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                                                                    EXHIBIT 99.1

                              CAUTIONARY STATEMENT
                      REGARDING FORWARD-LOOKING STATEMENTS

STOCKWALK GROUP, INC. (the "Company") wishes to take advantage of the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995 (the
"Act") and is filing this cautionary statement in connection with such safe
harbor legislation.

The Company's Form 10-K, any Form 10-Q or Form 8-K filed by the Company or any
other written or oral statements made by or on behalf of the Company may include
"forward-looking statements" as defined in the Act. The words "believe,"
"expect," "anticipate," "intend," "estimate," "forecast," "project" and similar
expressions identify such forward-looking statements. Forward-looking statements
reflect the Company's current views with respect to future events and financial
performance, and the Company wishes to caution investors that any
forward-looking statements made by or on behalf of the Company are subject to
uncertainties and other factors that could cause actual results to differ
materially from such statements. These uncertainties and other factors include,
but are not limited to, the factors listed below (many of which have been
discussed in the Company's prior filings with the Securities and Exchange
Commission).

Although the Company has attempted to identify important factors, the Company
wishes to caution investors that other factors might in the future prove to be
important in affecting the Company's results of operations. New factors emerge
from time to time, and it is not possible for Company management to predict all
of such factors, nor can Company management assess the impact of each such
factor on the business, or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements. Investors are further cautioned not to place
undue reliance on such forward-looking statements because such statements
reflect the Company's views only as of the date the statement was made. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

COMPANY RISKS

We experienced overall losses in recent operating periods, and these losses may
continue

         We experienced after-tax losses of $8.1 million and $1.7 million in the
last two fiscal years. These losses were primarily related to start-up costs,
including, but not limited to, significant investments in personnel, technology
and marketing, associated with our online brokerage business that commenced
operations in September 1999. While our acquisitions of R.J. Steichen and John
G. Kinnard expanded our traditional full service brokerage business, weakened
market conditions, among other things, have prohibited us from achieving the
intended results, financial and otherwise, of these mergers. Between July 1999
and February 2001, we invested heavily in our online brokerage businesses -
Online Brokerage Solutions and Stockwalk.com. In February 2001, we sold Online
Brokerage Solutions and have substantially reduced spending on Stockwalk.com.
Since the acquisitions of R.J. Steichen and John G. Kinnard we have been in the
process of refocusing our business on our traditional, full service brokerage
business and our clearing business.

We expect significant fluctuations in our quarterly operating results

         We expect significant fluctuations in future quarterly operating
results, which may be caused by the following factors:

         - changes in trading volume in the securities markets;

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         - trends in the securities markets;

         - changes in our pricing policies or in our competitors' pricing
           policies;

         - the success of and costs associated with acquisitions, joint ventures
           or other strategic relationships; and

         - changes in the level of operating expenses to support projected
           growth.

Due to the factors listed above, quarterly revenue and operating results are
difficult to forecast. As a result, comparing our period-to-period operating
results may not be meaningful, and results of operations from prior periods may
not be indicative of future results. It is likely that our future quarterly
results will fluctuate from time-to-time, which could adversely affect the
market value of our common stock.

We must adapt to rapid technological changes to remain competitive

         The brokerage and financial services industries are characterized by
rapid technological change, changes in customer requirements, frequent new
service and product introductions and enhancements, and emerging industry
standards. Recent legislative changes have led to increased competition and
consolidation in the industry. The introduction of services or products
utilizing new technologies and the emergence of new industry standards and
practices can render existing services or products obsolete and unmarketable.
Our future success will depend, in part, on our ability to accomplish the
following:

         - develop and incorporate leading technologies;

         - enhance our existing services and products;

         - develop new services and products that address the increasingly
           sophisticated and varied needs of our customers and prospective
           customers; and

         - respond to technological advances and emerging industry standards and
           practices on a timely and cost-effective basis.

