<PAGE>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-Q

(MARK ONE)

<TABLE>
<C>        <S>
   /X/     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

                                       OR

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

        FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                         COMMISSION FILE NUMBER 0-28436

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

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

<TABLE>
<S>                                            <C>
                  DELAWARE                                      04-3214536
       (State or other jurisdiction of                       (I.R.S. Employer
       incorporation or organization)                     Identification Number)
</TABLE>

                                ONE WAYSIDE ROAD
                        BURLINGTON, MASSACHUSETTS 01803
              (Address of principal executive offices) (Zip Code)

                                 (781) 359-3000
              (Registrant's telephone number, including area code)

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

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

    As of May 8, 2001, there were 46,936,132 shares of the Registrant's Common
Stock outstanding.

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<PAGE>
                               OPEN MARKET, INC.
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                         PAGE
                                                                       --------
<S>      <C>                                                           <C>
PART I--FINANCIAL INFORMATION

ITEM 1.  Financial Statements
    Consolidated Balance Sheets as of March 31, 2001 and                   3
     December 31, 2000...............................................
    Consolidated Statements of Operations for the three months ended
     March 31, 2001 and 2000.........................................      4
    Consolidated Statements of Cash Flows for the three months ended
     March 31, 2001 and 2000.........................................      5
    Notes to Consolidated Financial Statements.......................      6
ITEM 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations.................................     11
ITEM 3.  Quantitative and Qualitative Disclosures about Market
           Risk......................................................     26

PART II--OTHER INFORMATION

ITEM 1.  Legal Proceedings...........................................     27
ITEM 2.  Changes in Securities and Use of Proceeds...................     27
ITEM 3.  Defaults Upon Senior Securities.............................     28
ITEM 4.  Submission of Matters to a Vote of Security Holders.........     28
ITEM 5.  Other Information...........................................     28
ITEM 6.  Exhibits and Reports on Form 8-K............................     28

SIGNATURES...........................................................     29

EXHIBIT INDEX........................................................
</TABLE>

                                       2
<PAGE>
                         PART I--FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                               OPEN MARKET, INC.

                          CONSOLIDATED BALANCE SHEETS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               MARCH 31,    DECEMBER 31,
                                                                 2001           2000
                                                              -----------   -------------
                                                              (UNAUDITED)
<S>                                                           <C>           <C>
                                         ASSETS
Current Assets:
  Cash and cash equivalents.................................   $  10,342      $  20,717
  Marketable securities.....................................       4,412          9,713
  Accounts receivable, net of allowances of $5,843 and
    $5,896 at March 31, 2001 and December 31, 2000,
    respectively............................................      15,541         22,385
  Prepaid expenses and other current assets.................       3,886          4,481
                                                               ---------      ---------
    Total current assets....................................      34,181         57,296
                                                               ---------      ---------
Property and equipment, at cost:
  Computers and office equipment............................      17,737         17,643
  Leasehold improvements....................................       5,689          5,694
  Furniture and fixtures....................................       2,358          2,372
                                                               ---------      ---------
    Total property and equipment............................      25,784         25,709
  Less--accumulated depreciation and amortization...........      17,529         16,663
                                                               ---------      ---------
    Net property and equipment..............................       8,255          9,046
                                                               ---------      ---------
Intangible assets...........................................          --          2,657
Other assets................................................       1,076          1,076
                                                               ---------      ---------
Total assets................................................   $  43,512      $  70,075
                                                               =========      =========

      LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Lines of credit...........................................   $      --      $  17,405
  Accounts payable..........................................       4,376          5,538
  Accrued expenses..........................................      14,830         18,463
  Deferred revenues.........................................       6,981          8,012
                                                               ---------      ---------
    Total current liabilities...............................      26,187         49,418
                                                               ---------      ---------

Redeemable convertible preferred stock
  Series E 6% cumulative convertible preferred stock, $0.10
    par value--Authorized--5 shares, issued and outstanding
    5 and no shares at March 31, 2001 and December 31, 2000,
    respectively............................................       3,557             --

Stockholders' Equity:
  Preferred stock, $0.10 par value--Authorized--1,995
    shares, issued and outstanding--None....................          --             --
  Common stock, $0.001 par value--Authorized--300,000
    shares, issued and outstanding 46,929 and 46,708 shares
    at March 31, 2001 and December 31, 2000, respectively...          47             47
  Additional paid-in capital................................     224,937        223,162
  Deferred compensation.....................................        (187)          (216)
  Accumulated deficit.......................................    (211,029)      (202,336)
                                                               ---------      ---------
    Total stockholders' equity..............................      13,768         20,657
                                                               ---------      ---------
Total liabilities, redeemable convertible preferred stock
  and stockholders' equity..................................   $  43,512      $  70,075
                                                               =========      =========
</TABLE>

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

                                       3
<PAGE>
                               OPEN MARKET, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                                   MARCH 31,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
Revenues:
  Product revenues..........................................  $  6,299   $15,355
  Service revenues..........................................     6,715     9,468
                                                              --------   -------
    Total revenues..........................................    13,014    24,823
                                                              --------   -------
Cost of revenues:
  Product revenues..........................................       598     2,376
  Service revenues..........................................     6,285     7,714
                                                              --------   -------
    Total cost of revenues..................................     6,883    10,090
                                                              --------   -------
    Gross profit............................................     6,131    14,733
                                                              --------   -------
Operating expenses:
  Selling and marketing.....................................    10,744    10,477
  Research and development..................................     5,149     6,036
  General and administrative................................     2,700     2,372
  Amortization of intangible assets.........................       450       765
                                                              --------   -------
    Total operating expenses................................    19,043    19,650
                                                              --------   -------
    Loss from operations....................................   (12,912)   (4,917)
                                                              --------   -------

Gain on sale of assets......................................     4,710        --
Interest income.............................................       141       352
Interest expense............................................      (312)      (93)
Other expense...............................................      (176)      (58)
                                                              --------   -------
    Loss before provision for incomes taxes.................    (8,549)   (4,716)
                                                              --------   -------
Provision for income taxes..................................       115        52
                                                              --------   -------
    Net loss................................................    (8,664)   (4,768)
                                                              --------   -------
Accretion of preferred stock discount and dividends.........        29        --
                                                              --------   -------
Net loss applicable to common shareholders..................  $ (8,693)  $(4,768)
                                                              ========   =======
Net loss per share applicable to common shareholders--basic
  and diluted...............................................  $  (0.19)  $ (0.11)
                                                              ========   =======
Weighted average common shares outstanding--basic and
  diluted...................................................    46,832    44,401
                                                              ========   =======
</TABLE>

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

                                       4
<PAGE>
                               OPEN MARKET, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                                   MARCH 31,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
Cash Flows from (used by) Operating Activities:
  Net loss applicable to common shareholders................  $ (8,693)  $(4,768)
  Adjustments to reconcile net loss to net cash used in
    operating activities--
    Depreciation and amortization...........................       866     1,096
    Gain on sale of Folio technology to NextPage............    (4,460)       --
    Amortization of intangible assets.......................       450       765
    Stock based compensation expense........................        29        28
    Accretion of preferred stock discount and dividends.....        29        --
  Changes in assets and liabilities--
    Accounts receivable.....................................     6,844       129
    Prepaid expenses and other current assets...............       595        15
    Accounts payable........................................    (1,162)   (1,814)
    Accrued expenses........................................    (3,633)      339
    Deferred revenues.......................................    (1,031)    3,375
                                                              --------   -------
Net cash used by operating activities.......................   (10,195)     (835)
                                                              --------   -------
Cash Flows from Investing Activities:
    Purchases of property and equipment.....................       (75)   (1,081)
    Maturities of marketable securities, net................     5,301     4,352
                                                              --------   -------
Net cash provided by investing activities...................     5,226     3,271
                                                              --------   -------
Cash Flows from (used by) Financing Activities:
    Net payments under lines of credit......................   (17,405)       --
    Proceeds from issuance of redeemable convertible
      preferred stock, net of issuance costs................     4,750        --
    Proceeds from sale of Folio technology to NextPage......     6,667        --
    Payments on long-term obligations.......................        --       (15)
    Proceeds from employee stock purchase plan..............       530       567
    Proceeds from exercise of stock options.................        23     6,424
                                                              --------   -------
Net cash (used by) provided by financing activities.........    (5,406)    6,976
                                                              --------   -------
Net (decrease) increase in cash and cash equivalents........   (10,375)    9,412
                                                              --------   -------
Cash and cash equivalents, beginning of period..............    20,717    19,258
                                                              --------   -------
Cash and cash equivalents, end of period....................  $ 10,342   $28,669
                                                              ========   =======
Supplemental Disclosure of Cash Flow Information:
Interest paid during the period.............................  $    312   $    49
                                                              ========   =======
Taxes paid during the period................................  $    111   $    88
                                                              ========   =======
Supplemental Disclosure of Non-cash Investing and Financing
  Activities:
  Warrants issued in connection with redeemable convertible
    preferred stocks........................................  $  1,221   $    --
                                                              ========   =======
</TABLE>

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

                                       5
<PAGE>
                               OPEN MARKET, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1.  BASIS OF PRESENTATION

    The consolidated financial statements of Open Market, Inc. (Open Market or
the Company) presented herein have been prepared pursuant to the rules of the
Securities and Exchange Commission for quarterly reports on Form 10-Q and do not
include all of the information and note disclosures required by generally
accepted accounting principles. These statements should be read in conjunction
with the consolidated financial statements and notes thereto for the year ended
December 31, 2000, included in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission on April 2, 2001.

    The consolidated financial statements and notes herein are unaudited but, in
the opinion of management, include all adjustments (consisting of normal,
recurring adjustments) necessary to present fairly the consolidated financial
position, results of our operations and cash flows and those of our
subsidiaries.

