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

                                   FORM 10-Q/A
                                (AMENDMENT NO. 1)

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

                      FOR THE QUARTER ENDED MARCH 31, 2003

                         COMMISSION FILE NUMBER 0-21324
                            ------------------------

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

         DELAWARE                                           06-1344888
(State of other jurisdiction of          (I.R.S. Employer identification number)
incorporation or organization)

                                333 LUDLOW STREET
                           STAMFORD, CONNECTICUT 06902
                                 (203) 425-8000
                    (Address of principal executive offices)

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

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

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes |X| No |_|

There were 32,263,781  shares of Common Stock issued and outstanding as of April
30, 2004.







                                   NYFIX, INC.

                                   FORM 10-Q/A

                      For the quarter ended March 31, 2003


                                                                           PAGE
                                                                           ----

PART I.     FINANCIAL INFORMATION

            Introductory Note                                                3

  Item 1.   Consolidated Financial Statements (Unaudited)

            Consolidated Balance Sheets as of March 31, 2003                 4
              (As Restated) and December 31, 2002

            Consolidated Statements of Operations for the three
              months ended March 31, 2003 and March 31, 2002 (As Restated)   5

            Consolidated Statements of Cash Flows for the three months
             ended March 31, 2003 and March 31, 2002 (As Restated)           6

             Notes to Consolidated Financial Statements                      7

  Item 2.   Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                       23

  Item 3.   Quantitative and Qualitative Disclosures About Market Risk      32

  Item 4.   Controls and Procedures                                         32


PART II     OTHER INFORMATION

  Item 1.   Legal Proceedings                                               33

  Item 5.   Other Information                                               33

  Item 6.   Exhibits and Reports on Form 8-K                                33

  Signatures                                                                34


                                       2







INTRODUCTORY NOTE

        NYFIX,  Inc.  is filing  this  Amendment  No. 1 on Form  10-Q/A  for the
quarter  ended  March 31,  2003 that was  originally  filed on May 14, 2003 (the
"Original  10-Q"),  to reflect the  restatement  of our  consolidated  financial
statements  based on the accounting of our 1999 and 2001 investments in and 2002
acquisition of an additional 30% ownership interest in NYFIX Millennium,  L.L.C.
("NYFIX  Millennium").  See Item 2,  "Management's  Discussion  and  Analysis of
Financial  Condition and Results of Operations"  ("MD&A")  and Note 2 to
the Consolidated Financial Statements included elsewhere herein.

        For the  convenience  of the reader,  this Amendment No. 1 amends in its
entirety the Original  10-Q.  This  Amendment No. 1 continues to speak as of the
date of the  Original  10-Q,  and we have not updated the  disclosure  contained
herein to reflect any events  that  occurred at a later date other than that set
forth above.  All  information  contained in this  Amendment No. 1 is subject to
updating and  supplementing  as provided in our periodic  reports filed with the
Securities  and Exchange  Commission  (the "SEC")  subsequent to the date of the
filing of the Original 10-Q.

        The following sections of this Quarterly Report on Form 10-Q/A have been
revised from the Original 10-Q:

        o   Item 1 -  Consolidated Financial Statements
        o   Item 2 -  Management's   Discussion   and   Analysis  of   Financial
                      Condition and Results of Operations
        o   Item 4 -  Controls and Procedures

        We have  recently  filed with the SEC our Form 10-K/A for the year ended
December 31, 2002. We have not amended,  and do not intend to amend,  any of our
filed  annual or  quarterly  reports  prior to  December  31,  2002.  Therefore,
financial  information that has been filed prior to our Form 10-K/A for the year
ended December 31, 2002 or otherwise reported for these periods should no longer
be relied upon and is superseded by the  information in this  quarterly  report.
Our  Quarterly  Reports on Form 10-Q for the  quarters  ended June 30,  2003 and
September  30, 2003 have also been  affected by this  restatement.  We intend to
file these amended quarterly reports as soon as practicable.

                                       3




                                   NYFIX, INC.
                     CONSOLIDATED BALANCE SHEETS (UNAUDITED)
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

                                                                                  MARCH 31,      DECEMBER 31,
                                                                                    2003            2002
                                                                               --------------    -----------
ASSETS                                                                         (AS RESTATED)
   Current assets:
   Cash and cash equivalents                                                      $   9,043      $  11,213
   Short-term investments                                                             9,853         10,727
   Accounts receivable, less allowances of $1,216 and $1,207                         18,921         16,601
   Inventory, net                                                                     1,168          1,098
   Due from unconsolidated affiliates                                                   544            537
   Deferred income taxes                                                                568            590
   Prepaid expenses and other                                                         2,194          2,938
                                                                                  ---------      ---------
       Total current assets                                                          42,291         43,704
Property and equipment, less accumulated depreciation of $18,402 and
   $16,424                                                                           17,720         18,186
Goodwill                                                                             49,261         49,261
Acquired intangible assets, net                                                       8,892          9,404
Investments in unconsolidated affiliates                                              5,149          5,510
Notes receivable from unconsolidated affiliates                                       2,542          1,519
Other amounts due from unconsolidated affiliates                                      1,468          1,002
Deferred income taxes                                                                13,024         12,879
Other assets, net                                                                     5,427          5,150
                                                                                  ---------      ---------
       Total assets                                                               $ 145,774      $ 146,615
                                                                                  =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                               $   3,361      $   3,729
   Accrued expenses                                                                   4,662          5,360
   Current portion of capital lease obligations                                         973          1,089
   Deferred revenue                                                                   2,946          2,561
   Other current liabilities                                                            172            142
                                                                                  ---------      ---------
       Total current liabilities                                                     12,114         12,881
Long-term portion of capital lease obligations                                          464            664
Other long-term liabilities                                                             175            207
                                                                                  ---------      ---------
       Total liabilities                                                             12,753         13,752
                                                                                  ---------      ---------

Commitments and Contingencies (see notes)

Stockholders' equity:
   Preferred stock, $1.00 par value; 5,000,000 shares authorized; none issued          --             --
   Common stock, $0.001 par value; 60,000,000 shares authorized;
     32,444,175 and 32,420,558 issued                                                    32             32
   Additional paid-in capital                                                       178,874        178,818
   Accumulated deficit                                                              (26,321)       (26,397)
   Treasury stock, 1,301,300 shares, at cost                                        (19,100)       (19,100)
   Due from employees for issuance of common stock                                     (605)          (597)
   Accumulated other comprehensive income                                               141            107
                                                                                  ---------      ---------
       Total stockholders' equity                                                   133,021        132,863
                                                                                  ---------      ---------
       Total liabilities and stockholders' equity                                 $ 145,774      $ 146,615
                                                                                  =========      =========

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

                                       4





                                   NYFIX, INC.
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                          THREE MONTHS ENDED
                                                              MARCH 31,
                                                        ------------------------
                                                           2003         2002
                                                        ---------    -----------
                                                                    (AS RESTATED)
REVENUE:
   Subscription                                         $  8,547      $  7,177
   Sale                                                    2,655         1,309
   Service contract                                        2,472         1,216
   Transaction                                             3,609           369
                                                        --------      --------
       Total revenue                                      17,283        10,071
                                                        --------      --------

COST OF REVENUE:
   Subscription                                            4,573         3,129
   Sale                                                      484           222
   Service contract                                          542           231
   Transaction                                             2,146           865
                                                        --------      --------
       Total cost of revenue                               7,745         4,447
                                                        --------      --------

GROSS PROFIT:
   Subscription                                            3,974         4,048
   Sale                                                    2,171         1,087
   Service contract                                        1,930           985
   Transaction                                             1,463          (496)
                                                        --------      --------
       Total gross profit                                  9,538         5,624
                                                        --------      --------

OPERATING EXPENSE:
   Selling, general and administrative                     7,835         5,212
   Research and development                                  177           179
   Equity in loss of NYFIX Millennium                       --           1,340
   Depreciation and amortization                           1,176           537
                                                        --------      --------
       Total operating expense                             9,188         7,268
                                                        --------      --------
Income (loss) from operations                                350        (1,644)

Interest expense                                             (31)          (87)
Investment income                                            106            44
Equity in loss of unconsolidated affiliates                 (362)          (32)
                                                        --------      --------
Income (loss) before income tax (benefit) provision           63        (1,719)
Income tax (benefit) provision                               (13)           62
                                                        --------      --------
Net income (loss)                                       $     76      $ (1,781)
                                                        ========      ========

Basic income (loss) per common share                    $   0.00      $  (0.06)
                                                        ========      ========
Basic weighted average common shares outstanding          31,131        27,901
                                                        ========      ========
Diluted income (loss) per common share                  $   0.00      $  (0.06)
                                                        ========      ========
Diluted weighted average common shares outstanding        31,936        27,901
                                                        ========      ========

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

                                       5




                                   NYFIX, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (IN THOUSANDS)

                                                                                THREE MONTHS ENDED
                                                                                     MARCH 31,
                                                                              -------------------------
                                                                                 2003           2002
                                                                              ---------    ------------
                                                                                           (AS RESTATED)
Cash flows from operating activities:
   Net income (loss)                                                          $     76      $ (1,781)
   Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities:
       Depreciation and amortization                                             3,075         2,018
       Deferred income taxes                                                      (145)          (13)
       Provision for bad debts                                                      15            26
       Equity in loss of unconsolidated affiliates                                 362         1,372
       Changes in assets and liabilities (net of business
         acquisitions):
         Accounts receivable                                                    (2,335)       (1,356)
         Inventory                                                                 (70)           80
         Prepaid expenses and other                                                735           153
         Deferred revenue                                                          385             8
         Accounts payable, accrued expenses and other                           (1,068)       (1,748)
           liabilities
         Other, net                                                                (38)          136
                                                                              --------      --------
             Net cash provided by (used in) operating activities                   992        (1,105)
                                                                              --------      --------
Cash flows from investing activities:
   Purchases of short-term investments                                             (21)       (2,346)
   Sales of short-term investments                                                 950        22,543
   Capital expenditures for property and equipment                              (1,514)         (766)
   Capitalization of product enhancement costs and other                          (851)         (562)
   Proceeds from sale of equipment                                                --             373
   Payments for acquisitions, net of cash acquired                                --          (6,230)
   Investments in unconsolidated affiliates                                       --          (4,000)
   (Loans and advances to) repayments from unconsolidated affiliates, net       (1,466)        2,178
                                                                              --------      --------
             Net cash (used in) provided by investing activities                (2,902)       11,190
                                                                              --------      --------
Cash flows from financing activities:
   Principal payments under capital lease obligations                             (316)         (228)
   Net proceeds from issuance of common stock                                       56            92
                                                                              --------      --------
             Net cash used in financing activities                                (260)         (136)
                                                                              --------      --------
Net (decrease) increase in cash and cash equivalents                            (2,170)        9,949
Cash and cash equivalents, beginning of period                                  11,213         4,968
                                                                              --------      --------
Cash and cash equivalents, end of period                                      $  9,043      $ 14,917
                                                                              ========      ========

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

                                       6




                                   NYFIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.      BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

        NYFIX, Inc. (together with its subsidiaries,  the "Company"), founded in
1991,  provides  electronic  trading  technology  infrastructure  and  execution
services to the  professional  trading  segment of the brokerage  industry.  The
Company's  products and services  automate  institutional  trading  workflows by
streamlining data entry and seamlessly  integrate electronic order and execution
handling.  The Company  offers a complete  electronic  desktop order  management
solution, stationary and wireless handheld exchange floor technology, and a high
volume trade execution platform. The Company's products deliver straight through
processing for front,  middle and back office trade  information  handling.  The
Company  delivers its products mainly as a service bureau offering and maintains
an  extensive  data  center  with a network  of  electronic  circuits  that link
industry   participants   together  and  provide  access  to  the  domestic  and
international  equities  and  derivatives  markets.  Headquartered  in Stamford,
Connecticut,  the  Company  has  additional  offices in New York  City,  London,
Chicago and San Francisco.

