<PAGE>

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

                                   FORM 10-Q

    (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934
                   For the quarter 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 #1-11747
                                            -------


                       THE ASHTON TECHNOLOGY GROUP, INC.
            (Exact name of registrant as specified in its charter)


                Delaware                              22-6650372
      (State or other jurisdiction of               (IRS Employer
      incorporation or organization)              Identification No.)


                         1900 Market Street, Suite 701
                        Philadelphia, Pennsylvania 19103
              (Address of Principal Executive Offices) (Zip Code)

                                 (215) 751-1900
              (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
                             ---                     ____


                     APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
Common stock, as of the last practical date.

         Common stock $.01 par value                    25,178,348
              (Title of Class)                  (No. of Shares Outstanding
                                                  as of October 29, 1999)
<PAGE>

                       THE ASHTON TECHNOLOGY GROUP, INC.

                                     INDEX

<TABLE>
<CAPTION>
Part I - Financial Information                                                                 Page
<S>                                                                                            <C>
Item 1.  Financial Statements (Unaudited)

           Consolidated Balance Sheets - March 31, 1999 and September 30, 1999................   4

           Consolidated Statements of Operations -
           For the Three and Six Months Ended September 30, 1998 and 1999.....................   5

           Consolidated Statements of Cash Flows -
           For the Six Months Ended September 30, 1998 and 1999...............................   6

           Notes to Consolidated Financial Statements.........................................   7

Item 2.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations..............................................................  13

Item 3.    Quantitative and Qualitative Disclosure of Market Risk.............................  18

Part II -  Other Information

Item 1.    Legal Proceedings..................................................................  19

Item 2.    Changes in Securities and Use of Proceeds..........................................  19

Item 3.    Default Upon Senior Securities.....................................................  19

Item 4.    Submission of Matters to a Vote of Security Holders................................  19

Item 5.    Other Information..................................................................  19

Item 6.    Exhibits and Reports on Form 8-K...................................................  20

Signatures ...................................................................................  21
</TABLE>

                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION

FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-Q constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the Private Securities Litigation Reform Act of
1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause the actual results,
performance or achievements of the Company to differ materially from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such risks, uncertainties and other important factors
include, among others: dependence on arrangements with self-regulatory
organizations; dependence on proprietary technology; ability to successfully
deploy the Company's volume-weighted average price trading system ("eVWAP");
technological changes and costs of technology; industry trends; competition;
ability to develop markets; changes in business strategy or development plans;
availability, terms and deployment of capital; availability of qualified
personnel; changes in government regulation; general economic and business
conditions; and other factors referenced in this Form 10-Q. Such forward-looking
statements speak only as of the date of this Form 10-Q. For discussion of the
factors that might cause performance of the Company to differ with actual
results, see Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations and the Company's other periodic reports and
registration statements filed with the Securities Exchange Commission (the "SEC"
or "Commission"). The Company expressly disclaims any obligation or undertaking
to disseminate any updates or revisions to any forward-looking statement
contained herein to reflect any change in the Company's expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.

                                       3
<PAGE>

ITEM 1.                         FINANCIAL STATEMENTS

              The Ashton Technology Group, Inc. and Subsidiaries
                          Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                        March 31,        September 30,
                                                                                          1999                1999
                                                                                        (Audited)         (Unaudited)
<S>                                                                               <C>                    <C>
ASSETS
Cash and cash equivalents...................................................      $     2,667,347        $  18,026,173
Investments available for sale..............................................                  ---            9,969,740
Accounts receivable and prepayments.........................................              308,249            1,451,429
Current portion of notes receivable.........................................              112,499              116,418
                                                                                  ---------------        -------------
          Total current assets..............................................            3,088,095           29,563,760
Notes receivable, net of current portion....................................              717,284              667,612
Property and equipment, net of accumulated depreciation.....................            1,017,179            2,083,928
Exchange Membership.........................................................              196,900              196,900
Capitalized software development costs......................................               95,354                  ---
Intangible assets...........................................................               58,563               39,042
Other assets................................................................              480,362              379,837
                                                                                  ---------------        -------------
                Total Assets                                                      $     5,653,737        $  32,931,079
                                                                                  ===============        =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable and accrued expenses.......................................      $       675,841        $   1,007,900
Other liabilities...........................................................              532,918              873,202
                                                                                  ---------------        -------------
          Total current liabilities.........................................            1,208,759            1,881,102

Minority Interest...........................................................                  ---            7,500,000

Stockholders' equity:
Preferred stock - shares authorized: 3,000,000
  250,000 shares designated as Series A - (liquidation preference $10 per
  share); shares issued and outstanding; 125,219 and none...................            1,252,188                  ---
  590,000 shares designated as Series B - (liquidation preference $10 per
  share); shares issued and outstanding; 417,500 and 145,200................            4,175,000            1,452,000
  10 shares designated as Series D $.01 par value - (liquidation preference
  equals stated value); shares issued and outstanding; none.................                  ---                  ---
  10 shares designated as Series E $.01 par value - (liquidation preference
  $1,000,000 per share); shares issued and outstanding; none................                  ---                  ---
  20,000 shares designated as Series F $.01 par value - (liquidation
  preference equals stated value of $1,000 per share); shares issued and
  outstanding; none and 20,000..............................................                  ---           20,000,000
Common stock - par value: $.01; shares authorized: 60,000,000;
  Shares issued and outstanding;  20,569,172 and 25,142,348.................              205,692              251,423
Additional paid-in capital..................................................           39,133,830           50,366,747
Deferred consulting expense.................................................             (285,208)                 ---
Accumulated deficit.........................................................          (40,036,524)         (48,520,295)
Accumulated other comprehensive income......................................                  ---                  102
                                                                                  ---------------        -------------
Total stockholders' equity..................................................            4,444,978           23,549,977
                                                                                  ---------------        -------------
                Total Liabilities and Stockholders' Equity                        $     5,653,737        $  32,931,079
                                                                                  ===============        =============
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       4
<PAGE>

              The Ashton Technology Group, Inc. and Subsidiaries
                     Consolidated Statements of Operations
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                      Three Months Ended               Six Months Ended
                                                                         September 30,                   September 30,
                                                            ------------------------------      -----------------------------
                                                                 1998              1999             1998            1999
                                                                 ----              ----             ----            ----
<S>                                                         <C>               <C>               <C>              <C>
Revenues...............................................     $     208,390     $  1,057,508      $    651,952     $  1,879,547
                                                            -------------     ------------      ------------     ------------
Costs and expenses:
 Costs of revenues.....................................            56,000           71,442            90,000          130,630
 Development costs.....................................            47,677           47,915            95,354           95,592
 Depreciation and amortization.........................            93,853          275,416           186,629          413,084
 Non-cash compensation charges.........................         4,770,667          135,989         4,915,198          285,208
 Selling, general and administrative...................         2,509,889        5,070,154         4,483,121        8,359,408
                                                            -------------     ------------      ------------     ------------
    Total costs and expenses                                    7,478,086        5,600,916         9,770,302        9,283,922
                                                            -------------     ------------      ------------     ------------
Loss from operations...................................        (7,269,696)      (4,543,408)       (9,118,350)      (7,404,375)
 Interest income.......................................            39,973          264,966            75,441          352,896
 Other expense.........................................               ---         (416,632)              ---         (416,632)
                                                            -------------     ------------      ------------     ------------
Net loss...............................................     $  (7,229,723)    $ (4,695,074)     $ (9,042,909)    $ (7,468,111)
                                                            =============     ============      ============     ============

