ..................................              --                 --             (700,000)
    Impairment of fixed assets ......................................         1,146,656          1,878,961               --
    Loss from investment in joint venture ...........................              --                 --               69,112
    Loss on disposal of assets ......................................            39,773            171,484                980
  Changes in operating assets and liabilities:
    Receivables .....................................................         1,519,231         (1,844,833)          (521,580)
    Other assets ....................................................           805,055            425,318         (1,597,903)
    Accounts payable and accrued liabilities ........................        (1,243,163)           598,200          1,242,363
    Accrued restructuring ...........................................              --           (1,360,761)         1,360,761
    Other liabilities ...............................................          (179,844)           580,774             48,771
                                                                          -------------      -------------      -------------
    Net cash used in continuing operating activities ................       (11,061,377)        (6,601,065)       (10,671,060)
                                                                          -------------      -------------      -------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of property and equipment ...............................          (503,582)          (857,707)        (3,884,628)
  Purchase of software licenses .....................................          (204,560)          (293,331)          (319,039)
  Proceeds from disposal of assets ..................................            12,520             57,060              4,826
    Net cash used in investing activities ...........................          (695,622)        (1,093,978)        (4,198,841)

CASH FLOWS FROM FINANCING ACTIVITIES
  Net proceeds from issuance of redeemable preferred stock ..........         9,630,854               --           99,989,121
  Proceeds from stockholders' notes .................................         4,000,000               --                 --
  Payments on capital leases ........................................          (249,437)        (1,403,351)        (1,418,868)
  Proceeds from the issuance of minority interest ...................           250,000               --                 --
  Proceeds from recovery of investment ..............................           530,000               --                 --
  Payments for treasury stock .......................................                (2)              --                 --
  Net proceeds from issuance of common stock ........................              --                 --               50,005
  Proceeds from recovery of receivable ..............................              --                 --              700,000
  Proceeds from the exercise of warrants for common stock ...........              --                 --            5,984,484
  Proceeds from term loan ...........................................              --                 --              999,653
  Proceeds from officer loan ........................................              --                 --            1,039,742
  Proceeds from exercise of options for common stock ................              --              205,864            851,861
                                                                          -------------      -------------      -------------
    Net cash provided by (used in) financing activities .............        14,161,415         (1,197,487)       108,195,998
                                                                          -------------      -------------      -------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................         2,404,416         (8,892,530)        93,326,097

NET CASH USED IN DISCONTINUED OPERATIONS ............................        (3,699,947)       (50,825,332)       (94,527,957)

CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD ..................         2,919,548         62,637,410         63,839,270


CASH AND CASH EQUIVALENTS, END OF THE PERIOD ........................     $   1,624,017      $   2,919,548      $  62,637,410
                                                                          =============      =============      =============
</TABLE>
                                       56
<PAGE>


<TABLE>
<S>                                                                       <C>                <C>                <C>
Supplement disclosure of cash flow information:
  Cash payments for interest - continuing operations ................     $     121,368      $     317,249      $     630,655
  Cash payments for interest - discontinued operations ..............              --              406,063            448,899

Non-cash financing activities:
  Conversion of stockholders' notes to Series E redeemable preferred      $   4,000,000               --                 --
stock

Supplemental schedule of non-cash investing and financing activities:
  Net reduction in vendor obligations ...............................              --        $   2,619,608               --
  Increase in capital leases ........................................              --                 --        $   6,359,303
  Acquisition of intangible asset ...................................              --                 --           28,000,000
</TABLE>


See notes to consolidated financial statements



                                       57
<PAGE>


<TABLE>
<CAPTION>
                     OPTIMARK HOLDINGS INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999



                       Series A                  Series B                Series C                 Series D
                      Convertible               Convertible             Convertible              Convertible
                    Preferred Stock           Preferred Stock          Preferred Stock         Preferred Stock
                  Shares       Amount       Shares       Amount      Shares       Amount     Shares       Amount
------------------------------------------------------------------------------------------------------------------


<S>              <C>          <C>         <C>           <C>         <C>          <C>         <C>           <C>
BALANCE,
JANUARY 1,
1999             3,547,068    $ 35,471    11,000,000    $110,000       -            -           -            -

Conversion of
Series A
Preferred Stock
into common
stock              (75,000)       (750)

Issuance of
Series C
Preferred Stock,
 net of expenses                                                    8,250,000    $ 82,500

Issuance of
Series D
Preferred Stock                                                                              250,000       $ 2,500

Issuance of
common stock

Issuance of
warrants
Warrants
exercised

Warrants
forfeited

Warrants
expired

Options
exercised

Restructuring
option charge



<CAPTION>
                                         Common Stock
              -------------------------------------------------------------------
                      Voting              Non-Voting                 Total
                 Shares     Amount    Shares      Amount      Shares       Amount
              -------------------------------------------------------------------


<S>            <C>          <C>        <C>        <C>        <C>           <C>
BALANCE,
JANUARY 1,
1999           30,818,922   $308,189   740,000    $ 7,400    31,558,922    315,589

Conversion of
Series A
Preferred Stock
into common
stock             300,000      3,000                            300,000      3,000

Issuance of
Series C
Preferred Stock
 net of expense

Issuance of
Series D
Preferred Stock

Issuance of
common stock    2,004,167     20,042                          2,004,167     20,042

Issuance of
warrants
Warrants
exercised       2,198,764     21,988                          2,198,764     21,988

Warrants
forfeited

Warrants
expired

Options
exercised         434,204      4,342                            434,204      4,342

Restructuring
option charge

</TABLE>

                                       58
<PAGE>


<TABLE>
<CAPTION>
                       Series A                  Series B                Series C                 Series D
                      Convertible               Convertible             Convertible              Convertible
                    Preferred Stock           Preferred Stock          Preferred Stock         Preferred Stock
                  Shares       Amount       Shares       Amount      Shares       Amount     Shares       Amount
------------------------------------------------------------------------------------------------------------------

<C>              <C>           <C>      <C>             <C>        <C>             <C>       <C>           <C>
Interest on
note receivable
from officer

Note receivable
repayment
from officer

Net loss

Other
comprehensive
loss
                 ---------    --------  ----------      -------    ---------      -------    -------     -------
BALANCE,
DECEMBER 31,
1999             3,472,068     34,721   11,000,000      110,000    8,250,000       82,500    250,000       2,500

Retirement of
Treasury Stock    (250,000)    (2,500)

Warrants
forfeited

Options
exercised

Restructuring
charge

Net loss

Other
comprehensive
loss
                 ---------    --------  ----------      -------   ---------       -------    --------       ------

BALANCE,
DECEMBER 31,
2000             3,222,068     32,221   11,000,000      110,000   8,250,000        82,500     250,000        2,500

Purchase of
Preferred
Shares          (2,296,385)   (22,964)    (180,000)      (1,800)

Purchase of
Common
Shares


<CAPTION>
                                         Common Stock
              -------------------------------------------------------------------
                      Voting              Non-Voting                 Total
                 Shares     Amount    Shares      Amount      Shares       Amount
              -------------------------------------------------------------------
<S>           <C>          <C>       <C>           <C>      <C>           <C>
Interest on
note receivable
from officer

Note receivable
repayment
from officer

Net loss

Other
comprehensive
loss
              ----------   -------   -------       -----    ----------    -------

BALANCE,
DECEMBER 31,
1999          35,756,057   357,561   740,000       7,400    36,496,057    364,961

Retirement of
Treasury Stock

Warrants
forfeited

Options
exercised        116,500     1,165                             116,500      1,165

Restructuring
charge

Net loss

Other
comprehensive
loss
               ----------  -------   -------     -------    ----------    -------


BALANCE,
DECEMBER 31,   35,872,557  358,726   740,000       7,400    36,612,557    366,126
2000

Purchase of
Preferred
Shares

Purchase of
Common
Shares
</TABLE>


                                       59
<PAGE>



<TABLE>
<CAPTION>
                       Series A                  Series B                Series C                 Series D
                      Convertible               Convertible             Convertible              Convertible
                    Preferred Stock           Preferred Stock          Preferred Stock         Preferred Stock
                  Shares       Amount       Shares       Amount      Shares       Amount     Shares       Amount
------------------------------------------------------------------------------------------------------------------
<S>              <C>          <C>         <C>          <C>         <C>           <C>         <C>         <C>
Net loss
Other
comprehensive
loss
                 -------      -------     ----------   ---------   ---------     --------    -------     -------

BALANCE,
DECEMBER 31,
2001             925,683      $ 9,257     10,820,000   $ 108,200   8,250,000     $ 82,500    250,000     $ 2,500
                 =======      =======     ==========   =========   =========     ========    =======     =======



<CAPTION>
                                         Common Stock
              -------------------------------------------------------------------
                      Voting              Non-Voting                 Total
                 Shares     Amount    Shares      Amount      Shares       Amount
              -------------------------------------------------------------------
<S>           <C>         <C>         <C>      <C>         <C>          <C>
Net loss
Other
comprehensive
loss
              ----------  ---------   -------  --------    ----------   ---------

BALANCE,
DECEMBER 31,
2001          35,872,557  $ 358,726   740,000  $  7,400    36,612,557   $ 366,126
              ==========  =========   =======  ========    ==========   =========
</TABLE>

See notes to consolidated financial statements



                                       60
<PAGE>



<TABLE>
<CAPTION>
                     Common Stock
                       Warrants            Additional                        Notes
                  -------------------       Paid-In       Accumulated      Receivable-
                  Shares       Amount       Capital         Deficit         Officer
----------------------------------------------------------------------------------------
<S>              <C>         <C>          <C>            <C>             <C>
BALANCE,
JANUARY 1,
1999             17,534,092  $ 1,845,467  $ 162,221,792  $ (94,205,814)  $ (1,003,678)


Conversion of
Series A
Preferred Stock
into common
stock                                            (2,250)

Issuance of
Series C
Preferred Stock,
 net of expenses                             96,906,621

Issuance of0
Series D
Preferred Stock                               2,997,500

Issuance of
common stock                                 28,029,963

Issuance of
warrants         32,729,158   40,631,364

Warrants
exercised        (2,198,764)      (4,002)     5,966,498

Warrants
forfeited            (8,000)

Warrants
expired          (1,666,667)  (6,786,306)     6,786,306

Options
exercised                                       847,519

Restructuring
option charge                                 5,810,840

Interest on
note receivable
from officer                                                                  (36,064)



<CAPTION>
                                    Treasury Stock
                      ----------------------------------------      Accumulated
                 Series A     Series A                         Other           Total
                 Preferred    Preferred    Common   Common  Comprehensive   Stockholders'
                  Shares       Amount      Shares   Amount     Loss            Equity
----------------------------------------------------------------------------------------
<S>              <C>        <C>              <C>       <C>       <C>         <C>
BALANCE,
JANUARY 1,
1999             (250,000)  $ (10,000,000)    -         -         -          $59,318,827


Conversion of
Series A
Preferred Stock
into common
stock                                                                            -

Issuance of
Series C
Preferred Stock,
 net of expenses                                                              96,989,121

Issuance of0
Series D
Preferred Stock                                                                  300,000

Issuance of
common stock                                                                 28,050,005

Issuance of
warrants                                                                      40,631,364

Warrants
exercised                                                                      5,984,484

Warrants
forfeited                                                                        -

Warrants
expired                                                                          -

Options
exercised                                                                        851,861

Restructuring
option charge                                                                  5,810,840

Interest on
note receivable
from officer                                                                     (36,064)
</TABLE>


                                       61
<PAGE>


<TABLE>
<CAPTION>
                     Common Stock
                       Warrants            Additional                        Notes
                  -------------------       Paid-In       Accumulated      Receivable-
                  Shares       Amount       Capital         Deficit         Officer
----------------------------------------------------------------------------------------
<S>              <C>          <C>          <C>            <C>              <C>
Note receivable
repayment
from officer                                                                1,039,742
Net loss                                                  (135,078,509)

Other
comprehensive
loss
                 ----------   ----------   -----------    ------------     ----------

BALANCE,
DECEMBER 31,
1999             46,389,819   35,686,523   309,564,789    (229,284,323)          -


Retirement of
Treasury Stock                              (9,997,500)

Warrants
forfeited          (124,000)

Options
exercised                                      204,699

Restructuring
charge                                       1,890,315

Net loss                                                  (104,086,068)

Other
comprehensive
loss
                 ----------   ----------   -----------    ------------     ----------
BALANCE,
DECEMBER 31,
2000             46,265,819   35,686,523   301,662,303    (333,370,391)           -

Purchase of
Preferred
Shares                                          24,762

Purchase of
Common
Shares

Net loss                                                   (29,536,416)



<CAPTION>
                                    Treasury Stock
                      ----------------------------------------      Accumulated
                 Series A     Series A                         Other           Total
                 Preferred    Preferred    Common   Common  Comprehensive   Stockholders'
                  Shares       Amount      Shares   Amount      Loss          Equity
----------------------------------------------------------------------------------------
<S>              <C>         <C>         <C>                    <C>         <C>
Note receivabl
repayment
from officer                                                                   1,039,742
Net loss                                                                    (135,078,509)

