##### Table of Contents



SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2000

Commission file number: 0-22247

STOCKWALK.COM GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)

|                                                                         |  |                                             
|------------------------------------------------------------------------ |  | --------------------------------------------
|MINNESOTA
(State or Other Jurisdiction
of Incorporation or Organization) |  | 41-1756256
(IRS Employer
Identification No.)

|                                                                                                 
|-------------------------------------------------------------------------------------------------
|5500 WAYZATA BOULEVARD, SUITE 800, MINNEAPOLIS, MN 55416
(Address of Principal Executive Offices)

|                                              
|----------------------------------------------
|(763) 542-6000
(Registrants Telephone Number)



---

(Former Name, Former Address and
Former Fiscal Year, if Changed Since Last Report)

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  No

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the last practicable date:

|                                    |  |                                                      
|----------------------------------- |  | -----------------------------------------------------
|Class:
Common Stock, $.04 par value |  | Outstanding as of October 31, 2000:
31,490,600 shares





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TABLE OF CONTENTS



|                                                                                              |                                                                                                                                                                          |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  |  |  |  |  | 
|Part I  Financial Information                                                               
|Item 1. Consolidated Condensed Financial Statements (Unaudited)                              
|                                                                                              | Consolidated Condensed Statements of Financial
Condition September 30, 2000 and March 31, 2000                                                                          
|                                                                                              | Consolidated Condensed Statements of Operations Three Months Ended September 30, 2000 and September 30, 1999,
Six Months Ended September 30, 2000 and September 30, 1999
|                                                                                              | Consolidated Condensed Statements of Cash Flows Six Months Ended September 30, 2000 and September 30, 1999                                                              
|                                                                                              | Notes to Consolidated Condensed Financial Statements                                                                                                                    
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|Employment Agreement                                                                         
|Employment Agreement                                                                         
|Finanical Data Schedule                                                                      
|Cautionary Statement                                                                         



---



STOCKWALK.COM GROUP, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q

|                                                                                              |  |                                                           |       |                                                              |     |  |  | 
|--------------------------------------------------------------------------------------------- |  | --------------------------------------------------------- | ----- | ------------------------------------------------------------ | --- |  |  | 
|PART I - FINANCIAL INFORMATION                                                                |  | PAGE                                                     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 1. Consolidated Condensed Financial Statements (Unaudited).                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |  | Consolidated Condensed Statements of Financial Condition: |       |                                                              | 4   | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |  |                                                           |       | September 30, 2000 and March 31, 2000                       
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |  | Consolidated Condensed Statements of Operations:          |       |                                                              | 5   | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |  |                                                           |       | Three Months Ended September 30, 2000 and September 30, 1999
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |  |                                                           |       | Six Months Ended September 30, 2000 and September 30, 1999  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |  | Consolidated Condensed Statements of Cash Flows:          |       |                                                              | 6   | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |  |                                                           |       | Six Months Ended September 30, 2000 and September 30, 1999  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |  | Notes to Consolidated Condensed Financial Statements      |       |                                                              | 7-9 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |  |                                                           | 10-14 |                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 3. Quantitative and Qualitative Disclosures about Market Risk                            |  |                                                           | 14    |                                                             

PART II  OTHER INFORMATION

Item 1. Legal Proceedings.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Many aspects of our business involve substantial risks of liability,
including exposure under federal and state securities laws in
connection with the underwriting and distribution of securities. We do
not presently maintain an errors and omissions insurance policy
insuring us against these risks. At the present time, we are not a
party to, nor is any property subject to, any pending legal
proceedings, other than routine litigation or arbitration proceedings
incidental to our business. We believe that we have good factual and
legal defenses to pending proceedings, and we do not expect that
losses related to any of these proceedings, in the aggregate, will be
material.



| |                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In September 2000, the Company settled a NASD arbitration award of
approximately $16.5 million filed against Dain Rauscher corporation in
favor of John G. Kinnard & Company, a wholly-owned subsidiary of
Stockwalk.com Group Inc., for $13.3 million. The settlement proceeds
were received on September 27, 2000.

Item 2. Changes in Securities and Use of Proceeds- None.

Item 3. Defaults Upon Senior Securities- None.

2



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##### Table of Contents



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



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At the Annual Shareholders meeting held on September 12, 2000, there
were 25,900,843 shares of Common Stock entitled to vote and a total of
15,860,550 shares (61.24%) were represented at the meeting, votes for
proposal 5 did not include votes from the former shareholders of R.J.
Steichen & Company. The Company submitted the following matters to a
vote of security-holders, in which the respective proposals received
the following votes:

|   |  |                        |  |     |  |            |  |  |  |        |  | 
|-- |  | ---------------------- |  | --- |  | ---------- |  |  |  | ------ |  | 
|1. |  | Election of Directors: |  | FOR |  | WITHHELD  
|   |  | Eldon C. Miller        |  |     |  | 15,851,558 |  |  |  | 8,992  | 
|  
|  
|  
|  
|   |  | David B. Johnson       |  |     |  | 15,850,488 |  |  |  | 10,062 | 
|  
|  
|  
|  
|   |  | Paul R. Kuehn          |  |     |  | 15,849,922 |  |  |  | 10,628 | 
|  
|  
|  
|  
|   |  | Stanley D. Rahm        |  |     |  | 15,849,922 |  |  |  | 10,628 | 
|  
|  
|  
|  
|   |  | John (Jack) E. Feltl   |  |     |  | 15,842,872 |  |  |  | 17,678 | 
|  
|  
|  
|  
|   |  | John C. Feltl          |  |     |  | 15,837,856 |  |  |  | 22,694 | 
|  
|  
|  
|  
|   |  | N. Lee Wesley          |  |     |  | 15,849,138 |  |  |  | 11,412 | 
|  
|  
|  
|  
|   |  | George E. Kline        |  |     |  | 15,851,538 |  |  |  | 9,012  | 
|  
|  
|  
|  
|   |  | Richard J. Nigon       |  |     |  | 15,850,438 |  |  |  | 10,112 | 

|   |  |                                                                                     |            |  |          |        |  |          |        |  |                  |         | 
|-- |  | ----------------------------------------------------------------------------------- | ---------- |  | -------- | ------ |  | -------- | ------ |  | ---------------- | ------- | 
|2. |  | Proposal to approve amendments to the 1996 Non-Employee Director Stock Option Plan.
|   |  | For:                                                                                | 14,970,550 |  | Against: | 86,900 |  | Abstain: | 35,108 |  | Broker Non-vote: | 767,992

