<PAGE>   1

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-K
                                AMENDMENT NO. 2

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       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)

<TABLE>
<S>                                            <C>
                   DELAWARE                                      22-3730995
       (STATE OR OTHER JURISDICTION OF                        (I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)                      IDENTIFICATION NO.)

    10 EXCHANGE PLACE CENTRE, 24TH FLOOR,                          07302
               JERSEY CITY, NJ                                   (ZIP CODE)
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>

                                 (201) 536-7088
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                      NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) 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 [X]     No [ ]

     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.  [ ]

     As of March 21, 2001, there were 36,612,557 shares of the Registrant's
Common Stock outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

     The information called for by Part III is incorporated by reference to
specified portions of the Registrant's definitive Proxy Statement to be issued
in conjunction with the Registrant's 2001 Annual Meeting of Stockholders, which
is expected to be filed not later than 120 days after the Registrant's fiscal
year ended December 31, 2000.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2

     In our previous filing of Form 10-K on April 2, 2001, certain items were
omitted. This filing restates and amends the former filing and includes the
following items that were omitted: Part II, Items 6, 7, 7A, and 8; and Part IV,
Item 14.
<PAGE>   3

                            OPTIMARK HOLDINGS, INC.

                                   FORM 10-K
                                AMENDMENT NO. 2
                               DECEMBER 31, 2000

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                          PAGE
                                                                          NO.
                                                                          ----
<S>         <C>                                                           <C>
                                    PART I
Item 1.     Business....................................................    3
Item 2.     Properties..................................................    8
Item 3.     Legal Proceedings...........................................    8
Item 4.     Submission of Matters to a Vote of Security Holders.........   10
Item 4A.    Executive Officers of the Registrant........................   10

                                   PART II
Item 5.     Market for Registrant's Common Equity and Related
            Stockholder Matters.........................................   10
Item 6.     Selected Financial Data.....................................   11
Item 7.     Management's Discussion and Analysis of Financial Condition
            and Results of Operation....................................   12
Item 7A.    Quantitative and Qualitative Disclosures About Market
            Risk........................................................   22
Item 8.     Financial Statements and Supplementary Data.................   23
Item 9.     Changes in and Disagreements with Accountants on Accounting
            and Financial Disclosure....................................   45

                                   PART III
Item 10.    Directors and Executive Officers of the Registrant..........   45
Item 11.    Executive Compensation......................................   45
Item 12.    Security Ownership of Certain Beneficial Owners and
            Management..................................................   45
Item 13.    Certain Relationships and Related Transactions..............   45

                                   PART IV
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form
            8-K.........................................................   45

SIGNATURES..............................................................   48
</TABLE>

                                        1
<PAGE>   4

                           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 Operation" elsewhere in this Form 10-K. 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.

                                        2
<PAGE>   5

                                     PART I

ITEM 1.  BUSINESS

     OptiMark Holdings, Inc. (the "Company" or "OptiMark", "we" or "our") 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 a company that had been founded
in 1996 to begin development of software for use in an electronic system for
trading stocks and other financial instruments, goods and services.

     We develop software and provide design, development and maintenance
services for building and operating electronic markets and exchanges. We enable
clients to build markets and exchanges in which buyers and sellers may submit
orders for products and services. Our software matches the orders of buyers and
sellers and provides other functions required to operate the market or exchange.
These markets and exchanges may be external (with multiple unrelated
participants) or internal (customer orders matched within a single firm).

     We attempt to generate revenues from

     - receiving fees for licensing the use of our software and intellectual
       property;

     - providing design and development services related to the customization of
       our software;

     - receiving royalties or other transaction based fees based on transactions
       completed using our software;

     - providing support and maintenance services for our software; and

     - receiving equity in the clients to which we provide our software and
       services in consideration of such software and services.

     Prior to September 19, 2000, we were also in the business of owning and
operating 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 because of the failure of these proprietary exchange
facilities to attract users or liquidity.

     Our goal is to become a leading provider of software and services for
electronic markets and exchanges. The key elements of our strategy are to

     - continue to pursue new clients and business opportunities;

     - continue to work with our existing clients and to seek ways to expand
       these relationships;

     - continue to develop and enhance our software that serves as the base for
       future product offerings;

     - build a business development capability; and

     - build strategic relationships with major technology companies and
       consulting companies as a marketing channel for our products through
       referrals.

     We intend to enter other securities and non-securities electronic markets
and exchanges. Examples of markets we are targeting include time shares,
insurance, energy, data transfer over networks and communication channels, and
options trading.

     We employ a business model that focuses on those areas of a business
opportunity where we can add the most value. We believe that our expertise in
designing and developing software for markets and exchanges gives us a
competitive advantage.

     We have contracted with the largest and fastest growing electronic equities
exchange, The Nasdaq Stock Market, Inc., to assist in its efforts to build its
next generation trading system. We believe that this relationship gives us a
competitive advantage in attracting new clients.

                                        3
<PAGE>   6

     We will continue to invest in and develop personnel. We believe that
investing in personnel is key to delivering superior software and services. We
intend to continue our practice of aggressively recruiting high caliber
personnel and retaining these personnel by providing appropriate compensation
incentives.

  Software and services

     Our software and services allow us to create markets and exchanges that
range from simple to complex. Our clients typically operate and manage these
markets and exchanges. We work with our clients to customize our software, and
design and develop new software, according to the requirements of the client's
market or exchange, the buyers and sellers who participate in the market or
exchange, and the particular products or services that are bought and sold on
the market or exchange. We also test and integrate that software with the
client's existing systems.

     Our software is based on proprietary technology that allows buyers and
sellers to buy and sell products and services. We currently offer two versions
of our software, which meet different client needs. These are the OptiMark basic
market platform and the OptiMark multi-attribute platform.

     Our services help clients determine the features that are critical to
increasing the appeal and efficiency of their markets and exchanges and we
deliver software and services to implement these features.

     We believe we bring at least three contributions to our clients:

     - software that includes patented and patent pending algorithms;

     - experience in designing and developing simple and complex markets and
       exchanges; and

     - modular components that enable faster design, integration, and
       implementation and therefore, faster time to market.

  OptiMark basic market platform

     The OptiMark basic market platform is used to match buyers and sellers of
products and services where generally only price and volume differentiate orders
from each other. The matching is done by means of a sophisticated and patented
process designed to maximize the volume traded while optimizing the price. This
helps to ensure fair treatment of both buyers and sellers.

     The OptiMark basic market platform provides a market or exchange where all
matched orders from buyers and sellers are executed. We believe that the
OptiMark basic market platform is unique because it

     - aggregates orders so that several buyers or sellers desiring to trade a
       smaller quantity of a product or service can be matched with one or more
       sellers or buyers desiring to trade a larger quantity of the product or
       service;

     - allows buyers and sellers possibly to buy or sell a product or service at
       a price better than they originally indicated, also known as "price
       improvement;"

     - permits buyers to enter multiple price and quantity orders to indicate
       fully their trading intent and therefore bid a price premium for a higher
       quantity (for example, a buyer may place an order to buy 1000 shares of
       company XYZ at $10 per share or alternatively, to buy 2000 shares at
       $10.50); a seller may do the opposite, (for example, offer a lower price
       for progressively larger quantities). The resulting spread between the
       bid and offer prices gives rise to the possibility of price improvement.

     - enables traders to use complex trading strategies including multiple
       price and quantity inputs on multiple items;

     - controls the extent that a buyer's or seller's identity and orders are
       made known to other buyers and sellers; and

     - may be configured to schedule matches of orders periodically or on a
       continuous basis.

                                        4
<PAGE>   7

     We are targeting several categories of potential clients for the OptiMark
basic market platform. We are seeking existing and new exchanges that would
benefit from this full function platform and the ability of users to enter
multiple price and quantity orders. Current prospects for this platform include
an options consortium.

     We are targeting potential clients who would use the platform in their
internal markets, for example, where an institution's orders are matched
internally before they are transmitted outside to an exchange for execution. Our
current prospects include large brokerage and banking institutions that have
sizable retail and institutional volume.

     We are also targeting potential clients who use Compaq's Tandem computers
in their exchanges and markets. Tandem computers are widely used to validate
credit card transactions, process ATM transactions, process airline
reservations, record telephone usage for billing systems, and manage inventory
distribution. We believe that we have an experienced team of Tandem
technologists and intellectual property, particularly as this technology is
applied in the financial services industry to high volume mission critical
applications. In this area, The Nasdaq Stock Market, Inc. has contracted with
OptiMark to develop key portions of its next generation electronic trading
system, which will include portions of the OptiMark basic market platform.
OptiMark intends to use its Tandem-related skills for clients in financial
services and other industries.

  OptiMark multi-attribute platform

     The OptiMark multi-attribute platform is used in markets and exchanges
where more than price and quantity define a product or service that is to be
bought and sold. The OptiMark multi-attribute platform allows buyers and sellers
to define orders for a product or service in terms of multiple specifications
and preferences.

     Once a buyer or seller enters a product or service description, the
description is compiled into a database. The platform produces a list of other
sellers and buyers who are ranked in order of who most closely meets the
description. Then, the buyer or seller can decide whether to

     - buy or sell the product or service;

     - redefine the product specifications; or

     - search or negotiate with chosen sellers or buyers.

     We believe that the OptiMark multi-attribute platform is unique because it
allows for a more complete product description than other platforms. Through the
use of multiple attributes, preferences and aggregation, a buyer or seller is
able to refine their product or service definitions precisely to describe their
full intent and, if desirable, negotiate alternative features and options.

     We believe that these features allow our clients to differentiate their
market or exchange from their competition. However, it is important that our
clients' markets offer standard communication and connectivity to outside
functions that are important to those markets. Therefore, the platform includes
the ability to incorporate market data into the market or exchange.

  Existing clients

     As of March 15, 2001, we had definitive agreements with three clients.

     We have contracted with The Nasdaq Stock Market, Inc. to develop its next
generation trading system, which is known as the SuperMontage system. Since
October 2, 2000, we have earned development fees in the amount of $2,800,000 and
$4,900,000 through December 31, 2000 and March 15, 2001, respectively, and will
continue to earn $700,000 per month until the earlier of the public launch of
the SuperMontage system or October 31, 2001. We have earned an additional
development amount of $750,000 for delivering certain services and deliverables
by a specified milestone date and may earn additional amounts that may total as
much as $5,000,000 if we deliver certain services and deliverables by specified
milestones dates over the next year. If Nasdaq uses our SuperMontage
implementation for actual trading (as opposed to an implementation that Nasdaq
may develop on its own), then Nasdaq has agreed to enter into a four year
software and services

                                        5
<PAGE>   8

maintenance contract, which will generate revenues of not less than $200,000 per
month. Under the contract and with certain specified exceptions, we agreed not
to provide our software or services to other parties who are developing markets
and exchanges for trading financial instruments unless Nasdaq gives its consent.
However, this exclusivity will lapse unless Nasdaq agrees to certain extensions
of the work currently being performed. This agreement contains certain
provisions under which Nasdaq may terminate the agreement early and without
cause upon the payment of a termination fee. The agreement also contains a right
of Nasdaq to receive unrestricted use of certain intellectual property created
by us pursuant to the agreement in the event we fail to maintain a current
ability to meet financial obligations on a timely basis. Nasdaq has recently
initiated discussions with regard to restructuring this SuperMontage development
agreement including possible changes in the timing or reductions in the amounts
of milestone or development payments and alterations in the specifications of
assigned tasks. These discussions are at an early stage and there is no
certainty about the outcome.

     We have an agreement with Asset International, Inc. to develop a service to
be offered on its Plansponsor.com website. The service will enable 401(k)
retirement plan administrators of companies having less than 500 employees to
match 401(k) plan demographics and buying criteria to appropriate investment
managers. In the first five years of the contract, we will receive 35% of
revenues generated and collected from the websites that use our software, less
development fees and expenses paid to us. After the fifth year, we will receive
20% of these revenues. We will also receive development fees that are based on,
but discounted from, our standard rates and we will be reimbursed for expenses
incurred during the development. We will also provide software support services
that are based on, but discounted from, our standard rates. We will provide
maintenance services at no charge to Asset International, Inc. We have received
1.67% of the common stock of Asset International, Inc. We have granted Asset
International limited exclusivity on this use of our intellectual property.

     We have also contracted with Japan OptiMark Systems, Inc. to develop a
system for trading Japanese equities within the territory of Japan. We will
receive a royalty for the use of our software, which is based on the revenues
generated from the system. No royalties will be received until the system
generates certain revenues based on completed transactions. Based on current low
volumes, no royalties are anticipated in the foreseeable future. We have earned
approximately $15,000,000 for the period of May 1999 through March 15, 2001 for
the development, and maintenance and support, of the system and have been and
will continue to be reimbursed for expenses incurred. OptiMark has also
purchased 15% of the shares of JOS common stock. OptiMark has granted JOS
exclusivity for trading certain equities in Japan.

  Competition

     In the growing Internet area, many companies provide services and products
to enable electronic markets and exchanges. Competition in this market is
rapidly increasing, and we expect that competition will further increase in the
future. Our competition, both direct and indirect, potentially comes from a wide
range of companies involved in electronic commerce, including:

     - companies that provide software that allows for the establishment of
       electronic markets and exchanges;

     - companies that develop and operate trading systems;

     - companies that operate websites that provide auction features to buyers
       and sellers;

     - providers of stand-alone software products that make available to buyers
       technology for conducting online auctions of products and services; and

     - professional service and consulting firms offering similar services.

     Currently, we believe that our greatest competition will be from General
Electric's global exchanges, Ariba Inc.'s Dynamic Trade, Idapta Inc., eSpeed
Inc., and ecMarket.com Inc.

                                        6
<PAGE>   9

  Research and development

     We originally began developing the OptiMark software in 1994 and we
continue to enhance the software on an ongoing basis. As of March 15, 2001, our
research and development team included approximately sixty-three employees and
consultants. The research and development team includes a number of key members
that have extensive experience with trading systems, advanced mathematics and
computer programming.

     We believe our technical personnel and core technologies represent a
significant competitive advantage. We believe a technically skilled and highly
productive research and development team is a key component for the success of
new and better product offerings.