BASIS OF PRESENTATION

        The accompanying  unaudited  consolidated financial statements have been
prepared in accordance  with the rules and  regulations  of the  Securities  and
Exchange Commission's  Regulation S-X and consequently do not include all of the
disclosures  required  under  accounting  principles  generally  accepted in the
United States of America.  The Company  believes that the disclosures  contained
herein are  adequate  to make the  information  presented  not  misleading.  The
accompanying  consolidated  financial  statements  include  the  accounts of the
Company  and  reflect  all  adjustments,  which  were  comprised  of normal  and
recurring  accruals,  considered  necessary  for  a  fair  presentation  of  the
Company's  financial  condition  and  results  of  operations.  All  significant
intercompany balances and transactions have been eliminated in consolidation.

        The operating results for the three months ended March 31, 2003 and 2002
are not  necessarily  indicative  of the  results to be  expected  for any other
interim  period or any future  year.  These  consolidated  financial  statements
should  be read  in  conjunction  with  the  audited  financial  statements  and
footnotes  thereto in the  Company's  Annual  Report on Form 10-K/A for the year
ended December 31, 2002.

        Effective  November  1,  2000,  the  Company  accounted  for its  equity
investment  in NYFIX  Millennium  on the equity  method.  Since the  Company was
viewed as the only  investor  with a  substantive  economic  investment in NYFIX
Millennium, the Company absorbed 100% of NYFIX Millennium's operating losses. On
February 1, 2002, the Company  acquired an additional 30% ownership  interest of
NYFIX  Millennium  resulting in a total  ownership  interest of 80% and regained
control of the NYFIX Millennium Board of Directors.  Effective on that date, the
Company consolidated the financial statements of NYFIX Millennium and recognized
100% of NYFIX Millennium's operating losses. (See Note 4).

        The  Company's  ownership of EuroLink  Network,  Inc.  ("EuroLink")  and
Renaissance  Trading  Technologies,  LLC ("Renaissance") was accounted for under
the equity  method,  since the Company  has the ability to exercise  significant
influence over the operating and financial policies of those companies.

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,  the disclosure of contingent  assets and liabilities at

                                       7



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)

the dates of the consolidated  financial  statements and the reported amounts of
revenue and expense during the reporting  periods in the consolidated  financial
statements and accompanying  notes. The estimates include the  collectibility of
accounts receivable,  the use and recoverability of inventory,  the useful lives
of tangible and  intangible  assets and the  realization of deferred tax assets,
among  others.  The markets for the  Company's  products  are  characterized  by
intense competition,  rapid technological development and pricing pressures, all
of  which  could  affect  the  future  realizability  of the  Company's  assets.
Estimates and assumptions are reviewed periodically and the effects of revisions
are reflected in the  consolidated  financial  statements in the period they are
determined to be necessary. Actual results could differ from those estimates.

RECLASSIFICATIONS

        Certain   reclassifications   have  been  made  in  the  prior  period's
consolidated   financial   statements   to  conform  to  the  current   period's
presentation.   In  connection  therewith,   the  Company  reclassified  certain
operating  expenses to cost of revenue,  primarily related to the Company's data
center operations, of $1.7 million for the three months ended March 31, 2002.

STOCK-BASED EMPLOYEE COMPENSATION

        The Company  accounts for its stock-based  employee  compensation  plans
under the recognition and measurement  provisions of Accounting Principles Board
Opinion  ("APB") No. 25,  "Accounting for Stock Issued to Employees" and related
interpretations. The Company does not recognize stock-based compensation expense
in its reported results as all stock options granted had an exercise price equal
to the fair  value of the  underlying  common  stock on the date of  grant.  The
following  table  illustrates  the effect on net income (loss) and income (loss)
per share if the Company had applied the fair value  recognition  provisions  of
Statement of  Financial  Accounting  Standards  ("SFAS") No. 123, as required by
SFAS No. 148, to stock-based employee compensation:

                                                      THREE MONTHS ENDED
                                                          MARCH 31,
                                                 -----------------------------
                                                     2003            2002
                                                 -------------    ------------
                                                     (IN THOUSANDS, EXCEPT
                                                      PER SHARE AMOUNTS)
Net income (loss), as reported                   $         76     $   (1,781)
Compensation expense based on the fair value           (1,732)        (2,115)
   method, net of tax
                                                 ------------      ---------
Pro forma net loss                               $     (1,656)    $   (3,896)
                                                 ============      =========

Basic income (loss) per common share:
   As reported                                   $       0.00      $   (0.06)
                                                 ============      =========
   Pro forma                                     $      (0.05)     $   (0.14)
                                                 ============      =========

Diluted income (loss) per common share:
   As reported                                   $       0.00      $   (0.06)
                                                 ============      =========
   Pro forma                                     $      (0.05)     $   (0.14)
                                                 ============      =========

                                       8



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

        In July  2002,  the FASB  issued  SFAS No.  146,  "Accounting  for Costs
Associated with Exit or Disposal  Activities."  SFAS No. 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 No.
146 are effective for exit or disposal  activities  initiated after December 31,
2002. The Company adopted SFAS No. 146 effective January 1, 2003.

        In November 2002, the FASB Emerging Issues Task Force ("EITF") reached a
consensus on No. 00-21, "Revenue Arrangements with Multiple  Deliverables." EITF
No. 00-21 applies to certain  contractually  binding  arrangements under which a
company performs  multiple revenue  generating  activities and requires that all
companies   account  for  each  element  within  an  arrangement  with  multiple
deliverables as separate units of accounting if (a) the delivered item has value
on a stand-alone  basis,  (b) there is objective  and reliable  evidence of fair
value and (c) the amount of the total  arrangement  consideration is fixed. EITF
No. 00-21 is effective for revenue  arrangements  entered into in fiscal periods
beginning  after June 15, 2003. The Company is evaluating the provisions of EITF
No. 00-21 and whether the  implementation of this statement will have a material
effect on the Company's financial position, results of operations or cash flows.

        In  December  2002,  the FASB  issued  SFAS  No.  148,  "Accounting  for
Stock-Based  Compensation - Transition and Disclosure." SFAS No. 148 amends SFAS
No. 123,  "Accounting  for  Stock-Based  Compensation,"  to provide  alternative
methods of transition  for companies that  voluntarily  change to the fair value
based method of accounting for stock-based employee  compensation.  SFAS No. 148
also amends the disclosure  provisions of SFAS No. 123 and APB No. 28,  "Interim
Financial  Reporting,"  to require  disclosure  in the  summary  of  significant
accounting policies of the effects of an entity's accounting policy with respect
to stock-based employee compensation on reported net income and income per share
in annual and interim financial  statements.  The disclosure  provisions of SFAS
No. 148 are effective for both interim and annual  periods ending after December
15,  2002.  The Company  adopted the  disclosure  provisions  of SFAS No. 148 at
December 31, 2002.

        In January  2003,  the FASB  issued FIN 46,  "Consolidation  of Variable
Interest  Entities,"  which  requires  the  consolidation  of  certain  entities
considered to be variable interest entities ("VIEs"). An entity is considered to
be a VIE  when it has  equity  investors  which  lack the  characteristics  of a
controlling  financial interest,  or its capital is insufficient to permit it to
finance  its  activities  without  additional  subordinated  financial  support.
Consolidation of a VIE by an investor is required when it is determined that the
investor will absorb a majority of the VIE's expected losses or residual returns
if they occur.  FIN 46 provides  certain  exceptions  to these rules,  including
qualifying special purpose entities subject to the requirements of SFAS No. 140,
"Accounting for Transfers and Servicing of Financial Assets and  Extinguishments
of  Liabilities."  VIEs  created  after  January 31,  2003 must be  consolidated
immediately,  while  VIEs  that  existed  prior  to  February  1,  2003  must be
consolidated as of July 1, 2003. The Company is evaluating the provisions of FIN
46 and  whether  the  implementation  of  this  statement,  with  regard  to the
Company's  unconsolidated  affiliates,  will  have  a  material  effect  on  the
Company's financial position, results of operations or cash flows.

2.      RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

        Subsequent to the issuance of the consolidated  financial  statements as
of and for the three  months  ended March 31,  2003,  management  of the Company
determined to restate its financial  statements to account for its 1999 and 2001
investments in and 2002  acquisition of an additional 30% ownership  interest in
NYFIX  Millennium,  as summarized  below.  See Note 4 for a  description  of the
Company's acquisition of NYFIX Millennium.

ACCOUNTING FOR THE COMPANY'S 1999 INVESTMENT IN NYFIX MILLENNIUM AND ISSUANCE OF
THE COMPANY'S COMMON STOCK TO THE INITIAL PARTNERS

                                       9



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)

        The Company restated its financial  statements to account for its equity
investment in NYFIX Millennium,  the issuance of its common stock to the Initial
Partners to purchase the Option and the Initial  Partners'  cash  contributed to
NYFIX  Millennium as an  "Integrated  Transaction"  with a  measurement  date of
October 27, 1999 (the  "Measurement  Date").  The Measurement  Date was the date
when the Company and the "Initial Partners" entered into the Operating Agreement
and funded  NYFIX  Millennium,  and when the Company  issued its common stock in
exchange  for the "Option"  and a press  release to announce  the  transactions.
See Note 4 for the definitions of Initial Partners and Option.

        Since the fair value of the  Company's  common  stock issued to purchase
the Option was greater than the cash equity  investment by the Initial Partners,
it was determined that the Initial Partners'  consideration  given in the option
transaction  was not viewed as having  economic  substance or  investment  risk.
Thus,  the  Company  restated  its  financial  statements  to  account  for this
Integrated Transaction as a sale of its common stock to the Initial Partners, in
exchange  for cash and the  Option.  The  Company  accounted  for the  total $16
million  contributed  to NYFIX  Millennium  (the  Company's  $2 million  and the
Initial Partners' $14 million) as its investment in NYFIX Millennium.

        Viewing the  transactions  as an  Integrated  Transaction,  the restated
accounting  reflected  the  issuance of the  Company's  common stock with a fair
value of $34.6  million  on the  Measurement  Date to the  Initial  Partners  in
exchange for $14 million in cash and the Option. The $34.6 million fair value of
the Company's common stock issued was $20.6 million in excess of the $14 million
Initial  Partners'  cash equity  investment in NYFIX  Millennium.  Of this $20.6
million  excess,  the Company  allocated $4.2 million to the Option based on its
fair value.  As the Option had an indefinite  life, it was not amortized.  There
were no additional intangible assets acquired. Thus, the remaining $16.4 million
was accounted for as a prior period adjustment relating to 1999.

ACCOUNTING FOR THE COMPANY'S COMMON STOCK ISSUED TO THE NEW PARTNERS IN 2001

        The  Company  restated  its  financial  statements  to  account  for the
issuance of its common  stock to the New Partners to purchase the Option and the
New Partners' cash contributed to NYFIX Millennium as an Integrated  Transaction
with measurement dates of March 16, 2001 (for one of the New Partners) and April
2, 2001 (for three of the New Partners).  These dates were when the New Partners
entered into the Operating  Agreement and funded NYFIX Millennium,  and when the
Company issued its common stock in exchange for the Option and press releases to
announce the transactions. See Note 4 for the definition of New Partners.

        As with the investment of the Initial Partners,  since the fair value of
the  Company's  common  stock issued to purchase the Option was greater than the
cash equity investment by the New Partners,  it was determined the New Partners'
consideration  given in the option transaction was not viewed as having economic
substance  or  investment  risk.  The  Company  accounted  for  this  Integrated
Transaction  as a sale of its common stock to the New Partners,  in exchange for
cash and the Option. The Company accounted for the total $8 million  contributed
to NYFIX Millennium ($2 million from each of the New Partners) as its investment
in NYFIX Millennium.