|   |  |                                                                                          |            |  |          |         |  |          |        |  |                  |         | 
|-- |  | ---------------------------------------------------------------------------------------- | ---------- |  | -------- | ------- |  | -------- | ------ |  | ---------------- | ------- | 
|3. |  | Proposal to approve an amendment to the 1995 Long- Term Incentive and Stock Option Plan.
|   |  | For:                                                                                     | 14,956,231 |  | Against: | 107,219 |  | Abstain: | 29,108 |  | Broker Non-vote: | 767,992 | 

|   |  |                                                                                   |            |  |          |        |  |          |        |  |                  |         | 
|-- |  | --------------------------------------------------------------------------------- | ---------- |  | -------- | ------ |  | -------- | ------ |  | ---------------- | ------- | 
|4. |  | Proposal to adopt the Stockwalk.com Group Inc. 2000 Employee Stock Purchase Plan.
|   |  | For:                                                                              | 15,015,096 |  | Against: | 49,764 |  | Abstain: | 27,698 |  | Broker Non-vote: | 767,992 | 

|   |  |                                                                                                                                                    |            |  |          |        |  |          |        |  |                  |         | 
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- |  | -------- | ------ |  | -------- | ------ |  | ---------------- | ------- | 
|5. |  | Proposal
to authorize the issuance of up to 2,000,000 shares of the company's
common stock to the former Shareholders of R. J. Steichen & Company.
|   |  |                                                                                                                                                   
|   |  | For:                                                                                                                                               | 13,892,517 |  | Against: | 54,459 |  | Abstain: | 39,848 |  | Broker Non-vote: | 767,992 | 

|   |  |                                                                                                |            |  |          |        |  |          |        |  |                  |   | 
|-- |  | ---------------------------------------------------------------------------------------------- | ---------- |  | -------- | ------ |  | -------- | ------ |  | ---------------- | - | 
|6. |  | Proposal to approve the appointment of Ernst & Young LLP as the independent auditors for 2001.
|   |  | For:                                                                                           | 15,823,069 |  | Against: | 15,433 |  | Abstain: | 22,048 |  | Broker Non-vote: | 0 | 

Item 5. Other Information

George E. Kline resigned as member of the board of directors on
September 22, 2000.

Item 6. Exhibits and Report on Form 8-K.



| |                                 
| | --------------------------------
| | a.) Exhibits Number Description:

| |      |  |                                                                                               
| | ---- |  | ----------------------------------------------------------------------------------------------
| | 10.6 |  | Assignment and Amendment of Robert J. Vosburgh employment agreement, dated September 12, 2000.
|
|
|
|
| | 10.7 |  | Assignment and Amendment of Frank H. Lallos employment agreement, dated September 12, 2000.*  
|
|
|
|
| | 27.1 |  | Financial Data Schedule                                                                       
|
|
|
|
| | 99.1 |  | Cautionary Statements                                                                         



| |                         
| | ------------------------
| | b.) Reports on Form 8-K.

| |                                                                                                         |  | 
| | ------------------------------------------------------------------------------------------------------- |  | 
| | Current Report on Form 8-K was filed on September 22, 2000  Acquisition of Kinnard Investments, Inc.  
|
|
|
|
| | Financial Statements of Acquired Business                                                              
| |     Audited financial statements for the three-year period ended December 31, 1999.                   
|
|
|
|
| |     Unaudited financial statements for the six-month period ended June 30, 2000.                      
|
|
|
|
| | Unaudited Proforma Financial Information                                                               
| |     Unaudited consolidated condensed proforma statement of financial condition as of June 30, 2000.   
|
|
|
|
| |     Unaudited consolidated condensed proforma statement of operation for the year ended June 30, 2000.
|
|
|
|
| |     Unaudited consolidated condensed proforma footnotes to the financial statements.                  



---

|* |  | Portions of this document were redacted and filed separately with the Securities and Exchange Commission pursuant
to a request by the Company for confidential treatment pursuant to Rule 24b-2 under the Securities and Exchange Act
of 1934, as amended, in connection with filing of this Report on Form 10-Q.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents









STOCKWALK.COM GROUP, INC.




|                                                                                  |                                                                         |   |                    |           |                |   |             |         | 
|--------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | - | ------------------ | --------- | -------------- | - | ----------- | ------- | 
|                                                                                  |                                                                         |   | September 30, 2000 |           | March 31, 2000
|                                                                                  |                                                                         |   |                    |           |               
|Assets                                                                           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Cash                                                                              |                                                                         | $ | 8,371,600          |           |                | $ | 5,533,500   |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Cash and cash equivalents segregated                                              |                                                                         |   | 42,942,600         |           |                |   | 83,009,400  |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Receivables from customers                                                        |                                                                         |   | 338,277,300        |           |                |   | 216,216,100 |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Receivables from brokers and dealers                                              |                                                                         |   | 408,438,100        |           |                |   | 160,230,300 |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Deposits at clearing organizations                                                |                                                                         |   | 26,981,200         |           |                |   | 26,234,900  |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Trading securities owned, at market                                               |                                                                         |   | 26,524,500         |           |                |   | 8,320,100   |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Secured demand notes receivable                                                   |                                                                         |   | 17,525,000         |           |                |   | 18,575,000  |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Goodwill, less accumulated amortization
 September  $1,543,200; March  $489,000 |                                                                         |   | 72,550,100         |           |                |   | 10,284,900  |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Other assets                                                                      |                                                                         |   | 23,733,000         |           |                |   | 10,471,100  |        
|                                                                                  |                                                                         |   |                    |           |                |   |             |        
|Total assets                                                                      |                                                                         | $ | 965,343,400        |           |                | $ | 538,875,300 |        
|                                                                                  |                                                                         |   |                    |           |                |   |             |        
|Liabilities                                                                      
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Short-term borrowings                                                             |                                                                         | $ | 81,564,000         |           |                | $ | 29,500,000  |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Payables to customers                                                             |                                                                         |   | 344,452,200        |           |                |   | 280,364,200 |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Payables to brokers and dealers                                                   |                                                                         |   | 371,481,700        |           |                |   | 160,153,400 |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Trading securities sold but not yet purchased, at market                          |                                                                         |   | 2,986,600          |           |                |   | 1,339,000   |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Notes payable                                                                     |                                                                         |   | 27,628,300         |           |                |   | 7,544,400   |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Liabilities subordinated to claims of general creditors                           |                                                                         |   | 20,525,000         |           |                |   | 18,575,000  |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Other liabilities                                                                 |                                                                         |   | 33,940,800         |           |                |   | 16,747,000  |        
|                                                                                  |                                                                         |   |                    |           |                |   |             |        
|Total liabilities                                                                 |                                                                         | $ | 882,578,600        |           |                | $ | 514,223,000 |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Shareholders equity                                                             
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Common stock, $.04 par value;                                                    
|                                                                                  | Authorized shares: 50,000,000                                          
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Issued and outstanding September - 31,490,600;
      March - 21,575,300 |   | $                  | 1,259,600 |                |   | $           | 863,000 | 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Paid-in capital                                                                   |                                                                         |   | 86,179,200         |           |                |   | 25,440,900  |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Retained earnings                                                                 |                                                                         |   | (4,674,000         | )         |                |   | (1,651,600  | )      
|                                                                                  |                                                                         |   |                    |           |                |   |             |        
|Total shareholders equity                                                        |                                                                         | $ | 82,764,800         |           |                | $ | 24,652,300  |        
|                                                                                  |                                                                         |   |                    |           |                |   |             |        
|Total liabilities & shareholders equity                                          |                                                                         | $ | 965,343,400        |           |                | $ | 538,875,300 |        
|                                                                                  |                                                                         |   |                    |           |                |   |             |        