    The results of operations for the interim periods shown herein are not
necessarily indicative of the results to be expected for any future interim
period or for the entire year.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    The accompanying consolidated financial statements reflect the application
of the following significant accounting policies described in this note and
elsewhere in the accompanying notes to consolidated financial statements.

    (a)  PRINCIPLES OF CONSOLIDATION

    The accompanying consolidated financial statements include the accounts of
Open Market and our wholly owned subsidiaries, which includes
FutureTense, Inc., for all periods presented. All material inter-company
accounts and transactions have been eliminated in consolidation.

    (b)  REVENUE RECOGNITION

    We recognize revenue in accordance with Statement of Position (SOP) 97-2,
SOFTWARE REVENUE RECOGNITION, as amended by SOP 98-9, SOFTWARE REVENUE
RECOGNITION, WITH RESPECT TO CERTAIN ARRANGEMENTS. We generate revenues from two
sources: license fees for the use of our products and service revenues for
implementation, support, consulting and training related to our products.

    We generally execute separate contracts that govern the terms and conditions
of each software license and maintenance arrangement and each professional
services arrangement. These contracts may be an element in a multiple element
arrangement. Revenues under multiple element arrangements, which may include
several different software products or services sold together, are allocated to
each element based on the residual method in accordance with SOP 98-9.

    We use the residual method when fair value does not exist for one of the
delivered elements in an arrangement. Under the residual method, the fair value
of the undelivered elements is deferred and subsequently recognized. We have
established sufficient vendor-specific objective evidence for the value of
professional services, training and maintenance and support services based on
the price charged when these elements are sold separately. Accordingly, software
license revenue is recognized under the residual method in arrangements in which
software is licensed with professional services, training and maintenance and
support services.

                                       6
<PAGE>
    Revenues from software license agreements are recognized upon delivery of
the software if there is evidence of an agreement, the payment is fixed or
determinable and collection is probable. If an acceptance period is required or
post-delivery obligations exist, revenues are recognized upon customer
acceptance and/or completion of the obligation. We enter into reseller
arrangements for certain products that typically provide for sublicense fees
payable to us based on a percentage of our list price. Royalty and sublicense
revenues from our reseller arrangements are recognized when earned, either on a
per-unit basis as reported to us by our licensees, or with regards to guaranteed
minimums, upon shipment of the master copy of all software to which the
guaranteed minimum sublicense fees relate, if there are no significant
post-delivery obligations. Revenues for post-contract customer support are
recognized ratably over the term of the support period, which is typically one
year. Service revenues, which include education, implementation and consulting
services, are recognized in the period services are provided, if customer
acceptance is not required, there is evidence of an agreement, the revenues are
fixed or determinable and collection is probable.

    Cost of product revenues consists of costs to distribute the product,
including the cost of the media on which it is delivered and royalty payments to
third-party vendors. Cost of service revenues consists primarily of consulting
and support personnel salaries and related costs.

    Deferred revenues represent cash received from customers for products and
services in advance of revenue recognition.

    (c)  CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

    We account for investments under Statement of Financial Accounting Standards
(SFAS) No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY
SECURITIES. Under SFAS No. 115, investments for which we have positive intent
and ability to hold to maturity, consisting of cash equivalents and marketable
securities, are reported at amortized cost, which approximates fair market
value. Cash equivalents are highly liquid investments with original maturities
of less than three months. Marketable securities are investment-grade securities
with original maturities of greater than three months. The average maturity of
our marketable securities was approximately 1 month and two months at March 31,
2001 and December 31, 2000, respectively. To date, we have not recorded any
realized gains or losses.

    (d)  TRANSLATION OF FOREIGN CURRENCIES

    The accounts of our foreign subsidiaries are translated in accordance with
SFAS No. 52, FOREIGN CURRENCY TRANSLATION. In translating the accounts of the
foreign subsidiaries into U.S. dollars, current assets and liabilities are
translated at the rate of exchange in effect at year-end, while non-monetary
assets and stockholders' equity are translated at historical rates. Revenue and
expense accounts are translated using the weighted-average rate in effect during
the year. Foreign currency translation and transaction gains or losses for the
foreign subsidiaries are included in the accompanying consolidated statements of
operations since the functional currency of these subsidiaries is the U.S.
dollar. We had accounts receivable of approximately $1,767 and $2,021
denominated in foreign currencies as of March 31, 2001 and December 31, 2000,
respectively. We mark these receivables to market and record a gain or loss,
which is a component of other income/expense in the consolidated statements of
operations. To date we have not incurred a significant foreign exchange loss on
our foreign accounts receivable.

    (e)  NET LOSS PER SHARE

    We apply SFAS No. 128, EARNINGS PER SHARE. SFAS No. 128 establishes
standards for computing and presenting earnings per share and applies to
entities with publicly held common stock or potential common stock. We have
applied the provisions of SFAS No. 128 and Staff Accounting Bulletin (SAB)
No. 98 for all periods presented. Net loss per share is based upon the weighted
average outstanding

                                       7
<PAGE>
shares of common stock, adjusted to give effect to the number of equivalent
shares of our common stock issued in connection with the FutureTense acquisition
for all periods presented. Diluted net loss per share for the three months ended
March 31, 2001 and 2000 is the same as basic net loss per share as the inclusion
of the potential common stock equivalents would be anti-dilutive. The number of
outstanding anti-dilutive potential common shares, which consist of warrants and
stock options that are not included in basic net loss per common share, were
9,821,428 and 8,506,245 for the three months ended March 31, 2001 and 2000,
respectively.

    (f)  COMPREHENSIVE LOSS

    SFAS No. 130, REPORTING COMPREHENSIVE INCOME, requires disclosure of all
components of comprehensive loss on an annual and interim basis. Comprehensive
loss is defined as the change in equity of a business enterprise during a period
from transactions and other events and circumstances from non-owner sources.
Total comprehensive loss, which is comprised of net loss and the accretion of
preferred stock dividends, was $8,693 for the three months ended March 31, 2001.
Total comprehensive loss was the same as next loss for the three months ended
March 31, 2000.

    (g)  DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE

    We apply SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND
RELATED INFORMATION which establishes standards for reporting information
regarding operating segments in annual financial statements and requires
selected information for those segments to be presented in interim financial
reports issued to stockholders. SFAS No. 131 also establishes standards for
related disclosures about products and services and geographic areas. Operating
segments are identified as components of an enterprise about which separate
discrete financial information is available for evaluation by the chief
operating decision maker, or decision making group, in making decisions on how
to allocate resources and assess performance. Our chief decision-maker, as
defined under SFAS No. 131, is a combination of the Chief Executive Officer and
the Chief Financial Officer.

    We report our revenues according to three operating segments: Content-driven
eBusiness solutions, Transact/ShopSite and other revenue. Our Content-driven
eBusiness revenues include license fees and service revenues from our Content
Server suite of integrated products. Our Transact/ShopSite revenues include
license fees and service revenues from our Transact and ShopSite products. The
other revenues relate to the royalties received from NextPage in accordance with
our arrangement, and revenues from licensing of patents.

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED
                                                                 MARCH 31,
                                                            -------------------
                                                              2001       2000
                                                            --------   --------
<S>                                                         <C>        <C>
REVENUES:
Content-driven eBusiness solutions product revenues.......  $ 4,578    $ 7,654
Transact/ShopSite product revenues........................       54      6,561
Other product revenues....................................    1,667      1,140
                                                            -------    -------
Total product revenues....................................    6,299     15,355
                                                            -------    -------
Content-driven eBusiness solutions service revenues.......    3,123      2,031
Transact/ShopSite service revenues........................    3,584      7,243
Other service revenues....................................        8        194
                                                            -------    -------
Total service revenues....................................    6,715      9,468
                                                            -------    -------
Total revenues............................................  $13,014    $24,823
                                                            =======    =======
</TABLE>

                                       8
<PAGE>
    Revenues from geographical sources in total and as a percentage of total
revenues for the months ended March 31, 2001 and 2000 were as follows:

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED MARCH 31,
                                                --------------------------------
                                                    2001               2000
                                                -------------      -------------
<S>                                             <C>       <C>      <C>       <C>
North America.................................  $ 6,071    47%     $16,163    65%
United Kingdom................................    1,881    14%       2,130     9%
Italy.........................................    1,090     8%       1,122     5%
Netherlands...................................      866     7%         543     2%
Spain.........................................      823     6%         639     3%
Europe........................................      814     6%       1,055     4%
Germany.......................................      725     6%         822     3%
Asia..........................................      709     5%       1,884     8%
Other.........................................       35     1%         465     1%
                                                -------   ---      -------   ---
Total.........................................  $13,014   100%     $24,823   100%
                                                =======   ===      =======   ===
</TABLE>

    All of our product sales for the three months ended March 31, 2001 and 2000
were shipped from our facilities located in the United States. As of March 31,
2001, all of our assets relate to the content-driven eBusiness and Transact.
Substantially all of our long-lived assets are located in the United States.

    (h)  NEW ACCOUNTING STANDARDS

    In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. SFAS
No. 133, as amended by SFAS No. 137, is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. We adopted SFAS No. 133, effective
January 1, 2001, and the adoption did not have a material impact on our
consolidated financial statements.

    (i)  RECLASSIFICATIONS

    We have reclassified certain prior year information to conform to the
current year's presentation.

3.  SERIES E PREFERRED STOCK

    In March 2001, we issued $5.0 million of our Series E 6% cumulative
convertible preferred stock (Series E preferred stock) and warrants to purchase
917,297 shares of our common stock at an exercise price of $1.91 per share,
subject to certain adjustments, to an affiliate of the Palladin Group. The
warrants and the beneficial conversion feature were valued in accordance with
EITF 00-27, ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS INDEXED TO, AND
POTENTIALLY SETTLED IN, A COMPANY'S OWN STOCK. This value, $1,221, was recorded
as a discount to the Series E preferred stock which will be accreted over a
2 year period. The warrants are exercisable for a period of five years.