        Viewing the  transactions as an Integrated  Transaction,  the accounting
reflected the issuance of the  Company's  common stock with a fair value of $8.4
million on the measurement  dates to the New Partners in exchange for $8 million
in cash and the Option.  The Company allocated the $0.4 million in excess of the
$8 million New  Partners'  cash equity  investment  in NYFIX  Millennium  to the
Option based on its fair value. As the Option had an indefinite life, it was not
amortized. There were no additional intangible assets acquired.

                                       10




                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)

RECOGNITION OF NYFIX MILLENNIUM OPERATING LOSSES

        As  described  above,  since the cash equity  investment  by the Initial
Partners  and the New Partners  was not viewed as having  economic  substance or
investment risk, the Company accounted for 100% of NYFIX Millennium's  operating
losses from the date of NYFIX Millennium's inception.  Accordingly, in the three
months  ended March 31,  2002,  the Company  recognized  equity in loss of NYFIX
Millennium of $1.3 million,  reversed the previously  recorded minority interest
of $0.3 and related tax benefit of $0.2 million,  and  eliminated  inter-company
interest  related to a note  receivable  from NYFIX  Millennium of $38,000.  The
Company  recognized  100% of  NYFIX  Millennium's  operating  losses  since  the
Company's   acquisition  of  an  additional  30%  ownership  interest  in  NYFIX
Millennium  (attaining a total  ownership of 80%) in February  2002. If and when
NYFIX Millennium achieves profitability, 24% of its profits will be allocated to
the  Initial  Partners  and New  Partners  in  accordance  with the  contractual
agreement amongst the parties.


CONSOLIDATION OF NYFIX MILLENNIUM FINANCIAL STATEMENTS

        Effective  November 1, 2000, the Company no longer  controlled the NYFIX
Millennium  Board  of  Directors  and  accounted  for its  investment  in  NYFIX
Millennium under the equity method. On February 1, 2002, the Company acquired an
additional  30% ownership  interest in NYFIX  Millennium  resulting in its total
ownership  interest  of 80%  and  the  Company  regained  control  of the  NYFIX
Millennium  Board of  Directors.  At that date,  the  Company  consolidated  the
financial statements of NYFIX Millennium.

ACCOUNTING  FOR THE COMPANY'S  EXERCISE OF THE OPTION AND  ALLOCATION OF THE NET
PURCHASE PRICE

        When the Company  exercised the Option on February 1, 2002,  the Company
issued  to the  Initial  Partners  and  the  New  Partners  an  aggregate  of an
additional  296,250 shares of its common stock with a fair value of $4.5 million
on the date of exercise.  At the point of  exercising  the Option and  regaining
control  of the  NYFIX  Millennium  Board of  Directors  and as a result  of the
aforementioned items, the Company's aggregate purchase price of NYFIX Millennium
was $9.1 million  consisting  of: (i) the Option issued by the Initial  Partners
with a fair value of $4.2  million;  (ii) the Option  issued by the New Partners
with a fair value of $0.4 million,  and (iii) the Company's  common stock issued
to the Initial  Partners  and New  Partners  to exercise  the Option with a fair
value of $4.5 million.  The Company allocated $2.2 million of the purchase price
to the fair value of intangible  assets acquired,  resulting in goodwill of $6.9
million.

NET EFFECT OF RESTATEMENT ADJUSTMENTS

        The  net  effect  of the  adjustments  made  to  restate  the  Company's
financial  statements  was for the  Company  to  reduce  its  total  assets  and
stockholders'  equity  at March  31,  2003 by $14.2  million.  The  total  asset
reduction  was  comprised of i) a decrease in goodwill of $20.9  million for the
acquisition of an additional  30% ownership  interest in NYFIX  Millennium  from
$27.8  million to $6.9  million;  and ii) an increase in deferred  tax assets of
$6.7 million for the tax benefit of a 1999 charge to operations of $16.4 million
related  to  the  purchase  of  the  Option  from  the  Initial  Partners.   The
stockholders'  equity  reduction  was  comprised  of the net  effect  of:  i) an
increase in accumulated deficit of $31.7 million,  which included: a) the equity
in loss of NYFIX Millennium of $1.3 million for the three months ended March 31,
2002;  b) the  reversal of the  previously  recorded  minority  interest of $0.3
million and related tax benefit of $0.2 million for the three months ended March
31, 2002; c) the elimination of inter-company  interest income related to a note
receivable from NYFIX Millennium of $38,000 for the three months ended March 31,
2002;  d) the  aforementioned  prior period  adjustment  related to 1999 of $9.7
million,  net of tax benefit of $6.7  million;  e) a prior period  adjustment of
$20.1 million related to NYFIX  Millennium's 1999 through 2001 operating losses;
and  f)  a  prior  period   adjustment   related  to  the  elimination  of  2001
inter-company interest income related to a note receivable from NYFIX Millennium
of $43,000;  and ii) an increase in additional paid-in capital of $17.5 million,
which  represents the additional fair value of the Company's common stock issued
for the Option of $17.1 million and $0.4 million in 1999 and 2001, respectively.
As of March 31, 2003, the Company's restated total assets were $145.8 million as
compared to $160.0 million and restated  stockholders' equity was $133.0 million
as compared to $147.2 million, prior to the restatement.

                                       11



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)


        The  following  table  summarizes  the  effects  of  the  aforementioned
adjustments on the Company's net income (loss):

                                                   THREE MONTHS ENDED
                                                     MARCH 31, 2002
                                                   ------------------
                                                     (IN THOUSANDS)
Net income, as previously reported                     $    98
    Operating expense and other adjustments:
    Equity in loss of NYFIX Millennium                   1,340
                                                       -------
       Total operating expense and other                 1,340
                                                       -------
    Investment income                                      (38)
    Provision for income taxes                            (195)
    Minority interest                                     (306)
                                                       -------
Increase in net loss                                    (1,879)
                                                       -------
Net loss, as restated                                  $(1,781)
                                                       =======

The following tables summarize the significant effects of the restatement:

                                                   THREE MONTHS ENDED
                                                     MARCH 31, 2002
                                               ----------------------------
                                                   AS
                                                PREVIOUSLY
                                                 REPORTED     AS RESTATED
                                                -----------   ------------
                                                  (IN THOUSANDS, EXCEPT
                                                    PER SHARE AMOUNTS)
Consolidated statement of operations
  data:
   Operating expense:
   Equity in loss of NYFIX Millennium             $  --        $ 1,340
                                                  -------      -------
       Total operating expense                       --          1,340
                                                  -------      -------
   Loss from operations                              (304)      (1,644)
   Investment income                                   82           44
   Loss before income tax (benefit) provision
     and minority interest                           (341)      (1,719)
   Income tax (benefit) provision                    (133)          62
   Loss before minority interest                     (208)      (1,781)
   Minority interest in NYFIX Millennium              306         --
   Net income (loss)                                   98       (1,781)

   Net income (loss) per common share -
     basic and diluted:                           $  0.00      $ (0.06)

                                       12



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)

                                                     AS OF MARCH 31, 2003
                                                   ----------------------------
                                                       AS
                                                   PREVIOUSLY
                                                     REPORTED      AS RESTATED
                                                   ------------    ------------
                                                          (IN THOUSANDS)
Consolidated balance sheet data:
   Goodwill                                           $  70,161     $  49,261
   Deferred income taxes                                  6,326        13,024
       Total assets                                     159,976       145,774
   Additional paid-in capital                           161,403       178,874
   Retained earnings (accumulated deficit)                5,352       (26,321)
       Total stockholders' equity                       147,223       133,021
       Total liabilities and stockholders' equity       159,976       145,774

3.      INVENTORY

        Inventory consisted of the following:

                                            MARCH 31,     DECEMBER 31,
                                              2003           2002
                                           ----------     -------------
                                                 (IN THOUSANDS)
Parts and materials                          $1,084         $  912
Work in process                                --               52
Finished goods                                  244            294
                                             ------         ------
       Total inventory, gross                 1,328          1,258
Less: Allowance for obsolescence                160            160
                                             ------         ------
       Total inventory, net                  $1,168         $1,098
                                             ======         ======

4.      ACQUISITIONS, GOODWILL AND OTHER ACQUIRED INTANGIBLES

ACQUISITIONS

NYFIX MILLENNIUM

        NYFIX  Millennium,  a  broker-dealer,  developed  an  ATS,  which  is an
electronic  system that  matches  buyers and sellers in a  completely  anonymous
environment.

        On October 27, 1999, the Measurement Date (see Note 2), NYFIX Millennium
was formed by the Company and seven global  international  investment  banks and
brokerage firms consisting of the "Initial Partners": Deutsche Bank US Financial
Markets,  ABN Amro Securities  (formerly ING Barings),  Lehman Brothers,  Morgan
Stanley  Dean  Witter  Equity  Investments  Ltd.,  Alliance  Capital  Management
(formerly Sanford C. Bernstein & Co.), Societe Generale  Investment  Corporation
(formerly SG Cowen) and UBS Warburg. The Initial Partners invested $14.0 million
($2.0  million  each) in NYFIX  Millennium in exchange for 175,000 units (25,000
units each) of NYFIX Millennium, collectively owning a 50% ownership interest in
NYFIX Millennium.  The Company invested $2.0 million and owned the remaining 50%
(175,000  units).  The Company  purchased from the Initial Partners an option to

                                       13



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)

buy an additional 30% ownership interest in NYFIX Millennium (the "Option").  As
consideration  for the  Option,  the Company  issued to the Initial  Partners an
aggregate  of  1,968,750  shares of its common  stock with a fair value of $34.6
million on October 27, 1999. The Option,  which was exercisable at any time, had
no  expiration  date,  and  required  the  Company to issue an  aggregate  of an
additional  236,250  shares of its common  stock to the  Initial  Partners  upon
exercise.  Exercising  the Option  would  enable the  Company  to  increase  its
ownership interest in NYFIX Millennium to 80% of the total ownership  interests.
Viewing  these  transactions  as  an  Integrated  Transaction,   the  accounting
reflected the issuance of the Company's  common stock with a fair value of $34.6
million to the  Initial  Partners  in  exchange  for $14 million in cash and the
Option.  The $34.6 million fair value of the  Company's  common stock issued was
$20.6  million  in  excess  of the $14  million  cash  invested  by the  Initial
Partners.  Of this $20.6 million excess,  the Company  allocated $4.2 million to
the Option based on its fair value. As the Option had an indefinite life, it was
not amortized.  There were no other intangible  assets  acquired.  The remaining
$16.4 million was accounted for as a prior period adjustment relating to 1999.

        Since the fair value of the  Company's  common  stock issued to purchase
the Option was greater than the cash equity  investment by the Initial Partners,
it was determined that the Initial Partners'  consideration  given in the option
transaction  was not viewed as having  economic  substance or  investment  risk.
Thus,  the  Company  restated  its  financial  statements  to  account  for this
Integrated Transaction as a sale of its common stock to the Initial Partners, in
exchange  for cash and the  Option.  The  Company  accounted  for the  total $16
million  contributed  to NYFIX  Millennium  (the  Company's  $2 million  and the
Initial  Partners'  $14  million)  as its  investment  in NYFIX  Millennium  and
absorbed 100% of the operating losses.