4



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##### Table of Contents



STOCKWALK.COM GROUP, INC.




|                                   |                           |   |            |                    |  |                  |            |           |  |      |            |            |  |   |            |            |  | 
|---------------------------------- | ------------------------- | - | ---------- | ------------------ |  | ---------------- | ---------- | --------- |  | ---- | ---------- | ---------- |  | - | ---------- | ---------- |  | 
|                                   |                           |   |            | Three months ended |  | Six months ended
|                                   |                           |   |            | September 30,      |  | September 30,   
|                                   |                           |   |            |                    |  |                 
|                                   |                           |   |            | 2000               |  | 1999             |            | 2000      |  | 1999
|                                   |                           |   |            |                    |  |                  |            |           |  |     
|Revenues                          
|                                  
|                                  
|                                  
|                                  
|                                   | Trading profits           |   | $          | 6,803,600          |  |                  | $          | 3,175,000 |  |      | $          | 10,274,500 |  |   | $          | 5,196,700  | 
|                                  
|                                  
|                                  
|                                  
|                                   | Interest                  |   |            | 12,248,200         |  |                  |            | 4,228,900 |  |      |            | 20,324,200 |  |   |            | 8,426,100  | 
|                                  
|                                  
|                                  
|                                  
|                                   | Commissions               |   |            | 7,135,500          |  |                  |            | 2,210,000 |  |      |            | 11,795,100 |  |   |            | 4,788,100  | 
|                                  
|                                  
|                                  
|                                  
|                                   | Investment banking        |   |            | 4,408,700          |  |                  |            | 2,625,400 |  |      |            | 6,246,600  |  |   |            | 5,093,800  | 
|                                  
|                                  
|                                  
|                                  
|                                   | Clearing fees             |   |            | 1,327,500          |  |                  |            | 945,200   |  |      |            | 2,743,200  |  |   |            | 2,059,800  | 
|                                  
|                                  
|                                  
|                                  
|                                   | Other income              |   |            | 1,482,000          |  |                  |            | 706,700   |  |      |            | 2,818,500  |  |   |            | 1,531,600  | 
|                                   |                           |   |            |                    |  |                  |            |           |  |      |            |            |  |   |            |           
|Total revenues                     |                           | $ | 33,405,500 |                    |  | $                | 13,891,200 |           |  | $    | 54,202,100 |            |  | $ | 27,096,100 |           
|                                  
|                                  
|                                  
|                                  
|Expenses                          
|                                  
|                                  
|                                  
|                                  
|                                   | Compensation and benefits |   | $          | 17,083,700         |  |                  | $          | 7,114,300 |  |      | $          | 26,492,400 |  |   | $          | 14,210,100 | 
|                                  
|                                  
|                                  
|                                  
|                                   | Clearing fees             |   |            | 1,061,700          |  |                  |            | 607,100   |  |      |            | 1,791,700  |  |   |            | 1,558,600  | 
|                                  
|                                  
|                                  
|                                  
|                                   | Occupancy                 |   |            | 2,972,300          |  |                  |            | 986,700   |  |      |            | 4,656,700  |  |   |            | 1,939,600  | 
|                                  
|                                  
|                                  
|                                  
|                                   | Communication             |   |            | 3,318,800          |  |                  |            | 1,631,200 |  |      |            | 6,157,600  |  |   |            | 3,180,100  | 
|                                  
|                                  
|                                  
|                                  
|                                   | Interest                  |   |            | 9,827,000          |  |                  |            | 3,167,700 |  |      |            | 16,347,600 |  |   |            | 6,232,900  | 
|                                  
|                                  
|                                  
|                                  
|                                   | Other expense             |   |            | 2,125,500          |  |                  |            | 2,439,000 |  |      |            | 3,826,000  |  |   |            | 3,758,600  | 
|                                   |                           |   |            |                    |  |                  |            |           |  |      |            |            |  |   |            |           
|Total expenses                     |                           | $ | 36,389,000 |                    |  | $                | 15,946,000 |           |  | $    | 59,272,000 |            |  | $ | 30,879,900 |           
|                                  
|                                  
|                                  
|                                  
|Loss before income taxes           |                           |   | (2,983,500 | )                  |  |                  | (2,054,800 | )         |  |      | (5,069,900 | )          |  |   | (3,783,800 | )         
|                                  
|                                  
|                                  
|                                  
|Income tax benefit                 |                           |   | 1,122,400  |                    |  |                  | 795,400    |           |  |      | 2,047,500  |            |  |   | 1,480,200  |           
|                                   |                           |   |            |                    |  |                  |            |           |  |      |            |            |  |   |            |           
|Net loss                           |                           | $ | (1,861,100 | )                  |  | $                | (1,259,400 | )         |  | $    | (3,022,400 | )          |  | $ | (2,303,600 | )         
|                                   |                           |   |            |                    |  |                  |            |           |  |      |            |            |  |   |            |           
|Basic loss per common share        |                           | $ | (0.07      | )                  |  | $                | (0.07      | )         |  | $    | (0.13      | )          |  | $ | (0.12      | )         
|                                   |                           |   |            |                    |  |                  |            |           |  |      |            |            |  |   |            |           
|Average shares outstanding-basic   |                           |   | 26,609,900 |                    |  |                  | 19,271,200 |           |  |      | 24,095,000 |            |  |   | 19,251,700 |           
|                                   |                           |   |            |                    |  |                  |            |           |  |      |            |            |  |   |            |           
|Diluted loss per common share      |                           | $ | (0.07      | )                  |  | $                | (0.06      | )         |  | $    | (0.13      | )          |  | $ | (0.12      | )         
|                                   |                           |   |            |                    |  |                  |            |           |  |      |            |            |  |   |            |           
|Average shares outstanding-diluted |                           |   | 26,643,100 |                    |  |                  | 19,407,800 |           |  |      | 24,271,500 |            |  |   | 19,371,900 |           
|                                   |                           |   |            |                    |  |                  |            |           |  |      |            |            |  |   |            |           

