SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               -------------------
                                    FORM 10-K
     (Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934 [FEE REQUIRED]

                   For the fiscal year ended December 31, 2000

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

                       For the transaction period from to

                         Commission file number 0-28572.

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

                             OPTIMAL ROBOTICS CORP.
             (Exact name of registrant as specified in its charter)

                [Canada]                                   98-0160833
      (State or other jurisdiction                      (I.R.S. Employer
   of incorporation or organization)                 Identification Number)
                               -------------------
           4700 de la Savane, Suite 101,                            H4P 1T7
             Montreal, Quebec, Canada                            (Postal code)
     (Address of principal executive offices)
Registrants telephone number, including area code:               (514) 738-8885

   Title of each class:                Name of each exchange on which registered
Class "A" shares, no par value                      Nasdaq National Market

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

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X].

     Aggregate  market  value  of the  voting  stock of the  registrant  held by
non-affiliates  of the registrant at February 15, 2001 (computed by reference to
the last  reported sale price of the common shares on the Nasdaq Stock Market on
such date): $377,987,535.63

     Number of common Shares outstanding at February 15, 2001: 13,772,690
     DOCUMENTS INCORPORATED BY REFERENCE: NONE
-------------------

<PAGE>

Item 1.   BUSINESS

Company Overview

     We are the leading  provider of  self-checkout  systems to retailers in the
United States.  Our principal product is the U-Scan, an automated  self-checkout
system which  enables  shoppers to scan,  bag and pay for their  purchases  with
little or no assistance  from store  personnel.  We estimate that in 2000 U-Scan
systems  processed  over 150 million  customer  transactions.  The U-Scan can be
operated  quickly and easily by shoppers  and makes the  checkout  process  more
convenient for them.  The U-Scan also reduces the cost of checkout  transactions
to retailers and addresses labor shortage  problems by replacing manned checkout
counters with our automated self-checkout stations.

     As of December  31, 2000,  we had sold 958 U-Scan  systems,  consisting  of
3,808 checkout stations, in 865 stores of leading retailers across 37 states and
two provinces.  Each U-Scan system typically includes four checkout stations and
one manned supervisor terminal.

     The following  chart provides  information  regarding the U-Scan systems we
sold during the last five years:

<TABLE>
<CAPTION>
                                                    1996     1997     1998      1999       2000
                                                    ----     ----     ----      ----       ----
<S>                                                 <C>      <C>      <C>      <C>        <C>
U-Scan system deliveries:
     Systems sold during year.....................     6       22       57       288        583
     Systems sold as at year-end..................     8       30       87       375        958
U-Scan checkout stations sold as at year-end......    32      120      346     1,498      3,808
Customer transactions (millions)(1)...............                      12        45        150
</TABLE>

---------
(1)  Estimated,  based on reports  provided by our customers.  Prior to 1998, we
     did not track this data.

Our Industry

     We currently target supermarket and supercenter chains in the United States
with  average  annual  sales per store in excess of $12  million.  According  to
industry  sources,  there are over 11,500 of these stores in the United  States.
U-Scan,  which can be quickly and easily  operated,  addresses  these  shoppers'
needs by providing them with more control over the checkout process.

     The potential  market for  self-checkout  solutions  includes  applications
beyond  supermarkets  and  supercenters.  General  merchandise  stores and other
big-box retailers have begun to install  self-checkout  systems.  Other types of
stores that we have identified where self-checkout systems could be used include
drug  stores,  warehouse  stores,  office  superstores,   toy  stores  and  home
improvement  centers.  In 2000, we  introduced  one new product for use in small
retail  establishments  and small  departments in larger stores and a second new
product for use in high volume retail outlets.  See "--Our  Business  Strategy."
Additionally, we believe that a large market for self-checkout systems exists in
Europe.

     We believe that the demand for self-checkout systems will continue to grow,
in part because they help alleviate the significant  labor shortage  confronting
retailers in certain markets.  The U.S. Bureau of Labor Statistics has estimated
that, from 1998 to 2008, the U.S.  economy will require over 550,000  additional
cashiers.  In addition to  providing  stores with a  dependable  and  economical
alternative to maintaining  cashiers in express  checkout lanes, we believe that
self-checkout  systems  allow large  retailers to offer  shoppers the speed of a
small convenience store while maintaining the greater selection and lower prices
of a supermarket.

     We also believe that the acceptance of self-checkout  systems will increase
over time much like the  increase in  acceptance  of automated  teller  machines
(ATMs) and pay-at-the-pump  credit/debit card machines. Banking industry sources
have  estimated that the number of ATMs in the United States grew from 18,500 in
1980 to over 200,000 in 1999,  and that the number of ATMs in use  worldwide was
over

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<PAGE>

700,000 at the end of 1999. According to the National Association of Convenience
Stores' 1999 State of the Industry report,  the percentage of convenience stores
with  pay-at-the-pump  technology  increased from less than 5% in 1990 to 50% in
1998. In the same way that many people have become more accustomed to using ATMs
to conduct  their  banking  and to paying at the pump when  fueling  their cars,
rather than interacting  with a bank teller or store attendant,  we believe that
consumers  seeking  convenience and "control" when shopping will choose to use a
self-checkout system instead of paying at a traditional manned checkout counter.

Our Customers

     Our most significant  customers have been  supermarkets  and  supercenters,
including the following retailers:

     o  Kroger. Kroger is the largest supermarket retailer in the United States,
        and  owns  and  operates   approximately   2,338  supermarkets  and  789
        convenience stores.  Kroger is our largest customer and recently ordered
        an additional 500 U-Scan systems,  of which 32 have been  delivered.  We
        have sold a total of 541 systems to Kroger's stores.

     o  Meijer.  Meijer is the second  largest U.S.  supercenter  operator  with
        approximately 130 stores.  Its typical store size is over 175,000 square
        feet.  We have sold 197 U-Scan  systems to Meijer's  stores.  In January
        2000,  Meijer  agreed to  purchase  up to 150  (with a  minimum  of 100)
        additional systems through June 2001, of which 103 have been delivered.

     o  Ahold.  Ahold  operates over 7,000 stores of various types in the United
        States, Europe, Asia and Latin America under various banners,  including
        over 1,000 BI-LO,  Stop & Shop, Tops Markets,  Giant and other stores in
        the United States.  We have sold 136 U-Scan  systems to Ahold's  stores.
        Recently,  Ahold agreed to purchase  210 U-Scan  systems for delivery in
        its U.S. stores, of which 26 have been delivered.

     These leading  retailers figure  prominently in the establishment of market
standards,  and we believe that our  relationships  with them and the increasing
presence  and use of our  systems in their  stores  contribute  to the  market's
growing  acceptance  of  U-Scan.  We  also  believe  that  shoppers'  increasing
familiarity  with our systems at these  retailers will  facilitate  future sales
efforts,  particularly  with retailers who have not yet installed our systems in
their stores.

     We believe that these customers have chosen to install U-Scan because it:

     o    increases convenience for their shoppers,  while accommodating typical
          shopping  patterns and allowing  shoppers to check out as if they were
          at a manned checkout counter,

     o    provides the shopper  with more  control  over the  checkout  process,
          similar to an ATM transaction,

     o    builds loyalty by making shopping easier and more convenient,

     o    addresses  labor  shortages  in certain  markets by  replacing  manned
          checkout counters with automated self-checkout stations, and

     o    provides labor cost savings by allowing one employee to supervise four
          unmanned stations.

     Of the 958 systems  sold as at  December  31,  2000,  over 50% were sold to
Kroger,  over 20% were sold to Meijer and over 14% were sold to Ahold.  The loss
of any one of these three  customers  could have a material  adverse effect upon
our company.


                                       3
<PAGE>

Our Competitive Advantages

     We believe that the following competitive  advantages have helped us become
the leading provider of self-checkout systems to retailers in the United States:

     o    the  largest  installed  base of  self-checkout  systems in the United
          States and well-established relationships with leading retailers,

     o    an established brand name and corporate identity,

     o    seven years'  experience  and  expertise  in  designing  self-checkout
          solutions for retailers,

     o    a  focused  business   strategy   targeting  the  rapidly   developing
          self-checkout market,

     o    a senior management team and experienced sales force familiar with the
          needs of retailers, and

     o    superior customer service through a 24-hour,  365-day on-line helpdesk
          supported by a dedicated network of service personnel.

Our Business Strategy

     Our primary  objectives  are to install more U-Scan  systems in  additional
supermarkets   and   supercenters,   to  begin   installing   U-Scan  and  other
self-checkout  systems  in other  kinds of  stores,  and to  initiate  sales and
installations of our systems in Europe.

     Key elements of our business strategy are to:

     Increase  Installations  in Existing and New  Supermarket  and  Supercenter
Accounts.  We plan to increase our penetration of existing customer accounts and
have  increased  the  size of our  direct  sales  force  in order to sell to new
customers  in North  America.  We are  continuing  to develop  opportunities  in
Europe.

     Extend Retail Applications of Our Products and Services. In addition to our
focus on  transactions  for  supermarkets  and  supercenters,  we have  recently
introduced  two new products,  U-Scan  Carousel and U-Scan Solo,  that have been
designed  to  extend  the  retail  applications  of  our  U-Scan   self-checkout
technology. Much like the U-Scan Express, each of these new applications enables
customers to scan, bag and pay for their purchases with limited or no assistance
from store personnel.

     U-Scan Carousel

     To meet the demands of existing and new customers, U-Scan Carousel has been
configured as a six-bag  self-checkout  system which can accommodate large order
purchases.  The  U-Scan  Carousel  utilizes  U-Scan  technology  that  has  been
specifically  adapted to handle large orders in the following high volume retail
outlets:

     o    warehouse stores,

     o    general merchandise stores,

     o    home improvement centers, and

     o    other big-box retailers.

     This larger  configuration  enables  these  retailers  to address the labor
shortage  found in many  markets  while  providing  a more  convenient  shopping
experience. We first delivered a U-Scan Carousel in the second quarter of fiscal
2000.


                                       4
<PAGE>

     U-Scan Solo

     U-Scan  Solo  is a  one-bag  self-checkout  station  in  which  our  U-Scan
technology  has been  adapted  to meet  the  needs  of  small  footprint  retail
establishments  such as drug stores,  convenience stores and general merchandise
stores, as well as for satellite areas, such as floral and video departments, in
supermarkets  and  supercenters.  We first  delivered a U-Scan Solo in the third
quarter of fiscal 2000.

     The  U-Scan  Carousel  and the U-Scan  Solo are the  direct  results of our
research and development  efforts.  We remain  committed to developing other new
products  like U-Scan  Carousel  and U-Scan Solo on a timely and  cost-effective
basis and continuing to improve our current products.

Products and Systems

     U-Scan System

     A  U-Scan  system,  in  a  typical   configuration  for  a  supermarket  or
supercenter application,  consists of four self-checkout stations and one manned
supervisor terminal.  Each checkout station consists of the following components
linked by a PC platform:

     o    a bar code scanner with a scale,

     o    a bagging station equipped with a scale,

     o    a touchscreen monitor,

     o    an overhead video camera,

     o    a credit/debit  terminal (with available support for signature capture
          devices),

     o    bill and coin acceptors and dispensers, and

     o    a receipt printer.

     The supervisor terminal consists of:

     o    a monitor that allows the  supervisor  to observe the activity at each
          checkout station,

     o    a  hand-held  scanner,  either  wired or  wireless,  that  enables the
          supervisor to assist shoppers with large items,

     o    an easy-to-use  touchscreen that makes it simple for the supervisor to
          interact with the system, and

     o  a receipt printer for credit/debit transactions.

     In a typical  configuration,  the U-Scan  occupies  the same floor space as
would three manned checkout  lanes. As a result,  shoppers are provided with one
additional checkout station.

Operation

     The U-Scan  system is equipped  with a  convenient,  intuitive  touchscreen
interface  and  provides  automated  voice  instructions  that guide the shopper
through the entire  checkout  process,  from scanning the first item to removing
the receipt after payment.

     To  commence  the  checkout  process,  a  shopper  presses  an  icon on the
touchscreen  of a U-Scan  station.  An  automated  voice  greets the shopper and
instructs him or her to begin  scanning  items using the station's  easy-to-use,
multi-directional  scanner.  As  each  item  is  scanned  by  the  shopper,  the
touchscreen   acknowledges   the   scanned   item  and   displays   its   price.
Simultaneously,  the shopper is instructed  by the automated  voice to place the
scanned item in the shopping bag located on the station's scale. In this


                                       5
<PAGE>

manner, not only are purchased items bagged, but the station also simultaneously
weighs each item and makes sure that its weight is correct for the item scanned.

     The  U-Scan  easily  handles  bar-coded  items  and has  been  designed  to
accommodate  non bar-coded  items and items  requiring  compliance with specific
procedures.  The U-Scan has the capacity to learn the weight of bar-coded  items
that it has not previously encountered.  For non-bar-coded items such as produce
or other items sold by weight,  the shopper  places the item on a separate scale
that is part of the scanner and presses a specific icon on the touchscreen  that
alerts the system  supervisor.  Each U-Scan station is equipped with an overhead
video  camera  that  transmits  an image of the item  placed on the scale to the
color  video  monitor  located at the  supervisor  terminal.  This  enables  the
supervisor  to identify the item for the system,  which,  in turn,  computes the
correct  price for the item.  At the  request of some  customers,  the system is
configured  to  allow  shoppers  to  identify  the  non-bar-coded   items  being
purchased, thereby eliminating the need for supervisor attention.  Additionally,
alcohol and tobacco product purchases automatically prompt the system supervisor
to verify the purchaser's age. The system supervisor terminal is equipped with a
hand-held scanner that is used to read bar codes on heavy, oversized items. Both
wired and wireless models are available.

     The U-Scan is able to handle  variations on the normal bar-coded  purchase.
For example, it can process  transactions  involving products that are sold on a
"per unit" basis. The system can identify  multiple-unit items such as six-packs
of canned beverages and partial  purchases of multiple-unit  items (such as five
cans of a six-pack).  The system also has the capability to adjust its tolerance
level for deviations in an item's weight, such as where the inclusion of a prize
in a cereal  box would  increase  the  weight of that box  beyond  the preset or
previously "learned" tolerance level.

     Once a shopper has scanned all the items he or she wishes to purchase,  the
shopper notifies the system by pressing the appropriate icon on the touchscreen.
The U-Scan then  prompts  the shopper to select the form of payment.  The U-Scan
can accept any form of payment,  either at the  self-checkout  station or at the
supervisor's  terminal,  that is accepted by cashiers,  including cash,  checks,
credit  cards,  debit cards,  coupons,  food stamps and gift  certificates.  The
U-Scan station can make change and dispense  additional  cash should the shopper
choose to withdraw  additional  money using a credit or debit card.  U-Scan also
identifies  and can handle "mix and match"  payments,  such as a combination  of
cash and coupons.  Those shoppers who choose to pay with checks,  food stamps or
gift  certificates  are  directed to the system  supervisor  to  complete  their
transactions.

     Once the  shopper  has made  payment  and  received  change from the U-Scan
station's bill and coin  dispenser,  a receipt is printed at the U-Scan station.
At all times, a system supervisor is located nearby to provide prompt assistance
should it be required by the shopper.

Security

     The close  proximity of the system  supervisor to the U-Scan stations helps
to deter theft.  Moreover, the U-Scan provides an additional level of protection
with a built-in,  three-tier  security system designed to guard against loss due
to theft or human error. The security system at each U-Scan station consists of:

     o    a bagging station  equipped with a scale that detects any unscanned or
          substituted items,

     o    an  overhead   video   camera   that   discourages   non-scanning   or
          substitution, and

     o    an  integrated  payment  mechanism  that  substantially   reduces  the
          opportunity for cashier fraud or error.

     The U-Scan weighs each item scanned. If the weight detected for the scanned
item is different from the item's weight contained in the system's database, the
shopper  will be asked to try again and the cashier  will be  alerted.  Should a
shopper fail to scan an item that is placed on the weighing platform, the system
will  prompt  the  shopper  to  remove  the item and scan it.  Should a  shopper
mistakenly  scan an item  more  than  once  before  placing  it on the  weighing
platform,  the U-Scan  station  will only charge the shopper once for such item.
The U-Scan can also be customized to support a retailer's  electronic anti-theft
system.


                                       6
<PAGE>

Customization and Flexible Technology

     The U-Scan  can be  customized  to meet the  individual  requirements  of a
particular  store  by  changing  features  such  as  the  user  graphics  on the
touchscreen  and  automated  voice  prompts.  It can be  programmed  to  include
frequent shopper and other loyalty and marketing  programs and is available with
a multilingual touchscreen.  To ensure compliance with governmental regulations,
the U-Scan can be  programmed  to comply  with local  weights and  measures  and
federal and local laws  regarding  proof-of-age  verification  for  purchases of
alcohol and tobacco products.

     The U-Scan  operates on an  industry-standard,  PC-based  platform with the
Windows  NT  operating  system,  and  uses  readily   available,   off-the-shelf
components. Its open architecture enables it to be integrated with most existing
information  systems.  It can be upgraded to take  advantage of new features and
can  generate  custom  management  reports.  The  U-Scan  obtains  most  of  the
information it needs to operate from the store's  information  systems,  just as
cashier-operated  terminals  do. A local area  network  links the four  checkout
stations to the supervisor terminal.

     We have  developed  software  that allows the U-Scan system to form part of
and communicate with a store's  information systems in the same way conventional
cashier-operated  terminals do. In doing so, the system uses the store's network
and communications protocol,  enabling it to interact easily and completely with
the information  systems.  Our technology allows  information to be communicated
between  the U-Scan  system  and a store's  information  systems on a  real-time
basis, including such information as:

     o    product movement data,

     o    inventory management data,

     o    cash balance information, and

     o    transaction summaries.

     The U-Scan  system's  software is customized for the first  installation at
each chain so it can communicate  with that chain's  information  systems and is
modified as necessary to address the needs of each retailer.

Optimal 6300 POS System

     The Optimal 6300 POS system is an open-architecture, PC-based point-of-sale
cash register system utilizing  Windows NT/95 or Novel SFTIII mirrored  servers.
We offer only the system software for the Optimal 6300 POS.

     The customer is responsible for purchasing the system hardware. The Optimal
6300 POS system  communicates  with a store's  information  systems and has been
designed for use as a conventional  cash register checkout system in high-volume
retailers such as supermarkets, department stores and warehouse stores.