        On March 16, 2001 and April 2, 2001,  NYFIX  Millennium  added four "New
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  invested $8.0 million ($2.0 million each) in NYFIX
Millennium   in  exchange  for  100,000  units  (25,000  units  each)  of  NYFIX
Millennium.  To maintain its 50%  ownership  interest in NYFIX  Millennium,  the
Company reduced certain of its rights to share future dividend  distributions of
NYFIX Millennium. The Company purchased from the New Partners an option, similar
to the  option  purchased  from  the  Initial  Partners,  to  buy an  additional
ownership  interest in NYFIX Millennium.  As consideration for that option,  the
Company issued to the New Partners, an aggregate of 376,000 shares of its common
stock with a fair value of $8.4  million on the  measurement  dates of March 16,
2001 for one of the New  Partners  and  April 2,  2001 for the  other  three New
Partners.  The option, which was also exercisable at any time, had no expiration
date,  and required the Company to issue an  aggregate of an  additional  60,000
shares of its  common  stock to the New  Partners  upon  exercise.  Hereinafter,
references  to the "Option"  include the option  received  from both the Initial
Partners and the New Partners. Exercising the Option would enable the Company to
increase  its  ownership  interest  in  NYFIX  Millennium  to 80%  of the  total
ownership interests.  The fair value of the Company's common stock issued to the
New  Partners was $0.4  million in excess of the $8 million New  Partners'  cash
equity investment in NYFIX  Millennium.  The Company allocated this $0.4 million
to the Option based on its fair value. As the Option had an indefinite  life, it
was not amortized.

        As with the investment of the Initial Partners,  since the fair value of
the  Company's  common  stock issued to purchase the Option was greater than the
cash equity  investment  by the New  Partners,  it was  determined  that the New
Partners' consideration given in the option transaction was not viewed as having
economic substance or investment risk. The Company accounted for this Integrated


                                       14


                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)

Transaction  as a sale of its common stock to the New Partners,  in exchange for
cash and the Option. The Company accounted for the total $8 million  contributed
to NYFIX Millennium ($2 million from each of the New Partners) as its investment
in NYFIX Millennium and continued to absorb 100% of the operating losses.

        Effective  February  1, 2002,  the  Company  exercised  the  Option.  In
exchange for the increased  ownership interest in NYFIX Millennium,  the Company
issued to the Initial  Partners and New Partners an aggregate of 296,250  shares
of its common stock,  with a fair value of $4.5 million on the date of exercise.
As a result, the Company increased its ownership interest in NYFIX Millennium to
80%. At the point of exercising  the Option and  regaining  control of the NYFIX
Millennium  Board and as a result of the  aforementioned  items,  the  Company's
aggregate  purchase price of NYFIX Millennium was $9.1 million,  which consisted
of:  (i) the Option  issued by the  Initial  Partners  with a fair value of $4.2
million;  (ii) the Option  issued by the New Partners  with a fair value of $0.4
million, and (iii) the Company's common stock issued to the Initial Partners and
New Partners for exercise of the Option with a fair value of $4.5 million on the
date of  exercise.  The  Company  allocated  $2.2  million  to the fair value of
intangible assets acquired,  resulting in goodwill of $6.9 million.  Some of the
Company's key  considerations for the acquisition of an additional 30% ownership
interest in NYFIX Millennium  included its ability to control NYFIX Millennium's
operations to effect changes in NYFIX Millennium's business model as a result of
the   attractiveness   of  the   synergies   anticipated   with  the   Company's
recently-acquired     NYFIX    Transaction     Services     broker-dealer    and
soon-to-be-acquired Javelin business.

        As previously mentioned, the Company absorbed 100% of NYFIX Millennium's
operating  losses  from the date of NYFIX  Millennium's  inception.  If and when
NYFIX Millennium achieves profitability, 24% of its profits will be allocated to
the  Initial  Partners  and New  Partners  in  accordance  with the  contractual
agreement amongst the parties.

        Viewing the situation  from NYFIX  Millennium's  inception in 1999 until
the  execution of the Amended  Operating  Agreement on November 1, 2000 based on
contractual  provisions  that  provided for the  Company's  control of the NYFIX
Millennium  Board of  Directors,  the Company  consolidated  NYFIX  Millennium's
financial  statements from inception until November 1, 2000.  Effective with the
amendment to the Operating  Agreement,  dated  November 1, 2000,  the Company no
longer  controlled the NYFIX  Millennium  Board of Directors  and,  accordingly,
accounted for its investment in NYFIX  Millennium  under the equity  method.  On
February 1, 2002,  the Company  acquired an additional  30% of NYFIX  Millennium
resulting in its 80%  ownership  of NYFIX  Millennium  and the Company  regained
control of the NYFIX  Millennium  Board of Directors.  At that date, the Company
consolidated the financial statements of NYFIX Millennium.

         NYFIX  Millennium's  statement of  operations  for the one month period
ended January 31, 2002 was as follows:

                                          MONTH ENDED
                                          JANUARY 31,
                                             2002
                                       ---------------
                                        (IN THOUSANDS)
Revenue:
   Transaction                             $    77

Cost of Revenue:
   Transaction                                 105
                                           -------

Gross Profit:
   Transaction                                 (28)

Operating Expense:
   Selling, general and administrative       1,215
   Research and development                   --
   Depreciation and amortization               117
                                           -------
       Total operating expense               1,332

Interest expense                               (38)
Interest income                                 20
                                           -------
       Net loss                            $(1,378)
                                           =======

                                       15


                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)

         Financial  information  reconciling  NYFIX  Millennium's  statement of
operations to the Company's equity in loss of NYFIX Millennium for the one month
period ended January 31, 2002 was as follows:

                                                  MONTH ENDED
                                                  JANUARY 31,
                                                    2002
                                               ---------------
                                               (IN THOUSANDS)
Net loss                                          $(1,378)
Elimination of inter-company interest                  38
                                                  -------
Equity in loss of NYFIX Millennium                $(1,340)
                                                  =======

JAVELIN

        Javelin Technologies, Inc. ("Javelin") is a provider of electronic trade
communication  technology and FIX protocol  technology.  The FIX protocol is the
messaging standard underlying language,  which was developed to enable real-time
electronic trading and communications. In utilizing the FIX protocol technology,
companies can eliminate the high costs and associated  risks of developing their
own proprietary network links and implementing a non-standard protocol.

        On March 31, 2002,  the Company  acquired  100% of the capital  stock of
Javelin. 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 Company  financed the  transaction  with a combination of (i) $10.0
million in net cash; (ii) 2,784,896 shares of common stock of the Company having
a fair value of $41.2  million;  and (iii) 493,699 shares of common stock of the
Company having a fair value of $3.5 million  reserved for issuance upon exercise
of  Javelin  stock  options  assumed  by  the  Company.   The  Company  incurred
approximately  $1.2 million in costs directly  associated with the  acquisition,
which  were  included  in the  overall  consideration.  The cash  portion of the
purchase price was financed  through  available funds. The results of operations
of Javelin have been included in the  consolidated  income  statements since the
acquisition  date.  The excess of the purchase  price over the fair value of the
net assets acquired was $42.3 million and has been recorded as goodwill.

        Of the  aforementioned  purchase price, $1.0 million in cash and 270,945
shares of common  stock,  having a fair  value of $4.0  million  as of March 31,
2002,  is being held in escrow by an  unrelated  third party and is subject to a
final working  capital  adjustment to be calculated as of March 31, 2002 and the
effect  of  the  outcome  of  specific  litigation  to be  determined  based  on
activities  through  March  31,  2003.  The  entire  amount  of cash and  shares
continues  to  be  held  in  escrow  pending   resolution  of  the   appropriate
distribution  of such cash and shares.  See Note 11,  Subsequent  Event,  to the
consolidated financial statements. The Company will record the return of escrow,
if any,  based  upon  activities  through  March 31,  2003,  as a  reduction  in
goodwill.

                                       16


                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)

        In connection with the  acquisition of Javelin,  the Company assumed the
liability  for the servicing of Javelin's  service  maintenance  contracts.  The
Company  has  accounted  for the  deferred  revenues  related  to these  service
contracts of Javelin in connection  with the acquisition in accordance with EITF
01-3,  Accounting in a Business Combination for Deferred Revenue of an Acquiree.
The Company recorded a liability as of the date of the acquisition  equal to the
fair value of this  liability  and adjusted  the amount for the  expected  gross
profit that Javelin would  normally  realize on service  maintenance  contracts.
Such  amounts  since the date of  acquisition  were  recognized  as revenue on a
straight-line  basis over the  remaining  service  maintenance  contract  period
through March 31, 2003. The purchase price  allocation of these  obligations was
included in "deferred revenue" in the accompanying consolidated balance sheet at
December 31, 2002.

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") to operate as a  broker-dealer  through the wholly
owned  subsidiary,  which was  renamed  NYFIX  Transaction  Services,  Inc.  The
application  was  approved  in May 2002 and  NYFIX  Transaction  Services  began
generating  revenue  on  July  1,  2002.  NYFIX  Transaction  Services  provides
electronic execution, 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.

GOODWILL AND ACQUIRED INTANGIBLE ASSETS

        Goodwill and other  acquired  intangibles at March 31, 2003 and December
31, 2002 primarily  relate to the Company's 2002 acquisition of an 80% ownership
interest in NYFIX  Millennium and acquisition of Javelin  described  above.  The
Company  completed  the asset  valuations  for the  acquisitions  and the annual
goodwill impairment test during the fourth quarter of 2002.

        Acquired intangible assets consisted of the following:

                                                                  WEIGHTED-
                                         MARCH 31,  DECEMBER 31,   AVERAGE
                                          2003         2002       USEFUL LIFE
                                         ---------  ------------  -----------
                                             (IN THOUSANDS)
Existing technology                       $ 7,500     $ 7,500     5.1 years
Customer related intangibles                2,700       2,700     5.3 years
Trademarks and other                          800         800     10.5 years
                                          -------   ---------
       Total intangible assets, gross      11,000      11,000
Less: Accumulated amortization              2,108       1,596
                                          -------   ---------
       Total intangible assets, net       $ 8,892     $ 9,404
                                          =======   =========

        Amortization  expense of acquired intangible assets was $0.5 million for
the period  ended March 31, 2003.  During the period  ended March 31,  2003,  no
goodwill was acquired, impaired or written-off.

        Based on identified  intangible  assets  recorded at March 31, 2003, and
assuming  no  subsequent   impairment  of  the  underlying  assets,  the  annual
amortization expense is expected to be as follows:

                                       17


                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)

                                                   AMOUNT
                                                   ------
YEAR ENDING DECEMBER 31,                       (IN THOUSANDS)
------------------------
   2003                                           $2,048
   2004                                            2,048
   2005                                            2,048
   2006                                            2,048
   2007                                              923
   Thereafter                                        289
                                                  ------
        Future estimated amortization expense     $9,404
                                                  ======

5.      INVESTMENT IN AFFILIATES

EUROLINK

        On March 6, 2002,  the Company  acquired a convertible  preferred  stock
interest in  EuroLink,  with its  operations  based in Madrid,  Spain,  for $4.0
million  in cash.  EuroLink  offers  the  European  securities  industry  direct
electronic  access to the U.S.  equity markets from Europe.  EuroLink offers the
Company's   equity   terminals  and  market  access  services  to  the  European
marketplace,  primarily on a transaction  fee basis.  The  preferred  stock will
automatically  convert into a 40% common stock  interest upon the earlier of two
years from the date of the  agreement  or a change of control,  as  defined,  of
EuroLink.  The Company  also has an option to purchase up to an  additional  40%
common stock interest in EuroLink from certain of its stockholders at a price to
be determined  based upon a formula of  EuroLink's  earnings,  as defined.  Such
exercise  price  ranges  from a minimum  of $1.0  million  to a maximum of $10.0
million.  The option is exercisable  between April 1, 2004 and June 30, 2004 and
is  payable  in  equal  amounts  of cash and the  Company's  common  stock.  The
investment in EuroLink is being  accounted for under the equity  method.  During
the three months ended March 31, 2003 and 2002,  the Company  recorded a loss on
the  investment  of $179,000  and $32,000,  respectively,  which was included in
"equity in loss of unconsolidated  affiliates" in the accompanying  consolidated
statements of operations.  In addition,  the Company had a note  receivable from
EuroLink at March 31, 2003 and  December  31, 2002 in the amount of $0.5 million
plus accrued interest at 6.0%, due October 2003, which was included in "due from
unconsolidated affiliates" in the accompanying consolidated balance sheets.