    The Series E preferred stock is convertible at the option of the holder into
shares of our common stock at an initial conversion price of $1.53 per share,
subject to certain adjustments. The initial conversion price is subject to
adjustment on the six-month anniversary of the initial issuance, provided that
in no event shall the adjusted conversion price be less than $0.8176. In
addition, the conversion price is subject to adjustment in the event that we
issue securities below the conversion price, with certain exceptions. The shares
of Series E preferred stock are redeemable by Open Market after two years in
cash or common stock at the Company's option. If the shares of Series E
preferred stock are redeemed for shares of common stock, the conversion price
will be the lesser of the initial conversion price, the six-month adjustment
price or the then fair market value of the common stock (determined

                                       9
<PAGE>
pursuant to a formula). In no event, however, will we be required to issue in
excess of 9,369,113 shares of common stock (subject to adjustment for stock
splits, stock dividends or similar adjustments to capitalization) upon
conversion of the Series E preferred stock and exercise of the related warrants.
As a result, the Series E preferred stock may be converted and the common stock
purchase warrants may be exercised at a price per share that may be less than
the then current market price of our common stock, which may cause substantial
dilution to our existing common stockholders.

    The shares of Series E preferred stock bear dividends at an annual rate of
6.0% of the liquidation preference of these shares, payable semi-annually,
through the issuance of shares of our common stock or, at our option, in cash.
Holders of Series E preferred stock have the right, after two years, to require
us to redeem the Series E preferred stock for cash or convert such shares into
our common stock, at our option. Also, in the event of a "change in control" as
defined in the terms of the Series E preferred stock, if the Series E preferred
stock is not converted into shares of common stock by the holder, we are
required to redeem the Series E preferred stock for cash, with such cash
redemption equal to 115% of the Series E preferred stock liquidation preference.
We are required to register the shares of common stock issuable upon conversion
and upon exercise of the warrants under the Securities Act of 1933 for public
resale.

4.  SALE OF FOLIO TECHNOLOGY TO NEXTPAGE, INC.

    On March 23, 2001, we entered into an Asset Purchase Agreement with
NextPage, Inc., pursuant to which we sold certain technology, which we refer to
as the Folio technology, to NextPage for a total purchase price of $6,667 in
cash. Our Board of Directors determined the purchase price to represent fair and
reasonable consideration for these assets. We recorded a one-time gain of $4,460
in the first quarter of 2001 in connection with the sale, which represents the
$6,667 consideration, less $2,207 of intangible assets, which existed at the
date of the sale.

5.  CONTINGENCIES

CLASS ACTION SUIT

    We are aware of six putative class actions that were filed between June 14,
2000 and August 10, 2000, against us and certain of our officers and directors
in the United States District Court for the District of Massachusetts. These
actions, each filed on behalf of an alleged class of our shareholders who
purchased their common stock between November 8, 1999 and April 18, 2000, allege
violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934
and Rule 10b-5 promulgated thereunder. The plaintiffs are seeking monetary
damages and other appropriate relief. On January 25, 2001, the court entered an
order consolidating these actions into one action. This consolidated case is
entitled IN RE OPEN MARKET SECURITIES LITIGATION, C.A. No. 00-CV-11162. On
April 13, 2001, the plaintiffs filed a consolidated class action complaint. We
believe we have meritorious defenses against this suit and intend to vigorously
defend this suit.

6.  SUBSEQUENT EVENTS

RESTRUCTURING

    On April 4, 2001, we announced a decision to reduce staffing by
approximately 25 percent. This action is in direct support of our efforts to
align our cost structure with our current revenue levels and to better position
us to execute on our plan for profitability in the second half of 2001. The
restructuring will result in a second quarter charge of approximately
$1 million for severance and other related charges.

                                       10
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

    YOU SHOULD READ THE FOLLOWING DISCUSSION OF OUR FINANCIAL CONDITION AND
RESULTS OF OPERATIONS TOGETHER WITH THE CONSOLIDATED FINANCIAL STATEMENTS AND
THE RELATED NOTES INCLUDED ELSEWHERE IN THIS REPORT. THE FOLLOWING FINANCIAL
DATA IS PRESENTED IN THOUSANDS.

OVERVIEW

    Open Market is a provider of enterprise content management and delivery
application software. Our software solutions are designed to enable businesses
and other organizations to use the Internet to optimize interactions with their
site visitors, employees, customers and distribution channels, in order to
reduce costs, accelerate business processes, gain market share, establish new
revenue streams and compete in the new online economy. We believe that quality
interactions result from the reliable and timely exchange of compelling and
accurate information and a consistent series of quality interactions is the key
to building and sustaining business relationships.

    We build our software based on two core beliefs. First, information, or
content, is a strategic asset, and world-class organizations strive to excel at
managing crucial information. For these organizations, the Internet introduces
new information management challenges and opportunities. Second, web
applications managing this crucial information must be reliable, scalable,
flexible and open. This puts new requirements on how eBusiness application
software needs to be developed and delivered.

    Companies use our software to build and operate captivating web sites, rich
product catalogs, self-service applications and web services for their
distribution channels, marketplaces and customers. Our products acquire content
from people and systems, manage that information through approval and workflow
processes, and then disseminate it in personalized delivery formats to trading
partners' systems and to a variety of presentation devices, including web
browsers, wireless devices, personal digital assistants and e-mail. These
eBusiness applications, which we call "content-driven eBusiness solutions" are
designed to enable companies to reduce costs, strengthen customer loyalty and
establish new revenue streams.

    We recognize revenue in accordance with Statement of Position (SOP) 97-2,
SOFTWARE REVENUE RECOGNITION, as amended by SOP 98-9. We generate revenue from
two sources: license fees for the use of our products, and service revenues for
implementation, support, consulting and training related to our products.

    We recognize license fee revenues upon licensing and delivery of the
software, if there is persuasive evidence of an agreement, the fee is fixed or
determinable, and collectibility is probable. If the license is subject to
customer acceptance or significant post-delivery obligations exist, we defer the
revenue recognition of the license fee until customer acceptance has occurred or
the post-delivery obligations have been met. We have established sufficient
vendor specific objective evidence for the value of professional services,
training, and maintenance and support services based on the price charged when
these elements are sold separately. Accordingly, software license revenue is
recognized under the residual method in arrangements in which software is
licensed with professional services, training, and maintenance and support
services. Under the residual method, the fair value of the undelivered elements
is deferred and subsequently recognized as earned.

    We execute separate contracts that govern the terms and conditions of each
software license and maintenance arrangement and each professional service
arrangement. These contracts may be an element in a multiple element
arrangement. Revenues under multiple element arrangements, which may include
several different software products or services sold together, are allocated to
each element based on the residual method in accordance with the Statement of
Position 98-9, SOFTWARE REVENUE RECOGNITION, WITH RESPECT TO CERTAIN
ARRANGEMENTS.

                                       11
<PAGE>
    We also enter into reseller arrangements for certain of our products that
typically provide for sublicense fees payable to us based on a percentage of our
list price. We recognize these sublicense revenues from resellers when earned,
either on a per-unit basis or, for guaranteed minimums, upon shipment of the
master copy of all our software to which the guaranteed sublicense fee minimums
relate, if there are no significant post-delivery obligations and if all other
criteria of SOP 97-2 and SOP 98-9 are met.

    Our service revenues are derived from a wide variety of contracted services
for technical support, consulting and training related to our products. We
charge fees for maintenance and support based on a percentage, generally 16% to
22%, of the corresponding license fee, depending on the level of support, and
recognize these fees ratably over the life of the maintenance and support
contract. Our maintenance agreements provide for unspecified product upgrades
and enhancements and technical support in the form of telephone or on-site
assistance. These agreements are renewable at the election of the customer.
Accordingly, our maintenance and technical support revenues are typically a
function of new product licenses and the annual renewal of maintenance
agreements. We also generate revenues from professional services, which include
implementation and technical consulting, and from education services, including
on-site and online training services. We recognize revenues from professional
and education services as such services are performed.

    We report our revenues according to three operating segments: Content-driven
eBusiness solutions, Transact/ShopSite and other revenue. Our content-driven
eBusiness solutions revenues include license fees and service revenues from our
Content Server family of integrated products. Our Transact/ ShopSite revenues
include license fees and service revenues from our Transact and ShopSite
products. The other revenues relate primarily to the royalties received from
NextPage in accordance with our arrangement, as well as patent licensing
revenue.

    Our cost of product revenues consists of costs to distribute our products,
including the cost of the media on which our products are delivered, and royalty
payments to third-party vendors for technology that is incorporated into our
products. Our cost of service revenues consists primarily of the salaries and
related costs of our technical personnel.

    Software development costs that qualified to be capitalized were immaterial
in all periods. Accordingly, we have charged all such expenses to research and
development in the period incurred.

    Our customer base is diversified, with no single customer representing
greater than 10% of our total revenues for periods ended March 31, 2001 and
2000.

RESULTS OF OPERATIONS

REVENUES

<TABLE>
<CAPTION>
                                                  THREE MONTHS
                                                 ENDED MARCH 31,
                                               -------------------   % CHANGE FROM
                                                 2001       2000      PRIOR YEAR
                                               --------   --------   -------------
<S>                                            <C>        <C>        <C>
Content-driven eBusiness solutions revenue...  $ 7,701    $ 9,686         (20)%
Transact/ShopSite revenue....................    3,638     13,804         (73)%
Other revenues...............................    1,675      1,333          25 %
                                               -------    -------         ---
    TOTAL REVENUES...........................  $13,014    $24,823         (47)%
                                               =======    =======         ===
</TABLE>

    For the three months ended March 31, 2001, total revenues decreased by
$11,809, or 47%, with product and services revenues decreasing by $9,056 and
$2,753, respectively, from the comparable prior year period.