Other
comprehensive
loss                                                            $(36,911)        (36,911)
                 ---------   -----------  -------    -------    ---------   ------------

BALANCE,
DECEMBER 31,
1999             (250,000)   (10,000,000)    -            -     $(36,911)    106,524,760
                                                                ---------   ------------

Retirement of
Treasury Stock    250,000     10,000,000                                            -

Warrants
forfeited                                                                           -

Options
exercised                                                                        205,864

Restructuring
charge                                                                         1,890,315

Net loss                                                                    (104,086,068)

Other
comprehensive
loss                                                              27,817          27,817
                 ---------   -----------  -------    -------    ---------   ------------

BALANCE,
DECEMBER 31,
2000                 -              -         -          -        (9,094)      4,562,688

Purchase of
Preferred
Shares                                                                                (2)

Purchase of
Common
Shares                                   (3,242,644)  $ (1)                           (1)

Net loss                                                                     (29,536,416)
</TABLE>



                                       62
<PAGE>



<TABLE>
<CAPTION>
                     Common Stock
                       Warrants            Additional                        Notes
                  -------------------       Paid-In       Accumulated      Receivable-
                  Shares       Amount       Capital         Deficit         Officer
---------------------------------------------------------------------------------------
<S>            <C>          <C>           <C>           <C>                 <C>
Other
comprehensive
loss
               ----------   ------------  ------------  ---------------     ---------

BALANCE,
DECEMBER 31,
2001           46,265,819   $ 35,686,523  $301,687,065  $ (362,906,807)     $    -
=====================================================================================




<CAPTION>
                                    Treasury Stock
                      ----------------------------------------      Accumulated
                 Series A     Series A                          Other           Total
                 Preferred    Preferred    Common    Common  Comprehensive   Stockholders'
                  Shares       Amount      Shares    Amount      Loss          Equity
-----------------------------------------------------------------------------------------
<S>                <C>       <C>         <C>           <C>    <C>           <C>
Other
comprehensive
loss                                                            (53,410)         (53,410)

BALANCE,
DECEMBER 31,
2001                 -         $  -      (3,242,644)   $ (1)  $ (62,504)    $(25,027,141)
=========================================================================================
</TABLE>






                                       63
<PAGE>


                    OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

1.     BASIS OF PRESENTATION AND REORGANIZATION

       OptiMark Holdings, Inc. ("Holdings") was established on May 19, 2000, and
became the sole  stockholder  of two  operating  subsidiaries  on June 12,  2000
pursuant to the  reorganization  of the legal structure of the company  formerly
known as OptiMark Technologies, Inc. ("OTI"). OTI was the successor to a company
that had been  founded in 1996 to begin  development  of the  OptiMark  matching
engine technology for use in an electronic  trading system for equity securities
and related technologies.  The reorganization was effected pursuant to which (i)
OTI formed  Holdings as a direct  wholly-owned  subsidiary of OTI, (ii) Holdings
formed OTI Acquisition  Corporation ("OTIA") as a direct wholly-owned subsidiary
of  Holdings,  (iii) OTI merged  with OTIA  pursuant  to  Section  251(g) of the
Delaware  General  Corporation  Law,  with  the  name of the  surviving  company
becoming OptiMark US Equities,  Inc. ("UEI"), and with stockholders of UEI being
deemed to have  received  shares of Holdings by operation of law. As a result of
such merger, UEI became a direct wholly-owned subsidiary of Holdings. References
herein to the "Company" refer to Holdings and its subsidiaries,  with respect to
periods  following the  reorganization,  and to OTI and its  subsidiaries,  with
respect to periods prior to the reorganization.

       Until  September 19, 2000, the Company had operated in two segments,  the
Exchange  Solutions  Services Business  (formerly  referred to as the Electronic
Markets Business) and the US Equities Business,  under two separate wholly owned
subsidiaries,  OptiMark,  Inc.  ("OptiMark"),  and OptiMark US  Equities,  Inc.,
respectively.  Effective  September  19,  2000,  the US  Equities  Business  was
discontinued   (Note  3).  On  December  28,  2001,   OptiMark   formed  a  then
majority-owned  subsidiary,  OptiMark  Innovations Inc. (formerly known as OTSH,
Inc. and referred to below as  "Innovations").  Innovations  was  capitalized on
December 31, 2001,  and at that time  OptiMark  held a 67% voting  interest (See
Note 20) and the remaining  interest was held by SOFTBANK  Capital  Partners LP,
SOFTBANK  Capital  LP and  SOFTBANK  Capital  Advisors'  Fund LP  (collectively,
"SOFTBANK").  Innovations has authorized capital stock of 7,000 shares of common
stock,  par value $.01 per share (the  "Innovations  Common  Stock"),  and 3,000
shares of preferred stock, par value $.01 per share (the "Innovations  Preferred
Stock"). Innovations has designated 2,000 shares of Innovations Preferred Stock,
as "Non-Qualified Preferred Stock," which has a cumulative preferred dividend at
an annual rate of $500 per share,  payable  when and if declared by the Board of
Directors  of  Innovations.  The  liquidation  preference  of the  Non-Qualified
Preferred  Stock is equal to  $10,000  per share  plus the  aggregate  amount of
accrued and unpaid dividends or distributions. The Non-Qualified Preferred Stock
is also subject to a mandatory  redemption,  at a price equal to the liquidation
preference  amount,  in four equal quarterly  installments on December 31, 2016,
March 31, 2017,  June 30, 2017 and  September 30, 2017.  Innovations  designated
1,000 shares of Innovations Preferred Stock as "Series B Preferred Stock," which
has a  cumulative  preferred  dividend  at an annual  rate of $519.21 per share,
payable  when and if  declared by the Board of  Directors  of  Innovations.  The
liquidation  preference  of the Series B Preferred  Stock is equal to $10,389.61
per  share  plus the  aggregate  amount  of  accrued  and  unpaid  dividends  or
distributions.  The principal  business of  Innovations  is to (a)  consummate a
purchase of a  controlling  interest in Ashton  through the purchase of Ashton's
common  stock  and  (b)  hold  Ashton's  common  stock  for the  benefit  of the
shareholders of Holdings and Innovations.

       OptiMark also has an approximately  15% voting interest in Japan OptiMark
Systems, Inc. ("JOS"), a Japanese corporation.  The investment in JOS previously
accounted for on the equity method does not have any carrying value in financial
statements of the Company as of December 31, 2001.  JOS has realized  continuing
losses  since its  inception  in 1998.  Since the Company has not  provided  any
guarantees  and is not committed to provide any future funding to JOS it has not
recorded its equity share of JOS' losses.

       Effective in January 2002, the development,  sales and marketing  efforts
of the Exchange Solutions Services Business was suspended.  As of that date, the
primary  purpose of the Company was to hold the securities of Innovations and to
consummate financing and strategic transactions with other parties.


                                       64
<PAGE>


       As a result of the  capitalization of Innovations,  Holdings and SOFTBANK
have certain call and put rights described  below. The Independent  Committee of
the  Board has the  right  commencing  October  1,  2002 and  exercisable  until
September 30, 2003,  to recommend to the Board that  Holdings  purchase all, but
not less than all, of the SOFTBANK Shares for $125,000 in cash and 16,667 shares
of Series E Cumulative Preferred Stock ("Series E Preferred Stock") of Holdings.
If the  Board  of  Directors  accepts  such  recommendation,  SOFTBANK  would be
obligated to sell the SOFTBANK shares for that consideration.

       Upon the  occurrence of a Liquidity  Event  (defined  below) on or before
September  30,  2003,  the  SOFTBANK  Shares will be  purchased  by Holdings for
$125,000 in cash and 16,667  shares of Series E Preferred  Stock of Holdings.  A
"Liquidity Event" means any of the following:  (i) Innovations' sale, conveyance
or  other  disposition  of all or  substantially  all of its  assets;  (ii)  the
acquisition of Innovations by another entity by means of merger or consolidation
resulting  in  the  exchange  of  the  outstanding  shares  of  Innovations  for
securities  or other  consideration  issued,  or  caused  to be  issued,  by the
acquiring  entity or its  subsidiary,  unless the  stockholders  of  Innovations
immediately  prior to the  consummation of such transaction hold at least 50% of
the voting power of the surviving  corporation as a result of such  transaction;
(iii) the  consummation  by  Innovations  of a transaction  or series of related
transactions,  including  the  issuance  or sale of  voting  securities,  if the
stockholders of Innovations  immediately  prior to such  transaction (or, in the
case of a series of transactions, the first of such transactions) hold less than
50% of the voting power of Innovations  immediately  after the  consummation  of
such transaction (or, in the case of a series of transactions,  the last of such
transactions);  or (iv) any initial  underwritten public offering of Innovations
Common Stock.  Notwithstanding  the  foregoing,  Holdings will not exercise this
call option in the event that the Independent Committee recommends that Holdings
not purchase the SOFTBANK Shares.

       In the event that: (i) the call rights of Holdings  described  above have
not been  exercised  on or  before  September  30,  2003,  (ii) the  Independent
Committee  no longer  exists  and (iii) no  independent  directors  serve on the
Holdings  Board of Directors  and,  after  reasonable  good faith efforts by the
remaining  members of the Holdings Board of Directors,  no  independent  persons
qualified  to serve on the Holdings  Board of  Directors  have been found or, if
found,  are not willing to serve on the Holdings  Board of  Directors,  then the
Holdings  Board of  Directors  will engage an  independent  investment  banking,
accounting or third party valuation firm to evaluate whether or not it is in the
best interests of Holdings that it purchase the SOFTBANK  Shares.  If such third
party  determines  it is in the best  interests  of  Holdings  to  purchase  the
SOFTBANK Shares, Holdings will be obligated to purchase such shares on or before
December 31, 2003 for  $125,000 in cash and 16,667  shares of Series E Preferred
Stock of Holdings.

       SOFTBANK  has the right,  commencing  on  October 1, 2002 and  continuing
until  September  30,  2003,  to put all, but not less than all, of the SOFTBANK
Shares to Holdings in exchange for 16,667 shares of Series E Preferred  Stock of
Holdings.

       In the event  that no put of, or call on,  the  SOFTBANK  Shares has been
exercised  by  October  31,  2003,  then  commencing  on  November  1,  2003 and
continuing  until November 30, 2003,  SOFTBANK has the right to require Holdings
to purchase all, but not less than all, of the SOFTBANK Shares for 16,667 shares
of Series E Preferred Stock of Holdings.

2.     GENERAL INFORMATION AND SUMMARY OF ACCOUNTING POLICIES

       General - The Exchange  Solutions  Services  Business is comprised of the
development and operation of trading platforms and environments for existing and
emerging electronic marketplaces through a combination of consulting, servicing,
licensing and equity  agreements.  The Company  commenced these activities after
termination of the license agreement with High Performance Markets, Ltd. ("HPM")
(Note 7). The OptiMark technology,  as adapted for these marketplaces,  allows a
broad array of auction and exchange  activities,  including the trading of goods
and services  whose value is  determined  by factors in addition to quantity and
price;  trading  among many  buyers  and many  sellers;  and broker  facilitated
trading.

       Basis of Preparation - The  accompanying  financial  statements have been
prepared on a going concern basis,  which contemplates the realization of assets
and the satisfaction of liabilities in the normal


                                       65
<PAGE>


course of business.  The Company's current cash and cash  equivalents,  plus the
expected cash flows for 2002, are not expected to be sufficient to meet its 2002
operating and financial  commitments.  Accordingly,  if the Company is unable to
raise  additional  cash  either  directly  or through  sale or  borrowing  gains
Innovations'  holdings of shares of the Ashton  Common  Stocks or the Note,  the
Company  would  face  the  imminent  and  likely  potential  for  bankruptcy  or
liquidation.   If  the  Company  is  forced  to  declare  bankruptcy  or  pursue
liquidation,  the value of the Company's assets may not be sufficient to pay its
creditors in full and,  accordingly,  the  Company's  common stock and preferred
stock would have no value. The Company will continue to seek additional  funding
both to support its  operation as a holding  company as well as its very limited
efforts related to potential new product development. While the Company hopes to
be able to obtain  additional  financing for these limited  product  development
activities,  continue to borrow money from SOFTBANK or raise capital through the
sale or borrowing  against the shares of Innovations  related to its holdings of
shares of the Ashton  Common Stock and the Note,  the Company may not be able to
raise this  capital  before it runs out of cash.  In  addition,  the Company has
pledged a portion of its shares of Capital Stock in  Innovations  to SOFTBANK as
payment for loans that have already been provided. In the event that the Company
does not have enough cash to pay the  principal  and  interest on these loans as
they  come  due,  the  Company's   holdings  in  Innovations  would  be  reduced
accordingly.  This would reduce the Company's ability to utilize these assets to
raise additional  capital  necessary to ensure  continuation as a going concern.
There is no assurance that the Company's holdings in Innovations, as represented
by  Innovations'  holdings of shares of the Ashton Common  Stock,  will have any
value useable as collateral  for a loan or sellable to raise cash at any time or
in a time frame that would let the Company continue as a going concern.