RENAISSANCE

        On October 2, 2002, the Company acquired an 18% interest in Renaissance.
The Company  acquired its interest in return for 300,000 shares of the Company's
stock with a fair value of $1.1 million. Renaissance was formed to commercialize
a NASDAQ  trading  platform  (the  "Platform").  The  Company  has an  option to
purchase  a  minimum  of 20% to a  maximum  of  40%  of  the  total  outstanding
membership  units  of  Renaissance  at a price  to be  determined  based  upon a
formula,  between  October 2004 and October 2006.  In October 2002,  the Company
loaned  $1.5  million to  Renaissance  in  exchange  for a  convertible  secured
promissory  note.  The note bears an  interest  rate of 5.5%,  is due in October
2007, or is  convertible  into 6,400,000  membership  units (or 32% of the total
outstanding  membership  units,  subject to  dilution)  of  Renaissance,  at the
Company's  option  anytime after October  2003.  In February  2003,  the Company
loaned an  additional  $1.0  million to  Renaissance  in exchange  for a secured
promissory  note. The note bears an interest rate of 5.5% and is due in February
2008. The Company's  investment in Renaissance is being  accounted for under the
equity  method.  During the three  months  ended  March 31,  2003,  the  Company
recorded a loss on the investment of $183,000,  which was included in "equity in
loss of unconsolidated affiliates" in the accompanying consolidated statement of
income.

                                       18


                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)

        In  connection  with its  investment,  the  Company  acquired,  for $1.0
million,  and contributed to Renaissance,  the intellectual  property rights and
source code to the Platform,  which was developed over the last several years by
a major bank and  brokerage  firm and  contributed  such  intellectual  property
rights and source code to  Renaissance.  In  addition,  the Company  advanced to
Renaissance  $0.5 million and $1.0 million to fund certain  operating  costs and
capital  expenditures during the three months ended March 31, 2003 and the three
months ended  December 31, 2002,  respectively.  Such advances were reflected as
"other  amounts  due  from   unconsolidated   affiliates"  in  the  accompanying
consolidated  balance sheets.  In consideration  for the  intellectual  property
rights   contributed  and  the  funding  of  the  operating  costs  and  capital
expenditures,  the Company  will share in 50% of  Renaissance's  revenue for, at
minimum,  3 years.  The Company  subleases  approximately  8,000  square feet of
office space to Renaissance at an annual cost of $0.2 million.

6.      INCOME TAXES

        The Company  recorded a tax benefit of $13,000  and a tax  provision  of
$62,000 during the three months ended March 31, 2003 and 2002, respectively. The
Company  will  receive  no income  tax  benefit  for the equity in loss of NYFIX
Millennium  of $1.3  million  for the three  months  ended March 31,  2002.  The
Company's effective tax rate was 21% and 4% for the three months ended March 31,
2003 and March 31, 2002, respectively. The Company's effective tax rate for the
three  months  ended  March 31, 2003 is lower than the  Federal  statutory  rate
primarily  due  to the  effect  of  the  recognition  of  certain  research  and
development  tax  credits  offset  by the  effect  of state  income  taxes.  The
Company's  effective tax rate for the three months ended March 31, 2002 is lower
than the Federal  statutory  rate  primarily  due to the impact of the equity in
loss of NYFIX Millennium.

7.      PER SHARE INFORMATION

        The  Company's   basic  income  (loss)  per  common  share  ("EPS")  was
calculated based on the net income (loss)  available to common  stockholders and
the  weighted-average  number of shares  outstanding during the reported period.
Diluted EPS normally includes additional dilution from common stock equivalents,
such as stock issuable  pursuant to the exercise of  outstanding  stock options.
Stock options representing 1,309,000 shares for the three months ended March 31,
2002 were excluded from the loss per share  calculations since the amounts would
be anti-dilutive.

                                       19


                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)

                                                      THREE MONTHS ENDED
                                                           MARCH 31,
                                                  -----------------------------
                                                     2003               2002
                                                  -----------         ---------
                                                        (IN THOUSANDS, EXCEPT
                                                          PER SHARE AMOUNTS)
Net income (loss)                                    $   76           $ (1,781)
                                                     ======           ========
Basic income (loss) per common share                 $ 0.00           $  (0.06)
                                                     ======           ========

Basic weighted average common shares outstanding     31,131             27,901
Potentially dilutive effect of stock options            805               --
                                                     ------           --------
Diluted weighted average shares outstanding          31,936             27,901
                                                     ======           ========
Diluted income (loss) per common share               $ 0.00           $  (0.06)
                                                     ======           ========
8.      BUSINESS SEGMENT INFORMATION

        The Company has adopted  the  disclosure  requirements  of SFAS No. 131,
"Disclosures  About  Segments of an Enterprise and Related  Information,"  which
establishes  standards for additional  disclosure  about operating  segments for
interim and annual financial  statements.  This standard requires  financial and
descriptive  information be disclosed for segments whose  operating  results are
reviewed  by  the  Company  for  decisions  on  resource  allocation.   It  also
establishes  standards  for related  disclosures  about  products and  services,
geographic areas and major customers.

        The Company operates as a financial  services  technology company in two
industry segments,  Technology Services and Transaction Services.  The Company's
broker-dealer operations, NYFIX Millennium and NYFIX Transaction Services, which
are  managed  separately  within  the  Company  and are  regulated  by the NASD,
comprise the Transaction  Services segment.  NYFIX Millennium  developed an ATS,
which is an  electronic  system that matches  buyers and sellers in a completely
anonymous environment.  NYFIX Transaction Services provides electronic execution
services, primarily to domestic and international broker-dealers and specialized
trading firms. The accounting  policies of the reportable  segments are the same
as those described in the summary of significant  accounting  policies contained
herein within Note 1. The operating  segments reported below are the segments of
the Company for which separate financial  information is available and for which
operating  results are evaluated  regularly by senior management in deciding how
to allocate resources and in assessing performance.

                                       20



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)

        The  Technology  Services  segment,  which  classifies  its  revenue  as
subscription,  sale or service contract,  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  broker-dealer  operations and
generally classifies its revenue as transaction.

        Summarized financial information by business segment was as follows:

                                THREE MONTHS ENDED
                                     MARCH 31,
                              ------------------------
                                2003           2002
                              --------      ---------
Revenue:                         (IN THOUSANDS)
   Technology Services        $ 13,919      $  9,702
   Transaction Services          3,849           369
   Eliminations                   (485)         --
                              --------      --------
       Total revenue          $ 17,283      $ 10,071
                              ========      ========

Gross Profit:
   Technology Services        $  8,243      $  6,120
   Transaction Services          1,295          (496)
                              --------      --------
       Total gross profit     $  9,538      $  5,624
                              ========      ========

        Reconciling  information between business segments and the income (loss)
before income tax (benefit) provision was as follows:

                                                         THREE MONTHS ENDED
                                                             MARCH 31,
                                                       -----------------------
                                                          2003         2002
                                                       ---------    ---------
                                                          (IN THOUSANDS)
Gross profit for reportable segments                    $ 9,538      $ 5,624
Operating expenses                                       (9,188)      (7,268)
Interest expense                                            (31)         (87)
Investment income                                           106           44
Equity in loss of unconsolidated affiliates                (362)         (32)
                                                        -------      -------
Income (loss) before income tax (benefit) provision     $    63      $(1,719)
                                                        =======      =======

9.      OTHER COMPREHENSIVE INCOME

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

                                       21



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)

                                                                     THREE MONTHS ENDED
                                                                         MARCH 31,
                                                                    --------------------
                                                                      2003       2002
                                                                    --------   --------
                                                                       (IN THOUSANDS)
Net income (loss)                                                   $    76     $(1,781)
Changes in net unrealized gain on available-for-sale securities          34          35
                                                                    -------     -------
Total comprehensive income (loss)                                   $   110     $(1,746)
                                                                    =======     =======

        Accumulated other  comprehensive  income,  net of tax, at March 31, 2003
and  December 31, 2002  consisted  of the  accumulated  net  unrealized  gain on
available-for-sale securities of $141,000 and $107,000, respectively.

10.     CASH FLOW SUPPLEMENTAL INFORMATION

        Information  about the cash flow  activities  related  to the  Company's
NYFIX Millennium and Javelin acquisitions was as follows:

                                                           THREE MONTHS
                                                              ENDED
                                                             MARCH 31,
                                                              2002
                                                          ------------
                                                          (IN THOUSANDS)
Fair value of net assets acquired, net of cash acquired     $ 75,173
Fair value of liabilities assumed                            (15,189)
Common stock issued                                          (49,154)
Pre-acquisition investment basis                              (4,600)
                                                            --------
       Payments for acquisitions, net of cash acquired      $  6,230
                                                            ========

        The above fair  values of net assets  and  liabilities  are based on the
preliminary  values at March 31, 2002. The final  allocation of assets  acquired
differed from the fair values presented.

        Information about other cash flow activities was as follows:

                                                         THREE MONTHS ENDED
                                                             MARCH 31,
                                                         ------------------
                                                          2003       2002
                                                         -------    -------
Supplemental disclosures of cash flow information:        (IN THOUSANDS)
    Cash paid for interest                               $  31      $  87
    Cash paid for income taxes, net of refunds            (688)       586
Supplemental schedule of noncash investing and
   financing information:
    Unrealized gain on available-for-sale securities       (34)       (35)

                                       22



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                   (UNAUDITED)

11.     SUBSEQUENT EVENT

        On May 13,  2003,  the Company was served as a defendant  in Kledaras v.
NYFIX,  Inc. (Sup. Ct. NY County) Index No.  601502/03,  which had been filed on
the same date in New York State  court in New York  City.  George  Kledaras,  as
representative  of shareholders of Javelin,  seeks the release of an escrow fund
established  in connection  with the Company's  acquisition  of Javelin in March
2002 and  alleges  damages of at least $18  million  against the Company and its
Chairman and CEO,  Peter K. Hansen,  in connection  with such  acquisition.  The
Company  believes  the  lawsuit is without  merit and  intends to defend  itself
vigorously.  The Company  does not believe that the  disposition  of this matter
will have a  material  adverse  impact on its  financial  condition,  results of
operation or cash flows.

                                       23




                                   NYFIX, INC.


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

OVERVIEW

        NYFIX,  Inc.,  a New  York  corporation  founded  in 1991,  through  our
subsidiaries   and   affiliates,    provides   electronic   trading   technology
infrastructure and execution services to the professional trading segment of the
brokerage  industry.  Our products and services automate  institutional  trading
workflows by streamlining data entry and seamlessly  integrate  electronic order
and execution handling.  We offer a complete electronic desktop order management
solution, stationary and wireless handheld exchange floor technology, and a high
volume  trade  execution   platform.   Our  products  deliver  straight  through
processing ("STP") for front, middle and back office trade information handling.
We deliver our  products  mainly as a service  bureau  offering  and maintain an
extensive  data center with a network of electronic  circuits that link industry
participants  together  and provide  access to the  domestic  and  international
equities and derivatives markets.

         Headquartered in Stamford,  Connecticut,  we have additional offices in
New York City, London, Chicago and San Francisco.

        Our   electronic   trading   systems,    industry-wide   trade   routing
connectivity,  STP and execution  services and systems  supported by our desktop
solutions,  stationary  and  wireless  exchange  floor  systems  and  electronic
automation systems provide a complete  electronic  solution to enter, manage and
route trade data and execute orders for brokerage firms and international  banks
trading in equities, futures and options.