                                       12
<PAGE>
PRODUCT REVENUES

<TABLE>
<CAPTION>
                                                     THREE MONTHS
                                                    ENDED MARCH 31,
                                                  -------------------   % CHANGE FROM
                                                    2001       2000      PRIOR YEAR
                                                  --------   --------   -------------
<S>                                               <C>        <C>        <C>
Content-driven eBusiness solutions product
  revenue.......................................   4,578       7,654         (40)%
Transact/ShopSite product revenue...............      54       6,561         (99)%
Other product revenue...........................   1,667       1,140          46 %
                                                   -----      ------         ---
    TOTAL PRODUCT REVENUES......................   6,299      15,355         (58)%
                                                   =====      ======         ===
</TABLE>

    For the three months ended March 31, 2001, total product revenues decreased
$9,056, or 58%, as compared to the same period of the prior year. Our
content-driven eBusiness solutions product revenue decreased $3,076 or 40%,
primarily due to a decline in IT spending as a result of external economic
uncertainty. Transact/ShopSite product revenue decreased $6,507 or 99%,
primarily as a result of reduced market demand for our heritage commerce
products. Other product revenue increased $527 or 46%, as a result of the
non-exclusive license of certain patent rights for $500. The remaining $1,167
represents royalty revenue from the NextPage master distribution agreement for
the Folio technology. In March 2001, we sold the Folio technology to NextPage
and therefore there will be no future revenue stream from these products
beginning in the second quarter of 2001.

    Product revenues accounted for 48% and 61% of total revenues for the three
months ended March 31, 2001 and 2000, respectively.

SERVICE REVENUES

<TABLE>
<CAPTION>
                                                   THREE MONTHS
                                                  ENDED MARCH 31,
                                                -------------------   % CHANGE FROM
                                                  2001       2000      PRIOR YEAR
                                                --------   --------   -------------
<S>                                             <C>        <C>        <C>
Content-driven eBusiness solutions service
  revenue.....................................   3,123      2,031           53 %
Transact/ShopSite service revenue.............   3,584      7,243          (50)%
Other service revenue.........................       8        194          (95)%
                                                 -----      -----          ---
    TOTAL SERVICE REVENUES....................   6,715      9,468          (29)%
                                                 =====      =====          ===
</TABLE>

    For the three months ended March 31, 2001, total service revenues decreased
by $2,753, or 29%, as compared to the same period of the prior year.
Content-driven eBusiness solutions service revenue increased $1,092, or 53%,
primarily as a result of an increase in both professional service and
maintenance and support revenue as compared to the quarter ended March 31, 2000.
The increase was due to a larger base of customers receiving professional
services and maintenance and support when compared to the prior year.
Transact/ShopSite service revenues decreased $3,659, or 50%. This decline was
expected as professional services for our customers are increasingly performed
by our partners. The decline in other services revenue of 95% was due to the
elimination of service revenue related to the Folio publishing segment. In
March 2001, we sold the Folio product line to NextPage and therefore we do not
expect to derive any future Folio service revenues.

    Service revenues accounted for 52% and 38% of total revenues for the three
months ended March 31, 2001 and 2000, respectively.

                                       13
<PAGE>
COST OF PRODUCT REVENUES

<TABLE>
<CAPTION>
                                                                   THREE MONTHS
                                                                 ENDED MARCH 31,
                                                              ----------------------
                                                                2001          2000
                                                              --------      --------
<S>                                                           <C>           <C>
Cost of product revenues....................................    $598         $2,376
% of total product revenue..................................       9%            15%
Product gross margin........................................      91%            85%
</TABLE>

    For the three months ended March 31, 2001, cost of product revenues
decreased $1,778, or 75%, primarily as a result of the decrease in licensing
product revenues. In addition, during the first quarter of 2001 we sold fewer
third party software products, which resulted in a decrease in the cost of
product when compared to the quarter ended March 31, 2000.

COST OF SERVICE REVENUES

<TABLE>
<CAPTION>
                                                                  THREE MONTHS
                                                                ENDED MARCH 31,
                                                             ----------------------
                                                               2001          2000
                                                             --------      --------
<S>                                                          <C>           <C>
Cost of service revenues...................................   $6,285        $7,714
% of total service revenue.................................       94%           81%
Service gross margin.......................................        6%           19%
</TABLE>

    For the three months ended March 31, 2001, cost of service revenues
decreased $1,429, or 19%, primarily as a result of a decrease in outside
consulting expenses as implementation services for our customers are
increasingly performed by our partners. The decrease in service margin of
approximately 13% was a result of a decrease in service revenues without a
proportionate decrease in service costs when compared to the prior year. Because
of the high costs of maintaining a service organization, we are seeking to have
services for our customers performed by our partners.

OPERATING EXPENSES

<TABLE>
<CAPTION>
                                                  THREE MONTHS
                                                 ENDED MARCH 31,
                                               -------------------   % CHANGE FROM
                                                 2001       2000      PRIOR YEAR
                                               --------   --------   -------------
<S>                                            <C>        <C>        <C>
Selling and Marketing........................  $10,744    $10,477           3 %
Research and Development.....................    5,149      6,036         (15)%
General and Administrative...................    2,700      2,372          14 %
Amortization of Intangibles..................      450        765         (41)%
                                               -------    -------         ---
    Total Operating Expenses.................  $19,043    $19,650          (3)%
                                               =======    =======         ===
</TABLE>

SELLING AND MARKETING

    Selling and marketing expenses consist primarily of the cost of sales and
marketing personnel and outside marketing consultants, as well as the costs
associated with marketing programs, industry tradeshows, sales seminars,
advertising, and product literature.

    For the period ended March 31, 2001, selling and marketing expenses
increased $267 over the comparable prior year period, primarily due to an
increase of approximately $136 in office rent expense and $470 in marketing
related expenses including marketing programs, tradeshows and advertising. This
was offset by a decrease in employee-related expenses, temporary help and
recruiting of $310.

                                       14
<PAGE>
RESEARCH AND DEVELOPMENT

    Research and development expenses consist primarily of the cost of research
and development personnel and independent contractors, certain licensed
technology and equipment and facilities costs related to such activities.

    For the three months ended March 31, 2001, research and development expenses
decreased $887 from the comparable prior year period. The decrease was primarily
attributed to a decline in employee-related expenses of $379 and outside
consulting expense of $328. The decline of these expenses is related to our cost
savings efforts and reductions in our work force.

GENERAL AND ADMINISTRATIVE

    General and administrative expenses consist primarily of the cost of
finance, management and administrative personnel and legal and other
professional fees.

    For the three months ended March 31, 2001, general and administrative
expenses increased $328 from the comparable prior year period. This increase was
primarily a result of an increase in bad debt expense of $593. The additional
bad debt expense was recorded to increase the allowance for bad debt to cover
our exposure for a number of customers that had experienced cash flow
difficulties related to the economic downturns. This was offset by a decrease in
employee related expenses of $259 as a result of our cost savings efforts and
reduction in workforce.

AMORTIZATION OF INTANGIBLES

    For the three months ended March 31, 2001, amortization of intangibles,
primarily resulting from the acquisitions of ICentral and Folio, decreased to
$450 from $765 in the comparable prior year. The decrease was attributable to
fully amortized assets of the ICentral acquisition at the end of fiscal 2000.

NON-OPERATING INCOME (EXPENSE)

    We recorded a gain on the sale of assets of $4,710 as a net result of the
sale of our Folio product line to NextPage and the sale of a certain patent
right for $250. On March 23, 2001, we entered into an Asset Purchase Agreement
with NextPage, Inc. pursuant to which we sold certain technology, which we refer
to as the Folio technology, to NextPage for a total purchase price of $6,667 in
cash. We recorded a one-time gain of $4,460 in the first quarter of 2001 in
connection with the sale, which represents the $6,667 consideration, less $2,207
of intangible assets, which existed at the date of the sale.

    Interest income represents interest earned on cash, cash equivalents and
marketable securities. For the three months ended March 31, 2001, interest
income decreased to $141 from $352 in the comparable prior year period,
primarily as a result of a decrease in our cash equivalents and marketable
securities.

    Interest expense relates to the interest charged on our line-of-credit and
long-term obligations. For the three months ended March 31, 2001, interest
expense increased to $312 from $93 in the comparable prior year period. The
increase was primarily attributed to fees related to the renewal of our line of
credit.

    Other income/expense primarily represents foreign currency translation gains
and losses.

PROVISION FOR INCOME TAXES

    We recorded a provision for foreign income taxes of $115 and $52 for the
three months ended March 31, 2001 and 2000, respectively. This provision relates
to the amount of estimated taxes due in foreign jurisdictions for our foreign
operations and certain withholding taxes. We incurred losses for U.S. tax
purposes for all periods to date and, accordingly, there has been no provision
for U.S. income

                                       15
<PAGE>
taxes. We believe that the provision for income taxes will fluctuate in the
future and is dependent upon the geographical locations of future sales and the
associated withholding taxes in those countries. The provision for income taxes
will also fluctuate when we become eligible for corporate income taxation in the
United States.

LIQUIDITY AND CAPITAL RESOURCES

    At March 31, 2001, we had $14,754 in cash, cash equivalents and marketable
securities, which did not include any borrowings against our existing lines of
credit. At December 31, 2000, we had $30,430 in cash, cash equivalents and
marketable securities, which included $17,405 of borrowing against our lines of
credit.