         The development of new services or products or enhanced versions of
existing services and products may require substantial capital to cover related
expenditures. We cannot assure you that we will be successful in effectively
implementing and using new technologies, adapting our services and products to
emerging industry standards, or developing, introducing and marketing service
and product enhancements or new services and products. Additionally, we may
experience difficulties that could delay or prevent the successful development,
introduction or marketing of these services and products, or our new services
and product enhancements may fail to adequately meet the requirements of the
marketplace and achieve market acceptance. Our failure, for technical reasons or
otherwise, to develop and introduce new services and products or enhancements of
existing services and products in a timely manner in response to changing market
conditions or customer requirements, or to achieve market acceptance of our new
services and products, could adversely and materially affect our business,
financial condition and operating results.

We rely upon third parties to provide critical transaction functions

         All of our servers are leased from or housed at Digital Island, Inc.
under an agreement whereby Digital Island provides turnkey maintenance of our
servers that route all of our transaction traffic. Automated Financial Systems,
Inc. currently provides the software systems that manage our online securities
brokerage activity. We also have an agreement with Securities Industries
Software Corporation, a division of ADP, to run our back office system. Finally,
we contract


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with other vendors to produce, batch and mail our confirmations and customer
reports. We do not have long-term agreements with many of these third parties.
As our business grows, we cannot be assured that the technology and services we
require from third parties will be available. A third party contractor's
inability to meet our needs could cause us to be unable to timely and accurately
process our customers' transactions or maintain complete and accurate records of
such transactions. In such event, we may be forced to slow the expansion of our
customer base or risk the loss of customers. Our long-term objective is to
develop our own systems to replace certain of these functions provided by
critical third party vendors. However, for the next several years, we will
continue to be dependent upon third party vendors, and there is no assurance
that we will be able to successfully develop and install internal systems to
provide such services, or that our systems will be cost-effective or as
dependable as those of our third party vendors.

If the equipment and systems we rely upon fail or perform poorly, our customers
could suffer delays in trading, which could subject us to claims for those
losses and lost accounts

         Orders placed from the close of the stock markets one day until the
opening of the next business day must be processed through our system in a short
period of time prior to the opening of the stock markets. During peak trading
times, our systems will be subject to heavy volume that could cause them to
operate at unacceptable speeds or to fail. Any significant degradation or
failure of our systems or any other systems in the trading process (e.g., online
service providers, our trading engine, record keeping and data processing
functions performed by third parties, and third-party software such as Internet
browsers), even for a short time, could cause customers to suffer delays in
trading. Such delays could result in substantial customer losses and could
subject us to claims or litigation for those losses or to the loss of
dissatisfied customers.

The extension of credit to our customers in margin and cash transactions exposes
us to credit losses if customers breach their obligations to us

         We lend funds to our customers and customers of our correspondent firms
as margin credit. These loans are made to customers on a secured basis, with the
firm maintaining collateral in the form of saleable securities, cash or cash
equivalents. In addition, cash securities transactions subject us to credit risk
during the period between the execution of a trade and the settlement of such
transaction by the customer.

         If our customers and correspondent firms or a customer of a
correspondent firm, fail

         - to pay for their purchases;

         - to supply securities that they have sold;

         - to repay funds they have borrowed; or

         - to satisfy any other customer obligations,

there is no assurance that the customer or correspondent firm will satisfy
obligations to us or that the collateral securing margin loans will cover the
losses. In such an event, we would be required to absorb the loss.

         Our business is also subject to the risk that market declines will
reduce the value of margin collateral below required coverage levels. Our
agreements with margin and short account clients permit us to liquidate or buy
securities if the amount of our collateral becomes insufficient. However, we may
be unable to liquidate or buy securities for various reasons, including the
following:

         - the securities may not be actively traded;

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         - the securities might be a large block of securities that exceeds
           current market demand; or

         - trading might be halted in a security for various reasons, including
           the issuance of a stop order.

As of March 31, 2001, customer margin loans owed to us totaled approximately
$403.3 million.