       The financial  statements do not include any adjustments  relating to the
recoverability and classification of recorded asset amounts,  or the amounts and
classification  of  liabilities  that might be necessary,  should the Company be
unable to continue as a going  concern.  The Company's  continuation  as a going
concern is dependent upon its ability to generate  sufficient  cash flow to meet
its  obligations  on  a  timely  basis,  to  obtain  additional  financing,   or
refinancing as may be required,  and ultimately to attain successful operations.
The  Company's  current  activities  addressing  the  cash  flow  issue  include
additional  cost  reductions,  generation  of new revenue and  discussions  with
investors regarding additional equity investments.

       Principles of  Consolidation - The  accompanying  consolidated  financial
statements include the accounts of the Company and its controlled  subsidiaries.
Companies in which  OptiMark has equity  investments  of 50% or less and has the
ability to exercise  significant  influence  are  accounted for using the equity
method. Intercompany accounts and transactions have been eliminated.

       Cash  and  Cash  Equivalents  -  The  Company   considers  highly  liquid
investments  with  an  original  maturity  of  three  months  or less to be cash
equivalents.

       Foreign  Currency  Translation - Assets and  liabilities of the Company's
foreign  operations are translated into U.S. dollars at fiscal year-end exchange
rates;  revenues and expenses are translated at weighted  average exchange rates
for the year.  Gains and losses  arising  from  translation  are  recorded  as a
cumulative translation adjustment within accumulated other comprehensive loss, a
component of stockholders' equity (deficiency).

       Property and Equipment - Property and equipment are recorded at cost. For
financial   reporting   purposes,   depreciation   is  provided  for  using  the
straight-line  method over the  estimated  useful  lives of the related  assets,
which range from three to seven years. Leasehold improvements had been amortized
over the  lesser  of the life of the  asset  or the life of the  lease;  however
remaining leasehold  improvements will be amortized over a twelve-month  period.
During  2001 and 2000,  the  Company  wrote down the value of certain  assets by
approximately  $1,147,000 and $1,879,000,  respectively,  in accordance with FAS
121  "Accounting  for the  Impairment  of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed Of" (See Note 6).


                                       66
<PAGE>


       Intangible  Assets -  Intangible  assets  consist  of  software  licenses
amortized using the straight-line method over periods of 24 to 36 months. During
2000, certain non-securities  industries rights and other software licenses were
written off (See Note 7).

       Income  Taxes - The  Company  files a  consolidated  Federal  income  tax
return, which includes all eligible United States subsidiary companies.  Foreign
subsidiaries  are taxed  according to  regulations  existing in the countries in
which  they do  business.  Deferred  income  taxes are  provided  for  temporary
differences  between  income  tax bases  and  financial  reporting  bases of the
Company's assets and liabilities utilizing currently enacted tax laws and rates.

       Revenue Recognition - Consulting, maintenance and support, licensing fees
and development services revenue are recorded as services are performed.

       Long-Lived Assets - The Company accounts for the impairment of long-lived
assets and for  long-lived  assets to be disposed of by evaluating  the carrying
value of its  long-lived  assets in relation to the  operating  performance  and
future undiscounted cash flows of the underlying  businesses when indications of
impairment  are  present.  Long-lived  assets to be  disposed  of,  if any,  are
evaluated in relation to the net  realizable  value.  The Company has determined
that,  as of  December  31,  2001  and  2000,  respectively,  there  had been no
impairment  in the carrying  value of  long-lived  assets except as discussed in
Notes 3 and 6.

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

       Recent Accounting  Pronouncements - During 2001, the Company adopted SFAS
133,  "Accounting  for Derivative  Instruments  and Hedging  Activities"  ("SFAS
133"),  as amended  by SFAS 137,  "Accounting  for  Derivative  Instruments  and
Hedging  Activities - Deferral of  effective  date of SFAS 133" ("SFAS 137") and
SFAS 138,  "Accounting  for Certain  Derivative  Instruments and Certain Hedging
Activities"  ("SFAS  138").  SFAS  133,  as  amended  by SFAS 137 and SFAS  138,
requires  that  an  entity   recognize  all  derivatives  as  either  assets  or
liabilities measured at fair value. The accounting for changes in the fair value
of a derivative depends on the use of the derivative.  The adoption of SFAS 133,
as amended by SFAS 137 and SFAS 138, did not result in any impact in net loss or
in accumulated other comprehensive loss during 2001.

       In July 2001, the Financial  Accounting  Standards  Board ("FASB") issued
SFAS 141, "Business Combinations" ("SFAS 141"). SFAS 141 requires the use of the
purchase method of accounting for all business combinations initiated after June
30, 2001 and eliminates the  pooling-of-interests  method.  The adoption of SFAS
141 by the  Company  during  2001 did not result in any impact in net loss or in
accumulated other comprehensive loss.

       In July 2001,  the FASB issued SFAS 142,  "Goodwill and Other  Intangible
Assets"  ("SFAS  142").  SFAS 142 requires  that  goodwill and other  intangible
assets with  indefinite  lives no longer be  amortized,  but instead  tested for
impairment at least annually. In addition,  the standard includes provisions for
the   reclassification   of  certain   existing   intangibles  as  goodwill  and
reassessment of the useful lives of existing recognized intangibles. SFAS 142 is
effective for fiscal years  beginning  after  December 15, 2001. The Company has
not  determined  the  impact,  if any,  that  this  statement  will  have on its
financial statements.

       In July 2001 the FASB issued SFAS 143,  "Accounting for Asset  Retirement
Obligations"  ("SFAS 143") which requires the  recognition of a liability for an
asset  retirement  obligation  in the period in which it is  incurred.  When the
liability is initially  recorded,  the carrying amount of the related long-lived
asset is correspondingly  increased. Over time, the liability is accreted to its
present value and the related  capitalized charge is depreciated over the useful
life of the asset.  SFAS 143 is effective for fiscal years  beginning after June
15,  2002.  The  Company is  currently  reviewing  the impact of SFAS 143 on the
Company.


                                       67
<PAGE>


       In August 2001, the FASB issued SFAS 144,  "Accounting for the Impairment
or Disposal of Long-Lived  Assets"  ("SFAS 144").  SFAS 144 addresses  financial
accounting  and reporting for the  impairment or disposal of long-lived  assets.
SFAS 144  supersedes  FASB  Statement  121,  "Accounting  for the  Impairment of
Long-Lived  Assets  and  for  Long-Lived  Assets  to be  Disposed  of",  and the
accounting and reporting provisions of APB Opinion 30, "Reporting the Results of
Operations - Reporting  the Effects of Disposal of a Segment of a Business,  and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions", for
the  disposal of a segment of a  business.  This  Statement  also amends ARB 51,
"Consolidated Financial Statements", to eliminate the exception to consolidation
for a subsidiary for which control is likely to be temporary.  The provisions of
this Statement are required to be applied  starting with fiscal years  beginning
after December 15, 2001.  The Company is currently  evaluating the impact of the
new accounting standard on existing long-lived assets and plans to adopt the new
accounting standard in its financial statements for the year ending December 31,
2002.

       During 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants  issued SOP No. 98-1,  "Accounting for
the Costs of Computer  Software  Developed or Obtained  for Internal  Use." This
statement requires the Company to capitalize certain payroll and payroll related
costs  and  has  been  adopted  in the  Company's  1999  consolidated  financial
statements.   At  December  31,  1999,  net  capitalized   software  costs  were
approximately $10,816,000. These costs were written off in 2000 and are included
as  part  of  discontinued  operations.  In  2001,  there  were  no  such  costs
capitalized.

       The  FASB  has  issued   Interpretation   44,   "Accounting  for  Certain
Transactions  Involving Stock  Compensation,"  which was effective as of July 1,
2000. Interpretation 44 has had no material effect on the consolidated financial
statements. Options repriced in 2000 are subject to variable plan accounting.

       Reclassifications  - Certain prior year amounts have been reclassified to
conform to the 2001 presentation.

3.     DISCONTINUED OPERATIONS

       On September 19, 2000, the Company announced its intention to discontinue
its US Equities  Business.  The Company has  discontinued  all operations of the
equities  trading  system  for  the US  Equities  Business  and  terminated  all
communications networks and other related systems that were necessary to support
that business.  Accordingly,  results of this operation have been  classified as
discontinued  operations  in the  consolidated  financial  statements  and prior
periods have been reclassified to conform to this classification.

       The Company recorded a loss on disposal of segment of $16,036,155 in 2000
associated with the discontinuation of the US Equities Business. This amount was
comprised of approximately $2,371,000,  representing a workforce reduction of 99
employees and approximately $13,665,000,  representing the impairment of various
assets and  liabilities.  The amount related to the impairment of various assets
and  liabilities  includes  the  write  off of  capitalized  software  and other
intangibles  of  approximately  $8,533,000,  a write  down in the value of fixed
assets  of  approximately   $5,091,000,   security   deposits  of  approximately
$1,142,000  and other expenses  related to office  closings and other matters of
approximately  $874,000 offset by a net reduction in lease obligations and other
accrued expenses of approximately $1,975,000. The Company expects the process of
disposing of the net liabilities of the discontinued business to be completed by
December 31, 2002 as a result of the  continuing  settlement  negotiations  with
certain  companies from which we had previously  leased  equipment.  Disposition
includes negotiated payments to be made after December 31, 2002.

       Included in the charge in 2000 for net asset impairment,  the Company has
provided  a  $4,595,000   reserve   related  to  contract   renegotiations   and
terminations in connection with certain capital and operating leases and certain
service  and  maintenance  agreements,   including   telecommunications  network
services and computer  software and hardware services which were entered into by
a subsidiary,  US Equities,  Inc., in connection with the creation,  maintenance
and operation of facilities for trading equity securities. This


                                       68
<PAGE>


amount  is  significantly  less  than the  approximate  termination  charges  of
approximately  $39,800,000  provided  in the  relevant  agreements.  The Company
believes  there  are  several   mitigating  factors  that  would  enable  it  to
substantially  reduce its  outstanding  obligations  to these  creditors.  These
factors include:  (a) certain  termination  charges are the subject of bona fide
disputes which are expected to be resolved in the Company's favor as a result of
negotiation or arbitration;  (b) certain  service  charges  included in payments
made by the service  provider to third parties for services and equipment needed
to provide the primary service;  (c) the Company may purchase certain  equipment
outright   which  is  the  subject  of  capital  or  operating   leases  thereby
substantially mitigating contractual termination charges; (d) the Company may be
able to  identify  potential  third  party  purchasers  or  lessees  or  certain
equipment having an estimated salvage value of approximately  $1,300,000,  which
is the subject of capital or operating leases, thereby substantially  mitigating
contractual   termination  charges;  (e)  the  Company  may  be  able  to  reach
settlements  and  accords  with  lessors  and  service  providers  based on some
combination  of  partial  payments,   extended  payments,  reduced  payments  or
exchanges of equity in lieu of payments. In addition,  The Company has forfeited
approximately  $1,142,000  of security  deposits  held by certain  creditors  in
connection  with  the  contract  renegotiations  and  terminations.  The  amount
provided  represents  management's  best estimate of the Company's  restructured
obligations with the lessors and service providers based on currently  available
information. (Note 14)

       During 2001 and January  2002, we entered into  agreements  with three of
the companies from which we had previously leased equipment settling all amounts
owed by OptiMark to those companies.  Settlements took the form of a combination
of immediate and deferred cash payments,  new preferred  stock and, in one case,
the purchase of a computer  previously leased. At December 31, 2001, the reserve
related to contract  renegotiations and terminations totaled  $13,525,000.  This
amount is  significantly  less than the  termination  charges  of  approximately
$26,981,000 provided in the relevant  agreements.  The December 31, 2001 reserve
represents  management's best estimate of the probable and reasonably  estimable
losses  based on the  mitigating  factors  described  above  and our  experience
negotiating those settlements already completed.

       Changes in Net Liabilities of  Discontinued  Operations from December 31,
2000 are summarized below.
<TABLE>
<CAPTION>
                                                       Paid or      Additional      Balance at
                                       Balance at      Charged       Accruals      December 31,
                                      December 31,     Against       And Other        2001
                                          2000        Liability     Adjustments       ----
                                          ----        ---------     -----------
<S>                                   <C>            <C>            <C>            <C>
Net Liabilities of Discontinued
  Operations ..................       $ 5,209,756    $(3,699,947)   $12,306,451    $13,816,260
                                      ===========    ===========    ===========    ===========
</TABLE>

       The  increase  in  Net   Liabilities  of   Discontinued   Operations  was
attributable  to an increase in the reserve  related to contract  renegotiations
and  terminations.   The  increase  reflected   differences  between  previously
estimated  settlement  amounts and actual settlement  amounts as well as revised
estimates of unsettled  amounts based on settlement  experience  and  continuing
settlement discussions.

