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

                                    FORM 10-Q

(Mark one)

|X|     QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE  SECURITIES
        EXCHANGE ACT OF 1934

        For the quarterly period ended June 30, 2002

                                       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 No. 0-21324

                                   NYFIX, INC.
             (Exact name of registrant as specified in its charter)

           NEW YORK                                     06-1344888
 (State of incorporation)                (I.R.S. Employer identification number)

                 333 LUDLOW STREET, STAMFORD, CONNECTICUT 06902
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (203) 425-8000

                             -----------------------

            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 |_|


30,767,147  shares of Common  Stock were issued and  outstanding  as of July 31,
2002.






NYFIX, INC.

FORM 10-Q
   For the quarterly period ended June 30, 2002


CONTENTS                                                                    PAGE

PART I.     FINANCIAL INFORMATION

   Item 1.    Financial Statements

              Consolidated Balance Sheets as of June 30, 2002
              (unaudited) and December 31, 2001                              3

              Consolidated Statements of Operations (unaudited)
              for the three and six month periods ended June 30,
              2002 and 2001                                                  4

              Condensed Consolidated Statements of Cash Flows (unaudited)
              for the six month periods ended June 30, 2002 and 2001         5

              Notes to Consolidated Financial Statements (unaudited)         6

   Item 2.    Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                     16

   Item 3.    Quantitative and Qualitative Disclosures About Market Risk    22

PART II. OTHER INFORMATION

   Item 4.    Submission of Matters to a Vote of Security Holders           23

   Item 6.    Exhibits and Reports on Form 8-K                              23


SIGNATURE                                                                   25

                                       2





                          NYFIX, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                                                                        June 30,      December 31,
                                                                                          2002           2001
                                                                                      ------------    ------------
ASSETS                                                                                (Unaudited)
CURRENT ASSETS:
    Cash and cash equivalents                                                      $   9,027,051    $   4,967,537
    Short-term investments in marketable securities                                   16,727,068       28,973,685
    Accounts receivable - less allowance of $1,027,000 and $511,000                   14,979,575       12,949,485
    Inventory, net                                                                     1,524,214        1,599,592
    Prepaid expenses and other current assets                                          5,377,242        2,138,912
    Due from NYFIX Millennium                                                               --          5,221,736
    Deferred income taxes                                                                402,000          443,000
                                                                                  --------------    -------------
                      Total Current Assets                                            48,037,150       56,293,947
PROPERTY AND EQUIPMENT, net                                                           19,142,167       14,366,097
INVESTMENT IN NYFIX MILLENNIUM                                                              --         27,500,000
NOTE RECEIVABLE FROM NYFIX MILLENNIUM                                                       --          6,043,151
GOODWILL AND OTHER ACQUIRED INTANGIBLES                                               84,865,208           34,000
INVESTMENT IN EUROLINK NETWORK                                                         3,860,683             --
DEFERRED INCOME TAXES                                                                    403,700          348,000
OTHER ASSETS                                                                           5,010,061        3,986,453
                                                                                  --------------    -------------
                      TOTAL ASSETS                                                 $ 161,318,969    $ 108,571,648
                                                                                  ==============    =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
    Accounts payable                                                               $   5,239,656    $   3,847,546
    Accrued expenses                                                                   4,270,559        3,530,427
    Current portion of capital lease obligations                                       1,261,835          952,176
    Current portion of other long-term liabilities                                       115,475             --
    Advance billings                                                                   3,202,768          451,195
                                                                                  --------------    -------------
                      Total Current Liabilities                                       14,090,293        8,781,344
LONG-TERM PORTION OF CAPITAL LEASE OBLIGATIONS                                         1,150,660          548,608
OTHER LONG-TERM LIABILITIES                                                              240,647             --
                                                                                  --------------    -------------
                      Total Liabilities                                               15,481,600        9,329,952
                                                                                  --------------    -------------
SHAREHOLDERS' EQUITY:
    Preferred stock - par value $1.00; 5,000,000 shares authorized; none issued             --               --
    Common stock - par value $.001; 60,000,000 authorized, 32,051,580 and
          28,869,800 shares issued                                                        32,052           28,870
    Additional paid-in capital                                                       159,950,888      110,497,679
    Retained earnings                                                                  5,620,961        8,442,406
    Due from officers and directors                                                     (678,791)        (591,732)
    Accumulated other comprehensive gain (loss)                                           12,111          (35,675)
    Treasury stock, at cost (1,301,300 shares)                                       (19,099,852)     (19,099,852)
                                                                                  --------------    -------------
                      Total Shareholders' Equity                                     145,837,369       99,241,696
                                                                                  --------------    -------------
                      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $ 161,318,969    $ 108,571,648
                                                                                  ==============    =============

        The accompanying notes to the consolidated financial statements
                    are an integral part of these statements.

                                       3





                          NYFIX, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

                                                        Three Month Period Ended       Six Month Period Ended
                                                        ------------------------       ----------------------
                                                         June 30,        June 30,      June 30,       June 30,
                                                          2002            2001           2002           2001
                                                          ----            ----           ----           ----
REVENUES:

Subscription                                         $  8,063,769    $  6,936,183    $ 15,241,044    $ 12,724,581

Sale                                                    1,294,647       1,456,427       2,603,469       3,161,650

Service contract                                        2,374,699       1,118,749       3,590,669       2,047,279

Transaction                                             1,352,978            --         1,721,444            --
                                                     ------------    ------------    ------------    ------------
      Total Revenues                                   13,086,093       9,511,359      23,156,626      17,933,510
                                                     ------------    ------------    ------------    ------------
COST OF REVENUES:

Cost of subscription                                    2,372,793       1,793,349       4,449,655       3,314,380

Cost of sale                                              606,996         208,172         829,246         375,680

Cost of service contract                                  870,461         254,434       1,063,769         506,311

Cost of transaction                                       501,375            --           751,272            --
                                                     ------------    ------------    ------------    ------------
      Total Cost of Revenues                            4,351,625       2,255,955       7,093,942       4,196,371
                                                     ------------    ------------    ------------    ------------
GROSS PROFIT                                            8,734,468       7,255,404      16,062,684      13,737,139
                                                     ------------    ------------    ------------    ------------
OPERATING EXPENSES:

Selling, general and administrative                    11,759,421       3,772,624      18,195,608       7,154,745

Research and development                                  317,460         108,088         496,253         186,406

Depreciation and amortization                           1,806,343         655,870       2,823,328       1,172,627
                                                     ------------    ------------    ------------    ------------
      Total Operating Expenses                         13,883,224       4,536,582      21,515,189       8,513,778
                                                     ------------    ------------    ------------    ------------
(LOSS) EARNINGS FROM OPERATIONS                        (5,148,756)      2,718,822      (5,452,505)      5,223,361

Interest expense                                          (56,017)       (108,870)       (143,062)       (219,965)

Investment income                                         115,638          62,954         197,589         111,200

Other expense                                            (107,376)         (5,133)       (139,439)        (14,456)
                                                     ------------    ------------    ------------    ------------

(LOSS) EARNINGS BEFORE INCOME TAX (BENEFIT)
   PROVISION AND MINORITY INTEREST                     (5,196,511)      2,667,773      (5,537,417)      5,100,140

INCOME TAX (BENEFIT) PROVISION                         (2,082,196)      1,065,778      (2,214,967)      2,034,603
                                                     ------------    ------------    ------------    ------------
(LOSS) EARNINGS BEFORE MINORITY INTEREST               (3,114,315)      1,601,995      (3,322,450)      3,065,537

MINORITY INTEREST IN NYFIX MILLENNIUM                     195,124            --           501,005            --
                                                     ------------    ------------    ------------    ------------
NET (LOSS) EARNINGS                                  $ (2,919,191)   $  1,601,995    $ (2,821,445)   $  3,065,537
                                                     ============    ============    ============    ============
BASIC (LOSS) EARNINGS PER COMMON SHARE               $      (0.10)   $       0.06    $      (0.10)   $       0.12
                                                     ============    ============    ============    ============
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING       30,720,029      25,869,171      29,318,268      25,682,770
                                                     ============    ============    ============    ============
DILUTED (LOSS) EARNINGS PER COMMON SHARE             $      (0.10)   $       0.06    $      (0.10)   $       0.11
                                                     ============    ============    ============    ============
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING     30,720,029      27,487,941      29,318,268      27,350,371
                                                     ============    ============    ============    ============

        The accompanying notes to the consolidated financial statements
                    are an integral part of these statements.

