SECURITIES AND EXCHANGE COMMISSION
 
 Washington, D.C. 20549
 
 FORM 10-K
 
  
 x
 For the fiscal year ended December 31,
2004
 
 o
 
 Commission file number 0-24634
 
 TRACK DATA CORPORATION
 
  
 **DELAWARE**
    **22-3181095**(State or other jurisdiction of
    (I.R.S. Employer Identification No.)incorporation or organization)**95 Rockwell Place****Brooklyn, New York**
    **11217**(Address of principal executive offices)
    (Zip Code)**(718) 522-7373**(Registrant's telephone number)
 
 None
 
 Common Stock, $.01 par
value
 
 x o
 x
 o x
  $24,229,000
 
  
 9,627,000 shares of common stock, $.01 par value, as of
February 28, 2005.
 
 DOCUMENTS INCORPORATED BY REFERENCE
 [SEE INDEX TO EXHIBITS]
 
 
   PART I
 
 Disclosures in this
Form 10-K contain certain forward-looking statements, including, without
limitation, statements concerning the Company's operations, economic performance
and financial condition. These forward-looking statements are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. The words "believe," "expect," "anticipate" and other similar expressions
generally identify forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
their dates. These forward-looking statements are based largely on the Company's
current expectations and are subject to a number of risks and uncertainties,
including, without limitation, changes in external market factors, changes in
the Company's business or growth strategy or an inability to execute its
strategy due to changes in its industry or the economy generally, the emergence
of new or growing competitors, various other competitive factors and other risks
and uncertainties indicated from time to time in the Company's filings with the
Securities and Exchange Commission. Actual results could differ materially from
the results referred to in the forward-looking statements. In light of these
risks and uncertainties, there can be no assurance that the results referred to
in the forward-looking statements contained in this Form 10-K will in fact
occur. The Company makes no commitment to revise or update any forward looking
statements in order to reflect events or circumstances after the date any such
statement is made.
 
 ITEM 1. BUSINESS
 
 
 
 
 
 Background
 
 
 
 Segments
 
  
  I-1
  
 **A.**
    **ONLINE TRADING, MARKET DATA SERVICES AND ECN
      SERVICES TO THE INSTITUTIONAL PROFESSIONAL INVESTMENT
      COMMUNITY**
 
 MarkeTrack
 
 
 
 proTrack Online Trading
 
 
 
 Electronic Communications Network
 
 
 
 
 
 NewsWatch Service
 
 
 
  I-2
  Marketing
 
 
 
 
 
 
 
 
 
 Competition
 
 
 
 
 
 
 
 
 
 
  I-3
  **B.**
    **INTERNET-BASED ONLINE TRADING, MARKET DATA SERVICES,
      AND OTHER SERVICES TO THE NON-PROFESSIONAL INDIVIDUAL INVESTMENT
      COMMUNITY**
 
 Internet-Based Online Trading and Market Data Services
 
 
 
 
 
 
 
 Other Internet-Based Market Data Services
 
 *AIQ Systems*
 
 
 
 *Dial/Data Service*
 
 
 
 Marketing
 
 
 
 I-4
 
 
 
 Competition
 
 
 
 
  
 
 
 
 
 
 MATTERS
RELATED TO BOTH OPERATING SEGMENTS
 
 Securities Regulation
 
 
  I-5
  
 
 
 
 
 *Operations*
 
 *Clearing and Order Processing*
 
 
 
 
 
 
 
 
 
 *Network Infrastructure*
 
 
  I-6
  
 
 
 Net Capital Requirements
 
 
 
 
 
 
 
 Limited Proprietary Information
 
 
 
 
 
 
 
  I-7
  Research and Development
 
 
 
 Employees
 
 
 
  C. ARBITRAGE TRADING
 
  
 
 
 ITEM 2. PROPERTIES
 
 
 
 
 
 
 
  I-8
  ITEM 3. LEGAL PROCEEDINGS
 
 
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
 
 
 
  I-9
  PART II
 
 **ITEM 5.**
      ****
    **MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
      MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES**
 
  
  **Common Stock****Sale Price****High**
    
    **Low****2003**First Quarter
    
    $
    4.00
    
    
    $
    2.20Second Quarter
    
    
    5.30
    
    
    
    2.20Third Quarter
    
    
    15.90
    
    
    
    4.20Fourth Quarter
    
    
    10.50
    
    
    
    6.35**2004**First Quarter
    
    $
    9.80
    
    
    $
    5.05Second Quarter
    
    
    8.00
    
    
    
    4.10Third Quarter
    
    
    5.70
    
    
    
    3.60Fourth Quarter
    
    
    5.35
    
    
    
    3.30
 
 Dividends
 
 
 