     We were engaged by Price Chopper Supermarkets of Schenectady,  New York, to
develop and install  the Optimal  6300 POS system.  We receive a monthly fee for
the  continuing  development  of the  system.  The  Optimal  6300 POS  system is
presently  installed  in all of the over 100  Price  Chopper  supermarkets.  The
system is also installed at Atlantic Food Mart in Reading, Massachusetts.

Sales and Marketing

     We primarily  market  U-Scan  directly to  customers  through our own sales
personnel.  We  also  market  the  system  through  IBM  under  a  non-exclusive
cooperative  marketing  agreement under which IBM receives a commission on sales
of systems to customers  that it has  registered  with us.  Consistent  with our
strategy of increasing  distribution of the U-Scan, we will continue to actively
review and evaluate other marketing relationships.


                                       7
<PAGE>

     We have six  employees  dedicated to sales and  marketing.  We plan to hire
additional sales and marketing employees to expand our direct sales force.

     To date,  we have  focused our  marketing  efforts  almost  exclusively  on
supermarket  and  supercenter  chains in the United  States.  We intend to begin
marketing  our  products in Europe in the near term.  With the  introduction  of
U-Scan  Carousel and U-Scan Solo,  we are marketing our products to drug stores,
convenience  stores and general  merchandise  stores,  and for use in  satellite
areas, such as floral and video departments, in supermarkets and supercenters.

     Sales to a retail chain typically follow a three-step process, in which the
customer takes delivery of a single U-Scan station and a supervisor  terminal in
a testing  facility,  then places a full system in a store for  evaluation,  and
finally decides whether to commit to a volume order.

     Before  delivering  a U-Scan  system  to the  first  store  of a chain,  we
customize the system, which typically takes two months. This process may include
modifying user graphics,  voice  instructions,  functions for specific  pricing,
couponing methods and software to meet the store's specifications.  This process
also includes  integrating  the U-Scan with the store's  information  systems so
that data compiled at each U-Scan  station is  automatically  transmitted to the
store's  information  systems  in the  same  way  data  would  be  compiled  and
transmitted by a manned cashier station.

     Once we have  completed the  customization  and  integration  process,  the
U-Scan system is delivered. Typically, the store will monitor the performance of
the  system  for a period of one to two  months  and  request  certain  software
modifications.  Upon the  completion  of a successful  first  installation,  the
U-Scan  system  generally  requires  only  minor  customization  to  accommodate
additional installations within the chain.

Research and Development

     Our research and development  efforts are focused on improving our existing
products and developing new products.  To date, most of the software relating to
our products has been developed internally by our employees.

     Features that have been  introduced  during the last 12 months  include the
following:

     o    EAS - We have  developed  a process  that  allows  electronic  article
          surveillance (EAS) systems, that are designed to deter shoplifting and
          internal theft, to be integrated with any of our U-Scan systems.

     o    Biometrics  - U-Scan now supports  the latest  biometrics  technology,
          enabling shoppers to pay for credit card and check  transactions using
          their unique fingerprint.

     o    U-Scan Mobile Attendant(TM)- We have introduced a miniature,  wireless
          handheld  unit  that  allows  range  of  supervisor  functions  to  be
          performed  even when the  supervisor  is not  behind  the  traditional
          supervisor terminal.

     We intend to increase  research and  development  efforts in the  following
areas:

     o    Developing  new products and  extending  our  existing  products  into
          additional retail applications.

     o    Adapting  U-Scan  self-checkout  solutions for use in Europe and other
          international markets.

     o    Displaying targeted and relational interactive advertising on a U-Scan
          station's  touchscreen when it is not in use and printing  advertising
          on receipts.

     o    Expanding the use of radio  frequency.  Radio frequency  technology is
          used in the recently  introduced  miniature handheld  supervisor unit.
          Radio frequency technology would also simplify


                                       8
<PAGE>

          installation  because it would eliminate the need to install wiring to
          connect the U-Scan to the store's information systems.

     o    Improving the receipt-of-payment  function by making the U-Scan system
          more   efficient  and  easier  to  use.  For  example,   incorporating
          technology that enables the system to verify customers' signatures and
          confirm bank balances  will allow the system to accept checks  without
          the  intervention  of  a  supervisor.   One  such  technology  is  the
          biometrics technology that is now supported by our system.

Our research and development  expenses,  net of tax credits,  were approximately
$913,000 in fiscal 2000, $220,000 in fiscal 1999 and $210,000 in fiscal 1998.

Product Assembly

     Since the  termination of PSC's  exclusive  assembly rights on December 31,
2000,  we assemble  all of our systems at our  Plattsburgh,  New York  facility.
Previously,  we performed final software  configuration and quality assurance at
the  Plattsburgh  facility,  where all systems  assembled by PSC were  certified
before delivery to a customer. See Item 2--"Description of Properties."

Suppliers

     The U-Scan is assembled  from  components  that are readily  available from
numerous  suppliers.  Given  the open  architecture  of our  system,  we are not
dependent on any single supplier for any particular component. The U-Scan casing
is specially manufactured for us by two suppliers.

Service and Field Support

     It is essential  to retailers  that  providers  offer timely and  efficient
software and hardware service and support. We provide both software and hardware
service and support for the U-Scan for a fee.

     Software  support is provided  to all  customers  via our  helpdesk on a 24
hours a day,  365 days a year basis.  Our  helpdesk  and support  personnel  are
trained to diagnose  software and hardware problems that may arise in the field.
Software  problems are typically  solved on-line,  as the U-Scan can be accessed
on-line from our premises.

     U-Scan  customers  can  choose  between a number of  options  for  hardware
support.  Customers  may elect to have  their  own  facility  engineering  group
perform  hardware  maintenance  on the  system,  in  which  case we  train  such
personnel.  Customers may also purchase  hardware  support service from us or an
authorized subcontractor.

     We maintain certified technicians at our headquarters,  at our central hubs
near Cincinnati,  Ohio and in Lansing,  Michigan, and at various other strategic
locations. We are generally able to remotely diagnose and solve software-related
problems  from our head office in  Montreal.  If there is a problem  caused by a
hardware  malfunction or another  matter  requiring  personnel to be on-site,  a
technician is dispatched to assist the customer.  For general  hardware  support
for our  system,  we have  contracted  with  and  certified  a small  number  of
independent service companies.  Furthermore, we maintain regional facilities for
parts  storage in  Phoenix,  Arizona;  Denver and  Greeley,  Colorado;  Atlanta,
Georgia;  Indianapolis,  Indiana;  Covington and Louisville,  Kentucky;  Boston,
Massachusetts;  Grand Rapids,  Kalamazoo,  Flint, Canton, Mishawaka and Lansing,
Michigan;  Plattsburgh,  New York; Greensboro,  North Carolina;  Columbus, Ohio;
Milwaulkie,  Oregon;  Simpsonville,  South  Carolina;  Nashville and  Hermitage,
Tennessee; Houston and Dallas, Texas; and Seattle, Washington.

Installation Personnel

     It is  important  that our  systems  are able to be  quickly  and  reliably
installed  with  minimal  impact  on  store  operations.  Installations  can  be
performed by our technicians,  by the customers trained and certified  employees
or by certified  third party  installers.  For a typical  installation by us, an
experienced  technician



                                       9
<PAGE>

visits the store before the delivery of the system to coordinate  all aspects of
the  installation.  The goal is to ensure that our systems can be installed  and
fully operational within six hours.

Government Regulation

     We and certain of the components  that are used in our products are subject
to regulation by various agencies in the United States and in other countries in
which our products are sold.  Laser safety is regulated in the United  States by
the Food and Drug  Administration's  Center for Devices and Radiological  Health
and in Canada by the Radiation  Protection Bureau of Health Canada. In addition,
the U.S.  Occupational  Safety and Health  Administration and various states and
U.S. cities have promulgated  regulations  concerning  working  condition safety
standards in connection with the use of lasers in the workplace. Radio emissions
are the subject of  governmental  regulation in all countries in which we expect
to sell our products.  We also voluntarily submit our products for certification
for  product  safety  in the  United  States  and in  Canada  by the  nationally
recognized testing  laboratories,  the Underwriters  Laboratories,  Inc. and the
Canadian Standards Association, respectively.

Competition

     We compete against manufacturers of traditional  cashier-operated terminals
as  well as  developers  of  portable  hand-held  devices  and  other  partially
automated   self-scanning  devices,   including  NCR,  Symbol  Technologies  and
Productivity Solutions.  Several of our competitors are substantially larger and
have greater financial, technical, and marketing resources. We believe, however,
that the U-Scan performs more functions than any other self-checkout  system for
retail use currently  available on the market. PSC has also recently entered the
self-checkout market.

     We  believe  that  the  principal   criteria  for  competition  within  the
self-checkout system market are the following:

     o    technological capability,

     o    product features,

     o    price,

     o    product support,

     o    ease of use,

     o    name recognition,

     o    distribution channel capability, and

     o    financial strength of the provider.

Intellectual Property

     We have registered the following trademarks in the United States:

     o    Optimal Robotics Corporation(R),

     o    a stylized version of Optimal Robotics Corporation(R),

     o    U-Scan,

     o    a stylized version of U-Scan, and

     o    U-Scan Express.


                                       10
<PAGE>

     Additionally,  we have  filed,  or are in the  process of filing  trademark
applications for the following marks:

     o    Optimal Robotics,

     o    A stylized version of Optimal Robotics(R)

     o    a second stylized  version of Optimal Robotics  Corporation,  which is
          used for different purposes than the registered mark noted above,

     o    Scan Pay Go,

     o    U-Scan Solo,

     o    U-Scan Carousel,

     o    It's That Simple, and

     o    The Best Service... Is Self Service.

   Trademark  applications  for the foregoing marks (other than Optimal Robotics
and its stylized  version,) have also been filed, or are in the process of being
filed in Canada and the European Economic Community.

     We have six patents,  and three  patents  pending in the United  States for
various components of our system. We have two German patents, one United Kingdom
patent and one European patent.

     As a general  policy,  we file domestic and foreign patent  applications to
protect our  technological  position and new product  development.  We intend to
continue to apply wherever  necessary to protect our patents in all countries in
which we operate.  Although we believe that our patents provide some competitive
advantage  and market  protection,  we rely for our success  primarily  upon our
proprietary  know-how,  innovative  skills,  technical  competence and marketing
abilities.  Furthermore,  there is no assurance  that these  patents will not be
challenged,  invalidated  or  circumvented  in the future.  We plan to apply for
additional patents on our products,  but our applications may not be granted and
any new products developed by us may not be patentable.

     We regard  our  software  as  proprietary  and  attempt  to protect it with
copyrights,  trade secret measures and nondisclosure  agreements.  Despite these
restrictions, it may be possible for competitors or users to copy aspects of our
products or to obtain  information  which we regard as trade  secrets.  Existing
copyright laws afford only limited practical  protection for computer  software.
The laws of foreign countries generally do not protect our proprietary rights in
our products to the same extent as the laws of the United States and Canada.  In
addition,  we may experience more difficulty in enforcing our proprietary rights
in certain foreign jurisdictions.

Employees

     As of December 31, 2000, we employed 288 (1999 - 168), full-time employees.

     Our employees are not represented by any collective  bargaining unit and we
have never experienced a work stoppage.  We believe that our employee  relations
are good.

Financial Information About Geographic Areas

     See Note 13 of the notes to the financial statements,  included in Item 8 -
"Financial Statements and Supplementary Data."



                                       11
<PAGE>

Enforceability of Civil Liabilities

     It may not be possible for shareholders to effect service of process within
the United  States upon our directors and officers and the experts named herein,
who are  residents  of  Canada,  or upon all or a  substantial  portion of their
assets and substantially all of our assets,  which are located in Canada. It may
also not be possible to enforce  against them judgments of U.S. courts under any
U.S. securities laws. There is doubt as to the enforceability in Canada of civil
liabilities predicated upon the U.S. securities laws.

Where You Can Find Additional Information

     We file  reports and other  information  with the  Securities  and Exchange
Commission. You may review these reports and other information without charge at
the Commission's Public Reference Room, 450 Fifth Street, N.W., Washington, D.C.
20549.  The  public  may  obtain  information  on the  operation  of the  Public
Reference  Room by  calling  the SEC at  1-800-SEC-0330.  The SEC  maintains  an
Internet site that contains reports, proxy and information statements, and other
information  regarding  issuers  that file  electronically  with the SEC,  which
Internet site is located at http://www.sec.gov.

     We are required to furnish to our  shareholders  annual reports  containing
audited financial  statements  certified by our chartered  accountants in Canada
and quarterly reports  containing  unaudited  financial data for the first three
quarters of each fiscal year following the end of the respective fiscal quarter.

     You may  request  a copy  of  these  filings  at no  cost,  by  writing  or
telephoning us at the following address or telephone number:

                                Optimal Robotics Corp.
                                4700 de la Savane
                                Suite 101
                                Montreal, Quebec H4P 1T7
                                Attention: O. Bradley McKenna
                                (514) 738-8885

     We are a foreign  private  issuer  under the rules and  regulations  of the
Commission.

Item 2.   DESCRIPTION OF PROPERTIES

Facilities

     Our headquarters are located in approximately  46,000 square feet of leased
space at 4700 de la Savane, Montreal,  Quebec, under a lease that expires on May
31, 2003,  subject to our right to renew the lease for an  additional  five-year
period. Our systems are assembled in a facility located in approximately  40,000
square feet of leased space in Plattsburgh, New York, under a lease that expires
on March 31,  2003,  subject  to our right to renew the lease for an  additional
three-year  period.  We also operate  technical  support  hubs in  approximately
19,200  square feet of leased space in the  Covington,  Kentucky,  approximately
2,700 square feet of leased space in Lansing,  Michigan and approximately 26,000
square feet of leased space in Phoenix, Arizona.

     We also maintain parts storage facilities in 13 states. We intend to expand
or to open additional hub facilities in the United States to support current and
future installations.



                                       12
<PAGE>


     The following is a summary of our facilities:


    Facility                            Location
    --------                            --------

Headquarters               4700 de la Savane, Montreal, Quebec

Systems Assembly           Plattsburgh, New York

Regional Facilities/       Arizona (Phoenix)
 Parts Storage Hubs        Colorado (Denver, Greeley)
                           Georgia (Atlanta)
                           Indiana (Indianapolis)
                           Kentucky (Covington , Louisville)
                           Massachusetts (Boston)
                           Michigan (Grand Rapids,  Kalamazoo,  Flint, Canton,
                           Mishawaka, Lansing)
                           North Carolina (Greensboro)
                           Ohio (Columbus)
                           Oregon (Milwaulkie)
                           South Carolina (Simpsonville)
                           Tennessee (Nashville, Hermitage)
                           Texas (Houston, Dallas)
                           Washington (Seattle)

Item 3.   LEGAL PROCEEDINGS

Legal Proceedings

     In each of 1995  and  1996,  we  received  a  demand  letter  from the same
claimant  alleging that U-Scan  infringes  upon the claimant's  patent.  In July
1999, this claimant filed a civil action in the United States District Court for
the District of Utah against us and PSC, the former assembler of U-Scan alleging
patent infringement. A second party also sent a demand letter to us in 1999, and
again in February 2001, alleging a different patent infringement. Although after
consultation  with  counsel,  we  believe  that the former  claimant  should not
prevail in its  lawsuit  and that the latter  claimant  should not  prevail if a
lawsuit is brought to assert its claim,  and that these  claims  will not have a
material adverse effect on our business or prospects,  no assurance can be given
that a court  will not find that the system  infringes  upon one or both of such
claimants' rights.

     A subsidiary of Kroger has also been sued by the same claimant in the State
of Utah based upon the same issues underlying the suit filed against us in 1999.
At our expense,  our counsel is also  defending the subsidiary of Kroger in such
action.  Furthermore,  we are  contractually  bound to indemnify  Kroger for any
damages that it may incur in connection with such suit.

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

          None



                                       13
<PAGE>

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

     (a)  Market Information

                                                          Nasdaq Stock Market
                                                          -------------------
                                                        US$ High        US$ Low
                                                        --------        -------
          2001
          First  Quarter  (through  February  15,
          2001)..................................        38.38           26.00
          2000
          1st Quarter............................        47.00           30.50
          2nd Quarter............................        46.25           33.38
          3rd Quarter............................        40.88           25.25
          4th Quarter............................        41.75           25.88
          1999
          1st Quarter............................        12.88            7.00
          2nd Quarter............................        11.13            7.06
          3rd Quarter............................        19.88            9.75
          4th Quarter............................        40.75           17.00

          Prior to September 2000, our common shares were quoted sporadically in
          the Canadian Dealing Network.  In September 2000, the Canadian Dealing
          Network merged with The Canadian Venture  Exchange.  Our common shares
          are not listed on The Canadian Venture Exchange.

     (b)  Holders

          At February 15, 2001,  there were 1,913  stockholders of record of our
          common shares.

     (c)  Dividends

          Our policy is to retain all  earnings,  if any are  realized,  for the
          development and growth of our business. We have never declared or paid
          cash  dividends on our common shares and we do not  anticipate  paying
          cash dividends in the foreseeable  future.  Any  determination  to pay
          dividends will be at the discretion of our Board of Directors and will
          depend upon our financial  condition,  results of operations,  capital
          requirements,  limitations contained in loan agreements and such other
          factors as our Board of Directors deems relevant.

Item 6.   SELECTED FINANCIAL AND OTHER DATA

     The following  selected financial data as of December 31, 2000 and 1999 and
for the years ended  December 31,  2000,  1999 and 1998 are derived from and are
qualified by reference to our audited financial  statements that are included in
Item  8--"Financial  Statements and Supplementary  Data." The following selected
financial  data as of December 31,  1998,  1997 and 1996 and for the years ended
December 31, 1997 and 1996 are derived from our audited financial statements, as
restated  for a change in  reporting  currency,  that are not  included  herein.
Effective  December  31,  1998,  we  adopted  the U.S.  dollar as the  reporting
currency for our financial statements.  The financial data for all periods prior
to 1999, for Canadian GAAP purposes, are presented in U.S. dollars in accordance
with a translation of convenience method using the representative  exchange rate
at  December  31,  1998 of  US$1.00=Cdn.$1.5333--see  note 2 of the notes to the
financial   statements,   included   in  Item   8--"Financial   Statements   and
Supplementary Data."