                                       4




                          NYFIX, INC. AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


                                                                                 Six Month Period Ended
                                                                            June 30, 2002    June 30, 2001
                                                                            -------------    -------------

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                          $    (13,026)   $  5,012,150
                                                                             ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of marketable securities                                         (9,730,642)    (20,000,000)
    Proceeds from sales of marketable securities                               25,793,034            --
    Capital expenditures                                                       (1,683,774)     (4,073,179)
    Proceeds from sale of equipment                                               372,825            --
    Payments for acquisition of Javelin Technologies, net of cash acquired     (9,987,112)           --
    Investment in EuroLink Network                                             (4,000,000)           --
    Cash acquired from NYFIX Millennium                                         3,205,831            --
    Repayment of advances to NYFIX Millennium prior to acquisition              2,139,605         125,128
    Payments for product enhancement costs and other assets                    (1,707,890)     (1,564,550)
                                                                             ------------    ------------
                      Net cash provided by (used in) investing activities       4,401,877     (25,512,601)
                                                                             ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Principal payments under capital lease obligations                           (532,312)       (407,026)
    Repayment of borrowings                                                          --          (500,000)
    Net proceeds from issuance of common stock                                    215,832      58,065,013
                                                                             ------------    ------------
                     Net cash (used in) provided by financing activities         (316,480)     57,157,987
                                                                             ------------    ------------
EFFECT OF FOREIGN CURRENCY TRANSLATION                                            (12,857)           --
                                                                             ------------    ------------
INCREASE IN CASH AND CASH EQUIVALENTS                                           4,059,514      36,657,536

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                  4,967,537       4,866,629
                                                                             ------------    ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                     $  9,027,051    $ 41,524,165
                                                                             ============    ============

        The accompanying notes to the consolidated financial statements
                    are an integral part of these statements.

                                       5




NYFIX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
------------------------------------------------------



1.          ORGANIZATION

            NYFIX,  Inc. is listed on the Nasdaq  Stock  Market under the symbol
            NYFX.

            References  herein to "we",  "our" and the "Company" refer to NYFIX,
            Inc. and consolidated  subsidiaries unless the context  specifically
            requires otherwise.


2.          BASIS OF PRESENTATION

            The  accompanying   unaudited   condensed   consolidated   financial
            statements   have  been  prepared  in  accordance   with  accounting
            principles  generally  accepted in the United  States of America for
            interim  financial  information  and with the  instructions  to Form
            10-Q. In the opinion of management, all adjustments,  which comprise
            normal  and  recurring  accruals  considered  necessary  for a  fair
            presentation,  have been  included.  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 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.  Operating  results for the six
            month period ended June 30, 2002 are not  necessarily  indicative of
            the results  that may be expected  for the year ending  December 31,
            2002. For further information,  refer to the consolidated  financial
            statements and footnotes  thereto  included in the Company's  annual
            report on Form 10-K for the year ended December 31, 2001.


3.          INVENTORY

            Inventory consists of parts,  finished goods and minor materials and
            is stated at the lower of cost, determined on an average cost basis,
            or market.

                                                   June 30,  December 31,
                                                    2002        2001
                                               ------------ -------------
                                               (unaudited)
            Parts and materials                $1,221,597   $1,120,329
            Work in process                        80,009      151,702
            Finished goods                        304,652      409,561
                                               ----------   ----------
                                                1,606,358    1,681,592
            Less: Allowance for obsolescence       82,144       82,000
                                               ----------   ----------
                                 Total         $1,524,214   $1,599,592
                                               ==========   ==========

                                       6




4.          PROPERTY AND EQUIPMENT, NET

            Property and equipment consists of the following:

                                                             June 30,     December 31,
                                                              2002           2001
                                                           -----------    ------------

                                                           (unaudited)
            Owned equipment:
            Computer software                               $ 3,626,085   $ 1,124,341
            Leasehold improvements                            1,911,111     1,312,417
            Furniture and equipment                           5,529,042     3,252,658
            Subscription and service bureau equipment        17,592,255    15,880,883
                                                            -----------   -----------
                Owned equipment - gross                      28,658,493    21,570,299
                                                            -----------   -----------
            Leased equipment:
            Furniture and equipment                             137,768          --
            Service bureau equipment under capital leases     2,968,684     2,546,842
                                                            -----------   -----------
                Leased equipment - gross                      3,106,452     2,546,842
                                                            -----------   -----------
            Total property and equipment - gross             31,764,945    24,117,141

            Less: Accumulated depreciation                   12,622,778     9,751,044
                                                            -----------   -----------
            Property and equipment, net                     $19,142,167   $14,366,097
                                                            ===========   ===========

5.          GOODWILL AND OTHER ACQUIRED INTANGIBLES

            Goodwill and other acquired intangibles at June 30, 2002 consists of
            the following:

                                                       June 30,
                                                        2002
                                                     -----------

                                                     (unaudited)

               NYFIX Millennium                      $30,005,963
               Javelin Technologies                   54,825,245
               NYFIX Transaction Services                 34,000
                                                     -----------
                                     Total           $84,865,208
                                                     ===========

            NYFIX Millennium:

            NYFIX Millennium,  L.L.C. ("NYFIX Millennium"), a broker-dealer,  is
            an Alternative Trading System which provides a real-time,  anonymous
            automated  matching  system for  equity  trading.  NYFIX  Millennium
            leverages the NYFIX  network's order routing share volume to provide
            a more efficient liquidity source for the financial community.

            In September  1999,  NYFIX  Millennium was formed by the Company and
            seven international investment banks and brokerage firms, consisting
            of Deutsche Bank, ABN Amro Securities (formerly ING Barings), Lehman

                                       7



            Brothers,  Morgan Stanley,  Alliance  Capital  (formerly  Sanford C.
            Bernstein & Co.),  Societe  Generale (SG Cowen) and UBS Warburg (the
            "Initial Partners").  Each partner,  including the Company, invested
            $2.0  million  in NYFIX  Millennium.  Each of the  Initial  Partners
            received 25,000 units of NYFIX Millennium, collectively owning a 50%
            membership interest in NYFIX Millennium, with the Company owning the
            remaining 50%. In addition,  the Company  purchased an option to buy
            from the Initial  Partners an additional 30% membership  interest in
            NYFIX Millennium (the "Option"),  for which the Company paid each of
            the Initial  Partners 281,250 shares of its common stock. The Option
            allowed  the Company to increase  its  membership  interest in NYFIX
            Millennium up to 80% of the total  membership  interest  through the
            exchange  of one  share of its  common  stock for each unit of NYFIX
            Millennium purchased, subject to certain adjustments.

            In March 2001, NYFIX Millennium added four more partners, consisting
            of  Bank of  America,  Wachovia  Securities  (formerly  First  Union
            Securities)  and LabMorgan  Corporation  (formerly J.P. Morgan & Co.
            and Chase H&Q) (the "New  Partners").  Pursuant  to the terms of the
            operating  agreement of NYFIX Millennium,  each New Partner invested
            $2.0 million in NYFIX  Millennium and received 25,000 units of NYFIX
            Millennium.  The Company  maintained its 50% membership  interest in
            NYFIX  Millennium in exchange for reducing  certain of its rights to
            share in future  dividend  distributions  of NYFIX  Millennium.  The
            Company issued 94,000 shares of its common stock to each New Partner
            in  return  for  the  same  Option  noted  above,   with   LabMorgan
            Corporation  (as the  successor to two partners)  receiving  188,000
            shares.