        We  operate  a  diverse   electronic  order  routing  and  communication
platform,  our NYFIX Network, based on the FIX protocol. The FIX protocol is the
messaging standard underlying language,  which was developed to enable real-time
electronic  trading  and  communications.  Our NYFIX  Network  is  connected  to
redundant data centers enabling electronic  communications between our customers
throughout the equities and  derivatives  markets as well as offering  long-term
optical disk storage and compliance retrieval of customer transactions.  Through
our NYFIX  Network,  we provide  the  technology  and  infrastructure  for trade
communication   and  global  order  routing   between   buy-side  and  sell-side
institutions,  numerous  exchange  floors,  as well as  other  electronic  trade
execution  venues,  such as ECNs and ATSs.  We sell an  integrated  portfolio of
modular desktop  trading  applications,  exchange floor  automation and exchange
access  applications  for trading in domestic and  international  equities,  and
derivatives,  including futures and options.  Many of our applications reside on
our centralized  system in our data center and are accessible  through our NYFIX
Network. By seamlessly  integrating our proprietary  infrastructure and software
applications,  we  provide  our  customers  with  a  complete  electronic  order
management and execution solution.

        Through NYFIX Millennium,  our 80% owned  broker-dealer  subsidiary,  we
have developed an ATS that functions  similarly to an ECN in that it matches buy
and sell orders.  NYFIX  Millennium can match either buy and sell orders or pass
them  through to the  exchange or execution  venue of the  trader's  choice,  in
real-time,  which we believe is a unique feature and key differential from other
ATSs and ECNs that rely on captive order liquidity.  NYFIX  Millennium  augments
traditional auction markets by combining the electronic  execution technology of
an ECN with the liquidity of traditional primary markets.  Institutional traders
benefit from the order  invisibility and anonymity provided by NYFIX Millennium,
which  eliminates the negative price impact  associated  with  displaying  large
blocks of shares.  NYFIX Millennium's ATS went into full production on September
5, 2001 and we continue to focus on expanding NYFIX  Millennium's  user base and
execution volumes.

                                       24


                                   NYFIX, INC.


RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

        The following discussion and analysis gives effect to the restatement of
our  financial  statements to account for our 1999 and 2001  investments  in and
2002 acquisition of an additional 30% ownership interest in NYFIX Millennium, as
discussed in Note 2 of the Consolidated Financial Statements.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

        Management's  Discussion and Analysis of Financial Condition and Results
of Operations discusses our consolidated  financial statements,  which have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States of America.  These  principles  require us to make  estimates and
assumptions  which could  materially  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 revenue and expense
during the reporting period. On an on-going basis, we evaluate our estimates and
assumptions,   including   those  related  to  accounts   receivable   reserves,
investments,   goodwill,   long-lived  assets,   revenue  recognition,   product
enhancement  costs,  income taxes and  contingencies.  We base our estimates and
assumptions  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 assumptions 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.

        For our  accounting  policies  that,  among others,  are critical to the
understanding  of our results of operations due to the  assumptions we must make
in their application,  refer to Item 7, Management's Discussion and Analysis, in
our Annual  Report on Form 10-K/A for the year ended  December 31, 2002.  Senior
management  has discussed  the  development  and  selection of these  accounting
policies, and estimates, and the related disclosures with the Audit Committee of
the  Board of  Directors  ("Audit  Committee").  See Note 1 in the  Notes to the
Consolidated  Financial  Statements  in our Annual Report on Form 10-K/A for the
year ended December 31, 2002 for our  significant  accounting  policies.  In the
first  three  months of 2003,  there  have been no  changes  to our  significant
accounting policies.

        Our revenue is comprised of  subscription,  sale,  service  contract and
transaction  components.  Subscription  fees  currently  represent a majority of
total  revenue.  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  automatic  renewal
periods, unless we receive prior notice of cancellation. Subscription revenue is
recognized  on  a  straight-line  basis  over  the  lives  of  the  subscription
agreements  and  begins  once  installation  is  complete  and  accepted  by the
customer.  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  over the contract period on a  straight-line  basis.  Service
contract revenue is typically  charged to customers as a fixed percentage of the
original sale contract.  Transaction  revenue consists of per-share fees charged
to customers who route orders through our order matching  system,  and per-share
fees charged to customers,  primarily domestic and international  broker-dealers
and  specialized  trading  firms,  to provide  execution and smart order routing
solutions.

        Cost of revenue  principally  consists of costs associated with our data
centers  where  we  maintain   equipment  and   infrastructure  to  support  our
operations,  amortization of capitalized product enhancement costs, depreciation
of subscription equipment and execution, clearing fees and market data feeds.

        Selling, general and administrative expense accounts for the majority of
our  operating  expense and consists of salaries and  benefits,  rent and office
expense,  provision for doubtful accounts and marketing expense. During the past
several years,  we have expanded our efforts to support an increasing  number of

                                       25



                                   NYFIX, INC.


services and to increase the number of exchanges,  sell-side  firms and buy-side
institutions connecting to our NYFIX Network.

        Research and development  expense relates to developing new products and
technologies to meet the current and future needs of our customers.  These costs
consist  primarily of salaries and related costs for  technical and  programming
personnel.

        Equity in loss of NYFIX  Millennium  relates to the operating losses for
our unconsolidated affiliate prior to its acquisition by us.

        Depreciation  and  amortization  expense  consists of  depreciation  and
amortization of corporate equipment and software, and amortization of intangible
assets.

        Certain   reclassifications   have  been  made  in  the  prior  period's
consolidated   financial   statements   to  conform  to  the  current   period's
presentation. In connection therewith, we reclassified certain operating expense
to cost of revenue,  primarily  related to our data center  operations,  of $1.6
million for the three months ended March 31, 2002.

        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.

HISTORICAL RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THREE MONTHS ENDED MARCH 31, 2002

REVENUE

        Total revenue  increased $7.2 million,  or 71%, to $17.3 million for the
three months ended March 31, 2003, from $10.1 million for the three months ended
March 31,  2002,  primarily  due to  increases  in revenue  attributable  to our
recently   acquired   broker-dealer   subsidiaries  of  $3.5  million,   revenue
attributable  to our recently  acquired  Javelin  business of $3.0 million,  and
subscription  and service  contract  revenue from increased demand from our core
customers and the addition of new customers, of $0.7 million.

        Subscription revenue increased $1.3 million, or 18%, to $8.5 million for
the three months  ended March 31,  2003,  from $7.2 million for the three months
ended March 31, 2002,  primarily due to increased demand from our core customers
and the net  addition  of new  customers,  of $0.6  million,  and  increases  in
subscription   revenue   attributable  to  our  recently  acquired  Javelin  and
broker-dealer  businesses,  of $0.8 million.  As a percentage of total  revenue,
subscription  revenue  decreased to 49% in the three months ended March 31, 2003
from 71% in the three months ended March 31, 2002, primarily due to the addition
of transaction revenue due to our recently acquired  broker-dealer  subsidiaries
and the increase of sale and service  contract  revenue of $2.5 million from our
recently acquired Javelin products.  Subscription revenue from our core business
was 45% of total revenue.

        Sale revenue  increased  $1.4 million,  or 108%, to $2.7 million for the
three months ended March 31, 2003,  from $1.3 million for the three months ended
March 31, 2002, primarily due to sale revenue from our recently acquired Javelin
business of $1.3  million.  As a  percentage  of total  revenue,  sales  revenue
increased to 15% in the three months ended March 31, 2003, from 13% in the three
months ended March 31, 2002, primarily due to the impact of sale revenue for our
Javelin  products.  This increase as a percentage of total revenue was partially
offset by the effect of the addition of transaction revenue for the three months
ended March 31, 2003.

                                       26



                                   NYFIX, INC.

        Service  contract  revenue  increased  $1.3  million,  or 108%,  to $2.5
million for the three  months  ended March 31,  2003,  from $1.2  million in the
three  months  ended March 31,  2002.  The  increase is due to service  contract
revenue  from our  recently  acquired  Javelin  business of $1.2  million.  As a
percentage  of total  revenue,  service  contract  revenue  was 14% in the three
months ended March 31, 2003,  as compared to 12% in the three months ended March
31, 2002, primarily due to the aforementioned  service contract revenue from our
recently  acquired  Javelin  business.  This  increase as a percentage  of total
revenue was  substantially  offset by the effect of the addition of  transaction
revenue for the three months ended March 31, 2003.

        Transaction revenue increased $3.2 million to $3.6 million for the three
months ended March 31,  2003,  from $0.4 million in the three months ended March
31, 2002. As a percentage of total revenue,  transaction  revenue was 21% in the
three months  ended March 31, 2003,  as compared to 4% in the three months ended
March 31, 2002, primarily due to the aforementioned  transaction revenue for our
recently  acquired   broker-dealer   businesses,   including  NYFIX  Transaction
Services,   which  started  generating  revenue  on  July  1,  2002,  and  NYFIX
Millennium,  whose  results  have been  included in our  consolidated  financial
statements  since  our  acquisition  of  an 80 %  ownership  interest  in  NYFIX
Millennium on February 1, 2002.

COST OF REVENUE

        Total cost of revenue  increased  $3.3 million,  or 75%, to $7.7 million
for the three months ended March 31, 2003, from $4.4 million in the three months
ended March 31,  2002,  due  primarily to  clearing,  execution  and other costs
related to our recently acquired NYFIX Millennium and NYFIX Transaction Services
businesses,  of $0.7  million,  increased  data  center  costs of $0.7  million,
increased costs  attributable to support our recently  acquired Javelin business
of $0.7  million,  increased  telecommunication  charges,  due to  more  desktop
connections  and  increased  capacity  in our data  centers to support  our core
business,  of $0.5 million and increased  depreciation  expense  attributable to
investment  in  data  center  equipment  to  support  our  subscription  revenue
components of $0.2 million.

        Subscription  cost of revenue  increased  $1.5 million,  or 48%, to $4.6
million for the three  months  ended March 31,  2003,  from $3.1 million for the
three months ended March 31, 2002, primarily due to increased data center costs,
including   telecommunication  charges  due  to  more  desktop  connections  and
increased  capacity  in our  data  centers,  of $0.7  million,  increased  costs
attributable  to our  recently  acquired  Javelin  business of $0.3  million and
increased  depreciation and amortization  expense of $0.2 million,  attributable
primarily to increased  investment  in our data center  equipment to support our
subscription revenue. As a percentage of subscription revenue, subscription cost
of revenue  increased  to 53.5% in the three  months  ended  March 31, 2003 from
43.6% in the three months ended March 31,  2002,  primarily  due to increases in
the  aforementioned  costs related to investments in our data centers,  which we
believe will support future revenue growth.

        Sale cost of revenue increased $0.3 million, or 150% to $0.5 million for
the three months  ended March 31,  2003,  from $0.2 million for the three months
ended March 31, 2002.  The increase in sale cost of revenue was primarily due to
increased labor costs  attributable to our recently acquired Javelin business of
$0.2 million, and increased amortization expense, of $0.1 million,  attributable
to  capitalized  software  included in our  products.  As a  percentage  of sale
revenue, sale cost of revenue increased to 18.2% in the three months ended March
31, 2003, from 17.0% in the three months ended March 31, 2002.

        Service contract cost of revenue increased $0.3 million, or 150% to $0.5
million for the three  months  ended March 31,  2003,  from $0.2  million in the
three  months ended March 31, 2002.  The increase was  primarily  due to service
contract labor costs of our recently  acquired Javelin business of $0.2 million.
As a percentage of service  contract  revenue,  service contract cost of revenue
increased  to 21.9% in the three  months  ended March 31,  2003,  as compared to
19.0% in the three  months  ended March 31, 2002,  primarily  attributed  to the
aforementioned cost increases.