5



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##### Table of Contents



STOCKWALK.COM GROUP, INC.




|                                                  |  |                    |             |                    |  |   |            |  
|------------------------------------------------- |  | ------------------ | ----------- | ------------------ |  | - | ---------- | -
|                                                  |  | Six Months Ended  
|                                                  |  |                   
|                                                  |  | September 30, 2000 |             | September 30, 1999
|                                                  |  |                    |             |                   
|Operating activities                             
|                                                 
|                                                 
|                                                 
|                                                 
|Net cash used for operating activities            |  | $                  | (29,226,300 | )                  |  | $ | (1,315,900 | )
|                                                 
|                                                 
|                                                 
|                                                 
|Investing activities                             
|                                                 
|                                                 
|                                                 
|                                                 
|Acquisition of R. J. Steichen and Company         |  |                    | (18,637,800 | )                  |  |   |           |  
|                                                 
|                                                 
|                                                 
|                                                 
|Acquisition of Kinnard Investments, Inc           |  |                    | (11,842,400 | )                  |  |   |           |  
|                                                 
|                                                 
|                                                 
|                                                 
|Purchase of furniture and equipment               |  |                    | (3,464,800  | )                  |  |   | (484,400   | )
|                                                 
|                                                 
|                                                 
|                                                 
|Purchase of license agreements                    |  |                    | (168,000    | )                 
|                                                  |  |                    |             |                    |  |   |            |  
|                                                 
|                                                 
|                                                 
|                                                 
|Net cash used for investing activities            |  | $                  | (34,113,000 | )                  |  | $ | (484,400   | )
|                                                 
|                                                 
|                                                 
|                                                 
|Financing activities                             
|                                                 
|                                                 
|                                                 
|                                                 
|Increase in short-term borrowings                 |  | $                  | 48,064,000  |                    |  | $ | (3,900,000 | )
|                                                 
|                                                 
|                                                 
|                                                 
|Net payment on notes payable                      |  |                    | (1,640,800  | )                  |  |   | (1,078,300 | )
|                                                 
|                                                 
|                                                 
|                                                 
|Issuance of common stock                          |  |                    | 220,400     |                    |  |   | 4,483,800  |  
|                                                 
|                                                 
|                                                 
|                                                 
|Issuance of notes payable                         |  |                    | 19,533,800  |                    |  |   |           |  
|                                                  |  |                    |             |                    |  |   |            |  
|Net cash provided (used for) financing activities |  | $                  | 66,177,400  |                    |  | $ | (494,500   | )
|                                                 
|                                                 
|                                                 
|                                                 
|Net increase (decrease) in cash                   |  | $                  | 2,838,100   |                    |  | $ | (2,294,800 | )
|                                                 
|                                                 
|                                                 
|                                                 
|Cash at beginning of the period                   |  |                    | 5,533,500   |                    |  |   | 5,294,900  |  
|                                                  |  |                    |             |                    |  |   |            |  
|Cash at the end of the period                     |  | $                  | 8,371,600   |                    |  | $ | 3,000,100  |  
|                                                  |  |                    |             |                    |  |   |            |  

6



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##### Table of Contents



STOCKWALK.COM GROUP, INC.




1. Description of Business

Our history began in 1980 with the incorporation of Miller Securities, Inc. a
specialized municipal bond firm. Miller Securities eventually broadened its
business to include a variety of financial services, including securities
clearing, and changed its name to Miller, Johnson & Kuehn, Incorporated. MJK
Holdings, Inc. was formed in June 1997 as a holding company for Miller Johnson
& Kuehn and its clearing division. In July 1999, then privately owned MJK
Holdings and publicly held NM Holdings, Inc. merged. The surviving entity
changed its name to Stockwalk.com Group, Inc. The Company completed mergers
with R. J. Steichen & Company in August 2000 and Kinnard Investments, Inc. in
September 2000. Today Stockwalk.com Group, Inc. is the holding company of five
broker-dealers: Miller, Johnson & Kuehn, Inc. Stockwalk.com, Inc, Online
Brokerage Solutions, Inc. R. J. Steichen & Company, and John G. Kinnard and
Company. The broker-dealers are registered with the SEC and are members of the
NASD and SIPC. Our stock trades on the NASDAQ National Market System under the
ticker symbol STOK.

We are a technologically-driven regional securities firm headquartered in
Minneapolis, Minnesota. Through our operating subsidiaries, we provide a broad
range of investment services to individual, corporate and public clients.
These services include both traditional and online securities brokerage,
investment banking, research services and the processing of securities
transactions for correspondent brokerage firms and financial institutions. Our
niche market includes small capitalization, emerging and start-up businesses
and public finance clients located principally in the upper Midwest. Our
Stockwalk.com, Inc. subsidiary offers a secure online brokerage service that
provides order placement, portfolio tracking and related market information,
news and other information to investors 24 hours a day, seven days a week, by
means of the Internet and telephone. These online services are offered to our
customers and through our private label subsidiary, Online Brokerage Solutions,
Inc. to customers and members of small to medium-sized financial institutions,
affinity groups and Internet portals through a private label program.

2. Managements Interim Financial Statement Representation

The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and in accordance with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, all
adjustments (consisting solely of normal recurring accruals) considered
necessary for a fair presentation have been included. Although we believe that
the disclosures are adequate to make the information presented not misleading,
it is suggested that these condensed financial statements be read in
conjunction with the audited financial statements and the notes thereto
included in our latest annual financial statements included in our Annual
Report on Form 10-K.