            In a letter dated January 23, 2002, the Company notified the Initial
            Partners  and New  Partners  that the  Company  was  exercising  the
            Option,  effective  February 1, 2002.  In exchange for the increased
            membership  interest  in  NYFIX  Millennium,  the  Company  paid the
            Initial  Partners and New Partners an aggregate of 296,250 shares of
            its common stock with a fair value of $4,506,000,  with each Initial
            Partner receiving 33,750 shares of common stock and each New Partner
            receiving  15,000 shares of common stock.  As a result,  the Company
            has an 80% membership interest in NYFIX Millennium.  The acquisition
            was accounted for as a purchase.  The results of operations of NYFIX
            Millennium  have  been  included  in  the  consolidated  results  of
            operations  since the date of  acquisition.  While it is anticipated
            that the  majority  of its  purchase  price  will be  classified  as
            goodwill,  the Company has not completed the final allocation of the
            purchase  price  to the  tangible  and  intangible  assets  of NYFIX
            Millennium.  Asset  valuations  will be performed by an  independent
            third-party  and are  expected to be  completed  by  year-end.  Upon
            completion  of the  valuation,  assets other than  goodwill  will be
            amortized over their respective useful lives.

            The Company's total investment in NYFIX Millennium of $27,500,000 at
            December 31, 2001, consists of $25,500,000 (1,968,750 shares in 1999
            of Company stock x $8.89 and 376,000  shares in March and April 2001
            of  company  stock x $21.28)  and a  capital  cash  contribution  of
            $2,000,000.  The Company had  temporarily  funded certain  operating
            costs and capital  expenditures on behalf of NYFIX Millennium.  Such
            advances  were  reflected  as  Due  from  NYFIX  Millennium  on  the
            Company's  consolidated  balance  sheet as of December 31, 2001.  In
            addition  the Company has loaned an aggregate  of  $9,000,000,  plus
            accrued  interest,  to NYFIX  Millennium,  of which  $3,000,000  was
            loaned  during  the  three  months  ended  June 30,  2002.  All such
            advances and loan have been eliminated in  consolidation  commencing
            on February 1, 2002.

            Pursuant to the NYFIX Millennium  Operating  Agreement,  as amended,
            the first $22,000,000 in losses since inception was allocated to the
            Initial Partners and New Partners, which equaled the extent of their
            capital  investment in NYFIX  Millennium.  Pursuant to the Operating
            Agreement,  the  Company  recognized  $1,762,000  in losses  for the
            period ended March 31, 2002, and an additional $238,000 in losses in
            the  period  ended  June  30,  2002,  equaling  the  Company's  cash
            investment of $2,000,000.  The Company also recognized an additional
            $1,500,000  in losses  during the period  ended June 30,  2002.  The
            Company expects NYFIX  Millennium to be profitable in the near term,
            at which time profits  will be allocated  76% to the Company and 24%

                                       8





            to the Initial  Partners and New Partners  pursuant to the Operating
            Agreement,  net of the Company's  recovering its  additional  losses
            recorded in excess of its $2,000,000 cash investment.

            Javelin Technologies:

            Javelin  Technologies,  Inc.  ("Javelin")  is a leading  supplier of
            electronic trade communication  technology and a leading provider of
            Financial  Information Exchange (FIX) technology.  Javelin solutions
            provide  universal   connectivity,   streamlining  of  workflow  and
            elimination  of  the  high  costs  and  risks  associated  with  the
            development    of    proprietary    network   links   and   protocol
            implementations.

            On March  31,  2002,  the  Company  acquired  the  capital  stock of
            Javelin.  The Company financed the transaction with a combination of
            (i)  $10,300,000 of cash,  (ii) 2,784,896  shares of common stock of
            the Company  having a fair value of  $41,189,000  and (iii)  493,636
            shares  of  common  stock  of the  Company  having  a fair  value of
            $3,459,000  reserved for  issuance  upon  exercise of Javelin  stock
            options assumed by the Company.  In addition,  the Company agreed to
            potentially pay additional consideration to the Javelin stockholders
            based on Javelin's  revenues for the year ending  December 31, 2002.
            The  acquisition  was  accounted  for  as a  purchase.  While  it is
            anticipated  that  the  majority  of  its  purchase  price  will  be
            classified  as  goodwill,  the Company has not  completed  the final
            allocation  of the purchase  price to the  tangible  and  intangible
            assets  of  Javelin.  Asset  valuations  will  be  performed  by  an
            independent   third-party  and  are  expected  to  be  completed  by
            year-end.  Upon  completion  of the  valuations,  assets  other than
            goodwill will be amortized over their  respective  useful lives. The
            results  of   operations  of  Javelin  have  been  included  in  the
            consolidated results of operations since the date of acquisition.

            NYFIX Transaction Services:

            In December 2001, the Company acquired an inactive broker-dealer for
            $34,000  and  filed  a  membership  application  with  the  National
            Association  of Securities  Dealers NASD,  which was approved in May
            2002,  to  operate  as a  broker/dealer  through  the  wholly  owned
            subsidiary,  which was  renamed  NYFIX  Transaction  Services,  Inc.
            ("NYFIX Transaction Services").  NYFIX Transaction Services provides
            execution and smart order routing  solutions,  primarily to domestic
            and international  broker-dealers and specialized trading firms. The
            acquisition  was  accounted  for as a  purchase  and the cost of the
            acquisition  has been  allocated  to goodwill.  The Company  started
            generating revenue from NYFIX Transaction  Services business on July
            1, 2002.

6.          INVESTMENT IN EUROLINK NETWORK

            On March 6, 2002, the Company  acquired a 40% ownership  interest in
            EuroLink Network, Inc. ("Eurolink"),  a privately held company based
            in Madrid,  Spain, which offers direct electronic access to the U.S.
            equity  markets  from Europe.  The Company  acquired its interest in
            return  for  granting   licensing   and   distribution   rights  and
            $4,000,000.  Under the terms of the  agreement,  EuroLink will offer
            the Company's  equity  terminals,  market access and services to the
            European  marketplace,  primarily on a  transaction  fee basis.  The
            terms of the  agreement  give the Company the option to increase its
            ownership  interest  in  EuroLink  to  80%  at  a  later  date.  The
            investment  in  EuroLink  is being  accounted  for under the  equity
            method.  During the three and six months  ended June 30,  2002,  the
            Company recorded losses of $107,000 and $139,000,  respectively,  on
            the  investment,   which  are  included  in  other  expense  on  the
            consolidated statement of operations.

7.          OTHER ASSETS

            Included in other assets are deferred product  enhancement  costs of
            $4,076,000  as of June 30, 2002 and  $3,411,000  as of December  31,
            2001, net of accumulated  amortization  of $6,082,000 as of June 30,
            2002 and  $5,038,000  as of December 31,  2001.  Included in cost of
            revenues is  amortization  expense of deferred  product  enhancement

                                       9





            costs of $570,000 and  $1,044,000 for the three and six months ended
            June 30, 2002, respectively, and $415,000 and $773,000 for the three
            and six months ended June 30, 2001, respectively.

            State and  Federal  income  tax  assets  from  prepayments  and from
            potential  operating loss carrybacks and carryforwards  amounting to
            $2,253,000 are included in Prepaid Expenses and Other Current Assets
            at June 30, 2002.

8.          ACCRUED EXPENSES

            Accrued expenses consists of the following:

                                                       June 30,     December 31,
                                                        2002           2001
                                                        ----           ----
                                                     (unaudited)

               Income taxes payable                  $     --        $  535,562
               Taxes, other than income taxes         1,895,924       1,728,856
               Commissions payable                      680,046         560,474
               Payroll-related accruals                 969,182         334,323
               Other current liabilities                725,407         371,212
                                                     ----------      ----------
                                     Total           $4,270,559      $3,530,427
                                                     ==========      ==========

9.          CAPITAL STOCK

            In connection with the acquisitions mentioned in Note 5, the Company
            issued  296,250  shares  of  common  stock to the  NYFIX  Millennium
            Initial  Partners and New Partners on February 1, 2002,  with a fair
            value of $4,506,000, and 2,784,896 shares of common stock to Javelin
            stockholders on March 31, 2002, with a fair value of $41,189,000.