     The data should be read in conjunction  with  "Management's  Discussion and
Analysis of  Financial  Condition  and  Results of  Operations,"  the  financial
statements, related notes and the other financial information included elsewhere
in this annual report.

     The selected  financial  data are  prepared on the basis of Canadian  GAAP,
which is  different in some regards from U.S.  GAAP.  For a  description  of the
material  differences  between  Canadian  GAAP and U.S.  GAAP in  regard  to our
financial  statements,  see note 15 of the  notes to the  financial  statements,
included in Item 8--"Financial Statements and Supplementary Data."



                                       14
<PAGE>

<TABLE>
<CAPTION>
                                                                                         Year ended December 31,
                                                                            -------------------------------------------------
                                                                            2000      1999       1998       1997       1996
                                                                            ----    --------  ---------- ----------  --------
                                                                            (U.S. dollars, in thousands except per share data)
<S>                                                                      <C>         <C>         <C>        <C>        <C>
     Income Statement Data:
     Revenues......................................................      $ 60,971    $ 29,634    $ 5,618    $ 3,397    $   894
     Cost of sales ................................................        45,558      23,457      5,135      2,709        837
                                                                         --------    --------    -------    -------    -------

     Gross margin .................................................        15,413       6,177        483        688         57
     Research and development expenses, net of tax credits ........           913         220        210        294        506
     Selling, general, administrative and other expenses ..........        10,629       6,126      4,633      2,359        745
     Write-down of inventory ......................................          --           604       --         --         --
     Investment income ............................................        (3,896)       (893)      (449)      (584)      (127)
                                                                         --------    --------    -------    -------    -------
     Earnings (loss) before income taxes ..........................         7,767         120     (3,911)    (1,381)    (1,067)
     Provision for (recovery of) income taxes(1) ..................         2,972      (3,532)      --         --         --
                                                                         --------   ---------    -------    -------    -------
     Net earnings (loss) ..........................................      $  4,795    $  3,652    $(3,911)  $ (1,381) $ (1,067)
                                                                         ========    ========    =======    =======    =======
     Weighted average number of common shares outstanding
        (thousands) ...............................................        13,104       9,699      7,464      7,410      4,918
     Weighted average fully diluted number of common shares
        Outstanding (thousands) ...................................        14,168      12,709      7,464      7,410      4,918
     Basic net earnings (loss) per common share ...................      $   0.37     $  0.38    $ (0.52)   $ (0.19)   $ (0.22)
                                                                         ========    ========    =======    =======    =======
     Diluted net earnings (loss) per common share .................      $   0.35     $  0.35    $ (0.52)   $ (0.19)   $ (0.22)
                                                                         ========    ========    =======    =======    =======
     Other data:
     U-Scan system deliveries:
          Systems sold during year ................................           583         288         57         22          6
          Systems sold as at year-end .............................           958         375         87         30          8
     U-Scan checkout stations sold as at year-end .................         3,808       1,498        346        120         32
     Customer transactions (millions)(2) ..........................           150          45         12

<CAPTION>

  Balance Sheet Data:                                                                            December 31,
                                                                            ----------------------------------------------------
                                                                            2000        1999        1998       1997      1996
                                                                            ----        ----        ----       ----      ----
                                                                                        (U.S. dollars, in thousands)
<S>                                                                      <C>         <C>         <C>       <C>         <C>
Cash, cash equivalents and short-term investments..................      $ 76,149    $ 29,136    $ 6,063   $ 10,354    $12,868
Working capital....................................................        99,904      36,032      7,319     10,783     12,855
Total assets.......................................................       111,273      44,206      9,329     11,848     13,741
Shareholders' equity...............................................       104,746      39,705      7,596     11,072     12,453

<CAPTION>

  U.S. GAAP Financial Data:                                                                 Year ended December 31,
                                                                           -----------------------------------------------------
                                                                            2000        1999        1998       1997      1996
                                                                           -----        ----        ----       ----      ----
                                                                            (U.S. dollars, in thousands except per share data)
<S>                                                                      <C>         <C>         <C>        <C>       <C>
Revenues..............................................                   $ 60,971    $ 29,634    $ 5,721    $ 3,749   $  1,006
Net loss..............................................                   $(14,105)   $ (5,575) $ (16,403)   $(6,806)  $ (1,362)
Basic and diluted net loss per common share...........                   $  (1.08)   $  (0.57)   $ (2.20)   $ (0.92)  $  (0.28)

<CAPTION>

                                                                                                   December 31,
                                                                            ----------------------------------------------------
                                                                            2000        1999        1998       1997      1996
                                                                            ----        ----        ----       ----      ----
                                                                                       (U.S. dollars, in thousands)
<S>                                                                     <C>          <C>         <C>       <C>        <C>
Total assets..........................................                  $ 111,273    $ 44,191    $ 9,312   $ 12,679   $ 15,348
</TABLE>

(1)  Based upon the purchase  commitments for a large number of systems which we
     received in the fourth quarter of 1999, which covered a substantial portion
     of our fiscal 2000  budgeted  sales target,  and the positive  trend in our
     profitability  and sales levels in the  preceding  quarters,  we determined
     that as of  December  31,  1999,  it was more likely than not that we would
     earn sufficient taxable income during the allowable carry-forward period to
     fully  realize  all of our  future  income  tax  assets  as at  that  date.
     Therefore,  during the fourth  quarter of 1999,  we  recognized  the future
     benefit of all of our future income tax assets, which relate principally to
     previously  unrecognized  non-capital  losses and  undeducted  research and
     development expenses. With respect to the future income tax assets recorded
     as at December 31, 2000,  we have  determined  that it is still more likely
     than not that we will earn  sufficient  taxable income during the allowable
     carry-forward  period to fully realize all of our future income tax assets.
     See Item  7--"Management's  Discussion and Analysis of Financial  Condition
     and Results of Operations--Results of Operations--2000 Compared with 1999."

(2)  Estimated,  based on reports  provided by our customers.  Prior to 1998, we
     did not track this data.


                                       15
<PAGE>


Item 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

Overview

     We are the leading  provider of  self-checkout  systems to retailers in the
United States.  Our principal product is the U-Scan, an automated  self-checkout
system which  enables  shoppers to scan,  bag and pay for their  purchases  with
little or no assistance from store personnel.

      As of December 31, 2000,  we had sold 958 U-Scan  systems,  consisting  of
3,808 checkout stations, in 865 stores of leading retailers across 37 states and
two  provinces.  We estimate that in 2000,  U-Scan  systems  processed  over 150
million customer transactions.  The U-Scan can be operated quickly and easily by
shoppers and makes the checkout  process more  convenient  for them.  The U-Scan
also reduces the cost of checkout  transactions to retailers and addresses labor
shortage  problems by replacing  manned  checkout  counters  with our  automated
self-checkout stations.

     We believe that the market for the U-Scan extends beyond  supermarkets  and
supercenters  and we now sell to general  merchandise  stores and other  big-box
retailers.

Agreement with PSC

     In 1995,  we entered  into a strategic  relationship  agreement  whereby we
granted to Spectra-Physics Scanning Systems, Inc. an exclusive worldwide license
to  distribute,   sell,  assemble  and  install  U-Scan  systems.  PSC  acquired
Spectra-Physics in 1996 and assumed this agreement.

     The  agreement  obligated  PSC to service and  maintain the hardware in the
systems  after  installation.  Our role was to develop the product,  provide and
service the software for it and assist in selling it. We shared the gross margin
relating to sales of systems with PSC. As our resources expanded,  we negotiated
to  reduce  PSC's  role.  Beginning  April 1,  1998,  PSC was paid to act as the
exclusive   assembler   for  our  U-Scan   systems,   and  we  assumed   primary
responsibility  for  the  sale  and  all   responsibilities   for  distributing,
installing and servicing our systems and became entitled to all the revenue from
their sale.

     In October  1999,  we  notified  PSC that we would not renew its  exclusive
assembly  rights beyond  December 31, 2000, the date specified in our agreement.
We now assemble our U-Scan systems in our Plattsburgh, New York facility.

Trends in our costs

     Gross  margins on the sale of U-Scan  systems  are  expected to increase to
approximately  35% in 2001,  from  approximately  25% in 2000. The increase will
result from our taking over the assembly  function of the U-Scan  system,  which
was previously done by a third party.

     We continue to focus on taking advantage of economies of scale and reducing
the  costs  of  installing  and  servicing  our  product.  One  of  the  primary
responsibilities  of our purchasing  department is sourcing of new suppliers and
obtaining the best possible prices for our raw materials.

     As a result of the continuing  cost-cutting  initiatives,  we experienced a
reduction  in some of our raw material  costs.  The decrease in the overall cost
per system was a direct  result of the increase in the number of U-Scan  systems
sold. We believe that as the number of firm  commitments we have to purchase the
U-Scan  increases,   we  will  be  able  to  leverage  our  increased  component
requirements into lower prices from suppliers.

     We  continue  to make  significant  investments  in our  infrastructure  to
support the rapid growth of our business.



                                       16
<PAGE>


Financial Condition

     Our cash and  short-term  investment  portfolio  totaled  $76,149,000 as at
December 31, 2000. The portfolio consists of short-term  discounted notes with a
weighted  average  effective  yield of 6.5%.  Our  investments  are  liquid  and
investment  grade.  The  portfolio  is  invested  in  U.S.  dollar   denominated
securities.  The  portfolio  is invested in  short-term  securities  to minimize
interest rate risk.

     During  the fourth  quarter  of 2000,  we sold,  on a  non-recourse  basis,
certain  designated  accounts  receivable to a Canadian  chartered  bank.  These
receivables  had an aggregate  carrying  value of  approximately  $7,310,000 for
which we received net proceeds of  approximately  $7,223,000.  This  transaction
resulted in an interest expense of approximately $87,000.  However,  taking into
account the interest to be earned on the sale proceeds that we recovered and the
tax on  capital  that we saved by  investing  the sale  proceeds  in  qualifying
instruments,  the pro forma net effect of the sale transaction will be a gain to
us of approximately  $12,000.  The sale also resulted in a reduction in our days
outstanding of accounts receivable ("DSO's") at year-end to 38 days from 74 days
at the end of the third quarter of 2000.  Under  generally  accepted  accounting
principles,  DSOs are  calculated  by  dividing  revenues  by the average of the
beginning and ending balance of trade receivables.  As at December 31, 2000, our
ending balance of trade receivables was $8,287,000.

     Our inventory  position at year-end was $16,726,000,  up from $3,364,000 at
the end of 1999. The year-end inventory position included $3,543,000 of finished
goods and  $590,000 of work in process,  compared to $601,000 of finished  goods
and no work in process in 1999.  The increase in 2000 is a direct  result of the
significant increase in orders for the first quarter of 2001 as compared to that
of the  first  quarter  of 2000 and the fact  that we  began  assembling  U-Scan
systems  during  the  fourth  quarter  of 2000.  In  addition,  included  in the
inventory were raw materials and  replacement  parts amounting to $3,658,000 and
$8,935,000,  respectively.  We believe that,  considering our current  installed
base and our anticipated  run rate for 2001, this level of replacement  parts is
appropriate for the current servicing and support of our customers.

     We have no long-term  debt.  Shareholders'  equity at December 31, 2000 was
$104,746,000.

     We will  continue  to  invest  in  sales,  marketing  and  product  support
infrastructure.   We  will  continue  to  increase   spending  in  research  and
development activities in the areas of new technologies.  Additions to leasehold
improvements  and  equipment  will  continue,   including   enhancing   existing
facilities  and  computer  systems  for  research  and  development,  sales  and
marketing, support and administrative staff.

     During the third quarter of fiscal 2000, we determined  that our functional
currency had clearly  changed from the Canadian  dollar to the U.S. dollar as at
the beginning of the quarter. As a result of this change, which has been applied
prospectively  from July 1, 2000,  transactions  denominated in currencies other
than the U.S.  dollar are now  translated  into U.S.  dollars using the temporal
method.  Under this method,  monetary assets and liabilities are translated into
U.S.  dollars  at the  exchange  rate  in  effect  on the  balance  sheet  date.
Non-monetary  assets  and  liabilities  are  translated  into  U.S.  dollars  at
historical  exchange  rates.  Revenues  and expenses  are  translated  into U.S.
dollars  at the  exchange  rates  prevailing  at  the  dates  of the  respective
transactions. Gains and losses resulting from translation of monetary assets and
liabilities into U.S. dollars are reflected in the statement of operations.

     Prior to July 1, 2000,  our  functional  currency was the Canadian  dollar.
Accordingly, the financial statements were translated from Canadian dollars into
U.S.  dollars  using the current rate method.  Gains and losses  resulting  from
translation  of  the  financial  statements  were  included  in  the  cumulative
translation  adjustment in shareholders'  equity. The translated amounts for the
non-monetary  items as at June 30,  2000 become the  historical  basis for those
items in subsequent periods.

Recently Issued Accounting Standards

     As a result of the issuance of Staff Accounting  Bulletin No. 101 (SAB 101)
issued by the staff of the  Securities  and  Exchange  Commission  of the United
States, we reviewed our accounting  policies and changed our revenue recognition
policy for sales of systems and installation services to that noted below.



                                       17
<PAGE>

Prior to the change,  we accounted for revenues  related to sales of systems and
installation services upon completion of installation. This change in policy did
not have a  material  effect on the  current  or prior  years'  revenues  or net
earnings (loss).

     Revenue is now recognized when all of the following  conditions are met: we
have  persuasive  evidence  of an  arrangement;  the prices  for the  systems or
services are fixed or determinable;  collection is reasonably  assured;  and the
systems  have been  delivered or the services  have been  provided.  Delivery of
systems  occurs at the later of shipment  of the system to the  customer or upon
customer  acceptance.  Revenue for  installation  services is  recognized as the
services are performed.  Revenue from  maintenance  contracts is recognized over
the term of the contract.

Quarterly Results

     The  following  table sets forth  certain  summarized  unaudited  quarterly
financial and other data for the periods presented.  The financial data has been
derived from unaudited financial  statements that, in the opinion of management,
reflect  all  adjustments,  consisting  only of  normal  recurring  adjustments,
necessary for a fair  presentation of such quarterly data. The operating results
for any quarter are not necessarily indicative of the results to be expected for
any future period.

     The summary  financial  data are  prepared  on the basis of Canadian  GAAP,
which is  different in some regards from U.S.  GAAP.  For a  description  of the
material  differences  between  Canadian  GAAP and U.S.  GAAP in  regard  to our
financial  statements,  see note 15 of the  notes to the  financial  statements,
included in Item 8--"Financial Statements and Supplementary Data."
<TABLE>
<CAPTION>


                                                                 For the quarter ended
                                    -----------------------------------------------------------------------------------
                                    Dec. 31, Sept. 30,  June 30,  March 31,  Dec. 31,  Sept. 30,   June 30,  March 31,
                                      2000      2000      2000      2000       1999      1999       1999      1999
                                      ----      ----      ----      ----       ----      ----       ----      ----
                                                 (U.S. dollars, in thousands except per share data)
                                                                     (unaudited)
<S>                                <C>         <C>        <C>        <C>        <C>       <C>        <C>        <C>
Revenues.........................  $   12,543  $  20,301  $  16,123  $ 12,004   $ 6,835   $ 10,686   $ 7,023    $ 5,090
Cost of sales....................       9,467     15,120     11,957     9,014     5,449      8,128     5,536      4,344
                                        -----     ------     ------     -----     -----      -----     -----      -----
Gross margin.....................       3,076      5,181      4,166     2,990     1,386      2,558     1,487        746
                                        -----     ------     ------     -----     -----      -----     -----      -----
Earnings (loss) before income
   Taxes.........................         354      2,962      3,317     1,135    (1,153)     1,420       428       (575)
Provision for (recovery of)
      Income taxes...............         136      1,133      1,269       434    (3,532)      --          --         --
                                        -----     ------     ------     -----    ------       --          --         --

Net earnings (loss)..............      $  218   $  1,829   $  2,047  $    701   $ 2,379   $ 1,420    $   428    $  (575)
                                        -----     ------     ------     -----    ------     ------     -----      -----

Basic net earnings (loss) per
   Common share..................     $  0.02   $   0.13    $  0.15   $  0.06   $  0.21   $  0.13    $  0.05    $ (0.08)
Fully diluted net earnings
   (loss) per common share.......     $  0.02   $   0.13    $  0.15   $  0.06   $  0.18   $  0.12    $  0.05    $ (0.08)

Other data:
U-Scan systems
   Sold during quarter...........         114        196        158       115        64       105         68         51

</TABLE>

     The following table sets forth, for the periods indicated, income statement
data expressed as a percentage of total revenues: For the quarter ended

<TABLE>
<CAPTION>

                                                                 For the quarter ended
                                    -------------------------------------------------------------------------------
                                    Dec. 31, Sept. 30, June 30,  March 31,  Dec. 31, Sept. 30, June 30,  March 31,
                                      2000      2000     2000      2000       1999     1999      1999       1999
                                      ----      ----     ----      ----       ----     ----      ----       ----
                                                                      (unaudited)
<S>                                  <C>       <C>      <C>       <C>        <C>      <C>       <C>        <C>
Revenues.................            100.0%    100.0%   100.0%    100.0%     100.0%   100.0%    100.0%     100.0%
Cost of sales............             75.5      74.5     74.2      75.1       79.7     76.1      78.8       85.3
                                     -----     -----    -----     -----      -----    -----     -----      -----
Gross margin.............             24.5      25.5     25.8      24.9       20.3     23.9      21.2       14.7
                                     -----     -----    -----     -----      -----    -----     -----      -----
Earnings (loss) before
    Income taxes.........              2.8      14.6     20.6       9.4      (16.9)    13.3      6.1       (11.3)
Provision for (recovery of)
    Income taxes.........              1.1       5.6      7.9       3.6      (51.7)    --        --         --
                                     -----     -----    -----     -----      -----    -----     ----       -----
Net earnings (loss)......              1.7%      9.0%    12.7%      5.8%      34.8%    13.3%     6.1%      (11.3)%
                                     -----     -----    -----     -----      -----    -----     ----       -----
</TABLE>



                                       18
<PAGE>


Results of Operations

     The  following  discussion  and analysis of our results of  operations  and
liquidity and capital resources should be read in conjunction with the financial
information  and our financial  statements and their related notes,  included in
Item 8--"Financial  Statements and Supplementary  Data." All dollar amounts have
been rounded to the nearest thousand.