    Our operating activities used cash and cash equivalents of $10,195 and $835
for the three months ended March 31, 2001 and 2000, respectively, to fund our
operations. At March 31, 2001, our net loss increased approximately 82% to
$8,693 from $4,768 in the comparable prior year period. Also, partially
offsetting this increased loss was a gain of $4,460 from the sale of our Folio
technology and related assets to NextPage. The increased use of cash was offset
by changes in accounts receivable and prepaid expenses and other current assets,
when compared to the same quarter of the prior year.

    Our investing activities provided cash and cash equivalents of $5,226 and
$3,271 for the three months ended March 31, 2001 and 2000, respectively. For the
three months ended March 31, 2001, the primary source of cash from investing
activities was $5,301 related to the maturity of marketable securities. This was
partially offset by purchases of property and equipment in the amount of $75. In
the comparable prior year period, the primary source of cash from investing
activities was $4,352 related to the maturity of marketable securities, which
was partially offset by purchases of property and equipment of $1,081.

    Our financing activities used cash and cash equivalents of $5,406 for the
three months ended March 31, 2001 as compared to the cash provided by financing
activities of $6,976 for the same period of the prior year. For the three months
ended March 31, 2001, the primary source of cash used by financing activities
was $17,405 for payment on the lines of credit. This was offset by the $4,779 of
funds received from the issuance of Series E preferred stock and $6,667 of funds
received from the sale of Folio technology. In the comparable prior year period,
cash and cash equivalents provided by financing activities consisted primarily
of $6,991 from the issuance of common stock under our stock option and stock
purchase plans.

    We had an unsecured credit facility with a bank, which provided up to
$15,000 in financing in the form of a demand line of credit. Borrowings under
this line were limited to 80% of eligible domestic accounts receivable and 90%
of eligible foreign accounts receivable, as defined, and bore interest at the
prime lending rate (9.5% at December 31, 2000). We were required to comply with
certain restrictive covenants under this agreement and the line was
collateralized by our accounts receivable. We were in compliance with all such
covenants at December 31, 2000. As of December 31, 2000, our borrowing under
this facility was $11,459. This line was fully paid in January 2001 and expired
on January 15, 2001. In February 2001, we replaced this line with a secured
credit facility arrangement with the same bank. This facility provides up to
$12,000 in financing in the form of a demand line of credit. Borrowings under
this line are limited to between 60% and 80% of eligible domestic accounts
receivable and 90% of eligible foreign accounts receivable, as defined, and bear
interest at the prime lending rate plus 2%. We are required to comply with
certain restrictive covenants under this agreement and the line is
collateralized by all assets. There were no borrowings under this line of credit
at March 31, 2001.

    We had a royalty line of credit with the same bank, which provided up to
$6,996 in financing in the form of a line of credit. Borrowings under this line
were limited to 85% of minimum guaranteed royalty receivable from NextPage, as
defined, and bore interest at the prime lending rate (9.5% at

                                       16
<PAGE>
December 31, 2000). Our borrowing under this facility was $5,946 at
December 31, 2000. This line was fully paid in January 2001. In concert with our
March 2001 sale of the underlying technology to NextPage, this line terminated.

    At December 31, 2000, we had net operating loss carryforwards for income tax
purposes of approximately $169,000. These losses are available to reduce federal
and state taxable income, if any, in future years. These losses are subject to
review and possible adjustment by the Internal Revenue Service and may be
limited in the event of certain cumulative changes in ownership interests of
significant shareholders over a three-year period that are in excess of 50%.
While we believe that we have experienced a change in ownership in excess of
50%, we do not believe that this change in ownership will significantly impact
our ability to use our net operating loss carryforwards.

    In March 2001, we issued 5,000 shares of Series E preferred stock for gross
proceeds of approximately $5,000 to Halifax Fund, LP, a fund managed by the
Palladin Group, and sold our Folio technology to NextPage, Inc. for $6,667.
Based upon our current revised operating plan, projected capital expenditures
and belief that we can generate additional cash via non-core asset sales or debt
or equity financings during 2001, we believe that sufficient capacity exists to
fund our operations, debt service and capital expenditure requirements at least
through December 31, 2001. However, if we are unable to meet our revised
operating plan for 2001, or are unable to raise additional funding through the
sale of assets, or raise debt or equity capital, we may be required to
significantly curtail certain of our operations or otherwise modify our plans.

                                       17
<PAGE>
EURO CURRENCY

    On January 1, 1999, certain member countries of the European Union (EU)
established fixed conversion rates between their existing currencies and the
EU's common currency, the Euro. The former currencies of the participating
countries are scheduled to remain legal tender as denominations of the Euro
until January 1, 2002, when the Euro will be adopted as the sole legal currency.
We continue to assess the impact that the conversion to the Euro will have on
our European operations. We are evaluating the potential impact in several areas
of our business, including the ability of our information systems to handle
Euro-denominated transactions and the impact on exchange costs and currency
exchange rate risks. We are also evaluating the impact that cross-border price
transparencies, which may affect the ability to price products differently in
various countries, will have on our gross margin. Although we are still in the
assessment phase, the conversion to the Euro is not expected to have a material
impact on our operations or financial position.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

INTRODUCTION

    This Quarterly Report contains certain forward-looking statements. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
generality of the foregoing, the words "believes", "anticipates", "plans",
"expects", and similar expressions are intended to identify forward-looking
statements. There are a number of important factors that could cause our actual
results to differ materially from those indicated by forward-looking statements
made in this Quarterly Report and presented elsewhere by management from time to
time. Some of the important risks and uncertainties which may cause our
operating results to differ materially or adversely are discussed below.

WE HAVE A HISTORY OF SIGNIFICANT LOSSES AND THESE LOSSES MAY CONTINUE IN THE
FUTURE WHICH COULD CAUSE THE MARKET PRICE OF OUR COMMON STOCK TO DECLINE.

    We have experienced operating losses in each quarterly and annual period
since our inception and these operating losses may continue in the future. We
incurred net losses of $37.0 million for the year ended December 31, 1998,
$19.8 million for the year ended December 31, 1999, and $37.8 million for the
year ended December 31, 2000. As of March 31, 2001, our accumulated deficit was
$211.0 million. We expect to continue to make investments to broaden the range
of our product offerings. These efforts will require capital expenditures, a
substantial portion of which we will make long before any corresponding revenue
may be realized. We may never achieve profitability, and if we do achieve
profitability in any period, we may not be able to sustain or increase
profitability on a quarterly or annual basis.

    Because we continue to incur losses, we will be required to raise additional
capital in order to fund our operations, expand our business and increase our
revenues. We cannot assure you that we will be successful in raising additional
funds on terms, which are acceptable to us or at all, or in increasing our
revenues. In the event that we are unable to obtain additional cash infusions
when required, we expect that we will have to significantly curtail certain of
our operations, sell certain of our assets or otherwise reduce the breadth of
our operations, all of which could adversely affect our business and potential
future growth and prospect.

IF WE ARE UNABLE TO RESTRUCTURE OUR OPERATIONS EFFECTIVELY, WE MAY NOT REALIZE
EXPECTED COST SAVINGS AND INCREASED REVENUES.

    We are currently pursuing a business plan that, if successfully implemented,
will result in us restructuring our operations to reduce expenses by
streamlining our workforce and realigning resources across business segments to
appropriately support each segment's customer base. In addition, we are

                                       18
<PAGE>
transitioning our professional services organization to focus on higher-margin
design assurance services for partners. This restructuring will require
significant time commitments from our senior management and will restrict senior
management's ability to pursue other projects. We may experience a decline in
product and services revenues and a loss of customers as a result of changing
the mix of products and services to which we devote our development and
marketing efforts without realizing any benefits.

THE SUCCESS OF OUR BUSINESS DEPENDS, IN LARGE PART, ON OUR NEW CONTENT SERVER
ENTERPRISE EDITION EBUSINESS SOLUTIONS, WHICH HAVE BEEN RECENTLY INTRODUCED AND
MAY NOT BE WIDELY ADOPTED BY OUR CUSTOMERS.

    We expect to derive substantially all of our product license revenues in the
future from our newly announced CSEE software. Our future growth and
profitability will depend upon the successful release, introduction and customer
acceptance of this new suite of products and future enhancements to these
products. Any factors adversely affecting the pricing of, demand for or market
acceptance of our suite of CSEE software products, including competition or
technological change, could cause our revenues to decline and our business and
future operating results to suffer.

OUR OPERATING RESULTS ARE LARGELY DEPENDENT UPON THE CONTINUED DEMAND FOR
CONTENT MANAGEMENT APPLICATIONS.

    Because we have only been primarily focused on providing content management
and delivery solutions for a short time, we have a limited operating history
pursuing this business model. The revenue growth potential of this market for
content management is still unproven. As a result, our historical financial
statements may not be an accurate indicator of our future operating results. In
addition, we have limited insight into trends that may emerge and affect our new
line of business, and we cannot forecast our operating expenses based on our
historical results. Our future operating results depend upon the development and
growth of the market for Internet-based packaged software applications,
including content management and delivery applications. If the Internet content
management and delivery market fails to continue to develop or develops more
slowly than expected, our business and prospects will suffer.

WE ARE DEPENDENT ON THIRD PARTY TECHNOLOGY, AND IF OUR SOFTWARE CEASES TO BE
COMPATIBLE WITH OR WE ARE UNABLE TO LICENSE THIS TECHNOLOGY OR IF DEFECTS IN
THIS TECHNOLOGY EXIST, OUR PRODUCT SHIPMENTS COULD BE DELAYED.

    We rely in large part on third party software and technology including
technology we license from third parties. Our software requires specific servers
and software to be in place before it can be installed and operated. For
example, platform components include servers running on Sun Microsystems Solaris
operating environment, or Microsoft Windows NT, databases from Oracle, Sybase or
Microsoft and Java application servers from BEA, IBM or iPlanet. The licenses
from these third parties may not continue to be available to us on commercially
reasonable terms, or at all or our software may cease to be compatible with this
technology. If we were to lose any of these technology licenses or if our
software ceased to be compatible with this technology, we would have to cease
selling our products that incorporate or rely on this technology and expend
substantial amounts of resources to redesign our products using equivalent
technology, if available. If we are forced to cease selling and to redesign our
products, our business and prospects would be adversely affected.