10.         PER SHARE INFORMATION

            The Company's  basic (loss) earnings per share ("EPS") is calculated
            based on net (loss) earnings  available to common  shareholders  and
            the  weighted-average   number  of  shares  outstanding  during  the
            reported  period.  Diluted EPS  includes  additional  dilution  from
            common stock  equivalents,  such as stock  issuable  pursuant to the
            exercise of stock options and warrants.  Stock options were excluded
            from the (loss) earnings per share calculation for the three and six
            month  periods  ended  June 30,  2002,  since the  amounts  would be
            anti-dilutive.

                                       10





                                                  Three Month                     Six Month
                                                 Period Ended                    Period Ended
                                           ---------------------------  -----------------------------
                                             June 30,      June 30,        June 30,          June 30,
                                               2002          2001            2002             2001
                                           ---------------------------  -----------------------------

Net (loss) earnings                        $(2,919,191)   $  1,601,995   $ (2,821,445)   $  3,065,537
                                           ============   ============   ============    ============

Basic weighted average shares
  outstanding                               30,720,029      25,869,171     29,318,268      25,682,770
                                           ============   ============   ============    ============

Basic (loss) earnings per common share     $     (0.10)   $       0.06   $      (0.10)   $       0.12
                                           ============   ============   ============    ============

Basic weighted average shares
  outstanding                               30,720,029      25,869,171     29,318,268      25,682,770
     Dilutive options                             --         1,586,377           --         1,635,042
     Dilutive warrants                            --            32,393           --            32,559
                                           ------------   ------------   ------------    ------------
Diluted weighted average shares
  outstanding                               30,720,029      27,487,941     29,318,268      27,350,371
                                           ============   ============   ============    ============

Diluted (loss) earnings per common share   $     (0.10)   $       0.06   $      (0.10)   $       0.11
                                           ============   ============   ============    ============


11.         IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

            In June 2001, the FASB issued two new  pronouncements:  SFAS No. 141
            ("SFAS  141"),  "Business  Combinations,"  and SFAS No.  142  ("SFAS
            142"),  "Goodwill and Other  Intangible  Assets." SFAS 141 prohibits
            the use of the pooling-of-interest  method for business combinations
            initiated  after June 30,  2001,  and also  applies to all  business
            combinations accounted for by the purchase method that are completed
            after June 30, 2001. There are also transition provisions that apply
            to business  combinations  completed  before July 1, 2001, that were
            accounted  for by the purchase  method.  SFAS 142 is  effective  for
            fiscal years  beginning after December 15, 2001, to all goodwill and
            other intangible  assets  recognized in an entity's balance sheet at
            that  date,   regardless  of  when  those  assets  were   originally
            recognized.  SFAS 142 requires that goodwill and certain intangibles
            with  an  indefinite  life  not  be  amortized,  but  subject  to an
            impairment test on an annual basis. The Company has adopted SFAS 141
            and SFAS 142. The Company has recorded  goodwill on its consolidated
            financial  statements as a result of acquisitions  made in the first
            quarter of 2002,  but has not completed the final  allocation of the
            purchase  price  to the  tangible  and  intangible  assets  of NYFIX
            Millennium  or  Javelin  Technologies.  Asset  valuations  for  both
            acquisitions will be performed by independent  third-parties and are
            expected to be completed by year-end.  Until those asset  valuations
            are completed,  the impact of SFAS 142 on the Company's consolidated
            financial statements will not be known.

            In  October  2001,  the FASB  issued  SFAS  No.  144  ("SFAS  144"),
            "Accounting   for  the  Impairment  of  Long-Lived   Assets,"  which
            supercedes SFAS No. 121 ("SFAS 121"), "Accounting for the Impairment
            of Long-Lived  Assets and for Long-Lived  Assets to be Disposed of,"
            and  the  accounting  and  reporting   provisions  of  APB  No.  30,
            "Reporting  the  Results of  Operation  -  Reporting  the Effects of
            Disposal of a Segment of a Business, and Extraordinary,  Unusual and
            Infrequently Occurring Events and Transactions," for the disposal of
            a segment of a business.  SFAS 144 retains many of the provisions of
            SFAS 121, but addresses  certain  implementation  issues  associated
            with  that  Statement.  SFAS  144  is  effective  for  fiscal  years
            beginning  after  December  15, 2001.  The Company  adopted SFAS 144
            effective  January 1, 2002. The adoption of SFAS 144 did not have an
            impact on the financial  position,  results of  operations,  or cash
            flows of the Company.

                                       11





            In  April  2002,   the  FASB  issued  SFAS  No.  145  ("SFAS  145"),
            "Rescission of FASB  Statements No. 4, 44 and 64,  Amendment of FASB
            Statement No. 13, and Technical  Corrections."  SFAS 145  eliminates
            extraordinary  accounting  treatment for  reporting  gain or loss on
            debt  extinguishment,   and  amends  other  existing   authoritative
            pronouncements to make various technical corrections. The provisions
            of SFAS 145 are  effective  for the Company on January 1, 2003.  The
            adoption  of SFAS  145 is not  expected  to have  an  impact  on the
            financial  position,  results  of  operations,  or cash flows of the
            Company.

            In July 2002, the FASB issued SFAS No. 146 ("SFAS 146"), "Accounting
            for Exit or Disposal  Activities." SFAS 146 requires recording costs
            associated  with exit or  disposal  activities  at their fair values
            when a liability has been incurred. Under previous guidance, certain
            exit costs were  accrued  upon  management's  commitment  to an exit
            plan.  The provisions of SFAS 146 are effective for exit or disposal
            activities  initiated  after  December 31, 2002. The Company has not
            yet completed  its  evaluation of the impact of adopting SFAS 146 on
            its financial position or results of operations.


12.         BUSINESS SEGMENT INFORMATION

            Prior to 2002, the Company  operated in a single industry segment as
            a provider of electronic trading  infrastructure and technologies to
            the  professional  trading  segment of the brokerage  community.  In
            2002,  the  Company  increased  its  ownership   interest  in  NYFIX
            Millennium from 50% to 80%, and filed a membership  application with
            the  NASD,  which  was  approved  in  May  2002,  to  operate  as  a
            broker/dealer through NYFIX Transaction Services.

            As a result of these  acquisitions,  the Company  now  operates as a
            financial  services  technology  company in two  industry  segments,
            Technology Services and Transaction Services.

            The Technology Services segment provides desktop solutions, wireless
            exchange   floor   systems,   electronic   automation   systems  and
            straight-through  processing to the professional  trading segment of
            the brokerage community.

            The  Transaction  Services  segment  provides  an  electronic  order
            routing and matching  environment.  This segment provides  anonymous
            order   matching  and  execution   services  to  both  our  existing
            technology  customers and web based desktop users. This segment also
            will provide execution and smart order routing solutions,  primarily
            to domestic and international broker-dealers and specialized trading
            firms, commencing on July 1, 2002.

                                       12





      Summarized  financial  information  by  business  segment as  follows  (in
000's):

                                  Three Month Period Ended     Six Month Period Ended
                                 ------------------------------------------------------
                                   June 30,       June 30,       June 30,     June 30,
                                     2002           2001           2002         2001
                                 ------------------------------------------------------

Revenues:
   Technology Services             $11,733        $ 9,512        $21,435        $17,934
   Transaction Services              1,353           --            1,722           --
                                   ----------------------        ----------------------
Total revenues                     $13,086        $ 9,512        $23,157        $17,934
                                   ======================        ======================

Gross Profit:
   Technology Services             $ 7,883        $ 7,255        $15,093        $13,737
   Transaction Services                852           --              970           --
                                   ----------------------        ----------------------
Total gross profit                 $ 8,735        $ 7,255        $16,063        $13,737
                                   ======================        ======================

13.         OTHER COMPREHENSIVE INCOME (LOSS)

      The components of other  comprehensive  income (loss), net of tax, were as
follows:

                                              Three Month Period Ended    Six Month Period Ended
                                          --------------------------------------------------------
                                            June 30,       June 30,       June 30,       June 30,
                                             2002           2001           2002           2001
                                          --------------------------------------------------------