2000 Compared with 1999

     Total revenues increased by $31,336,000,  or 106%, from 1999 to 2000. Sales
of U-Scan  grew  from 288  systems  in 1999 to 583  systems  in 2000,  producing
$29,049,000 of additional  systems revenues,  an increase of 103%. The growth in
sales was due to a  significant  increase  in orders  from  existing  customers.
Service  contract  revenue  recognized  for hardware  and  software  maintenance
increased by $2,370,000,  or 238%,  because of the increased number of customers
that entered into service contracts with us after purchasing U-Scan systems.

     Total cost of sales  increased by  $22,101,000,  or 94%, from 1999 to 2000.
Overall gross margin  increased as a percentage of sales from 21% in 1999 to 25%
in 2000,  primarily  representing  the increase in gross margin on system sales.
This increase resulted primarily from taking advantage of economies of scale and
reducing the costs of installing our systems.

     Gross research and development  expenses increased by $97,000, or 10%, from
1999 to 2000. As a percentage of total revenues,  gross research and development
expenses  decreased  from 3% in 1999 to 2% in  2000.  This  percentage  decrease
resulted from the substantial  increase in the number of systems sold in 2000 as
compared to 1999. Research and development expenses during the year included the
cost of the development of the biometrics  support feature and the U-Scan Mobile
Attendant(TM).

     We may,  for  Canadian  federal  income tax  purposes,  defer and deduct in
future  years  certain   scientific   research  and   experimental   development
expenditures  incurred to date.  As of  December  31,  2000,  the amount of such
deferred deductions is CA $3,228,000  (approximately US $2,153,000) for Canadian
federal income tax purposes and CA $3,363,000  (approximately US $2,243,000) for
Quebec provincial  income tax purposes.  These deductions may be carried forward
indefinitely.  In addition,  we have  non-refundable  investment  tax credits of
approximately  CA $836,000  (approximately  US  $558,000),  which can be carried
forward to reduce  Canadian  federal  income  taxes  payable and which expire in
various years through 2010.

     During 1999, we retroactively  adopted the revised  recommendations  of the
Canadian  Institute of Chartered  Accountants  regarding  accounting  for income
taxes,  which are consistent with U.S. GAAP.  During the fourth quarter of 1999,
we received  purchase  commitments for a large number of systems which covered a
substantial portion of our fiscal 2000 budgeted sales target. In addition, there
had been a positive trend in our profitability and sales levels in the preceding
quarters. Based on these factors, we determined that as of December 31, 1999, it
was more likely than not that we would earn sufficient taxable income during the
allowable  carry-forward  period to fully  realize all of our future  income tax
assets as at that date.  Therefore,  as a result of this determination,  we were
required to record,  during the fourth  quarter of 1999,  an income tax recovery
with respect to these future income tax assets.

     With  respect to the future  income tax assets  recorded as at December 31,
2000, we have determined that it is still more likely than not that we will earn
sufficient  taxable  income during the allowable  carry-forward  period to fully
realize all of our future income tax assets.  Our ability to ultimately  realize
these future  income tax assets will be  dependent  upon our  realizing  certain
sales levels within the allowable carry-forward period, thus creating sufficient
taxable  income to realize the benefit of these  assets.  Our ability to realize
these assets is also  dependent on effective  control over our selling,  general
and  administrative  expenses.  Our determination that we will realize these tax
assets is based upon the fact that we currently have purchase  commitments for a
large  number of systems  which cover a  substantial  portion of our fiscal 2001
budgeted sales target,  there has been a positive trend in our profitability and
sales  levels



                                       19
<PAGE>

and we expect our gross and  operating  margins to  increase  as a result of our
having assumed the assembly responsibility for our systems.

     Selling,  general,  administrative and other expenses (including  operating
lease expenses) increased by $4,503,000,  or 74%, in 2000 compared to 1999. As a
percentage of total revenues,  these expenses  decreased from 21% in 1999 to 17%
in 2000.  During the last  quarter of 2000,  we  continued  to expand  sales and
marketing  efforts and hired additional  personnel,  as our backlog continued to
increase.  In addition, we incurred increased costs during 2000 in the following
areas:  engineering,   related  to  the  design,  development  and  early  phase
commercial  production of new casings for the U-Scan systems; the enlargement of
our Plattsburgh  facility in connection with the commencement of system assembly
at this facility; the enlargement of our head office premises to accommodate the
growth in the  number of our  employees;  and the  opening  of our  facility  in
Phoenix, Arizona.

1999 Compared with 1998

     Total revenues increased by $24,016,000,  or 427%, from 1998 to 1999. Sales
of  U-Scan  grew  from 57  systems  in 1998 to 288  systems  in 1999,  producing
$23,147,000 of additional  systems revenues,  an increase of 449%. The growth in
sales was due to a  significant  increase  in orders  from  existing  customers.
Service  contract  revenue  recognized  for hardware  and  software  maintenance
increased by $855,000,  or 600%,  because of the  increased  number of customers
that entered into service contracts with us after purchasing U-Scan.

     Total cost of sales increased by  $18,322,000,  or 357%, from 1998 to 1999.
Overall  gross margin  increased as a percentage of sales from 9% in 1998 to 21%
in 1999,  primarily  representing  the increase in gross margin on system sales.
This increase resulted primarily from taking advantage of economies of scale and
reducing the costs of installing and servicing our products.

     Gross research and  development  expenses  increased by $636,000,  or 196%,
from  1998 to 1999.  As a  percentage  of total  revenues,  gross  research  and
development  expenses  decreased from 6% in 1998 to 3% in 1999.  This percentage
decrease resulted from the substantial increase in the number of systems sold in
1999 as compared to 1998.  Research  and  development  expenses  during the year
included  the cost of the  development  of our U-Scan  Solo and U-Scan  Carousel
systems.

     Selling,  general,  administrative and other expenses (including  operating
lease expenses) increased by $1,493,000,  or 24%, in 1999 compared to 1998. As a
percentage of total revenues,  these expenses  decreased from 82% in 1998 to 21%
in 1999. This percentage decrease resulted from the substantial  increase in the
number of systems  sold in 1999  compared  to 1998.  During the last  quarter of
1999,  we continued to expand sales and  marketing  efforts and hire  additional
personnel,  as our backlog  continued  to  increase.  In  addition,  we incurred
increased  costs in  engineering  follow-through  during  the  early  phases  of
commercial  production for our U-Scan Solo and U-Scan Carousel systems.  We also
incurred increased costs adapting the capabilities of our existing U-Scan system
to new customers' needs and for the start-up of our Plattsburgh facility.

     A write-down  of  inventory  of $604,000 in the fourth  quarter of 1999 was
required due to upgrades in some hardware components, to recognize the declining
replacement  costs for many components as a result of stronger  purchasing power
with our suppliers, and due to parts obsolescence.

     Our 1999 net  earnings  of  $3,652,000  reflect an income tax  recovery  of
$3,532,000,   which   represents  the  future   benefit  of   non-capital   loss
carryforwards and undeducted  scientific  research and experimental  development
expenditures  which may be used to reduce taxable income,  for Canadian  federal
and Quebec provincial income tax purposes, in future years. We may utilize these
loss  carryforwards  and  undeducted  expenditures  only to the  extent  that we
generate  taxable income for Canadian federal and Quebec  provincial  income tax
purposes, in the future.

     During 1999, we retroactively  adopted the revised  recommendations  of the
Canadian  Institute of Chartered  Accountants  regarding  accounting  for income
taxes,  which are consistent with U.S. GAAP.



                                       20
<PAGE>

During the fourth quarter of 1999, we received purchase  commitments for a large
number of  systems  which  covered a  substantial  portion  of our  fiscal  2000
budgeted  sales  target.  In  addition,  there had been a positive  trend in our
profitability  and  sales  levels  in the  preceding  quarters.  Based  on these
factors, we determined that as of December 31, 1999, it was more likely than not
that we would earn sufficient taxable income during the allowable  carry-forward
period to fully  realize  all of our  future  income tax assets as at that date.
Therefore, as a result of this determination, we were required to record, during
the fourth  quarter of 1999, an income tax recovery with respect to these future
income tax assets.

     Based on our earnings estimates for fiscal 2000, $3,013,000 of these future
income tax assets were  classified as a current  asset.  These future income tax
assets were fully utilized in fiscal 2000.

Liquidity and Capital Resources

     As of December 31,  2000,  we had cash,  cash  equivalents  and  short-term
investments of $76,149,000 and working capital of $99,904,000.

     Operating  activities used $8,657,000 of cash and cash equivalents in 2000,
as compared to $2,918,000 in 1999.  In 2000, we issued  1,625,000  common shares
pursuant to a public offering and 646,449 common shares pursuant to the exercise
of options and warrants,  which resulted in net cash proceeds of $58,682,000 and
$1,984,000, respectively. In 1999, we issued 3,000,000 common shares pursuant to
a public  offering and 961,963 common shares pursuant to the exercise of options
and warrants, which resulted in net cash proceeds of $24,206,000 and $2,467,000,
respectively.

     In 2000,  we had capital  expenditures  of  $3,070,000,  which  principally
related to computer equipment,  testing units and leasehold improvements related
to the expansion of our head office  premises,  our facility in Plattsburgh  and
the opening of our facility in Phoenix. In 1999, we had capital  expenditures of
$1,013,000,  which were  principally  related to computer  equipment and testing
units and leasehold improvements.

     We believe that our cash, cash equivalents and short-term investments, will
be adequate to meet our needs for at least the next 12 months.

Item 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


       Interest rate and foreign currency exchange rate sensitivity table
<TABLE>
<CAPTION>

                                                                                          December 31, 2000
                                                                                          -----------------
                                                                                       Maturing in       Fair
                                                                                       -----------       ----
                                                                                           2001        Value(1)
                                                                                           ----        --------
                                                                                            (U.S. dollars)
<S>                                                                                    <C>           <C>
Short-term  discounted notes  denominated in U.S.  dollars,  held for other than
trading purposes, with a weighted average effective yield of 6.5% (1999 - 5.8%),
maturing between January 26, 2001 and November 15, 2001 (1999 - matured on April
3, 2000), with a maturity value of $72,872,000...................................      $71,141,910   $72,345,779
</TABLE>


(1)  Fair  value has been  determined  based  upon  quoted  market  values as at
     December 31, 2000.

     We are exposed to foreign  currency  exchange  rate  fluctuations.  We have
never tried to hedge our exchange rate risk, do not plan to do so and may not be
successful  should we attempt  to do so in the  future.  We are also  exposed to
interest  rate  fluctuation  risk,  which we do not  systematically  manage.  We
presently invest in short-term investment grade paper.


                                       21
<PAGE>

Item 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Auditors' Report

To the Shareholders of
Optimal Robotics Corp.


We have audited the consolidated  balance sheets of Optimal Robotics Corp. as at
December  31,  2000 and  1999 and the  consolidated  statements  of  operations,
deficit  and cash  flows for each of the years in the  three-year  period  ended
December 31, 2000.  These  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in Canada  and the  United  States.  Those  standards  require  that we plan and
perform an audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement presentation.

In our opinion,  these consolidated  financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 2000
and 1999 and the  results of its  operations  and its cash flows for each of the
years in the  three-year  period  ended  December  31, 2000 in  accordance  with
Canadian generally accepted accounting principles.


/s/ PricewaterhouseCoopers LLP


Chartered Accountants

Montreal, Quebec, Canada
February 9, 2001



                                       22
<PAGE>

Optimal Robotics Corp.
Consolidated Balance Sheets
As at December 31, 2000 and 1999
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

<TABLE>
<CAPTION>
                                                                                                 2000                   1999
                                                                                                    $                      $
<S>                                                                                         <C>                   <C>
Assets
Current assets
Cash                                                                                         5,006,982             4,499,084
Short-term investments (note 14)                                                            71,141,910            24,636,606
Accounts receivable, net of allowance for doubtful accounts of nil (note 4)                 10,485,017             4,641,566
Inventories (note 5)                                                                        16,725,885             3,363,943
Tax credits receivable                                                                         323,788               252,520
Future income taxes (note 12)                                                                2,420,718             3,012,997
Prepaid expenses and deposits                                                                  327,039               127,017
                                                                                      --------------------------------------

                                                                                           106,431,339            40,533,733

Loan receivable (note 6)                                                                       125,934               155,643

Deferred share issue costs                                                                          --                56,985

Future income taxes (note 12)                                                                1,462,227             2,112,028

Capital assets (note 7)                                                                      3,253,148             1,347,903
                                                                                      --------------------------------------

                                                                                           111,272,648            44,206,292
                                                                                      --------------------------------------

Liabilities

Current liabilities
Accounts payable and accrued liabilities (note 8)                                            6,492,371             3,659,189
Deferred revenue                                                                                34,695               592,271
Contract advance (note 11)                                                                          --               250,000
                                                                                      --------------------------------------

                                                                                             6,527,066             4,501,460
                                                                                      --------------------------------------

Commitments and contingency (note 11)

Shareholders' Equity

Share capital (note 9)                                                                     107,050,914            44,657,833

Other capital                                                                                    9,684                20,559

Cumulative translation adjustment                                                           (1,484,471)              652,062

Deficit                                                                                       (830,545)           (5,625,622)
                                                                                      --------------------------------------

                                                                                           104,745,582            39,704,832
                                                                                      --------------------------------------

                                                                                           111,272,648            44,206,292
                                                                                      --------------------------------------
</TABLE>

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

Approved by the Board of Directors

 /s/ Neil S. Wechsler                      /s/ Leon P. Garfinkle
____________________________ Director     _____________________________ Director


                                       23
<PAGE>

Optimal Robotics Corp.
Consolidated Statements of Operations
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

<TABLE>
<CAPTION>
                                                                          2000                   1999                   1998
                                                                             $                      $                      $
                                                                                                                    (note 2)
<S>                                                                  <C>                    <C>                    <C>
Revenues                                                             60,970,505             29,634,246             5,618,013

Cost of sales                                                        45,557,943             23,457,413             5,135,077
                                                               -------------------------------------------------------------

Gross margin                                                         15,412,562              6,176,833               482,936
                                                               -------------------------------------------------------------

Research and development expenses, net of tax
      credits (note 11)                                                 912,679                219,956               210,374

Selling, general and administrative expenses                          9,153,760              5,548,833             4,215,487

Operating lease expense                                                 624,834                232,471               211,399

Write-down of inventory                                                      --                604,364                    --

Amortization of capital assets                                          850,872                344,718               205,684

Investment income                                                    (3,896,899)              (893,694)             (449,244)
                                                               -------------------------------------------------------------

                                                                      7,645,246              6,056,648             4,393,700
                                                               -------------------------------------------------------------

Earnings (loss) before income taxes                                   7,767,316                120,185            (3,910,764)

Provision for (recovery of) income taxes (note 12)                    2,972,239             (3,531,583)                   --
                                                               -------------------------------------------------------------

Net earnings (loss) for the year                                      4,795,077              3,651,768            (3,910,764)
                                                               -------------------------------------------------------------

Weighted average number of common shares outstanding                 13,104,361              9,699,385             7,463,984
                                                               -------------------------------------------------------------

Net earnings (loss) per common share
      Basic                                                                0.37                   0.38                 (0.52)
                                                               -------------------------------------------------------------

      Fully diluted                                                        0.35                   0.35                 (0.52)
                                                               -------------------------------------------------------------
</TABLE>

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



                                       24
<PAGE>

Optimal Robotics Corp.
Consolidated Statements of Deficit
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

<TABLE>
<CAPTION>
                                                                          2000                   1999                   1998
                                                                             $                      $                      $
                                                                                                                     (note 2)
<S>                                                                  <C>                    <C>                   <C>
Deficit - Beginning of year                                          (5,625,622)            (9,277,390)           (5,366,626)

Net earnings (loss) for the year                                      4,795,077              3,651,768            (3,910,764)
                                                               -------------------------------------------------------------

Deficit - End of year                                                  (830,545)            (5,625,622)           (9,277,390)
                                                               -------------------------------------------------------------
</TABLE>



















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



                                       25
<PAGE>

Optimal Robotics Corp.
Consolidated Statements of Cash Flows
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

<TABLE>
<CAPTION>
                                                                     2000            1999           1998
                                                                        $               $              $
                                                                                                 (note 2)
Cash flows provided by (used for)
<S>                                                             <C>             <C>           <C>
Operating activities
Net earnings (loss) for the year                                4,795,077       3,651,768     (3,910,764)
Items not affecting cash
      Write-down of inventory                                          --         604,364             --
      Amortization of capital assets                              850,872         344,718        205,684
      Unrealized foreign exchange loss (gain) on contract
           advance                                                  5,948         (14,016)        53,414
      Non-refundable tax credits                                  (65,539)       (490,438)            --
      Future income taxes                                       2,972,239      (3,531,583)            --
      Loss on securitization of accounts receivable                86,686              --             --
Change in non-cash operating working capital items
      Increase in accounts receivable                         (13,391,909)     (3,271,239)      (380,271)
      Proceeds on securitization of accounts receivable         7,222,898              --             --
      Increase in inventories                                 (13,556,156)     (2,441,539)    (1,376,724)
      Increase in tax credits receivable                          (77,451)       (128,289)       (14,894)
      Decrease (increase) in prepaid expenses and deposits       (204,897)       (120,936)        16,265
      Increase in accounts payable and accrued liabilities      3,237,491       2,029,510        902,972
      Increase (decrease) in deferred revenue                    (532,007)        449,257        124,784
                                                              ------------------------------------------

                                                               (8,656,748)     (2,918,423)    (4,379,534)
                                                              ------------------------------------------

Financing activities
Issuance of common shares                                      65,358,738      29,467,094        435,596
Share issue costs                                              (4,693,285)     (2,793,434)            --
Deferred share issue costs                                             --         (55,616)            --
Repayment of loans under Employee Stock Purchase
      Arrangement                                                      --         141,348             --
Decrease in contract advance                                     (250,000)       (125,000)      (125,000)
                                                              ------------------------------------------

                                                               60,415,453      26,634,392        310,596
                                                              ------------------------------------------

Investing activities
Purchase of capital assets                                     (3,069,584)     (1,012,586)      (234,207)
Decrease (increase) in short-term investments                 (47,707,424)    (18,460,828)     4,558,988
Repayment of loans receivable                                      26,231          15,088         12,854
                                                              ------------------------------------------

                                                              (50,750,777)    (19,458,326)     4,337,635
                                                              ------------------------------------------

Increase in cash and cash equivalents during the year           1,007,928       4,257,643        268,697

Effect of exchange rate changes on cash and cash
      equivalents                                                (500,030)       (297,049)            --

Cash and cash equivalents - Beginning of year                   4,499,084         538,490        269,793
                                                              ------------------------------------------

Cash and cash equivalents - End of year                         5,006,982       4,499,084        538,490
                                                              ------------------------------------------
Supplementary information
Cash paid during the year for interest                             34,747          38,786          1,182
Cash paid for income taxes                                         26,660              --             --
</TABLE>

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

                                       26
<PAGE>

Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

1.   Nature of operations

     The Company is engaged in the development, marketing, installation and
     servicing of automated transaction software and systems designed for use in
     the retail sector. The Company's principal product focus is its U-Scan(R)
     system, a self-service checkout system for the retail industry. The Company
     also develops, markets and services its 6300 POS for the supermarket
     industry.

