<PAGE>

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

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

                                   FORM 10-Q

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

(MARK ONE)

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

               For the quarterly period ended September 30, 1999

                                       OR

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

                   For the transition period from        to

                        Commission File Number 0-28436


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


           Delaware                                          04-3214536
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                          Identification Number)


                                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  November 11, 1999, there were 43,859,429 shares of the Registrant's
Common Stock outstanding.

                                       1
<PAGE>

                               OPEN MARKET, INC.
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                          -------
<S>                                                                                                      <C>
PART I--FINANCIAL INFORMATION

ITEM 1. Financial Statements
    Consolidated Balance Sheets as of September 30, 1999 and December 31, 1998............................   3
    Consolidated Statements of Operations for the three and nine months ended September 30, 1999
    and 1998..............................................................................................   4
   Consolidated Statements of Cash Flows for the nine months ended September 30, 1999 and 1998............   5
   Notes to Consolidated Financial Statements.............................................................   6
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.............  13
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk........................................  28

PART II--OTHER INFORMATION

ITEM 1. Exhibits and Reports on Form 8-K..................................................................  29

SIGNATURES................................................................................................  30

EXHIBIT INDEX.............................................................................................  31
</TABLE>

                                       2
<PAGE>

                         PART I--FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                               OPEN MARKET, INC.
                          CONSOLIDATED BALANCE SHEETS
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                                 SEPTEMBER 30,   DECEMBER 31,
                                                                                                 --------------  -------------
                                                                                                      1999           1998
                                                                                                 --------------  -------------
                                                                                                  (UNAUDITED)
                                                            ASSETS
<S>                                                                                              <C>             <C>
Current assets:
 Cash and cash equivalents......................................................................     $  19,156      $  19,921
 Marketable securities..........................................................................        13,903         14,958
 Accounts receivable, net of allowances of $3,031 and $2,523, respectively......................        25,246         28,250
 Prepaid expenses and other current assets......................................................         4,954          1,892
                                                                                                     ---------      ---------
    Total current assets........................................................................        63,259         65,021
                                                                                                     ---------      ---------
Property, plant and equipment, at cost:
 Computers and office equipment.................................................................        15,568         14,743
 Leasehold improvements.........................................................................         5,412          5,421
 Land & building................................................................................         4,200          4,200
 Furniture & fixtures...........................................................................         2,140          2,157
                                                                                                     ---------      ---------
    Total property and equipment................................................................        27,320         26,521
Less: Accumulated depreciation and amortization.................................................        14,260         11,093
                                                                                                     ---------      ---------
    Net property and equipment..................................................................        13,060         15,428
Long-term marketable securities.................................................................            --          1,510
Intangible assets, net..........................................................................         9,421         11,627
Other assets....................................................................................         1,372          1,372
                                                                                                     ---------      ---------
                                                                                                     $  87,112      $  94,958
                                                                                                     =========      =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Current maturities of long-term obligations....................................................     $      60      $      88
 Line of credit.................................................................................        10,350         11,000
 Note payable...................................................................................            --          5,000
 Accounts payable...............................................................................         3,316          2,848
 Accrued expenses...............................................................................        10,406         13,692
 Deferred revenues..............................................................................         5,925          4,548
                                                                                                     ---------      ---------
    Total current liabilities...................................................................        30,057         37,176
                                                                                                     ---------      ---------
Long-term obligations, net of current maturities................................................         2,720          2,789
Stockholders' equity:
 Preferred stock, $.10 par value--
   Authorized--2,000,000 shares; Issued and outstanding none...................................             --             --
 Common stock, $.001 par value--
   Authorized--100,000,000 shares; Issued and outstanding - 36,438,000 shares
    and 35,291,000 shares at September 30, 1999 and December 31, 1998,
    respectively................................................................................            36             35
 Additional paid-in capital.....................................................................       191,665        186,074
 Accumulated deficit............................................................................      (137,366)      (131,116)
                                                                                                     ---------      ---------
    Total stockholders' equity..................................................................        54,335         54,993
                                                                                                     ---------      ---------
                                                                                                     $  87,112      $  94,958
                                                                                                     =========      =========
</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          NINE MONTHS ENDED
                                                                    -------------------------  -------------------------
                                                                          SEPTEMBER 30,              SEPTEMBER 30,
                                                                    -------------------------  -------------------------
                                                                       1999          1998         1999          1998
                                                                    -----------  ------------  -----------  ------------
<S>                                                                 <C>          <C>           <C>          <C>
REVENUES:
   Product revenues...............................................     $11,078       $ 8,693      $33,943      $ 32,123
   Service revenues...............................................       6,936         5,670       18,217        13,967
                                                                       -------       -------      -------      --------
     Total revenues...............................................      18,014        14,363       52,160        46,090
                                                                       -------       -------      -------      --------
COST OF REVENUES:
   Product revenues...............................................         932           702        2,411         2,044
   Service revenues...............................................       4,085         3,850       12,386        10,259
                                                                       -------       -------      -------      --------
     Total cost of revenues.......................................       5,017         4,552       14,797        12,303
                                                                       -------       -------      -------      --------
     Gross profit.................................................      12,997         9,811       37,363        33,787
                                                                       -------       -------      -------      --------
OPERATING EXPENSES:
   Selling and marketing..........................................       7,061         8,097       22,367        23,980
   Research and development.......................................       4,510         5,350       14,018        18,693
   General and administrative.....................................       1,822         2,492        5,049         7,422
   Amortization of intangibles....................................         765           720        2,205         1,740
   Acquired in-process research and development...................          --            --           --         5,700
                                                                       -------       -------      -------      --------
     Total operating expenses.....................................      14,158        16,659       43,639        57,535
                                                                       -------       -------      -------      --------
     Loss from operations.........................................      (1,161)       (6,848)      (6,276)      (23,748)
OTHER INCOME (EXPENSE):
Interest income...................................................         275           376          832           985
Interest expense..................................................        (155)         (312)        (465)         (849)
Other expense.....................................................          26            19         (126)          (52)
                                                                       -------       -------      -------      --------
Loss before provision for incomes taxes...........................      (1,015)       (6,765)      (6,035)      (23,664)
                                                                       -------       -------      -------      --------
Provision for income taxes........................................          71           121          216           186
                                                                       -------       -------      -------      --------
NET LOSS..........................................................     $(1,086)      $(6,886)     $(6,251)     $(23,850)
                                                                       =======       =======      =======      ========

NET LOSS PER SHARE BASIC AND DILUTED (Note 2(e))..................      $(0.03)       $(0.20)      $(0.17)       $(0.72)
                                                                       =======       =======      =======      ========

WEIGHTED AVERAGE NUMBER OF COMMON AND
  COMMON EQUIVALENT SHARES OUTSTANDING--
  BASIC AND DILUTED (Note 2(e))...................................      36,225        34,323       35,833        32,945
                                                                       =======       =======      =======      ========
</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>
                                                                                              NINE MONTHS ENDED
                                                                                         ---------------------------
                                                                                                SEPTEMBER 30,
                                                                                         ---------------------------
                                                                                             1999          1998
                                                                                         ------------  -------------
<S>                                                                                      <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss..............................................................................      $(6,251)      $(23,850)
 Adjustments to reconcile net loss to net cash used in operating activities:
  Depreciation and amortization........................................................        3,167          3,672
  Amortization of intangible assets....................................................        2,205          1,740
  Charge associated with acquired in-process research & development....................           --          5,700
  Deferred compensation................................................................           --            105
  Changes in assets and liabilities:
  Accounts receivable..................................................................        3,004         (5,784)
  Prepaid expenses and other current assets............................................       (1,905)          (604)
  Accounts payable.....................................................................          468            274
  Accrued expenses.....................................................................       (3,286)        (2,378)
  Deferred revenues....................................................................        1,378            253
                                                                                             -------       --------
    Net cash used in operating activities..............................................       (1,220)       (20,872)
                                                                                             -------       --------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of property, plant and equipment............................................         (799)        (5,059)
 Payment from founder on loan..........................................................           --            993
 Sales (purchases) of marketable securities, net.......................................        2,568        (15,646)
 Cash used for merger related costs....................................................       (1,157)            --
 Increase in other assets..............................................................           --           (101)
 Net cash used in the purchase of ICentral.............................................           --         (1,420)
                                                                                             -------       --------
    Net cash provided by (used in) investing activities................................          612        (21,233)
                                                                                             -------       --------
CASH FLOWS FROM FINANCING ACTIVITIES:
 (Payments) proceeds from line of credit...............................................         (650)         5,331
 Payments on note payable..............................................................       (5,000)        (1,818)
 Proceeds from the factoring of accounts receivable....................................           --          3,128
 (Payments) proceeds on long-term obligations..........................................          (98)         2,761
 Proceeds from issuance of common stock................................................        5,591         27,336
                                                                                             -------       --------
    Net cash (used in) provided by financing activities................................         (157)        36,738
                                                                                             -------       --------
Net decrease in cash and cash equivalents..............................................         (765)        (5,367)
                                                                                             -------       --------
Cash and cash equivalents, beginning of period.........................................       19,921         19,666
                                                                                             -------       --------
Cash and cash equivalents, end of period...............................................      $19,156       $ 14,299
                                                                                             =======       ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 Interest paid during the period.......................................................      $   155       $  1,212
                                                                                             =======       ========
 Taxes paid during the period..........................................................      $    12       $     48
                                                                                             =======       ========
In connection with the acquisition of ICentral, the following non-cash transaction
 occurred:
 Fair value of assets acquired.........................................................      $    --       $ 12,086
 Liabilities assumed...................................................................           --           (666)
 Issuance of common stock..............................................................           --        (10,000)
                                                                                             -------       --------
 Cash paid for acquisition and acquisition costs.......................................      $    --       $  1,420
                                                                                             =======       ========
In connection with the acquisition of Folio, the following non-cash transaction
 occurred:
 Payment of note payable through issuance of common stock..............................      $    --       $  3,182
                                                                                             =======       ========

</TABLE>
  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       5
<PAGE>

                               OPEN MARKET, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          (ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                  (UNAUDITED)

1. BASIS OF PRESENTATION

   The consolidated financial statements of Open Market, Inc. (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, 1998,
included in the Company's Annual Report on Form 10-K/A filed with the Securities
and Exchange Commission on April 2, 1999.