                                       27



                                   NYFIX, INC.


        Transaction  cost of revenue  increased  $1.2  million,  or 133% to $2.1
million for the three  months  ended March 31,  2003,  from $0.9  million in the
three months ended March 31, 2002,  primarily  due to the growth in  transaction
revenue  for the  period.  The  increase  in  transaction  cost of  revenue  was
primarily  due to  clearing  and  execution  related  fees of $0.6  million,  an
increase  in  data  center   costs,   including   labor,   maintenance,   lease,
communication  and data feed expenses,  of $0.4 million,  and  depreciation  and
amortization  expense of $0.2 million.  As a percentage of transaction  revenue,
transaction  cost of revenue  decreased to 59.5% in the three months ended March
31, 2003,  as compared to 234.4% in the three  months ended March 31, 2002,  due
primarily to the aforementioned  increase in transaction  revenue in the current
period.  Transaction  cost of revenue was a greater  percentage  of costs in the
three  months  ended  March 31,  2002,  due to the fact that  NYFIX  Transaction
Services  had costs in that period but did not start  generating  revenue  until
July 1, 2002.

GROSS PROFIT (AS A PERCENTAGE OF REVENUE)

        Gross  profit  decreased  to 55.2% for the three  months ended March 31,
2003,  from 55.8% for the three  months  ended March 31,  2002.  The decrease in
gross profit is primarily  attributable  to the impact of increased  data center
costs to  support  our  subscription  and  transaction  revenue  components  and
increased  telecommunication  charges,  due  to  more  desktop  connections  and
increased capacity in our data centers to support our core business.

        Subscription  gross profit decreased to 46.5% for the three months ended
March 31,  2003,  from 56.4% for the three  months  ended  March 31,  2002.  The
decrease in subscription gross profit is primarily attributable to the impact of
lower gross profit for our recently  acquired  Javelin business and depreciation
and   amortization   expense  related  to  our  capital  and   telecommunication
infrastructure investments made in our data center.

        Sale gross  profit  decreased  to 81.8% for the three months ended March
31,  2003,  from 83.0% for the three  months  ended March 31,  2002.  The slight
decrease  in sale  gross  profit  was  primarily  attributable  to the impact of
increased  depreciation expense attributable to capitalized  software,  which is
included in our products delivered to our customers.

        Service  contract  gross profit  decreased to 78.1% for the three months
ended March 31, 2003,  from 81.0% for the three months ended March 31, 2002. The
decrease in service  contract  gross  profit is  primarily  attributable  to the
impact of higher costs to support our increase in service contract revenue.

        Transaction  gross profit  increased to 40.5% for the three months ended
March 31,  2003,  from a deficit of 134.4% for the three  months ended March 31,
2002.  The  increase  in  gross  profit  was  attributable  to the  increase  in
transaction  revenue,  which  grew at a higher  rate than  costs.  As  mentioned
previously, NYFIX Transaction Services had costs in the three months ended March
31, 2002, but did not start generating revenue until July 1, 2002.

SELLING, GENERAL AND ADMINISTRATIVE

        Selling,  general and administrative  expense increased $2.6 million, or
50% to $7.8 million for the three months ended March 31, 2003, from $5.2 million
for the three  months ended March 31, 2002.  The increase was  primarily  due to
increased selling,  general and administrative expense for our recently acquired
NYFIX Millennium and Javelin  businesses and start-up  expenses related to NYFIX
Transaction   Services  of  $2.0  million,  and  increased  costs  of  corporate
departments  to  support a larger  organization  as a result of our  growth  and
acquisitions of $0.6 million, which reflects increased salaries, commissions and
related  benefit  costs,  rent  expense,  and  various  office  expenses.  As  a
percentage  of  total  revenue,   selling  general  and  administrative  expense
decreased  to 45% in the three months ended March 31, 2003 from 52% in the three
months ended March 31, 2002.  The decrease as a percentage  of total revenue was
attributable   to  a  higher  growth  in  revenue  than  selling,   general  and
administrative expense.

                                       28



                                   NYFIX, INC.


RESEARCH AND DEVELOPMENT

        Research  and  development  expense was constant at $0.2 million for the
three months ended March 31, 2003 and 2002.  As a percentage  of total  revenue,
research and  development  expense  decreased to 1.0% for the three months ended
March 31, 2003 from 1.8% for the three months ended March 31, 2002. The decrease
as a percentage of total revenue was  attributable to a higher growth in revenue
than research and development expense.

EQUITY IN LOSS OF NYFIX MILLENNIUM

        Effective  February 1, 2002,  we  exercised  the Option to increase  our
ownership  interest  in  NYFIX  Millennium,  from  50% to 80% and on  that  date
consolidated NYFIX Millennium's financial statements.  NYFIX Millennium incurred
operating  losses  of $1.3  million  for the  month of  January  2002,  which we
recognized under the equity method.

DEPRECIATION AND AMORTIZATION

        Depreciation and amortization  expense increased $0.7 million,  or 140%,
to $1.2  million for the three months ended March 31, 2003 from $0.5 million for
the three months ended March 31, 2002. This increase was primarily  attributable
to the  amortization  expense  related  to our  acquired  intangible  assets  in
connection with our recently acquired NYFIX Millennium and Javelin businesses of
$0.5 million,  depreciation and amortization  expense for our recently  acquired
transaction and Javelin businesses of $0.1 million, and the continued investment
in our  infrastructure  and to  administrative  support  equipment and leasehold
improvements  to support our growth of $0.1  million.  As a percentage  of total
revenue,  depreciation and amortization  expense increased to 6.8% for the three
months ended March 31, 2003 from 5.3% for the three months ended March 31, 2002.
The increase in percentage of revenue was primarily  attributable  to the impact
of the aforementioned costs.

INCOME (LOSS) FROM OPERATIONS

        Income from operations was $0.4 million for the three months ended March
31,  2003 as compared to a loss from  operations  of $1.6  million for the three
months ended March 31, 2002. The improvement in operating  results was primarily
due to the  increase  in revenue  from our  recently  acquired  transaction  and
Javelin  businesses,  which more than offset the higher  costs  associated  with
these businesses. In addition, our 2002 results were unfavorably impacted by the
equity in loss of NYFIX  Millennium  of $1.3  million.  As a percentage of total
revenue,  income from operations was 2% in the three months ended March 31, 2003
as compared to a deficit of 16% in the three months  ended March 31,  2002.  The
improvement as a percentage of total revenue was attributable to a higher growth
in revenue than costs of our acquired businesses.

INTEREST EXPENSE

        Interest  expense  decreased  $56,000,  or 64%, to $31,000 for the three
months ended March 31,  2003,  from $87,000 for the three months ended March 31,
2002,  principally due to interest  incurred in connection with late payments of
certain obligations of $43,000 for the three months ended March 31, 2002.

INVESTMENT INCOME

        Investment income increased to $106,000 for the three months ended March
31, 2003,  from $44,000 for the three months ended March 31, 2002. This increase
was  principally  due to  realized  losses  on sales of  short-term  investments
aggregating  $136,000 for the three months ended March 31, 2002, offset by lower

                                       29



                                   NYFIX, INC.


interest income of $112,000 in the current period,  principally  from short-term
investments,  due to lower yields on lower average  investment  balances for the
current period when compared to the prior year's three month period.

EQUITY IN LOSS OF UNCONSOLIDATED AFFILIATES

        Equity  in loss  of  unconsolidated  affiliates  increased  $330,000  to
$362,000 for the three  months ended March 31, 2003,  from $32,000 for the three
months ended March 31, 2002, as a result of losses  recognized from  investments
in  unconsolidated  affiliates  of $179,000  for  EuroLink  and of $183,000  for
Renaissance  in the three months ended March 31, 2003. In 2002, we recorded only
one month of EuroLink results as we acquired our investment on March 1, 2002.

INCOME TAXES

        We recorded an income tax benefit of $13,000 for the three  months ended
March 31,  2003,  compared to an income tax  provision  of $62,000 for the three
months  ended March 31,  2002.  The income tax benefit in the three months ended
March 31, 2003 was  attributable  to a tax  provision on our pretax income which
was more than offset by a tax benefit for certain estimated Federal research and
development  tax  credits  aggregating  $38,000,   available  for  research  and
development  expenses  incurred during the three months ended March 31, 2003. We
will receive no income tax benefit for the equity in loss of NYFIX Millennium of
$1.3  million in 2002 as these  operating  losses were  allocated to the Initial
Partners and New Partners for income tax  purposes.  Our  effective  tax benefit
rate of 21% in the three  months  ended March 31, 2003  differs from the Federal
statutory rate primarily due to the effects of the  aforementioned  research and
development tax credits,  offset  slightly by state income taxes.  Our effective
tax rate of 4% in the  three  months  ended  March 31,  2002 was lower  than the
Federal  statutory  rate  primarily  due to the  impact of the equity in loss of
NYFIX Millennium.

LIQUIDITY AND CAPITAL RESOURCES

        In June 2001, we raised $57.3 million, net of expenses, from a follow-on
public  offering of 3 million  shares of our common stock.  We used a portion of
the net proceeds for working  capital  requirements,  to re-purchase 1.3 million
shares of our common  stock,  to  continue to invest in our  infrastructure  and
products and,  subsequently,  to acquire  Javelin in March of 2002 and invest in
EuroLink and  Renaissance.  At March 31, 2003, our cash,  cash  equivalents  and
short-term  investments  totaled  $18.9  million as compared to $21.9 million at
December 31, 2002. We had short-term  investments in current marketable security
instruments  of $9.9 million at March 31, 2003,  having  interest  rates ranging
from 0.85% to 3.74%. Included in cash and cash equivalents at March 31, 2003 was
$3.1 million in money market funds with an average 30 day yield of 0.8% and $0.1
million in a tax-free money fund with an average 30 day yield of 0.5%.

        At March 31, 2003, we had total debt of $1.4 million,  which represented
current and long-term amounts  outstanding under capital lease  obligations.  At
March 31,  2003,  we had no material  commitments  for capital  expenditures  or
inventory  purchases.  Our long-term  capital needs depend on numerous  factors,
including   the  rate  we  obtain   new   clients   and  expand  our  staff  and
infrastructure,  as needed,  to accommodate such growth,  as well as the rate at
which we choose to invest in new  technologies  to modify our NYFIX  Network and
infrastructure. We have ongoing needs for capital, including working capital for
operations and capital expenditures to maintain and expand our operations.

        We believe  that we can achieve  synergies  from our  recently  acquired
NYFIX Millennium and Javelin businesses.  Although our NYFIX Millennium business
has incurred losses through its development and start-up stages, we believe that
revenue will  continue to increase as we gain greater  acceptance of our product

                                       30



                                   NYFIX, INC.


offerings.  However,  we expect NYFIX  Millennium  to possibly  need  additional
working  capital during the first six to nine months of 2003,  until it achieves
positive cash flow from  operations.  Our strategy is to migrate Javelin to more
of a  subscription-based  revenue model, similar to our core NYFIX USA business.
This  may  cause  Javelin   capital  sale  revenue  to  be   unpredictable   and
inconsistent.  Although  Javelin  generated  cash from  operations  in the three
months  ended March 31,  2003,  there can be no  assurance  that this trend will
continue. In addition, our unconsolidated affiliates,  Renaissance and EuroLink,
have received $4.6 million in cumulative funding from us through March 31, 2003,
including  $1.5 million in the three months ended March 31, 2003. We may provide
additional  funding to them,  until they  generate  positive cash flow or obtain
other sources of capital. Such additional funding, if necessary, may unfavorably
impact our working capital.