Dividends attributed to preferred stock................          (362,699)        (800,630)         (362,699)        (800,630)
Beneficial conversion feature of preferred stock.......        (1,207,500)             ---        (5,083,484)             ---
Dividends in arrears on preferred stock................          (159,685)        (231,557)         (213,960)        (231,557)
                                                            -------------     ------------      ------------     ------------
Net loss applicable to common stock....................     $  (8,959,607)    $ (5,727,261)     $(14,703,052)    $ (8,500,298)
                                                            =============     ============      ============     ============
Net loss per common share..............................     $        (.99)    $       (.24)     $      (1.68)    $       (.37)
                                                            =============     ============      ============     ============

Weighted average number of common shares outstanding...         9,034,175       24,420,929         8,760,604       23,276,653
                                                            =============     ============      ============     ============
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       5
<PAGE>

              The Ashton Technology Group, Inc. and Subsidiaries
                     Consolidated Statements of Cash Flows
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                                  Six Months Ended September 30,
                                                                                  ------------------------------
                                                                                       1998             1999
                                                                                  -------------     ------------
<S>                                                                               <C>               <C>
Net loss...................................................................        $ (9,042,909)     $ (7,468,111)
Adjustments to reconcile net loss to net cash used in operating activities:
 Depreciation and amortization.............................................             281,983           508,676
 Non-cash compensation charges.............................................           4,626,136               ---
 Common stock issued for consulting services...............................             289,062           285,208
 Common stock issued in connection with termination agreement..............                 ---           416,632
Changes in operating assets and liabilities
 Increase in accounts receivable and prepayments...........................            (183,095)       (1,143,180)
 Increase in notes receivable..............................................            (380,000)              ---
 Decrease in stock subscriptions receivable................................             245,000               ---
 Decrease in other assets..................................................               6,456            99,164
 (Decrease)/ increase in accounts payable and accrued expenses.............          (1,517,330)          332,059
 Increase in other liabilities.............................................               9,000           340,284
                                                                                    -----------
     Net cash used in operating activities.................................          (5,665,697)       (6,629,268)
                                                                                    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of investments available for sale................................                 ---        (9,968,771)
 Purchase of fixed assets..................................................            (382,769)       (1,460,312)
 Cash received from notes receivable.......................................              50,399            45,753
 Capitalized software development costs....................................             (61,375)              ---
                                                                                    -----------      ------------
     Net cash used in investing activities.................................            (393,745)      (11,383,330)
                                                                                    -----------      ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Preferred stock dividends paid in cash....................................            (319,062)         (156,655)
 Issuance costs for common stock...........................................            (150,000)         (575,000)
 Proceeds from issuance of common stock....................................           1,500,000         5,750,000
 Proceeds from exercise of stock options and warrants to purchase common
  stock....................................................................                 ---         2,158,713
 Issuance costs for preferred stock........................................            (864,628)         (682,563)
 Proceeds from issuance of preferred stock.................................           6,275,000        20,000,000
 Issuance costs for Gomez preferred stock..................................                 ---          (611,898)
 Proceeds from issuance of Gomez preferred stock...........................                 ---         5,500,000
 Proceeds from issuance of Gomez common stock..............................                 ---               500
 Issuance costs for UTTC(TM) preferred stock...............................                 ---           (11,673)
 Proceeds from issuance of UTTC(TM) preferred stock........................                 ---         2,000,000
                                                                                    -----------      ------------
     Net cash provided by financing activities.............................           6,441,310        33,371,424
                                                                                    -----------      ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS..................................        $    381,868      $ 15,358,826
Cash and cash equivalents, beginning of period.............................             815,680         2,667,347
Cash and cash equivalents, end of period...................................        $  1,197,548      $ 18,026,173
</TABLE>

                See Notes to Consolidated Financial Statements

                                       6
<PAGE>

THE ASHTON TECHNOLOGY GROUP, INC. AND SUBSIDIARIES NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.  Basis of Presentation

The consolidated financial statements included herein have been prepared without
audit pursuant to the rules and regulations of the Securities and Exchange
Commission.  Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations.  The accompanying consolidated financial statements reflect all
adjustments that are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented.  Such adjustments
are of a normal recurring nature.  Certain amounts in prior periods have been
reclassified for comparative purposes.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported amounts of revenues and
expenses during the period.  Actual results could differ from those estimates.

These consolidated financial statements should be read in conjunction with the
audited financial statements and the notes thereto included in the registrant's
Annual Report on Form 10-KSB for the year ended March 31, 1999.  The results for
the three months ended September 30, 1999 and the six months ended September 30,
1999 are not necessarily indicative of the results that may be expected for the
year ended March 31, 2000.

The consolidated financial statements include the accounts of The Ashton
Technology Group, Inc. ("ATG(TM) "Ashton", or the "Company") and its
subsidiaries, Universal Trading Technologies Corporation ("UTTC(TM)"), Gomez
Advisors, Inc. ("Gomez"), ATG(TM) International ("International"), and
Electronic Market Center, Inc. ("EMC"). ATG(TM) owns 100% of the voting equity
of International and EMC. ATG owns approximately 93% and 70%, respectively, of
the voting equity of UTTC(TM) and Gomez. Also included in the consolidated
financial statements are the accounts of UTTC(TM)'s wholly-owned subsidiaries,
REB Securities, Inc. ("REB"), Croix Securities, Inc. ("Croix"), and
NextExchange, Inc. ("NextExchange"). EMC was formed in June 1998, and
International was formed in July 1998. Croix Securities and NextExchange were
formed in February 1999. The results of operations for these subsidiaries are
included from the date of formation. All significant intercompany accounts and
transactions have been eliminated.

2.  Certain Transactions

Series F Convertible Preferred Stock

On August 18, 1999 (the "Issue Date"), the Company completed a private placement
for the sale of 20,000 shares of Series F Convertible Preferred Stock (the
"Series F Preferred") with a par value of $.01 and a stated value of $1,000 per
share, and warrants to purchase an aggregate of 200,000 shares of the Company's
common stock (the "Warrants") for gross proceeds of $20,000,000. Each share of
the Series F Preferred is convertible into a number of shares of the Company's
common stock equal to the stated value plus a premium of up to 9% per annum,
divided by a conversion price.  The conversion price of the Series F Preferred
is the lesser of $10.79 or the average of the five lowest closing bid prices
during the 22-day trading period preceding conversion. Prior to February 17,
2000, if any conversions take place on days where the common stock trades below
$7.85 (the "Floor Price"), then the conversion price will equal the Floor Price.
Beginning on February 18, 2000, the Series F Preferred is subject to redemption,
at the Company's option, if the market price of the common stock is below $7.35
on the conversion date.  The Company accrued dividends in arrears of $215,000 to
reflect the premium on the Series F Preferred through September 30, 1999.