   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 operations and cash flows of the Company and its
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 certain accounting policies described in this and other notes to these
consolidated financial statements.

   (a) Principles of Consolidation

   The accompanying consolidated financial statements reflect the accounts
of the Company and its wholly- owned subsidiaries. All material intercompany
accounts and transactions have been eliminated in consolidation.

   (b) Revenue Recognition

   The Company applies Statement of Position No. 97-2, Software Revenue
Recognition. The Company generates revenue from licensing the rights to use its
software products to end users and sublicense fees from resellers. The Company
also generates service revenues from the sale of postcontract customer support
and the sale of certain consulting and development services.

   Revenues from software license agreements are recognized upon delivery of the
software if there is evidence of an agreement, there are no significant post-
delivery obligations, and the payment is fixed or determinable and collection
is probable. If an acceptance period is required, revenues are recognized upon
customer acceptance. The Company enters into reseller arrangements for certain
products that typically provide for sublicense fees payable to the Company based
on a percentage of the Company's list price. Royalty and sublicense revenues
from the Company's reseller arrangements are recognized when earned, either on a
per-unit basis as reported to the Company by its 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 and determinable and collectibility 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.

                                       6
<PAGE>

                               OPEN MARKET, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

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

 (c) Cash, Cash Equivalents and Marketable Securities

   The Company accounts 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 the Company has the
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
maturities of less than three months at the time of acquisition. Marketable
securities consist of investment grade commercial paper, corporate notes, and
obligations of certain municipalities as of September 30, 1999. These
instruments typically have maturities of greater than three months but less than
one year. The average maturity of the Company's marketable securities is
approximately ten months.

 (d) Translation of Foreign Currencies

   The accounts of the Company's 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 period-end, while
stockholders' equity is 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. The Company had $438 and $988 of accounts receivable denominated in
foreign currencies as of September 30, 1999 and December 31, 1998, respectively.
The Company marks these receivables to market and records a gain or loss, which
is a component of other income/expense in the statement of operations.  The
Company has not incurred a significant loss to date.

 (e) Net Loss Per Share

   The Company applies 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.
Basic net loss per share is determined by dividing net loss per share by the
weighted average common shares outstanding during the period.  Diluted net loss
per share for the three months and nine months ended September 30, 1999 and 1998
are the same as basic net loss per share, as the inclusion of potential common
stock would be antidilutive.

   For the nine months ended September 30, 1999 and 1998, 6,207,000 and
7,318,000, respectively, of anti-dilutive securities were not included in the
calculation of basic and diluted net loss per share.

 (f) Comprehensive Income

   The Company applies SFAS No. 130, Reporting Comprehensive Income. SFAS No.
130 which establishes standards for reporting and display of comprehensive
income and its components in financial statements. Comprehensive income includes
all changes in equity during a period except those resulting from investments by
owners and distribution to owners. The comprehensive net loss is the same as net
loss for all periods presented.

                                       7
<PAGE>

                               OPEN MARKET, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

 (g) Disclosures about Segments of an Enterprise and Significant Customers

   The Company adopted SFAS No. 131, Disclosures about Segments of an Enterprise
and Related Information in the fiscal year ended December 31, 1998. SFAS No. 131
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 how to allocate resources and assess
performance. The Company's chief decision-maker, as defined under SFAS No. 131,
is a combination of the Chief Executive Officer and Chief Financial Officer.

   As a result of the NextPage License and Distribution Agreement (see Note 6)
the Company now has two reportable operating segments: (1) Commerce Products,
including the licensing of Transact, Live Commerce and Shopsite products and (2)
Publishing Products which include the Folio publishing product suite. The
Company evaluates performance of the operating segments based on gross profit.


<TABLE>
<CAPTION>
                                                                 THREE MONTHS Ended           NINE MONTHS ENDED
                                                            ----------------------------  --------------------------
                                                                    SEPTEMBER 30                 SEPTEMBER 30
                                                            ----------------------------  --------------------------
                                                                 1999           1998          1999          1998
                                                            --------------  ------------  ------------  ------------
<S>                                                         <C>             <C>           <C>           <C>
Commerce Product Revenues..................................        $10,024       $ 4,729       $28,391       $16,388
Commerce Service Revenues..................................          6,602         4,725        16,496        10,959
                                                                   -------       -------       -------       -------
  Subtotal Commerce Revenues...............................         16,626         9,454        44,887        27,347
                                                                   -------       -------       -------       -------
Publishing Product Revenues................................          1,054         3,964         5,552        15,735
Publishing Service Revenues................................            334           945         1,721         3,008
                                                                   -------       -------       -------       -------
  Subtotal Publishing Revenues.............................          1,388         4,909         7,273        18,743
                                                                   -------       -------       -------       -------
     Total Revenues........................................         18,014        14,363        52,160        46,090
                                                                   =======       =======       =======       =======

Commerce Cost of Product...................................            932           576         2,252         1,612
Commerce Cost of Service...................................          4,085         3,369        10,953         8,378
                                                                   -------       -------       -------       -------
  Subtotal Cost of Commerce Revenues.......................          5,017         3,945        13,205         9,990
                                                                   -------       -------       -------       -------
Publishing Cost of Product.................................              -           126           159           432
Publishing Cost of Service.................................              -           481         1,433         1,881
                                                                   -------       -------       -------       -------
  Subtotal Cost of Publishing Revenues.....................              -           607         1,592         2,313
                                                                   -------       -------       -------       -------
     Total Cost of Revenues................................          5,017         4,552        14,797        12,303
                                                                   -------       -------       -------       -------

Gross Profit--Commerce.....................................         11,610         5,509        31,682        17,356
Gross Profit--Publishing...................................          1,387         4,302         5,681        16,431
                                                                   -------       -------       -------       -------
     Total Gross Profit....................................         12,997         9,811        37,363        33,787
                                                                   =======       =======       =======       =======
</TABLE>


                                       8
<PAGE>

                               OPEN MARKET, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

  The following table presents geographical revenues from sources in total and
as a percent of total revenues for the three and nine months ended  September
30, 1999 and 1998:

<TABLE>
<CAPTION>
                                  THREE MONTHS ENDED                        NINE MONTHS ENDED
                       ----------------------------------------  ----------------------------------------
                       SEPTEMBER 30, 1999   SEPTEMBER 30, 1998   SEPTEMBER 30, 1999   SEPTEMBER 30, 1998
                       -------------------  -------------------  -------------------  -------------------
<S>                    <C>         <C>      <C>         <C>      <C>         <C>      <C>         <C>
North America..........   $12,472      70%     $ 8,863      62%     $36,757      70%     $32,269      69%
Europe/Africa..........     4,224      23%       4,088      28%      12,120      23%       9,497      21%
Asia/Pacific Rim.......     1,246       7%       1,107       8%       2,875       6%       3,621       8%
Other..................        72       0%         305       2%         408       1%         703       2%
                          -------     ---      -------     ---      -------     ---      -------     ---
                          $18,014     100%     $14,363     100%     $52,160     100%     $46,090     100%
                          =======     ---      =======     ---      =======     ---      =======     ---
</TABLE>

3. RESTRUCTURING

   In the fourth quarter of 1998, the Company implemented a restructuring plan
to better align its operating costs with its anticipated future revenue stream.
The major component of the restructuring charge relates to the elimination of
approximately 67 employees across the following functions: Engineering (27),
Marketing (17), General and Administrative (22) and Services (1). In addition,
10 employees moved from Engineering to Consulting. Other components related to
the exiting of certain contractual arrangements for porting and product
integration that resulted from a change in product strategy. Other charges
included the write-off of unutilized software, originally intended for use by
the sales force but not implemented due to the reduction in marketing personnel.
The restructuring charge was comprised of the following:

<TABLE>
<S>                                                              <C>
Employee severance, benefits and related costs.................   $1,260
Write-off of assets............................................      294
Termination costs of certain contractual arrangements..........      488
                                                                  ------
Total..........................................................   $2,042
                                                                  ======
</TABLE>

   At September 30, 1999, approximately $448 of accrued restructuring charges
remained, which is comprised of approximately $70 of severance-related costs and
$377 of contractual costs. The total cash impact of the restructuring amounted
to approximately $1,748. The total cash paid as of September 30, 1999 was
approximately $1,268 and the remaining amount is expected to be paid during the
fourth quarter of 1999.