       Results of operations  from  discontinued  operations for each of the two
years ended December 31 are as follows:

                                                      2000             1999
                                                      ----             ----
Revenues ...................................     $    321,258      $  1,391,790
                                                 ------------      ------------
Operating expenses (excluding depreciation
and amortization) ..........................       41,409,888        69,165,854
Depreciation and amortization ..............        9,711,431         7,606,313
                                                 ------------      ------------
Total expenses .............................       51,121,319        76,772,167
                                                 ------------      ------------
Net non-operating expense ..................          405,236         1,004,862
                                                 ------------      ------------
Loss from discontinued operations ..........     $(51,205,297)     $(76,385,239)
                                                 ============      ============

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<PAGE>


         Net  liabilities  from  discontinued  operations  are  composed  of the
following at December 31:

                                                      2001              2000
                                                      ----              ----
Current assets .............................     $    112,414      $     50,000
Other assets ...............................           12,256           369,556
Current liabilities ........................      (13,940,930)       (5,629,312)
                                                 ------------      ------------
Net liabilities from discontinued operations     $(13,816,260)     $ (5,209,756)
                                                 ============      ============

4.     RELATED PARTY TRANSACTIONS

       At  December  31,  1998,  the  Company  had  two  notes  receivable  from
affiliates aggregating  $2,550,000,  which were fully reserved and bear interest
at 5.45% per annum. As these notes were deemed to be uncollectable,  no interest
income had been accrued on these notes. In 1999, the Company received  aggregate
payments of approximately  $827,000 on these notes. This amount represented full
repayment of one note,  partial  repayment on the other note and interest income
of approximately $127,000. Due to the uncertainty of the remaining balance being
collected, the Company has continued to record a valuation allowance against the
note and has not  recorded any  additional  interest.  The Company  recorded the
repayment of principal on both notes as a gain on the recovery of bad debts.

       Included in  stockholders'  equity at  December  31, 1998 is a loan to an
officer of the Company of approximately  $1,004,000,  including  interest.  This
note was repaid during 1999.

       In September  1998,  the Company  entered into the Japan Joint Venture to
develop and implement the System for the trading of equity  securities in Japan.
As of  December  31,  1998,  OptiMark  had  made  its  capital  contribution  of
approximately  $69,000 for a 15% interest.  It is  management's  belief that the
Company has the ability to exercise  significant  influence over the Japan Joint
Venture  through veto power and  membership on the board and therefore  accounts
for its  investment  in the Japan  Joint  Venture  using the equity  method.  At
December  31,  1999,  the  Company,  in  accordance  with the  equity  method of
accounting,  realized losses up to its capital contribution.  In connection with
the Japan Joint  Venture,  the Company  entered into a development  agreement in
principle,  whereby the Company provided  services on a time and materials basis
and was reimbursed at fully  allocated cost. On May 23, 2001,  OptiMark  amended
its agreement with Japan OptiMark  Systems,  Inc.  ("JOS") in connection  with a
proposed restructuring of JOS. Among other terms in the amendment,  (a) OptiMark
approved the suspension of JOS' trading system operating on the Osaka Securities
Exchange in Japan and (b) JOS agreed to pay to OptiMark  maintenance and support
amounts through August 31, 2001. Amounts earned from the Japan Joint Venture are
reported  as  "Revenue  from  affiliate"  in  the  Consolidated   Statements  of
Operations and Comprehensive  Loss and amounts  receivable are classified in the
Consolidated Balance Sheets as "Receivable from affiliate."

       Included in Other Current Assets are loans to an officer of approximately
$240,000 at December 31, 2001 and  approximately  $100,000 at December 31, 2000.
The loans to the officers at December 31, 2001 and 2000 incur  interest at 6% in
each year. In accordance  with the terms of a separation  agreement  with one of
the  officers,  $50,000 of the loans  outstanding  as of December  31, 2000 were
forgiven in 2001.

       In September  2001,  the Company  received  proceeds of $530,000 from the
sale of an investment in a related  company.  The investment had previously been
written off and therefore the proceeds were recorded as a gain on recovery of an
investment.

5.     OTHER CURRENT ASSETS AND OTHER ASSETS

                                  Other Current Assets         Other Assets
                                   2001         2000         2001        2000
                                   ----         ----         ----        ----
Prepaid expenses ...........   $  123,504   $  526,783   $     --     $     --
Security deposits ..........       18,403       30,521      837,007    1,037,678
Restricted cash ............       33,736      294,989         --           --
Interest receivable ........        9,155       29,369         --           --


                                       70
<PAGE>



Investment in customer .....         --           --           --        500,000
Loan to officer ............      240,000      100,000         --           --
Other ......................       22,113       68,632           65        1,057
                               ----------   ----------   ----------   ----------
                               $  446,911   $1,050,294   $  837,072   $1,538,735
                               ==========   ==========   ==========   ==========

       Prepaid expenses as of December 31, 2001 and 2000,  consists primarily of
warranty,  support and service  agreements for purchased  hardware and software.
Security  deposits consist primarily of deposits with respect to rental property
and operating leases (Note 10). Included in restricted cash at December 31, 2001
and 2000 are  guarantees of  approximately  $34,000 and $120,000  related to one
employee loan in 2001 and two employee loans in 2000 as well as  certificates of
deposit  of  approximately  $175,000  in 2000.  Interest  receivable  relates to
interest  earned,  but not yet received,  on the Company's loans to the officer,
commercial paper and the certificates of deposit.

6.     PROPERTY AND EQUIPMENT

                                                         2001            2000
                                                         ----            ----
Computer equipment .............................     $ 7,427,584     $ 7,578,285
Furniture and fixtures .........................         692,797       1,118,323
Software .......................................       1,676,584       2,082,803
Leasehold improvements .........................       1,636,292       2,366,277
                                                     -----------     -----------
Total ..........................................      11,432,949      13,145,688
Less accumulated depreciation and amortization .      10,051,514       7,299,928
                                                     -----------     -----------
Net property and equipment .....................     $ 1,381,435     $ 5,845,760
                                                     ===========     ===========

       As of  December  31, 2000 the Company  recorded  an  impairment  of fixed
assets in the amount of approximately $1,879,000.  The impaired assets consisted
principally of computers and related equipment that were specifically identified
as not used in the Company's continuing operations. The Company anticipates that
these assets will be disposed of in 2002.

       As of  December  31, 2001 the Company  recorded  an  impairment  of fixed
assets in the amount of approximately $1,147,000.  The impaired assets consisted
principally of computers and related equipment, furniture and fixtures, computer
software and leasehold  improvements  that were  specifically  identified as not
used in the Company's continuing operations.

       Depreciation  and  amortization  expense  was  approximately  $3,787,000,
$1,203,000  and $245,000 for the years ended  December 31, 2001,  2000 and 1999,
respectively.

7.     INTANGIBLE ASSETS

       Intangible assets consist of the following at December 31:

                                                       2001               2000
                                                       ----               ----
Software licenses ........................           $452,654           $612,371
Less: accumulated amortization ...........            393,307            491,623
                                                     --------           --------
Intangible assets - net ..................           $ 59,347           $120,748
                                                     ========           ========

       In May 1996, the Company sold to HPM, a newly formed limited  partnership
controlled by the then stockholders of the Company,  a royalty-free,  perpetual,
worldwide license to make, have made, use, sell and distribute products, systems
and  services,  outside  of the  securities  industry  field,  under the  issued
OptiMark  patent  and one  other  patent  application  (the "HPM  License"),  in
exchange  for a  nonrecourse  subordinated  promissory  note  in the  amount  of
$650,000  (which was fully  reserved  for in 1996).  In March 1999,  the Company
entered  into a license  termination  agreement  with HPM to  terminate  the HPM
License. In consideration for the termination of the license, the Company issued
to HPM  2,000,000  shares of common  stock of the Company at $14 per share (fair
market value at date of  issuance).  In  connection  with the issuance of common
stock, the Company recorded an intangible asset in the amount of $28,000,000 to
be amortized over a 15 year life.  During 1999 HPM paid the Company an aggregate
of $767,700

                                       71
<PAGE>


representing  full repayment on the note (which  represents a portion of amounts
previously written off (Note 4) and interest income of $117,700.

       As of September 30, 2000, the Company  reevaluated the useful life of the
HPM  License and  concluded  that a more  appropriate  useful life would be five
years effective October 1, 2000. The reduced useful life determination was based
on recent  developments  in the  business-to-business  industry,  as well as the
success by competing  firms in obtaining new  electronic  business and the rapid
development of their competing technologies. At that time, the Company stated it
would  continually  evaluate  the  use of this  license  relative  to  competing
technologies  and the need to upgrade and customize its own  technology and may,
if necessary and appropriate, further revise the useful life of the license.

       As of December 31, 2000, the Company updated its  reevaluation  performed
as of September 30, 2000 and concluded that it could not justify maintaining any
related cost in its financial  statements for the HPM license.  As a result, the
Company  recorded  $23,940,000  as a  write  off  of  intangible  assets  on the
consolidated  statements of operations and comprehensive loss. The write off was
deemed  necessary based on (1) the use of new innovative  customized  technology
improvements  and  concepts  now being  used by the  Company  in  non-securities
industry  applications,  (2) the increased pace of technology  innovation in the
exchange  solution  market and (3) the likelihood  that the Company will use its
new customized technology to respond to future client proposals.  At the current
time,  the Company has no current or  long-term  plan or intention to utilize in
the future any component of the underlying  code or technology of the license in
the development of non-securities industry applications.

8.     ACCRUED COMPENSATION

       Accrued compensation  includes accrued bonuses of approximately  $591,000
and accrued  vacation  of  approximately  $550,000  as of December  31, 2001 and
accrued vacation of approximately $784,000 as of December 31, 2000.

9.     ACCRUED RESTRUCTURING

       The Company recorded approximately $7,693,000 of restructuring charges in
1999  associated  with a workforce  reduction of 72 employees.  Included in this
amount was approximately  $5,811,000,  representing  charges associated with the
revaluation  of employee  options  and the  remaining  balance of  approximately
$1,882,000 included notice period salaries of approximately $876,000,  severance
of  approximately  $706,000 and vacation pay and other related employee costs of
approximately $300,000. As of December 31, 1999,  approximately $522,000 of such
amount had been paid and the remaining accrued  restructuring costs were paid in
2000.

       In November 1999,  the Company  entered into an agreement with an officer
of the Company in connection  with that officer's  termination as an officer and
director of the  Company.  The  agreement  called for cash  payments of $450,000
between November 1999 and June 2000, the vesting of 50% of any nonvested options
as of November  1999 and the  extension of the date on which all vested  options
can be exercised until November 2002. These costs, approximating $2,355,000, are
included in the amounts above.

       During 2000, the Company recorded  restructuring charges of approximately
$292,000.  Included in this  amount was  approximately  $1,890,000  representing
charges associated with the revaluation of employee options, $750,000 related to
a settlement payment to a vendor,  approximately $4,000 related to the write off
of  security  deposits  and the  remaining  balance  of  approximately  $268,000
included  notice  period  salaries  of  approximately  $167,000,   severance  of
approximately  $68,000 and  vacation  pay and other  related  employee  costs of
approximately  $33,000. The restructuring  charges were reduced by approximately
$2,620,000 from a net reduction in vendor obligations.  As of December 31, 2000,
all the restructuring costs had been paid.


                                       72
<PAGE>


       During 2001, the Company recorded  restructuring charges of approximately
$316,000  representing  severance costs associated with a workforce reduction of
forty employees.  As of December 31, 2001, all the restructuring  costs had been
paid.

10.    LEASE COMMITMENTS

       Operating Leases - The Company has operating lease obligations for office
space,  office equipment and computer  equipment,  which expire at various dates
through 2014.  The future  minimum rental  payments  under  operating  leases at
December 31, 2001 are as follows:

         2002............................................... $ 1,143,179
         2003...............................................   1,081,998
         2004...............................................   1,134,513
         2005...............................................   1,153,800
         2006...............................................   1,152,147
         Thereafter.........................................   8,177,435
                                                             -----------

         Total............................................. $ 13,843,072
                                                            ============

       Total rent expense for real estate amounted to approximately  $1,113,000,
$679,000 and $293,000 (net of sublease income of  approximately  $3,700;  $4,100
and $7,600) for the years ended December 31, 2001, 2000 and 1999, respectively.

       Total rent  expense for  equipment  amounted to  approximately  $167,000,
$728,000  and $80,000  for the years ended  December  31,  2001,  2000 and 1999,
respectively.

       Capital  Leases - The net book  value of  equipment  held  under  capital
leases was $0 at December  31, 2001 and  approximately  $625,000 at December 31,
2000.