The Warrants are immediately exercisable for a period of five years, ending
August 18, 2004, at an exercise price of $12.26 per share.  The fair value of
the Warrants, or $645,000, has been recorded as a dividend to the holders of the
Series F Preferred.

                                       7
<PAGE>

UTTC(TM) Series TK Convertible Preferred Stock

On June 4, 1999, UTTC(TM) completed a private placement of 145,700 shares of
Series TK Convertible Preferred Stock ("UTTC(TM) Series TK Preferred Stock") and
warrants to purchase 200,000 shares of ATG(TM) common stock at $10.00 per share.
Gross proceeds received by UTTC(TM) from the sale of the Series TK Preferred
Stock and the warrants amounted to $2,000,000. Between May 2001 and April 2004,
each share of UTTC(TM) Series TK Preferred Stock is convertible into ten shares
of UTTC(TM) common stock. Additionally, between May 1, 2001 and June 1, 2001,
holders of the UTTC(TM) Series TK Preferred Stock may exchange each share of
Series TK Preferred for 1.83 shares of ATG(TM) common stock. The UTTC(TM) Series
TK Preferred Stock is presented as a component of minority interest on the
September 30, 1999 unaudited consolidated balance sheet at its liquidation
preference of $2,000,000.

Gomez Series B Preferred Stock

On April 24, 1999, Gomez completed a private placement of 1,100,000 shares of
Redeemable Convertible Series B Preferred Stock ("Gomez Series B Preferred
Stock") for $5,500,000.  The Gomez Series B Preferred Stock ranks senior to the
Gomez Series A Preferred Stock and pays cumulative dividends semi-annually at an
annual rate of 6% of its liquidation preference, payable in cash or additional
shares of Gomez Series B Preferred Stock until April 2002.  At any time after
April 2002, and if an initial public offering registration statement has not
been filed with the SEC, holders of 67% of the outstanding shares of the Gomez
Series B Preferred Stock can request all such shares to be redeemed.  Each
holder of shares of Gomez Series B Preferred Stock has the right to convert each
share of Gomez Series B Preferred Stock into one share of Gomez common stock.
Upon the consummation of an initial public offering, each share of Gomez Series
B Preferred Stock will automatically convert into one share of Gomez common
stock. The Gomez Series B Preferred Stock is presented as a component of
minority interest on the September 30, 1999 unaudited consolidated balance sheet
at its liquidation preference of $5,500,000.

3.  Stockholders' Equity

On September 18, 1997, the Company commenced a private offering and exchange
offer pursuant to which it offered to certain investors (i) shares of its Series
A Convertible PIK Preferred Stock (with a liquidation preference of $10.00 per
share) (the "Series A Preferred"); (ii) shares of its Series B Convertible
Preferred Stock (with a liquidation preference of $10.00 per share) (the "Series
B Preferred"); and (iii) the opportunity to exchange (the "Exchange Offer") up
to 300,000 shares of its Series B Preferred for up to $3,000,000 of convertible
and non-convertible notes issued by UTTC(TM) (the "UTTC(TM) Notes"). The Series
A Preferred paid cumulative dividends semi-annually at an annual rate of $0.50
per share and is payable in cash or additional shares of Series A Preferred
until February 15, 2000. Each holder of shares of Series A Preferred had the
right to convert each share of Series A Preferred into: (i) ten shares of
ATG(TM) common stock; and (ii) one warrant to purchase three shares of the
common stock of UTTC(TM), par value $0.01 per share (the "UTTC(TM) common
stock"), with an exercise price of $0.75 per share, subject to adjustment. The
Series B Preferred pays cumulative dividends semi-annually at an annual rate of
$0.90 per share. Each holder of shares of Series B Preferred has the right to
convert each share of Series B Preferred into: (i) six shares of ATG(TM) common
stock; and (ii) one warrant to purchase two shares of UTTC(TM) common stock,
with an exercise price of $0.75 per share, subject to adjustment. During the six
months ended September 30, 1999, 125,219 shares of Series A Preferred and
272,300 shares of Series B Preferred were converted into 2,884,736 shares of
ATG(TM) common stock. As of September 30, 1999, all shares of Series A Preferred
Stock have been converted into common stock.

On April 3, 1998 (the "Subscription Date"), the Company entered into the Private
Equity Line of Credit Agreement (the "Private Equity Agreement") with a group of
accredited investors (the "Private Equity Investors") which provided for an
aggregate commitment of $18,000,000 to the Company.  On the Subscription Date,
the Private Equity Investors purchased three shares of Series D Convertible
Preferred Stock (the "Series D Preferred"), with a liquidation preference of
$1,000,000 per share, for an aggregate purchase price of $3,000,000.  On July
15, 1998, the Private Equity Investors also purchased two shares of Series E
Convertible Preferred Stock (the "Series E Preferred") with a liquidation
preference of $1,000,000 per share for an aggregate purchase price of
$2,000,000. The conversion price of the Series D Preferred was equal to 75% of
the average closing bid price per share over the five days preceding the
conversion date (the "Market Price").  The conversion price of the Series E
Preferred was equal to 80% of the Market Price.  Each share of the Series D
Preferred and Series E Preferred (i) ranked pari passu with the other authorized
preferred stock of the Company and (ii) was entitled to a cumulative dividend of
8% per annum on its respective liquidation preference. During the fiscal year
ended March 31, 1999 all of the outstanding 3.174

                                       8
<PAGE>

shares of the Series D Preferred were converted into 2,863,521 shares of common
stock, and the outstanding 2.1 shares of the Series E Preferred were converted
into 1,567,058 shares of common stock.

Also on the Subscription Date, the Private Equity Investors received warrants to
purchase up to an aggregate of 250,000 shares of common stock and on July 15,
1998, received additional warrants to purchase up to an aggregate of 100,000
shares of common stock.  The warrants, which were exercisable for a period of
five years, were exercised in May 1999.  As a result of the exercise, the
Company received gross proceeds of $1,601,450 and issued 350,000 shares of
common stock.

Following the purchase of the Series E Preferred and subject to the satisfaction
of certain other conditions, the Company was entitled to Put to the Private
Equity Investors shares of the common stock for an aggregate Put price of
$13,000,000.  The Put price per share was equal to 85% of the average of the
lowest bid prices of such common stock over the seven day period beginning three
days before and ending three days after the Company gave notice of a Put.
During the fiscal year ended March 31, 1999, the Company exercised six Puts in
the aggregate amount of $7,250,000, and issued 4,810,788 shares of common stock
in connection with the Puts. During the six months ended September 30, 1999, the
Private Equity Investors fulfilled their remaining commitment to the Company
under the Private Equity Agreement when the Company exercised four Puts in the
aggregate amount of $5,750,000, and issued 696,570 shares of common stock.