Net (loss) earnings                       $(2,919,191)   $ 1,601,995    $(2,821,445)   $ 3,065,537
Change in net unrealized gain on
    available-for-sale securities              24,968           --           60,643           --
Foreign currency translation adjustment       (12,857)          --          (12,857)          --
                                          -----------    -----------    -----------    -----------
Total comprehensive (loss) income         $(2,907,080)   $ 1,601,995    $(2,773,659)   $ 3,065,537
                                          ===========    ===========    ===========    ===========


      The components of accumulated other comprehensive gain (loss), net of tax,
were as follows:

                                                    June 30,   December 31,
                                                     2002          2001
                                                  -------------------------

Accumulated net unrealized gain (loss) on
   available-for-sale securities                    $ 24,968    $(35,675)
Foreign currency translation adjustment              (12,857)       --
                                                    --------    --------
Total accumulated other comprehensive gain (loss)   $ 12,111    $(35,675)
                                                    ========    ========

                                       13





14.          CASH FLOW SUPPLEMENTAL INFORMATION

                                                             Six Month Period Ended
                                                          June 30, 2002  June 30, 2001
                                                          ----------------------------
Supplemental disclosures of cash flow information:
Cash paid during the period for interest                   $   142,948   $   183,571
Cash paid during the period for income taxes                 1,558,046       155,405

Supplemental schedule of noncash investing and financing
  information:
Capital lease obligations incurred                         $ 1,278,107   $   523,950

NYFIX Millennium:
Fair value of assets acquired, net of cash acquired        $39,144,071          --
Fair value of liabilities assumed                           10,343,939          --
Common stock issued for acquisition                          4,505,963   $ 8,000,000

Javelin:
Fair value of assets acquired, net of cash acquired        $60,513,494          --
Fair value of liabilities assumed                            5,778,845          --
Common stock issued for acquisition                         41,188,612          --
Stock options assumed                                        3,458,925          --


15.         PRO FORMA SUPPLEMENTAL INFORMATION

            Following are the summarized unaudited pro forma combined results of
            operations  for the three and six  months  ended  June 30,  2002 and
            2001,  assuming the acquisitions of NYFIX Millennium and Javelin had
            taken place at the  beginning of each of those fiscal  periods,  and
            giving  effect to the  addition of the New  Partners  and the Option
            exercise as of January 1, 2001.  The  unaudited  pro forma  combined
            results of operations  for both periods were prepared based upon the
            consolidated  statements of operations of NYFIX,  the  statements of
            operations  of NYFIX  Millennium  and the  consolidated  results  of
            operations of Javelin for the respective periods.  The unaudited pro
            forma combined results of operations  presented below do not reflect
            future   events  that  may  occur  after  the  Option   exercise  or
            acquisition.  As  a  result  of  these  assumptions,  estimates  and
            uncertainties, the accompanying unaudited pro forma combined results
            of  operations  does not  purport to describe  the actual  financial
            condition or results of operations that would have been achieved had
            the Option  exercise  or  acquisition  in fact  occurred on the date
            indicated,  nor does it purport to predict NYFIX's future results of
            operations.

                                       14





     Summarized  unaudited  pro forma  combined  results  of  operations  are as
follows (in 000's):

                                                 Three Month               Six Month
                                                Period Ended              Period Ended
                                           ----------------------------------------------------
                                           June 30,    June 30,      June 30,      June 30,
                                             2002        2001          2002         2001
                                           ----------------------------------------------------

Net revenues                               $13,086    $      11,069    $  26,918     $   22,783
                                           =========================  =========================

Net (loss) earnings                        $(2,919)   $        (101)   $  (4,029)    $      524
                                           =========================  =========================

Basic (loss) earnings per common share     $ (0.10)   $       (0.00)   $   (0.13)    $     0.02
                                           =========================  =========================

Diluted (loss) earnings per common share   $ (0.10)   $       (0.00)   $   (0.13)    $     0.02
                                           =========================  =========================

                                       15





ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Critical Accounting Policies and Estimates

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations discusses the Company's consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements 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. On an on-going basis, management evaluates
its  estimates and  judgments,  including  those related to accounts  receivable
reserves,   investments,   long-lived  assets,   revenue  recognition,   product
enhancement  costs,  income  taxes  and  contingencies.   Management  bases  its
estimates and judgments on  historical  experience  and on various other factors
that are believed to be reasonable under the circumstances, the results of which
form the basis for  making  judgments  about the  carrying  values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.

Effective  February 1, 2002,  NYFIX  Millennium is included in the  consolidated
financial statements of the Company.  Pursuant to the NYFIX Millennium Operating
Agreement, the first $22,000,000 of losses was allocated to the Initial Partners
and New Partners of NYFIX Millennium,  which equaled the extent of their capital
investment in NYFIX Millennium. Effective March 31, 2002, Javelin is included in
the consolidated financial statements of the Company.

For a list of the critical accounting policies that Management  believes,  among
others,  affect  its  more  significant  judgments  and  estimates  used  in the
preparation of its  consolidated  financial  statements,  refer to  Management's
Discussion and Analysis in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001.

Overview

The  Company's  revenues  comprise  subscription,  sale,  service  contract  and
transaction  revenue.  At this time,  subscription  fees represent a majority of
total  revenues.  Subscription  revenue  contracts are primarily  with brokerage
firms,  international  banks and global exchanges  trading in equities,  and are
generally  for an  initial  period of one to three  years with one to three year
renewal periods.  Subscription revenues are recognized ratably over the lives of
the  subscription  agreements  with  customers  and begin once  installation  is
complete.  Sale  revenue,  which is comprised of software and capital  equipment
sales, is generated primarily by sales to customers in the futures,  options and
currencies  trading  market,  and is recognized upon shipment of the product and
acceptance by the customer. Service contract revenue is comprised of maintenance
contracts for software and capital  equipment sales and  subscription  equipment
and is recognized ratably over the period that the service is provided.  Service
contract  revenue on  subscription  contracts is charged to customers as a fixed
percentage of such  contracts.  Transaction  revenue  consists of per-share fees
charged to  customers  who route orders  through the  Company's  order  matching
system.

Cost of revenues  principally  consists of communication  lines for subscription
and transaction services,  amortization of capitalized product enhancement costs
and depreciation of subscription-based equipment, labor, materials and overhead,
execution and clearing fees.

Selling,  general and  administrative  expenses  account for the majority of the
Company's  operating  expenses  and consist of salaries and  benefits,  rent and
office  expenses,  non-customer  specific  communication  fees,  provisions  for
doubtful  accounts and marketing  expenses.  During the past several years,  the
Company has expanded its efforts to support an increasing number of services and
to increase the number of exchanges, brokerage firms and "buy-side" institutions
connecting  to  the  NYFIX  Network.  Management  believes  that  its  continued

                                       16





investment  in  the   development   of  the  NYFIX  system  and  its  associated
applications  and  services  has  increased  order  flow,  which in turn  should
facilitate both revenue growth and further distribution of its products.

Research  and  development  expenses  relate  to  developing  new  products  and
technologies  to meet the current and future needs of the  Company's  customers.
These costs  consist  primarily of salaries and related  costs for technical and
programming personnel.

Depreciation and amortization  expense consists of depreciation and amortization
of equipment and software used to operate the Company's systems.

The following  discussion and analysis  should be read in  conjunction  with the
consolidated financial statements and notes thereto.  Historical results are not
necessarily indicative of the operating results for any future period.

Results of Operations

Three and Six Months Ended June 30, 2002 Compared to Three and Six Months Ended
June 30, 2001

Revenues
Subscription revenue increased 16% and 20% to $8,064,000 and $15,241,000 for the
three and six months ended June 30, 2002,  from  $6,936,000 and  $12,725,000 for
the same periods in 2001,  principally  due to increased  demand among  existing
customers, and also the addition of new customers and new product offerings sold
to existing and new customers.  As a percentage of total revenues,  subscription
revenue decreased to 62% and 66% in the three and six months ended June 30, 2002
from 73% and 71% in the same  periods in 2001,  due in part to the effect on the
percentage calculations of the addition of transaction revenue in 2002.