WE MAY HAVE DIFFICULTY IN PREDICTING OUR QUARTERLY RESULTS, AND THE MARKET PRICE
OF OUR COMMON STOCK MAY DECLINE IF OUR OPERATING RESULTS DO NOT MEET
EXPECTATIONS.

    Our operating results in recent quarters have fallen below the expectations
of some securities analysts and investors and may not meet such expectations in
future quarters. As a result, the market price of our common stock may decline
further. We have difficulty predicting our quarterly results in part because the
sales cycle for our products is lengthy. The licensing of our products generally
involves a significant commitment of resources by our prospective customers, and
we are often required to provide a significant level of education to them
regarding the use and benefits of our products. This

                                       19
<PAGE>
process can be time consuming. The lengthy delays associated with the sales
cycle affect the timing of our revenue recognition and make it difficult to
predict our quarterly results. In addition, we have experienced and may continue
to experience difficulty in collecting our accounts receivable which may also
make it difficult for us to forecast our quarterly results accurately.

IF WE FAIL TO MAINTAIN AND STRENGTHEN OUR RELATIONSHIPS WITH OUR SERVICE
PARTNERS, WE MAY NOT ACHIEVE EXPECTED REVENUE GROWTH.

    We have recently expanded our indirect sales channels through an enhanced
partner program and rely on our partners' skills and networks to integrate our
products with other technologies and to implement our products at customer
sites. If a significant number of potential systems integrators adopt a
different product or technology as part of their integrated solution instead of
our products, we may not achieve expected revenue growth. In addition, if we
fail to maintain relationships with these partners or build new relationships,
our ability to expand our customer base may be harmed. We also cannot be sure
that such service partners will be able to successfully support our products
within their overall solutions, and our revenues may vary depending on their
ability to offer such support.

IF WE DO NOT COMPETE EFFECTIVELY, PARTICULARLY AGAINST ESTABLISHED PARTICIPANTS
WITH GREATER FINANCIAL AND OTHER RESOURCES THAN OURS, WE WILL LOSE MARKET SHARE.

    The market for eBusiness content management and delivery applications is
relatively new, rapidly evolving and intensely competitive. If we fail to
compete successfully with current or future competitors, we may lose market
share. Our customers' requirements and the technology available to satisfy those
requirements continually change. We expect competition in this market to persist
and increase in the future. Our primary competition includes in-house
development efforts by prospective customers and other vendors of application
software or application development platforms and tools directed at interactive
commerce and financial services, such as Art Technology Group, BroadVision,
Documentum, Interwoven and Vignette.

    In addition, larger companies with much broader product offerings, such as
BEA, IBM, Microsoft and Oracle, may bundle their products to discourage users
from purchasing our products. Companies such as IBM, BEA and iPlanet also may
add content management functionality to their application servers or introduce
their own content management software. Some of our current and potential
competitors have longer operating histories, greater name recognition, larger
installed customer bases and significantly greater financial, technical and
marketing resources than we do. As a result, these competitors may be able to
develop and expand their product offerings more quickly, adapt more swiftly to
new or emerging technology and changes in customer demands, devote greater
resources to the marketing and sales of their product, pursue acquisition and
other opportunities more readily and adapt more aggressive pricing policies. In
addition, competitors have established and, in the future, may establish
cooperative relationships among themselves or with third parties to market or
enhance their products. Accordingly, it is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share. Competitive pressures may make it difficult for us to acquire and retain
customers and are likely to result in price reductions, reduced gross margins
and loss of market share.

IF WE DO NOT RESPOND EFFECTIVELY AND ON A TIMELY BASIS TO RAPID TECHNOLOGICAL
CHANGES AND EVOLVING INDUSTRY STANDARDS, OUR PRODUCTS MAY BECOME OBSOLETE, AND
WE WOULD PROBABLY LOSE EXISTING CUSTOMERS AND BE UNABLE TO ATTRACT NEW ONES.

    Internet markets are characterized by rapidly changing technologies,
evolving industry standards, frequent new product and service introductions and
changing customer demands. Our new product family, Content Server Enterprise
Edition, employs the J2EE technology architecture. We cannot assure you that
this architecture will be widely adopted, that we can continue to support J2EE
standards

                                       20
<PAGE>
established by Sun from time to time or that the J2EE brand will continue to be
made available to us in the future. If J2EE support decreases or we could not
continue to use Java or Java related technologies, we may have to modify our
product line to run on other platforms. If we could not implement modifications
to our products on a timely basis, our revenues could decline.

    In addition, the introduction of new products or technologies could render
our product offerings obsolete, reduce the cost of competing products or
increase the number of products similar to those that we provide or plan to
provide. Our future success will depend on our ability to adapt to rapidly
changing technologies and to enhance existing solutions and develop and
introduce a variety of new solutions and services to address our customers'
changing demands. We may be required to make significant and ongoing investments
in future periods in order to remain competitive. Further, we may experience
difficulties that could delay or prevent the successful design, development,
introduction or marketing of our solutions and services or lengthen our sales
cycles. In addition, our new solutions or enhancements must meet the
requirements of our current and prospective customers and must achieve
significant market acceptance. Any material delays in introducing new solutions
and enhancements may cause customers to forego purchases of our solutions and
purchase those of our competitors. Our failure to successfully design, develop,
test and introduce new products and/or services, or the failure of our recently
introduced products or services to achieve market acceptance, could prevent us
from maintaining existing client relationships, gaining new clients or expanding
our markets. In such a case, we would not achieve our expected revenue growth.

WE MAY EXPERIENCE DIFFICULTY IN ATTRACTING AND RETAINING MEMBERS OF OUR KEY
SENIOR MANAGEMENT TEAM AND OTHER HIGHLY QUALIFIED INDIVIDUALS IN THE INTERNET
INDUSTRY.

    Our ability to establish and maintain a position of technology leadership in
the highly competitive eBusiness software market depends in large part upon our
ability to attract and retain highly qualified managerial, sales and technical
personnel. We have recently experienced the departure of several senior
executives and may experience the departure of executives in the future due to
competition for talent from start-ups and other companies. Our future success
also depends on our continuing to attract, retain and motivate highly skilled
employees. Competition for employees in our industry is intense. We may be
unable to retain our key employees or attract, assimilate or retain other highly
qualified employees in the future. We have from time to time in the past
experienced, and we expect to continue to experience in the future, difficulty
in hiring and retaining highly skilled employees with appropriate
qualifications. If our stock price continues to decline, we may face a difficult
and significant task of motivating key personnel to stay committed to us.

FLUCTUATIONS IN OUR QUARTERLY REVENUE AND OPERATING RESULTS MAY RESULT IN
REDUCED PROFITABILITY AND CAUSE THE PRICE OF OUR COMMON STOCK TO DECLINE.

    We have experienced significant fluctuations in our results of operations on
a quarterly and annual basis. We expect to continue experiencing significant
fluctuations in our future quarterly and annual results of operations due to a
variety of factors, many of which are outside our control, including:

    - the introduction of new products by us and our competitors;

    - the variability and length of sales cycles associated with our product
      offerings;

    - the market acceptance of, and demand for, our products;

    - the pace of development of electronic commerce conducted on the Internet;

    - customer order deferrals in anticipation of enhancements or new products
      offered by us or our competitors;

    - non-renewal of service agreements;

                                       21
<PAGE>
    - software defects and other product quality problems;

    - the mix of products and services we sell;

    - customer retention;

    - the ability to collect payments from our customers on a timely basis;

    - any changes in our pricing policies and/or those of our competitors;

    - changes in the level of operating expenses;

    - sales productivity; and

    - general economic conditions.

    In addition, our operating expenses are largely based on anticipated revenue
trends and a significant portion of our expenses, such as leased real estate
facilities, depreciation and personnel, is fixed in the short term. Accordingly,
our results of operations are particularly sensitive to fluctuations in
revenues. If our revenues fall below our expectations, we would probably not be
able to reduce our fixed or other expenses in sufficient time to respond to the
shortfall. If our operating results fall below the expectations of securities
analysts or investors in some future quarter or quarters, the market price of
our common stock is likely to decline.

WE ARE SUSCEPTIBLE TO NUMEROUS RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS.

    Our international activities expose us to numerous additional risks. In the
quarter ended March 31, 2001, we derived approximately 47% of our total revenues
from sales outside North America. We currently have eight offices in Europe and
Asia. A key component of our business strategy is to expand our international
activities. As we continue to expand internationally, we are increasingly
subject to risks of doing business internationally, including the following:

    - unexpected changes in regulatory requirements;

    - export controls relating to encryption technology and other export
      restrictions;

    - tariffs and other trade barriers;

    - difficulties in staffing and managing foreign operations;

    - political and economic instability;

    - fluctuations in currency exchange rates;

    - reduced protection for intellectual property rights;

    - cultural barriers;

    - difficulty of enforcing agreements and collecting accounts receivables;

    - seasonal reductions in business activity during the summer months in
      Europe and certain other parts of the world; and

    - potentially adverse tax consequences.

    Our international sales growth will be limited if we are unable to establish
additional foreign operations, expand international sales channel management and
support, hire additional personnel, customize products for local markets and
develop relationships with international distributors and systems integrators.
Even if we are able to successfully expand our international operations, we
cannot be certain that we will succeed in maintaining or expanding international
market demand for our products.