During the six months ended September 30, 1999, 100,000 warrants that were
issued in January 1998 to investors in the Series C Convertible Preferred Stock
("Series C Preferred") were exercised.  As a result of this exercise, the
Company received gross proceeds of $171,282 and issued 100,000 shares of common
stock.  Of the 350,000 warrants issued to the placement agent for the Series C,
Series D, and Series E Preferred Stock offerings, 130,000 warrants were
exercised during the six months ended September 30, 1999, resulting in gross
proceeds of  $308,687 and the issuance of 130,000 shares of common stock.
Additionally, warrants that were issued to the underwriters of the Company's
initial public offering in May 1996 were exercised on a cashless basis during
the six months ended September 30, 1999.  As a result of this exercise, 100,555
shares of common stock were issued.

The following table summarizes the proforma number of shares of common stock
outstanding, assuming conversion of the Series B Preferred and Series F
Preferred, and the exercise of all stock purchase warrants and stock options
outstanding as of September 30, 1999:

<TABLE>
     <S>                                                 <C>
     Common Stock outstanding at September 30, 1999      25,142,348
     Common Stock issuable upon:
          Conversion of Series B Preferred Stock            871,200
          Conversion of Series F Preferred Stock (1)      2,576,801
          Exercise of warrants and options (2)           11,384,850
                                                         ----------
     Total Pro Forma Common Stock at September 30, 1999  39,975,199
</TABLE>

(1) Estimated based upon the Series F Preferred Floor Price of $7,845.
(2) Exercise of warrants and options would result in proceeds to the Company of
    approximately $46 million.

At the time of issuance, the Series A, Series B, Series C, Series D, and Series
E Preferred Stocks were convertible at prices below the market value of the
underlying Common stock.  The beneficial conversion feature represented by the
intrinsic value is calculated as the difference between the conversion price and
the market price of the underlying Common stock multiplied by the number of
shares to be issued upon conversion.  The beneficial conversion feature was
fully recognized as a return to the preferred stockholders when the shares
became convertible, or at the time of issuance.  The accumulated beneficial
conversion feature amounts to $1,643,900, $2,695,436, $349,943, $1,180,549, and
$607,087 for the Series A, Series B, Series C, Series D, and Series E Preferred,
respectively, and is included as a component of the accumulated deficit on the
unaudited consolidated balance sheets at March 31, 1999 and September 30, 1999.

                                       9
<PAGE>

4.  Related Party Transactions

The Company utilizes the Dover Group, Inc. ("Dover") for consulting services
related to the Company's financings and product development efforts.  Fredric W.
Rittereiser, the Company's Chairman and Chief Executive Officer, is the sole
shareholder, director and officer of Dover.  The Company paid consulting fees
to Dover amounting to $90,000 in each of the six-month periods ended September
30, 1999 and 1998.

In 1997, the Company retained Adirondack Capital, LLC ("Adirondack") to provide
investment banking and financial advisory services.  K. Ivan F. Gothner, a
member of the Company's Board of Directors, is the Managing Director of
Adirondack.  The Company paid consulting fees to Adirondack amounting to $60,000
in each of the six-month periods ended September 30, 1999 and 1998.  In April
1999, Gomez paid a fee of $50,000 to Adirondack for its assistance in
structuring the private placement of the Gomez Series B Preferred Stock.
Additionally, the Company paid Adirondack $287,500 in the six months ended
September 30, 1999 pursuant to the Private Equity Line of Credit Agreement, and
$388,750 in the six months ended September 30, 1998 pursuant to the Private
Equity Line of Credit Agreement and in connection with the sale of the Series C
Preferred, the Series D Preferred and the Series E Preferred.  Effective
April 1, 1999, Mr. Gothner began receiving a monthly board retainer.

During 1998, the Company retained Richard Butler, a member of the Company's
Board of Directors, to provide strategic marketing services.  For the six months
ended September 30, 1998 the Company paid $45,000 in consulting fees to Richard
Butler under that arrangement.  Effective April 1, 1999, the arrangement was
terminated, and Mr. Butler began receiving a monthly board retainer.

In 1997, the Company retained Wyndham Capital Corporation ("Wyndham") to provide
investment banking and financial advisory services.  Thomas G. Brown, a member
of the Company's Board of Directors, is the President and Managing Director of
Wyndham.  The Company paid $30,000 in consulting fees to Wyndham and $120,000
pursuant to the sale of equity in the six months ended September 30, 1998 under
this agreement.  Effective April 1, 1999, the consulting fees were terminated
and Mr. Brown began receiving a monthly board retainer.

5.  Investments Available for Sale and Accumulated Other Comprehensive Income

The Company classifies its marketable securities as available for sale.
Investments available for sale are recorded at fair value with unrealized gains
and losses reported as a component of accumulated other comprehensive income.
As of September 30, 1999, the Company's investments available for sale consist
of government agency and corporate debt securities with remaining maturities not
exceeding 18 months.

                                       10
<PAGE>

6.  Segment Information

Summarized financial information, excluding intercompany transactions, by
business segment is as follows:

<TABLE>
<CAPTION>
                                         Three Months Ended September 30,               Six Months Ended September 30,
                                        ------------------------------------------------------------------------------
                                             1998                1999                     1998                 1999
                                        -------------        ------------              ----------           ----------
<S>                                     <C>                  <C>                       <C>                  <C>
Revenues:
    Gomez............................     $  208,390          $1,044,791               $  651,952           $1,866,830
    Trading systems..................            ---              12,717                      ---               12,717
                                          ----------          ----------               ----------           ----------
                                             208,390           1,057,508                  651,952            1,879,547
Loss from operations:
    Gomez............................      5,117,909           2,068,162                5,210,527            2,897,581
    Trading systems..................      2,151,787           2,475,246                3,907,823            4,506,794
                                          ----------          ----------               ----------           ----------
                                           7,269,696           4,543,408                9,118,350            7,404,375
Interest income:
    Gomez............................            ---              35,730                      ---               62,109
    Trading systems..................         39,973             229,236                   75,441              290,787
                                          ----------          ----------               ----------           ----------
                                              39,973             264,966                   75,441              352,896
Depreciation and amortization:
    Gomez............................         17,081             160,481                   34,162              182,481
    Trading systems..................        124,449             162,850                  247,821              326,195
                                          ----------          ----------               ----------           ----------
                                             141,530             323,331                  281,983              508,676
Non-cash compensation charges
    Gomez............................      4,626,136                 ---                4,626,136                  ---
    Trading systems..................        144,531             135,989                  289,062              285,208
                                          ----------          ----------               ----------           ----------
                                           4,770,667             135,989                4,915,198              285,208
</TABLE>