 II-1
  Issuer Purchases of Equity Securities
 Total Numberof SharesNumber of
    
    
    
    Purchased as
    
    Maximum NumberShares of
    
    Average
    
    Part of
    
    of Shares That MayPeriod
    
    Common Stock
    
    Price Paid
    
    Publicly
    
    Yet be PurchasedPurchased
    
    Purchased
    
    Per Share
    
    Announced Plans
    
    Under the PlansOctober, 2004
    
    
    5,820
    
    
    
    $3.94
    
    
    
    5,820
    
    
    
    231,898November, 2004
    
    
    00-0000
    
    
    
    
    
    
    
    000-
    
    
    
    231,898December, 2004
    
    
    29,395
    
    
    
    $4.82
    
    
    
    29,395
    
    
    
    202,503Total
    
    
    35,215
    
    
    
    
    
    
    
    35,215
 
 
 
  II-2
  ITEM 6. SELECTED FINANCIAL
DATA
 
 **Year Ended December 31,**
    
    **2004**
    
    **2003**
    
    **2002**
    
    **2001**
    
    **2000***(in thousands, except earnings and dividends per
    share)***SERVICE FEES AND REVENUE**
    
    $
    40,093
    
    
    $
    40,881
    
    
    $
    57,188
    
    
    $
    62,217
    
    
    $
    58,767**COSTS, EXPENSES AND OTHER:**Direct operating costs
    
    
    23,544
    
    
    
    23,201
    
    
    
    31,309
    
    
    
    29,539
    
    
    
    31,484Selling and administrative expenses
    
    
    14,415
    
    
    
    15,098
    
    
    
    19,307
    
    
    
    19,560
    
    
    
    21,564Marketing and advertising
    
    
    414
    
    
    
    394
    
    
    
    659
    
    
    
    1,243
    
    
    
    5,472Write off of investment in private companies
    
    
    -0000
    
    
    
    00-0000
    
    
    
    716
    
    
    
    00-0000
    
    
    
    254Gain on arbitrage trading
    
    
    (1,512
    )
    
    
    (1,891
    )
    
    
    (445
    )
    
    
    (1,800
    )
    
    
    (783
    )Gain on marketable securities-Innodata and Edgar Online
    
    
    (5,887
    )
    
    
    (624
    )
    
    
    (124
    )
    
    
    -0000
    
    
    
    -0000Other income
    
    
    
    
    
    
    -0000
    
    
    
    0-0000
    
    
    
    (1,949
    )
    
    
    (900
    )Interest expense (income) - net
    
    
    305
    
    
    
    107
    
    
    
    657
    
    
    
    (58
    )
    
    
    288Total
    
    
    31,279
    
    
    
    36,285
    
    
    
    52,079
    
    
    
    46,535
    
    
    
    57,379**INCOME BEFORE EQUITY IN****NET INCOME OF AFFILIATE****AND INCOME TAXES**
    
    
    8,814
    
    
    
    4,596
    
    
    
    5,109
    
    
    
    15,682
    
    
    
    1,388**EQUITY IN NET INCOME OF AFFILIATE**
    
    
    00-0000
    
    
    
    00-0000
    
    
    
    00-0000
    
    
    
    276
    
    
    
    718**INCOME BEFORE INCOME TAXES**
    
    
    8,814
    
    
    
    4,596
    
    
    
    5,109
    
    
    
    15,958
    
    
    
    2,106**INCOME TAXES**
    
    
    3,614
    
    
    
    1,750
    
    
    
    2,118
    
    
    
    4,880
    
    
    
    47**NET INCOME**
    
    $
    5,200
    
    
    $
    2,846
    
    
    $
    2,991
    
    
    $
    11,078
    
    
    $
    2,059**BASIC AND DILUTED NET****INCOME PER SHARE**
    
    
    $.53
    
    
    
    $.29
    
    
    
    $.28
    
    
    
    $.93
    
    
    
    $.16**DIVIDENDS PER SHARE**
    
    
    $.05
    
    
    
    $.05**WEIGHTED AVERAGE SHARES OUTSTANDING**
    
    
    9,732
    
    
    
    9,942
    
    
    
    10,525
    
    
    
    11,919
    
    
    
    12,732**ADJUSTED DILUTIVE SHARES OUTSTANDING**
    
    
    9,740
    
    
    
    9,960
    
    
    
    10,580
    
    
    
    11,975
    
    
    
    12,811**December 31,**
    
    
    **2004**
    
    
    
    **2003**
    
    
    
    **2002**
    
    
    
    **2001**
    
    
    
    **2000***(in thousands)***TOTAL ASSETS**
    
    $
    69,438
    
    
    $
    73,498
    
    
    $
    46,416
    
    
    $
    76,920
    
    
    $
    24,479**TOTAL LIABILITIES**
    
    
    42,570
    
    
    