     We expect that most of our technology and enhancements to existing and
future systems will be developed internally. However, we currently license
certain externally-developed technologies and will continue to evaluate
externally-developed technologies to integrate with our systems.

  Intellectual property and proprietary rights

     As of March 15, 2001, we held seven issued United States patents and nine
pending United States patent applications. As of that date, we also held
seventeen issued international patents and sixty-one pending international
patent applications. We plan to file additional patent applications, both
domestically and internationally, as we create new inventions. We also have
discontinued prosecution of patent applications and maintenance of patents that
were deemed to be strategically unimportant, either because of geography or
subject matter.

     We seek to protect our trade secrets, service marks, trademarks, and
copyrights through a combination of laws and contractual restrictions, such as
confidentiality and license agreements. We attempt to register our trademarks
and service marks in the United States and internationally. We have registered
our 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 every
country in which OptiMark's software may be made available. We also have
discontinued prosecution of trademark applications and maintenance of trademark
that were deemed to be strategically unimportant, either because of geography or
subject matter.

  Sales, marketing and business development

     We believe that there are four main categories of sales, marketing and
business development that we will need to master in order to be successful:

     - DIRECT SALES -- We will focus our initial direct sales effort on a number
       of core vertical markets. These include financial services,
       transportation and energy.

     - CHANNEL MARKETING -- We will make other providers of e-commerce solutions
       and exchange builders aware of the capabilities of our software and
       services. This will enable us to become part of a flow of deals and
       business. We have identified channel segments including e-commerce
       integrators, marketplace builders and integration solution providers.

     - MARKETING OUTREACH -- We will leverage the marketing materials used in
       our direct sales and channel marketing efforts to clarify our software
       and services and deliver a common message. For this purpose we have
       employed the services of a public relations and marketing firm and a
       design firm.

     - PARTNERSHIPS/ACQUISITIONS -- We will develop an active program to
       identify and seek opportunities to enhance our product offerings through
       formalized partnerships or acquisition of technology and people.

EMPLOYEES

     As of March 15, 2001, we had one-hundred twenty-seven full-time employees,
sixty-three of whom were engaged in research and development, forty-four in
quality assurance, testing and operations, eight in sales and

                                        7
<PAGE>   10

marketing, and twelve in executive, finance, administration and personnel. We
have never had a work stoppage and our employees are not represented by any
collective bargaining unit.

  Financial information about industry segments

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

  Financial information about foreign and domestic operations and export sales

     Financial information about our foreign and domestic operations and export
sales, as applicable, is included in the financial statements and is
incorporated by reference.

  Discontinued operations

     Until September 19, 2000, the Company operated in two segments. The first
segment, the Exchange Solutions Business, was formerly referred to as the
Electronic Markets Business. The Exchange Solutions Business operates under the
Company's wholly-owned subsidiary, OptiMark, Inc. The second segment, the US
Equities Business, operated under the Company's wholly-owned subsidiary,
OptiMark US Equities, Inc. We discontinued the operations of the US Equities
Business on September 19, 2000. We continued operations of the Exchange
Solutions Business after that date. 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.

ITEM 2.  PROPERTIES

     Our headquarters are located in Jersey City, New Jersey. We sublease
approximately 32,000 square feet under a sublease that expires in February 2014.
We also lease approximately 14,000 square feet for our data center in Jersey
City, New Jersey. However, that leasehold will be reduced to approximately 3,300
square feet as of April 1, 2001 with a remaining term to September 30, 2008. In
addition, we lease approximately 2,000 square feet in Durango, Colorado for use
as a scientific research office on a month-to-month basis. The Company also has
small representative offices in Toronto, Canada and Tokyo, Japan. All of the
foregoing space consists of standard commercial office premises in metropolitan
areas. We believe that our present facilities are adequate for our current
needs.

ITEM 3.  LEGAL PROCEEDINGS

     The Company or its subsidiaries are subject to the following legal
proceedings:

          1.  In the Matter of the Arbitration between International Exchange
     Networks, Ltd. against OptiMark Technologies, Inc., OptiMark Holdings,
     Inc., OptiMark, Inc. and OptiMark US Equities. On February 8, 2001,
     Claimant, International Exchange Networks, Ltd. ("IXnet"), filed a
     statement of claim before the American Arbitration Association ("AAA"),
     amended on March 6, 2001, alleging that IXnet entered into a master
     services agreement with all of the named respondents under which IXnet
     agreed to provide telecommunications services and equipment to respondents
     to support OptiMark US Equities, Inc.'s matching engine technology in
     exchange for respondents' commitment to pay certain monthly fees. IXnet
     alleges that respondents later improperly terminated the master services
     agreement and are thus liable for damages totaling $18,625,504.14,
     exclusive of interest and costs. The Company intends vigorously to defend
     this action. On March 26, 2001, a temporary restraining order was issued by
     the Supreme Court of the State of New York stopping the arbitration pending
     a hearing, the date for which has not been definitively set, on opposition
     by the Company to the arbitration.

          2.  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., Superior Court of New Jersey -- Hudson
     County. Plaintiffs filed this action on February 9, 2001 and assert claims
     that allegedly arise out of a master lease agreement pursuant to which it
     is alleged that OptiMark US Equities, Inc. agreed to lease

                                        8
<PAGE>   11

     computer and other business equipment. Plaintiffs contend that OptiMark US
     Equities, Inc. breached the master lease by, among other things, failing to
     pay the amounts due under the master lease and by transferring certain of
     the equipment to the other subsidiaries of the Company. Based on these
     allegations, plaintiffs make claims for replevin, breach of contract,
     tortious interference, fraudulent conveyance, punitive damages, and
     attorneys' fees in unspecified amounts. The Company intends vigorously to
     defend this action.

          3. Comdisco, Inc. v. OptiMark Technologies, Inc. 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 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 Comdisco. The Company intends
     vigorously to defend this action.

          4. Comdisco, Inc. v. OptiMark Technologies, Inc., Superior Court of
     New Jersey Law Division -- Hudson County. Plaintiff filed a complaint in
     this action on January 23, 2001 naming OptiMark Technologies, Inc. as a
     defendant. In the complaint, Comdisco alleges that OptiMark Technologies,
     Inc. breached a master lease agreement with Comdisco under which it was
     obligated to make lease payments for computer equipment leased to it by
     Comdisco. The complaint seeks an order of replevin to recover the equipment
     at issue as well as damages of $1,732,617.36 for breach of the lease. Since
     the complaint was filed, most, if not all, of the equipment was returned
     consensually to Comdisco. This action is similar to, and based on the same
     master lease agreement, as the action pending in Connecticut, referenced
     above. The Company intends vigorously to defend this action. On March 30,
     2001, the parties agreed to consolidate this proceeding with the related
     proceeding pending in Connecticut and described above.

     In addition to the foregoing, Trans-Lux Corp has demanded that OptiMark US
Equities, Inc. pay $685,694.94 allegedly due under certain equipment leases and
has threatened to commence legal proceedings against it unless such payment is
made promptly. FINOVA Capital Corporation has threatened to commence legal
proceedings against OptiMark US Equities, Inc. unless a demand for payment of
$6,100,359.61 allegedly due under certain equipment leases is made promptly.

     On December 29, 2000, the Company entered into a Settlement Agreement with
ISM Information Systems Management Corporation and IBM Canada Limited (the "IBM
Entities") relating to disputed payment amounts owed to the IBM Entities
pursuant to certain software license and information technology service
agreements. Pursuant to the Settlement Agreement, the Company agreed to pay a
total amount of $2,550,000 Canadian to the IBM Entities in settlement of the
disputed payment amounts owed by the Company pursuant to such agreements. The
Company is paying the settlement amount in four installments. The first
installment of $1,225,000 Canadian was paid at the end of December 2000 and the
second installment of $450,000 Canadian was paid on April 1, 2001. The remaining
two payments of $450,000 Canadian each will be completed by October 1, 2001.

     The Company believes that each of the foregoing pending actions or
threatened proceedings is derived from the discontinuation of the business of
OptiMark US Equities, Inc., a subsidiary of the Company, 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.

     This annual report is written in compliance with the SEC's plain English
rules in which words such as "Company", "we" and "our" may be used to describe
the businesses and operations of the parent company and subsidiaries taken as a
whole. However, the separate legal status of each entity in the group and the
distinct contractual and legal rights and obligations of each such entity are
important elements in the pending litigation and other legal disputes and the
debt restructuring negotiations described in this annual report. Interested
parties are referred to the relevant agreements and legal dockets for further
information with regard to the roles of specific entities and the positions of
the parties with respect to those entities. The use of plain

                                        9
<PAGE>   12

English to describe a group of companies should not be construed as an admission
of the role of any particular company or subsidiary which is contrary or adverse
to the stated legal position of that company or subsidiary.

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

     Not applicable.

ITEM 4A.  EXECUTIVE OFFICERS OF THE REGISTRANT

     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 March 15, 2001 (none of whom has a family
relationship with another executive officer):

<TABLE>
<CAPTION>
NAME                                            AGE                 POSITION
----                                            ---                 --------
<S>                                             <C>   <C>
Robert J. Warshaw.............................  47    Chief Executive Officer and Director
James G. Rickards.............................  49    Chief Administrative Officer
</TABLE>

     Selected biographical information with respect to executive officers is set
forth hereafter.

     Robert J. Warshaw (47), Chief Executive Officer since March 14, 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. From January 1990 to October 1993, he was a partner at
McKinsey & Company, a global management consulting 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.

     James G. Rickards (49) resigned from positions with the Company and its
affiliates effective April 6, 2001. Prior to that date, Mr. Rickards served as
the Chief Administrative Officer, General Counsel and Secretary. Mr. Rickards
also served as Chief Administrative Officer, General Counsel and Secretary of
OptiMark, Inc. From August 1999 to June 2000, he served as Senior Vice
President, General Counsel and Secretary of OptiMark Technologies, Inc. From
1994 to August 1999, Mr. Rickards was General Counsel of Long-Term Capital
Management, L.P., an investment management firm. From 1985 to 1994, Mr. Rickards
was Senior Vice President, Secretary and General Counsel of Greenwich Capital
Markets, Inc., an investment banking firm. Prior to joining Greenwich Capital,
he was Vice President and international tax counsel at Citibank N.A. Mr.
Rickards received his Juris Doctoris degree from the University of Pennsylvania
Law School and his LL.M. (Taxation) from the New York University School of Law.
He received his Bachelor of Arts Degree in Political Science from The Johns
Hopkins University and his Master of Arts Degree in International Relations from
the Paul H. Nitze School of Advanced International Studies of The Johns Hopkins
University.

                                    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 December 31, 2000, we had
36,612,557 outstanding shares of common stock, including 740,000 shares of non-
voting common stock owned by approximately 740 holders.

     There are 69,000,829 outstanding shares of common stock on an as converted
basis that can be sold currently pursuant to Rule 144. As of December 31, 2000,
we have

     - issued options to purchase an aggregate of 8,870,636 shares of common
       stock to our directors, officers and current and former employees,

                                        10
<PAGE>   13

     - issued warrants to purchase an aggregate of 5,940,900 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.

     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 will be retained to
finance operations.

ITEM 6.  SELECTED FINANCIAL DATA

     Our selected financial data for and as of each of the years ended December
31, 2000, 1999, 1998, 1997, and 1996 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 financial statements and notes thereto
included elsewhere in this Form 10-K.

<TABLE>
<CAPTION>
                                                     FIVE YEARS ENDED DECEMBER 31,
                                 ---------------------------------------------------------------------
                                     2000           1999          1998          1997          1996
                                 ------------   ------------   -----------   -----------   -----------
<S>                              <C>            <C>            <C>           <C>           <C>
Revenue........................  $ 15,234,063   $  1,620,454            --            --            --
Operating expenses.............    53,285,111     63,811,183   $ 9,924,040   $ 5,132,371   $ 3,428,593
Other (income)
  expense -- net...............    (1,206,432)    (3,497,459)   (2,159,512)     (562,366)      267,753
Loss from continuing
  operations...................   (36,844,616)   (58,693,270)   (7,764,528)   (4,570,005)   (3,696,346)
Loss from continuing operations
  per share....................  $      (1.00)  $      (1.67)  $     (0.25)  $     (0.17)  $     (0.14)
Weighted average common shares
  outstanding (basic and
  diluted).....................    36,603,854     35,193,208    31,067,059    27,199,563    26,297,577
Cash and cash equivalents......  $  2,919,548   $ 62,637,410   $63,839,270   $ 7,416,760   $ 4,100,165
Working capital................    (2,941,710)    59,127,384    61,803,570     6,356,581     3,261,025
Property and
  equipment -- net.............     5,845,760     12,881,116     6,085,506     1,438,266       212,129
Intangible assets -- net.......       120,748     26,733,541            --            --            --
Total assets...................    13,841,498    114,511,939    63,806,571     7,549,417     4,780,298
Stockholders' equity...........     4,562,688    106,524,760    59,318,827     6,016,090     3,914,270
</TABLE>

                                        11
<PAGE>   14

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS 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 Risk
Factors".

DISCONTINUED 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 continuing operations, its Exchange
Solutions Business.

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 2001, are not expected to be
sufficient to meet its 2001 operating and financial commitments. These factors,
among others, may indicate that the Company will be unable to continue as a
going concern for a reasonable period. On April 11, 2001 the Company borrowed
$2,500,000 from a stockholder in the form of a promissory note convertible at
the stockholder's option into a new series of preferred stock. The Company is
currently in discussions with this shareholder with regard to additional equity
investments.

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, 2000, our accumulated
deficit was approximately $333,370,000.

RESULTS OF OPERATIONS

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.

     Our revenue streams are derived from several distinct categories; license
fees, development services, maintenance & support, royalties and other value
added services such as consulting and resales of third party computer equipment
and licenses to customers.

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

     Cost of Sales.  Cost of Sales includes all 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

                                        12
<PAGE>   15

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.

     Operating Expense.  Operating expenses for the twelve months ended December
31, 2000 totaled approximately $45,030,000 as compared to $62,915,000 for the
twelve months ended December 31, 1999. The following is a discussion of the
increase as it relates to each of the expense components:

     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 is
primarily due to costs associated with developing existing customer
relationships and in attracting new business. The increase primarily consists of
personnel related expenses, travel and entertainment expense and other general
operating expenses.