     The U-Scan(R) system allows shoppers to scan, bag and pay for their
     purchases with limited or no assistance from store personnel. The 6300 POS
     is an open architecture, PC-based, point-of-sale system designed to replace
     proprietary cash registers at high volume retailers.


2.   Summary of significant accounting policies

     Basis of presentation

     These financial statements have been prepared in accordance with accounting
     principles generally accepted in Canada. These principles conform, in all
     material respects, with accounting principles generally accepted in the
     United States, except as described in note 15. The principal accounting
     policies of the Company, which have been consistently applied, are
     summarized as follows:

     Use of estimates

     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 and
     disclosures of contingent assets and liabilities at the date of the
     financial statements and revenues and expenses during the reporting period.
     Actual results could differ from those estimates.

     Principles of consolidation

     These consolidated financial statements include the accounts of the Company
     and its wholly owned U.S. subsidiary, Optimal Robotics, Inc.

     Foreign currency translation

     Functional currency

     During the third quarter of fiscal 2000, the Company determined that its
     functional currency had clearly changed from the Canadian dollar to the
     U.S. dollar as at the beginning of the quarter. As a result of this change,
     which has been applied prospectively from July 1, 2000, transactions
     denominated in currencies other than the U.S. dollar are now translated
     into U.S. dollars using the temporal method. Under this method, monetary
     assets and liabilities are translated into U.S. dollars at the exchange
     rate in effect on the balance sheet date. Non-monetary assets and
     liabilities are translated into U.S. dollars at historical exchange rates.
     Revenues and expenses are translated into U.S. dollars at the exchange
     rates prevailing at the dates of the respective transactions. Gains and
     losses resulting from translation of monetary assets and liabilities into
     U.S. dollars are reflected in the statement of operations.


                                       27
<PAGE>

Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

     Prior to July 1, 2000, the Company's functional currency was the Canadian
     dollar. Accordingly, the financial statements were translated from Canadian
     dollars into U.S. dollars using the current rate method. Gains and losses
     resulting from translation of the financial statements were included in the
     cumulative translation adjustment in shareholders' equity. The translated
     amounts for non-monetary items as at June 30, 2000 became the historical
     basis for those items in subsequent periods.

     Reporting currency

     The financial statements of the Company were presented in Canadian dollars
     up to December 31, 1997. Effective December 31, 1998, the U.S. dollar was
     adopted as the reporting currency. Comparative financial information for
     1998 has been presented in U.S. dollars in accordance with a translation of
     convenience method using the representative exchange rate at December 31,
     1998 of US$1.00 - CA$1.5333. The translated amount for non-monetary items
     as at December 31, 1998 became the historical basis for those items in
     subsequent years.

     Foreign currency transactions

     Transactions denominated in foreign currencies are translated into the
     functional currency using the temporal method.

     Cash and cash equivalents

     Cash and cash equivalents consist of cash on hand and balances with banks
     and all highly liquid debt instruments with original terms to maturity of
     three months or less.

     Short-term investments

     Short-term investments, which management intends to hold until maturity,
     are carried at the lower of amortized cost and market value.

     Inventories

     Replacement parts and raw material inventories are stated at the lower of
     landed cost and replacement cost. Finished goods and work in process
     inventories are stated at the lower of cost and net realizable value. Cost
     is determined on the basis of actual costs.

     Capital assets

     Capital assets are recorded at cost. Amortization is provided for over the
     estimated useful lives of the capital assets using the straight-line method
     as follows:

        Test units                                                           33%
        Equipment                                                            10%
        Leasehold improvements           Over lease term plus one renewal period
        Computer equipment and software                                      33%
        Patents                                                               5%


                                       28
<PAGE>

Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

     Revenue recognition

     Revenue is recognized when all of the following conditions are met: the
     Company has persuasive evidence of an arrangement; the prices for the
     systems or services are fixed or determinable; collection is reasonably
     assured; and the systems have been delivered or the services have been
     provided. Delivery of systems occurs at the later of shipment of the system
     to the customer or upon customer acceptance. Revenue for installation
     services is recognized as the services are performed. Revenue from
     maintenance contracts is recognized over the term of the contract.

     Change in accounting policy

     As a result of the issuance of Staff Accounting Bulletin No. 101 (SAB 101)
     issued by the staff of the Securities and Exchange Commission of the United
     States, the Company reviewed its accounting policies and changed its
     revenue recognition policy for sales of systems and installation services
     to that noted above. Prior to the change, the Company accounted for
     revenues related to sales of systems and installation services upon
     completion of installation. This change in policy did not have a material
     effect on the current or prior years' revenues or net earnings (loss).

     Tax credits

     The Company is entitled to scientific research and experimental development
     ("SRED") tax credits granted by the Canadian federal government ("Federal")
     and the government of the Province of Quebec ("Provincial"). Federal SRED
     tax credits, which can only be used to offset Federal income taxes
     otherwise payable, are earned on qualified Canadian SRED expenditures at a
     rate of 20%. Provincial SRED tax credits are earned on qualified SRED
     salaries in the Province of Quebec at a rate of 20%. These tax credits are
     refundable.

     SRED tax credits are accounted for as a reduction of the related
     expenditures. The refundable portion of SRED tax credits is recorded in the
     year in which they are earned. The non-refundable portion of SRED tax
     credits is recorded at such time as the Company has reasonable assurance
     that the credits will be realized.

     Income taxes

     The Company provides for income taxes using the liability method of tax
     allocation. Under this method, future income tax assets and liabilities are
     determined based on deductible or taxable temporary differences between
     financial statement values and tax values of assets and liabilities using
     enacted income tax rates expected to be in effect for the year in which the
     differences are expected to reverse.

     The Company establishes a valuation allowance against future income tax
     assets if, based on available information, it is more likely than not that
     some or all of the future income tax assets will not be realized.

     Research and development expenses

     Research costs, which include all costs incurred to establish technological
     feasibility, are charged to operations in the year in which they are
     incurred. Technological feasibility has been defined as the completion of
     the product design for the computer software.

     Once technological feasibility has been established, development costs are
     evaluated for deferral and subsequent amortization. As at December 31,
     2000, the Company has not deferred any development costs.


                                       29

<PAGE>

Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

     Stock-based compensation plan

     The Company maintains a stock-based compensation plan, which is described
     in note 10. Under accounting principles generally accepted in Canada, no
     compensation expense is recognized for this plan when stock options or
     shares are issued to employees. Any consideration received from plan
     participants upon exercise of stock options is credited to capital stock.

     Earnings (loss) per share

     Basic earnings (loss) per share is determined using the weighted average
     number of common shares outstanding during the period.

     Fully diluted earnings (loss) per share is determined using the weighted
     average number of common shares and dilutive common share equivalents, such
     as stock options and warrants, outstanding during the period. Earnings for
     the period are increased by the estimated additional earnings, net of
     applicable income taxes, on the proceeds from the exercise of dilutive
     common share equivalents.


3.   New accounting pronouncements

     The Canadian Institute of Chartered Accountants ("CICA") has approved
     revised recommendations relating to the computation of earnings per share.
     These new recommendations, which are effective for fiscal years beginning
     on or after January 1, 2001, substantially eliminate the current
     differences between Canadian and U.S. generally accepted accounting
     principles with respect to the computation of the weighted average number
     of shares for purposes of computing diluted earnings per share. The
     adoption of this new standard will result in diluted earnings (loss) per
     share of $0.32, $0.33 and $(0.52) for the years ended December 31, 2000,
     1999 and 1998, respectively.


4.   Accounts receivable


                                                  2000                   1999
                                                     $                      $

      Trade accounts receivable               8,287,492             4,305,188
      Accrued interest                        1,309,772               176,019
      Other                                     887,753               160,359
                                           ----------------------------------

                                             10,485,017             4,641,566
                                           ----------------------------------

     During fiscal 2000, the Company entered into an agreement with a Canadian
     chartered bank which provides the Company with the right to sell designated
     accounts receivable to the bank on a non-recourse basis. During the fourth
     quarter of fiscal 2000, the Company sold accounts receivable with an
     aggregate carrying value of $7,309,584 for net proceeds amounting to
     $7,222,898. The excess of the carrying value over the net proceeds on
     securitization of these accounts receivable of $86,686 has been charged to
     interest expense in 2000.



                                       30
<PAGE>

Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

5.   Inventories

                                                  2000                   1999
                                                     $                      $

      Finished goods                          3,543,262               600,682
      Work in process                           589,424                    --
      Raw materials                           3,657,967                    --
      Replacement parts                       8,935,232             2,763,261
                                       --------------------------------------

                                             16,725,885             3,363,943
                                       --------------------------------------


6.   Loan receivable

     To an officer/director to purchase a home in the amount of CA$204,000 (1999
     - CA$221,000). This loan is non-interest bearing and is repayable in annual
     instalments of CA$17,000 until July 1, 2012. This loan is forgivable if the
     officer/director leaves the employment of the Company for any reason.


7.   Capital assets

<TABLE>
<CAPTION>
                                                                       2000                   1999
                                                                          $                      $

<S>                                                               <C>                    <C>
      Cost
      Test units                                                     926,564               443,931
      Equipment                                                      716,441               331,775
      Leasehold improvements                                       1,751,151               499,105
      Leasehold improvements under construction                           --               275,862
      Computer equipment and software                              1,407,920               516,286
      Patents                                                         13,686                13,686
                                                            --------------------------------------

                                                                   4,815,762             2,080,645
                                                            --------------------------------------

      Accumulated amortization
      Test units                                                     531,548               268,670
      Equipment                                                       72,727                33,322
      Leasehold improvements                                         462,932               253,756
      Computer equipment and software                                482,098               164,050
      Patents                                                         13,309                12,944
                                                            --------------------------------------

                                                                   1,562,614               732,742
                                                            --------------------------------------

      Net carrying amount                                          3,253,148             1,347,903
                                                            --------------------------------------
</TABLE>



                                       31
<PAGE>

Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

8.   Accounts payable and accrued liabilities

<TABLE>
<CAPTION>
                                                                       2000                   1999
                                                                          $                      $

<S>                                                                <C>                   <C>
      Trade accounts payable                                       5,355,993             2,877,331
      Accrued salaries, vacation pay and benefits                    431,912               100,632
      Sales taxes payable                                            547,158                45,792
      Book overdraft(1)                                              157,308               635,434
                                                            --------------------------------------

                                                                   6,492,371             3,659,189
                                                            --------------------------------------
</TABLE>

(1)  Represents the excess of outstanding cheques over bank balances on certain
     of the Company's cash accounts.


9.   Share capital

     The Company's authorized share capital consists of an unlimited number of
     Class "A" shares, and Class "B" and Class "C" preference shares.

     The Class "A" shares are designated as common shares.

     The Class "B" preference shares are voting, non-participating and
     redeemable at the option of the Company for the amount paid up thereon. In
     the event of the liquidation, dissolution or wind-up of the Company, the
     Class "B" preference shares rank in priority to all other classes.

     The Class "C" preference shares are issuable in series with rights,
     privileges, restrictions and conditions designated by the directors. In the
     event of the liquidation, dissolution or wind-up of the Company, the Class
     "C" preference shares rank in priority to the common shares.





                                       32
<PAGE>

Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

      Issued


<TABLE>
<CAPTION>

                                                                                            Common shares                  $

<S>                                                                                           <C>                <C>
           Balance - December 31, 1997                                                         7,408,022          16,411,360

           Issued for cash pursuant to exercise of stock options                                   1,000               2,998
           Issued pursuant to exercise of warrants                                                70,256
                Ascribed value from other capital                                                                      3,575
                Cash                                                                                                 432,598
           Cancellation of shares under Employee Stock Purchase Arrangement                       (4,000)            (22,827)
           Cancellation of loan receivable under Employee Stock Purchase Arrangement                  --              22,827
                                                                                        ------------------------------------

           Balance - December 31, 1998                                                         7,475,278          16,850,531

           Issued for cash pursuant to exercise of stock options                                 934,271           2,393,538
           Issued pursuant to exercise of warrants                                                27,692                  --
                Ascribed value from other capital                                                     --               2,681
                Cash                                                                                  --              73,556
           Issued for cash pursuant to public offering                                         3,000,000          27,000,000
           Share issue costs, net of related future income taxes                                      --          (1,803,821)
           Repayment of loans under Employee Stock Purchase Arrangement                               --             141,348
                                                                                        ------------------------------------

           Balance - December 31, 1999                                                        11,437,241          44,657,833
                                                                                        ------------------------------------

           Issued for cash pursuant to exercise of stock options                                 578,500           1,763,983
           Issued pursuant to exercise of warrants                                                67,949                  --
                Ascribed value from other capital                                                                     10,875
                Cash                                                                                                 219,755
           Issued for cash pursuant to public offering                                         1,625,000          63,375,000
           Share issue costs, net of related future income taxes                                      --          (2,976,532)
                                                                                        ------------------------------------

           Balance - December 31, 2000                                                        13,708,690         107,050,914
                                                                                        ------------------------------------
</TABLE>

     During 2000, the Company filed a registration statement with the Securities
     and Exchange Commission qualifying the issuance of 1,625,000 common shares
     for gross proceeds of $39.00 per share. The net proceeds from this offering
     amounted to $60,398,468, after deducting underwriting commissions and other
     expenses of $2,976,532 (net of future income taxes of $1,772,369).

     During 1999, the Company filed a registration statement with the Securities
     and Exchange Commission qualifying the issuance of 3,000,000 common shares
     for gross proceeds of $9.00 per share. The net proceeds from this offering
     amounted to $25,196,179, after deducting underwriting commissions and other
     expenses of $1,803,821 (net of future income taxes of $989,613).


                                       33
<PAGE>

Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

     On February 26, 1996, regulatory approval was received to issue 42,000
     common shares under an Employee Stock Purchase Arrangement pursuant to
     which certain employees of the Company were entitled to purchase common
     shares of the Company at a price of CA$8.75 per share. Under the
     Arrangement, the Company provided interest-free non-recourse loans payable
     according to various occurrences, but no later than the 10th anniversary of
     the issuance of the shares, which loans were secured by a pledge of the
     shares. These loans receivable have been presented as a deduction from
     share capital. At December 31, 2000, 24,000 common shares are issued and
     outstanding under this Arrangement and all loans under the Arrangement have
     been repaid.


10.  Stock option plan/warrants

     The Company has a stock option plan that provides for the granting of
     options to employees and directors for the purchase of the Company's common
     shares. Options may be granted by the Board of Directors for terms of up to
     ten years. The Board of Directors establishes the exercise period, vesting
     terms and other conditions for each grant at the grant date. Options may be
     granted with exercise prices as permitted by securities regulatory
     authorities. On June 22, 2000, the shareholders approved an amendment to
     the stock option plan increasing the maximum number of common shares that
     may be issued pursuant to options granted under this plan from 3,000,000 to
     6,000,000. Options outstanding under the plan expire between five and ten
     years after the date of grant and vest either immediately or over a period
     of up to two years.

     In addition, the Company has granted options under certain employment
     agreements and established certain terms for some options granted under the
     1997 Stock Option Plan as follows:

          a)   In 1997, options to purchase 1,200,000 common shares were granted
               to three senior officers. These options have an exercise price of
               $3.00 per share and expire in 2002. As at December 31, 2000,
               options to purchase 460,000 common shares are outstanding, all of
               which are exercisable (1999 - 900,000 outstanding, all of which
               were exercisable). The employment agreements contained the
               following provisions:

               i)   The holder was permitted to exercise the above options
                    without paying cash by accepting the number of shares having
                    a value equal to the in-the-money value of the options. This
                    right was irrevocably waived by the holders in 1998.

               ii)  If a change of control or substantial asset disposal
                    occurred, the unexercised options would no longer be
                    exercisable and the holder would have the right to acquire
                    4.04% of the then outstanding shares of the Company reduced
                    by a specified number of shares if any of the options had
                    been exercised. Such shares could be acquired for nominal
                    consideration. If the shares could not be issued, the
                    holders would be entitled to a cash payment based on certain
                    specified criteria. In January 1999, the change of control
                    and substantial asset disposal provisions were deleted and a
                    new change of control provision was inserted in the
                    agreements. Under the new change of control provision, if a
                    change of control should occur, the exercise price of all
                    options, warrants or rights held by these senior officers
                    would be amended to a nominal value. If shares cannot be
                    issued under this change of control provision, the Company
                    is required to pay the holders the fair value of the shares
                    that would have been issued.


                                       34
<PAGE>

Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

               iii) In the event of termination by the Company without cause,
                    the exercise price on the options would be amended to a
                    nominal value.

          b)   The 1997 employment agreements provide that in the event of
               termination without cause, the exercise price of all options,
               warrants or rights would be amended to a nominal value. At
               December 31, 2000, options to purchase 2,062,000 (1999 -
               1,812,000) common shares with a weighted average exercise price
               of $18.02 (1999 - $10.84) and 100,000 (1999 - 140,000) warrants
               with a weighted average exercise price of CA$5.00 (1999 - $4.64)
               were subject to this provision, of which 1,312,000 options and
               100,000 warrants were exercisable (1999 - 1,182,000 options and
               140,000 warrants).

          c)   In 1997, options to purchase 312,000 common shares were granted,
               including 282,000 which were granted to three senior officers,
               with a reload feature whereby upon exercise of the option, a new
               option is issued with an exercise price equal to the then current
               market price. Two consecutive reloads are permitted. The holder
               was permitted to exercise the options without paying cash by
               accepting the number of shares having a value equal to the
               in-the-money value of the options. This right was irrevocably
               waived by the holders of options to acquire 307,000 common shares
               in 1998.