3. Financing Arrangements

At September 30, 2000 we had discretionary lines of credit totaling $105
million, which were and are secured by firm-owned securities, customer
securities collateralizing liabilities subordinated to claims of general
creditors and unpaid customer securities. These lines are payable on demand.
Borrowings on the lines bear interest at various rates over the banks cost of
funds; such rates generally vary daily. We had outstanding balances of $76.8
million at September 30, 2000, with an average annual interest rate of 7.83%,
and outstanding balances of $29.5 million at March 31, 2000, with and average
annual interest rate of 7.55%.

In August 2000, we completed an offering for $21.5 million of 10% convertible
subordinated bonds due in 2005. In September 2000, we issued $4.8 million of
short-term commercial paper with yields of approximately 8% with various
maturity dates between 20 and 270 days from the date of issuance.

7



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##### Table of Contents



STOCKWALK.COM GROUP, INC.
Notes to Consolidated Condensed Financial Statements

4. Shareholders Equity

On August 1, 2000, we completed our previously announced merger agreement with
R.J. Steichen & Company (Steichen). The former shareholders of Steichen
received $17.5 million in cash and approximately 4,300,000 shares of our common
stock and five-year warrants to purchase 300,000 shares of our common stock
exercisable at $6.375 per share. The former shareholders of Steichen can earn
up to an additional 2,000,000 shares of our common stock upon the achievement
of certain pre-tax earning levels during the two years following closing of the
transaction.

On September 8, 2000, we announced the closing of the Kinnard Investments, Inc.
merger transaction. In this transaction, we issued an aggregate of 3,557,819
registered shares (the equivalent of .7676 shares of the registrants common
stock for each outstanding share of Kinnard common stock) of its common stock,
to the former shareholders of Kinnard. We also paid to such shareholders an
aggregate of $27.8 million in cash ($6.00/share for each outstanding Kinnard
share). Pursuant to the terms of the Kinnard merger, we also paid $4.1 million
to the former holders of Kinnards outstanding options and
warrants.

Computation of Weighted Average Number of Shares Outstanding

We calculate net income per share in accordance with FASB Statement No. 128 by
dividing net income by the weighted average number of shares of common stock
outstanding, to arrive at the net income per common share  basic. We
calculate net income per share  dilutive by dividing net income by the
weighted average number of shares of common stock and dilutive stock
equivalents using the treasury stock method. The weighted average number of
shares outstanding includes the 2,000,000 shares issuable pursuant to the
Steichen earn out. Dilutive stock equivalents are options and warrants which
have an exercise price less than the average market price of our common stock,
for the respective period.

|                                                                                             |  |                    |            |                  |  |      |            |      |  |  |            |  |  |  |            | 
|-------------------------------------------------------------------------------------------- |  | ------------------ | ---------- | ---------------- |  | ---- | ---------- | ---- |  |  | ---------- |  |  |  | ---------- | 
|                                                                                             |  | Three Months Ended |            | Six Months Ended
|                                                                                             |  | September 30,      |            | September 30,   
|                                                                                             |  | 2000               |            | 1999             |  | 2000 |            | 1999
|                                                                                             |  |                    |            |                  |  |      |            |     
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Weighted average shares outstanding- basic                                                   |  |                    | 26,609,900 |                  |  |      | 19,271,200 |      |  |  | 24,095,000 |  |  |  | 19,251,700 | 
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Dilutive effect of stock options and warrants
after application of the treasury stock method |  |                    | 33,200     |                  |  |      | 136,600    |      |  |  | 176,500    |  |  |  | 120,200    | 
|                                                                                             |  |                    |            |                  |  |      |            |      |  |  |            |  |  |  |            | 
|Weighted average shares outstanding-dilutive                                                 |  |                    | 26,643,100 |                  |  |      | 19,407,800 |      |  |  | 24,271,500 |  |  |  | 19,371,900 | 
|                                                                                             |  |                    |            |                  |  |      |            |      |  |  |            |  |  |  |            | 

5. Business Combinations

The acquisitions of Steichen and Kinnard were accounted for under the purchase
method of accounting, and accordingly, the respective purchase prices were
allocated to assets acquired and liabilities assumed based on their fair market
values at the dates of acquisition. The excess of the purchase price over the
fair market value of the net assets acquired, $39.8 million and $20.2 million
respectively, was recorded as goodwill and will be amortized over 20 years.
The results of operations of the two entities have been included in the
Consolidated Condensed Statements of Operations since the dates of acquisition.

8



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##### Table of Contents



The following pro forma operating results assume that the acquisitions had
occurred at the beginning of each period presented. In addition to combining
the historical results of operations, the pro forma results include adjustments
for the estimated effect of purchase accounting.

|                              |  |                    |            |                  |  |      |            |      |  |  |            |   |  |  |            |  
|----------------------------- |  | ------------------ | ---------- | ---------------- |  | ---- | ---------- | ---- |  |  | ---------- | - |  |  | ---------- | -
|                              |  | Three Months Ended |            | Six Months Ended
|                              |  | September 30,      |            | September 30,   
|                              |  |                    |            |                 
|                              |  | 2000               |            | 1999             |  | 2000 |            | 1999
|                              |  |                    |            |                  |  |      |            |     
|Total revenues                |  |                    | 46,175,700 |                  |  |      | 24,741,700 |      |  |  | 92,688,200 |   |  |  | 72,689,800 |  
|                             
|                             
|                             
|                             
|Net income                    |  |                    | (2,049,300 | )                |  |      | (1,006,400 | )    |  |  | (1,842,900 | ) |  |  | (1,959,000 | )
|                             
|                             
|                             
|                             
|Diluted loss per common share |  |                    | (0.06      | )                |  |      | (0.03      | )    |  |  | (0.05      | ) |  |  | (0.07      | )

6. Net Capital Requirements and Dividend Restrictions

Our five broker-dealers are subject to the Securities and Exchange Commissions
Uniform Net Capital Rule (Rule 15c3-1) which requires the maintenance of
certain levels of minimum net capital. Miller, Johnson, & Kuehn, Inc., and R.
J. Steichen & Company have elected to use the alternative method permitted by
Rule 15c3-1, which requires that they maintain minimum net capital equal to the
greater of $250,000 or 2% of aggregate debit balances arising from customer
transactions. The minimum net capital requirement for J. G. Kinnard is the
greater of the aggregate amount of unsecured and customer liabilities divided
by 15 or the product of multiplying the number of markets made for equity
securities by $2,500. The minimum net capital for the Stockwalk.com and Online
Brokerage Solutions is the greater of the aggregate amount of unsecured and
customer liabilities divided by 15 or $50,000. The net capital rule also
provides that equity capital may not be withdrawn or cash dividends may not be
paid if resulting net capital would be less than 5% of aggregate debits under
the alternative method and less than 120% of the minimum net capital
requirement for the traditional calculation.