     Research & Development.  Research & 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 is primarily due to an increase in the development of our core
platforms and capabilities for use in future applications. The increase
primarily consists of personnel related expenses, travel and entertainment
expense and other general operating expenses.

     General and Administrative Expense.  General & 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 is primarily due to a decrease in external professional
fees of approximately $1,844,000, a decrease in travel and entertainment
expenses of approximately $278,000, a decrease of approximately $83,000 in other
general office expenses, reduced by an increase in the loss on disposal of
assets in 2000 of approximately $577,000.

     Depreciation and Amortization Expense.  Depreciation & 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 is 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 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 $10,244,000 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 fixed assets in its
continuing operations for items that no longer provide 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
presents 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
is approximately $2,158,000 related to a workforce reduction of twelve employees
and approximately $754,000 for expenses related to vendor workouts. The
restructuring charges were reduced by approximately $2,620,000 from a net
reduction in vendor liabilities. 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 72 employees.

     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 $40,617,000 for the twelve months ended December 31, 1999. These
amounts are 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".

                                        13
<PAGE>   16

These amounts were issued in conjunction with warrants earned under various
agreements with strategic partners, lessors and consultants.

     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 is 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.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

     Revenue.  Total Revenue for the year ended December 31, 1999 was
approximately $1,620,000 as compared to $0 for the year ended December 31, 1998.
We began to recognize revenue from an affiliate for development services in July
1999.

     Cost of Sales.  Cost of Sales for the twelve months ended December 31, 1999
totaled approximately $896,000 as compared to $0 for the twelve months ended
December 31, 1998. The increase is due to the allocation of resources to the
affiliate project and consists primarily of increases in personnel related
expenses, equipment, travel and entertainment expense and other general
operating expenses.

     Operating Expense.  Operating expenses for the twelve months ended December
31, 1999 totaled approximately $62,915,000 as compared to $9,924,000 for the
twelve months ended December 31, 1998. The following is an explanation of the
increase in each of the components:

     Sales & Marketing.  Sales and Marketing expense for the twelve months ended
December 31, 1999 totaled approximately $618,000 as compared to $0 for the
twelve months ended December 31, 1998. The increase is due to the additional
focus associated with developing existing customer relationships and in
attracting new business. The increase primarily consists of personnel related
expenses, travel and entertainment expense and other general operating expenses.

     Research & Development.  Research & Development expense totaled
approximately $1,030,000 for the twelve months ended December 31, 1999 as
compared to $0 for the twelve months ended December 31, 1998. The increase is
primarily due to the additional focus associated with developing our core
platforms and capabilities for use in future applications. The increase
primarily consists of personnel related expenses, travel and entertainment
expense and other general operating expenses.

     General and Administrative Expense.  General & Administrative expense
totaled approximately $11,229,000 for the twelve months ended December 31, 1999
as compared to $9,196,000 for the twelve months ended December 31, 1998. The
increase of $2,033,000 is primarily due to an increase in external professional
fees of approximately $1,844,000, an increase in travel and entertainment
expenses of approximately $278,000 and a decrease of approximately $89,000 in
other general office expenses.

     Depreciation and Amortization Expense.  Depreciation & Amortization expense
totaled approximately $1,728,000 for the twelve months ended December 31, 1999
as compared to $181,000 for the twelve months ended December 31, 1998. The
increase of $1,547,000 relates to the addition of a software license in March
1999 and approximately $6,294,000 in additional fixed assets acquired during
1998.

     Restructuring Expense.  We recorded 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 72 employees.

     Warrant Compensation Expense.  Warrant compensation expense for the twelve
months ended December 31, 1999 was approximately $40,617,000 as compared to
$547,000 for the twelve months ended December 31, 1998. The increase of
$40,070,000 is due to warrants being charged to expense in accordance with the
Emerging Issues Task Force 96-18, "Accounting for Equity Instruments That Are
Issued to Other
                                        14
<PAGE>   17

issued in connection with warrants earned under various agreements with
strategic partners, lessors and consultants.

     Other Income and Expense.  Other income and expense includes interest
income on cash and cash equivalents, interest expense on capital leases, equity
loss in investee and gain on recovery of bad debt. Other income, net, was
approximately $3,497,000 for the twelve months ended December 31, 1999 as
compared to approximately $2,160,000 for the twelve months ended December 31,
1998. The increase of $1,337,000 is primarily due to a increase in interest
bearing deposits over the course of the prior twelve months, a $700,000 gain
recognized in 1999 associated with the partial recovery of a bad debt that had
previously been written off, offset by an equity participation in a loss from an
investee of approximately $69,000 in 1999.

LIQUIDITY AND CAPITAL RESOURCES

     As of December 31, 2000, our principal sources of liquidity consisted of
approximately $2,920,000 of cash and cash equivalents as compared to
approximately $62,637,000 of cash and cash equivalents as of December 31, 1999.

     Net cash used in operating activities was approximately $6,601,000 and
approximately $10,671,000 for the twelve months ended December 31, 2000 and
1999, respectively. The change in net operating cash flows were attributable to
net losses in both periods, partially offset 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.

     Net cash used in investing activities was approximately $1,094,000 and
$4,199,000 for the twelve months ended December 31, 2000 and 1999, respectively.
The uses of cash primarily consisted of purchases of fixed assets and software
licenses.

     Net cash used in financing activities for the twelve months ended December
31, 2000 was approximately $1,197,000 and net cash provided by financing
activities for the twelve months ended December 31, 1999 was approximately
$108,196,000. 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. The net cash provided in 1999 was primarily due to the
proceeds from the issuance of preferred stock, repayment of a loan to an
officer, the exercise of warrants and options on common stock and a term loan
used for equipment financing, offset by principal payments made on capital
leases.

     The results indicated for continuing operations in our Consolidated
Statement of Operations for the year ended December 31, 2000 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 new business model. In particular, our current
operating expenses may increase as additional employees are hired and as a
result of normal compensation increases.

  Factors that may affect future results

     Since our inception, our operating and investing activities have used
substantially more cash than they have generated. Because we will continue to
need substantial amounts of working capital to fund the growth of our business,
we expect to continue to experience significant negative operating and investing
cash flows for the foreseeable future. We need to raise additional capital
imminently to meet our operating and investing cash requirements. We may not be
able to find additional financing on favorable terms or at all. 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 stockholders may experience dilution
to their equity ownership.

     On April 11, 2001, the Company borrowed $2,500,000 from a stockholder in
the form of a promissory note. The promissory note will automatically convert
into a new series of preferred stock (described below) if the stockholder, in
its discretion, elects to invest in that preferred stock. The promissory note
bears interest at

                                        15
<PAGE>   18

the rate of 10% per annum, matures on July 10, 2001 and is secured by
substantially all the assets of the Company. The Company and the stockholder
have also entered into a non-binding agreement in principle, subject to
negotiation of definitive documentation and other conditions, under which
investors, including the stockholder, would invest up to an additional
$12,500,000 over a period of a year in a new series of 8% preferred stock. There
can be no assurance that any investment will take place on these terms or at
all. In addition, because each installment will be subject to separate
conditions, even if definitive agreements are executed and delivered and one or
more installments funded, there can be no assurance that the remaining
installments will be funded. The preferred stock would be entitled to a
preference over existing stockholders, in the event of a liquidation, sale of
assets or merger involving the Company, equal to twice its purchase price plus
80% of proceeds above that amount up to $300 million and 56% of proceeds above
$300 million. The preferred stock would vote together with the Company's common
stock and have multiple votes per share. In the aggregate, the new series of
preferred stock could represent up to 57.4% of the votes of the outstanding
common stock (and shares entitled to vote with the common stock), calculated
based on shares outstanding as of March 31, 2001. In the event that the
stockholder is the only investor purchasing shares of the new series of
preferred stock, the number of votes per share will be reduced so that, after
giving effect to the investment, the votes represented by the capital stock held
by the stockholder will represent less than 50% of the votes of the outstanding
common stock (and shares entitled to vote together with the common stock).
Holders of the new preferred stock will be entitled to preemptive and
registration rights. It is also contemplated that if this investment occurs, the
Company would adopt a new stock option plan under which employees could receive
options to acquire another class of preferred stock with similar terms.

  Workout and debt restructuring negotiations

     We are currently engaged in restructuring and workout negotiations with
certain large creditors of a subsidiary of the Company. The aggregate gross
claims of these creditors are approximately $40,000,000. The Company expects to
conclude those negotiations in a manner, which allows the Company as a whole to
continue to pursue its business. These negotiated settlements are expected 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
warrants. However, there can be no assurance that these negotiations will be
successful or that the creditors will not seek to put the subsidiary or the
Company into bankruptcy in the near future. A bankruptcy proceeding will
materially and negatively affect the ability of the Company to continue
operating its existing business.

  Finding new clients

     We are currently seeking new clients with a view to generating revenues
from those clients. However, the inability to secure new clients and generate
additional revenues combined with the Company's current negative cash flow could
cause the Company to cease operations in the future even if new financing is
obtained quickly.

     We have a history of losses and have never been profitable. We have not
achieved profitability, we expect to continue to incur losses for the
foreseeable future and we may never be profitable. If we do achieve
profitability in any period, we cannot be certain that we will sustain or
increase such profitability on a quarterly or annual basis.

     Our quarterly operating results may fluctuate, We expect to experience
fluctuations in future quarterly operating results that may be caused by many
factors, including the following:

     - issuance or exercise of warrants;

     - trends in securities and other markets;

     - competition;

     - domestic and international regulation;

     - changes in strategy;

     - the success of or costs associated with acquisitions, joint ventures or
       other strategic relationships;
                                        16
<PAGE>   19

     - changes in key personnel;

     - international expansion;

     - changes in the level of operating expenses to support projected growth;
       and

     - general economic conditions.

     Due to these factors, quarterly revenues and operating results are
difficult to forecast. We believe that period-to-period comparisons of our
operating results will not necessarily be meaningful and you should not rely on
them as any indication of future performance.

     Our limited operating history makes evaluating our business and prospects
difficult. We have a limited operating history on which you can base an
evaluation of our business and future prospects. You should carefully consider
our prospects in light of the risks and difficulties frequently encountered by
early stage companies in new and rapidly evolving markets. Our success will
depend in part upon our ability to implement and execute our business and
marketing strategy in our Exchange Solutions Business. There is a risk that we
will not be able to accomplish our objectives. Failure to achieve any of our
objectives could negatively affect our business, financial condition and results
of operations.

     We currently depend on The Nasdaq Stock Market and Japan OptiMark Systems
for substantially all of our revenues. We currently do not have any revenues
other than revenues derived from software and services that we provide to
development of Nasdaq's SuperMontage system and revenues derived from services
we provide to The Nasdaq Stock Market and Japan OptiMark Systems. The Nasdaq
Stock Market and Japan OptiMark Systems represented substantially all of our
revenue in 2000. We do not expect any other significant sources of revenues
until the software has been implemented on other markets and exchanges.
Therefore, our business would be harmed if The Nasdaq Stock Market or Japan
OptiMark Systems stopped making payment for the software and services we provide
to them. We currently anticipate that the services we provide to Japan OptiMark
Systems and the fees from such services will decrease substantially upon the
launch of the equities trading system on the Osaka Securities Exchange.

     Our Exchange Solutions Business is unproven and may not be successful. Our
business model attempts to generate revenue from fees for licensing the use of
its software and intellectual property; providing design and development
services related to the customization of its software; royalties based on
transactions consummated using its software; supporting and maintaining its
software; and receiving equity in the clients to which we provide our software
and services in consideration of such software and services and the intellectual
property they contain.

     If this business model is flawed, or if we are unable to execute it
effectively, our business, operating results and financial condition will be
substantially harmed. Our model is unproven, our management team has limited
experience in licensing and developing electronic markets and exchanges.

     In addition, we may incur losses in the future as we enter new markets and
exchanges. Implementation of our software in new markets will require us to
incur substantial expenses. We may incur significant research and development
expenses to adapt our software for use in these markets and exchanges. We may
experience long delays between these implementation expenses and any resulting
revenues. For example, we incurred significant expenses prior to implementing
the OptiMark equities trading system on the Pacific Exchange and Nasdaq before
we received any revenues and these operations were later shut down. We may incur
even greater expenses if we enter non-financial markets. Therefore, entering new
markets may affect our short-term profits and cash position. Furthermore, these
efforts may divert management attention or inefficiently use our resources.

     Many of our competitors have had more experience in this field and have
developed a greater client base than we have to date. Because many of these
potential competitors are more established and larger than we are, they may be
able to commit more resources to promotions and marketing of their products and
services. The services we provide may look similar to those of our competitors,
despite actual differences, which may hurt our client base and recognition of
our product. We also face the potential risk that customers will be

                                        17
<PAGE>   20

dissatisfied with our products or services, which will make it difficult to
maintain our client base and attract new clients.

     Our business model depends on establishing relationships with parties with
relevant market expertise to develop and successfully operate electronic markets
and exchanges. A key element of our business model is to provide our software
and services to parties through strategic alliances, both domestically and
internationally, that will supply relevant market expertise, management,
liquidity and capital. We cannot assure you that we will be able to identify,
attract and reach agreement with these parties or that if we reach agreement,
these agreements will be on terms favorable to us.

     In addition, given the potential complexity of these relationships, there
may be significant delay between the identification of parties and reaching the
necessary agreements. Even if we reach the necessary agreements with one or more
parties, we cannot assure you that these parties will be able to implement our
software effectively, that they will develop and launch electronic markets or
exchanges or that buyers and sellers in the respective markets in which our
software is deployed will participate in the markets or exchanges. Operating
through these strategic alliances can be complex, we may be a minority equity
holder in these alliances with limited control over the venture, and we may not
be able to reach agreement with our counterparties on important matters
regarding the direction of the venture.

     Because the electronic commerce market is highly competitive and has low
barriers to entry, we cannot assure you that we will be able to compete
effectively. The market for electronic markets and exchanges is extremely
competitive. We expect competition to intensify as current competitors expand
their product offerings and new competitors like us enter the market. We cannot
assure you that we will be able to compete successfully against current or
future competitors, or that competitive pressures we face will not harm our
business, operating results or financial condition.