               During 2000, 20,000 (1999 - 287,000) of these options were
               exercised and immediately reloaded at the then current market
               price. As at December 31, 2000, options subject to this
               provision, all of which are exercisable, are as follows:

                                                              Number of
                    Exercise price                              options
                                 $                          outstanding

                             16.13                              282,000(1)
                             24.56                                5,000(1)
                             47.00                               20,000(1)
                                                       ----------------

                                                                307,000
                                                       ----------------

          (1)  These options may be reloaded one more time.


                                       35
<PAGE>

Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

d)   Details of stock options are as follows:

<TABLE>
<CAPTION>

                                           United States dollar exercise price          Canadian dollar exercise price
                                          --------------------------------------- ---------------------------------------

                                                                      Weighted                                Weighted
                                                                       average                                 average
                                                                exercise price                          exercise price
                                                Number of            per share           Number of           per share
                                                  options                    $             options                 CA$
<S>                                              <C>                     <C>             <C>                      <C>
     Balance - December 31, 1997                 1,571,000                3.00             360,000                2.08

     Granted                                       105,000                5.78                  --                  --
     Expired                                       (10,000)               3.00                  --                  --
                                          ----------------------------------------------------------------------------

     Balance - December 31, 1998                 1,666,000                3.18             360,000                2.08

     Granted                                     1,028,000               19.81                  --                  --
     Expired                                        (1,000)               3.00                  --                  --
     Exercised                                    (636,000)               3.13            (300,000)               2.00
                                          ----------------------------------------------------------------------------

     Balance - December 31, 1999                 2,057,000               11.49              60,000                2.50

     Granted                                     1,398,000               25.60                  --                  --
     Expired                                        (3,500)              29.96                  --                  --
     Exercised                                    (518,500)               3.24             (60,000)               2.50
                                          ----------------------------------------------------------------------------

     Balance - December 31, 2000                 2,933,000               19.66                  --                  --
                                          ----------------------------------------------------------------------------
</TABLE>

     The following table summarizes information concerning currently outstanding
options:

<TABLE>
<CAPTION>
                                                                                                       Weighted
                                                                                                        average
                                                                    Number of           Number of      remaining
                                          Exercise price              options             options    contractual
                                                       $          outstanding         exercisable           life

<S>                                                <C>            <C>                  <C>             <C>
                                                    3.00             476,000             476,000       1.3 years
                                                    5.56              37,000              37,000       2.2 years
                                                    9.75              65,000              32,500       3.3 years
                                                   12.88             327,500             327,500       3.0 years
                                                   16.13             282,000             282,000       1.3 years
                                                   24.56               5,000               5,000       1.3 years
                                                   25.25           1,369,750                  --       9.6 years
                                                   31.25             343,250             171,625       3.9 years
                                                   32.38               7,500                  --       9.7 years
                                                   47.00              20,000              20,000       1.3 years
                                                            ------------------------------------

                                                                   2,933,000           1,351,625
                                                            ------------------------------------
</TABLE>


                                       36
<PAGE>

Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

     The following table summarizes the weighted average grant-date fair value
     per share for options granted:

<TABLE>
<CAPTION>
                                                                                                                    Weighted
                                                                                                                     average
                                                                                                                  grant-date
                                                                                                                  fair value
                                                                                            Number of              per share
                                                                                              options                      $
<S>                                                                                          <C>                      <C>
           1998
           Exercise price per share less than market price per share                           100,000                  5.22
           Exercise price per share equal to market price per share                              5,000                  5.60

           1999
           Exercise price per share equal to market price per share                          1,028,000                 11.60

           2000
           Exercise price per share equal to market price per share                          1,398,000                 22.78
</TABLE>

     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes pricing model with the following weighted average
     assumptions used for grants in 2000, 1999 and 1998: dividend yield of nil,
     risk-free interest rate of 5.18%, 5.58% and 4.85% respectively, expected
     volatility of 95%, 80%, 77% to 85% respectively, and expected lives of 9.9,
     3.44 and 5.0 years respectively.

     Details of warrants are as follows:

<TABLE>
<CAPTION>
                                                 United States dollar exercise price          Canadian dollar exercise price
                                                --------------------------------------- ---------------------------------------

                                                                            Weighted                                Weighted
                                                                             average                                 average
                                                                      exercise price                          exercise price
                                                      Number of            per share           Number of           per share
                                                       warrants                    $            warrants                 CA$

<S>                                                     <C>                     <C>              <C>                    <C>
           Balance - December 31, 1997                   331,023                6.58             220,000                5.69

           Exercised                                     (10,256)               6.50             (60,000)               9.46
           Expired                                       (13,500)               6.60                  --                  --
                                                ----------------------------------------------------------------------------

           Balance - December 31, 1998                   307,267                6.58             160,000                4.28

           Exercised                                      (7,692)               6.50             (20,000)               1.75
                                                ----------------------------------------------------------------------------

           Balance - December 31, 1999                   299,575                6.58             140,000                4.64

           Exercised                                     (30,769)               6.50             (40,000)               3.75
                                                ----------------------------------------------------------------------------

           Balance - December 31, 2000                   268,806                6.59             100,000                5.00
                                                ----------------------------------------------------------------------------
</TABLE>


                                       37
<PAGE>

Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

      The following table summarizes information regarding currently outstanding
warrants:

<TABLE>
<CAPTION>
                                                                                     Number of            Weighted
                                                                                      warrants             average
                                                                  Exercise         outstanding           remaining
                                                                     price                 and         contractual
                                                                         $         exercisable                life

<S>                                                                 <C>                <C>                <C>
                                                                    CA5.00             100,000            0.7 year
                                                                      6.50              28,206            1.8 years
                                                                      6.60             240,600            0.8 year
                                                                              ----------------

                                                                                       368,806
                                                                              ----------------
</TABLE>

     The warrants expire at various dates to October 24, 2002.


11.  Other disclosures

     Contract advance

     Pursuant to an exclusive, worldwide assembly and marketing agreement, the
     Company received a non-interest-bearing advance of $500,000. On April 1,
     1998, the agreement was replaced with an exclusive assembly agreement which
     terminated on December 31, 2000. The remaining balance of the advance at
     December 31, 1999 of $250,000 was repaid on December 31, 2000.

     Research and development expenses

     Research and development expenses comprise:

<TABLE>
<CAPTION>
                                                                          2000                   1999                   1998
                                                                             $                      $                      $
                                                                                                                    (note 2)

<S>                                                                   <C>                     <C>                   <C>
           Gross research and development expenses                    1,057,579                960,440               324,868
           Refundable tax credits                                       (79,361)              (250,046)             (114,494)
           Non-refundable tax credits realizable against
                future income taxes related to:
                Current year expenditures                               (65,539)              (171,473)                   --
                Prior years' expenditures not previously
                      recognized                                             --               (318,965)                   --
                                                               -------------------------------------------------------------

                                                                        912,679                219,956               210,374
                                                               -------------------------------------------------------------
</TABLE>


                                       38
<PAGE>

Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

     Commitments

     The Company has entered into operating leases for its premises and certain
     office equipment. The minimum amounts payable for each of the next five
     years, excluding the Company's proportionate share of common operating
     costs, are as follows:

                                                                        $

                2001                                               599,360
                2002                                               598,706
                2003                                               341,710
                2004                                               171,656
                2005                                                76,688
                                                          ----------------

                                                                 1,788,120
                                                          ----------------

     Contingency

     In each of 1995 and 1996, the Company received demand letters from the same
     claimant alleging patent infringement. In June 1999, this same claimant
     filed a civil action alleging patent infringement in the United States
     District Court for the District of Utah against the Company and PSC Inc.,
     one of the Company's suppliers. In addition, a similar suit has been filed
     in the State of Utah against one of the Company's customers. At the
     Company's expense, the Company's legal counsel is defending this suit. The
     Company is also retroactively bound to indemnify the customer for any
     damages it incurs in connection with such suit. The Company also received a
     lawyer's letter from another party in 1999 alleging infringement of another
     patent. The Company believes these claims to be without merit and intends
     to vigorously defend its position. Consequently, no provision has been made
     in these financial statements with respect to the above claims.


12.  Income taxes

     The provision for (recovery of) income taxes is composed of the following:

<TABLE>
<CAPTION>
                                                                          2000                   1999                   1998
                                                                             $                      $                      $
                                                                                                                    (note 2)

<S>                                                                   <C>                   <C>                         <C>
           Future, before undernoted item                             2,972,239                 65,758                    --
                Benefit of prior years' non-capital
                      losses not previously recognized                       --             (3,597,341)                   --
                                                               -------------------------------------------------------------

                                                                      2,972,239             (3,531,583)                   --
                                                               -------------------------------------------------------------
</TABLE>


                                       39
<PAGE>

Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

The reconciliation of the combined Canadian federal and Quebec provincial income
tax rate to the income tax recovery is as follows:

<TABLE>
<CAPTION>

                                                                          2000                   1999                   1998
                                                                             $                      $                      $
                                                                                                                    (note 2)
<S>                                                                   <C>                      <C>                <C>
           Earnings (loss) before income taxes                        7,767,316                120,185            (3,910,764)
                                                               -------------------------------------------------------------

           Combined Canadian federal and Quebec
                provincial income taxes at 38%                        2,951,580                 45,670            (1,486,090)
           Change in valuation allowance                                     --             (3,597,341)            1,475,785
           Other                                                         20,659                 20,088                10,305
                                                               -------------------------------------------------------------

                                                                      2,972,239             (3,531,583)                   --
                                                               -------------------------------------------------------------

      The future income tax balances are summarized as follows:

                                                                                                 2000                   1999
                                                                                                    $                      $

           Future income tax assets
                Non-refundable research and development tax credits
                      (net of related income taxes)                                            452,525               310,201
                Non-capital losses                                                             656,698             3,178,481
                Share issue costs                                                            1,938,971               811,184
                Research and development expenses                                              779,075               729,146
                Capital assets                                                                  55,676                96,013
                                                                                      --------------------------------------

           Total future income tax assets                                                    3,882,945             5,125,025
                                                                                      --------------------------------------

           Presented as:
                Current                                                                      2,420,718             3,012,997
                                                                                      --------------------------------------

                Long-term                                                                    1,462,227             2,112,028
                                                                                      --------------------------------------

     As at December 31, 2000, for Canadian federal and Quebec  provincial income
     tax purposes, ___ the Company has non-capital ___ loss ___ carryforwards of
     approximately  CA$1,431,000  and  CA$5,974,000  respectively  which  can be
     carried  forward  to reduce  future  taxable  income  and  which  expire as
     follows:

                                                                                              Federal                 Quebec
                                                                                                  CA$                    CA$

           2005                                                                                730,000             4,877,000
           2006                                                                                701,000             1,097,000
</TABLE>

                                       40
<PAGE>
Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

     Certain  eligible   scientific   research  and   experimental   development
     expenditures incurred by the Company may be deferred and deducted in future
     years.   These   unclaimed   deductions,   which  can  be  carried  forward
     indefinitely,  amounted to CA$3,227,703  for Canadian  federal purposes and
     CA$3,362,836 for Quebec provincial purposes as at December 31, 2000.

     As at  December  31,  2000,  the Company has  non-refundable  research  and
     development  tax  credits of  CA$836,000  which can be  carried  forward to
     reduce  Canadian  federal  income taxes payable and expire in various years
     until 2010.

     The future tax  benefits of these  carryforwards  and tax credits have been
     recognized in the financial statements.

     The  carryforwards  and the tax  credits  claimed are subject to review and
     possible   adjustment  by  the  Canadian  federal  and  Quebec   provincial
     government authorities.


 13. Segmented information

     Substantially  all of the  Company's  revenue  is  derived  from  sales  to
     supermarket  retailers  located in the United States and is  denominated in
     U.S.  dollars.  Substantially  all of the Company's  long-lived  assets are
     located in Canada.

     Major customers

     Sales to major customers (customers from which 10% or more of total revenue
     is derived during the specified period) are summarized as follows:
<TABLE>
<CAPTION>

                                               2000                   1999                   1998
                                                  $                      $                      $
                                                                                         (note 2)
<S>                                       <C>                    <C>                    <C>
           Customer 1                     27,903,357             15,909,477             4,035,080
           Customer 2                      9,887,156                    N/A                   N/A
           Customer 3                      9,852,775              8,267,126               725,420
</TABLE>


 14. Financial instruments

     Credit risk

     Financial   instruments   that   potentially   subject   the   Company   to
     concentrations  of  credit  risk  consist  primarily  of  cash,  short-term
     investments and accounts receivable.  Cash is maintained with a high-credit
     quality financial institution. Short-term investments consist of short-term
     discounted notes issued by high-credit quality  corporations.  For accounts
     receivable,  the Company performs periodic credit evaluations and typically
     does not require collateral. Allowances are maintained for potential credit
     losses  consistent  with the  credit  risk,  historical  trends  and  other
     information.


                                       41
<PAGE>
Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

     Interest rate risk

     The Company's exposure to interest rate risk is as follows:
<TABLE>
<CAPTION>

<S>                                                                                             <C>
           Cash                                                                                 Non-interest bearing
           Short-term investments                                                                Fixed interest rate
           Accounts receivable                                                                  Non-interest bearing
           Tax credits receivable                                                               Non-interest bearing
           Accounts payable and accrued liabilities                                             Non-interest bearing

     Short-term investments

     Short-term investments consist of the following:
</TABLE>

<TABLE>
<CAPTION>
                                                                                                 2000                   1999
                                                                                                    $                      $

<S>                                                                                        <C>                    <C>
           Short-term discounted notes denominated in U.S. dollars with a
                weighted average effective yield of 6.5% (1999 - 5.8%), maturing
                between January 26, 2001 and November 15, 2001 (1999 -
                matured on April 3, 2000)                                                   71,141,910             4,354,219
           Short-term discounted notes denominated in Canadian dollars with an
                effective yield of 5.1%, matured on March 7 and 14, 2000                            --            20,282,387
                                                                                      --------------------------------------

                                                                                            71,141,910            24,636,606
                                                                                      --------------------------------------
</TABLE>

      Fair value

      Due to their short-term maturities,  the carrying values of cash, accounts
      receivable,  tax  credits  receivable,  and  accounts  payable and accrued
      liabilities are reasonable estimates of their fair values.

      The fair value of short-term  investments as at December 31, 2000 amounted
      to approximately $72,346,000 (1999 - $24,637,000).


  15. Additional  disclosures  required by U.S. GAAP and differences between
      Canadian GAAP and U.S. GAAP

      These financial  statements have been prepared in accordance with Canadian
      generally accepted accounting  principles  ("Canadian GAAP") that conform,
      in all material respects, with generally accepted accounting principles in
      the United States ("U.S. GAAP") during the periods presented,  except with
      respect to the following:



                                       42
<PAGE>
Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

      New accounting standards

      SFAS 133,  as amended  by SFAS 137 and 138,  is  effective  for all fiscal
      quarters  of all fiscal  years  beginning  after June 15,  2000.  SFAS 133
      requires that all derivative  instruments be recorded on the balance sheet
      at their fair value. Changes in the fair value of derivatives are recorded
      for  each  period  in  current  earnings  or other  comprehensive  income,
      depending  on  whether  a  derivative  is  designated  as  part of a hedge
      transaction  and,  if it is, the type of hedge  transaction.  The  Company
      expects the impacts of the above to be insignificant.

      In September  2000,  FASB issued SFAS 140,  "Accounting  for Transfers and
      Servicing of Financial Assets and  Extinguishments  of Liabilities".  SFAS
      140,  which  replaces  SFAS 125,  revises  the  accounting  standards  for
      securitizations and other transfers of financial assets and collateral and
      requires  certain  additional  disclosures.  SFAS  140  is  effective  for
      securitizations  and other  transfers  occurring after March 31, 2001. The
      Company expects the impacts of this new standard to be insignificant.

      Accounting for stock-based compensation

      For stock-based  compensation plans with employees, the Company has chosen
      to use the intrinsic value method which requires  compensation costs to be
      recognized on the difference,  if any,  between the quoted market price of
      the stock as at the grant date and the amount the  individual  must pay to
      acquire the stock.  Certain of the  Company's  stock  options are variable
      because the exercise  price is not known until the options are  exercised.
      As a result,  compensation  cost is  measured  on the date the options are
      exercised.

      If the fair value-based accounting method under SFAS No. 123 had been used
      to account  for  stock-based  compensation  costs  relating to options and
      warrants issued to employees,  the net income figures and related earnings
      per share  figures under U.S. GAAP would be as follows for the years ended
      December 31, 2000, 1999 and 1998:
<TABLE>
<CAPTION>

                                                                          2000              1999                1998
                                                                             $                 $                   $
<S>                                                                 <C>                <C>                <C>
           Net loss for the year in accordance with U.S.
                GAAP                                                (11,466,047)       (1,629,811)        (5,685,587)
           Basic and diluted net loss per common share in
                accordance with U.S. GAAP                                 (0.87)            (0.17)             (0.76)
</TABLE>

      Change in reporting currency

      In 1998, the Company  adopted the U.S.  dollar as its reporting  currency.
      Under U.S.  GAAP, the financial  statements,  including  prior years,  are
      translated  according to the current rate method.  Under Canadian GAAP, at
      the  time of  change  in  reporting  currency,  the  historical  financial
      statements are presented using a translation of convenience.

      Under  Canadian  GAAP,  the  statement  of  operations  for the year ended
      December 31, 1998 was translated into U.S.  dollars using an exchange rate
      of US$1.00 = CA$1.5333.  Under U.S.  GAAP,  revenues and expenses would be
      translated  at exchange  rates  prevailing at the  respective  transaction
      dates.  The average exchange rate for the year ended December 31, 1998 was
      US$1.00 = CA$1.4835.



                                       43
<PAGE>
Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(express in U.S. dollars)

      Net earnings (loss) per share

      Under U.S. GAAP, diluted net earnings (loss) per share is calculated based
      on the weighted average number of shares outstanding during the year, plus
      the effects of  potential  common  shares,  such as options  and  warrants
      outstanding  during  the year.  This  method  requires  that  diluted  net
      earnings  (loss) per share be calculated  using the treasury stock method,
      as if all potential  common shares had been  exercised at the beginning of
      the reporting period, or period of issue, as the case may be, and that the
      funds obtained  thereby were used to purchase common shares of the Company
      at the average trading price of the common shares during the period.