    49,693
    
    
    
    26,809
    
    
    
    53,759
    
    
    
    7,747**STOCKHOLDERS’ EQUITY**
    
    
    26,868
    
    
    
    23,805
    
    
    
    19,607
    
    
    
    23,161
    
    
    
    16,732
 
 
 
  II-3
  ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 *Business*
 
 
 
 *Relevant Factors*
  
  
 
 
  
 
 II-4
 
 
 *Results of Operations*
 
 *Years ended December 31, 2004 and
2003*
 
 
 
 
 
 
  II-5
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 *Years ended December 31, 2003 and
2002*
 
 
 
 
 
  II-6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  II-7
  *Liquidity and Capital Resources*
 
 
 
 
 
 
 
 
 
 
 
 
  II-8
  *Contractual Obligations and
Commitment* s
 
 
 
 
 
 *Critical Accounting Policies*
 
 
 
 Revenue Recognition
 
 
 
 Marketable Securities
 
 
 
 
 
 Long-lived Assets
 
 
 
 II-9
 New Pronouncements
 
 
 
 
 
 *Inflation and Seasonality*
 
 
 
 ITEM 7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 
 
 
 
 
  II-10
  ITEM 8. FINANCIAL
STATEMENTS
 
 
 
 INDEX TO FINANCIAL STATEMENTS
 
 
 **PAGE****Track Data Corporation and
    Subsidiaries**Report of Independent Registered Public Accounting
Firm
    
    II-12Consolidated Balance Sheets as of December 31, 2004 and 2003
    
    II-13Consolidated Statements of Income for the three years endedDecember 31, 2004, 2003 and 2002
    
    II-14Consolidated Statements of Stockholders' Equity and
      ComprehensiveIncome for the three years ended December 31, 2004, 2003 and
      2002
    
    II-15Consolidated Statements of Cash Flows for the three years endedDecember 31, 2004, 2003 and 2002
    
    II-16Notes to Consolidated Financial Statements
    
    II-17-28
 
 
  II-11
  
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
  
  
  
    
  
   
 
   II-12
   Track Data Corporation and Subsidiaries
 Consolidated Balance Sheets
 December 31, 2004 and 2003
 (in thousands, except number of common shares)
 
 ***2004***
    
    ***2003*****ASSETS****CASH AND EQUIVALENTS**
    
    $
    6,818
    
    
    $
    8,315**ACCOUNTS RECEIVABLE** - net of allowance for
      doubtfulaccounts of $159 in 2004 and 2003
    
    
    2,160
    
    
    
    1,099**DUE FROM CLEARING BROKER**
    
    
    269
    
    
    
    547**DUE FROM BROKER**
    
    
    35,751
    
    
    
    37,141**MARKETABLE SECURITIES**
    
    
    20,132
    
    
    
    21,427**FIXED ASSETS** - at cost (net of accumulated
      depreciation)
    
    
    1,787
    
    
    
    2,140**EXCESS OF COST OVER NET ASSETS ACQUIRED**-
      net
    
    
    1,900
    
    
    
    1,900**OTHER ASSETS**
    
    
    621
    
    
    
    929**TOTAL**
    
    $
    69,438
    
    
    $
    73,498**LIABILITIES AND STOCKHOLDERS’ EQUITY****LIABILITIES**Accounts payable and accrued expenses
    
    $
    4,713
    
    
    $
    4,112Notes payable - other
    
    
    000-
    
    
    
    494Trading securities sold but not yet
    purchased
    
    
    33,615
    
    
    
    40,996Net deferred income tax liabilities
    
    
    2,052
    
    
    
    2,475Other liabilities, including income taxes
    
    
    2,190
    
    
    
    1,616Total
      liabilities
    
    
    42,570
    
    
    
    49,693**COMMITMENTS AND CONTINGENCIES****STOCKHOLDERS’ EQUITY**Common stock - $.01 par
      value; 60,000,000 shares authorized; issued andoutstanding 9,627,000 shares in 2004 and 9,800,000 shares in
      2003
    
    
    96
    
    
    
    98Additional paid-in
      capital
    
    
    13,786
    
    
    
    14,544Retained earnings
    
    
    10,411
    
    
    
    5,701Accumulated other
      comprehensive income
    
    
    2,575
    
    
    
    3,462Total
      stockholders’ equity
    
    
    26,868
    
    
    
    23,805**TOTAL**
    
    $
    69,438
    
    
    $
    73,498
 
 
  See
notes to consolidated financial statements
 II-13
  Track Data Corporation and Subsidiaries
 Consolidated Statements of Income
 Years Ended December 31, 2004, 2003 and 2002
 (in thousands, except earnings and dividends per
share)
 