Sale revenue  decreased 11% and 18% to $1,295,000  and  $2,603,000 for the three
and six months ended June 30, 2002,  from $1,456,000 and $3,162,000 for the same
periods in 2001. The decrease in sales revenue is  principally  due to customers
deferring  purchases  to future  periods,  offset in part by  licensing  fees of
Javelin's  FIX  technology.  As a percentage  of total  revenue,  sales  revenue
decreased to 10% and 11% in the three and six months  ended June 30, 2002,  from
15% and 18% in the  same  periods  in  2001,  due in part to the  effect  on the
percentage calculations of the addition of transaction revenue in 2002.

Service contract revenue increased 112% and 75% to $2,375,000 and $3,591,000 for
the three and six months ended June 30, 2002,  from $1,119,000 and $2,047,000 in
the same  periods  in 2001,  principally  due to  service  contract  revenue  on
Javelin's FIX technology  and to a lesser extent by an increase in  subscription
contract  revenue.  As a percentage of total revenue,  service  contract revenue
comprised  18% and 16% of total  revenue in the three and six months  ended June
30, 2002,  as compared to 12% and 11% for the same periods in 2001,  due in part
to the effect on the  percentage  calculations  of the  addition of  transaction
revenue in 2002.

Transaction  revenue amounted to $1,353,000 and $1,721,000 for the three and six
months ended June 30, 2002,  and  represented  10% and 7% of total  revenues for
those  respective   periods.   Transaction  revenue  is  attributable  to  NYFIX
Millennium,  our broker / dealer, whose results are included in the consolidated
financial statements since February 1, 2002.

Cost of Revenues and Gross Profit
Gross profit as a percentage of total revenues  decreased to 67% and 69% for the
three and six months ended June 30,  2002,  from 76% and 77% in the same periods
in 2001. On a dollar basis,  gross profit improved for subscriptions and service
contracts,  which was  offset  somewhat  by  higher  costs  attributable  to the
Company's  continued  investment in its  infrastructure  and a decline in higher
margined  OBMS sales due to delays in  customer  order  placement.  The  Company
experienced  increased  communication  charges  relating  to  increased  desktop
connections,  higher labor costs due to  increased  service  contract  revenues,
higher amortization  expense of product enhancement costs and cost increases due

                                       17





to the Javelin  acquisition,  which were offset  somewhat by cost  reduction and
containment programs introduced late in the current year's quarter.  Included in
cost of  revenues  was  amortization  expense  of product  enhancement  costs of
$570,000 and  $1,044,000  for the three and six months ended June 30, 2002,  and
$415,000 and $773,000 for the same periods in 2001, respectively.  Also included
in cost of revenues was depreciation expense for subscription-based equipment of
$539,000 and  $1,065,000  for the three and six months ended June 30, 2002,  and
$516,000 and $969,000  for the same periods in 2001,  respectively.  The Company
obtains its  materials  and  supplies  from a variety of vendors in the U.S. and
Asia and did not experience  any  significant  price  increases in its component
parts purchased during 2002.

Selling, General and Administrative
Selling,  general  and  administrative  expenses  increased  212%  and  154%  to
$11,759,000  and  $18,196,000  for the three and six months ended June 30, 2002,
from $3,773,000 and $7,155,000 for the same periods in 2001,  respectively,  and
increased for the six month period as a percentage  of total  revenues to 79% in
2002 from 40% in 2001. This increase in the current year includes cost increases
attributable to the acquisitions of NYFIX  Millennium and Javelin,  and start-up
costs related to NYFIX Transaction  Services.  The increase  reflects  increased
salaries and commissions,  related  personnel costs,  rent expense,  data center
expenses and various office  expenses due to an increase in personnel to support
the  Company's  growth and the  Company's  acquisitions.  Also  increasing  were
non-recoverable  communication  fees,  and  software  and  computer  support and
maintenance  contract  fees due to the  continued  investment  in the  Company's
infrastructure.

Research and Development
Research  and  development  expenses  increased to $317,000 and $496,000 for the
three and six months  ended June 30,  2002,  from  $108,000 and $186,000 for the
same  periods  in  2001,  primarily  as a result  of the  Company's  efforts  in
developing new product lines.

Depreciation and Amortization
Depreciation and amortization expenses increased 175% and 141% to $1,806,000 and
$2,823,000  for the three and six months ended June 30, 2002,  from $656,000 and
$1,173,000 for the same periods in 2001. Included in this increase is additional
depreciation  expense  related  to the  acquisitions  of  NYFIX  Millennium  and
Javelin.  The  increase,  exclusive of those costs from  acquisitions,  reflects
principally  the  continued  investment  in  the  Company's  infrastructure,  in
addition to  administrative  support  equipment  and leasehold  improvements  to
support the Company's growth.

Interest Expense
Interest expense decreased 49% and 35% to $56,000 and $143,000 for the three and
six months ended June 30, 2002,  from $109,000 and $220,000 for the same periods
in  2001,  principally  as a result  of  decreased  interest  on  capital  lease
obligations of $25,000 and a $103,000  decrease in other interest expense due to
the payoff of the  Company's  line of credit  during July 2001,  offset by other
interest expense of $51,000.

Investment Income
Investment  income  increased 84% and 78% to $116,000 and $198,000 for the three
and six months  ended June 30,  2002,  from  $63,000 and  $111,000  for the same
periods in 2001,  principally  due to interest and dividends  earned on a higher
balance of cash  equivalents  and  marketable  securities in 2002 as compared to
2001. The higher balance of cash equivalents and marketable securities is due to
the proceeds received from the Company's follow-on public offering in June 2001.

Income Tax (Benefit) Provision
The Company recorded tax benefits of $2,082,000 and $2,215,000 for the three and
six months  ended June 30,  2002,  compared to  provisions  for income  taxes of
$1,066,000  and  $2,035,000  for the same periods in 2001.  The tax benefits are
attributable to the Company's pretax losses in 2002. The Company's effective tax
benefit rate of 40% in the current period exceeds the Federal  statutory benefit
rate primarily due to state income taxes.

                                       18





Liquidity and Capital Resources

In June 2001, the Company raised $57,284,000 from a follow-on public offering of
3,000,000  shares of its common  stock,  net of  expenses.  The  Company  used a
portion of the net  proceeds  for working  capital,  to  purchase  shares of its
common stock and for other general corporate purposes. The Company has also used
a portion of the net  proceeds  for  acquisitions  of  businesses,  products and
technologies or the  establishment  of joint ventures that are  complementary to
our business.  At June 30, 2002, the cash and cash equivalents balance increased
to $9,027,000  from $4,968,000 at December 31, 2001 primarily as a result of the
sale of  marketable  securities,  cash acquired  from the  acquisition  of NYFIX
Millennium, repayment of advances to NYFIX Millennium and proceeds from the sale
of equipment,  offset by payments for the  acquisition  of Javelin  Technologies
(net of cash  acquired),  purchases  of  marketable  securities,  investment  in
EuroLink  Network,  capital  expenditures,  the  acquisition  of other assets to
support  the  Company's   infrastructure  and  repayments  under  capital  lease
obligations.

On March 6, 2002,  the  Company  acquired a 40%  ownership  interest in EuroLink
Network,  Inc.  ("EuroLink"),  a privately held company based in Madrid,  Spain,
which offers direct  electronic  access to the U.S.  equity markets from Europe.
The  Company  acquired  its  interest  in  return  for  granting  licensing  and
distribution rights and $4,000,000.  Under the terms of the agreement,  EuroLink
will offer the  Company's  equity  terminals,  market access and services to the
European  marketplace,  primarily on a transaction  fee basis.  The terms of the
agreement  give the  Company the option to increase  its  ownership  interest in
EuroLink to 80% at a later date.  This  investment  is  accounted  for under the
equity  method and the Company  recorded a loss of  $139,000 on this  investment
during the six months ended June 30, 2002.