Our failure to comply with net capital requirements could result in termination
of our business

         Securities broker-dealers are subject to stringent rules with respect
to the maintenance of specific levels of net capital. Generally, net capital is
the measure of a broker-dealer's readily available liquid assets, reduced by its
total liabilities other than approved subordinated debt. Thus, as we increase
the amount of margin credit extended to our customers, our net capital
requirements increase. If our broker-dealer subsidiaries fail to maintain
required net capital levels, we may be subject to suspension or revocation of
our license, which could ultimately lead to our liquidation. If the net capital
rules are changed or expanded, or if we incur an unusually large charge against
net capital, we might be required to limit or discontinue those portions of our
business that require intensive use of capital. A large operating loss or charge
against net capital could adversely affect our ability to expand or even
maintain our present levels of business. Failure to meet our regulatory minimum
net capital requirements could require us to cease business.

We may incur significant losses from our trading and investment activities due
to market fluctuations and volatility

         We generally maintain trading and investment positions in the fixed
income, currency and equity markets. To the extent that we own securities (have
long positions) in any of those markets, a downturn in those markets could
result in material losses from a decline in the value of those long positions.
Conversely, to the extent that we have sold securities that we do not own (have
short positions) in any of those markets, an upturn in those markets could
expose us to potentially unlimited losses as we attempt to cover our short
positions by acquiring assets in a rising market. We may from time-to-time have
a trading strategy consisting of holding a long position in one asset and a
short position in another, from which we expect to earn revenues based on
changes in the relative value of the two assets. If, however, the relative value
of the two assets changes in a direction or manner that we did not anticipate,
or against which we are not hedged, we might realize a loss in those paired
positions. In addition, we maintain trading positions that can be adversely
affected by the degree to which trading prices fluctuate over a particular
period, in a particular market, regardless of market levels.

Our success depends upon the services of key personnel

         We rely heavily upon the personal efforts and abilities of Eldon C.
Miller, David B. Johnson, John E. Feltl and Todd W. Miller. The loss of services
of any of these individuals likely would materially and adversely affect our
business, financial condition and operating results.

We cannot guarantee that we will be able to retain existing personnel and
attract and retain additional personnel to support the growth of our business

         Our success is dependent upon our ability to retain and hire highly
skilled personnel. As our business grows, we will need to hire many additional
employees. We face intense competition from other broker-dealers in hiring
experienced and licensed personnel. Additionally, we face a tight and expensive
employment market in general, particularly for skilled programmers, customer
service representatives and systems maintenance personnel. We cannot assure you
that we will be able to retain such personnel or hire and retain additional
qualified and skilled personnel.

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Our management exercises substantial control over our business

         As of May 31, 2001, our directors and executive officers beneficially
owned, in the aggregate, approximately 19,848,240 shares of our common stock,
representing approximately 63.4% of our common stock outstanding. Eldon C.
Miller, David B. Johnson, Paul R. Kuehn, Stanley D. Rahm, John E. Feltl and John
C. Feltl directly or indirectly own approximately 59.0% of our common stock.
Accordingly, these people will substantially control matters requiring approval
of our shareholders, including, but not limited to, the election of persons to
our Board of Directors.

We cannot guarantee that we will be financially or otherwise able to make
necessary acquisitions to fulfill our growth strategy or that the acquisitions
we do make will be successful

         We may make additional strategic acquisitions of complementary
brokerage and technology companies serving the securities industry to help our
business grow. We cannot guarantee that we will have the financial resources to
make acquisitions when they become available, nor can we guarantee that
satisfactory acquisition alternatives will always be available. When and if we
do make acquisitions, they may entail significant risks, including possible
difficulty in assimilating acquired operations and products, diverting
management's attention to other business concerns, amortizing acquired
intangible assets, and potentially losing key employees of acquired companies.
We cannot guarantee that we will be able to successfully integrate any
operations, personnel, services or products that might be acquired in the
future, or that any such acquisitions will enhance our business, financial
condition or operating results.