4. ACQUISITIONS

 ICentral Incorporated

   On April 30, 1998, the Company acquired all of the outstanding shares of
capital stock of ICentral, Incorporated (ICentral) based in Provo, Utah.
ICentral specializes in Internet store-building products geared to small and
medium-sized businesses. As payment of the purchase price, the Company (i)
issued an aggregate of 480,140 shares of common stock of the Company and (ii)
made a cash payment of $720 to the former stockholders of ICentral. The value of
the shares of the Company's common stock issued in connection with the
acquisition was approximately $10,000 based on a weighted average market price,
as defined. In addition, in connection with this acquisition, the Company
entered into employment agreements with certain key employees of ICentral under
which the Company agreed to pay bonuses in the form of the Company's common
stock in an aggregate amount of $1,000, depending on certain future events, as
defined. The employees earned $570 under the employment agreements, which was
paid through the issuance of 42,223 shares of common stock under the Company's
1994 Stock Incentive Plan. For financial statement purposes, this acquisition
was accounted for as a purchase, and accordingly, the results of operations of
ICentral subsequent to April 30, 1998 are included in the Company's consolidated
statements of operations.

                                       9
<PAGE>

                               OPEN MARKET, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


  The aggregate purchase price of $12,086 consisted of the following:

<TABLE>
<CAPTION>
DESCRIPTION                                                                      AMOUNT
-----------                                                                      ------
<S>                                                                         <C>
  Common stock..............................................................    $10,000
  Cash......................................................................        720
  Assumed liabilities.......................................................        666
  Acquisition costs.........................................................        700
                                                                                -------
     Total purchase price:..................................................    $12,086
                                                                                =======
</TABLE>

  The purchase price was allocated based upon the fair value of the tangible and
intangible assets acquired. These allocations represent the fair values
determined by an appraisal. The appraisal incorporated proven valuation
procedures and techniques in determining the fair value of each intangible
asset. The purchase price has preliminarily been allocated as follows:

<TABLE>
<CAPTION>
DESCRIPTION                                                                       AMOUNT
-----------                                                                       ------
<S>                                                                          <C>
  Current assets............................................................     $    86
  Other acquired intangible assets..........................................       6,300
  In-process research & development.........................................       5,700
                                                                                 -------
     Total assets acquired:.................................................     $12,086
                                                                                 =======
</TABLE>

  As of the acquisition date of ICentral in April 1998, ICentral had initiated a
research and development effort related to the third major revision of its
flagship ShopSite product suite, an Internet commerce product suite that allows
small to medium-sized web merchants to transact business on the Internet. The
elements of the product suite are as follows: (1) ShopSite Express, a tool that
allows web designers to add a shopping system to any existing web site, (2)
ShopSite Manager, which offers the shopping functionality of ShopSite Express
combined with an automated commerce site management system, and (3) ShopSite
Pro, which combines the features of ShopSite Manager with an additional set of
advanced commerce tools including real-time payment processing. The in-process
technology included significant new modifications of the features and
functionality of the current suite of products, such as the addition of
Cybercash as a payment option, quantity discount interface capability to allow
customers to purchase at quantity discounts, tax modifications to allow the
merchant to decide whether to calculate tax before or after shipping is
calculated, improved shipping configuration of United Parcel Service shipping
zones, and a mailing list generator. It is expected that these modifications
will further enhance the product's ease of use in the marketplace. As of the
acquisition date, the in-process project was approximately 60% complete and it
was estimated that the in-process technology would have a seven-year life. The
first integrated product was introduced during the second quarter of 1999.

  The value of the acquired in-process technology was computed using a
discounted cash flow analysis on the anticipated income stream of the estimated
future product sales of the developed technology. This was determined by
estimating the costs of developing the purchased in-process development project
into commercially viable products, estimating the resulting net cash flows from
the project, adjusting the cash flow for the percentage of completion and the
core technology component of the required technology and discounting the
adjusted net cash flows to their present value. The estimates used to value the
future revenue benefits of the in-process research and development were based on
elements of relevant market sizes and growth/risk factors, expected trends in
technology, and the nature and expected timing of new product introductions by
the Company and its competitors.

                                       10
<PAGE>

                               OPEN MARKET, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

   In the valuation analysis, aggregate revenues for ICentral products were
estimated to be approximately $3,300 for fiscal 1998 and to increase to
approximately $62,500 in 2007. Revenues for the in-process technology were
estimated to be approximately $2,300 for fiscal 1998 and to approximately
$28,700 in fiscal 2002, representing a compound annual growth rate of
approximately 65%. The estimated revenues for the in-process technologies were
expected to peak within four years of the acquisition date. The estimated
overall life of the acquired developed technologies of ICentral is five years.

   Operating expenses used in the valuation of ICentral included selling,
general and administrative, and research and development expenses. Operating
expenses were estimated based on historical expense levels of similar companies
operating in similar industries. Selling, and general and administrative
expenses expressed as a percentage of revenue for the in-process technologies
were estimated to be 30% throughout the estimation period. Research and
development expenses, also expressed as a percentage of estimated revenue, were
estimated to be approximately 32% and 13% in 1998 and 1999, respectively, and to
stabilize at 20% for the remainder of the estimation period. Cost of sales was
estimated based on an analysis of historical information for similar companies
operating in similar industries. Cost of sales for both the developed and in-
process technologies was estimated to be 19% throughout the estimation period.

   The discount rate selected for both the developed and in-process technologies
was 22% and was estimated by calculating a Weighted Average Cost of Capital
(WACC) based on publicly traded guideline companies. The WACC represents the
blended, after-tax costs of debt and equity. The cost of equity was estimated
using the Capital Asset Pricing Model (CAPM) and by reviewing venture capital
rates of return.

   The valuation analysis was performed in accordance with the provisions of
Accounting Principles Board (APB) Opinions Nos. 16 and 17, wherein all
identifiable assets and intangible assets acquired were identified and analyzed
to determine their fair market values. In addition, to identify the in-process
research and development and determining if there were any alternative future
uses for these projects, these projects were evaluated in the context of
Interpretation 4 of Financial Accounting Standards Board Statement No. 2 (SFAS
2) and SFAS No. 86: Accounting For Software Costs. Such evaluation consisted of
a specific review of the efforts and uniqueness of the developments of these
projects, and a determination of whether technological feasibility had been
achieved. Accordingly, the Company believed that the foregoing assumptions used
in the ICentral acquired in-process research and development analysis were
reasonable at the time of acquisition. However, no assurance can be given that
the underlying assumptions used to estimate expected sales revenues, development
costs, or profitability, or the events associated with such projects will
transpire, or have transpired, as estimated. The Company recorded approximately
$525 of amortization expense relating to these intangible assets during 1998 and
$945 for the nine months ending September 30, 1999.  The results prior to the
ICentral Acquisition were not material to the Company.  Accordingly the proforma
results for the three and nine months ended September 30, 1998 were not
presented.

5. RELATED PARTY TRANSACTIONS

   During the three and nine month periods ended September 30, 1999, the Company
recorded revenues of $432  related to the sale of  FutureTense, Inc.(R)
("FutureTense") products and services as part of a reseller agreement.  The
Company believes that the terms of these transactions are on terms no less
favorable to the Company than could be obtained from unaffiliated third parties
(See Note 7).

6. EXCLUSIVE DISTRIBUTION AGREEMENT

   On June 9, 1999, the Company announced the formation of a strategic
partnership with ABSB, L.C., now known as NextPage. Under the terms of the
agreement, as amended on September 30, 1999, in exchange for exclusive worldwide
marketing and distribution rights for Folio publishing products, NextPage will
pay Open Market a minimum of $14,000 in guaranteed royalties over a three-year
period commencing July 1, 1999.  At the end of the three-year period,

                                       11
<PAGE>

                               OPEN MARKET, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NextPage has an option to obtain all rights, title and interests to the Folio
products for a purchase price equal to such products' fair-market value. In
addition, Open Market will receive a minimum of $3,000 in software license fees
from NextPage in exchange for NextPage's non-exclusive worldwide rights to
market and distribute Open Market's Internet commerce software products to the
commercial publishing industry. In connection with this distribution agreement,
the Company recorded $1,167 in publishing product revenue during the three
months ended September 30, 1999.

7. SUBSEQUENT EVENT

   On October 18, 1999, the Company announced the completion of its merger with
FutureTense, a leading provider of Internet content management and delivery
software. Under the terms of the agreement, Open Market issued 7,346,210 shares
of its common stock to the holders of outstanding FutureTense stock. In
addition, Open Market assumed employee options and a warrant to acquire shares
of FutureTense stock that will convert into options to acquire 1,124,628 shares
of Open Market common stock. A substantial portion of these options were
exercisable upon the closing of the transaction.  As of October 15, 1999, the
common stock issued by Open Market had an aggregate value of $96,419 and Open
Market issued options to acquire Open Market stock valued at $14,760.  The
Company intends to account for this transaction as a pooling of interests.  At
September 30, 1999, the Company has recorded $1,157 in other assets consisting
of legal, accounting and other fees incurred in connection with the merger.
These costs will be expensed in the fourth quarter, upon closing of the
transaction. Additional details are published in the Company's Registration
Statement on Form S-4, as amended (File No. 333-84801) filed with the Securities
and Exchange Commission.

                                       12
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                                 OF OPERATIONS
          (ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


RESULTS OF OPERATIONS


Overview


Open Market develops, markets, licenses and supports enterprise-class, packaged
application software products and professional services that allow its customers
to engage in business-to-business and business-to-consumer Internet commerce and
information commerce.  Open Market's Internet commerce software includes a wide
spectrum of functionality required to effectively conduct business on the
Internet, allowing companies to attract customers to their Web site, engage
customers in acting upon a commercial offer, complete a secure transaction and
service customers once a transaction has been completed.

This section of the Quarterly Report may include historical information and
certain forward-looking statements.  Please review below the information
contained under the heading "Certain Factors That May Affect Future Operating
Results" that addresses certain risks and uncertainties that could cause the
Company's future operating results to differ from those indicated by any forward
looking statements made by the Company or others.  The Company recommends that
the business and historical discussions put forth in this section be read
together with the discussion of such risks and uncertainties.  In addition, the
following discussion should be read in conjunction with the consolidated
financial statements and the notes thereto, and the information included
elsewhere herein.