        We believe that our cash and investments of $18.9 million, together with
anticipated  cash to be generated from  operations will be sufficient to support
our  capital  and  operating  needs,  including  the  operating  needs  of NYFIX
Millennium, Javelin and our unconsolidated affiliates,  EuroLink and Renaissance
for at least the next twelve months.

WORKING CAPITAL

        Our present capital resources include proceeds from internal operations.
At March 31, 2003, we had working  capital of $30.2 million as compared to $30.8
million at December 31, 2002.  The decrease in working  capital was  principally
due to the cash used to acquire  property and  equipment,  make working  capital
advances to our unconsolidated  affiliates,  EuroLink and Renaissance,  and fund
product enhancements. This decrease was partially offset by cash flows generated
from operating activities and sales of short-term investments.

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

        Net cash  provided by  operating  activities  in the three  months ended
March 31, 2003 was $1.0 million, as our net income of $0.1 million, adjusted for
non-cash items, such as depreciation,  amortization,  deferred taxes,  provision
for bad debts and  equity in loss of  unconsolidated  affiliates  provided  $3.4
million.  Unfavorable working capital changes,  including accounts receivable of
$2.4 million and accounts  payable and accrued  expenses of $1.1 million,  which
were partially  offset by favorable net changes in other assets and  liabilities
of $1.1 million, decreased cash by $2.4 million.

        Net cash used in  operating  activities  in the three months ended March
31,  2002  was  $1.1  million,  as our net loss of $1.8  million,  adjusted  for
non-cash items, such as depreciation,  amortization,  deferred taxes,  provision
for bad debts and  equity in loss of  unconsolidated  affiliates  provided  $1.6
million.  Unfavorable  working capital,  including  accounts  receivable of $1.4
million and accounts  payable and accrued  expenses of $1.7  million,  decreased
cash by $2.7 million.

CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

        For the three  months  ended March 31,  2003 net cash used in  investing
activities was $2.9 million.  This consisted  primarily of loans and advances to
unconsolidated affiliates of $1.5 million, capital expenditures, mostly for data
center equipment and software,  of $1.5 million and product enhancement costs of
$0.9 million,  partially offset by net proceeds from the net sales of short-term
investments of $0.9 million.

        For the three months ended March 31, 2002 net cash provided by investing
activities  was  $11.2  million.  This  consisted  primarily  of  net  sales  of
short-term  investments  of $20.2  million  to fund the  cash  required  for our
Javelin acquisition and EuroLink investment, repayment of loans and net advances
from  NYFIX  Millennium  of $2.1  million  prior  to our  acquisition  of an 80%
interest on February 1, 2002 and the sale of  equipment of $0.4  million.  These
items  were  partially  offset by the net  payments  for the  Javelin  and NYFIX
Millennium  acquisitions  of $6.2  million,  our  investment in EuroLink of $4.0
million,  capital expenditures,  mostly for data center equipment and to support
our  infrastructure,  of $0.8  million  and  product  enhancement  costs of $0.6
million.

                                       31



                                   NYFIX, INC.


CASH USED IN FINANCING ACTIVITIES

        For the three months  ended March 31, 2003 and March 31,  2002,  our net
cash  used in  financing  activities  totaled  $0.3  million  and $0.1  million,
respectively,  consisting  primarily of principal  payments  under capital lease
obligations, partially offset by net proceeds from the exercise of stock options
by employees.

SEASONALITY AND INFLATION

        We believe that our operations have not been  significantly  affected by
seasonality or inflation.

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

        In July  2002,  the FASB  issued  SFAS No.  146,  "Accounting  for Costs
Associated with Exit or Disposal  Activities."  SFAS No. 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 No.
146 are effective for exit or disposal  activities  initiated after December 31,
2002. The Company adopted SFAS No. 146 effective January 1, 2003.

        In November  2002,  the EITF reached a consensus on No. 00-21,  "Revenue
Arrangements  with  Multiple  Deliverables."  EITF No. 00-21  applies to certain
contractually  binding  arrangements  under  which a company  performs  multiple
revenue  generating  activities and requires that all companies account for each
element within an arrangement  with multiple  deliverables  as separate units of
accounting if (a) the delivered item has value on a stand-alone basis, (b) there
is objective and reliable evidence of fair value and (c) the amount of the total
arrangement  consideration  is fixed.  EITF No. 00-21 is  effective  for revenue
arrangements  entered into in fiscal periods  beginning  after June 15, 2003. We
are evaluating  the provisions of EITF No. 00-21 and whether the  implementation
of this statement will have a material effect on our financial position, results
of operations or cash flows.

        In  December  2002,  the FASB  issued  SFAS  No.  148,  "Accounting  for
Stock-Based  Compensation - Transition and Disclosure." SFAS No. 148 amends SFAS
No. 123,  "Accounting  for  Stock-Based  Compensation,"  to provide  alternative
methods of transition  for companies that  voluntarily  change to the fair value
based method of accounting for stock-based employee  compensation.  SFAS No. 148
also amends the  disclosure  provisions of SFAS No. 123 and APB No. 28,  Interim
Financial  Reporting,  to  require  disclosure  in the  summary  of  significant
accounting policies of the effects of an entity's accounting policy with respect
to stock-based employee compensation on reported net income and income per share
in annual and interim financial  statements.  The disclosure  provisions of SFAS
No. 148 are effective for both interim and annual  periods ending after December
15, 2002. We adopted the  disclosure  provisions of SFAS No. 148 at December 31,
2002.

        In January  2003,  the FASB  issued FIN 46,  "Consolidation  of Variable
Interest  Entities,"  which  requires  the  consolidation  of  certain  entities
considered to be variable interest entities ("VIEs"). An entity is considered to
be a VIE  when it has  equity  investors  which  lack the  characteristics  of a
controlling  financial interest,  or its capital is insufficient to permit it to
finance  its  activities  without  additional  subordinated  financial  support.
Consolidation of a VIE by an investor is required when it is determined that the
investor will absorb a majority of the VIE's expected losses or residual returns
if they occur.  FIN 46 provides  certain  exceptions  to these rules,  including
qualifying special purpose entities subject to the requirements of SFAS No. 140,
Accounting for Transfers and Servicing of Financial  Assets and  Extinguishments
of  Liabilities.  VIEs  created  after  January  31,  2003 must be  consolidated
immediately,  while  VIEs  that  existed  prior  to  February  1,  2003  must be
consolidated  as of July 1, 2003. We are evaluating the provisions of FIN 46 and
whether the implementation of this statement,  with regard to our unconsolidated
affiliates,  will have a material effect on our financial  position,  results of
operations or cash flows.

                                       32



                                   NYFIX, INC.


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, our ability to market and develop our products.  Although we believe
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 us or any other
person that our objectives and plans 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.  We do not use derivative  financial
instruments for any purpose.

        We are exposed to market risk  principally  through  changes in interest
rates and equity prices. Our short-term investment portfolio of $9.9 million and
$10.7 million at March 31, 2003 and December 31, 2002,  respectively,  consisted
of $5.9 million and $6.8 million, respectively, of auction rate certificates and
$4.0 million and $3.9 million,  respectively, of mutual fund securities. Risk is
limited on the auction rate  certificates  portfolio  due to the fact that it is
invested in insured  municipal  bonds of which no more than 5% of our  portfolio
can be invested in any one security issue. The potential  decrease in fair value
resulting from a hypothetical  10% change in interest rates for the auction rate
certificates would not be material to income, cash flows or fair value.

        The mutual fund securities  portfolio was 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.  These  securities  are subject to equity price risk. The estimated
potential loss in fair value  resulting from a hypothetical  10% decrease in the
quoted price is $0.4 million.

        We are also  subject to interest  rate risk on our $3.1 million and $2.0
million of notes receivable from unconsolidated affiliates at March 31, 2003 and
December 31, 2002. A hypothetical  10% change in interest rates would not result
in a material change in their fair value.

ITEM 4. CONTROLS AND PROCEDURES

        Based on an evaluation of the  effectiveness of the design and operation
of our disclosure controls and procedures, our Chief Executive Officer and Chief
Financial  Officer  concluded  that, as of the end of the period covered by this
report,  our disclosure  controls and  procedures  were effective to ensure that
information  required to be  disclosed  in our Exchange Act reports is recorded,
processed,  summarized  and reported  within the time  periods  specified in the
SEC's rules and forms.

        On May 27, 2004, we restated the consolidated  financial statements that
appear in this Form 10-Q/A.  The  restatement  relates to our accounting for our
1999 and 2001  investments in and 2002 acquisition of an additional 30% interest
in NYFIX  Millennium.  Based on an evaluation of the effectiveness of the design
and  operation of our  disclosure  controls and  procedures,  in light of, among
other things, the facts and circumstances of our May 27, 2004 restatement of our
financial  statements,  our Chief Executive  Officer and Chief Financial Officer
concluded  that,  as of the  end of the  period  covered  by  this  report,  our
disclosure  controls and procedures  were  effective to ensure that  information
required to be disclosed  in our  Exchange  Act reports is recorded,  processed,
summarized and reported within the time periods specified in the SEC's rules and
forms.

In  light of our  determination  on May 27,  2004 to  restate  our  consolidated
financial  statements that appear in this Form 10-Q/A,  our management  directed
that steps be taken to review the  operation and  effectiveness  of our internal
controls  and  procedures  with respect to our  accounting  for  investment  and
acquisition transactions.

                                       33



                                   NYFIX, INC.


                                     PART II

OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

           See Item 5, Other  Information,  for  discussion  of  recently  filed
litigation.

ITEM 5.     OTHER INFORMATION

           On May 13, 2003, the Company was served as a defendant in Kledaras v.
           NYFIX, Inc. (Sup. Ct. NY County) Index No. 601502/03,  which had been
           filed on the  same  date in New York  State  court in New York  City.
           George  Kledaras,   as  representative  of  shareholders  of  Javelin
           Technologies,  Inc. ("Javelin"),  seeks the release of an escrow fund
           established in connection  with the Company's  acquisition of Javelin
           in March 2002 and alleges damages of at least $18 million against the
           Company and its Chairman and CEO, Peter K. Hansen, in connection with
           such  acquisition.  The Company believes the lawsuit is without merit
           and intends to defend itself vigorously.

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

           (a) EXHIBITS

31.1       Certification  of Chief Executive  Officer pursuant to Section 302 of
           the Sarbanes-Oxley Act of 2002.
31.2       Certification  of Chief Financial  Officer pursuant to Section 302 of
           the Sarbanes-Oxley Act of 2002.
32.1       Certification  of Chief Executive  Officer pursuant to Section 906 of
           the Sarbanes-Oxley Act of 2002.
32.2       Certification  of Chief Financial  Officer pursuant to Section 906 of
           the Sarbanes-Oxley Act of 2002.

           (b) REPORTS ON FORM 8-K

                  There  were no  Reports  on Form 8-K  filed  during  the three
months ended March 31, 2003.

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

                                       34




                                   NYFIX, INC.


                                   SIGNATURES

        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.



                                   By: /s/ Mark R. Hahn
                                       --------------------------
                                       Mark R. Hahn
                                       Chief Financial Officer and Secretary
                                       (Principal Financial and Accounting
                                          Officer)


Dated: May 28, 2004

                                       35





                                 Exhibits Index

Exhibit

31.1       Certification  of Chief Executive  Officer pursuant to Section 302 of
           the Sarbanes-Oxley Act of 2002.
31.2       Certification  of Chief Financial  Officer pursuant to Section 302 of
           the Sarbanes-Oxley Act of 2002.
32.1       Certification  of Chief Executive  Officer pursuant to Section 906 of
           the Sarbanes-Oxley Act of 2002.
32.2       Certification  of Chief Financial  Officer pursuant to Section 906 of
           the Sarbanes-Oxley Act of 2002.`