      Foreign exchange gain (loss)

      Selling,  general and  administrative  expenses  include foreign  exchange
      gains (losses)  amounting to  $1,507,340,  $(104,002) and $632,317 for the
      years ended December 31, 2000, 1999 and 1998, respectively.

      Reconciliation of net earnings (loss) to conform with U.S. GAAP

      The following  summary sets out the material  adjustments to the Company's
      reported  net  earnings  (loss) and net  earnings  (loss) per common share
      which would be made to conform with U.S. GAAP.
<TABLE>
<CAPTION>

                                                                          2000                   1999                   1998
                                                                             $                      $                      $
<S>                                                                   <C>                    <C>                  <C>
           Net earnings (loss) for the year in accordance
                with Canadian GAAP                                    4,795,077              3,651,768            (3,910,764)
           Stock-based compensation costs                           (18,900,560)            (9,227,197)          (12,371,637)
           Change in reporting currency                                      --                     --              (120,255)
                                                               -------------------------------------------------------------

           Net loss for the year in accordance with U.S.
                GAAP                                                (14,105,483)            (5,575,429)          (16,402,656)

           Other comprehensive income (loss)
                Foreign currency translation adjustments             (2,136,533)               652,062              (690,003)
                                                               -------------------------------------------------------------

           Comprehensive loss                                       (16,242,016)            (4,923,367)          (17,092,659)
                                                               -------------------------------------------------------------

           Basic and diluted net loss per common share in
                accordance with U.S. GAAP                                 (1.08)                 (0.57)                (2.20)
                                                               -------------------------------------------------------------
</TABLE>

     Balance sheet

     Loans receivable

      Under U.S. GAAP, loans provided in exchange for shares issued are required
      to be reflected as an offset to shareholders' equity.



                                       44
<PAGE>
Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

      Share issue costs

      Under U.S. GAAP,  SFAS No. 123,  transactions  in which an entity acquires
      goods and services from  non-employees in exchange for equity  instruments
      are  required  to be  recorded  at fair  value.  On May 31,  1996,  45,000
      warrants  were granted to an outside  consultant  and on October 24, 1996,
      240,600  warrants were granted to a non-related  party. The fair values of
      these  warrants were $205,472 and $628,447  respectively,  which have been
      charged to deficit as share issue costs.

      As a  result  of the  above  adjustments  to net  earnings  (loss),  loans
      receivable and share issue costs,  differences with respect to the balance
      sheet under U.S. GAAP are as follows:

      Share capital
<TABLE>
<CAPTION>

                                                                                 2000                   1999
                                                                                    $                      $
<S>                                                                        <C>                    <C>
      Share capital in accordance with Canadian GAAP                       107,050,914            44,657,833
      Stock-based compensation costs on options exercised
           Current year                                                     24,519,022            15,111,792
           Cumulative effect of prior years                                 15,111,792                    --
      Change in reporting currency                                           2,587,999             2,587,999
      Loan receivable                                                               --               (14,953)
                                                                       -------------------------------------

      Share capital in accordance with U.S. GAAP                           149,269,727            62,342,671
                                                                       -------------------------------------

      Other capital

                                                                                 2000                   1999
                                                                                    $                      $

      Other capital in accordance with Canadian GAAP                             9,684                20,559
      Stock-based compensation costs
           Current year                                                     18,900,560             9,227,197
           Cumulative effect of prior years                                 27,034,487            17,807,290
           Stock-based compensation costs on options exercised
                Current year                                               (24,519,022)          (15,111,792)
                Cumulative effect of prior years                           (15,111,792)                   --
      Change in reporting currency                                             968,350               968,350
                                                                       -------------------------------------

      Other capital in accordance with U.S. GAAP                             7,282,267            12,911,604
                                                                       -------------------------------------
</TABLE>

                                       45
<PAGE>
Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

      Deficit
<TABLE>
<CAPTION>

                                                                                 2000                   1999
                                                                                    $                      $
<S>                                                                           <C>                 <C>
      Deficit in accordance with Canadian GAAP                                (830,545)           (5,625,622)
      Share issue costs                                                       (833,919)             (833,919)
      Stock-based compensation costs
           Current year                                                    (18,900,560)           (9,227,197)
           Cumulative effect of prior years                                (27,034,487)          (17,807,290)
      Change in reporting currency                                          (1,188,668)           (1,188,668)
                                                                    ----------------------------------------

      Deficit in accordance with U.S. GAAP                                 (48,788,179)          (34,682,696)
                                                                    ----------------------------------------

      Accumulated other comprehensive income (loss)

      Accumulated other comprehensive  income (loss),  which results solely from
      the translation of the financial statements in accordance with the current
      rate method, is summarized as follows:

                                                                                 2000                   1999
                                                                                    $                      $

           Opening balance                                                    (881,700)           (1,533,762)
           Change during the year                                           (2,136,533)              652,062
                                                                    ----------------------------------------

           Closing balance                                                  (3,018,233)             (881,700)
                                                                    ----------------------------------------

      Shareholders' equity

                                                                                  2000                  1999
                                                                                     $                     $

      Shareholders' equity in accordance with Canadian GAAP                104,745,582            39,704,832
      Loan receivable                                                               --               (14,953)
                                                                    ----------------------------------------

      Shareholders' equity in accordance with U.S. GAAP                    104,745,582            39,689,879
                                                                    ----------------------------------------
</TABLE>


                                       46
<PAGE>
Optimal Robotics Corp.
Notes to Consolidated Financial Statements
For each of the years in the three-year period ended December 31, 2000
--------------------------------------------------------------------------------

(expressed in U.S. dollars)

      Statement of cash flows

      Under  Canadian  GAAP,  the  statement  of cash  flows for the year  ended
      December 31, 1998 was translated into U.S.  dollars using an exchange rate
      of US$1.00 = CA$1.5333.  Under U.S. GAAP, the historical exchange rates on
      the  dates of the cash  flow  activities  would  be used.  Following  is a
      summary statement of cash flows for 1998 under U.S. GAAP.
<TABLE>
<CAPTION>

                                                                                           $

<S>                                                                                <C>
      Operating activities                                                         (5,130,768)
      Financing activities                                                            325,219
      Investing activities                                                          5,054,858
                                                                             ----------------

      Increase in cash and cash equivalents during the year                           249,309
      Cash and cash equivalents - Beginning of year                                   289,181
                                                                             ----------------

      Cash and cash equivalents - End of year                                         538,490
                                                                             ----------------

</TABLE>

  16. Subsequent events

      On February 5, 2001, the Company  issued 50,000 common shares  pursuant to
      the  exercise of warrants  at an  exercise  price of $6.60 per share,  for
      total gross cash proceeds of $330,000.  In addition,  in January 2001, the
      Company issued 14,000 common shares pursuant to the exercise of options at
      a  weighted  average  exercise  price of $4.62 per  share  for gross  cash
      proceeds of $64,688.


  17. Comparative figures

      Certain comparative figures have been reclassified in order to comply with
      the basis of presentation adopted in the current year.


                                       47


<PAGE>

Item  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

          None

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

       The names,  ages and  positions of our directors and officers at December
       31, 2000, are as follows:
<TABLE>
<CAPTION>
<S>                                 <C>  <C>
  Name                              Age  Position
Neil S. Wechsler................    34   Co-Chairman, Chief Executive Officer and Director
Holden L. Ostrin................    40   Co-Chairman and Director
Henry M. Karp...................    46   President, Chief Operating Officer and Director
Gary S. Wechsler, C.A. .........    42   Treasurer and Chief Financial Officer
Ike Tamigian....................    41   Senior Vice-President and Chief Technology Officer
Elliot Brenhouse................    47   Senior Vice-President and General Manager
Leon P. Garfinkle...............    40   Senior Vice-President, General Counsel, Secretary and
                                         Director
O. Bradley McKenna, C.A.........    50   Vice President, Administration and Human Resources
Charles Morris..................    43   Vice-President, Software Development
Frank Alcaraz...................    52   Vice-President, Operations
Catherine Rotiroti..............    42   Vice-President, Project Management
Martin J. Reiss.................    46   Vice-President, Sales
James S. Gertler................    33   Director
Thomas D. Murphy................    47   Director
</TABLE>

     Neil S. Wechsler has been a director since June 1995,  the Chief  Executive
Officer  since  October  1994 and was Chairman of Optimal from June 1996 through
June 1999,  at which time Mr.  Wechsler  and Mr.  Holden L.  Ostrin  each became
Co-Chairman.  Mr.  Wechsler  earned  a  Bachelor  of  Arts  degree  from  McGill
University  in 1988 and a Bachelor  of Civil Law degree and a Bachelor of Common
Law degree from McGill University in 1992.

     Holden L. Ostrin has been a director of Optimal since June 1996. Mr. Ostrin
was Vice Chairman from June 1996 through June 1999, at which time Mr. Ostrin and
Mr. N. Wechsler each became  Co-Chairman.  From May 1995 to May 1996, Mr. Ostrin
was an independent business consultant. Prior to April 1995, Mr. Ostrin was Vice
President and Director of CIBC Wood Gundy Securities Inc., a Canadian investment
dealer.  Mr. Ostrin  earned a Bachelor of Arts degree from Boston  University in
1982 and a Juris Doctor degree from Boston University School of Law in 1985.

     Henry M.  Karp has been a  director  and the  Chief  Operating  Officer  of
Optimal since June 1996. Since June 1999, Mr. Karp has been Optimal's President.
From June 1996 through June 1999,  Mr. Karp was the Executive  Vice President of
Optimal,  and from  December  1994 to May  1996,  Mr.  Karp was Vice  President,
Business  Development  of Optimal.  Mr. Karp earned a Bachelor of Arts degree in
Economics from McGill University in 1976 and a Master of Business Administration
degree from McGill University in 1978.

     Gary S. Wechsler,  C.A. has been the Treasurer and Chief Financial  Officer
of Optimal since May 1994. For over five years until May 1999, Mr.  Wechsler was
a partner of Victor & Gold,  a  Montreal-based  accounting  firm.  Mr.  Wechsler
continues to act as a consulting  partner for Victor & Gold. Mr. Wechsler earned
a Bachelor of  Commerce  degree from McGill  University  in 1980.  Mr.  Wechsler
obtained his Chartered Accountant designation in 1983. Neil S. Wechsler and Gary
S. Wechsler are brothers.

     Ike  Tamigian  has been the  Senior  Vice-President  and  Chief  Technology
Officer of Optimal since June 2000.  From June 1998 to June 2000,  Mr.  Tamigian
was  Vice-President,  Software  Development  of Optimal.  From June 1995 to June
1998, Mr.  Tamigian was Director of Software  Development  of Optimal.  Prior to
June 1995,  Mr.  Tamigian  was the Senior  Design  Engineer/Microprocessors  and
Microcontroller-



                                       48
<PAGE>


Based Systems at Centrodyne Inc. for more than four years. Mr. Tamigian earned a
Bachelor of Electrical Engineering degree from McGill University in 1987.

     Elliot  Brenhouse  has been Senior  Vice-President  and General  Manager of
Optimal since June 2000.  From June 1998 to June 2000, Mr.  Brenhouse was a Vice
President of Optimal.  Prior to June 1998, Mr. Brenhouse held various managerial
positions with the aerospace division of AlliedSignal  Canada Inc. for more than
five years.  Mr. Brenhouse  earned a Bachelor of Electrical  Engineering  degree
from McGill University in 1976.

     Leon P.  Garfinkle  has been a director of Optimal  since June 1996 and has
been Senior Vice-President,  General Counsel and Secretary of Optimal since July
2000.  Prior to July  2000,  Mr.  Garfinkle  was a partner  with the law firm of
Goodman  Phillips &  Vineberg,  in  Montreal,  Quebec.  Mr.  Garfinkle  earned a
Bachelor of Commerce  degree from McGill  University in 1982, a Bachelor of Laws
degree from the University of Toronto in 1985 and a Bachelor of Laws degree from
the University of Montreal in 1986.

     O. Bradley McKenna,  C.A. has been the  Vice-President,  Administration and
Human Resources of Optimal since June 1999. From March 1994 until June 1999, Mr.
McKenna was the Controller of Optimal. Mr. McKenna earned a Bachelor of Commerce
degree  from  Loyola  College  in 1973 and a Master of  Business  Administration
degree from McGill  University  in 1975.  Mr.  McKenna  obtained  his  Chartered
Accountant designation in 1978.

     Charles  Morris has been  Vice-President,  Software  Development of Optimal
since  June 2000.  From June 1998 to June  2000,  Mr.  Morris  was  Director  of
Software  Development of Optimal.  Prior to June 1998, Mr. Morris was Manager of
Software Development of Optimal. Prior to August 1996, Mr. Morris was a software
consultant.  Mr. Morris earned a Bachelor of Science degree in  Mathematics  and
Computer  Science from McGill  University in 1979, a Bachelor of Theology degree
from  McGill  University  in 1984 and a Master  of  Divinity  from the  Montreal
Diocesan Theological College in 1985.

     Frank  Alcaraz has been  Vice-President,  Operations  of Optimal since June
2000.  From  November  1998 to June 2000,  Mr.  Alcaraz was Director of Cost and
Quality  Control of Optimal.  Prior to November  1998,  Mr.  Alcaraz was Product
Costing/Program  Manager with the aerospace division of AlliedSignal Canada Inc.
for  more  than  five  years.  Mr.  Alcaraz  earned  a  Bachelor  of  Mechanical
Engineering degree from Concordia  University in 1968 and a Bachelor of Commerce
degree from Concordia University in 1974.

     Catherine Rotiroti has been  Vice-President,  Project Management of Optimal
since  September  2000.  From June 1997 to  September  2000,  Ms.  Rotiroti  was
Director of Project Management of Optimal.  Prior to June 1997, Ms. Rotiroti was
Director MIS of Cumberland  Pharmacies.  Ms.  Rotiroti earned a Bachelor of Arts
degree in Mathematics and Computer Science from Concordia University in 1980.

     Martin J. Reiss has been Vice-President,  Sales of Optimal since July 2000.
Prior to July 2000, Mr Reiss was a Sales  Director of PSC, Inc. Mr. Reiss earned
a Bachelor of Science degree in Economics from University of Georgia in 1977.

     James S. Gertler has been a director of Optimal since November 1997.  Since
January 1996, Mr.  Gertler has been Vice  President of Corporate  Development of
Applied  Graphics  Technologies,  Inc. Since May 1993, he has also been the Vice
President of Corporate  Development for Daily News, L.P. and U.S. News and World
Report,  L.P. Mr.  Gertler earned a Bachelor of Science degree in Economics from
the Wharton  School of the  University of  Pennsylvania  in 1988 and a Master of
Business Administration degree from Harvard University in 1992.

     Thomas D.  Murphy is the  president  of Peak Tech  Consulting,  a firm that
specializes  in   information   technology   management   and  related   benefit
realization.  Prior to January 2000, Mr. Murphy was Vice President,  Information
Technology  of  Kroger  Co.  Mr.  Murphy  earned a  Bachelor  of Arts  degree in
Education and Sciences from Western State College, Colorado in 1976.


                                       49
<PAGE>

     As at the time of the 2000 annual and special meeting of shareholders,  the
number of directors of Optimal was set at five, divided into three classes,  the
first  class  consisting  of one  director  and the  second  and  third  classes
consisting  of  two  directors   each.  At  the  1998  annual   meeting  of  our
shareholders,  Messrs.  Karp and  Garfinkle,  as  members  of a single  class of
directors,  were  elected  to hold  office  until the  close of the 2001  annual
meeting of  shareholders;  at the 1999 annual meeting of  shareholders,  Messrs.
Ostrin and Gertler,  as members of a single class of directors,  were elected to
hold office until the close of the 2002 annual meeting of  shareholders;  and at
the 2000 annual and special meeting of  shareholders,  Mr. N. Wechsler,  as sole
member of a class of  directors,  was elected to hold office  until the close of
the 2003 annual meeting of  shareholders.  In July 2000, the number of directors
was  increased to six and Mr.  Murphy was appointed as a director to hold office
until the close of the 2001 annual meeting of shareholders.

     Pursuant to their employment agreements,  each of Messrs. N. Wechsler, Karp
and Ostrin must be  nominated  by Optimal for  election as a director.  See Item
11--"Executive Compensation."

     Executive  officers  of  Optimal  are  appointed  annually  by the Board of
Directors and serve until their successors are duly appointed and qualified.

Audit Committee

     The Audit Committee of the Board of Directors  performs services related to
the completion of the audit of our financial statements. The Audit Committee has
responsibility  for, among other things,  (i) reviewing the scope and results of
the audit with the independent auditors,  (ii) reviewing with management and the
independent auditors our financial statements, (iii) considering the adequacy of
our internal accounting,  bookkeeping and control procedures, and (iv) reviewing
any  non-audit  services  and  special   engagements  to  be  performed  by  the
independent  auditors and  considering  the effects of such  performance  on the
auditors'  independence.  The members of the Audit Committee are Messrs. Ostrin,
Gertler and Murphy.

Item 11. EXECUTIVE COMPENSATION

Compensation

     The  compensation  paid to the Chief  Executive  Officer  and the two other
executive   officers  of  our  Company   (collectively,   the  "Named  Executive
Officers"),  for each of the three most recently  completed  fiscal years is set
forth in the following table.
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------
                                                    Annual                       Long Term
                                               Compensation ($)                 Compensation
-----------------------------------------------------------------------------------------------------
                                                                             Shares Underlying
      Name and Position        Year      Salary(1)         Bonus(1)               Options
-----------------------------------------------------------------------------------------------------
<S>                            <C>       <C>              <C>                     <C>
Neil S. Wechsler               2000      252,491          73,559                  250,000
-----------------------------------------------------------------------------------------------------
   Co-Chairman and             1999      123,166          30,791                  284,000(2)
-----------------------------------------------------------------------------------------------------
   Chief Executive Officer     1998      123,348          30,837                       --
-----------------------------------------------------------------------------------------------------

Holden L. Ostrin               2000      252,491          73,559                  250,000
-----------------------------------------------------------------------------------------------------
   Co-Chairman                 1999      123,166          30,791                  284,000(2)
-----------------------------------------------------------------------------------------------------
                               1998      123,348          30,837                       --
-----------------------------------------------------------------------------------------------------

Henry M. Karp                  2000      252,491          73,559                  250,000
-----------------------------------------------------------------------------------------------------
   President and               1999      123,166          30,791                  284,000(2)
-----------------------------------------------------------------------------------------------------
   Chief Operating Officer     1998      123,348          30,837                       --
-----------------------------------------------------------------------------------------------------
</TABLE>

(1)  We pay salaries and bonuses in Canadian  dollars.  The  respective  average
     exchange rates for 1998,  1999 and 2000 were used to convert these salaries
     into dollars:  US$1.00=Cdn.$1.4836  (1998);  US$1.00=Cdn.$1.4858 (1999) and
     US$1.00=Cdn.$1.4852  (2000).
(2)  Includes   94,000  common  shares   issuable   pursuant  to  the  automatic
     replacement  ("reload")  feature of an option granted in 1997 and exercised
     in 1999.  See  footnote (3) under Item  12--"Security  Ownership of Certain
     Beneficial Owners and Management."