On March 31, 2002, the Company acquired Javelin Technologies,  Inc. ("Javelin").
Javelin,  widely  known as one of the  pioneers  in FIX  (Financial  Information
exchange  Protocol)  technology,  has over 1,000  installations at more than 300
leading buy and sell-side  institutions,  exchanges and ECNs,  including over 50
clients in Europe and 20 in Asia. Javelin possesses the leading  market-share in
the  buy-side   institutional  market  for  electronic  order  routing  enabling
technology.   The  Company  financed  the  transaction  with  a  combination  of
$10,300,000  in cash and the  issuance  and reserve of common  stock with a fair
value of  approximately  $44,648,000.  The cash  portion  was  financed  through
available  funds. In addition,  the Company agreed to potentially pay additional
consideration to the Javelin  stockholders  based on Javelin's  revenues for the
year ending December 31, 2002.

Some of the Company's key considerations for the acquisition of Javelin include:
increased  connectivity  to  the  buy-side  institutional  market;  consolidated
product offering; cross-selling of core products and transaction services; and a
single  point of  electronic  exchange  access  across  all major  domestic  and
international  equity  and  derivatives  exchanges.  The plan is to embed  NYFIX
Millennium capabilities in Javelin products,  which should reduce implementation
time of the NYFIX Millennium ATS throughout the financial industry.

As a  result  of the  Company's  acquisition  of an  inactive  broker-dealer  in
December 2001,  renamed NYFIX  Transaction  Services,  Inc., the exercise of the
Option on NYFIX  Millennium  in February  2002 and the  agreement  with EuroLink
noted above,  the Company  began to record  transaction  revenue in 2002.  NYFIX
Transaction  Services  moved  into  full  operational  status  on July 1,  2002,
following  NASD  approval  of its  membership  application  late  in the  second
quarter.

At June 30, 2002,  the Company had invested  $16,727,000  in current  marketable
security  instruments,  having  interest  rates  ranging  from  1.25% to  4.24%,
$334,000 in a tax-free  money fund with an average yield of 0.91% and $3,742,000
in money market funds with a 30 day yield of 1.57%.

At June 30, 2002,  the Company had total debt of  $2,412,000,  which  represents
amounts  outstanding  under capital  lease  obligations.  At June 30, 2002,  the
Company  had no  material  commitments  for capital  expenditures  or  inventory
purchases.

                                       19





The Company believes it has sufficient liquidity,  including cash generated from
operations and issuances of common stock, to support its cash needs for at least
the next twelve months.

The following summarizes the Company's contractual obligations at June 30, 2002,
and the effect such  obligations  are expected to have on its liquidity and cash
flows in future periods (in 000's):

                                           Payments Due In
                                 ------------------------------------------
                                                                      After
                                   2002    2003     2004    2005       2005
                                   ----    ----     ----    ----       ----

          Capital leases         $  740   $2,270   $  551   $  136   $ --
           Non-cancelable
              operating leases    1,588    2,885    2,721    1,762    2,994
                                 ------   ------   ------   ------   ------
          Total obligations      $2,328   $5,155   $3,272   $1,898   $2,994
                                 ======   ======   ======   ======   ======

Working Capital
At June 30, 2002 and  December  31,  2001,  the  Company had working  capital of
$33,947,000  and  $47,513,000,   respectively.  The  Company's  present  capital
resources include proceeds from internal operations and from issuances of common
stock.  The decrease in working  capital was  principally due to the decrease in
cash and investments  used for the acquisition of Javelin  Technologies  and for
the investment in EuroLink Network.

Cash Provided by Operating Activities
During  the six months  ended June 30,  2002,  net cash used in  operations  was
$13,000 as compared to net cash provided by operations  for the six months ended
June 30, 2001 of  $5,012,000.  The  decrease is  primarily  due to the change in
earnings to a net loss of  $2,821,000 in 2002 from net earnings of $3,066,000 in
2001.  The  decrease is also due to an increase  in prepaid  expenses  and other
current  assets of  $2,723,000,  and a decrease in accounts  payable and accrued
expenses  of  $1,134,000,  offset  by  a  decrease  in  accounts  receivable  of
$1,377,000,  net of an  increase  in the  allowance  for  doubtful  accounts  of
$517,000. All increases and decreases are net of assets and liabilities acquired
from  Javelin  Technologies  and  NYFIX  Millennium  as of  the  date  of  their
respective  acquisitions.  The increase in prepaid  expenses  and other  current
assets is  principally  due to state and federal tax refunds due the Company and
tax benefits  attributable to the pre-tax loss. The decrease in accounts payable
and accrued expenses is primarily due to payments made to vendors during the six
months ended June 30, 2002. The decrease in accounts receivable is primarily due
to improved  collections  and amounts  written  off  against the  allowance  for
doubtful accounts.

Cash Used in Investing Activities
During the six months  ended  June 30,  2002,  net cash  provided  by  investing
activities  was  $4,402,000  as  compared  to  $25,513,000  of net cash  used in
investing  activities  for the six months ended June 30,  2001.  The increase is
primarily due to proceeds from the sale of marketable securities of $25,793,000,
cash acquired from NYFIX  Millennium  of  $3,206,000,  repayments of advances to
NYFIX  Millennium  prior to acquisition of $2,140,000 and proceeds from the sale
of  equipment of $373,000,  offset by payments  for the  acquisition  of Javelin
Technologies  (net of cash acquired) of $9,987,000,  payments for the investment
in  EuroLink  Network of  $4,000,000,  purchases  of  marketable  securities  of
$9,731,000,   capital  expenditures  of  $1,684,000  and  payments  for  product
enhancements and other assets of $1,708,000.

Cash Provided By Financing Activities
During the six months ended June 31, 2002, net cash used in financing activities
was  $316,000,  compared  to  net  cash  provided  by  financing  activities  of
$57,158,000 in the six months ended June 30, 2001, when the Company  concluded a
secondary  offering of common stock.  During the six months ended June 30, 2002,
principal  repayment under capital lease  obligations of $532,000 were partially
offset by proceeds of $216,000 from the exercise of stock options.

                                       20





Seasonality

The Company  believes  that its  operations  are not  significantly  effected by
seasonality.

Impact of Recently Issued Accounting Pronouncements

In June 2001, the FASB issued two new pronouncements: SFAS No. 141 ("SFAS 141"),
"Business  Combinations,"  and SFAS No. 142 ("SFAS  142"),  "Goodwill  and Other
Intangible Assets." SFAS 141 prohibits the use of the pooling-of-interest method
for business combinations initiated after June 30, 2001, and also applies to all
business  combinations  accounted for by the purchase  method that are completed
after June 30, 2001. There are also transition provisions that apply to business
combinations  completed  before  July 1, 2001,  that were  accounted  for by the
purchase method. SFAS 142 is effective for fiscal years beginning after December
15, 2001, to all goodwill and other intangible  assets recognized in an entity's
balance  sheet at that date,  regardless  of when those  assets were  originally
recognized.  SFAS 142 requires  that  goodwill and certain  intangibles  with an
indefinite life not be amortized, but subject to an impairment test on an annual
basis.  The Company has adopted  SFAS 141 and SFAS 142. The Company has recorded
goodwill on its  consolidated  financial  statements as a result of acquisitions
made in the first quarter of 2002, but has not completed the final allocation of
the purchase price to the tangible and intangible  assets of NYFIX Millennium or
Javelin  Technologies.  Asset valuations for both acquisitions will be performed
by independent third-parties and are expected to be completed by year-end. Until
those asset  valuations are  completed,  the impact of SFAS 142 on the Company's
consolidated financial statements will not be known.

In October 2001, the FASB issued SFAS No. 144 ("SFAS 144"),  "Accounting for the
Impairment of Long-Lived  Assets," which  supercedes  SFAS No. 121 ("SFAS 121"),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed  of," and the  accounting  and  reporting  provisions of APB No. 30,
"Reporting  the Results of  Operation  - Reporting  the Effects of Disposal of a
Segment of a Business,  and  Extraordinary,  Unusual and Infrequently  Occurring
Events and Transactions," for the disposal of a segment of a business.  SFAS 144
retains many of the provisions of SFAS 121, but addresses certain implementation
issues  associated with that  Statement.  SFAS 144 is effective for fiscal years
beginning  after  December 15,  2001.  The Company  adopted  SFAS 144  effective
January  1,  2002.  The  adoption  of SFAS  144 did not  have an  impact  on the
financial position, results of operations, or cash flows of the Company.