                                       22
<PAGE>
WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS AND WE MAY BE SUBJECT TO
INFRINGEMENT CLAIMS THAT COULD SUBJECT US TO SIGNIFICANT LIABILITY AND DIVERT
THE TIME AND ATTENTION OF OUR SENIOR MANAGEMENT.

    We regard our products, services and technology as proprietary. We attempt
to protect them through a combination of patents, copyrights, trademarks and
trade secret laws. We also generally enter into confidentiality agreements with
our employees, consultants and customers, and generally control access to and
distribution of our documentation and other proprietary information. These
methods may not be sufficient to protect our proprietary rights. We have no
patented technology that would preclude or inhibit competitors from entering our
market. Although we hold several U.S. patents asserting claims relating to
certain aspects or uses of electronic commerce software, we cannot be sure of
the degree of intellectual property protection those patents will provide.
Despite these precautions, it may be possible for a third party to copy or
otherwise misappropriate and use our products, services or technology without
authorization, particularly in foreign countries where the laws may not protect
our proprietary rights to the same extent as do the laws of the United States.
We also cannot assure you that third parties will not develop similar technology
independently.

    We have resorted, and may continue to resort, to litigation in the future to
enforce our intellectual property rights, to protect our trade secrets or to
determine the validity and scope of the proprietary rights of others. On
January 8, 2001, we filed a patent infringement lawsuit against Intershop
Communications, Inc. in the U.S. District Court for the District of Delaware. We
allege that Intershop's software products infringe upon three of our patents. We
are seeking injunctive relief and damages due to the infringement. On March 1,
2001, Intershop filed its answer denying infringement and asserting claims for a
declaratory judgement of invalidity of the patents and non-infringement. We can
provide no assurance as to the outcome of this litigation. There is a risk that
our patents can be declared invalid and unenforceable. Any conclusion of this
litigation in a manner adverse to us could have a material adverse effect on our
business. In addition, this litigation could result in substantial costs and
diversion of resources and could harm our business.

    In addition to licensing technologies from third parties, we are developing
and acquiring additional proprietary intellectual property. Third parties may
try to claim our products or services infringe their intellectual property. We
expect that participants in our markets will be increasingly subject to
infringement claims. Any claim, whether meritorious or not, could be time
consuming, result in costly litigation and/or require us to enter into royalty
or licensing agreements. These royalty or licensing agreements might not be
available on terms acceptable to us or at all, in which case we would have to
cease selling, incorporating or using those products and services that
incorporate the challenged intellectual property and expend substantial amounts
of resources to redesign our products or services. If we are forced to enter
into royalty or licensing agreements or to redesign our products or services,
our business and prospects would suffer.

IF LIMITATIONS ON THE ONLINE COLLECTION OF PROFILE INFORMATION ARE IMPOSED, THE
UTILITY OF THE PERSONALIZATION FUNCTIONALITY OF OUR PRODUCTS WOULD BE LIMITED,
AND WE MAY NOT ATTRACT A SIGNIFICANT NUMBER OF NEW CUSTOMERS.

    One of the principal features of our products is the ability to develop and
maintain profiles of online users to assist business managers in personalizing
content and commercial offers to be displayed to specific online users. The
resistance of online users to providing personal data and any future laws and
regulations prohibiting use of personal data gathered online without express
consent or requiring businesses to notify their web site visitors of the
possible dissemination of their personal data could limit the utility of our
products. These types of laws or regulations could heighten privacy concerns by
requiring businesses to notify web site users that the data captured from them
online may be used by marketing entities to direct product messages to them.
While we are not aware of any laws or regulations of this type currently in
effect or in development in the United States, other countries and political
entities, including the European Union and its member states, have adopted legal
requirements imposing restrictions on the collection, use and processing of
personal data. It is possible

                                       23
<PAGE>
that similar legal requirements could be adopted in the United States. If the
privacy concerns of consumers are not adequately addressed, the effectiveness of
our products could be impaired and we may not attract new customers and the
revenues they represent.

OUR PRODUCTS MAY CONTAIN DEFECTS, WHICH MAY PROVE COSTLY AND TIME CONSUMING FOR
US TO CORRECT.

    Sophisticated software products, such as those we develop and market, may
contain errors or failures that become apparent when we introduce the products
or when we provide an increased volume of services. We cannot assure you that
testing by us and our potential customers will detect all errors in our products
prior to licensing or sale. Correcting such errors may result in loss of
revenues, delay in market acceptance, diversion of development resources, damage
to our reputation or increased service and warranty costs, any of which would
adversely affect our business and our ability to market our products profitably.

EXISTING AND FUTURE EXPORT CONTROLS MAY DELAY THE INTRODUCTION OF NEW PRODUCTS
OR LIMIT OUR ABILITY TO DISTRIBUTE PRODUCTS OUTSIDE OF THE UNITED STATES.

    Due to the encryption technology contained in our products, our products are
subject to export controls within the United States. These export controls,
either in their current form or as may be subsequently enacted, may delay the
introduction of new products or limit our ability to distribute products outside
the United States. In addition, federal or state legislation or regulation may
further limit levels of encryption or authentication technology. Also, various
countries regulate the import of certain encryption technology and have adopted
laws relating to personal privacy issues that could limit our ability to
distribute products in those countries.

OUR BUSINESS MAY SUFFER IF THE INTERNET INFRASTRUCTURE IS UNABLE TO EFFECTIVELY
SUPPORT THE GROWTH IN DEMAND PLACED ON IT.

    Our success will depend, in large part, upon the maintenance of the Internet
infrastructure, such as reliable network backbones with the necessary speed,
data capacity and security, and the timely development of enabling products such
as high speed modems, for providing reliable Internet access and services and
improved content. We cannot assure you that the Internet infrastructure will
continue to effectively support the demands placed on it as the Internet
continues to experience increased numbers of users, frequency of use and
increased bandwidth requirements. Even if the necessary infrastructure or
technologies are developed, we may have to spend considerable amounts to adapt
our solutions accordingly. Furthermore, the Internet has experienced a variety
of outages and other delays due to damage to portions of its infrastructure.
These outages and delays could impact the Internet sites of customers using our
products and services.

THE IMPOSITION OF SALE AND OTHER TAXES ON PRODUCTS SOLD BY OUR CUSTOMERS OVER
THE INTERNET COULD HAVE A NEGATIVE EFFECT ON ONLINE COMMERCE AND, AS A RESULT,
ON DEMAND FOR OUR PRODUCT.

    The imposition of new sales or other taxes could limit the growth of
eBusiness generally and, as a result, the demand for our products. There is
recent federal legislation that limits the imposition of state and local taxes
on Internet-related sales. In 1998, the United States Congress passed the
Internet Tax Freedom Act, which places a three-year moratorium on state and
local taxes on Internet access, unless the tax was already imposed prior to
October 1, 1998, and discriminatory taxes on electronic commerce. There is a
possibility that Congress may not renew this legislation in 2001. If Congress
chooses not to renew this legislation, state and local governments would be free
to impose taxes on goods purchased over the Internet. In addition, one or more
foreign countries may seek to impose sales or other tax collection obligations
on out-of-jurisdiction companies that engage in electronic commerce. A
successful assertion by one or more foreign countries that companies engaged in
electronic business

                                       24
<PAGE>
should collect sales or other taxes on sales of their products over the
Internet, even though not physically present in the foreign country, could
indirectly reduce demand for our products.

WE ARE PARTY TO SECURITIES CLASS ACTION LITIGATION WHICH MAY BE COSTLY TO DEFEND
AND THE OUTCOME OF WHICH IS UNCERTAIN AND MAY HARM OUR BUSINESS.

    We and several of our former and present officers and directors are named as
defendants in several class action complaints which have been filed on behalf of
certain of our stockholders who purchased securities between November 8, 1999
and April 18, 2000. These complaints allege violations of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated under
this Act. The plaintiffs are seeking monetary damages and other appropriate
relief. On January 25, 2001, the court entered an order consolidating these
actions into one action. One April 13, 2001, the plaintiff filed a consolidated
class action complaint.

    We can provide no assurance as to the outcome of this litigation. Any
conclusion of this litigation in a manner adverse to us would have a material
adverse effect on our business, financial condition, and results of operations.
In addition, the cost to us of defending any litigation or other proceeding,
even if resolved in our favor, could be substantial. Such litigation could also
substantially divert the attention of our management and our resources in
general. Uncertainties resulting from the initiation and continuation of this
litigation or other proceedings could harm our ability to compete in the
marketplace. Because the price of our common stock has been, and may continue to
be, highly volatile, we have no assurance that additional securities class
action complaints will not be filed against us in the future.

OUR STOCKHOLDERS MAY EXPERIENCE FURTHER DILUTION AND THE PRICE OF OUR COMMON
STOCK MAY DECLINE AS A RESULT OF OUR SERIES E PREFERRED STOCK FINANCING.

    In March 2001 we sold $5.0 million of our Series E preferred stock and
warrants to purchase 917,297 shares of our common stock at an exercise price of
$1.9078 per share, subject to certain adjustments, to a fund managed by the
Palladin Group. The warrants are exercisable for a period of five years.

    The Series E preferred stock is convertible at the option of the holder into
shares of our common stock at an initial conversion price of $1.5262 per share,
subject to adjustment,

    - on the six-month anniversary of the initial issuance, provided that in no
      event shall the adjusted conversion price be less than $0.8176; and

    - under some circumstances in the event of redemption of the Series E
      preferred stock by Open Market on the two-year anniversary of the original
      issuance.

    In no event will any such adjustment result in an increase of the conversion
price. In addition, the conversion price is subject to adjustment in the event
that we issue securities below the conversion price, with certain exceptions.