The net capital positions for each of the five broker dealers at September 30,
2000 are summarized as follows:

|                                 |             |  |            |  |  |  |            | 
|-------------------------------- | ----------- |  | ---------- |  |  |  | ---------- | 
|Broker Dealer                    | Net Capital |  | Excess    
|                                 |             |  |            |  | 
|                                
|                                
|                                
|                                
|Miller, Johnson, & Kuehn, Inc.   |             |  | 18,117,040 |  |  |  | 12,960,881 | 
|                                
|                                
|                                
|                                
|R.J. Steichen & Company          |             |  | 9,535,082  |  |  |  | 6,986,327  | 
|                                
|                                
|                                
|                                
|John G. Kinnard & Company        |             |  | 1,305,144  |  |  |  | 430,711    | 
|                                
|                                
|                                
|                                
|Stockwalk.com, Inc.              |             |  | 801,785    |  |  |  | 726,390    | 
|                                
|                                
|                                
|                                
|Online Brokerage Solutions, Inc. |             |  | 643,270    |  |  |  | 580,949    | 

9



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##### Table of Contents



STOCKWALK.COM GROUP, INC.




General

We are a technologically-driven regional securities firm headquartered in
Minneapolis, Minnesota. Through our operating subsidiaries, we provide a broad
range of investment services to individual, corporate and public clients.
These services include both traditional and online securities brokerage,
investment banking, research services and the processing of securities
transactions for correspondent brokerage firms and financial institutions. Our
niche market includes small capitalization, emerging and start-up businesses
and public finance clients located principally in the upper Midwest. Our
Stockwalk.com, Inc. subsidiary offers a secure online brokerage service that
provides order placement, portfolio tracking and related market information,
news and other information to investors 24 hours a day, seven days a week, by
means of the Internet and telephone. These Stockwalk.com services are offered
to our customers and through our private label subsidiary, Online Brokerage
Solutions, Inc, to customers and members of small to medium-sized financial
institutions, affinity groups and Internet portals.

Recent Developments

On August 1, 2000, we completed our previously announced merger agreement with
R.J. Steichen & Company (Steichen). The former shareholders of Steichen
received $17.5 million in cash and approximately 4,300,000 shares of our common
stock and five-year warrants to purchase 300,000 shares of our common stock
exercisable at $6.375 per share. The former shareholders of Steichen can earn
up to an additional 2,000,000 shares of our common stock upon the achievement
of certain pre-tax earning levels during the two years following closing of the
transaction. At the time of the closing John E. Feltl and John C. Feltl became
members of the board of directors of Stockwalk.com Group, Inc.

On August 11, 2000, we completed the public offer and sale of $21.5 million of
five year 10% convertible subordinated notes.

On September 8, 2000, we announced the closing of the Kinnard Investments, Inc.
merger transaction. In this transaction, we issued an aggregate of 3,557,819
registered shares (the equivalent of .7676 shares of the registrants common
stock for each outstanding share of Kinnard common stock) of its common stock,
to the former shareholders of Kinnard. We also paid to such shareholders an
aggregate of $27.8 million in cash ($6.00/share for each outstanding Kinnard
share). Pursuant to the terms of the Kinnard merger, we also paid $4.1 million
to the former holders of Kinnards outstanding options and warrants.

On September 27, 2000, we settled a NASD arbitration award of approximately
$16.5 million filed against Dain Rauscher Corporation, in favor of John G.
Kinnard and Company, a wholly-owned subsidiary of Stockwalk.com Group, Inc.,
for $13.3 million. The settlement proceeds were received on September 27,
2000. The tax-adjusted value of the award was reflected in connection with the
Kinnard merger and will result in a reduction of future amortization expense.

Factors that may affect future results

Certain matters set forth in this public dissemination on Form 10-Q, including
managements expectations regarding future growth and profitability, are
forward-looking statements within the context of the Private Securities
Litigation Reform Act of 1995. These statements involve certain risks and
uncertainties which could cause such statements to differ materially from
actual results. See additional cautionary statements in exhibit 99.1

Segments

Our reportable segments are as follows: full-service brokerage, clearing
services, online brokerage, private label brokerage, and other / eliminations.

10



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##### Table of Contents



Full Service Brokerage

Through our three traditional full-service broker dealers, Miller, Johnson &
Kuehn, Inc., R. J. Steichen & Company and John G. Kinnard and Company, we act
as agents, principals and underwriters for customers seeking to trade
securities or obtain financing. We charge a brokerage commission when acting
as an agent for the purchaser or seller of a security. We recognize income or
loss on inventory sold to customers from inventory maintained for those
securities in which we make a market. We also provide investment-banking
services to our clients by managing or co-managing public offerings of
securities or by arranging private placements of securities with institutional
or individual investors. Our corporate and public capital finance departments
accept invitations to participate in competitive or negotiated underwritings
managed by other investment banking firms and allocate our underwriting
positions to our brokers, institutional clients and other broker dealers.

Clearing Services

Miller, Johnson, & Kuehn, Inc. also serves as a clearing agent providing
transaction execution, account maintenance, including extension of credit, and
record keeping services for customers of its introducing brokers. We collect a
clearing fee and charge interest on the customers margin accounts and pay
interest on cash in customers accounts. Additionally we charge and pay
interest on cash balances resulting from stock borrowed from or loaned to other
broker dealers.

Online Brokerage

Through our Stockwalk.com, Inc. broker-dealer and our web-site
www.stockwalk.com, we provide automated order placement, portfolio tracking and
related market information, news and other information services 24 hours a day,
seven days a week. This is done by means of the Internet and direct modem
access which allows our customers the ability to place orders for stock trades
and other investment transactions directly, and at a lower, more predictable
transaction cost than traditional full-commission brokerage firms. Further, we
expect that our technology will be adopted to provide information and
transaction processing services related to other aspects of electronic
commerce, such as the processing of insurance transactions and electronic cash
transfers.