<TABLE>
<CAPTION>
                                                                    March 31,     September 30
                                                                      1999            1999
                                                                  ------------    ------------
               <S>                                                <C>             <C>
               Balance Sheet:
               Current assets
                   Gomez.................................         $    290,849       2,287,749
                   Trading systems.......................            2,797,246      27,276,011
                                                                  ------------    ------------
                                                                     3,088,095      29,563,760
               Total assets
                   Gomez.................................            1,090,761       4,117,860
                   Trading systems.......................            4,562,976      28,813,219
                                                                  ------------    ------------
                                                                     5,653,737      32,931,079
               Minority interest
                   Gomez.................................                  ---       5,500,000
                   Trading systems.......................                  ---       2,000,000
                                                                  ------------    ------------
                                                                           ---       7,500,000
               Preferred stock
                   Gomez.................................                  ---             ---
                   Trading systems.......................            5,427,188      21,452,000
                                                                  ------------    ------------
                                                                     5,427,188      21,452,000
               Total stockholders' equity
                   Gomez.................................              388,801      (3,043,069)
                   Trading systems.......................            4,056,177      26,593,046
                                                                  ------------    ------------
                                                                     4,444,978      23,549,977
</TABLE>


                                       11
<PAGE>

7.  Recently Adopted Accounting Standards

In March 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) No.98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use. The Company has adopted SOP No.
98-1 effective April 1, 1999. Adoption of this Statement has not had a material
impact on the Company's consolidated financial position or results of
operations.

In April 1998, the AICPA issued SOP No. 98-5, Reporting on the Costs of Start-Up
Activities, which requires all costs associated with pre-opening, pre-operating,
organization activities to be expensed as incurred. The Company has adopted SOP
No. 98-5 beginning April 1, 1999. Adoption of this Statement has not had a
material impact on the Company's consolidated financial position or results of
operations.


8.  Net Loss per Share

Net loss per share is computed in accordance with SFAS No 128, Earnings per
Share.  SFAS 128 requires companies to present basic and diluted earnings per
share. Basic earnings per share excludes any dilutive effect of outstanding
stock options whereas diluted earnings per share includes the effect of such
items. As the Company is a net loss position for all periods presented and the
effect of the Company's common share equivalents would be anti-dilutive, there
is no difference between basic and diluted net loss per share.

9.  Subsequent Events

On September 10, 1999, Gomez commenced a private placement of equity securities
with BancBoston Robertson Stephens, Inc. as exclusive placement agent. The
securities offered in the private placement will not be registered under the
Securities Act of 1933, as amended, and may not be sold in the U.S. absent
registration or an applicable exemption from the registration requirements. The
private placement is expected to be completed by December 31, 1999. Upon
completion of the private placement, it is expected that the ATG's ownership
position of Gomez will be reduced to below 50%. As such, ATG expects to begin
accounting for its remaining investment in Gomez under the equity method of
accounting, rather than the consolidation method.

On July 7, 1999, Croix was admitted to membership in the PHLX subject to
acquisition of a seat on the PHLX stock exchange. Croix received NASD approval
to operate as a registered broker-dealer on October 27, 1999. Croix is in the
process of obtaining a seat on the PHLX and expects to commence operation prior
to March 31, 2000.

                                       12
<PAGE>

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

Overview

The Company is engaged in the development and commercialization of on-line
transaction systems for participants in the U.S. and international financial
markets.  The Company was founded in 1994 to take advantage of commercial
opportunities through the application of advanced telecommunication and
computing technologies to the area of financial and electronic commerce
("e-commerce"). The Company is currently organized as a parent company, which
has four subsidiaries:

     .   Universal Trading Technologies Corporation ("UTTC") and its three
         subsidiaries:
            REB Securities, Inc. ("REB")
            Croix Securities, Inc. ("Croix")
            NextExchange, Inc. ("NextExchange")
     .   Gomez Advisors, Inc. ("Gomez")
     .   Electronic Market Center, Inc. ("EMC")
     .   ATG (TM) International, Inc. ("International")

For the quarters ended September 30, 1999 and 1998, Gomez generated
substantially all of the Company's revenues. Gomez provides information and
research to individuals and businesses that want to effectively and efficiently
transact e-commerce online.


On March 24, 1999, the SEC approved the Philadelphia Stock Exchange's ("PHLX")
proposed rule change allowing the Company to begin implementation of the
eVWAP(TM) trading system. On August 27, 1999, Ashton began a controlled, live
trading period of its eVWAP(TM) on the PHLX with a group of PHLX floor
specialists and "upstairs" customers involving twenty (20) listed equity
securities. This initial trading period has successfully met management's
expectations for the first phase rollout of the eVWAP(TM) trading system.
Highlights from the 41 trading days beginning on August 27, 1999 and ending on
October 25, 1999 include:

     .   Successful integration of electronic connectivity among 13 users;
     .   Demonstrated ability to provide electronic back office (T+3) straight
         through processing for the floor specialists;
     .   eVWAP(TM) match engine processed and reported matched trades within 15
         seconds;
     .   Received and processed 7.5 million shares through the system in 20
         securities; and
     .   Matched over 2.6 million shares resulting in match efficiency in excess
         of 30%.

Management anticipates the second phase of the eVWAP(TM) trading system rollout
to commence by the end of November 1999 with the addition of participants and
eligible securities. This next phase of the rollout is expected to integrate up
to eight national clearing firms, which is expected to allow over 20
institutions and broker-dealers to participate in the system. This phase is
intended to solidify the electronic integration of geographically diverse
customers through their clearing agents, which is a prerequisite of the PHLX for
an effective electronic straight through processing system. The third stage of
the rollout is expected to provide the connectivity to the larger institutions
and brokers-dealers, who aggregate orders from multiple locations, and will
demonstrate eVWAP(TM) volume growth and liquidity.

The Company's limited operating history and dependence upon the operation of its
eVWAP(TM) make the prediction of future operating results difficult. Although
the Company has activated its eVWAP(TM) and attempted to develop additional
sources of revenue, there can be no assurance that the Company will generate the
anticipated revenues from the operation of the eVWAP(TM) or other sources.

The Company intends to continue to increase its investments in research and
development, sales and marketing and related infrastructure. Such increases will
be dependent upon factors including, but not limited to, operation of the
eVWAP(TM), success in hiring the appropriate personnel, market acceptance of the
Company's products, and development of a revenue stream from the Company's
products. Due to such anticipated increases in the Company's operating expenses,
the Company's operating results may be materially and adversely affected.

                                       13
<PAGE>

At September 30, 1999, the Company's consolidated total assets were $32,931,079,
compared to $5,653,737 at March 31, 1999. Current assets at September 30, 1999
totaled $29,563,760 and current liabilities were $1,881,102. Stockholders'
equity at September 30, 1999 increased to $23,549,977 from $4,444,978 at March
31, 1999 due to the issuance of 20,000 shares of its Series F Preferred Stock
for gross proceeds of $20,000,000, the issuance of 1,582,685 shares of its
common stock for proceeds of $7,908,713 in connection with the Company's Private
Equity Line of Credit Agreement (see "Notes to Unaudited Consolidated Financial
Statements - Stockholders' Equity), and the exercise of stock options and
warrants. The increase in stockholders' equity resulting from the issuance of
stock was partially offset by the net loss applicable to common stock of
$7,468,111 and net issuance costs of approximately $1,300,000.