     Because there are relatively low barriers to entry in the electronic
commerce market, competition from other established and emerging companies may
develop in the future. In addition, our customers and parties with whom we enter
strategic alliances may become competitors in the future. Certain of our
competitors may be able to negotiate alliances on more favorable terms than we
are able to negotiate. Many of our competitors may also have well-established
relationships with our existing and prospective customers. Increased competition
is likely to result in price reductions, lower average sales prices, reduced
margins, longer sales cycles or loss of market share, any of which could harm
our business, operating results or financial condition.

     Many of our competitors will have, and potential competitors may have, more
experience developing software and matching solutions, larger technical staffs,
larger customer bases, greater brand recognition and greater financial and other
resources than we have. In addition, competitors may be able to develop products
and services that are superior to our products and services, that achieve
greater customer acceptance or that have significantly improved functionality as
compared to our existing and future products and services. There is a risk that
the electronic commerce solutions offered by our competitors now or in the
future will be perceived as superior to ours.

     Users may not use our client's markets and exchanges at levels sufficient
to sustain our business. To the extent we seek royalties, we believe our success
depends in part upon our ability to attract users. A significant portion of our
revenues may be directly related to the volume traded through our client's
markets and exchanges. In order to encourage use of our client's markets and
exchanges, we need to depend on our client's ability to ensure that users'
trades are adequately matched. This may require a large volume of shares to be
processed through such systems. If the systems do not achieve sufficient trading
volume, our clients may not be able to attract additional users to generate the
trading volume necessary for widespread acceptance.

     We currently own the Internet domain name "OPTIMARK.com". Domain names
generally are regulated by Internet regulatory bodies. The relationship between
regulations governing domain names and laws protecting trademarks and similar
proprietary rights is unclear.

     To the extent our software is used in a regulated environment, we depend
heavily on third parties over whom we have limited control in order to obtain
regulatory approvals and make systems modifications. Some of our licensees may
be heavily dependent on third parties to submit for regulatory approval and
implement
                                        18
<PAGE>   21

modifications and enhancements to our equities trading system. In many cases the
business priorities of these third parties will not necessarily be the same as
ours. If we are unable to obtain the timely cooperation of these third parties
in connection with these approvals, modifications and enhancements, it could
have a material adverse effect on our business, financial condition and
operating results. We have experienced delays of this nature in the past.

     Markets and exchanges may not adopt our software. Currently, the only
application of our software is for Japan OptiMark Systems' system on the Osaka
Securities Exchange. Acceptance of our software by other markets and exchanges
is highly uncertain. Our growth may be limited if we are unable to establish
additional relationships with other markets and exchanges.

     Some of these elements are not within our control, such as client network
connectivity and software, hardware and telecommunications equipment and service
we purchase from others. In addition, hardware and software are potentially
vulnerable to interruption from power failures, telecommunications outages,
network service outages and disruptions, natural disasters, and vandalism and
other misconduct.

     We cannot assure that the network structure of our customers will operate
appropriately in any of the following events:

     - subsystem, component or software failure or power or telecommunications
       failure;

     - an earthquake, fire or other natural disaster; or

     - an act of God or war.

     There is a risk that in any such event, we will not be able to prevent an
extended systems failure. Any systems failure that interrupts our operations
could harm our business.

     Our revenues may be affected by diminished market activity due to adverse
economic, political and market conditions. Our revenues in our business segments
are partly directly related to the volume of trades matched using our software.
Numerous national and international factors that are beyond our control may
affect our businesses, including:

     - economic, political and market conditions;

     - the availability of short-term and long-term funding and capital;

     - level and volatility of interest rates;

     - legislative and regulatory changes; and

     - currency values and inflation.

     Any decline in market volume, liquidity or price or any other of these
factors could have a material adverse effect on our business, financial
condition and operating results. Any of these factors may contribute to reduced
levels of activity in the markets in which we operate, which could result in
lower revenues from our activities.

     Many of our competitors have longer operating histories and significantly
greater financial, technical, marketing and other resources than we do. Many of
our competitors offer a wider range of services and financial products than we
do, and thus may be able to respond more quickly to new or changing
opportunities, technologies and customer requirements. Many of our competitors
also have greater name recognition and larger customer bases that could be
leveraged, thereby inhibiting our ability to gain market share. Moreover,
certain competitors have established cooperative relationships among themselves
or with third parties to enhance their services and products.

     We face significant regulation in foreign countries. We intend to expand
the use of our software to other countries. Through the joint venture we created
in Japan, we have entered into agreements with the Osaka Securities Exchange. We
intend to enter into other foreign markets. In order to expand our services
globally, we must comply with the regulations of each country in which we
operate. Our international expansion will be limited by the compliance
requirements of various national regulatory organizations. We intend to rely
                                        19
<PAGE>   22

primarily on local third parties for regulatory compliance in international
jurisdictions. The varying compliance requirements of these different regulatory
jurisdictions and other factors may limit our ability to expand internationally.
There is a risk that we will not be successful in obtaining the necessary
regulatory approvals for any such expansion, or if such approvals are obtained,
that we will be able to continue to comply with such regulations. The failure to
obtain or comply with such approvals could have a material adverse effect on our
business, financial condition and operating results.

     We depend on key personnel and may need to recruit new personnel. As we
attempt to implement our new business model and expand into other financial and
non-financial markets, we may need to add additional key personnel. If we cannot
attract and retain enough qualified and skilled staff, the growth of our
business may be limited. Our ability to provide services to clients and expand
our business depends, in part, on our ability to attract and retain staff with
college and graduate degrees, as well as professional experiences that are
relevant to technology development and other functions we perform. Competition
for personnel with these skills is intense. Some technical job categories are
under conditions of severe shortage in the United States. In addition,
restrictive immigration quotas could prevent us from recruiting skilled staff
from outside the United States. We may not be able to recruit or retain the
caliber of staff required to carry out essential functions at the pace necessary
to sustain or expand our business.

     We believe our future success will depend in part on the following:

     - the continued employment and performance of our senior management;

     - our ability to retain and motivate our other officers and key employees;
       and

     - our ability to identify, attract, hire, train, retain and motivate other
       highly skilled technical, managerial, marketing, business development,
       and customer service personnel.

     We face risks associated with international expansion. One component of our
strategy is to implement our software in countries other than the United States.
We have established a joint venture in Japan. Our experience in implementing our
matching engine technology in foreign markets is very limited. We cannot assure
you that our international partners and licensees will be able to implement our
trading technology successfully in international markets. In addition, there are
certain risks inherent in doing business in international markets, particularly
in the heavily regulated securities and financial services industries, such as:

     - unexpected changes in regulatory requirements, tariffs and other trade
       barriers;

     - difficulties in staffing and managing foreign operations;

     - political instability;

     - fluctuations in currency exchange rates;

     - reduced protection for intellectual property rights in some countries;

     - seasonal reductions in business activity in various parts of the world;
       and

     - potentially adverse tax consequences.

     Any of the foregoing could adversely affect the success of our
international operations.

     We depend on intellectual property rights and protection is uncertain. Our
success and ability to compete depend to a significant degree on our proprietary
technology. If we are not successful in protecting and enforcing our
intellectual property, there could be a material adverse effect on our business.

     Effective trademark protection may not be available for our trademarks.
Although we have registered the trademark "OptiMark" in the United States and
various other countries and have other registered trademarks, there is a risk
that we will not be able to secure significant protection for and successfully
enforce these trademarks. Our competitors or others may adopt product or service
names similar to "OptiMark" impeding our ability to build brand identity and
possibly leading to customer confusion. Our inability to adequately protect the
name "OptiMark" would harm our business.

                                        20
<PAGE>   23

     Effective patent protection may not be available for our technology. While
we believe that our patents, together with our pending patent applications, help
protect our business, there is a risk that

     - our patents cannot be successfully defended against challenges by third
       parties;

     - the pending patent applications will not result in the issuance of
       patents;

     - our competitors or potential competitors will devise new methods of
       competing with us that are not covered by our patents or patent
       applications;

     - because of variations in the fungible goods and services to be traded
       using our matching engine technology, our patents may not be effective in
       preventing one or more third parties from utilizing a copycat system to
       offer the same matching services for one or more goods or services; or

     - a third party will have or obtain one or more patents that prevent us
       from practicing features of our business or will require us to pay for a
       license to use those features.

     Despite any precautions we take, a third party may be able to copy or
otherwise obtain and use our software or other proprietary information without
authorization or develop similar software independently. The laws of other
countries may afford us little or no effective protection for our intellectual
property. We cannot assure you that the steps we have taken or will take will
prevent misappropriation of our technology or that agreements entered into for
that purpose will be enforceable.

     Litigation may be necessary in the future to:

     - enforce our intellectual property rights;

     - protect our trade secrets;

     - determine the validity and scope of the proprietary rights of others; or

     - defend against claims of infringement or invalidity.

     This litigation, whether successful or unsuccessful, could result in
substantial costs and diversions of resources, either of which could harm our
business.

     We may infringe intellectual property rights of third parties. Litigation
regarding intellectual property rights is common in the software and technology
industries. We have in the past received letters suggesting that we are
infringing the intellectual property rights of others. We may in the future be
the subject of claims for infringement or invalidity, or indemnification claims
based on such claims of other parties' proprietary rights. These claims, with or
without merit, could be time consuming and costly to defend or litigate, divert
our attention and resources or require us to enter into royalty or licensing
agreements. There is a risk that such licenses would not be available on
reasonable terms, or at all. Although we believe we have the ability to use our
intellectual property to use, market and license our existing products without
incurring liability to third parties, there is a risk that our products and
services infringe the intellectual property rights of third parties.

     Our products and technology depend on the continued availability of
licensed technology from third parties. We license and will continue to license
certain technology and software from third parties, including certain software
from IBM Canada that comprises a portion of the equities trading system in use
by Japan OptiMark Systems at the Osaka Securities Exchange. These licenses are
integral to our business. If any of these relationships were terminated or if
any of these third parties were to cease doing business, we would be forced to
spend significant time and money to replace the licensed software. We cannot
assure you that we would be able to replace these licenses. This could have a
material adverse effect on our business, financial condition and operating
results.

     Officers and directors may be able to influence stockholder actions.
Executive officers, directors and entities affiliated with them, in the
aggregate, beneficially own over 50% of our outstanding voting stock. These
stockholders acting together would be able to significantly influence matters
requiring approval by our stockholders, including the election of directors and
the approval of mergers or other business combination transactions in a manner
that could conflict with our other stockholders.

                                        21
<PAGE>   24

     Shares eligible for future sale may reduce our stock price. As of March 13,
2001 we had outstanding 69,000,829 shares of common stock (on an as converted
basis). all of these shares are eligible for sale in the public market subject
to certain restrictions under the Federal securities laws.

     A number of our stockholders, representing approximately 40,113,000 shares
of our common stock (on an as converted basis), have registration rights. By
exercising their registration rights and causing a large number of shares to be
registered and sold in the public market, these holders may cause the price of
our common stock to fall. In addition, any demand to include these shares in a
registration statement could have an adverse effect on our ability to raise
needed capital.

     You will incur dilution on the exercise of outstanding warrants we have
granted. The number and exercise prices of these warrants are described in
"Financial statements and supplemental data". If the holders of these warrants
exercise these warrants you will incur dilution.

     Anti-takeover provisions may prevent an acquisition. Provisions of our
certificate of incorporation, bylaws and Delaware law could make it more
difficult for a third party to acquire us, even if doing so would be beneficial
to our stockholders. Our certificate of incorporation authorizes the board to
determine the terms of our unissued series of preferred stock and to fix the
number of shares of any series of preferred stock without any vote or action by
our stockholders. As a result, the board can authorize and issue shares of
preferred stock with rights that could adversely affect the rights of holders of
our common stock or junior classes of preferred stock. In addition, the issuance
of preferred stock may have the effect of delaying or preventing a change of
control, because the rights given to the holders of a series of preferred stock
may prohibit a merger, reorganization, sale, liquidation or other extraordinary
corporate transaction.

     We have no intention of paying dividends. We have never declared or paid
any cash dividends on our capital stock. We currently intend to retain any
future earnings for funding growth and, therefore, do not expect to pay any
dividends for the foreseeable future.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES 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, 2000, we 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
1 above.

     Interest Rate Risk.  As of December 31, 2000, we had cash and cash
equivalents of approximately $2,920,000 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, 2000 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. The Company has no debt as of
December 31, 2000 other than fixed terms on remaining capital leases that expire
in 2001. Changes in market interest rates will have no effect on interest
expense and an immaterial impact on the carrying value of lease obligations.

     Foreign Currency Exchange Rate Risk.  All of our revenues recognized to
date have been denominated in U.S. dollars. Although revenues from international
customers, to date, have been denominated in the U.S. dollar, we cannot be
certain that future international customers or future business ventures will
result exclusively in U.S. dollar denominated revenues, royalties or dividends.
As a result, our operating results could become subject to significant
fluctuations based upon changes in the exchange rates of certain currencies in
relation to the U.S. dollar. We have operations in Canada where the functional
currency is the Canadian dollar. A hypothetical increase or decrease of 10
percent in the Canadian dollar against the US dollar at December 31, 2000 would
have caused the US dollar equivalent of our Canadian operations to change by an
immaterial amount.

     Equity Price Risk.  As of December 31, 2000, we were not subject to equity
price risk.

                                        22
<PAGE>   25

ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
INDEPENDENT AUDITORS' REPORT................................   24
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
  DECEMBER 31, 2000, 1999 AND 1998:
  Balance Sheets............................................   25
  Statements of Operations and Comprehensive Loss...........   26
  Statements of Changes in Stockholders' Equity.............   27
  Statements of Cash Flows..................................   29
  Notes to Consolidated Financial Statements................   31
</TABLE>

                                        23
<PAGE>   26

                          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, 2000 and
1999, and the related consolidated statements of operations and comprehensive
loss, stockholders' equity, and cash flows for each of the three years in the
period ended December 31, 2000. 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,
2000 and 1999, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2000 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 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.