Private Label Brokerage

Our business plan for growth in the online brokerage business is based on the
development of private label arrangements with small to medium-sized financial
institutions, affinity groups and Internet portals through our Online Brokerage
Solutions, Inc. subsidiary. The program allows customers of these organizations
to open and access an online account through the organizations existing
web-site. We collect a commission similar to those by other online customers
and remit a portion of each transaction to the organization.

Other / Eliminations

Intersegment transactions, including management fees, are measured on the same
basis as if the transactions occurred with external customers. In reviewing
the segment operating results, our operating decision-makers do not distinguish
between inter-segment and external customer transactions. Intersegment
transactions are eliminated to reconcile total segment revenue to consolidated
revenue. We do not provide balance sheet data for segment reporting, as this
data is not measured for its operating segments.

11



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##### Table of Contents



Information concerning operations in these segments of business is as follows:

|                          |                         |   |                    |            |                  |   |            |            |      |   |            |            |   |   |            |            |  
|------------------------- | ----------------------- | - | ------------------ | ---------- | ---------------- | - | ---------- | ---------- | ---- | - | ---------- | ---------- | - | - | ---------- | ---------- | -
|                          |                         |   | Three Months Ended |            | Six Months Ended
|                          |                         |   | September 30,      |            | September 30,   
|                          |                         |   |                    |            |                 
|                          |                         |   | 2000               |            | 1999             |   | 2000       |            | 1999
|                          |                         |   |                    |            |                  |   |            |            |     
|Revenue                  
|                         
|                         
|                         
|                         
|                          | Full service brokerage  |   | $                  | 20,139,700 |                  |   | $          | 8,073,100  |      |   | $          | 29,049,000 |   |   | $          | 14,806,500 |  
|                         
|                         
|                         
|                         
|                          | Clearing services       |   |                    | 12,538,300 |                  |   |            | 6,050,200  |      |   |            | 23,590,100 |   |   |            | 12,379,400 |  
|                         
|                         
|                         
|                         
|                          | Online brokerage        |   |                    | 1,066,500  |                  |   |            | 1,800      |      |   |            | 2,368,300  |   |   |            | 1,900      |  
|                         
|                         
|                         
|                         
|                          | Private label brokerage |   |                    | 13,900     |                  |   |            |           |      |   |            | 14,300     |   |   |            |           |  
|                         
|                         
|                         
|                         
|                          | Other / eliminations    |   |                    | (352,900   | )                |   |            | (233,900   | )    |   |            | (819,600   | ) |   |            | (91,700    | )
|                         
|                         
|                         
|                         
|Consolidated revenue      |                         | $ | 33,405,500         |            |                  | $ | 13,891,200 |            |      | $ | 54,202,100 |            |   | $ | 27,096,100 |           
|                          |                         |   |                    |            |                  |   |            |            |      |   |            |            |   |   |            |           
|Pre-tax income (loss)    
|                         
|                         
|                         
|                         
|                          | Full service brokerage  |   | $                  | (148,500   | )                |   | $          | (738,500   | )    |   | $          | (1,150,200 | ) |   | $          | (2,753,400 | )
|                         
|                         
|                         
|                         
|                          | Clearing services       |   |                    | 38,400     |                  |   |            | 435,700    |      |   |            | 813,100    |   |   |            | 1,130,800  |  
|                         
|                         
|                         
|                         
|                          | Online brokerage        |   |                    | (1,388,900 | )                |   |            | (1,359,400 | )    |   |            | (3,256,800 | ) |   |            | (1,459,900 | )
|                         
|                         
|                         
|                         
|                          | Private label brokerage |   |                    | (1,472,900 | )                |   |            |           |      |   |            | (1,472,600 | ) |   |            |           |  
|                         
|                         
|                         
|                         
|                          | Other / eliminations    |   |                    | (11,600    | )                |   |            | (392,600   | )    |   |            | (3,400     | ) |   |            | (701,300   | )
|                         
|                         
|                         
|                         
|Consolidated pre-tax loss |                         | $ | (2,983,500         | )          |                  | $ | (2,054,800 | )          |      | $ | (5,069,900 | )          |   | $ | (3,783,800 | )         
|                          |                         |   |                    |            |                  |   |            |            |      |   |            |            |   |   |            |           
|                         
|                         
|                         
|                         

Three Months Ended September 30, 2000 and September 30, 1999

Full service brokerage revenues for the quarter ended September 30, 2000 were
$20.1 million representing a $12.1 million or 149.5% increase from the similar
period in 1999. A large component of this increase related to the newly
acquired Steichen and Kinnard subsidiaries, which were acquired on August 1,
2000 and September 8, 2000, respectively. These broker-dealers generated
revenues to the Company of $10.7 million from their respective dates of
acquisition. Full service brokerage expenses increased $11.5 million to $20.3
million in the quarter ended September 30, 2000 compared to the similar period
in 1999. Steichen and Kinnard expenditures from their respective dates of
acquisition were $9.8 million.

During the quarter ended September 30, 2000, our clearing fee revenue was $12.5
million, an increase of $6.5 million or 107.3% from $6.1 million in the quarter
ended September 30, 1999. Interest income on customer margin accounts
increased $1.7 million as a result of increased customer balances and interest
income on cash positions resulting from stock borrowed from other broker
dealers increased $3.8 million in the quarter ended September 30, 2000.
Clearing fee expenses for the quarter ended September 30, 2000 totaled $12.5
million, an increase of $6.9 million or 122.7% from the comparable period in
1999. The increase in clearing expense is primarily due to a $4.5 million
increase in interest expense on increased customer cash balances and cash
received in connection with the stock loaned to other broker dealers in
addition to a $876,800 increase in communication expenditures. It is
anticipated that clearing fee income and fees will grow as we attract new
correspondents, clear trades for our growing online brokerage business, and
perform clearing services for customers of our Kinnard broker-dealer that were
previously cleared through an outside broker-dealer.

The online brokerage commission revenues of $1.1 million in the quarter ended
September 30, 2000 were primarily generated from customers obtained through
prior year acquisitions. We are attempting to obtain new online customers
through our private label brokerage program. The $1.4 million pre-tax loss in
the quarter ended September 30, 2000 is attributed to staffing, technology and
infrastructure costs incurred to develop and further refine our online
brokerage trading website.