Results of Operations

For the Three Months Ended September 30, 1999 and 1998

The net loss applicable to common stock totaled $5,727,261 or $.24 per share for
the three months ended September 30, 1999, and $8,959,607 or $.99 per share for
the three months ended September 30, 1998. The Company incurred a net loss of
$4,695,074, or $.19 per share for the three months ended September 30, 1999,
compared to a net loss of $7,229,723, or $.80 per share for the three months
ended September 30, 1998.

The Company's revenues totaled $1,057,508 for the three months ended September
30, 1999, and $208,390 for the three months ended September 30, 1998. UTTC
generated $12,717 from the operation of eVWAP(TM) during the three months ended
September 30, 1999 and Gomez generated the balance of the revenues. The revenues
in the three months ended September 30, 1998 were generated entirely by Gomez.

In the three months ended September 30, 1999, $526,085 or 50% of Gomez's
revenues were from subscriptions and related data and analysis services from its
GomezPro web site, which it began selling in March 1999.  For the same period,
Gomez generated $334,473 in advertising and sponsorship revenues and listing
fees paid by vendors to be listed in its Vendor Showcase.  Consulting and
advisory service revenues for the period declined as a percentage of total
revenues from the three months ended September 30, 1998 due to Gomez's
introduction of its GomezPro web site and Research Station as new sources of
revenue.  Total consulting and advisory service revenues were $174,390 or 17% of
Gomez's revenues in the three months ended September 30, 1999, compared to
$175,500 or 84% of revenues in the three months ended September 30, 1998.

The costs of revenues represent salaries associated with the delivery of Gomez's
consulting and advisory services, and amounts paid in connection with lead
generations.  Costs of revenues for the three months ended September 30, 1999
were $71,442 or 6.8% of total revenues, compared to $56,000 or 26.9% of revenues
for the three months ended September 30, 1998.  The decrease as a percent of
total revenues is primarily due to the decline in consulting and advisory
revenues as a percent of the Company's total revenues.

During the three-month periods ended September 30, 1999 and 1998, the Company
amortized system development costs related to the eVWAP(TM) totaling $47,915 and
$47,677, respectively. The Company has not capitalized computer software costs
related to the eVWAP(TM) since the second quarter of fiscal 1999, when the
application development stage of the eVWAP(TM) was completed. As of September
30, 1999, the capitalized computer software asset has been completely amortized.

Depreciation and amortization expense includes depreciation of property and
equipment, comprised primarily of computer equipment, and amortization of
intangible assets. Depreciation and amortization for the three months ended
September 30, 1999 increased to $275,416 from $93,853 for the three months ended
September 30, 1998, due to an increase in the computer equipment purchased.
Capital expenditures increased to approximately $685,000 for the three months
ended September 30, 1999 compared to approximately $190,000 in the same period
last year. The increase is primarily due to Gomez's purchase of computer
equipment and software to accommodate additional staff and to support the
increased traffic on their web site and network servers. The level of capital
expenditures is expected to increase as the Company moves to replace hardware
originally purchased in 1996, expand the operation of the eVWAP(TM) trading
system, and to develop additional trading systems.

                                       14
<PAGE>

In February 1998, the Company entered into a consulting agreement with
Continental Capital & Equity Corporation ("Continental") whereby the Company
issued 300,000 shares of common stock, with a fair value of $475,125, in
exchange for promotional services through February 1999. During August 1998, the
Company amended the consulting agreement with Continental whereby the Company
issued 250,000 additional shares of common stock, with a fair market value of
$416,657, in exchange for additional promotional services and a reduction in
cash payments required pursuant to the previous consulting agreement. The
Company recorded the deferred consulting expenses in 1998 and 1999 as a
reduction to stockholders' equity. During the three months ended September 30,
1999, $135,989 was reflected as a non-cash compensation charge for the
amortization of deferred consulting expenses, compared to $144,531 during the
three months ended September 30, 1998. The deferred consulting expense relating
to this agreement was fully amortized as of September 30, 1999.

During the three months ended September 30, 1998, the Company entered into
employment agreements with Julio Gomez, John Robb and Alexander Stein. Pursuant
to the employment agreements, an aggregate of 3,000,000 options were granted at
an exercise price of $.01 per share. In addition, 1,400,000 options with an
exercise price of $.01 per share were granted to certain officers and directors
of ATG. During the three months ended September 30, 1998, Gomez and the Company
recognized a non-cash compensation charge of $4,367,809 to reflect the
difference between the estimated fair market value of the vested Gomez stock
options at the date of grant and the exercise price of those options. Those
options were exchanged for Gomez common stock on January 22, 1999 pursuant to an
exchange agreement among Gomez, ATG, and other persons affiliated with them.
Also during the three months ended September 30, 1998, the Company incurred a
non-cash compensation charge of $258,327 related to the issuance of non-employee
stock options to consultants and professional advisors.

Selling, general and administrative expenses ("SG&A") totaled $5,070,154 and
$2,509,889 for the three-month periods ended September 30, 1999 and 1998,
respectively. For the period ended September 30, 1999, Gomez's SG&A totaled
$2,881,030, or 57% of the Company's total SG&A, compared to $575,876 or 23% in
the three months ended September 30, 1998. The increase in Gomez's SG&A was due
primarily to the growth in staff and related expenses incurred in building
Gomez's infrastructure, and increased advertising and marketing costs related to
introduction of new products and services.

Excluding Gomez, the Company's SG&A for the three months ended September 30,
1999 totaled $2,189,124 compared to $1,934,013 during the three months ended
September 30, 1998. The increase in SG&A is primarily a result of the growth in
staff and is partially offset by decreases in consulting and professional fees.
As of September 30, 1999, ATG and UTTC employed a total of 30 employees compared
to 21 employees at September 30, 1998.

Interest income increased to $264,966 for the three months ended September 30,
1999 from $39,973 for the three months ended September 30, 1998, as a result of
the higher cash and cash equivalents and investments available for sale
balances. (see "Liquidity and Capital Resources"). Other expense for the three
months ended September 30, 1999 is comprised of a charge of $416,632 for the
value of UTTC stock issued to one of the Company's former directors in
satisfaction of the terms of an agreement executed on June 29, 1999 between the
former director and the Company.


For the Six Months Ended September 30, 1999 and 1998

The net loss applicable to common stock totaled $8,500,298 or $.37 per share for
the six months ended September 30, 1999, and $14,703,052 or $1.68 per share for
the six months ended September 30, 1998. The Company incurred a net loss of
$7,468,111, or $.32 per share for the six months ended September 30, 1999,
compared to a net loss of $9,042,909, or $1.03 per share for the six months
ended September 30, 1998.

The Company's revenues totaled $1,879,547 and $651,952 for the six months ended
September 30, 1999 and 1998, respectively.  UTTC generated $12,717 from the
operation of eVWAP(TM) during the six months ended September 30, 1999 and Gomez
generated the balance of the revenues.  The revenues in the six months ended
September 30, 1998 were generated entirely by Gomez.