    The shares of Series E preferred stock bear dividends at an annual rate of
6.0% of the liquidation preference of these shares, payable semi-annually,
through the issuance of shares of our common stock or, at our option, in cash.
Holders of Series E preferred stock have the right, after two years, to require
us to redeem the Series E preferred stock for cash or convert such shares into
our common stock, at our option. Also, in the event of a "change in control" as
defined in the terms of the Series E preferred stock, if the Series E preferred
stock is not converted into shares of common stock by the holder, we are
required to redeem the Series E preferred stock for cash, with such cash
redemption equal to 115% of the Series E preferred stock liquidation preference.
The shares of Series E preferred stock are redeemable by Open Market after two
years in cash or common stock at the Company's option. If the shares of
Series E preferred stock are redeemed for shares of common stock, the

                                       25
<PAGE>
conversion price will be the lesser of the initial conversion price, the
six-month adjustment price or the then fair market value of the common stock
(determined pursuant to a formula). In no event, however, will we be required to
issue in excess of 9,369,113 shares of common stock (subject to adjustment for
stock splits, stock dividends or similar adjustments to capitalization) upon
conversion of the Series E preferred stock and exercise of the related warrants.
As a result, the Series E preferred stock may be converted and the common stock
purchase warrants may be exercised at a price per share that may be less than
the then current market price of our common stock, which may cause substantial
dilution to our existing common stockholders. In no event, however, shall we be
required to issue, upon the conversion of the Series E preferred stock and the
exercise of the warrants, in excess of 9,369,113 shares of common stock (subject
to adjustment for stock splits, stock dividends and similar adjustments in
capitalization) which represents 19.99% of our outstanding common stock as of
March 20, 2001.

    We are required to register the shares of common stock issuable upon
conversion and upon exercise of the warrants under the Securities Act of 1933
for public resale. Any sale of shares of common stock upon conversion of the
Series E preferred stock and exercise of the warrants into the public market
could cause a decline in the trading price of our common stock.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    FOREIGN EXCHANGE HEDGING.  The accounts of our foreign subsidiaries are
translated in accordance with SFAS No. 52, FOREIGN CURRENCY TRANSLATION. In
translating the accounts of the foreign subsidiaries into U.S. dollars, assets
and liabilities are translated at the rate of exchange in effect at year-end,
while stockholders' equity is translated at historical rates. Revenue and
expense accounts are translated using the weighted-average exchange rate in
effect during the year. Foreign currency translation and transaction gains or
losses for our subsidiaries are included in the accompanying consolidated
statements of operations since the functional currency for our subsidiaries is
the U.S. dollar. We have not entered into hedges of our foreign currency
exposures.

    INVESTMENT PORTFOLIO.  We do not invest in derivative financial instruments.
Our investment policy permits only high credit quality investment vehicles, and
this policy also limits the amount of credit exposure of any one issue, issuer,
and type of investment. See "Note 2--Summary of Significant Accounting Policies"
in the accompanying Notes to Consolidated Financial Statements.

                                       26
<PAGE>
                           PART II--OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

    Six putative class actions were filed between June 14, 2000 and August 10,
2000, against us and certain of our officers and directors in the United States
District Court for the District of Massachusetts. These actions, each filed on
behalf of an alleged class of our shareholders who purchased our common stock
between November 18, 1999 and April 18, 2000, allege violations of Sections
10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated under the Securities Exchange Act. The plaintiffs are seeking
monetary damages and other appropriate relief. On January 25, 2001, the court
entered an order consolidating these actions into one action. This consolidated
case is entitled IN RE OPEN MARKET SECURITIES LITIGATION, C.A. No. 00-CV-11162.
On April 13, 2001, the plaintiffs filed a consolidated class action complaint.

    On January 8, 2001, we filed a patent infringement lawsuit against Intershop
Communications, Inc. in the U.S. District Court for the District of Delaware.
Our complaint alleges that Intershop's software products infringe upon three of
our patents. We are seeking injunctive relief and damages due to Intershop's
infringement. On March 1, 2001, Intershop filed its answer denying infringement
and asserting claims for a declaratory judgement of invalidity of the patents
and non-infringement.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

    In March 2001, we sold 5,000 shares of our Series E 6% cumulative
convertible preferred stock and warrants to purchase 917,297 shares of our
common stock at an exercise price of $1.9078 per share, subject to certain
adjustments, for aggregate cash consideration of $5.0 million, to Halifax
Fund, LP, a fund managed by the Palladin Group. The warrants are exercisable for
a period of five years. The Company's total expenses in connection with the
offering were $300, $200 of which was for brokers' commissions and $100 of which
was for other expenses paid to persons other than directors or officers of the
Company, persons owning more than 10 percent of any class of equity securities
of the Company, or affiliates of the Company. The Company's net proceeds from
the offering were $4,700. The Company intends to use these proceeds for working
capital. The Company invested, from time to time, the balance of such net
proceeds primarily in investment grade interest bearing instruments. As of
March 31, 2001, the Company had $14,754 of cash, cash equivalents, and
available-for-sale investments. The sale of these shares and warrants were
exempt from registration under the Securities Act of 1933 pursuant to Rule 506
of Regulation D, promulgated thereunder, as there were less than 35 purchasers
of these securities and the purchaser was an accredited investor as defined in
Rule 501 of Regulation D.

    The Series E preferred stock is convertible at the option of the holder into
shares of our common stock at an initial conversion price of $1.5262 per share,
subject to adjustment,

    - on the six-month anniversary of the initial issuance, to a conversion
      price equal to the lesser of (i) $1.5262 and (ii) 105% of the average of
      the daily volume-weighted average sales price for the 20 trading days
      preceding such anniversary date, provided that in no event shall the
      adjusted conversion price be less than $0.8176; and

    - under some circumstances in the event of redemption of the Series E
      preferred stock by Open Market on the two-year anniversary of the original
      issuance, as determined above.

    In no event will any such adjustment result in an increase of the conversion
price. In addition, the conversion price is subject to adjustment in the event
that we issue securities below the conversion price, with certain exceptions.

    The shares of Series E preferred stock bear dividends at an annual rate of
6.0% of the liquidation preference of these shares, payable semi-annually,
through the issuance of shares of our common stock

                                       27
<PAGE>
or, at our option, in cash. Holders of Series E preferred stock have the right,
after two years, to require us to redeem the Series E preferred stock for cash
or convert such shares into our common stock, at our option. Also, in the event
of a "change in control" as defined in the terms of the Series E preferred
stock, if the Series E preferred stock is not converted into shares of common
stock by the holder, we are required to redeem the Series E preferred stock for
cash, with such cash redemption equal to 115% of the Series E preferred stock
liquidation preference. The shares of Series E preferred stock are redeemable by
Open Market after two years in cash or common stock at the Company's option. If
the shares of Series E preferred stock are redeemed for shares of common stock,
the conversion price will be the lesser of the initial conversion price, the
six-month adjustment price or the then fair market value of the common stock
(determined pursuant to a formula). In no event, however, will we be required to
issue in excess of 9,369,113 shares of common stock (subject to adjustment for
stock splits, stock dividends or similar adjustments to capitalization) upon
conversion of the Series E preferred stock and exercise of the related warrants.
As a result, the Series E preferred stock may be converted and the common stock
purchase warrants may be exercised at a price per share that may be less than
the then current market price of our common stock, which may cause substantial
dilution to our existing common stockholders. In no event, however, shall we be
required to issue, upon the conversion of the Series E preferred stock and the
exercise of the warrants, in excess of 9,369,113 shares of common stock (subject
to adjustment for stock splits, stock dividends and similar adjustments in
capitalization) which represents 19.99% of our outstanding common stock as of
March 20, 2001.

    We are required to register the shares of common stock issuable upon
conversion and upon exercise of the warrants under the Securities Act of 1933,
as amended, for public resale. On April 26, 2001, we filed a Registration
Statement of Form S-3 with the Securities and Exchange Commission relating to
the resale of these securities.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

    None

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

    None

ITEM 5.  OTHER INFORMATION

    None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

    (a) EXHIBITS

       None

    (b) REPORTS ON FORM 8-K

       On March 20, 2001 (the "Closing Date"), a fund managed by The Palladin
       Group, L.P., Halifax Fund, L.P. ("Halifax") made an equity investment in
       Open Market by purchasing $5.0 million of Series E 6% cumulative
       convertible preferred stock and warrants to purchase shares of common
       stock. The Current Report on Form 8-K reporting this event under Item 5
       was filed with the Securities and Exchange Commission on March 27, 2001.

       On March 23, 2001, Open Market and its wholly owned subsidiary, Folio
       Corporation, entered into an Asset Purchase Agreement with
       NextPage, Inc., pursuant to which we sold certain technology and related
       assets to NextPage for a total purchase price of $6.6 million in cash
       (which included a $1.1 million license fee payment from NextPage to us
       for the first quarter of 2001). The Current Report on Form 8-K reporting
       this event under Items 2 and 7 was filed with the Securities and Exchange
       Commission on April 9, 2001.

                                       28
<PAGE>
                                   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 hereunto duly authorized.

<TABLE>
<S>                                                    <C>  <C>
                                                       OPEN MARKET, INC.
                                                       (Registrant)

Date: May 15, 2001                                     By:            /s/ HARLAND K. LAVIGNE
                                                            -----------------------------------------
                                                                        Harland K. LaVigne
                                                             CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
                                                                             OFFICER
                                                                  (PRINCIPAL EXECUTIVE OFFICER)

Date: May 15, 2001                                     By:              /s/ EDWARD DURKIN
                                                            -----------------------------------------
                                                                          Edward Durkin
                                                            VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
                                                                  (PRINCIPAL FINANCIAL OFFICER)

Date: May 15, 2001                                     By:             /s/ ANNMARIE RUSSELL
                                                            -----------------------------------------
                                                                         Annmarie Russell
                                                                    VICE PRESIDENT OF FINANCE
                                                                  (PRINCIPAL ACCOUNTING OFFICER)
</TABLE>

                                       29