On October 18, 1999, the Company announced the completion of its merger with
FutureTense, a leading provider of Internet content management and delivery
software. Under the terms of the agreement, Open Market issued 7,346,210 shares
of its common stock to the holders of outstanding FutureTense stock. In
addition, Open Market assumed employee options and a warrant to acquire
FutureTense stock that will convert into options to acquire 1,124,628 shares of
Open Market common stock. A substantial portion of these options are exercisable
upon the closing of the transaction.  As of October 15, 1999, the common stock
issued by Open Market had an aggregate value of $96,419 and Open Market issued
options to acquire Open Market common stock valued at $14,760.  The company
intends to account for this transaction as a pooling of interests.  At September
30, 1999, the Company has recorded $1,157 in other assets consisting of legal,
accounting and other fees incurred in connection with the merger.  These costs
will be expensed in the fourth quarter, upon closing of the transaction.
Additional details are published in the Company's Registration Statement on Form
S-4, as amended (File No. 333-84801) filed with the Securities and Exchange
Commission.


REVENUES

The following table summarizes product revenues by segment:

<TABLE>
<CAPTION>
      ------------------------------------------------------------------------------------------------------------------
                                     Three months ended                         Nine months ended
                                        September 30,        % change from         September 30,          % change from
                                  ------------------------                   --------------------------
                                       1999        1998       prior year          1999        1998         prior year
                                  ------------------------                   --------------------------
<S>                              <C>         <C>            <C>          <C>                  <C>         <C>

      Commerce product revenue      10,024       4,729           112%         28,391           16,388         73%
      Publishing product revenue     1,054       3,964           (73%)         5,552           15,735         (65%)
                                  ------------------------                   --------------------------
      Total product revenues        11,078       8,693           27%          33,943           32,123           6%
      ------------------------------------------------------------------------------------------------------------------

</TABLE>

Total product revenues increased approximately 27% to $11,078, or 62% of total
revenues, for the three months ended September 30, 1999, compared to $8,693, or
61% of total revenues, for the same period of the prior year.  Product revenues
include: (1) commerce product revenues, which include the licensing of Transact,
the Company's flagship product for Internet commerce, LiveCommerce, and ShopSite
products, and (2) publishing product revenues, which include royalties from
NextPage, Inc. (formerly ABSB) pursuant to of the Master Distribution

                                       13
<PAGE>

Agreement for the Folio publishing product suite that was consummated during the
second quarter of 1999.

The increase in product revenues was attributed primarily to growth in the
Company's core Internet commerce products segment.  In the three months ended
September 30, 1999, Internet commerce product revenues grew to $10,024, or
approximately 112% over the comparable prior year period.  The Company
attributed commerce product revenue growth to new customers as well as follow-on
sales to its installed base of customers.  In addition, the Company's average
system price increased as a result of a new modular system format and pricing
schedule that was introduced during the first quarter of 1999.  The modular
system format allows new customers to more easily tailor an individual commerce
system to meet their specific needs and allows existing installed base customers
the flexibility to change their systems with new and different products.
Management believes that follow-on sales to its installed base of customers are
integral to its strategy of building strong and lasting customer relationships.

Total product revenues increased 6% to $33,943, or 65% of total revenues, for
the nine months ended September 30, 1999, from to $32,123, or 70% of total
revenues, for the comparable prior year period.  The Company attributed the
increase primarily to demand for its commerce products, which increased
approximately 73% from the nine months ended September 30, 1998.

Management expects that revenues from the Folio publishing products segment,
which declined approximately 73% and 65%, respectively, from the three and nine
months ended September 30, 1998, will remain flat in future quarters in
accordance with the Master Distribution Agreement with NextPage pursuant to
which the Company will receive a flat quarterly product royalty fee of
approximately $1,167 for the duration of the three-year agreement.  Prior to the
NextPage agreement, the Company recorded license revenue from end-users and
resellers.  At the end of the three-year period, NextPage has an option to
obtain all rights, title and interests to the Folio products for a purchase
price equal to such products fair-market value.


The following table summarizes service revenues by segment:

<TABLE>
<CAPTION>
         ---------------------------------------------------------------------------------------------------------------------

                                            Three months ended                       Nine months ended
                                               September 30,     % change from          September 30,        % change from
                                       ------------------------                  --------------------------
                                          1999        1998         prior year         1999        1998         prior year
                                       ------------------------                  --------------------------
<S>                                   <C>           <C>          <C>                 <C>         <C>         <C>

          Commerce service revenue          6,602       4,725       40%               16,496      10,959          51%
          Publishing service revenue          334         945      (65%)               1,721       3,008         (43%)
                                      ------------------------                   --------------------------
          Total service revenues            6,936       5,670       22%               18,217      13,967          30%
         ---------------------------------------------------------------------------------------------------------------------
</TABLE>

Service revenues include revenues related to maintenance and support and
professional services offered by the Company.  Service revenues increased
approximately 22% to $6,936, or 38% of total revenues, for the three months
ended September 30, 1999, from $5,670, or 39% of total revenues, for the three
months ended September 30, 1998. Generally, customers purchase maintenance and
support and professional services from the Company upon purchase of the
Company's products.  In addition, recurring quarterly revenues are derived from
the ratable recognition of maintenance and support services as well as
subsequent purchases of professional services from the Company's existing
installed base of customers.  Accordingly, the Company expects service revenues
to grow in relative proportion to growth in new product business.

Service revenues increased approximately 30% to $18,217, or 35% of total
revenues, for the nine months ended September 30, 1999, from $13,967, or 30% of
total revenues, for the nine months ended September 30, 1998.  The growth in
service revenues was attributed primarily to the commerce segment, which grew
40% and 51%, respectively, during the three and nine months ended September 30,
1999 from the comparable prior year period, primarily as a result of growth in
the Company's commerce product revenues.

The Company's publishing service revenue declined approximately 65% and 43%,
respectively, for the three and nine months ended September 30, 1999, from the
comparable prior year periods.  The decrease was attributed to the Master
Distribution Agreement with NextPage and the related decrease in publishing
product revenues for the three and nine month periods ended September 30, 1999.
Over the three-year duration of this agreement, the Company does not expect to
record any service revenues related to its publishing segment.

                                       14
<PAGE>

COST OF REVENUES

The following table summarizes cost of revenues by segment:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------

                                Three months ended                            Nine months ended
                                  September 30,          % change from          September 30,          % change from
                           --------------------------                  ----------------------------
                                 1999         1998         prior year         1999         1998          prior year
                           --------------------------                  ----------------------------
<S>                          <C>          <C>          <C>                 <C>         <C>           <C>

Commerce cost of product         932         576             62%             2,252         1,612            40%
Publishing cost of product         -         126           (100%)              159           432           (63%)

Total cost of product            932         702             33%             2,411         2,044            18%


Commerce cost of service       4,085       3,369             21%            10,953         8,378            31%
Publishing cost of service         -         481           (100%)            1,433         1,881           (24%)
                           --------------------------                  ----------------------------

Total cost of service          4,085       3,850              6%            12,386        10,259            21%


Total cost of revenues         5,017       4,552             10%            14,797        12,303            20%
---------------------------------------------------------------------------------------------------------------------
</TABLE>

Cost of product revenues for the three and nine months ended September 30, 1999
increased approximately 33% and 18%, respectively, to $932 and $2,411 from $702
and $2,044 in the comparable prior year periods.  The increase was attributed
primarily to growth in product revenues and increased costs for third party
licensing royalties related to the Company's Internet commerce products.  Cost
of product revenues includes the costs to distribute products, costs of media on
which products are delivered, royalties for third-party technology that is
embedded into certain products of the Company, and royalties for the resale of
third-party software products.  For the three and nine months ended September
30, 1999, cost of product revenues was approximately 8% and 7%, respectively, of
total product revenues.  Management believes that these costs as a percentage of
product revenues will remain in the range of 8% to 10% for the foreseeable
future as the Company incorporates more third-party technology into its products
and continues to resell third-party software products with its Internet commerce
solutions.

Cost of service revenues consists primarily of personnel and related costs
incurred in providing development, consulting, and other technical services to
customers.  Cost of service revenues for the three and nine months ended
September 30, 1999 increased approximately 6% and 21%, respectively, to $4,085
and $12,386 from $3,850 and $10,259 in the comparable prior year periods.  The
increase was attributed to increased costs in the commerce segment as a result
of growth in commerce service revenues during the period.  The increase in
commerce cost of service was attributed primarily to higher costs related to the
employment of outside consultants and higher recruiting costs related to the
hiring of new employees. Management believes that these costs will increase in
proportion to growth in service revenues, particularly anticipated growth in the
Company's commerce consulting business.

Publishing costs of product and service were eliminated in the three months
ended September 30, 1999 as a result of the Master Distribution Agreement with
NextPage.  Accordingly, over the three-year duration of this agreement, the
Company does not expect to incur any costs of product or service revenue related
to its publishing segment.

GROSS MARGIN

Product revenue gross margin was approximately 92% and 93%, respectively, for
the three and nine months ended September 30, 1999, as compared to approximately
90% and 93%, respectively, for the three and nine months ended September 30,
1998.  Management expects that product revenue gross margin will fluctuate based
on the amount of third party technology that the Company uses and resells to its
customers with its Internet commerce solutions.  Additionally, management
expects that product revenue gross margin will remain in the range of 90% to 92%
for the foreseeable future.