 
 
 ***2004***
    
    ***2003***
    
    ***2002*****SERVICE FEES AND REVENUE**
    
    $
    40,093
    
    
    $
    40,881
    
    
    $
    57,188**COSTS, EXPENSES AND OTHER:**Direct operating
      costs
    
    
    23,544
    
    
    
    23,201
    
    
    
    31,309Selling and administrative
      expenses
    
    
    14,415
    
    
    
    15,098
    
    
    
    19,307Marketing and
      advertising
    
    
    414
    
    
    
    394
    
    
    
    659Gain on arbitrage trading
    
    
    (1,512
    )
    
    
    (1,891
    )
    
    
    (445
    )Gain on sale of marketable
      securities - Innodata and Edgar Online
    
    
    (5,887
    )
    
    
    (624
    )
    
    
    (124
    )Write off of investment in
      private companies
    
    
    000-
    
    
    
    000-
    
    
    
    716Interest income
    
    
    000-
    
    
    
    (142
    )
    
    
    (300
    )Interest expense
    
    
    305
    
    
    
    249
    
    
    
    957Total
    
    
    31,279
    
    
    
    36,285
    
    
    
    52,079**INCOME BEFORE INCOME TAXES**
    
    
    8,814
    
    
    
    4,596
    
    
    
    5,109**INCOME TAXES**
    
    
    3,614
    
    
    
    1,750
    
    
    
    2,118**NET INCOME**
    
    $
    5,200
    
    
    $
    2,846
    
    
    $
    2,991**BASIC AND DILUTED NET INCOME PER SHARE**
    
    
    $.53
    
    
    
    $.29
    
    
    
    $.28**DIVIDENDS PER SHARE**
    
    
    $.05
    
    
    
    $.05**WEIGHTED AVERAGE NUMBER OF SHARES
      OUTSTANDING**
    
    
    9,732
    
    
    
    9,942
    
    
    
    10,525**ADJUSTED DILUTIVE SHARES OUTSTANDING**
    
    
    9,740
    
    
    
    9,960
    
    
    
    10,580
 
  See
notes to consolidated financial statements
 II-14
  Track Data Corporation and Subsidiaries
 Consolidated Statements of Stockholders’ Equity and
Comprehensive Income
 Years Ended December 31, 2004, 2003 and 2002
 (in thousands)
 **Accumulated**
    
    
    
    **Total****Additional**
    
    
    
    **Other**
    
    **Stock-**
    
    **Compre-****Common**
    
    **Paid-in**
    
    **Retained**
    
    **Comprehensive**
    
    **holders’**
    
    **hensive****Stock**
    
    **Capital**
    
    **Earnings**
    
    **Income**
    
    **Equity**
    
    **Income****BALANCE, JANUARY 1, 2002**
    
    
    **$**
    **109**
    
    
    
    
    **$**
    **19,023**
    
    
    
    
    **$**
    **353**
    
    
    
    
    **$**
    **3,676**
    
    
    
    
    **$**
    **23,161**Net
      income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,991
    
    
    
    
    
    
    
    
    
    
    
    2,991
    
    
    
    
    $
    2,991Stock options
      and warrants exercised
    
    
    
    
    
    
    
    
    
    205
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    205Purchase and
      retirement of treasury stock
    
    
    
    (6
    )
    
    
    
    
    (4,030
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,036
    )Contribution
      of stock by Chairman
    
    
    
    (1
    )
    
    
    
    
    1Tax effect of
      stock options exercised
    
    
    
    
    
    
    
    
    
    227
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227Reclassification
      adjustment for gainon marketable securities - net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88
    )
    
    
    
    
    (88
    )
    
    
    
    
    (88
    )Unrealized
      loss on marketable securities -net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,853
    )
    
    
    
    
    (2,853
    )
    
    
    
    
    (2,853
    )Comprehensive
      income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    50**BALANCE, DECEMBER 31, 2002**
    
    
    
    **102**
    
    
    
    
    
    **15,426**
    
    
    
    
    
    **3,344**
    
    
    
    
    
    **735**
    
    
    
    
    
    **19,607**Net
      income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,846
    
    
    
    
    
    
    
    
    
    
    
    2,846
    
    
    
    
    $
    2,846Stock options
      and warrants exercised
    
    
    
    
    
    
    
    
    
    399
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    399Dividends
      paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (489
    )
    
    
    
    
    
    
    
    
    
    
    (489
    )Purchase and
      retirement of treasury stock
    
    
    
    (4
    )
    
    
    
    
    (1,363
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,367
    )Tax effect of
      stock options exercised
    
    
    
    
    
    
    
    
    
    82
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82Reclassification
      adjustment for gainon marketable securities - net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (179
    )
    