In April 2002,  the FASB issued SFAS No. 145 ("SFAS 145"),  "Rescission  of FASB
Statements  No. 4, 44 and 64,  Amendment of FASB Statement No. 13, and Technical
Corrections."  SFAS  145  eliminates   extraordinary  accounting  treatment  for
reporting  gain or  loss  on debt  extinguishment,  and  amends  other  existing
authoritative   pronouncements  to  make  various  technical  corrections.   The
provisions  of SFAS 145 are  effective  for the Company on January 1, 2003.  The
adoption  of  SFAS  145 is not  expected  to  have an  impact  on the  financial
position, results of operations, or cash flows of the Company.

In July 2002, the FASB issued SFAS No. 146 ("SFAS 146"), "Accounting for Exit or
Disposal  Activities." SFAS 146 requires recording costs associated with exit or
disposal  activities  at their fair values when a liability  has been  incurred.
Under  previous  guidance,  certain exit costs were  accrued  upon  management's
commitment to an exit plan. The provisions of SFAS 146 are effective for exit or
disposal  activities  initiated after December 31, 2002. The Company has not yet
completed  its  evaluation  of the impact of adopting  SFAS 146 on its financial
position or results of operations.

Risk Factors: Forward Looking Statements

This document contains certain forward-looking  statements within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the  safe  harbors   created   thereby.   Investors  are   cautioned   that  all
forward-looking  statements  involve risks and  uncertainty,  including  without
limitation,  the  ability of the  Company to market and  develop  its  products.

                                       21





Although   the   Company   believes   that  the   assumptions   underlying   the
forward-looking   statements  contained  herein  are  reasonable,   any  of  the
assumptions could be inaccurate,  and therefore,  there can be no assurance that
the  forward-looking  statements  included  in this  document  will  prove to be
accurate.   In  light  of  the   significant   uncertainties   inherent  in  the
forward-looking  statements  included herein,  the inclusion of such information
should not be regarded as a  representation  by the Company or any other  person
that the objectives and plans of the Company will be achieved.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk generally represents the risk of loss that may be expected to result
from the  potential  change in value of a  financial  instrument  as a result of
fluctuations in credit ratings of the issuer,  equity prices,  interest rates or
foreign  currency  exchange  rates.  The  Company  is  exposed  to  market  risk
principally  through  changes in  interest  rates,  equity  prices  and  foreign
currency  exchange rates.  Interest rate exposure is principally  limited to the
$16.7  million of current  marketable  securities  and $4.1 million  invested in
money  funds at June 30,  2002.  Risk is  limited on the  marketable  securities
portfolio  due to the fact that $10.3  million is invested in insured  municipal
bonds of which no more than 5% of the Company's portfolio can be invested in any
one security issue.

The  remaining  $6.4 million of current  marketable  securities is invested in a
quoted  fund that is  managed  by an  institution  which  primarily  invests  in
investment grade securities,  with up to a maximum of 10% invested in high yield
securities rated B or higher.

The  fair  value  of the  Company's  investment  portfolio  at  June  30,  2002,
approximated  carrying  value  due to its  short-term  duration.  The  potential
decrease  in fair value  resulting  from a  hypothetical  10% change in interest
rates for the money funds would not be material to earnings,  cash flows or fair
value.  Current  marketable  securities at June 30, 2002, are recorded at a fair
value of $16.7  million,  net of an  unrealized  gain of $42,000.  The potential
decrease in fair value  resulting from a  hypothetical  10% decrease in interest
rates for the marketable  securities  contained in the investment  portfolio and
the tax-free  money funds would not be material to earnings,  cash flows or fair
value. $6.4 million of the marketable securities has exposure to price risk. The
estimated  potential  loss in  fair  value  resulting  from a  hypothetical  10%
decrease in the quoted price is $640,000.

As discussed in Note 2 to the consolidated financial statements in the Company's
Form 10-K for the year ended December 31, 2001, the financial  statements of the
Company's  London sales office are remeasured  into U.S.  dollars using the U.S.
dollar  as  the  functional  currency.   The  financial  statements  of  Javelin
Technologies  Limited,  a subsidiary of Javelin operating in the United Kingdom,
are also remeasured into U.S.  dollars.  The market risk associated with foreign
currency   exchange   rates  is  not  material  in  relation  to  the  Company's
consolidated  financial  position,  results of  operations  or cash  flows.  The
Company does not use derivative financial instruments for any purpose.

                                       22





PART II

OTHER INFORMATION

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

(a)         The 2002 annual meeting of shareholders was held on June 10, 2002.

(b)         Not applicable

(c)         Matter voted on at the meeting and the number of votes cast:

            Proposal 1 - Election of Directors for a term of one year.

                        Name                 Shares For         Withheld Vote
                        ----                 ----------         -------------

                  Peter K. Hansen            24,937,541           1,817,033
                  George O. Deehan           26,555,136             199,438
                  William J. Lynch           26,562,551             192,023
                  Carl E. Warden             24,651,329           2,103,245
                  George Kledaras            26,566,874             187,700

            Proposal 2 - To approve an  amendment  to the  Company's  2001 Stock
            Option Plan (the "2001 Plan") to increase the total number of shares
            of the  Company's  Common  Stock  available  for  issuance  upon the
            exercise of options granted under the 2001 Plan by 1,500,000  shares
            to an aggregate of 3,500,000.

                  For                   23,040,775
                  Against                3,646,259
                  Abstain                   67,540

            Proposal 3 - To ratify the  appointment  of Deloitte & Touche LLP as
            auditors of the Company for the year ending December 31, 2002.

                  For                   26,295,566
                  Against                  427,320
                  Abstain                   31,688


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K.

           (a)    EXHIBITS

                  99.1 Certification of Chief Executive Officer
                  99.2 Certification of Chief Financial Officer

           (b)    REPORTS ON FORM 8-K

As reported in a Form 8-K dated March 31, 2002 (filed April 15, 2002) under Item
2,  Acquisition or Disposition of Assets,  the Company entered into an Agreement
and Plan of Merger (the  "Merger  Agreement"),  dated as of March 12,  2002,  to
acquire all of the capital stock of Javelin Technologies,  Inc. ("Javelin") from

                                       23





the  stockholders of Javelin at the time of the  consummation of the transaction
(the "Javelin  Stockholders")  in exchange for a combination  of cash and common
stock of the  Company.  The Merger  Agreement  was amended on March 20, 2002 and
again on March 26, 2002. The  transaction  was consummated as of March 31, 2002.
The Company  financed the  transaction  with a combination of (i)  approximately
$11,000,000  of cash and (ii)  shares of common  stock of the  Company  having a
market value of approximately  $44,000,000.  In addition,  the Company agreed to
potentially pay additional  consideration to the Javelin  Stockholders  based on
Javelin's revenues for the year ending December 31, 2002.

Also  reported in the same Form 8-K,  under Item 7,  Financial  Statements,  Pro
Forma Financial  Information and Exhibits,  the Company  announced it would file
the required  financial  statements  as required by Item 7(a) and Item 7(b),  no
later than June 14, 2002.  The Form 8-K/A  containing  the required  information
under Item 7 was filed on June 13, 2002.

Omitted  from  this Part II are items  which  are  inapplicable  or to which the
answer is negative for the period presented.

                                       24





                                    SIGNATURE

            Pursuant to the requirements of the Securities Exchange Act of 1934,
            the  registrant  has duly  caused  this  report  to be signed on its
            behalf by the undersigned thereunto duly authorized.




                                   NYFIX, INC.
                                  (Registrant)



                                         By: /s/ Richard A. Castillo
                                             ------------------------
                                             Richard A. Castillo
                                             Chief Financial Officer and Secretary
                                             (Principal Financial and Accounting
                                             Officer)


Dated: August 14, 2002`