     As discussed in Note 2 to the consolidated financial statements, the
Company changed its method of accounting for costs of computer software
developed or obtained for internal use in 1999.

/s/ DELOITTE & TOUCHE LLP

New York, New York
April 11, 2001

                                        24
<PAGE>   27

                    OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                  2000             1999
                                                              -------------    -------------
<S>                                                           <C>              <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................  $   2,919,548    $  62,637,410
  Receivable from affiliate (Note 4)........................      1,616,413          521,580
  Accounts receivable.......................................        750,000               --
  Other current assets (Note 5).............................      1,050,294        1,694,779
                                                              -------------    -------------
         Total current assets...............................      6,336,255       64,853,769
PROPERTY AND EQUIPMENT -- NET (Note 6)......................      5,845,760       12,881,116
INTANGIBLE ASSETS -- NET (Note 7)...........................        120,748       26,733,541
NET ASSETS OF DISCONTINUED OPERATIONS (Note 3)..............                       8,723,945
OTHER ASSETS (Note 5).......................................      1,538,735        1,319,568
                                                              -------------    -------------
         TOTAL ASSETS.......................................  $  13,841,498    $ 114,511,939
                                                              =============    =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
  CURRENT LIABILITIES:
  Accounts payable and accrued liabilities..................  $   2,224,589    $   1,642,222
  Accrued compensation (Note 8).............................        784,466          768,749
  Accrued restructuring (Note 9)............................             --        1,360,761
  Current portion of capital leases payable (Note 10).......        249,437        1,827,233
  Net liabilities of discontinued operations (Note 3).......      5,209,756               --
  Other current liabilities.................................        809,717          127,420
                                                              -------------    -------------
         Total current liabilities..........................      9,277,965        5,726,385
CAPITAL LEASES PAYABLE, NET OF CURRENT PORTION (Note 10)....             --        2,158,426
OTHER LIABILITIES...........................................            845          102,368
                                                              -------------    -------------
         TOTAL LIABILITIES..................................      9,278,810        7,987,179
                                                              -------------    -------------
COMMITMENTS AND CONTINGENCIES (Notes 3, 10 and 14)
STOCKHOLDERS' EQUITY (Note 15):
  Preferred stock, authorized and unissued 17,277,932 and
    16,952,932 at December 31, 2000 and 1999,
    respectively............................................
  Series A preferred stock, convertible and participating,
    $0.01 par value; 3,222,068 and 3,547,068 shares
    authorized; 3,222,068 and 3,472,068 shares issued and
    outstanding at December 31, 2000 and 1999,
    respectively............................................         32,221           34,721
  Series B preferred stock, convertible, $0.01 par value;
    11,000,000 shares authorized, issued and outstanding at
    December 31, 2000 and 1999..............................        110,000          110,000
  Series C preferred stock, convertible, $0.01 par value;
    8,250,000 shares authorized, issued and outstanding at
    December 31, 2000 and 1999..............................         82,500           82,500
  Series D preferred stock, convertible, $0.01 par value;
    250,000 shares authorized, issued and outstanding at
    December 31, 2000 and 1999..............................          2,500            2,500
  Common stock, $0.01 par value; 150,000,000 shares
    authorized; 36,612,557 and 36,496,057 shares issued and
    outstanding at December 31, 2000 and 1999,
    respectively............................................        366,126          364,961
  Warrants, common stock....................................     35,686,523       35,686,523
  Additional paid-in capital................................    301,662,303      309,564,789
  Accumulated deficit.......................................   (333,370,391)    (229,284,323)
  Accumulated other comprehensive loss......................         (9,094)         (36,911)
  Treasury stock, Series A preferred; at cost, no shares at
    December 31, 2000 and 250,000 shares at December 31,
    1999....................................................             --      (10,000,000)
                                                              -------------    -------------
         TOTAL STOCKHOLDERS' EQUITY.........................      4,562,688      106,524,760
                                                              -------------    -------------
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.........  $  13,841,498    $ 114,511,939
                                                              =============    =============
</TABLE>

                 See notes to consolidated financial statements
                                        25
<PAGE>   28

                    OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

<TABLE>
<CAPTION>
                                                     2000             1999             1998
                                                 -------------    -------------    ------------
<S>                                              <C>              <C>              <C>
REVENUE:
  Revenue from affiliate (Note 4)..............  $  11,684,064    $   1,620,454    $         --
  Revenue, other...............................      3,549,999               --              --
                                                 -------------    -------------    ------------
     Total revenue.............................     15,234,063        1,620,454              --
COST OF SALES..................................      8,255,553          896,321              --
                                                 -------------    -------------    ------------
  Gross margin.................................      6,978,510          724,133              --
                                                 -------------    -------------    ------------
EXPENSES:
  Sales and marketing..........................      1,893,389          617,778              --
  Research and development.....................      3,459,558        1,030,417              --
  General and administrative...................      9,600,923       11,228,711       9,196,446
  Depreciation and amortization................      3,949,551        1,728,108         180,988
  Impairment of fixed assets (Note 6)..........      1,878,961               --              --
  Write off of intangible asset (Note 7).......     23,940,000               --              --
  Restructuring expense (Note 9)...............        292,634        7,693,026              --
  Warrant compensation expense (Note 15).......         14,542       40,616,822         546,606
                                                 -------------    -------------    ------------
          Total operating expenses.............     45,029,558       62,914,862       9,924,040
                                                 -------------    -------------    ------------
OTHER (INCOME) EXPENSES:
  Interest income..............................     (1,518,932)      (3,315,664)     (2,234,087)
  Interest expense.............................        312,500          449,093          74,575
  Gain on recovery of bad debts................             --         (700,000)             --
  Equity in loss of affiliate..................             --           69,112              --
                                                 -------------    -------------    ------------
          Total other income...................     (1,206,432)      (3,497,459)     (2,159,512)
                                                 -------------    -------------    ------------
LOSS FROM CONTINUING OPERATIONS................    (36,844,616)     (58,693,270)     (7,764,528)
                                                 -------------    -------------    ------------
DISCONTINUED OPERATIONS (NOTE 3):
  Loss from discontinued operations............    (51,205,297)     (76,385,239)    (49,442,567)
  Loss on disposal of discontinued
     operations................................    (16,036,155)              --              --
                                                 -------------    -------------    ------------
  Loss from discontinued operations............    (67,241,452)     (76,385,239)    (49,442,567)
                                                 -------------    -------------    ------------
NET LOSS.......................................   (104,086,068)    (135,078,509)    (57,207,095)
OTHER COMPREHENSIVE INCOME (LOSS):
  Foreign currency translation adjustments.....         27,817          (36,911)             --
                                                 -------------    -------------    ------------
COMPREHENSIVE LOSS.............................  $(104,058,251)   $(135,115,420)   $(57,207,095)
                                                 =============    =============    ============
LOSS PER SHARE -- BASIC AND DILUTED:
  Continuing operations........................  $       (1.00)   $       (1.67)   $      (0.25)
                                                 -------------    -------------    ------------
  Discontinued operations......................          (1.84)           (2.17)          (1.59)
                                                 -------------    -------------    ------------
  Total loss per share.........................  $       (2.84)   $       (3.84)   $      (1.84)
                                                 =============    =============    ============
  Weighted average number of common shares
     outstanding -- basic and diluted..........     36,603,854       35,193,208      31,067,059
</TABLE>

                 See notes to consolidated financial statements
                                        26
<PAGE>   29

                    OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
<TABLE>
<CAPTION>
                                                           SERIES A               SERIES B               SERIES C
                                                          CONVERTIBLE            CONVERTIBLE            CONVERTIBLE
                                                        PREFERRED STOCK        PREFERRED STOCK        PREFERRED STOCK
                                                      -------------------   ---------------------   -------------------
                                                       SHARES     AMOUNTS     SHARES     AMOUNTS     SHARES     AMOUNTS
                                                      ---------   -------   ----------   --------   ---------   -------
<S>                                                   <C>         <C>       <C>          <C>        <C>         <C>
BALANCE, JANUARY 1, 1998............................  3,547,068   $35,471           --        --           --       --
Issuance of common stock (Note 15)..................         --       --            --        --           --       --
Repurchase of Series A preferred treasury stock
 (Note 5)...........................................         --       --            --        --           --       --
Sale of common treasury stock (Note 15).............         --       --            --        --           --       --
Issuance of Series B preferred stock, and warrants,
 net of expenses (Note 15)..........................         --       --    11,000,000   $110,000          --       --
Issuance of warrants (Note 15)......................         --       --            --        --           --       --
Warrants exercised (Note 15)........................         --       --            --        --           --       --
Warrants forfeited (Note 15)........................         --       --            --        --           --       --
Options exercised (Note 15).........................         --       --            --        --           --       --
Conversion of common stock to nonvoting common stock
 (Note 15)..........................................         --       --            --        --           --       --
Value assigned to warrants issued as compensation
 (Note 15)..........................................         --       --            --        --           --       --
Note receivable from officer, plus interest (Notes
 15 and 16).........................................         --       --            --        --           --       --
Net loss............................................         --       --            --        --           --       --
                                                             --       --            --        --           --       --
                                                      ---------   -------   ----------   --------   ---------   -------
BALANCE, DECEMBER 31, 1998..........................  3,547,068   35,471    11,000,000   110,000           --       --
Conversion of Series A Preferred Stock into common
 stock (Note 15)....................................    (75,000)    (750)           --        --           --       --
Issuance of Series C Preferred Stock, net of
 expenses (Note 15).................................         --       --            --        --    8,250,000   82,500
Issuance of Series D Preferred Stock (Note 15)......         --       --            --        --           --       --
Issuance of common stock (Note 15)..................         --       --            --        --           --       --
Issuance of warrants (Note 15)......................         --       --            --        --           --       --
Warrants exercised (Note 15)........................         --       --            --        --           --       --
Warrants forfeited (Note 15)........................         --       --            --        --           --       --
Warrants expired (Note 15)..........................         --       --            --        --           --       --
Options exercised (Note 15).........................         --       --            --        --           --       --
Restructuring option charge (Note 9)................         --       --            --        --           --       --
Interest on note receivable from officer (Note
 15)................................................         --       --            --        --           --       --
Note receivable repayment from officer (Note 15)....         --       --            --        --           --       --
Net loss............................................         --       --            --        --           --       --
Other comprehensive loss............................         --       --            --        --           --       --
                                                      ---------   -------   ----------   --------   ---------   -------
BALANCE, DECEMBER 31, 1999..........................  3,472,068   34,721    11,000,000   110,000    8,250,000   82,500
Retirement of Treasury Stock........................   (250,000)  (2,500)           --        --           --       --
Warrants forfeited (Note 15)........................         --       --            --        --           --       --
Options exercised (Note 15).........................         --       --            --        --           --       --
Restructuring option charge (Note 9)................         --       --            --        --           --       --
Net loss............................................         --       --            --        --           --       --
Other comprehensive loss............................         --       --            --        --           --       --
                                                      ---------   -------   ----------   --------   ---------   -------
BALANCE, DECEMBER 31, 2000..........................  3,222,068   $32,221   11,000,000   $110,000   8,250,000   $82,500
                                                      =========   =======   ==========   ========   =========   =======

<CAPTION>
                                                          SERIES D
                                                         CONVERTIBLE
                                                       PREFERRED STOCK
                                                      -----------------
                                                      SHARES    AMOUNTS
                                                      -------   -------
<S>                                                   <C>       <C>
BALANCE, JANUARY 1, 1998............................       --       --
Issuance of common stock (Note 15)..................       --       --
Repurchase of Series A preferred treasury stock
 (Note 5)...........................................       --       --
Sale of common treasury stock (Note 15).............       --       --
Issuance of Series B preferred stock, and warrants,
 net of expenses (Note 15)..........................       --       --
Issuance of warrants (Note 15)......................       --       --
Warrants exercised (Note 15)........................       --       --
Warrants forfeited (Note 15)........................       --       --
Options exercised (Note 15).........................       --       --
Conversion of common stock to nonvoting common stock
 (Note 15)..........................................       --       --
Value assigned to warrants issued as compensation
 (Note 15)..........................................       --       --
Note receivable from officer, plus interest (Notes
 15 and 16).........................................       --       --
Net loss............................................       --       --
                                                           --       --
                                                      -------   ------
BALANCE, DECEMBER 31, 1998..........................       --       --
Conversion of Series A Preferred Stock into common
 stock (Note 15)....................................       --       --
Issuance of Series C Preferred Stock, net of
 expenses (Note 15).................................       --       --
Issuance of Series D Preferred Stock (Note 15)......  250,000    2,500
Issuance of common stock (Note 15)..................       --       --
Issuance of warrants (Note 15)......................       --       --
Warrants exercised (Note 15)........................       --       --
Warrants forfeited (Note 15)........................       --       --
Warrants expired (Note 15)..........................       --       --
Options exercised (Note 15).........................       --       --
Restructuring option charge (Note 9)................       --       --
Interest on note receivable from officer (Note
 15)................................................       --       --
Note receivable repayment from officer (Note 15)....       --       --
Net loss............................................       --       --
Other comprehensive loss............................       --       --
                                                      -------   ------
BALANCE, DECEMBER 31, 1999..........................  250,000    2,500
Retirement of Treasury Stock........................       --       --
Warrants forfeited (Note 15)........................       --       --
Options exercised (Note 15).........................       --       --
Restructuring option charge (Note 9)................       --       --
Net loss............................................       --       --
Other comprehensive loss............................       --       --
                                                      -------   ------
BALANCE, DECEMBER 31, 2000..........................  250,000   $2,500
                                                      =======   ======