                                       15
<PAGE>

Service revenue gross margin increased to approximately 41% and 32% in the three
and nine months ended September 30, 1999, respectively, from approximately 32%
and 27% in the comparable prior year periods. The increase was attributed
primarily to higher resource utilization rates. Management expects that the
service gross margin may fluctuate in subsequent quarters depending upon such
factors as resource utilization rates and growth in the consulting business.

OPERATING EXPENSES

Overall, management attributed lower operating expenses to general improvement
in the Company's cost structure that resulted from lower employee headcount and
improved cost controls across all internal organizations.  The Company continued
to experience cost efficiencies as a result of the restructuring plan
implemented in the fourth quarter of 1998.  In addition, the Company reduced its
workforce by approximately  21% as a result of its Master Distribution Agreement
with NextPage in July 1999.

Selling and marketing expenses consisted primarily of the cost of sales and
marketing personnel and consultants, as well as the costs associated with
marketing programs, advertising costs, and literature.  Selling and marketing
expenses decreased to $7,061 and $22,367 for the three and nine months ended
September 30, 1999, respectively, from $8,097 and $23,980 for the three and nine
months ended September 30, 1998, respectively.  The decrease in these expenses
of approximately 13% and 7% for the three and nine months ended September 30,
1999, respectively, was attributed primarily to a decrease in general marketing
and advertising expenses related to improved cost controls. In addition,
employee-related expenses decreased as a result of an 18% reduction in headcount
from the comparable prior year periods.

Research and development expenses consisted primarily of the cost of research
and development personnel and independent contractors, as well as equipment and
facilities costs related to such activities.  For the three and nine months
ended September 30, 1999, these expenses decreased to $4,510 and $14,018,
respectively, from $5,350 and $18,693 for the three and nine months ended
September 30, 1998, respectively.  The decrease in expenses of approximately 16%
and 25% for the three and nine months ended September 30, 1999, respectively,
was attributed primarily to a reduction in employee related expenses as a result
of a 30% reduction in research and development headcount from the comparable
prior year periods.  This headcount reduction was primarily the result of the
completion of certain development projects related to the Company's next-
generation group of products that occurred during the nine months ended
September 30, 1998.

Qualifying capitalized software development costs were immaterial in both
periods.  Accordingly, the Company has charged all such expenses to research and
development in the period incurred.  The Company believes that significant
investments in research and development are required to remain competitive in
the software industry.  Certain research and development expenditures are
incurred substantially in advance of the related revenues and, in some cases, do
not generate revenues.

General and administrative expenses consisted primarily of the cost of finance,
management, and administrative personnel, as well as legal and other
professional fees.  These expenses decreased for the three and nine months ended
September 30, 1999, to $1,822 and $5,049, respectively, from $2,492 and $7,422
for the three and nine months ended September 30, 1998, respectively. These
amounts represent decreases of approximately 27% and 32%, respectively, for the
three and nine months ended September 30, 1999 from the comparable prior year
periods.  The decrease was attributed primarily to a decrease in communications
expenses as a result of consolidation and improvement in the Company's
communication services and cost controls.  In addition, employee-related
expenses decreased as a result of a 33% reduction in headcount from the
comparable prior year periods.

Amortization of intangibles increased for the three and nine months ended
September 30, 1999, to $765 and $2,205, respectively, from $720 and $1,740 for
the three and nine months ended September 30, 1998.  These costs are a result of
the acquisitions of Folio and ICentral and the related goodwill.

                                       16
<PAGE>

Acquired In-Process Research and Development

Acquired in-process research and development expenses consisted of $5,700
relating to the ICentral acquisition in the second quarter of fiscal 1998. These
costs were expensed as of the acquisition dates and are included in the
accompanying consolidated statements of operations for the respective periods.
The amount allocated to acquired in-process research and development relates to
projects that have not yet reached technological feasibility and that, until
completion of development, have no alternative future use.

As of the acquisition date of ICentral in April 1998, ICentral had initiated a
research and development effort related to the third major revision of its
flagship ShopSite product suite, an Internet commerce product suite that allows
small to medium-sized web merchants to transact business on the Internet. The
elements of the product suite are as follows: (1) ShopSite Express, a tool that
allows web designers to add a shopping system to any existing web site, (2)
ShopSite Manager, which offers the shopping functionality of ShopSite Express
combined with an automated commerce site management system, and (3) ShopSite
Pro, which combines the features of ShopSite Manager with an additional set of
advanced commerce tools including real-time payment processing. The in-process
technology included significant new modifications of the features and
functionality of the current suite of products, such as the addition of
Cybercash as a payment option, quantity discount interface capability to allow
customers to purchase at quantity discounts, tax modifications to allow the
merchant to decide whether to calculate tax before or after shipping is
calculated, improved shipping configuration of United Parcel Service shipping
zones, and a mailing list generator. It is expected that these modifications
will further enhance the product's ease of use in the marketplace. As of the
acquisition date, the in-process project was approximately 60% complete and it
was estimated that the in-process technology would have a 7-year life and that
the first product(s) were introduced during the second quarter of fiscal 1999.

The value of the acquired in-process technology was computed using a discounted
cash flow analysis on the anticipated income stream of the estimated future
product sales of the developed technology. This was determined by estimating the
costs of developing the purchased in-process development project into
commercially viable products, estimating the resulting net cash flows from the
project adjusting the cash flow for percentage of completion and the core
technology component of the acquired technology and discounting adjusted the net
cash flows to their present value. The estimates used to value the future
revenue benefits of the in-process research and development were based on
elements of relevant market sizes and growth/risk factors, expected trends in
technology, and the nature and expected timing of new product introductions by
the Company and its competitors.

In the valuation analysis, aggregate revenues for ICentral products were
estimated to be approximately $3,300 for fiscal 1998 and increasing to
approximately $62,500 in 2007. Revenues for the in-process technology were
estimated to be approximately $2,300 for fiscal 1998 and increasing to
approximately $28,700 in fiscal 2002, representing a compound annual growth rate
of approximately 65%. The estimated revenues for the in-process technologies
were expected to peak within four years of the acquisition date. The estimated
overall life of the acquired developed technologies of ICentral is five years.

Operating expenses used in the valuation of ICentral included selling, general
and administrative, and research and development expenses. Operating expenses
were estimated based on historical expense levels of similar companies operating
in similar industries. Selling, general and administrative expenses expressed as
a percentage of revenue for the in-process technologies were estimated to be 30%
throughout the estimation period. Research and development expenses, also
expressed as a percentage of estimated revenue, were estimated to be
approximately 32% and 13% in 1998 and 1999, respectively, and stabilizing at 20%
for the remainder of the estimation period. Cost of sales was estimated based on
an analysis of historical information for similar companies operating in similar
industries.  Cost of sales for both the developed and in-process technologies
was estimated to be 19% throughout the estimation period.

The discount rate selected for both the developed and in-process technologies
was 22% and was estimated by calculating a Weighted Average Cost of Capital
(WACC) based on publicly traded guideline companies. The WACC represents the
blended, after-tax costs of debt and equity. The cost of equity was estimated
using the Capital Asset Pricing Model (CAPM) and by reviewing venture capital
rates of return.

                                       17
<PAGE>

The fair values of the assets acquired from ICentral were allocated between the
following:

<TABLE>
<CAPTION>
                                                                           FAIR
                                                                          MARKET
                                                                          VALUE
<S>                                                                     <C>
  ASSET
  In-process research and development.................................    $ 5,700
  Other acquired intangible assets....................................      6,300
  Current assets......................................................         86
                                                                          -------
     Total:...........................................................    $12,086
                                                                          =======
</TABLE>

The valuation analysis was performed in accordance with the provisions of
Accounting Principles Board (APB) Opinions Nos. 16 and 17, wherein all
identifiable assets and intangible assets acquired were identified and analyzed
to determine their fair market values. In addition, to identify the in-process
research and development and to determine if there were any alternative future
uses for these projects, these projects were evaluated in the context of
Interpretation 4 of Financial Accounting Standards Board Statement No. 2 (SFAS
2) and SFAS 86: Accounting For Software Costs. Such evaluation consisted of a
specific review of the efforts and uniqueness of the developments of these
projects, and a determination of whether technological feasibility had been
achieved. Accordingly, the Company believed that the foregoing assumptions used
in the ICentral acquired in-process research and development analysis were
reasonable at the time of acquisition. However, no assurance can be given that
the underlying assumptions used to estimate expected sales revenues, development
costs, or profitability, or the events associated with such projects will
transpire, or have transpired, as estimated.

OTHER INCOME AND EXPENSE

Interest income represents interest earned on cash, cash equivalents and
marketable securities. Interest income decreased to $275 and $832, respectively,
for the three and nine months ended September 30, 1999, from approximately $376
and $985 for the three and nine months ended September 30, 1998, respectively.
The decrease was attributed primarily to lower average investments in cash, cash
equivalents and marketable securities during the periods.  Interest expense
decreased to $155 and $465 for the three and nine months ended September 30,
1999, respectively, from $312 and $849 for the three and nine months ended
September 30, 1998, respectively.  The decrease in interest expense was
attributed primarily to the final payment made on the note payable issued to
Reed Elsevier in 1997 in connection with the Folio acquisition.  Interest
expense relates to the Company's line-of-credit, the Company's note payable
issued in conjunction with the Folio acquisition, the mortgage on the Company's
Provo, Utah facility, as well as an obligation under a license agreement.  For
the three months ended September 30, 1999, other income of $26 represents
foreign currency translation gains as compared to $19 of foreign currency
translation gains in the prior year period.  For the nine months ended September
30, 1999, other expense of $126 represents foreign currency translation losses
as compared to $52 of foreign currency translation losses in the prior year
period.