    
    
    
    (179
    )
    
    
    
    
    (179
    )Unrealized
      gain on marketable securities -net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,906
    
    
    
    
    
    2,906
    
    
    
    
    
    2,906Comprehensive
      income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,573**BALANCE, DECEMBER 31, 2003**
    
    
    
    **98**
    
    
    
    
    
    **14,544**
    
    
    
    
    
    **5,701**
    
    
    
    
    
    **3,462**
    
    
    
    
    
    **23,805**Net
      income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,200
    
    
    
    
    
    
    
    
    
    
    
    5,200
    
    
    
    
    $
    5,200Stock options
      exercised
    
    
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11Dividends
      paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (490
    )
    
    
    
    
    
    
    
    
    
    
    (490
    )Purchase and
      retirement of treasury stock
    
    
    
    (2
    )
    
    
    
    
    (804
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (806
    )Tax effect of
      stock options exercised
    
    
    
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35Reclassification
      adjustment for gainon
      marketable securities - net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,176
    )
    
    
    
    
    (2,176
    )
    
    
    
    
    (2,176
    )Unrealized
      gain on marketable securities -net of
      taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,289
    
    
    
    
    
    1,289
    
    
    
    
    
    1,289Comprehensive
      income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    **$**
    **4,313****BALANCE, DECEMBER 31, 2004**
    
    
    **$**
    **96**
    
    
    
    
    **$**
    **13,786**
    
    
    
    
    **$**
    **10,411**
    
    
    
    
    **$**
    **2,575**
    
    
    
    
    **$**
    **26,868**
 
 
  See
notes to consolidated financial statements
 II-15
  
 Track Data Corporation and Subsidiaries
 Consolidated Statements of Cash Flows
 Years Ended December 31, 2004, 2003 and 2002
 (in thousands)
 
 **2004**
    
    **2003**
    
    **2002****CASH FLOWS FROM OPERATING ACTIVITIES:**Net income
    
    $
    5,200
    
    
    $
    2,846
    
    
    $
    2,991Adjustments to
      reconcile net income to net cash (used in) provided byoperating
      activities:Depreciation
      and amortization
    
    
    1,053
    
    
    
    1,310
    
    
    
    1,792Deferred
      taxes
    
    
    168
    
    
    
    362
    
    
    
    1,513Tax effect of
      stock options exercised
    
    
    35
    
    
    
    82
    
    
    
    164Write off of
      investment in private companies
    
    
    0-0000
    
    
    
    00-0000
    
    
    
    716Write off of
      fixed assets
    
    
    0-0000
    
    
    
    0-0000
    
    
    
    349Gain on sale
      of Innodata and Edgar Online common stock
    
    
    (5,887
    )
    
    
    (624
    )
    
    
    (124
    )Changes in
      operating assets and liabilities:Accounts
      receivable and due from clearing broker
    
    
    (783
    )
    
    
    2,539
    
    
    
    (1,637
    )Due from
      broker
    
    
    1,390
    
    
    
    (17,027
    )
    
    
    (5,301
    )Marketable
      securities
    
    
    (1,295
    )
    
    
    (6,217
    )
    
    
    29,642Other
      assets
    
    
    296
    
    
    
    (107
    )
    
    
    113Accounts
      payable and accrued expenses
    
    
    712
    
    
    
    (226
    )
    
    
    1,502Securities
      sold, but not yet purchased
    
    
    (7,381
    )
    
    
    21,271
    
    
    
    (26,684
    )Other
      liabilities
    
    
    343
    
    
    
    1,077
    
    
    
    115Net cash (used
      in) provided by operating activities
    
    
    (6,149
    )
    
    
    5,286
    
    
    
    5,151**CASH FLOWS FROM INVESTING
    ACTIVITIES:**Purchase of
      fixed assets
    
    
    (683
    )
    
    
    (557
    )
    
    
    (351
    )Proceeds from
      sale of Innodata and Edgar Online common stock
    
    
    6,978
    
    
    
    980
    
    
    
    181Net cash
      provided by (used in) investing activities
    
    
    6,295
    
    
    
    423
    
    
    
    (170
    )**CASH FLOWS FROM FINANCING
    ACTIVITIES:**Payments under
      capital lease obligations
    
    
    0-0000
    
    
    
    (83
    )
    
    
    (397
    )Net payments
      on note payable - bank
    
    
    0-0000
    
    
    
    (1,030
    )
    
    
    (835
    )Net payments
      on notes payable - other
    
    
    (494
    )
    
    
    (376
    )
    
    
    (48
    )Net proceeds
      (payments) on loans from employees
    
    
    154
    
    
    
    77
    
    
    
    (60
    )Dividends
      paid
    
    
    (490
    )
    