<CAPTION>
                                                                                COMMON STOCK
                                                      -----------------------------------------------------------------
                                                             VOTING               NONVOTING               TOTAL
                                                      ---------------------   -----------------   ---------------------
                                                        SHARES     AMOUNTS    SHARES    AMOUNTS     SHARES     AMOUNTS
                                                      ----------   --------   -------   -------   ----------   --------
<S>                                                   <C>          <C>        <C>       <C>       <C>          <C>
BALANCE, JANUARY 1, 1998............................  27,779,568   $277,795        --       --    27,779,568   $277,795
Issuance of common stock (Note 15)..................     167,000     1,670         --       --       167,000      1,670
Repurchase of Series A preferred treasury stock
 (Note 5)...........................................          --        --         --       --            --         --
Sale of common treasury stock (Note 15).............          --        --         --       --            --         --
Issuance of Series B preferred stock, and warrants,
 net of expenses (Note 15)..........................          --        --         --       --            --         --
Issuance of warrants (Note 15)......................          --        --         --       --            --         --
Warrants exercised (Note 15)........................   3,358,844    33,589         --       --     3,358,844     33,589
Warrants forfeited (Note 15)........................          --        --         --       --            --         --
Options exercised (Note 15).........................     253,510     2,535         --       --       253,510      2,535
Conversion of common stock to nonvoting common stock
 (Note 15)..........................................    (740,000)   (7,400)   740,000   $7,400            --         --
Value assigned to warrants issued as compensation
 (Note 15)..........................................          --        --         --       --            --         --
Note receivable from officer, plus interest (Notes
 15 and 16).........................................          --        --         --       --
Net loss............................................          --        --         --       --            --         --
                                                              --        --         --       --            --         --
                                                      ----------   --------   -------   ------    ----------   --------
BALANCE, DECEMBER 31, 1998..........................  30,818,922   308,189    740,000    7,400    31,558,922    315,589
Conversion of Series A Preferred Stock into common
 stock (Note 15)....................................     300,000     3,000         --       --       300,000      3,000
Issuance of Series C Preferred Stock, net of
 expenses (Note 15).................................          --        --         --       --            --         --
Issuance of Series D Preferred Stock (Note 15)......          --        --         --       --            --         --
Issuance of common stock (Note 15)..................   2,004,167    20,042         --       --     2,004,167     20,042
Issuance of warrants (Note 15)......................          --        --         --       --            --         --
Warrants exercised (Note 15)........................   2,198,764    21,988         --       --     2,198,764     21,988
Warrants forfeited (Note 15)........................          --        --         --       --            --         --
Warrants expired (Note 15)..........................          --        --         --       --            --         --
Options exercised (Note 15).........................     434,204     4,342         --       --       434,204      4,342
Restructuring option charge (Note 9)................          --        --         --       --            --         --
Interest on note receivable from officer (Note
 15)................................................          --        --         --       --            --         --
Note receivable repayment from officer (Note 15)....          --        --         --       --            --         --
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 (Note 15)........................          --        --         --       --            --         --
Options exercised (Note 15).........................     116,500     1,165         --       --       116,500      1,165
Restructuring option charge (Note 9)................          --        --         --       --            --         --
Net loss............................................          --        --         --       --            --         --
Other comprehensive loss............................          --        --         --       --            --         --
                                                      ----------   --------   -------   ------    ----------   --------
BALANCE, DECEMBER 31, 2000..........................  35,872,557   $358,726   740,000   $7,400    36,612,557   $366,126
                                                      ==========   ========   =======   ======    ==========   ========
</TABLE>

                                        27
<PAGE>   30

                    OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES

   CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY -- (CONTINUED)
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
<TABLE>
<CAPTION>

                                                                  COMMON STOCK
                                                                    WARRANTS            ADDITIONAL                        NOTES
                                                            ------------------------     PAID-IN       ACCUMULATED    RECEIVABLE --
                                                              SHARES       AMOUNTS       CAPITAL         DEFICIT         OFFICER
                                                            ----------   -----------   ------------   -------------   -------------
<S>                                                         <C>          <C>           <C>            <C>             <C>
BALANCE, JANUARY 1, 1998..................................   8,868,408   $   384,000   $ 42,850,023   $ (36,998,719)            --
Issuance of common stock (Note 15)........................          --            --      1,668,330              --             --
Repurchase of Series A preferred treasury stock (Note
 15)......................................................          --            --             --              --             --
Sale of common treasury stock (Note 15)...................          --            --      1,547,520              --             --
Issuance of Series B preferred stock, and warrants, net of
 expenses (Note 15).......................................     500,000       914,861    108,006,651              --             --
Issuance of warrants (Note 15)............................  11,250,000            --             --              --             --
Warrants exercised (Note 15)..............................  (3,358,844)           --      7,443,310              --             --
Warrants forfeited (Note 15)..............................     (40,800)           --             --              --             --
Options exercised (Note 15)...............................          --            --        705,958              --             --
Conversion of common stock to nonvoting common stock (Note
 15)......................................................          --            --             --              --             --
Value assigned to warrants issued as compensation (Note
 15)......................................................     315,328       546,606             --              --             --
Note receivable from officer, plus interest (Notes 15 and
 16)......................................................          --            --             --              --    $(1,003,678)
Net loss..................................................          --            --             --     (57,207,095)            --
                                                            ----------   -----------   ------------   -------------    -----------
BALANCE, DECEMBER 31, 1998................................  17,534,092     1,845,467    162,221,792     (94,205,814)    (1,003,678)
Conversion of Series A Preferred Stock into common stock
 (Note 15)................................................          --            --         (2,250)             --             --
Issuance of Series C Preferred Stock, net of expenses
 (Note 15)................................................          --            --     96,906,621              --             --
Issuance of Series D Preferred Stock (Note 15)............          --            --      2,997,500              --             --
Issuance of common stock (Note 15)........................          --            --     28,029,963              --             --
Issuance of warrants (Note 15)............................  32,729,158    40,631,364             --              --             --
Warrants exercised (Note 15)..............................  (2,198,764)       (4,002)     5,966,498              --             --
Warrants forfeited (Note 15)..............................      (8,000)           --             --              --             --
Warrants expired (Note 15)................................  (1,666,667)   (6,786,306)     6,786,306              --             --
Options exercised (Note 15)...............................          --            --        847,519              --             --
Restructuring option charge (Note 9)......................          --            --      5,810,840              --             --
Interest on note receivable from officer (Note 15)........          --            --             --              --        (36,064)
Note receivable repayment from officer (Note 15)..........          --            --             --              --      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 (Note 15)..............................    (124,000)           --             --              --             --
Options exercised (Note 15)...............................          --            --        204,699              --             --
Restructuring option charge (Note 9)......................          --            --      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)   $        --
                                                            ==========   ===========   ============   =============    ===========

<CAPTION>
                                                                            TREASURY STOCK
                                                            -----------------------------------------------
                                                            SERIES A      SERIES A                 COMMON      ACCUMULATED
                                                            PREFERRED    PREFERRED      COMMON     SHARES     COMPREHENSIVE
                                                             SHARES        AMOUNT       SHARES     AMOUNT         LOSS
                                                            ---------   ------------   --------   ---------   -------------
<S>                                                         <C>         <C>            <C>        <C>         <C>
BALANCE, JANUARY 1, 1998..................................        --              --   (208,000)  $(532,480)          --
Issuance of common stock (Note 15)........................        --              --         --          --           --
Repurchase of Series A preferred treasury stock (Note
 15)......................................................  (250,000)   $(10,000,000)        --          --           --
Sale of common treasury stock (Note 15)...................        --              --    208,000     532,480           --
Issuance of Series B preferred stock, and warrants, net of
 expenses (Note 15).......................................        --              --         --          --           --
Issuance of warrants (Note 15)............................        --              --         --          --           --
Warrants exercised (Note 15)..............................        --              --         --          --           --
Warrants forfeited (Note 15)..............................        --              --         --          --           --
Options exercised (Note 15)...............................        --              --         --          --           --
Conversion of common stock to nonvoting common stock (Note
 15)......................................................        --              --         --          --           --
Value assigned to warrants issued as compensation (Note
 15)......................................................        --              --         --          --           --
Note receivable from officer, plus interest (Notes 15 and
 16)......................................................        --              --         --          --           --
Net loss..................................................        --              --         --          --           --
                                                            --------    ------------   --------   ---------     --------
BALANCE, DECEMBER 31, 1998................................  (250,000)    (10,000,000)        --          --           --
Conversion of Series A Preferred Stock into common stock
 (Note 15)................................................        --              --         --          --           --
Issuance of Series C Preferred Stock, net of expenses
 (Note 15)................................................        --              --         --          --           --
Issuance of Series D Preferred Stock (Note 15)............        --              --         --          --           --
Issuance of common stock (Note 15)........................        --              --         --          --           --
Issuance of warrants (Note 15)............................        --              --         --          --           --
Warrants exercised (Note 15)..............................        --              --         --          --           --
Warrants forfeited (Note 15)..............................        --              --         --          --           --
Warrants expired (Note 15)................................        --              --         --          --           --
Options exercised (Note 15)...............................        --              --         --          --           --
Restructuring option charge (Note 9)......................        --              --         --          --           --
Interest on note receivable from officer (Note 15)........        --              --         --          --           --
Note receivable repayment from officer (Note 15)..........        --              --         --          --           --
Net loss..................................................        --              --         --          --           --
Other comprehensive loss..................................        --              --         --          --     $(36,911)
                                                            --------    ------------   --------   ---------     --------
BALANCE, DECEMBER 31, 1999................................  (250,000)    (10,000,000)        --          --      (36,911)
Retirement of Treasury Stock..............................   250,000      10,000,000         --          --           --
Warrants forfeited (Note 15)..............................        --              --         --          --           --
Options exercised (Note 15)...............................        --              --         --          --           --
Restructuring option charge (Note 9)......................        --              --         --          --           --
Net loss..................................................        --              --         --          --           --
Other comprehensive loss..................................        --              --         --          --       27,817
                                                            --------    ------------   --------   ---------     --------
BALANCE, DECEMBER 31, 2000................................        --    $         --         --   $      --     $ (9,094)
                                                            ========    ============   ========   =========     ========

<CAPTION>

                                                                TOTAL
                                                            STOCKHOLDERS'
                                                               EQUITY
                                                            -------------
<S>                                                         <C>
BALANCE, JANUARY 1, 1998..................................  $   6,016,090
Issuance of common stock (Note 15)........................      1,670,000
Repurchase of Series A preferred treasury stock (Note
 15)......................................................    (10,000,000)
Sale of common treasury stock (Note 15)...................      2,080,000
Issuance of Series B preferred stock, and warrants, net of
 expenses (Note 15).......................................    109,031,512
Issuance of warrants (Note 15)............................             --
Warrants exercised (Note 15)..............................      7,476,899
Warrants forfeited (Note 15)..............................             --
Options exercised (Note 15)...............................        708,493
Conversion of common stock to nonvoting common stock (Note
 15)......................................................             --
Value assigned to warrants issued as compensation (Note
 15)......................................................        546,606
Note receivable from officer, plus interest (Notes 15 and
 16)......................................................     (1,003,678)
Net loss..................................................    (57,207,095)
                                                            -------------
BALANCE, DECEMBER 31, 1998................................     59,318,827
Conversion of Series A Preferred Stock into common stock
 (Note 15)................................................             --
Issuance of Series C Preferred Stock, net of expenses
 (Note 15)................................................     96,989,121
Issuance of Series D Preferred Stock (Note 15)............      3,000,000
Issuance of common stock (Note 15)........................     28,050,005
Issuance of warrants (Note 15)............................     40,631,364
Warrants exercised (Note 15)..............................      5,984,484
Warrants forfeited (Note 15)..............................             --
Warrants expired (Note 15)................................             --
Options exercised (Note 15)...............................        851,861
Restructuring option charge (Note 9)......................      5,810,840
Interest on note receivable from officer (Note 15)........        (36,064)
Note receivable repayment from officer (Note 15)..........      1,039,742
Net loss..................................................   (135,078,509)
Other comprehensive loss..................................        (36,911)
                                                            -------------
BALANCE, DECEMBER 31, 1999................................    106,524,760
Retirement of Treasury Stock..............................             --
Warrants forfeited (Note 15)..............................             --
Options exercised (Note 15)...............................        205,864
Restructuring option charge (Note 9)......................      1,890,315
Net loss..................................................   (104,086,068)
Other comprehensive loss..................................         27,817
                                                            -------------
BALANCE, DECEMBER 31, 2000................................  $   4,562,688
                                                            =============
</TABLE>

                See Notes to Consolidated Financial Statements.

                                        28
<PAGE>   31

                    OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                               2000             1999             1998
                                                           -------------    -------------    ------------
<S>                                                        <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss...............................................  $(104,086,068)   $(135,078,509)   $(57,207,095)
  Deduct loss from discontinued operations...............    (67,241,452)     (76,385,239)    (49,442,567)
                                                           -------------    -------------    ------------
  Loss from continuing operations........................    (36,844,616)     (58,693,270)     (7,764,528)
  Adjustments to reconcile net loss from continuing
    operations to net cash used in continuing operations:
    Interest on note receivable..........................             --          (36,064)         (3,678)
    Value assigned to warrants issued as compensation....         14,542       40,616,822         546,606
    Value assigned to options in connection with
      restructuring......................................      1,890,315        5,810,840
    Depreciation and amortization........................      3,949,551        1,728,108         180,988
    Write off of intangible asset........................     23,940,000               --              --
    Gain on recovery of receivable.......................             --         (700,000)             --
    Loss on disposal of assets...........................        171,484              980              --
    Loss from investment in joint venture................             --           69,112              --
    Impairment of fixed assets...........................      1,878,961               --              --
  Changes in operating assets and liabilities:
    Receivables..........................................     (1,844,833)        (521,580)             --
    Other assets.........................................        425,318       (1,597,903)       (933,394)
    Accounts payable and accrued liabilities.............        598,200        1,242,363         752,401
    Accrued restructuring................................     (1,360,761)       1,360,761              --
    Other liabilities....................................        580,774           48,771         (77,870)
                                                           -------------    -------------    ------------
  Net cash used in operating activities..................     (6,601,065)     (10,671,060)     (7,299,475)
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of property and equipment....................       (857,707)      (3,884,628)     (3,493,254)
  Purchases of software licenses.........................       (293,331)        (319,039)             --
  Investment in joint venture............................             --               --         (69,112)
  Proceeds from disposal of assets.......................         57,060            4,826              --
                                                           -------------    -------------    ------------
    Net cash used in investing activities................     (1,093,978)      (4,198,841)     (3,562,366)
                                                           -------------    -------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Net proceeds from issuance of common stock.............             --           50,005         670,000
  Net proceeds from issuance of preferred stock..........             --       99,989,121     108,116,651
  Net proceeds from issuance of warrants.................             --               --         914,861
  Net proceeds from recovery of receivable...............             --          700,000              --
  Proceeds from exercise of warrants for common stock....             --        5,984,484       7,476,899
  Proceeds from exercise of options for common stock.....        205,864          851,861         708,493
  Proceeds from term loan................................             --          999,653       2,575,560
  Proceeds from officer loan.............................             --        1,039,742              --
  Payments on capital leases.............................     (1,403,351)      (1,418,868)       (217,982)
  Purchase of treasury stock, Series A...................             --               --     (10,000,000)
  Proceeds from sale of treasury stock, common...........             --               --       2,080,000
                                                           -------------    -------------    ------------
    Net cash (used in) provided by financing
      activities.........................................     (1,197,487)     108,195,998     112,324,482
                                                           -------------    -------------    ------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS.....     (8,892,530)      93,326,097     101,462,641
NET CASH USED IN DISCONTINUED OPERATIONS.................    (50,825,332)     (94,527,957)    (45,040,131)
</TABLE>