11     SEGMENTS

       As of December 31, 1998,  the Company  operated in one industry  segment,
the US Equities  Business.  As of December 31, 1999, the Company operated in two
industry segments,  the US Equities Business and the Exchange Solutions Services
Business.  As a  result  of the  discontinuation  of the US  Equities  Business,
effective  September 30, 2000,  the Company  currently  operates in one industry
segment, the Exchange Solutions Services Business. Effective in January 2002 the
development,  sales and  marketing  efforts of the Exchange  Solutions  Services
Business were suspended.  As of that date, the Company's  principal business was
to hold the securities of OptiMark and,  through  OptiMark,  Innovations  and to
solicit interest from or opportunities  with third parties  concerning  possible
investments and/or strategic alliances,  including such transactions with regard
to the Exchange Solutions Services Business.  OptiMark's VWAP assets utilized in
the  Ashton  transaction  were part of a general  effort  to  determine  ways or
utilize  OptiMark's  technology  for trading  venues to be owned and operated by
OptiMark.  OptiMark has  continued to develop  additional  concepts  with a very
limited team. There is no assurance that these limited  development efforts will
result in new products or receive the funding necessary for them to continue.

12     INCOME TAXES

       The tax effected components of deferred income tax assets and liabilities
at December 31, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                              2001             2000
                                                          ------------     ------------
<S>                                                       <C>              <C>
Deferred income tax assets:
     Net operating loss and R&D credit carryforwards      $107,818,000     $98,779,000
     Tax fixed assets, capitalized research and
     development costs of other intangibles in excess
</TABLE>


                                       73
<PAGE>



<TABLE>
<CAPTION>
<S>                                                       <C>              <C>
      of book                                                7,707,000       5,284,000
      Vacation accruals and other reserves                   9,823,000       3,386,000
      Other                                                    405,000         516,000
                                                           -----------     -----------
Total deferred income tax assets                           125,753,000     107,965,000
                                                           -----------     -----------

Deferred income tax liabilities:                                  -               -
                                                           -----------     -----------
Net deferred income tax assets                             125,753,000     107,965,000
Less valuation in allowance                               (125,753,000)   (107,965,000)
                                                           -----------     -----------
                                                                  -               -
                                                           ===========     ===========
</TABLE>

       Realization of the future tax benefits related to the deferred income tax
assets is dependent on many factors, including the Company's ability to generate
taxable income within the net operating loss carryforward period. Management has
considered  these  factors  in  reaching  its  conclusion  as to  the  valuation
allowance for financial reporting purposes.

       The  Company  had  net  operating  loss  carryforwards  of  approximately
$267,103,000  and  $249,872,000  at December 31, 2001 and 2000. The Company also
has research and development  (R&D) credits  available of $3,647,000 at December
31, 2001. The net operating loss  carryforward  and the research and development
credits will expire for federal purposes in 2004 through 2021; the expiration of
the net operating loss carryforward for states varies.

       In 1998, as a result of the issuance of additional  shares of stock,  the
Company incurred a change in ownership for tax purposes,  which may limit future
use of the net operating loss and research and development credit carryforwards.
The Company may have  incurred a second  change of ownership in 2001 which would
preclude the use of virtually all of the net  operating  loss  carryforward  and
research and development credits that arose prior to the change.

13     401(K) EMPLOYEE BENEFIT PLAN

       OptiMark  has a 401(k)  defined  contribution  plan (the  "Plan"),  which
covers all  full-time  employees  over the age of 21 as of their initial date of
employment. The Plan has no matching requirement. Any future matching will be at
the discretion of the Board of Directors. The amounts charged to expense related
to the administration of the Plan were approximately $19,700; $12,600 and $9,200
for the years ended December 31, 2001, 2000 and 1999, respectively.

14     COMMITMENTS AND CONTINGENCIES

       In conjunction with the discontinuance of the US Equities  Business,  the
Company and certain  subsidiaries  are the subject of termination  charges in an
aggregate amount of approximately  $26,981,000  relating to and derived from the
inability of the subsidiary through which that business was conducted  (OptiMark
US Equities,  Inc.) to pay contractual amounts related to loans,  capital leases
of computer equipment,  and operating leases of computer  equipment.  All of the
plaintiffs and potential  plaintiffs  claim  contractual  damages  approximately
equal  to the  net  present  value  of the  remaining  payments  due  under  the
respective loans,  leases or service  agreements,  plus certain past due amounts
including interest, termination fees and, in one case, certain punitive damages.

       Holdings  and/or its  subsidiaries  are  subject to the  following  legal
proceedings:

       Finova Capital Corporation  (Plaintiff) v. OptiMark  Technologies,  Inc.,
OptiMark, Inc. and OptiMark Holdings,  Inc. (Defendants),  Superior Court of New
Jersey - Hudson County.  Plaintiff filed this action on June 15, 2001, asserting
claims that  allegedly  arise out of an equipment  lease  agreement  pursuant to
which it is alleged that OptiMark  Technologies,  Inc. (now known as OptiMark US
Equities,  Inc.) agreed to lease  certain  equipment.  Plaintiff  contends  that
OptiMark Technologies, Inc. breached the equipment


                                       74
<PAGE>


lease by, among other things, failing to pay the amounts due under the equipment
lease.  Based on these  allegations,  Plaintiff  has made  claims  for breach of
contract,  tortuous interference,  fraudulent conveyance of such equipment lease
agreement  and/or the  related  equipment  and/or  other  assets  from  OptiMark
Technologies,  Inc. to OptiMark, Inc. and/or OptiMark Holdings, Inc. and damages
in  unspecified  amounts  exceeding  $6,000,000,  plus  interest,  late charges,
litigation  costs and  expenses,  and  reasonable  counsel  fees.  In the fourth
quarter of 2001,  most, if not all, of the equipment that was the subject of the
equipment lease was returned  consensually to Plaintiff.  The parties  currently
are engaged in exchanging  responses to written discovery requests.  On February
14, 2002, Plaintiff made a motion to add Innovations as a defendant in the case.
In the  motion,  Plaintiff  alleges  that the  transfer  of certain  assets from
OptiMark to Innovations on December 31, 2001 constituted a fraudulent conveyance
of such assets.  On March 25, 2002, the court granted Finova permission to amend
its  complaint  to include  Innovations.  The  amended  complaint  was served on
Innovations on April 22, 2002 and Innovations has until  approximately late June
2002 to file a response to the complaint.  On June 13, 2002,  Finova amended the
complaint to include Ashton.  The  Defendants,  Innovations and Ashton intend to
defend this  action and the motion  vigorously.  The outcome of this  litigation
cannot be predicted at this time,  although it may have a material affect on the
Company's financial condition and results of operations.

       Comdisco,  Inc. (Plaintiff) v. OptiMark Technologies,  Inc. (now known as
OptiMark US Equities,  Inc.)  (Defendant)  and Avnet,  Inc. State of Connecticut
Superior Court, Judicial District of Fairfield at Bridgeport.  Plaintiff filed a
Complaint on December 18, 2000. The action seeks possession of leased equipment,
proceeds  from  the  sale of  leased  equipment,  a  deficiency  judgment  in an
unspecified  amount,  and fees and costs and  interest.  Since the complaint was
filed,  most,  if not  all,  of  the  equipment  was  returned  consensually  to
Plaintiff.  Based on the  complaint  filed in a  related  action  in New  Jersey
(described  below)  and on  other  information  received  from  Comdisco,  it is
believed that amount of damages claimed is  approximately  $6,500,000.  On March
30, 2001, the parties  agreed to consolidate a related case captioned  Comdisco,
Inc. v. OptiMark  Technologies,  Inc., Superior Court of New Jersey Law Division
Hudson County (filed on January 23, 2001) with the  Connecticut  proceeding.  To
effect  the  consolidation,  on or about  April 2,  2001,  the  parties  filed a
stipulation withdrawing Defendant's motion to dismiss Comdisco's Complaint filed
in  the  Superior  Court  of  New  Jersey.  That  motion  had  sought  dismissal
principally on grounds that an identical  action alleging breach of contract had
previously  been filed by Comdisco in Connecticut  State Court.  In exchange for
Defendant's  agreement to withdraw its motion,  Comdisco  agreed to withdraw its
New Jersey Complaint without prejudice. In June 2001, Comdisco made a motion for
summary judgment with respect to a claim against Avnet relating to a guaranty by
Avnet of  Defendant's  obligations  under a Master Lease  Agreement for computer
equipment leased from Comdisco.  Avnet responded to Comdisco's motion by denying
liability  under the guaranty and  asserting a variety of special  defenses.  In
addition,  Avnet filed a cross claim against Defendant.  The cross claim alleges
that if Avnet is found liable under the guaranty,  then Avnet becomes subrogated
to  Comdisco's  rights  under the Master  Lease  Agreement  to the extent of the
payments  Avnet makes to Comdisco  and that  OptiMark is liable to Avnet for any
such  payments.  Defendant  has  responded  to the  cross-claim  by denying  its
material allegations.  The Company intends to defend this action vigorously.  On
February  12, 2002,  Plaintiff  filed a motion for default for failure to plead,
alleging that OptiMark Technologies,  Inc. did not file a pleading responsive to
Plaintiff's second amended complaint. This default will be set aside if OptiMark
Technologies,  Inc.  files an answer  before a judgment  after  default has been
rendered.  OptiMark  Technologies,  Inc.  intends  to  file  such  a  responsive
pleading.  The  outcome of this  litigation  cannot be  predicted  at this time,
although it may have a material affect on the Company's  financial condition and
results of operations.

       Management  intends to  vigorously  contest  these  suits and  threatened
suits;  however,  the  likelihood  that  these  claims  will  result  in loss or
impairment of an asset is probable  with the exception of one matter  subject to
arbitration  as to which the  likelihood  that this claim will result in loss or
impairment of an asset is reasonably possible.  Any loss or impairment resulting
from any of these suits may have a material  impact on the  Company's  financial
position,  results of operations  and cash flows in future years.  An accrual of
$13,525,000  with respect to these loss  contingencies  has been recorded by the
Company  as  part of its  loss  on  discontinued  operations,  which  represents
management's best estimate of the outcome of the negotiations (See Note 3).


                                       75
<PAGE>


       In August  2001,  the  Company  entered  into a new  one-year  employment
agreement with an officer of the Company, which provides for annual compensation
of $250,000 and a guaranteed bonus of $200,000, to be paid ratably over the term
of the agreement.

       In August 1996,  OptiMark  entered into a revenue sharing  agreement (the
"PCX Revenue  Agreement") with the Pacific Exchange,  Inc. (the "PCX").  The PCX
Revenue  Agreement  required the Company to pay 1.5% of its  consolidated  gross
revenues, as defined, to PCX, up to a maximum of $3,855,580.  The timing and the
amount of the payments was based on PCX's attainment of certain  milestones with
respect to the  deployment  of the System at PCX as specified in the PCX Revenue
Agreement,  which  expires on  December  31,  2005.  Based on gross  revenues as
defined,  for the  year  ended  December  31,  1999,  the PCX  was  entitled  to
approximately $46,600 under this agreement, which has been paid. The PCX was not
entitled  to any  amounts or  payments  in 1998 or  earlier.  As a result of the
discontinuance  of the US  Equities  business,  the  Company  will not incur any
further obligation under this agreement.

15.    REDEEMABLE PREFERRED STOCK

       Series  E  Preferred  Stock - In  June  2001,  the  Company  and  certain
stockholders  entered  into a Preferred  Stock  Purchase  Agreement  whereby the
stockholders  agreed to purchase up to an aggregate  of 1,000,000  shares of the
Series E Preferred Stock at a price of $15.00 per share.  The purchase of shares
took place at approximately  one-month  intervals from June 2001 through January
2002.  The  first  such  closing  occurred  on June 29,  2001 at which  time the
stockholders  purchased an aggregate of 403,332 shares of the Series E Preferred
Stock.  In payment for the shares,  the  stockholders  cancelled two outstanding
promissory  notes due from the Company in 2001 and paid the balance in cash. The
proceeds  to  OptiMark  were  approximately  $5,781,000  net of  legal  fees  of
approximately  $269,000.  Such legal fees were not accreted as redemption is not
certain.

       On August 16, 2001,  the Company  amended the  Preferred  Stock  Purchase
Agreement to permit an  additional  investor to purchase  shares of the Series E
Preferred Stock. The shares to be purchased by the additional investor come from
those originally  allocated to the initial  purchasers of the Series E Preferred
Stock.  In monthly  closings  during the  remainder of the year,  the  investors
purchased  523,333  additional  shares of the  Series E  Preferred  Stock for an
aggregate amount of $7,850,000.