    
    (489
    )
    
    
    -0000Proceeds from
      exercise of stock options and warrants
    
    
    11
    
    
    
    399
    
    
    
    215Purchase of
      treasury stock
    
    
    (806
    )
    
    
    (1,367
    )
    
    
    (4,033
    )Net cash used
      in financing activities
    
    
    (1,625
    )
    
    
    (2,869
    )
    
    
    (5,158
    )**EFFECT OF EXCHANGE RATE DIFFERENCES ON
      CASH**
    
    
    (18
    )
    
    
    (16
    )
    
    
    (19
    )**NET (DECREASE) INCREASE IN CASH AND
      EQUIVALENTS**
    
    
    (1,497
    )
    
    
    2,824
    
    
    
    (196
    )**CASH AND EQUIVALENTS, BEGINNING OF
      YEAR**
    
    
    8,315
    
    
    
    5,491
    
    
    
    5,687**CASH AND EQUIVALENTS, END OF YEAR**
    
    $
    6,818
    
    
    $
    8,315
    
    
    $
    5,491**SUPPLEMENTAL DISCLOSURES OF CASH FLOW
      INFORMATION:**Cash paid
      for:Interest
    
    $
    535
    
    
    $
    222
    
    
    $
    1,156Income taxes
    
    
    3,135
    
    
    
    472
    
    
    
    45
 
 
 
 
   See
notes to consolidated financial statements
 II-16
   Track Data Corporation and Subsidiaries
 Notes To Consolidated Financial Statements
 Years Ended December 31, 2004, 2003 and 2002
  A. The Company and Summary of Significant
Accounting Policies
 
 *Description of Business and Basis of
Presentation* --
 
  
  
 *Principles of
Consolidation* --
 
 *Cash and Cash Equivalents*
 
 *Accounts Receivable*
 
 *Marketable Securities*
 
 II-17
 *Due From Broker*
 
 *Fixed Assets* --
 
 *Software and Database
Costs* --
 
 *Long-lived Assets* --
 
  
   II-18
  *Foreign Currency
Translation* --
 
 *Revenue
Recognition* --
 
 *Income Taxes* --
 
 *Research and Development*
 
 *Marketing and Advertising*
 
 *Segment Reporting*
 
 *Fair Value of Financial
Instruments* --
 
 *Use of Estimates* --
 
 *Comprehensive Income (Loss)*
  II-19
  *Earnings Per
Share* --
 
 *Accounting for Stock Options*
 
  **Year Ended December 31,****2004**
    
    **2003**
    
    **2002**(in thousands, except earnings per share)Net income, as reported
    
    $
    5,200
    
    
    $
    2,846
    
    
    $
    2,991Deduct: Total stock-based employee compensationexpense determined under fair value based method forall awards, net of related tax effects
    
    
    (943
    )
    
    
    (935
    )
    
    
    (1,168
    )Net income, as adjusted
    
    $
    4,257
    
    
    $
    1,911
    
    
    $
    1,823Earnings per share:Basic and diluted --as reported
    
    
    $.53
    
    
    
    $.29
    
    
    
    $.28Basic and diluted --as adjusted
    
    
    $.44
    
    
    
    $.20
    
    
    
    $.15
 
  
 *New Pronouncements*
 
 II-20
  
 B. Fixed Assets
 
  
 **2004**
    
    **2003**Equipment
    
    $
    14,874
    
    
    $
    14,238Telephone systems
    
    
    904
    
    
    
    871Furniture and fixtures
    
    
    432
    
    
    
    421Transportation equipment
    
    
    42
    
    
    
    42Leasehold improvements
    
    
    967
    
    
    
    1,34317,219
    
    
    
    16,915Less accumulated depreciationand amortization
    
    
    15,432
    
    
    
    14,775Fixed assets - net
    
    $
    1,787
    
    
    $
    2,140
 
 
  
 C. Marketable Securities
 
  **December 31,****2004**
    
    **2003**Edgar Online - Available for sale securities - at market
    
    $
    1,054
    
    
    $
    1,150Innodata - Available for sale securities - at market
    
    
    3,597
    
    
    
    6,088Arbitrage trading securities - at market
    
    
    15,481
    
    
    
    14,189Marketable securities
    
    $
    20,132
    
    
    $
    21,427Arbitrage trading securities sold but not yet purchased - at
      market
    
    $
    33,615
    
    
    $
    40,996
 
  
 II-21
  
  
  
  
  
 D. Note Payable -
Bank
 
  
 II-22
 E. Segment Information
 
  
   
 Revenues
    
    
    **2004**
    
    
    
    **2003**
    
    
    
    **2002**Professional Market
    
    $
    25,103
    
    
    $
    24,118
    
    
    $
    37,675Non-Professional Market
    
    
    14,990
    
    
    