                                        29
<PAGE>   32
                    OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

<TABLE>
<CAPTION>
                                                               2000             1999             1998
                                                           -------------    -------------    ------------
<S>                                                        <C>              <C>              <C>
CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR.........     62,637,410       63,839,270       7,416,760
                                                           -------------    -------------    ------------
CASH AND CASH EQUIVALENTS, END OF THE YEAR...............  $   2,919,548    $  62,637,410    $ 63,839,270
                                                           =============    =============    ============
Supplemental disclosure of cash flow information:
  Cash payments for interest -- continuing operations....  $     317,249    $     630,655    $    126,980
  Cash payments for interest -- discontinued
    operations...........................................        406,063          448,899          74,575
Supplemental schedule of non-cash investing and financing
  activities:
  Net reduction in vendor obligations....................  $   2,619,608               --              --
  Increase in capital leases.............................             --    $   6,359,303    $  2,800,921
  Acquisition of intangible asset........................             --       28,000,000              --
  Common stock issued for note...........................             --               --       1,000,000
</TABLE>

                 See Notes to Consolidated Financial Statements
                                        30
<PAGE>   33

                    OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

1.  BASIS OF PRESENTATION AND REORGANIZATION

     OptiMark Holdings, Inc. ("Holdings") was established 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" or "OptiMark" 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 Business (formerly referred to as the Electronic Markets
Business) and the US Equities Business, under two separate wholly-owned
subsidiaries, OptiMark, Inc., and OptiMark US Equities, Inc., respectively.
Effective September 19, 2000, the US Equities Business was discontinued (Note
3).

2.  GENERAL INFORMATION AND SUMMARY OF ACCOUNTING POLICIES

     GENERAL -- The Exchange Solutions Business is comprised of the development
and operation of trading platforms and environments for existing and emerging
electronic market places 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.

     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 2001, are not expected to be
sufficient to meet its 2001 operating and financial commitments. These factors,
among others, may indicate that the Company will be unable to continue as a
going concern for a reasonable period.

     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 two
current investors regarding additional equity investments.

     PRINCIPLES OF CONSOLIDATION -- The accompanying consolidated financial
statements include the accounts of the Company and its wholly-owned
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.

                                        31
<PAGE>   34

     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.

     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 are amortized over
the lesser of the life of the asset or the life of the lease. During 2000, the
Company wrote down the value of certain assets by approximately $1,879,000 in
accordance with FAS 121 "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of" (Note 6).

     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 (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, 2000 and 1999, respectively, there had been no
impairment in the carrying value of long-lived assets except as discussed in
Notes 3 and 7.

     USE OF ESTIMATES -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
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 -- A recent pronouncement of the Financial
Accounting Standards Board, which is not required to be adopted at this date, is
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
("SFAS No. 133"), which is effective for the Company's consolidated financials
statements for the year ending December 31, 2001. SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including certain
derivatives embedded in other contracts, and for hedging activities. SFAS No.
133, as amended by SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities -- Deferral of effective date of SFAS No. 133" and SFAS No.
138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities" is effective for the Company as of January 1, 2001. SFAS No. 133
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. Adoption of these new
accounting standards is not expected to result in a material impact in net loss
or in accumulated other comprehensive loss during the first fiscal quarter of
2001.

     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

                                        32
<PAGE>   35

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.

     The Financial Accounting Standards Board 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, however options repriced in 2000 are now
subject to variable plan accounting as a result of Interpretation 44.

     SEGMENT REPORTING -- With effect from September 19, 2000, the Company
operates in one industry segment, the Exchange Solutions Business.

     RECLASSIFICATIONS -- Certain prior year amounts have been reclassified to
conform to the 2000 presentation, principally for discontinued operations.

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, 2001 and will include the sale of certain leased assets and final
negotiation of other liabilities.

     Included in the charge 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 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 renegotiation 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).

                                        33
<PAGE>   36

     Changes in Net Liabilities of Discontinued Operations from the effective
measurement date are summarized below.

<TABLE>
<CAPTION>
                                                      PAID OR                ADDITIONAL
                                     BALANCE AT       CHARGED                 ACCRUALS      BALANCE AT
                                    SEPTEMBER 30,     AGAINST       CASH      AND OTHER    DECEMBER 31,
                                        2000         LIABILITY    RECEIPTS   ADJUSTMENTS       2000
                                    -------------   -----------   --------   -----------   ------------
<S>                                 <C>             <C>           <C>        <C>           <C>
Net Liabilities of Discontinued
  Operations......................   $(6,455,116)   $ 3,026,968   $(32,832)  $(1,748,776)  $(5,209,756)
                                     ===========    ===========   ========   ===========   ===========
</TABLE>

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

<TABLE>
<CAPTION>
                                                       2000            1999            1998
                                                   ------------    ------------    ------------
<S>                                                <C>             <C>             <C>
Revenues.........................................  $    321,258    $  1,391,790    $         --
                                                   ------------    ------------    ------------
Operating expenses (excluding depreciation and
  amortization)..................................    41,409,888      69,165,854      47,791,993
Depreciation and amortization....................     9,711,431       7,606,313       1,403,351
                                                   ------------    ------------    ------------
Total expenses...................................    51,121,319      76,772,167      49,195,344
                                                   ------------    ------------    ------------
Net non-operating expense........................       405,236       1,004,862         247,223
                                                   ------------    ------------    ------------
Loss from discontinued operations................   (51,205,297)    (76,385,239)   $(49,442,567)
                                                   ------------    ------------    ------------
</TABLE>

     Net assets (liabilities) from discontinued operations at December 31 was
composed of the following:

<TABLE>
<CAPTION>
                                                                       2000            1999
                                                                    -----------    ------------
<S>                                                 <C>             <C>            <C>
Current assets....................................                  $    50,000    $  3,597,085
Property and equipment............................                      369,556       7,086,248
Intangible assets.................................                           --       1,116,211
Other assets......................................                           --       1,276,180
Capitalized software..............................                           --      10,816,389
Current liabilities...............................                   (5,629,312)    (10,130,984)
Capital lease payable.............................                           --      (5,015,661)
Other liabilities.................................                                      (21,523)
                                                                    -----------    ------------
Net (liabilities) assets from discontinued
  operations......................................                  $(5,209,756)   $  8,723,945
                                                                    -----------    ------------
</TABLE>

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 uncollectible, 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

                                        34
<PAGE>   37

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 provides services on a time and
materials basis and is reimbursed at fully allocated cost. 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 is a loan to an officer of approximately
$100,000 at December 31, 2000 and included in Other Assets at December 31, 1999
is a loan to an officer of approximately $212,000. The loans to the officers at
December 31, 2000 and 1999 incur interest at 6% in each year. The loan
outstanding at December 31, 2000 is due on September 30, 2001. The loan
outstanding at December 31, 1999 was forgiven in 2000 (Note 5).

5.  OTHER CURRENT ASSETS AND OTHER ASSETS

<TABLE>
<CAPTION>
                                                     OTHER
                                                 CURRENT ASSETS               OTHER ASSETS
                                            ------------------------    ------------------------
                                               2000          1999          2000          1999
                                            ----------    ----------    ----------    ----------
<S>                                         <C>           <C>           <C>           <C>
Prepaid expenses..........................  $  526,783    $  909,728    $       --    $       --
Security deposits.........................      30,521         5,189     1,037,678     1,107,568
Restricted cash...........................     294,989       267,557            --            --
Interest receivable.......................      29,369       262,552            --            --
Investment in customer....................          --            --       500,000            --
Loan to officer...........................     100,000            --            --       212,000
Other.....................................      68,632       249,753         1,057            --
                                            ----------    ----------    ----------    ----------
                                            $1,050,294    $1,694,779    $1,538,735    $1,319,568
                                            ==========    ==========    ==========    ==========
</TABLE>

     Prepaid expenses as of December 31, 2000 and 1999, 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, 2000
and 1999 are certificates of deposit of approximately $175,000 and $148,000 as
well as restricted cash of $120,000 in 2000 and 1999 related to a guarantee of
two employee loans. Interest receivable relates to interest earned, but not yet
received, on the Company's commercial paper and the certificates of deposit.

6.  PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                 2000           1999
                                                              -----------    -----------
<S>                                                           <C>            <C>
Computer equipment..........................................  $ 7,578,285    $13,118,220
Furniture and fixtures......................................    1,118,323      1,171,043
Software....................................................    2,082,803      2,539,552
Leasehold improvements......................................    2,366,277      2,461,996
                                                              -----------    -----------
Total.......................................................   13,145,688     19,290,811
Less accumulated depreciation and amortization..............    7,299,928      6,409,695
                                                              -----------    -----------
Net property and equipment..................................  $ 5,845,760    $12,881,116
                                                              ===========    ===========
</TABLE>

     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 of
property and 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 2001.

                                        35
<PAGE>   38

     Depreciation expense was approximately $1,203,000, $245,000 and $179,000
for the years ended December 31, 2000, 1999 and 1998, respectively.

7.  INTANGIBLE ASSETS

     Intangible assets consist of the following at December 31:

<TABLE>
<CAPTION>
                                                                2000         1999
                                                              --------    -----------
<S>                                                           <C>         <C>
Non-securities industry rights..............................        --    $28,000,000
Software licenses...........................................  $612,371        319,039
                                                              --------    -----------
                                                               612,371     28,319,039
Less: accumulated amortization..............................   491,623      1,585,498
                                                              --------    -----------
Intangible assets -- net....................................  $120,748    $26,733,541
                                                              ========    ===========
</TABLE>

     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) (Note 5). 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 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 vacation of approximately $784,466
and $668,749 as of December 31, 2000 and 1999, respectively and approximately
$100,000 of employee bonuses at December 31, 1999.

                                        36
<PAGE>   39

9.  ACCRUED RESTRUCTURING

     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 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.

     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.

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, 2000 are as follows:

<TABLE>
<S>                                                             <C>
2001........................................................    $ 1,123,786
2002........................................................      1,121,551
2003........................................................      1,073,624
2004........................................................      1,127,901
2005........................................................      1,152,147
Thereafter..................................................      9,315,362
                                                                -----------
Total.......................................................    $14,914,371
                                                                ===========
</TABLE>

     Total rent expense for real estate amounted to approximately $679,000,
$293,000 and $348,000 (net of sublease income of approximately $4,100; $7,600
and $46,800) for the years ended December 31, 2000, 1999 and 1998, respectively.

     Total rent expense for equipment amounted to approximately $728,000,
$80,000 and $224,000 for the years ended December 31, 2000, 1999 and 1998,
respectively.

     Capital Leases -- The net book value of equipment held under capital leases
was approximately $625,000 and $7,910,000 at December 31, 2000 and 1999,
respectively.

     Future lease payments under capital leases as of December 31, 2000 are as
follows:

<TABLE>
<S>                                                           <C>
2001........................................................  $257,711
                                                              --------
Total.......................................................   257,711
Less amounts representing interest..........................     8,274
                                                              --------
Present value of future lease payments......................  $249,437
                                                              ========
</TABLE>

                                        37
<PAGE>   40

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 Business.
As a result of the discontinuation of the US Equities Business, effective
September 19, 2000, the Company currently operates in one industry segment, the
Exchange Solutions Business.

12.  INCOME TAXES

     The tax effected components of deferred income tax assets and liabilities
at December 31, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                             2000             1999
                                                         -------------    ------------
<S>                                                      <C>              <C>
Deferred tax assets:
  Net operating loss carryforwards.....................  $  98,779,000    $ 69,946,000
  Tax fixed assets, capitalized research and
     development costs and other intangibles in excess
     of book...........................................      5,284,000         386,000
  Vacation accruals and other reserves.................      3,386,000       1,535,421
  Warrants expense.....................................             --      15,391,990
  Other................................................        516,000         532,000
                                                         -------------    ------------
          Total deferred tax asset.....................    107,965,000      88,512,911
                                                         -------------    ------------
Deferred tax liabilities:
  Tax depreciation in excess of book depreciation......             --         265,000
  Deferred gain on sale of assets......................             --         750,000
                                                         -------------    ------------
          Total deferred tax liability.................             --       1,015,000
                                                         -------------    ------------
Net deferred tax assets................................    107,965,000      87,497,911
Less valuation allowance...............................   (107,965,000)    (87,497,911)
                                                         -------------    ------------
                                                         $          --    $         --
                                                         =============    ============
</TABLE>

     Realization of the future tax benefits related to the deferred 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 has net operating loss carryforwards of approximately
$243,671,000 and research and development credit carryforwards of $3,648,000 at
December 31, 2000. Both the net operating loss carryforwards and research and
development credit carryforwards will begin to expire in 2004 through 2020.

     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.

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 $12,600; $9,200 and $9,100
for the years ended December 31, 2000, 1999 and 1998, respectively.

                                        38
<PAGE>   41

14.  COMMITMENTS AND CONTINGENCIES

     In conjunction with the discontinuance of the US Equities Business, the
Company and certain subsidiaries are the subject to pending or threatened
litigation in an aggregate amount of approximately $21,200,000 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. In addition, the Company is a respondent in an arbitration matter
brought by a former provider of telecommunications services in the amount of
approximately $18,600,000. All 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.