                                       15
<PAGE>

In the six months ended September 30, 1999, $662,919 or 36% of Gomez's revenues
were from subscriptions and related data and analysis services from its GomezPro
web site, which it began selling in March 1999. For the six-month periods ended
September 30, 1999 and 1998, Gomez generated $642,621 and $244,952,
respectively, in advertising and sponsorship revenues and listing fees paid by
vendors to be listed in its Vendor Showcase. Consulting and advisory service
revenues declined as a percentage of total revenues due to Gomez's introduction
of its GomezPro web site and Research Station as new sources of revenue. Total
consulting and advisory service revenues were $497,601 or 27% of Gomez's
revenues in the six months ended September 30, 1999, compared to $394,000 or 60%
of revenues in the three months ended September 30, 1998.

The costs of revenues represent salaries associated with the delivery of Gomez's
consulting and advisory services, and amounts paid in connection with lead
generations. Costs of revenues for the six months ended September 30, 1999 were
$130,630 or 6.9% of total revenues, compared to $90,000 or 13.8% of revenues for
the six months ended September 30, 1998. The decrease as a percent of total
revenues is primarily due to the decline in consulting and advisory revenues as
a percent of the Company's total revenues.

During the six-month periods ended September 30, 1999 and 1998, the Company
amortized system development costs related to the eVWAP(TM) totaling $95,592 and
$95,354, respectively. The Company has not capitalized computer software costs
related to the eVWAP(TM) since the second quarter of fiscal 1999, when the
application development stage of the eVWAP(TM) was completed. As of September
30, 1999, the capitalized computer software asset has been completely amortized.

Depreciation and amortization expense includes depreciation of property and
equipment, comprised primarily of computer equipment, and amortization of
intangible assets. Depreciation and amortization for the six months ended
September 30, 1999 increased to $413,084 from $186,629 for the six months ended
September 30, 1998, due to an increase in the computer equipment purchased.
Capital expenditures increased to approximately $1,460,000 for the six months
ended September 30, 1999 compared to approximately $383,000 in the same period
last year. The increase is primarily due to Gomez's purchase of computer
equipment and software to accommodate additional staff and to support the
increased traffic on their web site and network servers. The level of capital
expenditures is expected to increase as the Company moves to replace hardware
originally purchased in 1996, expand the operation of the eVWAP(TM) trading
system, and to develop additional trading systems.

During the six months ended September 30, 1999 and 1998, $285,208 and 289,062,
respectively, was reflected as a non-cash compensation charge for the
amortization of deferred consulting expenses in connection with the common stock
issued to Continental described above.  The deferred consulting expense relating
to the agreement with Continental was fully amortized as of September 30, 1999.

Gomez and the Company recognized a non-cash compensation charge of $4,367,809 in
the six months ended September 30, 1998 to reflect the difference between the
estimated fair market value at the date of grant and the exercise price of the
Gomez stock options issued to Julio Gomez, John Robb, Alexander Stein and
certain officers and directors of ATG(TM).  Also during the six months ended
September 30, 1998, the Company incurred a non-cash compensation charge of
$258,327 related to the issuance of non-employee stock options to consultants
and professional advisors.

Selling, general and administrative expenses ("SG&A") totaled $8,359,408 and
$4,483,121 for the six-month periods ended September 30, 1999 and 1998,
respectively.  For the six months ended September 30, 1999, Gomez's SG&A totaled
$4,451,300, or 53% of the Company's total SG&A, compared to $1,022,312 or 23% in
the six months ended September 30, 1998.  The increase in Gomez's SG&A was due
primarily to the growth in staff and related expenses incurred in building
Gomez's infrastructure, and increased advertising and marketing costs related to
introduction of new products and services.

Excluding Gomez, the Company's SG&A for the six months ended September 30, 1999
totaled $3,908,108 compared to $3,460,809 during the six months ended September
30, 1998.  The increase in SG&A is primarily a result of the growth in staff of
ATG(TM) and UTTC(TM), and is partially offset by decreases in consulting and
professional fees.

                                       16
<PAGE>

Interest income increased to $352,896 for the six months ended September 30,
1999 from $75,441 for the six months ended September 30, 1998, as a result of
the higher cash and cash equivalents and investments available for sale
balances.  (see "Liquidity and Capital Resources").  Other expense for the six
months ended September 30, 1999 is comprised of a charge of $416,632 for the
value of UTTC(TM) stock issued to one of the Company's former directors in
satisfaction of the terms of an agreement executed on June 29, 1999 between the
former director and the Company.


Liquidity and Capital Resources

At September 30, 1999, the Company's principal sources of liquidity consisted of
cash and cash equivalents of $18,026,173 and investments available for sale of
$9,969,740, compared to cash and cash equivalents of $2,667,347 at March 31,
1999.   The increase in cash and cash equivalents and investments available for
sale is primarily a result of the following transactions: (i) in August 1999,
ATG(TM) completed a private placement of 20,000 shares of its Series F
Convertible Preferred Stock for gross proceeds of $20,000,000; (ii) in June
1999, UTTC(TM) completed a private placement of its Series TK Convertible
Preferred Stock for gross proceeds of $2,000,000; and (iii) in April 1999, Gomez
completed a private placement of its 6% Series B Convertible Preferred Stock for
gross proceeds of $5,500,000. (see "Notes to Unaudited Consolidated Financial
Statements -Certain Transactions").

On April 3, 1998, the Company entered into the Private Equity Agreement with the
Private Equity Investors, which provided for an aggregate commitment of
$18,000,000 to the Company, subject to the satisfaction of certain conditions
(see "Notes to Unaudited Consolidated Financial Statements - Stockholders'
Equity").  During the quarter ended September 30, 1999, the Company drew down
$5,750,000 under the agreement, reaching the aggregate commitment of
$18,000,000.

The Company believes, on a forward-looking basis, it will begin to generate more
significant revenues, in addition to those generated by Gomez, during its fiscal
year ending March 31, 2000.  The level and timing of such revenue is dependent
upon, among other factors, the Company's assumptions regarding (i) the rollout
of the eVWAP(TM) trading system implementation; (ii) the trading volume
experienced by the eVWAP(TM) trading system; and (iii) the pricing the Company
is able to obtain for eVWAP(TM) trade execution. Until adequate revenue is
derived from the eVWAP(TM) trading system, the Company's cash and cash
equivalents, investments and cash flow from operations will be sufficient to
meet the presently anticipated cash requirements of the Company for a period of
approximately twenty-four (24) months.

The Company's future capital requirements will depend on many factors, including
the timing for the implementation of the next phases of the eVWAP(TM) trading
system, market acceptance of the Company's products, the timing and extent of
spending to support new product development efforts and the timing of
introductions of new products and enhancements to existing products. The Company
may need additional financing in the future if (i) the Company experiences
unexpected costs, (ii) there are delays in the continued expansion of the
eVWAP(TM), or (iii) the Company fails to successfully develop markets for its
products. The Company and its subsidiaries will also require additional
financing to fund development of its products and launch the Canadian and Asian
joint ventures. Such financing may be raised through spin-offs, additional
equity offerings, borrowings, or other collaborative relationships, which may
require Ashton to share ownership of its subsidiaries, joint ventures, and/or
revenue from products. There can be no assurance that additional equity or debt
financing, if required, will be available on acceptable terms or at all.