INCOME TAXES

The Company recorded a provision for foreign income taxes of $71 and $216 for
the three and nine months ended September 30, 1999, respectively, compared to
$121 and $186 for the three and nine months ended September 30, 1998,
respectively.  This provision was recorded for estimated taxes due in foreign
jurisdictions.  The Company has had losses for U.S. tax purposes for all periods
to date and, accordingly, there has been no provision for U.S. income taxes.

SUBSEQUENT EVENT

The Company expects to record non-recurring charges of approximately $4,000 to
$4,500 in connection with the FutureTense merger relating to legal fees,
accounting services and other integration costs as well as additional expenses
of approximately $1,000 to $1,500 relating to a marketing and advertising
campaign that is designed to promote the new entity.  Management acknowledges
that actual costs may be higher than are presently anticipated.

                                       18
<PAGE>

In addition, the Company may incur other additional unanticipated merger costs
and these costs may delay the anticipated benefits of the merger. Some of these
nonrecurring costs will be charged to operations in the fourth quarter of 1999,
while others will be expensed as incurred during the post-merger integration
period.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 1999, the Company had $33,059 in cash, cash equivalents, and
marketable securities, which represented a decrease of $1,820 from December 31,
1998.

The Company's operating activities used cash and cash equivalents of
approximately $1,220 for the nine months ended September 30, 1999 and used cash
of $20,872 for the nine months ended September 30, 1999 and 1998, respectively.
The improvement in cash used in operating activities was primarily the result of
the reduction in net loss and in the accounts receivable balance.  The Company's
net loss decreased approximately 74% to $6,251 for the nine months ended
September 30, 1999 from $23,850 for the comparable prior year period due
primarily to a reduction in the Company's operating expenses.  The level of
accounts receivable improved primarily as a result of shorter average payment
terms in new contracts in the commerce segment and payment of receivables that
had extended payment terms.

The Company's investing activities generated cash and cash equivalents of
approximately $612 for the nine months ended September 30, 1999 and used cash of
$21,233 for the nine months ended September 30, 1998.  The principal use of cash
from investing activities for the nine months ended September 30, 1999 was
$1,157 for legal, accounting and other costs related to the FutureTense merger.
Additionally there was an improvement in cash from investing activities due to a
decrease in purchases of marketable securities and a reduction in spending on
equipment.  In addition, $1,420 of net cash was used in the ICentral acquisition
(see Note 4) in the nine months ended September 30, 1998.

The Company's financing activities used cash and cash equivalents of
approximately $157 for the nine months ended September 30, 1999 and provided
approximately $36,738 in the comparable prior year period.  The principal use of
cash from financing activities for the nine months ended September 30, 1999 was
the final payment of $5,000 on the note payable issued to Reed Elsevier in
connection with the Folio acquisition and the $650 reduction in the amount
outstanding under the line of credit.  In addition, the Company received
proceeds of $5,591 from the exercise of stock options under the Company's 1994
Stock Incentive Plan and stock purchases under the Company's Employee Stock
Purchase Plan.  During the first nine months of 1998, the Company received
proceeds of $27,336 for the issuance of common stock.  The Company received
$5,000 from Intel and $20,000 from CMG and CVI for the private sale of equity
securities.  In addition, the Company received proceeds of $2,336 from the
exercise of stock options under the Company's 1994 Stock Incentive Plan and
stock purchases under the Company's Employee Stock Purchase Plan.

In July 1998, the Company entered into a $2,800 mortgage of its Provo, Utah,
building which bears interest at the fixed rate of 8.5%. The mortgage principal
payments are based upon a 20-year term with a balloon payment required at the
end of the fifth year.

The Company has an unsecured bank credit facility that provides up to $15,000 in
financing in the form of a demand line of credit.  Borrowings under this line
are limited to 80% of eligible domestic accounts receivable and 90% of eligible
foreign accounts receivable, as defined, and bears interest at the prime lending
rate (8.25% at September 30, 1999).  The Company is required to comply with
certain restrictive covenants under this credit facility and the line is
collateralized by the Company's accounts receivable.  The Company was in
compliance with all such convenants at September 30, 1999.  During the nine
months ended September 30, 1999, the Company decreased its borrowings under this
credit facility to $10,350 from $11,000 at December 31, 1998.  At September 30,
1999, $4,650 remained available to the Company under this credit facility.

At December 31, 1998, the Company had net operating loss carryforwards for
income tax purposes of approximately $92,000. 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


                                       19
<PAGE>

interests of significant stockholders over a three-year period that are in
excess of 50%. While the Company believes that it has experienced a change in
ownership in excess of 50%, it does not believe that this change in ownership
will significantly impact the Company's ability to utilize its net operating
loss carryforwards.

The Company believes that its existing capital resources are adequate to meet
its cash requirements for at least the next 12 months.  The Company will incur
additional spending during the fourth quarter related to the Futuretense merger.
These expenditures will primarily relate to professional fees of approximately
$4,000 to $4,500 and marketing expenditures of approximately $1,000 to $1,500.
However, there can be no assurance that changes in the Company's plans or other
events affecting the Company's operations will not result in accelerated or
unexpected expenditures.

YEAR 2000 COMPLIANCE

Background

The Company recognizes that it must ensure that its products and operations will
not be adversely impacted by Year 2000 software failures, which can arise in
date-sensitive software applications that utilize a field of two digits to
define the applicable year.  In such applications, a date using "00" as the year
may be recognized as the year 1900 rather than the year 2000.

State of Readiness

With respect to the Company's internal systems, all mission critical information
technology systems are considered to be Year 2000 compliant, as defined by the
criteria established by the British Standards Institute.  With respect to the
Company's software products, the Company has developed and implemented a
detailed Year 2000 test procedure for the phase review and software release
process to ensure that its software products are Year 2000 compliant.  The
execution of this test procedure began in October 1998 and, as a result, Year
2000 compliant software upgrades have been developed and distributed.
Additionally, approximately 95% of the Company's embedded product vendors are
already considered to be Year 2000 compliant, based wholly on external and
internal testing of such embedded products.  As a result, management expects
that the Company and its key vendors will be positioned to successfully meet all
Year 2000 compliance issues for the Company's products.

Related Costs

Management has assessed the related costs for Year 2000 compliance to be in the
range of $750 to $1,000.  To date, the Company has incurred costs of
approximately $750 for its Year 2000 projects.  Such costs may include those for
research and development, capital equipment, outside software tools, outside
contractors, and other internal resources that may be assigned to the project.
Management acknowledges that these costs may be subject to reassessment as
testing of the Company's products and mission critical systems is completed and
compliance is fully achieved.

Perceived Risks

At the present time, management does not expect Year 2000 issues to have a
material adverse impact on the Company's business or future operating results.
However, there can be no assurance that there will not be interruptions of
operations or other limitations of system or product functionality, or that the
Company will not incur significant costs to avoid such interruptions or
limitations.  For example, such interruptions or limitations may include
disruptions in customer service and technical support facilities, interruptions
to customer access to on-line products and services, information, or other
communications, delays in manufacturing and shipping of products, and other
interruptions or delays in the day-to-day operations of the Company.  In
addition, even if the Company's products are Year 2000 compliant, other systems
or software used by the Company's domestic and international customers,
including such software created through custom development either by the
Company, its customers, or other third party developers, may not be Year 2000
compliant.  The failure of any such non-compliant third-party

                                       20
<PAGE>

software or systems contained in such operating environments may negatively
affect the performance of the Company's products, which may lead to increased
costs associated with correcting technical problems, lost sales, or other
negative consequences resulting from customer dissatisfaction, including
litigation. Such failure may have a material adverse effect on the Company's
business, financial condition and operating results.

Contingency Plans

In order to avoid such material adverse effects, the Company will continue to
seek business relationships only with those entities that are actively and
successfully addressing Year 2000 issues.  If the inability of certain existing
vendors or customers to successfully address Year 2000 issues begins to present
adverse business effects for the Company, management may elect to suspend such
business relationships until such time that such vendors or customers become
fully compliant.

CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING 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 the
Company's 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 the Company's operating results to differ materially or
adversely are discussed below and in the Company's Annual Report on Form 10-K/A
for the fiscal year ended December 31, 1998 filed with the Securities and
Exchange Commission on April 12, 1999.

Demand for Open Market's products may decrease if Open Market is unable to adapt
continually to rapid changes in the market for Internet-based software
applications.

The market for Internet-based software applications is characterized by rapid
technological change. As a result, there is uncertainty about the widespread
acceptance of new products that can cause significant delays in the sales cycle.
The introduction of product or service enhancements or new products or services
embodying new technologies, industry standards, or customer requirements could
supplant or make our existing products and services obsolete. Open Market must
continue to upgrade its technologies and commercialize products and services
incorporating such technologies, which may lengthen Open Market's sales cycles.

Open Market's operating results are largely dependent upon the continued
development and acceptance of Internet commerce.

The market for our Internet products and services has only recently begun to
develop, is rapidly evolving and has an increasing number of market entrants
that have introduced and developed products and services for Internet commerce
that compete with Open Market. Open Market's future operating results depend
upon the development and growth of the market for Internet-based packaged
software applications, including electronic commerce applications. The
widespread acceptance of electronic commerce in general and, in particular, the
Internet as a sales, marketing, order receipt and processing medium are highly
uncertain and subject to a number of risks. The following critical issues remain
unresolved and may impact the growth of Internet commerce:

 . security;

 . reliability;

 . ease of use;

 . quality;

                                       21
<PAGE>

 . service; and

 . government regulation.