We cannot guarantee the success of our encryption technology

         The secure transmission of confidential information over public
networks places a significant barrier to online commerce and communication. We
rely on encryption and authentication technology, including public key
cryptography technology licensed from third parties, to provide the security and
authentication necessary to effect secure transmission of confidential
information. We cannot assure you that advances in computer capabilities, new
discoveries in the field of cryptography or other events or developments will
safeguard against a compromise or breach of technologies to be used by us to
protect customer transaction data. Any such compromise of our security could
adversely and materially affect our business, financial condition and operating
results.

Our growth may require more capital, and we cannot guarantee that we will obtain
additional financing to meet future capital needs

         Our business plan requires additional capital. Each of our
broker-dealer subsidiaries is required to maintain certain minimum regulatory
capital amounts. We have historically retained capital in excess of minimum
regulatory requirements. To the extent these broker-dealers hold customer funds,
the capital requirement is much greater. In particular, growth in our clearing
and customer margin business will require increasing levels of capital. Should
the proportionate increase in customer margin balances outpace earnings, we may
require additional capital. If we issue equity securities to raise additional
capital, the percentage ownership of our shareholders will be reduced,
shareholders may experience dilution in net book value or earnings per share, or
such equity securities may have rights, preferences or privileges senior to
holders of our common stock. We cannot assure you that additional financing will
be available when needed on terms favorable to us, if at all. If adequate funds
are not available on acceptable terms, we may be forced to slow our growth plan
and unable to take advantage of future opportunities or respond to competitive
pressures or unanticipated requirements. Our inability to do so could materially
and adversely affect our business, financial condition and operating results.

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Employee misconduct is difficult to detect and could harm our business

         We run the risk that employee misconduct could occur, including binding
us to transactions that exceed authorized limits or present unacceptable risks,
or hiding unauthorized or unsuccessful activities. This type of misconduct could
result in unknown and unmanaged losses. Employee misconduct could also involve
the improper use of confidential information, which could result in the loss of
confidential and proprietary information, regulatory sanctions or harm to our
reputation. We may not be able to detect, deter or prevent any of these types of
employee misconduct.

Our common stock price may be volatile

         The market price of our common stock could fluctuate significantly in
response to quarterly operating results and other factors, including many over
which we have no control and that may not be directly related to us. The stock
market has from time-to-time, including recently, experienced extreme price and
volume fluctuations, which have often been unrelated or disproportionate to the
operating performance of particular companies. These fluctuations could
adversely affect our ability to raise capital through future equity financings.

Future sales of large amounts of our common stock in the public market could
depress our stock price

         Sales of substantial amounts of our common stock in the public market,
or the appearance that a large number of our shares are available for sale,
could adversely affect the market price for our common stock. During the year
ended March 31, 2001, we issued approximately 6,315,062 shares of our common
stock in private transactions. Currently, these shares are restricted and may
not be sold except in conjunction with Rule 144 of the Securities Exchange Act.

         We currently have 32,672,711 shares of common stock outstanding, of
which 24,595,334 were sold in private transactions. Currently, 26,357,649 of our
outstanding shares are freely saleable. An aggregate of 19,848,240 of these
freely saleable shares are held by affiliates and, as a result, are subject to
the volume limitations set forth in Rule 144. An additional 6,315,062 shares
become freely saleable on August 1, 2001, subject to the Rule 144 volume
limitations.

         We have adopted two stock option plans and have reserved 3,500,000
shares of common stock for issuance under those plans. As of March 31, 2001,
options to purchase 1,222,625 shares of common stock were outstanding, of which
options to purchase 511,099 shares are currently exercisable. The shares
issuable upon exercise of outstanding options may be immediately sold as an
effective registration statement under the Securities Act of 1933 covers them.

         In addition, we have 734,320 outstanding warrants to purchase shares of
our common stock in conjunction with various prior debt and equity financing
activities. All warrants are vested and expire between October 2001 and August
2004. Holders of the warrants are entitled to register the underlying shares in
connection with certain registrations of shares proposed by us, unless the
shares may otherwise be sold under Rule 144, or if the underwriter of the
offering proposed by us is of the opinion that registration of such shares would
have a significant adverse effect on the offering proposed by us.