Year 2000 Computer Compliance

The Company has assessed the potential impact of what is commonly referred to as
the "Year 2000" or "Y2K" issue, concerning the inability of certain information
systems and automated equipment to properly recognize and process dates
containing the Year 2000 and beyond.  If not corrected, these systems and
equipment could fail or create erroneous results.  The Company is subject to the
potential impact of the Y2K issue due to the nature of financial information and
the potential impacts which may arise from software, hardware, and equipment
both within the Company's direct control and outside of the Company's control.

                                       17
<PAGE>

The Company views its Y2K risks as arising from three primary sources: (i)
internal software, hardware and equipment utilized in the operations of the
Company; (ii) applications the Company has developed or is developing for use by
its customers; and (iii) third parties with which the Company has material
relationships.

State of Readiness.  The Company has determined that none of its critical
internal systems and equipment presents Y2K issues. The Company is continuously
acquiring and replacing both hardware and software and is obtaining Y2K
compliance certifications with such purchases. The Company's systems interface
electronically and operationally with software, hardware and equipment outside
of the Company's control. The Company also contracts with third parties for such
services as telecommunications. These third party vendors with whom the Company
has material agreements are primarily large, publicly traded organizations. The
Company is reviewing the publicly available Y2K disclosures of these vendors;
however there can be no assurance that the Company will not be adversely
affected by the failure of these third parties to become Y2K compliant. The
Company is not independently verifying the Y2K compliance of these vendors.

The Company has also determined that none of the applications it has developed
for use by its customers present Y2K issues. In addition, the Company's
customers cannot enter or export non-Y2K compliant dates into the eVWAP(TM) and
all eVWAP(TM) business partners interact with the eVWAP(TM) via Y2K compliant
interfaces.

On October 9, 1999, ATG(TM) and the PHLX completed joint Y2K testing of the
eVWAP(TM) consisting of live order flow, execution, pricing, and settlement. The
testing included multiple user types, multiple trading accounts, enrolled and
adhoc commitments, matching and non-matching trades, queued orders, back office
systems, and other system functionality. The results of the testing were in
compliance with the test criteria.

Risks.  Since the Company's eVWAP(TM) trading system has been activated on a
limited basis with a limited number of users, the potential liabilities and
costs associated with the Y2K compliance issue cannot be estimated with
certainty at this time. The potential costs, including any potential loss of
revenue, would be dependent upon several factors including, but not limited to,
the volume transacted through the Company's products, the Y2K readiness of
customers utilizing the Company's products and the concentration of volume among
the Company's customers. Because of these uncertainties regarding others, there
can be no assurance that the Y2K issue will not have a material financial impact
on our business, results of operations and financial condition in any future
period.

More recently, the Company has encountered some delays in deploying its eVWAP
trading system with potential users as a result of Y2K.  This situation has, in
some instances, been referred to as the "Y2K slowdown".  The Y2K slowdown
involves organizations "locking down" their existing systems and refusing to
introduce new systems, hardware, or technology into operation during the
millennium transition period.  During the "lock down" phase, organizations are
not introducing new technology and are deploying technical resources to the
remediation and testing phases of their Y2K plans as they enter the final
quarter of 1999.  As a result of these "lockdowns" the Company may encounter
additional delays in deploying its eVWAP with certain potential users.  In
addition, there can be no assurance these potential users will become Y2K
compliant and won't extend their "lock down" periods.

Costs.  To date, the Company has not incurred any material costs in identifying,
evaluating or resolving Y2K compliance issues and expects any additional costs
incurred to complete its review will be immaterial.  However, the costs incurred
to address this issue could become material if the Company identifies non-
compliant systems and third-party technology which must be replaced or modified,
or if the Company identifies any other problems related to the Y2K issue which
must be addressed.

Contingency Plan.  Because of the factors described above, the Company has no
Y2K contingency plan and does not intend to develop such a plan at this time.
Should the Company become aware that certain products or services provided by
third parties or the customers utilizing the Company's products, are not Y2K
compliant, then the Company will develop contingency plans for those affected
services and vendors.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK

Not applicable.

                                       18
<PAGE>

                          PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

On August 18, 1999, the Company completed the sale of 20,000 shares of its
Series F Preferred with a stated value of $1,000 per share, and warrants to
purchase an aggregate of 200,000 shares of the Company's common stock, for gross
proceeds of $20,000,000. The shares were sold to RGC International Investors,
LDC, an investment fund managed by Rose Glen Capital Management, L.P ("Rose
Glen"), in a private equity offering pursuant to Regulation D of the Securities
Act of 1933, as amended. The net proceeds of the sale will be utilized for
general working capital, including the development of additional products and
initiatives of the Company's subsidiaries, eMC and NextExchange. Refer to
Current Report on Form 8-K dated August 18, 1999 and Registration Statement on
Form S-3 dated September 15, 1999.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MATTERS SUBMITTED TO SHAREHOLDERS FOR VOTE

On September 1, 1999, the Annual Meeting of Shareholders was held in
Philadelphia, PA.  At the meeting, the following individuals were nominated and
elected to serve as directors of the Company until the next annual meeting of
shareholders or until their successors have been duly elected and qualified:

          Arthur J. Bacci
          Thomas G. Brown
          Richard E. Butler
          K. Ivan F. Gothner
          Fredric W. Rittereiser
          William W. Uchimoto
          Fred S. Weingard

ITEM 5. OTHER INFORMATION

None.

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<PAGE>

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

     (A)  Exhibits

     10.34  Severance Agreement between Ashton and John A. Blohm, dated
            September 22, 1999
      3.11  Certificate of Correction to Certificate of Designation of
            Preferences and Rights of the Series A Cumulative PIK Preferred
            Stock
      3.12  Certificate of Correction to Certificate of Designation of
            Preferences and Rights of the Series B Cumulative Preferred Stock
      3.13  Certificate of Increase to Authorized Number of Shares of Series B
            Cumulative Preferred Stock
      3.14  Certificate of Retirement of Series A Cumulative PIK Preferred
            Stock, Series C Cumulative Preferred Stock, Series D Cumulative
            Preferred Stock, and Series E Cumulative Preferred Stock

     27     Financial Data Schedule

     (B)  Reports on Form 8-K

     Current Report on Form 8-K dated August 18, 1999.

                                       20
<PAGE>

                                  SIGNATURES


In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.



                                        The Ashton Technology Group, Inc.
                                        ---------------------------------
                                               (Registrant)



Date:  November 9, 1999                 By:  /s/ Arthur J. Bacci
     -------------------------             ------------------------------
                                             Arthur J. Bacci
                                             President
                                             Chief Financial Officer

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