If the Internet commerce market fails to continue to develop or develops more
slowly than expected, Open Market's business, operating results and financial
condition could be materially adversely affected.

Government regulation of and legal uncertainties relating to the Internet may
adversely affect Open Market's ability to market products facilitating Internet
commerce.

Open Market is not currently subject to direct regulation by any U.S. government
agency, other than regulations applicable to businesses generally, and there are
currently few laws or regulations directly applicable to access to, or commerce
on, the Internet. Moreover, the applicability to the Internet of existing laws
governing issues such as property ownership, libel and personal privacy is
uncertain. However, due to the increasing popularity and use of the Internet, it
is possible that a number of laws and regulations may be adopted with respect to
the Internet both in the U.S. and internationally, covering issues such as user
privacy, taxation, the content of products and the nature of services. The
adoption of any such laws or regulations may decrease the growth of the Internet
or inhibit electronic commerce, which could in turn adversely affect Open
Market's business, operating results or financial condition. Due to the
encryption technology contained in Open Market's products, such products are
subject to U.S. export controls. U.S. export controls, either in their current
form or as may be subsequently enacted, may delay the introduction of new
products or limit Open Market's ability to distribute products outside of the
United States. In addition, federal or state legislation or regulation may
further limit levels of encryption or authentication technology. Further,
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. Any such export or import restrictions,
new legislation or regulation or government enforcement of existing regulations
could have a material adverse effect on Open Market's business, financial
condition and operating results.

The sales cycles for Open Market's products may be lengthy due to the complexity
of Open Market's products and could negatively impact Open Market's operating
results.

Open Market's products are complex and prospective customers often must make
significant investment decisions to purchase Open Market's products.
Accordingly, licensing such complex software products may require Open Market to
provide a significant level of education to prospective customers regarding the
use and benefits of its products, which may be time consuming. As a result, Open
Market's sales cycles may be lengthy and subject to a number of significant
delays. Delays due to lengthy sales cycles or delays in Open Market's generation
of customers or deployment of its Internet commerce products could have a
material adverse effect on Open Market's business, financial condition and
operating results and could be expected to cause Open Market's operating results
to vary significantly from quarter to quarter.

Failure to provide secure transmission of information over the Internet could
adversely impact the acceptance of Open Market's Internet commerce products.

A significant barrier to market acceptance of online commerce and communication
is the concern regarding the secure exchange of valuable and confidential
information over public networks. Open Market relies on encryption and
authentication technology to provide the security and authentication necessary
to effect the secure exchange of valuable and confidential information. There
can be no assurance that advances in computer capabilities, new discoveries in
the field of cryptography or other events or developments (such as break-ins and
similar disruptive problems caused by Internet users) will not result in a
compromise or breach of algorithms used by Open Market in Open Market's products
to protect customer transaction data. If any such compromise or breach were to
occur, it could have a material adverse effect on Open Market's business,
financial condition, and operating results.

                                       22
<PAGE>

Demand for Open Market's products may decrease if Open Market cannot compete
successfully in the Internet commerce software market.

The market for Internet commerce software is new and intensely competitive. The
Internet is characterized by an increasing number of market entrants that have
introduced or developed products and services for commerce on the Internet. Open
Market's failure to introduce new products, services or product enhancements on
a timely basis may delay or hinder market acceptance and allow competitors to
gain a greater market share than Open Market. Many of Open Market's competitors
have greater financial, technical and marketing resources and greater name
recognition than Open Market does. Due to competition, Open Market may have to
reduce the prices of its products substantially or introduce lower-priced lines
of products to gain greater market share. Open Market's operating results will
be affected by the number of competitors it has and their pricing strategies and
market acceptance of their products. Open Market cannot assure you that it will
be able to compete successfully against these companies.

Open Market will depend on the continued service of its key technical and senior
management personnel to secure, maintain and enhance its industry position.

Open Market's future success depends in significant part upon the continued
service of its key technical and senior management personnel, and its continuing
ability to attract and retain highly qualified technical and managerial
personnel in a highly competitive market. Open Market's ability to establish and
maintain a position of technology leadership in the Internet commerce industry
depends in large part upon the skills of its development personnel.

Fluctuations in Open Market's quarterly revenue and operating results may result
in reduced profitability and lead to reduced prices for its stock.

Open Market's expense levels are fixed in advance and are based in part on its
expectations as to future revenues. Quarterly sales and operating results will
generally depend on the volume and timing of orders received within the quarter.
Open Market may be unable to adjust spending in a timely manner to compensate
for unexpected revenue shortfalls. Open Market expects in the future to
experience significant fluctuations in quarterly operating results that may be
caused by many factors, including, among other things, the following:

 . the number, timing and significance of product enhancements and new product
  announcements by Open Market or its competitors;

 . the length of Open Market's sales cycle;

 . market acceptance of, and demand for, Open Market's products;

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

 . customer order deferrals in anticipation of enhancements or new products
  offered by Open Market or Open Market's competitors;

 . non-renewal of service agreements;

 . software defects and other product quality problems;

 . Open Market's ability to attract and retain key personnel;

 . the extent of international sales;

 . changes in the level of operating expenses; and

 . general economic conditions.

                                       23
<PAGE>

As a result, Open Market's operating results in future quarters may be below the
expectations of market analysts and investors. In that event, the price of Open
Market's common stock would likely decrease.

Difficulties presented by international markets could negatively impact Open
Market's business.

In each of the three and nine month periods ended September 30, 1999,
international sales comprised of approximately 30% of total sales.  A downturn
in foreign economies may result in decreased sales of Open Market's products.
Generally, sales and manufacturing operations are subject to the risks normally
associated with international operations, including the following:

 . currency conversion risks and currency fluctuations limitations, including
  taxes, on the repatriation of earnings;

 . political instability, civil unrest and economic instability;

 . greater difficulty enforcing intellectual property rights and weaker laws
  protecting such rights;

 . greater difficulty and expense in conducting business abroad;

 . complications in complying with foreign laws and changes in governmental
  policies;

 . transportation delays and interruptions; and

 . the imposition of tariffs.

These risks could negatively impact international sales and manufacturing
operations, which could have a material adverse effect on Open Market's
business, financial condition and operating results.

Open Market will continue to depend on intellectual property rights to protect
its products although it may not always be able to protect such rights.

Open Market's success is dependent to a significant degree on its proprietary
software technology. Open Market provides its products to end users generally
under non-exclusive, non-transferable licenses for the term of the agreement,
which is usually in perpetuity. Open Market's policy is to enter into
confidentiality and assignment agreements with its employees, consultants, and
vendors and generally to control access to, and distribution of, its software,
documentation, and other proprietary information. Notwithstanding these
precautions, it may be possible for a third party to copy or otherwise obtain
and use Open Market's software or other proprietary information without
authorization or to develop similar software independently. Although Open Market
holds five U.S. patents covering certain aspects or uses of electronic commerce
software, it cannot be sure of the degree of intellectual property protection
such patents will provide. Policing unauthorized use of Open Market's products
is difficult, particularly because the global nature of the Internet makes it
difficult to control the ultimate destination or security of software or other
data transmitted. The laws of other countries may afford Open Market little or
no effective protection of its intellectual property. There can be no assurance
that the steps taken by Open Market will prevent misappropriation of its
technology or that agreements entered into for that purpose would be
enforceable.

Other parties may claim that Open Market has infringed their intellectual
property rights and such claims may interrupt Open Market's regular business
operations.

In the future, other parties may assert claims for infringement or invalidity
(or claims for indemnification from Open Market customers resulting from
infringement claims) against Open Market for violation of patent, trademark,
copyright or other proprietary rights as a result of the use by Open Market,
Open Market's customers or other third parties of Open Market's products to
transmit, disseminate, or display information over or on the Internet. Such
claims are likely to become increasingly prevalent as the Internet gains more
widespread use and new parties enter already competitive markets where
intellectual property rights are essential to conducting business. Any such

                                       24
<PAGE>

claims, with or without merit, could be time consuming to defend, result in
costly litigation, divert management's attention and resources, cause product
shipment delays, or require us to enter into royalty or licensing agreements.
There can be no assurance that any licenses would be available on reasonable
terms, if at all, and the assertion or prosecution of any such claims could have
a material adverse effect on Open Market's business, financial condition and
operating results.

Open Market's products may contain undetected defects which may prove costly and
time-consuming for Open Market to correct.

Sophisticated software products, such as those Open Market produces and markets,
may contain undetected errors or failures that become apparent when Open Market
introduces the products or when it provides an increased volume of services.
Open Market cannot assure you that its testing and its potential customers will
detect all errors in Open Market's 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 Open Market's
reputation, or increased service and warranty costs, which would have a material
adverse effect on Open Market's business, financial condition and operating
results.

Open Market may need to engage in litigation to protect its intellectual
property rights in the competitive market for Internet software products and
services.

Litigation may be necessary in the future to enforce Open Market's intellectual
property rights, to protect its patents, copyrights, trademarks or trade
secrets, to determine the validity and scope of the proprietary rights of
others, or to defend against claims of infringement or invalidity. Such
litigation, whether successful or unsuccessful, could result in substantial
costs and diversions of resources, which may have a material adverse effect on
Open Market's business, financial condition and operating results. Litigation
regarding intellectual property rights, copyrights, trademarks and patents is
increasingly common in the software industry. Intellectual property litigation
is complex and expensive and the outcome of such litigation is difficult to
predict.

Delays in Open Market's planned release schedule may result in a loss of market
share.