     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 $4,595,000 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 these negotiations (Note 3).

     Included in the terms of a settlement agreement between OptiMark and one of
the companies from which it leased equipment, the Company is obligated to
purchase a mainframe computer and a related one year maintenance agreement with
an aggregate cost of approximately $555,000 (Note 19).

     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 existing warrant agreement (Note 15).

     In August 1999, the Company entered into an employment agreement with an
officer of the Company, which provides for annual compensation of $225,000 and a
guaranteed bonus of $350,000, half of which was paid at the time of hire and the
balance of which was paid on the first anniversary of employment.

     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 requires 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 is 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, 2000, the PCX was entitled to approximately $5,000 in
connection with revenue earned by the discontinued operation, of which
approximately $2,700 has been paid and the remaining $2,300 has been included in
the net liabilities of discontinued operations. Based on gross revenues, as
defined, for the year ended December 31, 2000, the PCX was entitled to
approximately $74,000 in connection with revenue earned by continuing
operations, of which $45,000 has been paid, and the remaining $29,000 has been
accrued. Based on gross revenues as defined, for the year ended December 31,
1999, the PCX was entitled to approximately $46,600 under this agreement, of
which approximately $16,000 has been paid and the remaining $30,000 has been
included in net liabilities of discontinued operations. 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.  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 have 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

                                        39
<PAGE>   42

Participating Preferred Stock, 8,250,000 shares of preferred stock as Series C
Convertible Preferred Stock and 250,000 shares of preferred stock as Series D
Convertible Preferred Stock. As of December 31, 2000 and 1999, the Company had
17,277,932 and 16,952,932 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 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
(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 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 (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.

                                        40
<PAGE>   43

     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. 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.

     Pursuant to agreements among 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, these stockholders have 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 Exchange Commission for
resale.

     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 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 warrants can be earned in the
future under this 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 (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. 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 termination
of that business, no warrants can be earned in the future.

                                        41
<PAGE>   44

     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 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.

16.  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 1996 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 a vesting schedule not to exceed ten years.

     In November 1999, the Company amended the 1996 Plan and renamed it the 1999
Stock Plan (the "1999 Plan"), which made 14,669,224 shares 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, continue in effect
under their original terms. The 1999 Plan provides 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 and consultants. Options granted under the 1999 Plan that
are intended to be incentive stock options are 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 are granted at prices not less than 85% of fair
market value per share on the date of grant. No portion of the option may 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 $1.50 to $14.00 per share, over several grant dates. A total of
6,298,300 options related to those employees were repriced. Options for 853,500
options related to certain eligible employees who did not execute an agreement

                                        42
<PAGE>   45

related to all repriced options, 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 it board of directors at that date. The repriced options are
subject to variable plan accounting. No expense was recorded for 2000 as a
result of this repricing, as the fair market value at December 31, 2000 was
equal to the exercise price of $.50 per share.

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

     At December 31, 2000, 1999 and 1998, the components of the 1999 Plan
consisted of the following:

<TABLE>
<CAPTION>
                                                                             WEIGHTED-
                                                                              AVERAGE
                                                                             EXERCISE
                                                                SHARES         PRICE
                                                              -----------    ---------
<S>                                                           <C>            <C>
Options outstanding at December 31, 1997....................    3,961,500     $ 1.82
Options granted during 1998.................................    3,151,750       6.80
Options exercised during 1998...............................     (253,510)      2.79
Options canceled during 1998................................     (122,100)      2.95
                                                              -----------
Options outstanding at December 31, 1998....................    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
Weighted-average fair value of options granted during
  2000......................................................  $      1.67
Weighted-average fair value of options granted during
  1999......................................................  $      1.97
Weighted-average fair value of options granted during
  1998......................................................  $      0.99
Number of options exercisable at December 31, 1998..........    1,548,655     $ 2.81
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
</TABLE>

     The following table summarizes information related to stock options
outstanding at December 31, 2000:

<TABLE>
<CAPTION>
                                       OPTIONS OUTSTANDING                OPTIONS EXERCISABLE
                             ---------------------------------------    ------------------------
                                             WEIGHTED-
                                              AVERAGE      WEIGHTED-                   WEIGHTED-
                              NUMBER OF      REMAINING      AVERAGE      NUMBER OF      AVERAGE
RANGE OF                       SHARES       CONTRACTUAL    EXERCISE       SHARES       EXERCISE
EXERCISE PRICES              OUTSTANDING       LIFE          PRICE      OUTSTANDING      PRICE
---------------              -----------    -----------    ---------    -----------    ---------
<S>                          <C>            <C>            <C>          <C>            <C>
$  .50 - $ 1.50............   6,367,290        8.37         $  .51       1,222,447      $  .57
$ 1.83 - $ 7.50............     945,010        2.15           2.38         881,910        2.27
$10.00 - $14.00............   1,505,370        6.96          10.31         477,820       10.75
                              ---------                                  ---------
$  .50 - $14.00............   8,817,670        7.46         $ 2.39       2,582,177      $ 3.04
                              =========                                  =========
</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,

                                        43
<PAGE>   46

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 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, 2000, 1999 and
1998, would have increased to approximately $104,424,000, $135,747,000 and
$57,830,000 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 2000, 1999 and 1998 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 6.30%,
5.51%, and 5.08% in 2000, 1999 and 1998, respectively; no dividend yield,
expected life of three years in 2000 and between two and five years in 1999 and
1998, and volatility of 0%. All options were granted at the then fair market
value.

17.  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.

18.  LOSS PER SHARE ("EPS")

     Basic and diluted EPS for 2000, 1999 and 1998 was calculated using
36,603,854, 35,193,208 and 31,067,059 weighted-average shares outstanding for
the years ended December 31, 2000, 1999 and 1998, 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.

19.  SUBSEQUENT EVENTS

     On April 11, 2001 OptiMark Holdings, Inc. borrowed $2,500,000 from a
stockholder in the form of a promissory note. The promissory note will
automatically convert into a new series of preferred stock if the stockholder,
in its discretion, elects to invest in that preferred stock. The note bears
interest at a rate of 10% per annum, matures on July 10, 2001, and is secured by
substantially all the assets of the Company.

     On March 28, 2001 the Company entered into an agreement with one of the
companies from which it had leased equipment settling all amounts owed by
OptiMark. The settlement provides for OptiMark to pay approximately $1,700,000
comprised of approximately $800,000 in forfeited deposits and over payments and
approximately $900,000 to be paid in four cash installments in 2001. The Company
also purchased a mainframe computer and related maintenance agreement from the
company, the price of which is included in the settlement payments (Note 14).

                                        44
<PAGE>   47

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

     Not applicable.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information regarding directors and officers required by Item 10 is
incorporated by reference from the Company's definitive proxy statement for its
annual stockholders' meeting to be held on May 21, 2001.

ITEM 11.  EXECUTIVE COMPENSATION

     The information required by Item 11 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on May 21, 2001.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by Item 12 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on May 21, 2001.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by Item 13 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on May 21, 2001.

                                    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. See
"Item 8, Financial Statements and Supplementary Data."

  2. Reports on Form 8-K

     None

  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:

<TABLE>
<CAPTION>
EXHIBIT
NO.                               DESCRIPTION
-------                           -----------
<S>       <C>
 2.1**    Agreement and Plan of Merger dated June 12, 2000
 3.1**    Certificate of Incorporation of OptiMark Holdings
 3.2**    By-Laws of OptiMark Holdings
 4.1*     Specimen Common Stock Certificate
 4.2*     Specimen Preferred Stock Certificate
 4.3*     Series A Stock Purchase Agreement dated August 27, 1996 by
          and among OptiMark and the parties named therein
</TABLE>

                                        45
<PAGE>   48

<TABLE>
<CAPTION>
EXHIBIT
NO.                               DESCRIPTION
-------                           -----------
<S>       <C>
 4.4*     Registration Rights Agreement dated August 27, 1996 by and
          among OptiMark and the parties names therein
 4.5*     Amendment to Stock Purchase Agreement and Registration
          Rights Agreement dated March 19, 1997 by and among OptiMark
          and the parties named therein
 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
 4.7*     Amendment to Series A Registration Rights Agreement dated
          January 1999 by and among OptiMark and the parties named
          therein
 4.8*     Series B Stock Purchase Agreement dated December 22, 1998 by
          and among OptiMark and the parties named therein
 4.9*     Registration Rights Agreement dated April 23, 1998 by and
          among OptiMark and the parties named therein
 4.10*    Series C Stock Purchase Agreement dated June 11, 1999 by and
          among OptiMark and the parties named therein
 4.11*    Registration Rights Agreement dated July 26, 1999 by and
          among OptiMark and the parties named therein
 4.12*    Series D Stock Purchase Agreement dated July 30, 1999 by and
          between OptiMark and BancBoston Capital Inc.
 4.13*    Registration Rights Agreement dated July 30, 1999 by and
          between OptiMark and BancBoston Capital Inc.
 4.14*    Registration Rights Agreement dated September 19, 1998 by
          and between OptiMark and The NASDAQ Stock Market, Inc.
 4.15*    Amended and Restated Stockholders Agreement dated April 23,
          1998 by and among OptiMark and the parties named therein
10.5(a)*  OptiMark 1999 Stock Plan (adopted November 29, 1999)
10.5(b)** Amendment No. 1 to the OptiMark 1999 Stock Plan
10.5(c)   Amendment No. 2 to the OptiMark 1999 Stock Plan
10.6*     OptiMark Stock Option Plan (Amended & Restated January 27,
          1999)
10.7*     Form of Stock Option Agreement (1999 Stock Plan)
10.8*     Form of Stock Option Agreement (Amended and Restated Stock
          Option Plan)
10.8(b)   Form of Amendment No. 1 to Stock Option Agreements
10.9*     Form of Non-Employee Director Option Agreement
10.10*    Employment Agreement dated November 1, 1998 by and between
          OptiMark and Phillip J. Riese
10.11*    Employment, Trade Secret and Non-Competition Agreement dated
          August 27, 1996 by and between OptiMark and William A.
          Lupien
10.12*    Employment, Trade Secret and Non-Competition Agreement dated
          August 27, 1996 by and between OptiMark and John T. Rickard
10.12(b)  Severance Agreement dated January 5, 2001 by and between
          John T. Rickard and OptiMark, Inc.
10.12(c)  Consulting Agreement dated January 15, 2001 by and among
          Orincon Industries, Inc., John T. Rickard and OptiMark, Inc.
10.14*    Restricted Stock Purchase Agreement dated December 1, 1998
          by and between OptiMark and Phillip J. Riese
10.15*    Stock Purchase Agreement dated December 18, 1998 by and
          between OptiMark and Phillip J. Riese
10.16*    Stock Option Agreement dated November 1, 1998 by and between
          OptiMark and Phillip J. Riese
10.17*    Stock Option Agreement dated November 1, 1998 by and between
          OptiMark and Phillip J. Riese
10.18+**  Services Agreement dated January 1, 1999 by and between
          OptiMark and ISM Information Systems Management Corporation
</TABLE>

                                        46
<PAGE>   49

<TABLE>
<CAPTION>
EXHIBIT
NO.                               DESCRIPTION
-------                           -----------
<S>       <C>
10.19+**  OptiMark/IBM Ops Agreement dated February 2, 1999 by and
          between OptiMark and the parties named therein
10.20+**  Agreement for Information Technology Services dated May 6,
          1999 by and between OptiMark and IBM Canada Limited
10.21*    License Termination Agreement dated March 19, 1999 by and
          between OptiMark and High Performance Markets, Ltd.
10.22*    Common Stock Purchase Warrant dated August 27, 1996 in favor
          of The Pacific Exchange, Inc.
10.23*    Common Stock Purchase Warrant dated December 31, 1996 in
          favor of The Chicago Board Options Exchange, Inc.
10.24*    Common Stock Purchase Warrant dated April 23, 1998 in favor
          of Virginia Surety Company, Inc.
10.25*    Common Stock Purchase Warrant dated June 19, 1998 in favor
          of Transamerica Business Credit Corporation
10.26*    Common Stock Purchase Warrant dated August 24, 1998 by and
          between OptiMark and Francis X. Egan
10.27*    NASDAQ Warrant Agreement dated September 1, 1998 by and
          between OptiMark and The NASDAQ Stock Market, Inc.
10.28*    Common Stock Purchase Warrant dated January 27, 1999 by and
          between OptiMark and BIOS Group LP
10.29*    Warrant Agreement dated October 27, 1999 by and between
          OptiMark and Knight/Trimark Group, Inc.
10.30+    Services and License Agreement dated October 2, 2000 between
          OptiMark Holdings, Inc. and The Nasdaq Stock Market, Inc.
10.31+    Development, Subcontract, and Operations Agreement dated May
          17, 1999 by and among OptiMark, Inc. and Japan OptiMark
          Systems, Inc., as amended
21.1**    Subsidiaries of OptiMark Holdings
23.1      Independent Auditors' Consent
</TABLE>

---------------
 * Previously filed as an exhibit to the Registrant's Registration Statement on
   Form 10 (No. 000-30527) and incorporated by reference thereto.

** Previously filed as an exhibit to the Registrant's Registration Statement on
   Form 10/A-1 (No. 000-30527) and incorporated by reference thereto.

 + Confidential treatment is 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.

                                        47
<PAGE>   50

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 5(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 authorised.

                                          OPTIMARK HOLDINGS, INC.

                                          By: /s/ PETER L. BLOOM
                                            ------------------------------------
                                            Name: Peter L. Bloom
                                            Title: Director

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

                                          By /s/ RICHARD W. JONES
                                            ------------------------------------
                                            Name: Richard W. Jones
                                            Title: Director

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

                                          By /s/ MORTON H. MEYERSON
                                            ------------------------------------
                                            Name: Morton H. Meyerson
                                            Title: Director

                                          By /s/ JOHN T. RICKARD
                                            ------------------------------------
                                            Name: John T. Rickard
                                            Title: Director

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

                                          By /s/ ROBERT J. WARSHAW
                                            ------------------------------------
                                            Name: Robert J. Warshaw
                                            Title: Chief Executive Officer &
                                            Director

Dated April 16, 2001