Certain provisions of Minnesota law, and the fact that we are authorized to
issue preferred stock, could affect the voting power and rights of holders of
our common stock

         Our authorized and unissued capital stock includes 50,000,000
undesignated shares. The Board of Directors, without any action by our
shareholders, may designate and issue the undesignated shares in such classes
and series as it deems appropriate, and to establish the rights, preferences and
privileges of such shares, including dividends, liquidation and voting rights.
No shares of preferred stock or other senior equity securities are currently
designated, and there is no current plan to designate or issue any such
securities. The issuance of such shares may deprive current shareholders of the
ability to sell their shares at a premium over any market price or adversely
affect the voting power and other rights of

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holders of our common stock.

         Our Articles of Incorporation and Bylaws do not contain any
anti-takeover provisions. However, we are subject to certain provisions of the
Minnesota Business Corporation Act, which may inhibit certain changes of
control. These laws could have the effect of discouraging an attempt to acquire
control of our corporation and limit the price of our securities. See
"Description of Company Securities - Minnesota Anti-Takeover Law."

We do not expect to pay dividends in the foreseeable future

         We intend to retain all earnings in the foreseeable future for our
continued growth and, thus, do not expect to declare or pay any cash dividends
in the foreseeable future. Additionally, our ability to pay dividends in the
future may be restricted by our brokerage subsidiaries' obligations to comply
with the net capital rules applicable to broker-dealers.

SECURITIES INDUSTRY RISKS

Unpredictable economic and market conditions cause uncertainty in the securities
industry

         The securities business is, by its nature, subject to various risks,
particularly in volatile or illiquid securities markets, including the risk of
losses resulting from the underwriting or ownership of securities, customer
fraud, employee errors and misconduct, failures in connection with the
processing of securities transactions and litigation. Our business and its
profitability is affected by many factors, including the following:

         - the volatility and price level of the securities markets;

         - the volume, size and timing of securities transactions;

         - the demand for investment banking services;

         - the level and volatility of interest rates;

         - the availability of credit; and

         - legislation affecting the business, financial communities, and the
           economy in general.

Any one of the above factors could adversely affect our financial condition and
operating results.

If stock prices decrease, or if trading volumes decrease, commissions,
investment banking and margin interest revenue, will decline

         As we have recently seen, a market downturn could lead to a decline in
the volume of transactions that we execute for our customers and, therefore, to
a decline in commission and clearing revenue. A market downturn could also
reduce customer margin balances, which would, in turn, result in reduced margin
interest revenue. Similarly, unfavorable financial or economic conditions would
likely reduce the number and size of transactions in which we provide
underwriting, mergers and acquisitions advisory and other services. Our
investment banking revenue, in the form of financial advisory and underwriting
fees, are directly related to the number and size of the transactions in which
we participate and would, therefore, be adversely affected by a sustained market
downturn.

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We perform underwriting, brokerage and trading services for small
capitalization, emerging and start-up companies, whose securities may be
particularly volatile and subject to greater risks than larger, established
companies

         A large portion of our business focuses on the underwriting, brokerage
and trading of securities of small capitalization, emerging and start-up
companies, which may be subject to greater risks than the equity markets as a
whole and, consequently, may be marketable to only a limited segment of the
investing public. We believe that many small capitalization, emerging and
start-up companies have significant potential for growth, although such
companies generally have limited product lines, markets, market shares and
financial resources, and their securities may trade less frequently and in more
limited volume than those of more established companies. Additionally, in recent
years, the stock market has experienced a high degree of price and volume
volatility for the securities of many small capitalization, emerging and
start-up companies. In particular, small capitalization, emerging and start-up
companies that trade in the over-the-counter market have experienced wide price
fluctuations not necessarily related to the operating performance of such
companies.