       The Series E  Preferred  Stock is entitled  to certain  preferences  over
existing  classes  of  the  Company's  stock  in  the  event  of  any  voluntary
liquidation,  dissolution  or  winding up of the  affairs of the  Company or any
Deemed  Liquidation  Event (as defined  below)  involving the Company,  equal to
twice its  purchase  price,  plus 80% of  proceeds  above that amount up to $200
million,  plus 76.56% of proceeds above $200 million up to and including  $304.5
million,  plus 56% of amounts in excess of $304.5  million.  For the purposes of
this  paragraph,  the term  "Deemed  Liquidation  Event"  shall  mean any of the
following:  (i) the Company's  sale,  conveyance or other  disposition of all or
substantially all of its assets,  (ii) the acquisition of the Company by another
entity by means of merger or  consolidation  resulting  in the  exchange  of the
outstanding  shares of the Company for securities or  consideration  issued,  or
caused to be  issued,  by the  acquiring  entity or its  subsidiary,  unless the
stockholders  of  the  Company  immediately  prior  to the  consummation  of the
transaction  hold at least 50% of the voting power of the surviving  corporation
in such a transaction, (iii) the consummation by the Company of a transaction or
series  of  related  transactions,  including  the  issuance  or sale of  voting
securities,  if the  stockholders  of the  Company  immediately  prior  to  such
transaction  (or,  in the case of a series  of  transactions,  the first of such
transactions) hold less than 50% of the voting power of the Company  immediately
after  the  consummation  of such  transaction  (or,  in the case of a series of
transactions, the last of such transactions);  or (iv) a merger or consolidation
of any of the Company's subsidiaries unless, immediately after the effectiveness
thereof,  the Company or one of its  wholly-owned  subsidiaries  owns all of the
outstanding capital stock of the surviving  corporation.  The Series E Preferred
Stock will vote together  with the Company's  common stock and have 32 votes per
share.  Calculated  based on shares  outstanding  as of December 31,  2001,  the
Series E Preferred Stock represents 34.6% of the votes of the outstanding common
stock (and shares entitled to vote with the common stock) and, in the aggregate,
when fully  subscribed  for,  represents  36.4% of the votes of the  outstanding
common stock (and shares entitled to vote with the common stock). Holders of the
Series E


                                       76
<PAGE>


Preferred  Stock are  entitled to receive,  when and if declared by the Board of
Directors,  cumulative  cash  dividends at the annual rate of $1.20 per share as
well as certain preemptive and registration rights.

       Series F  Preferred  Stock - In 2001,  the  Company  adopted  a new stock
option plan under which  employees and others may receive options to acquire the
Company's Series F Preferred Stock (the "Series F Preferred Stock").  The Series
F Preferred Stock is entitled to certain  preferences  over existing  classes of
the Company's  stock in the event of any voluntary  liquidation,  dissolution or
winding up of the  affairs of the  Company or any Deemed  Liquidation  Event (as
defined below) involving the Company,  equal to 20% of proceeds greater than $30
million up to and including  $200 million,  19.14% of proceeds in excess of $200
million up to and  including  $304.5  million,  and 14% of proceeds in excess of
$304.5 million. For the purposes of this paragraph, the term "Deemed Liquidation
Event" shall mean any of the  following:  (i) a merger or  consolidation  of the
Company unless, immediately after the effectiveness thereof, the stockholders of
the  Company  immediately  prior to such  effectiveness  hold a majority  of the
voting  power in the  surviving  corporation  (or the  parent  of the  surviving
corporation,  in the event of a merger of the Company with any other corporation
in which the holders of the  Company's  capital  stock  receive,  in whole or in
part, shares of common stock of a direct or indirect parent  corporation of such
other  corporation),  (ii) a merger  or  consolidation  of any of the  Company's
subsidiaries unless, immediately after the effectiveness thereof, the Company or
one of its wholly-owned  subsidiaries owns all of the outstanding  capital stock
of the surviving  corporation or (iii) a sale of all or substantially all of the
Company's  assets.  Holders of Series F Preferred  Stock will be entitled to one
vote per share.  6,039,193  options  were issued of Series F Preferred  Stock of
7,400,000 total options eligible for issuance during 2001 (See Note 17).

       Series G Preferred  Stock - In December  2001, the Company issued 300,000
shares  of  Series G  Preferred  Stock  (the  "Series  G  Preferred  Stock")  in
connection  with the  settlement  agreement  with a former  supplier  of  leased
equipment.  The Series G Preferred  Stock ranks junior to the existing  Series E
Preferred  Stock and Series F Preferred Stock but senior to all other classes or
series of capital stock in the event of any voluntary  liquidation,  dissolution
or winding up of the affairs of the Company or any Deemed  Liquidation Event (as
defined below).  The  liquidation  preference of the Series G Preferred Stock is
equal to 4.3% of proceeds in excess of $200 million up to and  including  $304.5
million. For the purposes of this paragraph, the term "Deemed Liquidation Event"
shall mean any of the following:  (i) a merger or  consolidation  of the Company
unless,  immediately  after the effectiveness  thereof,  the stockholders of the
Company  immediately prior to such  effectiveness  hold a majority of the voting
power in the surviving corporation (or the parent of the surviving  corporation,
in the event of a merger of the Company with any other  corporation in which the
holders of the Company's  capital stock receive,  in whole or in part, shares of
common  stock  of  a  direct  or  indirect  parent  corporation  of  such  other
corporation).   (ii)  a  merger  or   consolidation  of  any  of  the  Company's
subsidiaries unless, immediately after the effectiveness thereof, the Company or
one of its wholly-owned  subsidiaries owns all of the outstanding  capital stock
of the surviving  corporation or (iii) a sale of all or substantially all of the
Company's  assets.  The Series G  Preferred  Stock will vote  together  with the
Company's common stock and have one vote per share.

16.    EQUITY

       Authorized   Stock  -  During  1998,  the  Board  of  Directors  and  the
stockholders of the Company  increased the authorized shares of common stock and
preferred   stock  of  the  Company  by  70,000,000   and   30,000,000   shares,
respectively.  The  Board  of  Directors  has  designated  3,547,068  shares  of
preferred  stock  as  Series  A  Convertible   Participating   Preferred  Stock,
11,000,000  shares  of  preferred  stock as Series B  Convertible  Participating
Preferred  Stock,  8,250,000  shares of preferred  stock as Series C Convertible
Preferred  Stock,  250,000  shares of  preferred  stock as Series D  Convertible
Preferred  Stock,  1,000,000  shares of  preferred  stock as Series E  Preferred
Stock,  7,400,000  shares of  preferred  stock as Series F  Preferred  Stock and
300,000 shares of preferred  stock as Series G Preferred  Stock.  As of December
31, 2001 and 2000, the Company had 8,577,932 and 17,277,932  undesignated shares
of preferred stock, respectively, authorized for issuance.

       Common Stock - During 1998,  the Company  issued 350,000 shares of common
stock to an officer at $10 per share (fair  market value at date of issuance) of
which 183,000  shares were issued out of treasury  stock.  The Company  received
cash of $2,500,000 and received a 4.33% interest-bearing note


                                       77
<PAGE>


receivable  for  $1,000,000.  On November  1, 1999,  the  principal  amount plus
interest of $39,742 on the note was repaid to the Company.

       During 1999, the Company issued  2,000,000  shares of common stock to HPM
(See  Note 7) at $14 per  share  (fair  market  value  at date of  issuance)  in
exchange for the termination of the non-securities  industry licenses previously
granted to HPM.  In  addition,  4,167  shares of common  stock were  issued to a
consultant  at $12 (fair  market  value at date of  issuance)  in  exchange  for
approximately $50,000 in cash.

       Common Stock  (Non-Voting) - During 1998, the Company created a new class
of non-voting common stock.  1,500,000 shares were authorized and 740,000 shares
were issued during 1998 to an investor in exchange for 740,000  shares of voting
common  stock.  Such amounts are  included in common  stock on the  consolidated
balance sheets.

       Series A Convertible Participating Preferred Stock - Each share of Series
A Convertible  Participating  Preferred Stock (the "Series A Preferred Stock")is
currently  convertible  into four  shares of common  stock,  subject  to certain
adjustments.

       In March 1999, a Series A Preferred  Stockholder  converted 75,000 shares
of Series A Preferred Stock into 300,000 shares of the Company's common stock.

       Series B Convertible  Preferred  Stock - Between April and December 1998,
in a series  of  closings,  the  Company  issued  11,000,000  shares of Series B
Convertible  Preferred Stock (the "Series B Preferred  Stock") at a price of $10
per share (fair market value at date of issuance) to  investors.  In  connection
therewith,  the  Company  issued  25,000  shares  of  Series B  Preferred  Stock
(included in the 11,000,000 shares above) and paid a $150,000 fee to an investor
who served as a  placement  agent on behalf of the  Company.  The  Company  also
granted to the initial  investor  in the Series B  Preferred  Stock a warrant to
purchase  500,000  shares of common stock at $10 per share (fair market value at
date of grant) and granted that investor a license to use,  sell and  distribute
products,  systems  and  services  using  the  OptiMark  technology  within  the
insurance  industry field (see  "Warrants"  below).  In advance of granting this
license,  the Company  purchased  the rights to the OptiMark  technology  in the
insurance industry field from HPM for $500,000 in cash. HPM had a license to the
rights to the OptiMark  technology in all  non-securities  industry markets (See
Note 7).  Legal  and other  costs of  approximately  $68,000  were  incurred  in
connection with these transactions.

       Each share of Series B Preferred Stock is currently  convertible into one
share of common stock, subject to certain adjustments.

       Series C Convertible  Preferred  Stock - In July 1999, the Company issued
8,250,000  shares  of  Series C  Convertible  Preferred  Stock  (the  "Series  C
Preferred  Stock") at a price of  approximately  $11.76 per share  (fair  market
value  at  date  of  issuance)  to two  investors.  Legal  and  other  costs  of
approximately $11,000 were incurred in connection with this transaction.

       Each share of Series C Preferred Stock is currently  convertible into one
share of common stock, subject to certain adjustments.

       Series D Convertible  Preferred  Stock - In July 1999, the Company issued
250,000 shares of Series D Convertible  Preferred Stock (the "Series D Preferred
Stock") at a price of $12 per share (fair  market  value at date of issuance) to
an investor.

       Each share of Series D Preferred Stock is currently  convertible into one
share of common stock, subject to certain adjustments.

       The  Series  A  Preferred  Stock,  Series  B  Preferred  Stock,  Series C
Preferred  Stock and Series D  Preferred  Stock are  entitled  to a  liquidation
preference  equal to $7.33 per share,  $10 per share,  approximately  $11.76 per
share and $12 per share, respectively,  (aggregating approximately $226 million)
plus  all  declared  and  unpaid  dividends   thereon  to  the  date  fixed  for
liquidation, dissolution or winding up.


                                       78
<PAGE>


Holders of the Series A  Preferred  Stock,  Series B Preferred  Stock,  Series C
Preferred Stock and Series D Preferred  Stock are entitled to receive  dividends
equal to any dividends received by the holders of the Company's common stock, as
if the Series A Preferred Stock,  Series B Preferred  Stock,  Series C Preferred
Stock and Series D Preferred Stock had been converted into common stock.

       The holders of the Series A Preferred Stock, one of the holders of Series
B Preferred  Stock,  certain  officers and  directors  of the  Company,  and the
Company,  have previously entered into agreements relating to certain preemptive
rights, rights of first refusal and tag-along rights.  Pursuant to four separate
registration rights agreements,  the holders of Series A Preferred Stock, Series
B Preferred  Stock,  Series C Preferred  Stock and Series D Preferred Stock have
certain rights,  subject to certain  restrictions and  limitations,  to have the
Company  register their shares with the  Securities and Exchange  Commission for
resale.  Holders of the Series E Preferred  Stock are entitled to preemptive and
registration rights.

       Warrants - During  1998,  the Company  issued  warrants to purchase up to
11,837,500 shares of its common stock. In September 1998, in connection with the
Company's  agreement  with the Nasdaq to implement the Nasdaq  Application,  the
Company entered into a warrant  agreement (the "Nasdaq Warrant  Agreement") with
The Nasdaq Stock Market,  Inc.  ("Nasdaq") whereby the Nasdaq has the ability to
earn warrants to purchase up to 11,250,000  shares of the Company's common stock
(the "Nasdaq  Warrants").  The Nasdaq Warrants are exercisable in tranches based
upon the  achievement  of certain  milestones,  as defined by the Nasdaq Warrant
Agreement.  In connection  with the launch of the Nasdaq  Application in October
1999, an aggregate of 4,500,000 warrants were earned. Of the 4,500,000 warrants,
2,250,000  are  exercisable  at $5 per share  and the  remaining  2,250,000  are
exercisable at $7 per share. In connection  with the above  4,500,000  warrants,
the  Company  recorded  an expense of  $33,800,000  in 1999 (the value using the
Black-Scholes  Model).  As of September  19, 2000,  the business  related to the
Nasdaq Warrants was discontinued and consequently, no additional Nasdaq Warrants
can be earned in the future under the original Nasdaq Warrant Agreement.

       In 1998, a warrant to acquire 42,500 shares of common stock was issued in
connection with a master  equipment lease agreement with a third party (See Note
10) and expires in June 2003. The remaining warrants to acquire 45,000 shares of
common stock were granted in 1998 to two  consultants of the Company and have an
exercise price of $10 (fair market value at date of grant).  Of these  warrants,
40,000  expire in August 2003 and the remaining  5,000 were  exercised in August
1999. The effect of the above  warrants in 1998 was an expense of  approximately
$109,000 (the value using the Black-Scholes Model).