                                       50
<PAGE>

     Option Grants in 2000

     The following table provides information regarding options granted to the
Named Executive Officers during 2000:
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------
                                                                             Potential Realizable
                                                                               Value at Assumed
                                                                            Annual Rates of Stock
                                        Individual Grants                 Price Appreciation ($) (1)
---------------------------------------------------------------------------------------------------------
                                      Percent of
                                         Total
                         Shares     Options Granted   Exercise
                       Underlying   to Employees in     Price    Expiration
Name                    Options          1999            ($)        Date         5%              10%
---------------------------------------------------------------------------------------------------------
<S>                      <C>             <C>            <C>       <C>         <C>              <C>
Neil S. Wechsler         250,000         18.2           25.25     29/7/10     3,969,897        10,060,499
---------------------------------------------------------------------------------------------------------

Holden L. Ostrin         250,000         18.2           25.25     29/7/10     3,969,897        10,060,499
---------------------------------------------------------------------------------------------------------

Henry M. Karp            250,000         18.2           25.25     29/7/10     3,969,897        10,060,499
---------------------------------------------------------------------------------------------------------
</TABLE>

(1)  The dollar amounts under these columns  represent the potential  realizable
     value of each option  granted  assuming that the market price of the common
     shares appreciates in value from the date of grant at the 5% and 10% annual
     rates  prescribed  by the SEC and  therefore  are not  intended to forecast
     possible future appreciation, if any, of the price of the common shares.

     Aggregated  Option and Warrant  Exercises in 2000 and  Year-end  Option and
     Warrant Values

     The following table provides information  regarding option exercises by the
Named Executive Officers in 2000 and the amount and value of the Named Executive
Officers'  exercised  and  unexercised  options and  warrants as of December 31,
2000. Between January 1, 2000 and December 31, 2000, each of the Named Executive
Officers exercised options and sold their shares at a price per share of $39.00.

<TABLE>
<CAPTION>

 -------------------------------------------------------------------------------------------------------------
                                                 Number of Shares Underlying         Value of Unexercised
                                                   Unexercised Options and           In-the-Money Options
                             Option Exercises            Warrants                       And Warrants ($)
 -------------------------------------------------------------------------------------------------------------
                         Common
                         Shares       Value
 Name                   Acquired  Realized ($)    Exercisable   Unexercisable    Exercisable     Unexercisable
 -------------------------------------------------------------------------------------------------------------
<S>                     <C>        <C>             <C>             <C>            <C>                 <C>
 Neil S. Wechsler       200,000    6,771,000(1)    289,000(2)      345,000        4,695,472          3,216,735
 -------------------------------------------------------------------------------------------------------------
 Holden L. Ostrin       200,000    6,771,000(1)    389,000(2)      345,000        8,853,602          3,216,735
 -------------------------------------------------------------------------------------------------------------
 Henry M. Karp          140,000    4,832,803(1)    449,000(2)      345,000       10,724,037          3,216,735
 -------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  All of the common shares acquired were sold pursuant to a prospectus  dated
     March 28, 2000.  The value  realized upon the exercise has been  determined
     net of the related underwriting discount.

(2)  Does not include an additional  94,000 common shares  issuable  pursuant to
     the reload  feature of an option  granted in 1997.  See  footnote (3) under
     Item 12--"Security Ownership of Certain Beneficial Owners and Management."

     Executive Employment Agreements

     We have entered into employment agreements with each of the Named Executive
Officers. The agreements, the terms of which are identical, were entered into as
of May 5, 1997 and amended as of January 5, 1999.  They were  designed to assure
us of the  continued  employment  of each  officer in his  respective  executive
positions with our company.

     Under the terms of these agreements, each officer receives a minimum annual
salary and an annual  bonus in an amount not less than 25% of the salary then in
effect.  Additional bonuses may also be paid in whatever amounts and at whatever
times as determined by our Board of Directors.


                                       51
<PAGE>

     Each of these agreements provided for an option grant. The option grant was
designed to provide  incentive in a manner similar to and commensurate  with the
incentive  arrangements for senior executives of other high technology companies
of  comparable  size and scope.  The option  grants  took into  account  that no
options had been granted in 1996 and none were going to be granted in 1998. Each
officer was granted an option to acquire  400,000  common  shares at an exercise
price of $3.00 per share (collectively the "Executive  Options").  The last sale
price of the  common  shares  prior to May 4,  1997 was  $2.75  per  share.  The
Executive  Options are presently  exercisable in full and were exercised in 1999
as to 100,000 of the underlying shares by each of the Named Executive Officers.

     The  agreements  provide that we will pay or reimburse  the officer for the
premiums for a life and disability term insurance policy with a minimum coverage
of $1,000,000.  The agreements  also provide for the forgiveness of indebtedness
of the officer if he leaves the  employment  of our company for any reason.  See
Item 13-- "Certain Relationships and Related Transactions."

     In the event of the sale of all or  substantially  all of our assets or the
acquisition by any person of outstanding shares of our company representing more
than 50% of the votes  attached to all of our  outstanding  voting shares at any
time during the term of the agreement or within 12 months thereafter (unless the
officer  has had his  employment  terminated  for cause),  the  officer  will be
entitled to a bonus in an amount not less than the aggregate of his then-current
salary and bonus,  and the term  insurance,  for which we have been  reimbursing
premiums will be converted to a whole life insurance  policy and we will pay the
entire cost of the premium for that whole life insurance policy. In addition, in
each such circumstance,  the exercise price of all options,  warrants and rights
to  purchase  common  shares  which are held by the  officer  shall,  subject to
regulatory approval, be reduced to Cdn.$1.00 in the aggregate.

     If the officer's  services are terminated  other than for cause or death or
disability,  or in the event that the officer terminates his employment with our
company for good reason (as  defined in the  agreements)  within six months of a
change of control (as defined in the agreements), (i) we will pay to the officer
an amount  equal to five  times the sum of (a) the  highest  salary  paid to him
during the term and (b) the  highest  aggregate  bonuses  paid to him during any
year during the term, and (ii) the exercise  price of all options,  warrants and
rights  held by the  officer  to  purchase  common  shares  shall be  reduced to
Cdn.$1.00  in the  aggregate  and all of such options  shall become  immediately
exercisable  and will expire  within 90 days of the  termination  of the covered
officer's employment with our company.

     The  agreements  each  contain a covenant on the part of the officer not to
compete with our company for a period of 24 months following the date upon which
he ceases to be an employee of our company.

Compensation of Directors

     In July 2000, options to purchase 25,000 common shares at an exercise price
of $25.25 per share were granted to each of Messrs.  Murphy and  Gertler,  being
our two non-executive  directors.  These options become exercisable as to 50% of
the  underlying  shares on July 29, 2001 and will become  exercisable  as to the
remaining 50% of the underlying shares on July 29, 2002. These options expire on
July 29, 2010.

Options to Purchase Securities

     On February 7, 1997,  our Board of  Directors  adopted a share  option plan
known as the 1997 Stock Option Plan (as amended, the "1997 Plan").



                                       52
<PAGE>

     Pursuant  to the  provisions  of the 1997  Plan,  we may grant  options  to
purchase common shares to our full-time  employees or directors.  Options may be
granted for a term of up to 10 years and the term during  which such options may
be exercised  will be  determined  by our Board of Directors at the time of each
grant of options.  The conditions of vesting and exercise of the options and the
option price will be established by our Board of Directors when such options are
granted  and the option  price shall not  involve a discount  greater  than that
permitted by law and by the  regulations,  rules and policies of the  securities
regulatory authorities to which we may then be subject.

     Options  granted  under the 1997 Plan cannot be  assigned  or  transferred,
except by will or by the laws of descent and distribution of the domicile of the
deceased  optionee.  Upon  an  optionee's  employment  with  our  company  being
terminated for cause or upon an optionee being removed from office as a director
or  becoming  disqualified  from  being a  director  by law,  any  option or the
unexercised  portion  thereof  shall  terminate  forthwith.   If  an  optionee's
employment  with our company is terminated  otherwise than by reason of death or
termination  for cause, or if any optionee ceases to be a director other than by
reason  of  death,  removal  or  disqualification  by  law,  any  option  or the
unexercised  portion thereof may be exercised by the optionee for that number of
shares  only which he was  entitled  to acquire  under the option at the time of
such  termination  or  cessation,  provided  that  such  option  shall  only  be
exercisable  within 90 days after such  termination or cessation or prior to the
expiration of the term of the option,  whichever occurs earlier.  If an optionee
dies while employed by our company or while serving as a director, any option or
the  unexercised  portion  thereof  may be  exercised  by the person to whom the
option is transferred by will or the laws of descent and  distribution  for that
number of shares  only which the  optionee  was  entitled  to acquire  under the
option at the time of death, provided that such option shall only be exercisable
within 180 days  following  the date of death or prior to the  expiration of the
term of the option, whichever occurs earlier.

     On June 22,  2000,  the  shareholders  approved an  amendment  to the stock
option plan  increasing  the maximum  number of common shares that may be issued
pursuant to options granted under this plan from 3,000,000 to 6,000,000.



                                       53

<PAGE>


Item 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT

     The following table sets forth, as of January 31, 2001, certain information
regarding  the  ownership of the common shares by (i) each person known to us to
be a beneficial owner of more than 5% of the common shares of Optimal, (ii) each
director  and Named  Executive  Officer of Optimal and (iii) all  directors  and
officers of Optimal as a group.

<TABLE>
<CAPTION>
                                                      Number and Nature
                                                             of
                                                         Beneficial
Name of Beneficial Owner                                 Ownership         Percent(1)
------------------------                              -----------------    ----------
<S>                                                   <C>                   <C>
Neil S. Wechsler...................................     608,000(2)(3)        4.44%
Henry M. Karp......................................     593,000(3)(5)        4.33%
Holden L. Ostrin...................................     589,000(3)(4)        4.30%
St. Denis J. Villere & Company.....................     759,800(6)           5.54%
Arbor Capital Management...........................     695,900(7)           5.07%
J. P. Morgan Chase & Co. ..........................     688,525(8)           5.02%
Leon P. Garfinkle..................................      32,000(3)(9)          *
James S. Gertler...................................      30,000(10)            *
Thomas D. Murphy...................................           0(11)            *
All directors and officers as a group (14 people)..   2,168,200(3)(12)      15.81%
</TABLE>

  *  less than one percent (1%)

(1)  Assumes  no  issuance  of  common  shares   reserved  for  issuance   under
     outstanding options and warrants,  except for those held by the director or
     officer.

(2)  Excludes  unvested options to purchase 295,000 common shares.  Mr. Wechsler
     holds vested options to purchase 433,000 common shares.

(3)  On May 5, 1997, an option to purchase  94,000 common shares granted to each
     of Messrs.  N.  Wechsler,  Ostrin and Karp,  an option to  purchase  20,000
     common shares  granted to Mr. G.  Wechsler and an option to purchase  5,000
     common shares granted to Mr. Garfinkle,  were each granted upon terms which
     provide that upon its exercise,  the option shall be automatically replaced
     with an option for an equal number of shares, at an exercise price equal to
     the then  current  market  value of the  common  shares.  This  replacement
     mechanism  can  operate  twice  during the term of the  option.  The common
     shares currently underlying these replacement options have been included in
     the number of common shares beneficially owned by these optionees.

(4)  Excludes  unvested  options to purchase  295,000 common shares.  Mr. Ostrin
     holds vested warrants to purchase  100,000 common shares and vested options
     to purchase 433,000 common shares.

(5)  Excludes unvested options to purchase 295,000 common shares. Mr. Karp holds
     vested options to purchase 593,000 common shares.

(6)  The address of this beneficial  owner is 210 Baronne  Street,  New Orleans,
     Louisiana 70112. The information in this table is based  exclusively on the
     most  recent  Schedule  13G/A  filed  by such  beneficial  owner  with  the
     Commission. We make no representation as to the accuracy or completeness of
     the information reported.

(7)  The  address  of  this   beneficial   owner  is  120  South  Sixth  Street,
     Minneapolis,  MN 55402. The information in this table is based  exclusively
     on the most recent Schedule 13G/A filed by such  beneficial  owner with the
     Commission. We make no representation as to the accuracy or completeness of
     the information reported.

(8)  The address of this beneficial owner is 270 Park Avenue, New York NY 10017.
     The  information  in this  table is based  exclusively  on the most  recent
     Schedule 13G/A filed by such beneficial owner with the Commission.  We make
     no  representation  as to the accuracy or  completeness  of the information
     reported.

(9)  Includes vested options to purchase 32,000 common shares. Excludes unvested
     options to purchase 35,000 common shares.

(10) Includes vested options to purchase 30,000 common shares. Excludes unvested
     options to purchase 25,000 common shares.

(11) Excludes unvested options to purchase 25,000 common shares.

(12) Includes  vested  options,  warrants and options vesting within 60 days, to
     purchase an aggregate of 1,780,000 common shares. Excludes unvested options
     to purchase 1,385,000 common shares.



                                       54
<PAGE>


Item 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Indebtedness of Directors and Employees

     The aggregate  indebtedness  to our company of all employees,  officers and
directors and former employees, officers and directors is $125,934 which relates
to an unsecured  home-loan  agreement with Holden L. Ostrin,  the Co-Chairman of
our  company.  This loan is  non-interest  bearing  and is  repayable  in annual
installments  of $11,448  through  and  including  July 1, 2012.  The  foregoing
indebtedness  is  denominated in Canadian  dollars,  and has been converted at a
rate of US$1.00=Cdn.$1.4849.

Item 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORT ON FORM 8-K

     Exhibits--Material Contracts

 Exhibit
 Number                                Exhibit
 -------                               -------
  3.1      Certificate and Articles of Continuance (incorporated by reference to
           Exhibit 3.1 to the Company's registration statement on Form F-1, file
           333-4950, with the Commission on October 24, 1996)

  3.2      By-laws  (incorporated  by reference to Exhibit 3.2 to the  Company's
           Annual  Report  on Form  10-K,  File  No.  0-28572,  filed  with  the
           Commission on March 8, 1999)

  3.3      Certificate and Articles of Amendment

  4        Specimen  certificate of the common shares (incorporated by reference
           to Exhibit 1.1 to the  Company's  Registration  Statement  on Form 8,
           File No. 0-28572, filed with the Commission on July 17, 1996)

  10.1     Agreement with International Business Machines, Inc. (incorporated by
           reference  to Exhibit II to the  Company's  Quarterly  Report on form
           10-Q for the quarter ended June 30, 1998,  filed with the  Commission
           on August 14, 1998)

  10.2     Employment Agreement with Neil S. Wechsler (incorporated by reference
           to Exhibit I to the Company's Annual Report on Form 10-K for the year
           ended December 31, 1997, filed with the Commission on March 31, 1998)

  10.3     Amendment to Employment Agreement with Neil S. Wechsler (incorporated
           by reference to Exhibit 10.4 to Form 10-K for the year ended December
           31, 1999, filed with the Commission on March 8, 1999)

  10.5     Employment Agreement with Henry M. Karp (incorporated by reference to
           Exhibit II to the  Company's  Annual Report on Form 10-K for the year
           ended December 31, 1997, filed with the Commission on March 31, 1998)

 10.6      Amendment to Employment Agreement with Henry M. Karp (incorporated by
           reference  to Exhibit  10.6 to Form 10-K for the year ended  December
           31, 1999, filed with the Commission on March 8, 1999)

  10.7     Employment Agreement with Holden L. Ostrin (incorporated by reference
           to Exhibit III to the  Company's  Annual  Report on Form 10-K for the
           year ended December 31, 1997,  filed with the Commission on March 31,
           1998)

  10.8     Amendment to Employment Agreement with Holden L. Ostrin (incorporated
           by reference to Exhibit 10.8 to Form 10-K for the year ended December
           31, 1999, filed with the Commission on March 8, 1999)


  21       List of Subsidiaries (incorporated by reference to Exhibit 21 to Form
           10-K for the year ended December 31, 1999,  filed with the Commission
           on February 24, 2000)

  23.1    Consent of PricewaterhouseCoopers LLP


                                       55
<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.



February 23, 2001                        Optimal Robotics Corp.


                                      By: /s/   NEIL S. WECHSLER
                                          --------------------------------------
                                           Neil S. Wechsler, Chairman
                                           (Principal Executive Officer)


                                      By:/s/   GARY S. WECHSLER
                                         ---------------------------------------
                                         Gary S. Wechsler
                                         (Principal Accounting Officer)



Pursuant to the  Securities  Exchange  Act of 1934,  this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.



February 23, 2001                     By:/s/   NEIL S. WECHSLER
                                         ---------------------------------------
                                         Neil S. Wechsler, Director



February 23, 2001                     By:/s/   HOLDEN L. OSTRIN
                                         ---------------------------------------
                                          Holden L. Ostrin, Director



February 23, 2001                     By:/s/   HENRY M. KARP
                                        ----------------------------------------
                                        Henry M. Karp, Director



February 23, 2001                     By:/s/   JAMES S. GERTLER
                                        ----------------------------------------
                                         James S. Gertler, Director



February 23, 2001                     By:/s/   LEON P. GARFINKLE
                                         ---------------------------------------
                                         Leon P. Garfinkle, Director



February 23, 2001                     By:/s/  THOMAS D. MURPHY
                                         ---------------------------------------
                                         Thomas D. Murphy, Director


                                       56