Our investment banking activities subject our capital to risks

         The potential risks of our investment banking activities include
market, credit and liquidity risks, which risks arise primarily when
underwritten securities cannot be resold, for any reason, at anticipated price
levels. Further, under applicable securities laws and court decisions regarding
underwriters' liability and limitations on indemnification by issuers, an
underwriter may be exposed to substantial claims by securities purchasers or
sellers arising out of public and private offerings of equity and debt
instruments.

Our clearing operations expose us to additional potential losses

         MJK Clearing provides clearing and execution services for all of our
brokerage businesses, as well as for our correspondent firms. Clearing services
include the confirmation, receipt, settlement and delivery functions involved in
securities transactions. As a clearing broker, our clearing subsidiary also
assumes direct responsibility for the possession and control of customer
securities and other assets, the clearance of customer securities transactions
and customer account record keeping. We risk losses if correspondent firms fail
to reimburse us if their customers fail or refuse to perform their obligations
to us. Additionally, as a self-clearing securities firm, we are subject to
substantially more regulatory control and examination than brokers that rely on
others to perform those functions, such as many of our competitors. Errors in
performing clearing functions, including clerical and other errors related to
the handling of funds and securities held by us on behalf of customers and
introducing brokers, could lead to civil penalties imposed by regulatory
authorities as well as claims brought by customers and others.

We are subject to increasing governmental and organizational regulation

         Our business, and the securities industry generally, is subject to
extensive regulation at both the federal and state levels. In addition,
self-regulatory organizations, such as the NASD, require strict compliance with
their rules and regulations. Among other things, these regulatory authorities
impose restrictions on sales methods, trading practices, use and safekeeping of
customer funds and securities, record keeping and the conduct of principals and
employees. The extensive regulatory framework applicable to broker-dealers, the
purpose of which is to protect customers and the integrity of the securities
markets, imposes significant compliance burdens on us. Failure to comply with
any of the laws, rules or regulations of any independent, state or federal
regulatory authority could result in a fine, injunction, suspension or expulsion
from the industry, which could materially and adversely impact us. Furthermore,
amendments to existing state or federal statutes and regulations or the adoption
of new statutes and regulations could require us to alter our methods of
operation at costs which could be substantial.

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We are subject to an increased risk of legal proceedings

         Many aspects of our business involve substantial risks of potential
liability and regulatory enforcement by state and federal regulators.
Additionally, participants in the securities industry face an increasing amount
of litigation and arbitration proceedings. Underwriters and selling agents may
be liable if they make material misstatements or omit material information in
prospectuses and other communications regarding underwritten offerings of
securities. Dissatisfied customers regularly make claims against securities
firms and stockbrokers for fraud, unauthorized trading, suitability, churning,
mismanagement and breach of fiduciary duty. We cannot assure you that these
types of proceedings will not materially and adversely affect us. Further, while
certain legal proceedings may be settled or otherwise resolved without a
material adverse economic effect on us, those proceedings may still result in
adverse publicity, which could affect our operations.

The NASDAQ market continues to implement reforms to monitor trading, which could
cause increased compliance requirements and costs

         NASD, the trade organization supervising the NASDAQ market, conducts
policing of NASDAQ-listed companies. In recent years, the NASD boosted its
internal compliance and monitoring programs. In addition, loosened restrictions
on relationships between financial institutions and securities firms are leading
to increased competition and consolidation in the industry. We face the risk
that the NASD will implement further changes. For example, if the NASD's
regulatory unit, NASD Regulation, Inc. ("NASDR"), combines with the New York
Stock Exchange regulatory unit, we could face additional compliance
requirements. We cannot fully anticipate the effects of any further NASDAQ
restructuring on our operations. The cost of compliance with any new rules,
regulations and procedures instituted by the NASDR could be significant.
Increased compliance costs or our inability to attain or maintain the listing of
underwriting clients on the NASDAQ system could adversely affect our
performance.