       During  1999,  the Company  issued to five  holders of Series B Preferred
Stock,  warrants to acquire an aggregate of 1,666,667 shares of its common stock
at $10 per share (fair market value at the date of grant).  In  connection  with
such issuance, the Company recorded an expense of approximately  $6,786,300 (the
value using the  Black-Scholes  Model) in 1999.  All of these  warrants  expired
unexercised  in June 1999.  Additionally,  warrants to acquire  25,000 shares of
common stock were granted to two consultants of the Company.  Of these warrants,
5,000 were  issued at $10 and expire in January  2002 or by  termination  by the
Company.  The effect of this  warrant  in 1999 was an  expense of  approximately
$6,300 (the value using the Black-Scholes Model). The remaining 20,000,  granted
to a former board member in consideration  for contracted  consulting  services,
were issued at $14 and expire in February 2009. The charge  associated with this
warrant  (utilizing the Black-Scholes  Model) was approximately  $38,800,  to be
amortized  over  the  life of the  contract.  The  amount  expensed  in 1999 was
approximately $24,300 and the balance of $14,500 was expensed in 2000.

       Additionally,  in October  1999,  the  Company  entered  into a strategic
alliance with Knight/Trimark  Group, Inc. ("Knight") under which Knight can earn
warrants to acquire  common stock of up to a maximum of 25% of the Company,  but
not in excess of 31,037,491  common shares.  The warrants are earned in tranches
based on the  number of shares  traded by Knight in the  OptiMark  System,  with
progressively  larger  amounts of trades  required to earn each  tranche.  As of
September  19,  2000,   the  business   related  to  the  Knight   warrants  was
discontinued.  As of that date,  no warrants had been earned and, as a result of
the discontinuation of that business, no warrants can be earned in the future.


                                       79
<PAGE>


       On October 2,  2000,  the  Company  and Nasdaq  executed a new  agreement
whereby the Company entered into a new development effort for Nasdaq and amended
the  terms of the  Nasdaq  Warrant  Agreement.  The  amended  warrant  agreement
maintained the remaining number of unearned  warrants that could be issued under
the prior  agreement,  but changed the  criteria  for  earning  each  tranche to
defined  critical  milestones of the new development  effort.  In addition,  the
exercise date for all warrants was extended by 3 years. As of December 31, 2000,
the first critical  milestone was achieved and 500,000 of the warrants which had
a fair market value of $.50 per share were earned.  The warrants are exercisable
at $7.00 per share.  At December 31, 2000, the warrants had no fair market value
as calculated using the Black-Scholes  Model. In April 2001, OptiMark and Nasdaq
amended the October 2, 2000 agreement and provided,  among other terms, that the
balance of the Nasdaq  warrants would vest in 2001 if OptiMark  earned a defined
cumulative  billing  amount in 2001. The defined  cumulative  billing amount was
reached in 2001 and the balance of the warrants, 6,250,000, was earned.

       In March 2000,  124,000  warrants granted to three former employees of an
affiliate expired.

       As discussed  above, a warrant to acquire  500,000 shares of common stock
was issued in connection with the Series B Preferred Stock financing and expires
in June  2003.  The  effect  of the above  warrant  in 1998 was a  reduction  in
additional  paid-in  capital of  approximately  $915,000  (the  value  using the
Black-Scholes Model).

       Treasury  Stock - During 1997,  the Company  purchased  208,000 shares of
common  stock at $2.56 per share  from an  individual  investor  and held  these
shares as treasury  shares.  In 1998,  these shares were sold to two consultants
and an officer of the  Company at $10 per share  (fair  market  value at date of
sale).

       Additionally, during 1998, the Company purchased 250,000 shares of Series
A  Preferred  Stock at $40 per share from an investor  and held these  shares as
treasury  shares at December 31, 1998 and 1999. In January  2000,  the Company's
board of directors  retired these Series A Preferred  shares and the shares were
returned to the authorized but unissued preferred shares.

       During 2001, the Company purchased  3,242,644 common shares and 2,296,385
shares of Series A  Preferred  Stock from one  investor  and  180,000  shares of
Series B Preferred Stock from a second  investor for a total cost of $2.00.  The
common  shares are being held in  treasury.  The  Series A  Preferred  Stock and
Series B Preferred Stock were returned to the authorized but unissued  preferred
shares.

17.    STOCK OPTION PLANS

       Common Stock Option Plan
       ------------------------

       During 1998, the Company  provided for the granting of 1,200,000  options
to an officer of the Company with an exercise price of $10 (fair market value at
the date of grant),  and an  exercise  period of 10 years from the date of grant
under the plan. Of the 1,200,000  options,  200,000 vested  immediately  and the
remaining  1,000,000  options  vest  ratably  over  a  five-year  period  on the
anniversary of the date of hire.  The officer  resigned from the Company in 2000
and all options were cancelled.

       Prior to November 1999,  the Company  maintained a stock option plan (the
"1996  Plan"),  which  provided for the issuance of stock  options to employees.
Under the 1996 Plan,  options that were  intended to be incentive  stock options
were  granted at prices not less than fair market value per share on the date of
grant,  as  determined  by the Board of  Directors.  The  options  granted  were
exercisable in accordance with the vesting  schedule not to exceed ten years. No
further stock options may be granted under the 1996 Plan.

       In  November  1999,  the  Company  adopted the 1999 Stock Plan (the "1999
Plan"),  which made  14,669,224  shares of common stock  available for issuance.
This amount  included  8,669,224  shares  under the 1996 Plan and an  additional
6,000,000  shares under the 1999 Plan.  All options  outstanding  under the 1996
Plan,  as of the date of adoption of the 1999 Plan,  continued  in effect  under
their original terms.  The 1999 Plan provided for the issuance of  non-statutory
and incentive stock options (as defined in the Internal Revenue Code of 1986, as
amended), restricted stock and stock equivalent rights to employees, directors


                                       80
<PAGE>


and  consultants.  Options  granted under the 1999 Plan that were intended to be
incentive  stock  options were granted at prices not less than fair market value
per share on the date of grant.  Non-Statutory  stock options  granted under the
1999 Plan were  granted  at prices  not less than 85% of fair  market  value per
share on the date of grant.  No portion of any option could be exercised  beyond
10 years from the grant date.

       In May 2000, the Company  amended the 1999 Plan to increase the number of
shares  authorized  for  issuance by  3,000,000,  which made  17,669,224  shares
available for issuance.

       On September  19, 2000,  the  Company's  board of directors  authorized a
repricing,  which  reduced  to  $.50  per  share,  the  exercise  price  of  all
outstanding  stock options that had been granted to those employees who remained
with the Company after that date.  The original  options were granted at amounts
ranging  from $1.83 to $14.00 per share,  over several  grant dates.  A total of
6,298,300  shares related to those employees were repriced.  Options for 863,500
shares  related to certain  eligible  employees who did not execute an agreement
related  to all  repriced  shares,  were not  repriced . All  outstanding  stock
options that had been granted to employees  who either left the Company prior to
September 19, 2000 or whose employment was terminated by the Company as a result
of the September 2000 restructuring were not repriced and remain at the original
exercise  price set at the time of  grant.  The new  exercise  price of $.50 per
share was based on a  determination  of the fair market  value of the  Company's
common stock by its board of directors  at that date.  The repriced  options are
subject to variable plan accounting. No expense was required for the years ended
2000 and 2001 as a result of this repricing.

       On voluntary termination an employee has thirty days in which to exercise
his or her vested options.

       At December 31, 2001, 2000 and 1999, the components of the Plan consisted
of the following:


<TABLE>
<CAPTION>
                                                                           AVERAGE
                                                                           WEIGHTED        EXERCISE
                                                                            SHARES           PRICE
                                                                           --------         -------

<S>                                                                       <C>               <C>
Options outstanding at January 1, 1999 ............................        6,737,640        $    4.08

Options granted during 1999 .......................................        2,074,450            12.60
Options exercised during 1999 .....................................         (434,204)            1.96
Options canceled during 1999 ......................................       (1,410,826)            6.27
                                                                          -----------


Options outstanding at December 31, 1999 ..........................        6,967,060        $    6.32
                                                                          -----------

Options granted during 2000 .......................................        9,120,600        $    5.85
Options exercised during 2000 .....................................         (116,500)       $    1.75
Options canceled during 2000 ......................................       (7,153,490)       $    8.55
                                                                          -----------

Options outstanding at December 31, 2000 ..........................        8,817,670        $    2.39
                                                                          -----------

Options granted during 2001 .......................................          673,000        $     .50
Options exercised during 2001 .....................................                0
Options canceled during 2001 ......................................       (4,564,531)       $    3.34
                                                                          -----------

Options outstanding at December 31, 2001 ..........................        4,926,139        $    1.27
                                                                          ===========

Weighted-average fair value of options granted during the year 2001                         $     .05

Weighted-average fair value of options granted during the year 2000                         $    1.67
</TABLE>


                                       81
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                       <C>               <C>
Weighted-average fair value of options granted during the year 1999....                     $    1.97


Number of options exercisable at December 31, 1999.....................    2,611,196        $    3.55

Number of options exercisable at December 31, 2000.....................    2,582,177        $    3.04

Number of options exercisable at December 31, 2001.....................    2,333,229        $    1.27
</TABLE>


       The  following   table   summarizes   information   about  stock  options
outstanding at December 31, 2001:

<TABLE>
<CAPTION>
                     OPTIONS OUTSTANDING                              OPTIONS EXERCISABLE
---------------------------------------------------------------     -----------------------

                                        WEIGHTED
   RANGE OF             NUMBER OF        AVERAGE       WEIGHTED       NUMBER       WEIGHTED
    AVERAGE             REMAINING        NO. OF         AVERAGE         OF          AVERAGE
   EXERCISE              SHARES        CONTRACTUAL     EXERCISE       SHARES       EXERCISE
    PRICES             OUTSTANDING        LIFE           PRICE      OUTSTANDING      PRICE
    ------             -----------        ----           -----      -----------      -----

<C>     <C>             <C>                <C>            <C>        <C>              <C>
$ .50 - $ 1.50......    4,322,929          7.38           $.50       1,930,719        $.54
$ 1.83 - $ 7.50.....      262,210          1.41           1.95         275,010        1.90
$ 10.00 - $14.00....      341,000          8.13          10.47         127,500       11.06
                          -------                                    ---------
$ .50 - $14.00......    4,926,139          7.11         $ 1.27        2,333,229     $ 1.27
                        =========                                                   ======
</TABLE>

       SFAS No. 123, "Accounting for Stock-Based Compensation"  encourages,  but
does not require, companies to record compensation cost for stock-based employee
compensation  plans at fair value. The Company has chosen to continue to account
for  stock-based  compensation  using the intrinsic  value method  prescribed in
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees and Related Interpretations". Accordingly, compensation cost for stock
options is measured as the  excess,  if any, of the fair value of the  Company's
stock at the date of grant over the amount an  employee  must pay to acquire the
stock. Had compensation cost for the 1999 Plan been determined at the fair value
on the grant dates under the method of SFAS No. 123, the  Company's net loss for
the years ended  December  31,  2001,  2000 and 1999,  would have  increased  to
approximately $29,571,000, $104,424,000 and $135,747,000 respectively.

       Options held by an optionee will generally  become  exercisable as to 20%
of the shares  covered by such options on the first  anniversary  of the date of
hire for initial grants and 20% of the shares on the first  anniversary  date of
the grant date for  subsequent  issues and with an additional  20% of the shares
covered by such options on each of the four succeeding anniversaries of the date
of the  hire or grant  date if the  optionee  continues  to be  employed  by the
Company, on each such date.

       The fair value of each option grant in 2001,  2000 and 1999 was estimated
on the date of grant  using the  Black-Scholes  option-pricing  model,  with the
following  assumptions:  weighted-average  risk-free  interest  rates of  3.60%,
5.00%,  and  5.51% in 2001,  2000 and 1999,  respectively;  no  dividend  yield,
expected  life of 3 years in 2001 and 2000  and  between  two and five  years in
1999,  and  volatility  of 1%. All options  were granted at the then fair market
value.

       Series F Preferred Stock Option Plan
       ------------------------------------

       On November  13,  2001,  the  stockholders  of the Company  approved  the
OptiMark  Holdings,  Inc. 2001 Series F Preferred  Stock Plan (the "2001 Plan").
The 2001 Plan  provides  for the  granting of awards to acquire up to  7,400,000
shares of Series F Preferred  Stock to officers,  employees,  or directors of or
consultants  to the  Company.  Awards  may take the form of  options,  rights to
purchase or unfunded and unsecured rights to receive Series F Preferred Stock in
the future. Options granted under the 2001 Plan

                                       82
<PAGE>


may be either incentive stock options or non-qualified options. The options have
a term of ten years and vest  cumulatively  at a rate no less than  twenty  five
percent per year over four years.