12



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##### Table of Contents



Our private label brokerage operations incurred a pre-tax loss of $1.5 million
in the three months ended September 30, 2000. The loss is attributable to the
staffing and technology required to market our services to financial
institutions and affinity groups. To date we have agreements in place with
many of the major online banking service providers in the United States and
have agreements in place with 56 financial institutions at September 30, 2000.
Online Brokerage Solutions, Inc. is working with these organizations to promote
the opening of new customer accounts, on which we will generate future
commission income.

Six Months Ended September 30, 2000 and 1999

Full service brokerage revenues for the six months ended September 30, 2000
were $29.0 million representing a $14.2 million or 96.2% increase from the
similar period in 1999. Revenues from the newly acquired Steichen and Kinnard
subsidiaries generated $10.7 million from their respective acquisition dates of
August 1, 2000 and September 8, 2000. The remaining increase was the result of
commission growth from equity and certificate of deposit transactions. Full
service brokerage expenses increased $12.6 million to $30.2 million in the
first six months ended September 30, 2000 compared to the similar period in
1999. Steichen and Kinnard expenditures from their respective dates of
acquisition were $9.8 million.

During the six months ended September 30, 2000, our clearing fee revenue was
$23.6 million, an increase of $11.2 million or 90.6% from $12.4 million in the
six months ended September 30, 1999. Interest income on customer margin
accounts increased $3.2 million as a result of increased customer balances and
interest income on cash positions resulting from stock borrowed from other
broker dealers increased $6.2 million in the six months ended September 30,
2000. The number of firms utilizing our clearing services increased to 55 at
September 30, 2000 from 50 at March 31, 2000. Clearing fee expenses for the
six months ended September 30, 2000 totaled $22.8 million, an increase of $11.5
million or 102.5% from the comparable period in 1999. The increase in clearing
expense is due to a $7.6 million increase in interest expense on increased
customer cash balances and cash received in connection with the stock loaned to
other broker dealers. It is anticipated that clearing fee income and fees will
grow as we attract new correspondents, clear trades for our growing online
brokerage business, and perform clearing services for our Kinnard broker-dealer
that were previously performed by an outside broker-dealer.

The online brokerage commission revenues of $2.4 million in the six months
ended September 30, 2000 were primarily generated from customers obtained
through prior year acquisitions. We are attempting to obtain new online
customers through our private label program. The $3.3 million pre-tax loss in
the six months ended September 30, 2000 is attributed to staffing, technology
and infrastructure costs incurred to develop and further refine our online
brokerage trading web-site.

Our private label brokerage operations incurred a pre-tax loss of $1.5 million
in the six months ended September 30, 2000. The loss is attributable to the
staffing and technology required to market our services to financial
institutions and affinity groups. To date we have agreements in place with
many of the major online banking service providers in the United States and
have agreements in place with 56 financial institutions at September 30, 2000.
Online Brokerage Solutions, Inc. is working with these organizations to promote
the opening of new customer accounts, on which we will generate future
commission income.

Liquidity and Capital Resources

Our assets consist primarily of cash and assets readily convertible into
cash. Security inventories are stated at market value and are generally readily
marketable. Customer margin loans are collateralized by securities and have
floating interest rates. Other receivables and payables with customers and
other brokers and dealers usually settle transactions within three days
following the date of transaction. Operations are financed by equity capital,
bank lines of credit, proceeds from sales of securities, non-interest bearing
liabilities such as checks and drafts payable, payables to customers and
employee compensation payable. The $29.2 million use of cash from operating
activities is primarily related to a $26.1 million net increase in broker
receivables.

Our investing activities used $34.1 million in the six months ended September
30, 2000. The Company paid the former owners of R.J. Steichen and Company
approximately $17.5 million in connection with the merger and incurred merger
related filing fees and professional service costs of $1.1 million. We used
$11.8 million to complete the merger with Kinnard Investments, Inc., which
included cash payments of $27.8 million to the former shareholders of Kinnard,
$4.1 million to former option and warrant holders of Kinnard, $3.9 million in
retention fees and professional service costs offset by the cash on hand at
Kinnard at the date of merger, and $13.3 million received in settlement of a
NASD arbitration award.

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Our financing activities provided cash of $66.2 million in the six months ended
September 30, 2000 primarily resulting from the increase in short term
borrowings used to fund operations as well as $19.5 million in net proceeds
from the sale of five year 10% convertible subordinated notes, completed in
August 2000.

Our five broker dealers are subject to the Securities and Exchange Commissions
Uniform Net Capital Rule (Rule 15c3-1) which requires the maintenance of
minimum net capital and also provides that equity capital may not be withdrawn
or cash dividends paid if resulting net capital would be less than 5% of
aggregate debits under the alternative method and less than 120% of the minimum
net capital requirement for the traditional calculation. At September 30, 2000
the five broker dealers had combined net capital of $30.4 million and a
combined minimum net capital requirement of $8.7 million.

At September 30, 2000, we had approximately $105 million in committed credit
agreements, of which $76.8 million was utilized.

We believe that our current cash position, cash generated from future
operations, availability of line of credit borrowings, additional capacity for
subordinated debt, and sale of securities and commercial paper will be adequate
to meet our current and anticipated obligations and operating needs.






QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary market risk exposure is the impact that equity market pricing and
interest rate fluctuations may have on the value of the securities we hold and
securities our customers hold in margin accounts. We manage this risk exposure
through a process of internal controls and management review. Position limits
for trading and investments are established and monitored on an on-going basis.
The trading inventory is turned over frequently throughout the year.
Management reviews our customers credit standing, and we maintain collateral
to support customer margin loans.

Our equity price risk results from the risk of loss from price movements,
volatility or liquidity over which we have no control. Our corporate equity
holdings on long positions were $6.5 million at September 30, 2000. The
potential loss in fair value, using a hypothetical 25% decline in equity prices
on September 30, 2000 holdings, is estimated to be $1.6 million. A 25%
hypothetical decline was used to represent a significant yet plausible market
change.

Our primary exposure to interest rate risk arises from our interest earning
assets held primarily for deposits at clearing organizations and NASD reserve
requirements. We mitigate this risk by holding high-grade government
obligations with short-term maturities.



SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                          |  |                           |  |                                                               
|------------------------- |  | ------------------------- |  | --------------------------------------------------------------
|Dated:  November 14, 2000 |  | STOCKWALK.COM GROUP, INC.
|                         
|                         
|                         
|                         
|                         
|                          |  |                           |  | By:     /s/ Jeffrey L. Houdek
Its:     Chief Financial Officer

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