    16,763
    
    
    
    19,513Total
      Revenues
    
    $
    40,093
    
    
    $
    40,881
    
    
    $
    57,188Arbitrage Trading - Gain on sale of marketable
    securities
    
    $
    1,387
    
    
    $
    1,891
    
    
    $
    445Income (loss) before unallocated amounts and income
    taxes:Professional
      Market
    
    $
    (494
    )
    
    $
    1,405
    
    
    $
    4,332Non-Professional
      Market
    
    
    3,537
    
    
    
    2,368
    
    
    
    4,133Arbitrage
      Trading (including interest)
    
    
    933
    
    
    
    1,521
    
    
    
    (144
    )Unallocated
      amounts:Depreciation and
      amortization
    
    
    (1,053
    )
    
    
    (1,310
    )
    
    
    (1,792
    )Gain on sale of Innodata
      common stock
    
    
    5,887
    
    
    
    624
    
    
    
    124Other (expense)
    
    
    -0000
    
    
    
    -0000
    
    
    
    (1,065
    )Interest income
      (expense)-net
    
    
    4
    
    
    
    (12
    )
    
    
    (479
    )Income before taxes
    
    $
    8,814
    
    
    $
    4,596
    
    
    $
    5,109
 
 F. Income Taxes
 
  **2004**
    
    
    
    **2003**
    
    
    
    **2002**Federal:Current
    
    $
    2,325
    
    
    $
    894
    
    
    $
    386Deferred
    
    
    151
    
    
    
    326
    
    
    
    1,363Total
      federal
    
    
    2,476
    
    
    
    1,220
    
    
    
    1,749State and local:Current
    
    
    1,086
    
    
    
    412
    
    
    
    55Deferred
    
    
    17
    
    
    
    36
    
    
    
    150Total
      state and local
    
    
    1,103
    
    
    
    448
    
    
    
    205Tax effect of stock options
    
    
    35
    
    
    
    82
    
    
    
    164Provision for income taxes
    
    $
    3,614
    
    
    $
    1,750
    
    
    $
    2,118
 
  II-23
   
 **2004**
    
    **2003**
    
    **2002**Federal
      statutory rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %State and
      local income taxes
    
    
    6.4
    
    
    
    5.9
    
    
    
    6.8Change in
      valuation allowance
    
    
    -0
    
    
    
    -0
    
    
    
    -0Other
    
    
    .6
    
    
    
    (1.8
    )
    
    
    .7Effective
      rate
    
    
    41.0
    %
    
    
    38.1
    %
    
    
    41.5
    %
 
  **2004**
    
    
    
    **2003**Deferred tax assets:Net operating loss and
      other carryforwards
    
    $
    -0000
    
    
    $
    54Deferred compensation
    
    
    94
    
    
    
    217Other
    
    
    146
    
    
    
    337240
    
    
    
    608Deferred tax liabilities:Unrealized gain on
      marketable securities
    
    
    (417
    )
    
    
    (456
    )Excess
      of book basis over tax basis of investment
    
    
    (1,377
    )
    
    
    (2,177
    )Accelerated
      depreciation
    
    
    (498
    )
    
    
    (450
    )(2,292
    )
    
    
    (3,083
    )Net deferred tax liability
    
    $
    (2,052
    )
    
    $
    (2,475
    )
 
  
 G. Commitments and Contingencies
 
 *Leases*
 **Operating Leases****Year Ending**
    
    **Office**
    
    **Computer****December 31,**
    
    **Space**
    
    **Equipment**
    
    **Total**2005
    
    $
    604,000
    
    
    
    $
    26,000
    
    
    
    $
    630,0002006
    
    
    331,000
    
    
    
    
    19,000
    
    
    
    
    350,0002007
    
    
    215,000
    
    
    
    
    7,000
    
    
    
    
    222,0002008
    
    
    167,000
    
    
    
    
    -0000
    
    
    
    
    167,0002009
    
    
    229,000
    
    
    
    
    -0000
    
    
    
    
    229,000$
    1,546,000
    
    
    
    $
    52,000
    
    
    
    $
    1,598,000
 
  
  
 II-24
 *Transactions with Clearing Broker and
Customers*
 
  
  
 *Net Capital Requirements* --
 
  
  
 *Litigation*
 
 H. Deferred Compensation and Savings
Program
 
  
 II-25
  
 I. Capital Stock and
Dividends
 
 *Common Stock* --
 
  
 *Dividends* --
 
 *Preferred Stock* --
 
 *Common Stock
Reserved* --
 
 J. Stock Options
 
  
 II-26
  
  
  
 **Weighted****Weighted**
    
    
    
    
    
    
    
    
    
    
    
    
    