       At December 31, 2001,  the  components of the 2001 Plan  consisted of the
following:

<TABLE>
<CAPTION>
                                                                                Weighted-
                                                                                 Average
                                                                                 Exercise
                                                                  Shares          Price
                                                                  ------          -----

<S>                    <C>                                       <C>             <C>
Options granted during 2001 ..............................       5,613,398       $   .10
Options cancelled during 2001 ............................          10,000       $   .10
                                                                 ---------
Options outstanding at December 31, 2001 .................       5,603,398       $   .10
                                                                 =========
Weighted-average fair value of options granted during 2001            --             --
Number of options exercisable at December 31, 2001 .......         627,840       $   .10
</TABLE>


       The weighted-average  remaining  contractual life for options outstanding
at December 31, 2001 was 9.60 years and the  weighted-average  exercise price of
options exercisable at December 31, 2001 was $.10.

       Had compensation cost for the 1999 Plan and the 2001 Plan been determined
at the fair  value on the grant  date  under the  method  of SFAS No.  123,  the
Company's net loss for the year ended  December 31, 2001 would have increased to
approximately  $29,593,000.  The fair value of each grant in 2001 was  estimated
using the Black-Scholes  option-pricing  model, with the following  assumptions:
weighted-average  risk-free interest rate of 3.60%; no dividend yield;  expected
life of 3 years and  volatility of 1%. All options were granted at the then fair
market value.

18.    FAIR VALUE OF FINANCIAL INSTRUMENTS

       In the  opinion  of  management,  the  carrying  value  of cash  and cash
equivalents,  receivables,  notes, other assets, current liabilities and capital
leases payable are a reasonable estimate of their fair value.

19.    LOSS PER SHARE ("EPS")

       Basic  and  diluted  EPS for  2001,  2000 and 1999 was  calculated  using
35,004,561,  36,603,854 and 35,193,208  weighted-average  shares outstanding for
the years ended December 31, 2001, 2000 and 1999,  respectively.  Due to the net
losses incurred in each year, all options and  convertible  preferred stock were
anti-dilutive  and therefore  excluded  from the basic and diluted  earnings per
share calculation.

20.    SUBSEQUENT EVENTS

       Suspension of Business
       ----------------------

       In January 2002, the Company effectively suspended development, sales and
marketing efforts related to its Exchange  Solutions  Services  Business.  As of
that date,  the  Company's  principal  business  was to hold the  securities  of
OptiMark and, through  OptiMark,  Innovations and to attempt to solicit interest
from  or  opportunities  with  third  parties  concerning   possible  additional
investments or strategic  alliances,  including such transactions with regard to
the Exchange Solutions Services Business. OptiMark's VWAP assets utilized in the
Ashton  transaction  were part of a general  effort to determine ways or utilize
OptiMark's  technology  for trading venues to be owned and operated by OptiMark.
OptiMark has continued to develop additional  concepts with a very limited team.
There is no assurance that these limited  development efforts will result in new
products or receive the funding necessary for them to continue.


                                       83
<PAGE>



       Settlement of Arbitration
       -------------------------

       On January  25,  2002,  OptiMark  Holdings,  Inc.  and its  subsidiaries,
OptiMark US Equities,  Inc.  (f/k/a OptiMark  Technologies,  Inc.) and OptiMark,
Inc.  (collectively,  "OptiMark  Parties"),  settled,  without any  admission of
liability,  the arbitration  captioned  International  Exchange  Networks,  Ltd.
("IXNET")  against  OptiMark  Technologies,   Inc.,  OptiMark  Holdings,   Inc.,
OptiMark, Inc. and OptiMark US Equities, Inc., (American Arbitration Association
Case No. 131170016601).  Under the terms of the settlement, the OptiMark Parties
agreed to pay IXNET,  on or before eleven (11) business days after  December 31,
2006, the amount of $6,000,000.  However,  if the OptiMark  Parties have paid to
IXNET (a) $500,000  immediately upon execution of a settlement  agreement (which
it did on January 30, 2002),  and pay (b)  $1,000,000 on or before  December 31,
2003 and (c)  $1,000,000  on or before  December 31,  2004,  then in that event,
IXNET has agreed to accept such  payments as full and complete  satisfaction  of
the OptiMark Parties'  obligations under the settlement and to forgo and forgive
irrevocably  any and all  other  sums due to IXNET  under  the  settlement.  The
OptiMark Parties  currently intends to make payments to IXNET in accordance with
this  payment  schedule.  However,  our  ability to make the two  payments of $1
million  dollars on or before  December  31, 2003 and 2004,  respectively,  will
depend on the Company  securing  additional  financing or  realizing  additional
value from our current assets.

       The Ashton Technology Group, Inc.
       ---------------------------------

       On  February  4, 2002,  The Ashton  Technology  Group,  Inc.,  a Delaware
corporation  ("Ashton"),  and  Innovations  entered into a  securities  purchase
agreement (as amended on March 6, 2002 and May 3, 2002, the "Securities Purchase
Agreement").  Pursuant  to the  terms  of  the  Securities  Purchase  Agreement,
Innovations  agreed to purchase up to 633,443,600 shares of Ashton common stock,
par value $.01 per share (the "Ashton Common Stock"), in exchange for $7,272,727
in cash and  intellectual  property  and other  non-cash  assets of  Innovations
valued by Ashton and  Innovations  for the purposes of the  Securities  Purchase
Agreement at $20 million.  The value ascribed to the  intellectual  property and
other non-cash  assets by OptiMark  Innovations was based in part on preliminary
discussions with a potential  investor in Innovations.  Ashton did not obtain an
appraisal  or  other  third  party  valuation  of the fair  market  value of the
intellectual  property and other non-cash assets. There can be no assurance that
the fair market value of the intellectual  property and other non-cash assets is
equal to the value  ascribed to these assets by  Innovations  in the  Securities
Purchase Agreement.

       On May 7, 2002 (the "Closing  Date"),  Innovations  and Ashton closed the
transactions contemplated by the Securities Purchase Agreement.

       In addition,  pursuant to the terms of the Securities Purchase Agreement,
Innovations loaned  approximately $2.7 million in cash to Ashton in exchange for
a senior  secured  convertible  note (the "Note").  The Note will mature in five
years,  may, at the option of Innovations,  be convertible into shares of Ashton
Common  Stock  at  a  rate  of  $.0515838   per  share   (subject  to  customary
anti-dilution  adjustments after the closing) and will accrue interest at a rate
of 7.5% per annum. Currently,  the Note is convertible into 52,870,757 shares of
Ashton  Common  Stock.  The Note is secured by a pledge and  security  agreement
pursuant to which  Innovations  has received a blanket lien on Ashton's  assets,
including,  without limitation, the pledge of the equity interests of Ashton and
Universal  Trading   Technologies   Corporation,   a  Delaware  corporation  and
majority-owned  subsidiary  of  Ashton  ("UTTC"),  in each of ATG  Trading  LLC,
wholly-owned   subsidiary  of  Ashton,   Electronic   Market  Center,   Inc.,  a
majority-owned   subsidiary  of  Ashton,   Ashton  Technology  Canada,  Inc.,  a
majority-owned  subsidiary of Ashton , Croix  Securities,  Inc., a  wholly-owned
subsidiary of UTTC, REB Securities Inc., a wholly-owned  subsidiary of UTTC; and
NextExchange, Inc., a wholly-owned subsidiary of UTTC.

       As of the Closing Date, Innovations owns approximately 80% of the diluted
outstanding  shares of the Ashton  Common  Stock  calculated  as of May 3, 2002.
Diluted shares include the outstanding shares of the Ashton Common Stock and (i)
shares of any series of capital  stock of Ashton or its  subsidiaries  that vote
together with the Ashton Common Stock,  (ii) any  outstanding  options issued to
employees and third parties, and (iii) shares of the Ashton Common Stock, or any
securities described in clause (i) above,


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<PAGE>


issuable pursuant to or upon conversion or exercise of all rights granted to any
party.  Assuming conversion of the Note,  Innovations would own approximately an
additional  7% of  Ashton's  fully-diluted  shares of the Ashton  Common  Stock,
calculated as of May 3, 2002.

       Other Subsequent Events
       -----------------------

       At December 31, 2001,  the Company  owned 67% of the  outstanding  common
stock of Innovations.  As a result of the additional  capital financing obtained
as described  below,  our ownership  percent of Innovations  was reduced to less
than  50%.  As a  result,  we  will  not be  able to  include  Innovations  as a
consolidated  subsidiary,  but will account for our investment  using the equity
method of accounting.

       On March 21, 2002, the Company entered into a loan agreement with certain
of its  shareholders.  Under the terms of the  agreement,  the Company  borrowed
$500,000 for a period of 180 days at an interest rate of 10% per annum. The loan
is  secured  by  substantially  all of the  assets  of the  Company.  In lieu of
repayment of principal in cash, the lenders may require the Company to repay the
principal amount of the loan by causing OptiMark,  Inc. to transfer eight shares
of common  stock,  valued at $2,500 per  share,  and  forty-eight  shares of the
Non-Qualified  Preferred  Stock,  valued at $10,000  per share,  of  Innovations
subject to adjustment as provided in the loan  agreement  with accrued  interest
payable in cash at maturity.

       On April 11, 2002, the Company  entered into a second loan agreement with
certain of its  shareholders.  Under this  second  loan  agreement,  the Company
borrowed $570,000 for a period of 180 days at an interest rate of 10% per annum.
The second loan is secured by substantially all of the assets of the Company. In
lieu of repayment  of principal in cash,  the lenders may require the Company to
repay the  principal  amount of the loan by causing  OptiMark,  Inc. to transfer
twelve shares of common stock, valued at $2,500 per share, and fifty-four shares
of  the  Non-Qualified   Preferred  Stock,  valued  at  $10,000  per  share,  of
Innovations  subject to adjustment as provided in the second loan agreement with
accrued interest payable in cash at maturity.

       On April 30, 2002, Draper Fisher Jurvetson ePlanet Ventures, L.P., Draper
Fisher  Jurvetson  ePlanet  Partners Fund,  L.L.C.  and Draper Fisher  Jurvetson
ePlanet Ventures GmbH & Co. KG (collectively,  "Draper") purchased 150 shares of
the  Innovations  Common Stock for an aggregate cash purchase price of $375,000.
On May 7,  2002,  Draper  purchased  963  shares  of the  Innovations  Series  B
Preferred Stock for an aggregate cash purchase price of $9,630,000.  As a result
of obtaining the financing,  OptiMark's  ownership  percent of  Innovations  was
reduced  to  less  than  50%.  As a  result,  we will  not be  able  to  include
Innovations  as a consolidated  subsidiary,  but will account for our investment
using the equity method of accounting.

       On May 24, 2002,  the Company's  agreement with Asset  International  was
terminated.  Under the terms of the agreement,  the Company  returned the shares
representing its investment in Asset  International and the Company was relieved
of any obligation to provide services to Asset International.

       On May 31, 2002,  the Company  entered into a third loan  agreement  with
certain of its  shareholders.  Under this  second  loan  agreement,  the Company
borrowed  $1,650,000  for a period  of 180 days at an  interest  rate of 10% per
annum.  The third  loan is  secured  by  substantially  all of the assets of the
Company.  In lieu of repayment of principal in cash, the lenders may require the
Company to repay the principal amount of the loan by causing  OptiMark,  Inc. to
transfer  twenty-eight  shares of common stock,  valued at $2,500 per share, and
one hundred  fifty-eight shares of the Non-Qualified  Preferred Stock, valued at
$10,000 per share, of Innovations subject to adjustment as provided in the third
loan agreement with accrued interest payable in cash at maturity.

       On May 31, 2002, the shareholders of JOS elected to dissolve the company.


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<PAGE>


21.    QUARTERLY FINANCIAL DATA (UNAUDITED)

       The following table presents  unaudited  quarterly  results of operations
for 2000 and 2001.  This  unaudited  information  has been  prepared on the same
basis as the  audited  consolidated  financial  statements.  In the  opinion  of
management,  this table  includes  all  adjustments,  consisting  of only normal
recurring adjustments,  that are considered necessary for a fair presentation of
the  Company's  financial  position and results of  operations  for the quarters
presented.



<TABLE>
<CAPTION>
2001                                First             Second             Third            Fourth
----                                -----             ------             -----            ------
<S>                             <C>               <C>               <C>               <C>
Total revenue .............     $  3,417,965      $  3,256,355      $  2,563,682      $  2,187,720
Loss from continuing
operations ................       (5,015,167)       (4,429,067)       (2,698,036)       (5,087,695)
Loss from continuing
operations per share ......     $      (0.14)     $      (0.12)     $      (0.08)     $      (0.15)
Weighted average number of
common shares outstanding -
basic and diluted .........       36,612,557        36,612,557        33,475,651        33,369,913

2000
----
Total revenue .............     $  2,905,189      $  2,878,833      $  3,836,244      $  5,613,797
Loss from continuing
operations ................       (5,895,642)       (4,736,650)         (966,091)      (25,246,233)
Loss from continuing
operations per share ......     $      (0.16)     $      (0.13)     $      (0.03)     $      (0.68)

Weighted average number of
common shares outstanding -
basic and diluted .........       36,585,057        36,606,954        36,612,057        36,612,144
</TABLE>




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