Delays in the planned release of Open Market's new products may adversely affect
forecasted revenues and create operational inefficiencies resulting from
staffing levels designed to support the forecasted revenues. Open Market's
failure to introduce new products, services or product enhancements on a timely
basis may delay or hinder market acceptance and allow competitors to gain
greater market share than Open Market.

Open Market has a limited operating history.

Open Market began operations in 1994. Open Market's ability to successfully
market its existing products and to develop and market new products must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development, particularly
companies in new and rapidly evolving markets like the Internet.

Volatility of Stock Price

Open Market's common stock is quoted on the NASDAQ National Market.  The market
price of Open Market's common stock, like that for the shares of many other high
technology and Internet companies, has been and may continue to be volatile. For
example, from October 1, 1998 to September 30, 1999, Open Market's common stock
traded as high as $27 per share and as low as $5 per share. Recently, the stock
market in general and the shares of software and Internet companies in
particular have experienced significant price fluctuations. The market price may
continue to fluctuate significantly in response to various factors, including:

 . quarterly variations in operating results or growth rates;

 . the announcement of technological innovations;

                                       25
<PAGE>

 . the introduction of new products by Open Market and its competitors;

 . changes in estimates by securities analysts;

 . market conditions in the industry;

 . announcements and actions by competitors;

 . regulatory and judicial actions; and

 . general economic conditions.

The failure of Open Market's software products and internal computer systems and
software programs to be year 2000 compliant could negatively impact its
business.

Many currently installed computer systems and software products only accept two
digits to identify the year in any date. Thus, the year 2000 will appear as
``00,'' which a system might consider to be the year 1900 rather than the year
2000. This could result in software product failures, system failures, delays or
miscalculations causing disruptions to Open Market's operations. Open Market has
begun and will continue to assess the impact of year 2000 date recognition
problems on its commercial products and internal systems. Open Market cannot be
certain that it will identify all of the potential risks to its business that
could result from year 2000-related issues. However, Open Market has identified
the following risks of which you should be aware:

 .  Year 2000 problems that affect Open Market's internal systems. Open Market
   has relied on the representations and certifications by its software vendors
   regarding the year 2000 readiness of its information technology systems and
   has not conducted extensive independent testing of these systems. It is
   possible that these systems could contain undetected problems that could
   cause serious disruptions which would have a material adverse effect on Open
   Market's business, financial condition and operating results.

 .  Year 2000 problems that affect Open Market's software products. Open Market
   is implementing a detailed year 2000 test procedure for the phase review and
   software release process to ensure that its software products will be year
   2000 compliant. This testing began in October 1998, and Open Market expects
   that such testing will continue through 1999 and into 2000. As part of this
   process, Open Market must also determine, through a combination of internal
   and external testing, whether the components of its software products
   supplied to Open Market by vendors are year 2000 compliant. Open Market
   cannot be certain that such testing will detect all potential year 2000
   problems. The failure of Open Market's products to be year 2000 compliant
   could result in claims by or liability to Open Market's customers, which
   could have a material adverse effect on Open Market's business, financial
   condition and operating results.

 .  The costs associated with remedying year 2000 problems. Open Market has
   assessed the cost of achieving year 2000 compliance to be in the range of
   $750 to $1 million. To date, Open Market has incurred costs of approximately
   $750 for its year 2000 projects. Such costs may include those for research
   and development, capital equipment, outside software tools, outside
   contractors or internal resources which may be allocated to year 2000
   projects. There can be no assurance that these costs will not increase or be
   subject to reassessment as testing of Open Market's products and essential
   technology information systems continues. Open Market may incur significant
   costs to avoid disruptions in customer service, technical support, access to
   on-line services and products and product functionality. Failure to contain
   costs could have a material adverse effect on Open Market's business,
   financial condition and operating results.

                                       26
<PAGE>

Open Market may face challenges in integrating Open Market and FutureTense and,
as a result, may not realize the expected benefits of the merger.

The Open Market and FutureTense merger was completed on October 15, 1999.
Integrating the operations and personnel of Open Market and FutureTense has been
and will continue to be a complex process, and Open Market is uncertain that the
integration will be completed rapidly or will achieve the anticipated benefits
of the merger. The successful integration of Open Market and FutureTense will
require, among other things, integration of each company's sales and marketing
groups and coordination of each company's development efforts. The diversion of
the attention of each company's management and any difficulties encountered in
the process of combining both companies could cause the disruption of, or a loss
of momentum in, the activities of the combined company's business. Further, the
process of combining both companies could negatively affect employee morale and
the ability of Open Market to retain some of its key employees after the merger.
In addition, the announcement and completion of the merger could cause customers
to delay or change orders for products as a result of uncertainty over the
integration of both companies' software products. The inability to successfully
integrate the operations and personnel of Open Market and FutureTense, or any
significant delay in achieving integration, could have a material adverse effect
on the business, financial condition and operating results of Open Market after
the merger.

Open Market may not be able to retain key employees of FutureTense.

Because of the high valuation Open Market placed on FutureTense, its key
founders and employees have received a substantial number of Open Market shares
and can sell these shares at substantial gains. In many cases, these individuals
could become financially independent through these sales, before the products of
either company have fully matured into commercially deliverable products
commanding reasonable market share. Additionally, startup and other companies
will seek out these individuals due to the financial result they have achieved
for their investors. Under the circumstances, Open Market faces a difficult and
significant task of retaining and motivating the key personnel of FutureTense to
stay committed to Open Market. Open Market has entered into employment
agreements with only five employees of FutureTense. Open Market may nonetheless
be unsuccessful in retaining these employees or any other FutureTense employees.

The Market's response to the recently completed FutureTense merger could effect
Open Market's stock price.

Under the terms of the merger agreement with FutureTense, Open Market issued
7,346,210 shares of its common stock to the holders of outstanding FutureTense
stock. In addition, Open Market assumed employee options and a warrant to
acquire FutureTense stock that will convert into options to acquire 1,124,628
shares of Open Market common stock. A substantial portion of these options are
exercisable upon the closing of the transaction.  Market response to the
issuuance of such share of Open Market common stock could cause the Open Market
stock price to decrease.

Significant FutureTense merger-related charges against earnings will increase
Open Market's losses in the quarter in which the merger is consummated and
during the post-merger integration period.

The Company expects to record non-recurring charges of approximately $4.0 to
$4.5 million in connection with the merger relating to legal fees and accounting
services and other integration costs and management acknowledges that actual
costs may be higher than are presently anticipated.  In addition, the Company
may incur other additional unanticipated merger costs and these costs may delay
the anticipated benefits of the merger.  Some of these nonrecurring costs will
be charged to operations in the fourth quarter of 1999 while others will be
expensed as incurred during the post-merger integration period.

Customers of Open Market and FutureTense may delay or cancel orders as a result
of concerns over the merger.

The FutureTense merger could cause customers and potential customers of Open
Market and FutureTense to delay or cancel orders for products as a result of
customer concerns and uncertainty over product evolution, integration and
support over the combined company's products. Such a delay or cancellation of
orders could have a material adverse effect on the business, financial condition
and operating results of Open Market or FutureTense.

                                       27
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Exchange Hedging. The accounts of the Company's 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 quarter 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 quarter. Foreign currency translation and transaction gains or
losses for the Company's subsidiaries are included in the accompanying
consolidated statements of operations since the functional currency for the
Company's subsidiaries is the U.S. dollar.

Investment Portfolio. The Company does not invest in derivative financial
instruments and other instruments that meet the high credit quality standards,
as specified in the Company's investment policy guidelines.  The Company's
policy guidelines also limit the amount of credit exposure of any one issue,
issuer, and type of investment. See "Note 2--Summary of Significant Accounting
Policies" in the Notes to Consolidated Financial Statements.

                                       28
<PAGE>

                           PART II--OTHER INFORMATION



ITEM 1.   EXHIBITS AND REPORTS ON FORM 8-K

 (a) Exhibits

     See exhibit index attached hereto:

 (b) During the third quarter of 1999, the Company filed the following reports
     on Form 8-K:

     (1) On July 14, 1999 Open Market, Inc. announced its plans to acquire
         FutureTense, Inc. pursuant to an   Agreement and Plan of Merger entered
         into on July 14, 1999.  The Current report in Form 8-K reporting this
         event was filed with the Securities and Exchange Commission on July 19,
         1999.

     (2) On September 15, 1999, Open Market, Inc. announced that Peter Woon,
         Senior Vice President of Engineering of Open Market, Inc., had resigned
         to pursue an opportunity as a division president and Chief Operating
         Officer of Insurance Technology Services of America, Inc.  The Current
         Report on Form 8-K reporting this event was filed with the Securities
         and Exchange Commission on September  17, 1999.

                                       29
<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.

                                  Open Market, Inc.
                                  (Registrant)



Date: November 11, 1999
                                  By: /s/ Betty J. Savage
                                    --------------------------------------------
                                                    BETTY J. SAVAGE
                                      VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
                                           (PRINCIPAL FINANCIAL OFFICER)


Date: November 11, 1999
                                  By: /s/ Annmarie Russell
                                    --------------------------------------------
                                                     ANNMARIE RUSSELL
                                                   DIRECTOR OF FINANCE
                                              (PRINCIPAL ACCOUNTING OFFICER)

                                       30
<PAGE>

                                 EXHIBIT INDEX

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

 10.1+       Amended Master Software License and Distribution Agreement, dated
             September 30, 1999 between NextPage L.C. and the Company.

 27.1        Financial Data Schedule for the quarter ended September 30, 1999.

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

+    Confidential materials omitted and filed separately with the Securities and
     Exchange Commission pursuant to an application for confidential treatment.