We face substantial competition within the securities industry

         In all aspects of our business, and at both the national and regional
level, we compete with numerous other securities firms, commercial banks,
investment banking firms, insurance companies, asset management firms, trust
companies and others. Our competitors have substantially greater access to
capital and other resources not available to us. In addition, many of these
competitors offer a wider range of services and financial products than we do
and possess greater name recognition and more extensive customer bases than we
do. These competitors may be able to respond more quickly to new or changing
opportunities, technologies and customer requirements. These competitors may
also be able to undertake more extensive promotional activities and offer more
attractive terms and prices to their customers, possibly even sparking a price
war within the brokerage business. Finally, current and potential competitors
may continue to establish cooperative relationships among themselves or with
third parties to enhance their services and products. Accordingly, it is
possible that new competitors or alliances among competitors may emerge and
rapidly acquire significant market share.

         The general financial success of companies within the securities
industry over the past several years, and the elimination of barriers between
financial institutions and securities firms through the Gramm-Leach-Bliley Act,
is expected to continue to attract new competitors to the industry, including
banks, insurance companies, providers of online financial and information
services and others, as such companies expand their product lines. Many of these
companies now offer their customers certain corporate and individual financial
services traditionally provided by securities firms. Due to the current trend
toward consolidation in the securities industry, our competitors' success in
attracting and retaining customers drawn to the convenience of one-stop shopping
could adversely affect our business and our ability to grow.

         We also expect the intensely competitive market for online brokerage
services to continue to evolve rapidly. We

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will encounter direct competition from other brokerage firms providing either
telephone or online brokerage services, or both. Additionally, we compete for
customer investment dollars with financial institutions, mutual fund sponsors
and other organizations, some of which provide electronic brokerage services.

         The clearing business has become considerably more competitive over the
past few years, and there are numerous large, highly visible and well-financed
securities firms that either have begun offering clearing services or have
attempted to increase their share of the market. Despite our efforts to remain
competitive, our clearing customers may decide to discontinue using our
services. In addition, there has been consolidation within the financial
services industry by securities firms and other financial institutions having
financial resources far greater than us. These developments have increased
competition from firms with greater capital resources and possibly greater
operating efficiencies than ours.

         We cannot assure you that we will be able to compete effectively with
current or future competitors. Likewise, we cannot assure you that the
competitive pressures we face will not materially or adversely affect our
business, financial condition and operating results.

Losses due to customer fraud could adversely affect our business

         We are exposed to potential losses resulting from fraud and other
misconduct by customers, such as fraudulent trading (including access to
legitimate customer accounts, or the use of a false identity to open an account)
or the use of forged or counterfeit checks for payment. These types of fraud may
be difficult to prevent or detect. We may not be able to recover the losses
caused by these activities. Any of these losses could materially and adversely
affect our business, financial condition and operating results.

New laws regarding the Internet may be passed, which could hinder our ability to
deliver our online services

         The legal and regulatory environment surrounding the Internet is
uncertain and rapidly changing. New laws and regulations, including securities
laws and regulations, could be difficult to comply with and could increase our
costs of doing business and prevent us from delivering our products and services
over the Internet, which could adversely affect our customer base and our
revenue. In addition to new regulations being adopted, existing laws may be
applied to the Internet. New and existing laws may cover issues that include
sales and other taxes, access charges, user privacy, characteristics and quality
of products and services, and other claims based on the nature and content of
the Internet.

We are dependent on Internet infrastructure in conducting our business

         The continued implementation of our online business strategy will
depend in large part upon the continued development of Internet infrastructure,
such as a reliable network backbone with the necessary speed, data capacity and
security, and timely development of complementary products for providing
reliable Internet access and services. Because global commerce and online
exchange of information on the Internet and other similar open wide area
networks are new and evolving, we cannot predict with any assurance whether the
Internet will support increasing use. The Internet has experienced, and is
expected to continue to experience, significant growth in the number of users
and the amount of content. We cannot assure you that the Internet infrastructure
will continue to be able to support the demands placed on it. Furthermore, the
performance or reliability of the Internet could be adversely affected by this
continued growth.


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