    **Average****Per Share**
    
    
    
    
    
    **Average**
    
    **Weighted**
    
    
    
    
    
    **Weighted**
    
    **Fair****Range of**
    
    
    
    
    
    **Remaining**
    
    **Average**
    
    
    
    
    
    **Average**
    
    **Value****Exercise**
    
    **Number**
    
    **Contractual**
    
    **Exercise**
    
    **Number**
    
    **Exercise**
    
    **Date of****Prices**
    
    **Outstanding**
    
    **Life (Years)**
    
    **Price**
    
    **Exercisable**
    
    **Price**
    
    **Grant**Balance 01/01/02
    
    $
    2.50
    -
    3.75
    
    
    
    136,200
    
    
    1
    
    $
    3.55
    
    
    
    136,200
    
    
    $
    3.55$
    5.00
    -
    8.75
    
    
    
    1,039,350
    
    
    4
    
    $
    7.50
    
    
    
    305,280
    
    
    $
    7.50$
    12.50
    -
    35.00
    
    
    
    172,180
    
    
    2
    
    $
    17.85
    
    
    
    160,590
    
    
    $
    17.701,347,730
    
    
    
    
    
    
    
    
    
    602,070Canceled
    
    $
    3.75
    -
    35.00
    
    
    
    (57,270
    )
    
    1
    
    $
    12.30Exercised
    
    $
    2.50
    -
    7.50
    
    
    
    (45,730
    )
    
    1
    
    $
    4.40Granted
    
    $
    7.50
    -
    10.00
    
    
    
    18,000
    
    
    4
    
    $
    9.70
    
    
    
    
    
    
    
    
    
    
    $
    6.85Balance 12/31/02
    
    $
    3.75
    
    
    
    
    
    102,200
    
    
    1
    
    $
    3.75
    
    
    
    102,200
    
    
    $
    3.75$
    7.50
    -
    8.75
    
    
    
    1,001,970
    
    
    3
    
    $
    7.50
    
    
    
    673,437
    
    
    $
    7.50$
    10.00
    -
    33.75
    
    
    
    158,560
    
    
    2
    
    $
    17.10
    
    
    
    139,780
    
    
    $
    18.501,262,730
    
    
    
    
    
    
    
    
    
    915,417Canceled
    
    $
    3.75
    -
    33.75
    
    
    
    (220,884
    )
    
    1
    
    $
    8.25Exercised
    
    $
    2.50
    -
    7.50
    
    
    
    (51,426
    )
    
    1
    
    $
    7.10Granted
    
    $
    5.00
    -
    6.25
    
    
    
    281,070
    
    
    4
    
    $
    5.65
    
    
    
    
    
    
    
    
    
    
    $
    2.75Balance 12/31/03
    
    $
    5.00
    -
    6.25
    
    
    
    254,220
    
    
    4
    
    $
    5.65
    
    
    
    141,670
    
    
    $
    5.65$
    7.50
    -
    10.00
    
    
    
    904,750
    
    
    3
    
    $
    7.55
    
    
    
    822,583
    
    
    $
    7.50$
    12.50
    -
    18.75
    
    
    
    94,420
    
    
    1
    
    $
    15.05
    
    
    
    95,020
    
    
    $
    15.05$
    21.25
    -
    33.75
    
    
    
    18,100
    
    
    1
    
    $
    32.90
    
    
    
    18,100
    
    
    $
    32.901,271,490
    
    
    
    
    
    
    
    
    
    1,077,373Canceled
    
    $
    5.00
    -
    27.50
    
    
    
    (219,190
    )
    
    1
    
    $
    11.35Exercised
    
    $
    5.00
    -
    7.50
    
    
    
    (1,800
    )
    
    3
    
    $
    5.95Granted
    
    $
    7.50
    
    
    
    
    
    289,930
    
    
    4
    
    $
    7.50
    
    
    
    
    
    
    
    
    
    
    $
    6.25Balance 12/31/04
    
    $
    5.00
    -
    6.25
    
    
    
    247,660
    
    
    3
    
    $
    5.65
    
    
    
    247,660
    
    
    $
    5.65$
    7.50
    
    
    
    
    
    1,076,770
    
    
    4
    
    $
    7.50
    
    
    
    881,253
    
    
    $
    7.50$
    33.75
    
    
    
    
    
    16,000
    
    
    1
    
    $
    33.75
    
    
    
    16,000
    
    
    $
    33.751,340,430
    
    
    
    
    
    
    
    
    
    1,144,913
 
  
  II-27
  K. Retirement Plan
 
  
 L. Income Per Share
 **Year Ended December 31****2004**
    
    **2003**
    
    **2002**Net income
    
    $
    5,200
    
    
    $
    2,846
    
    
    $
    2,991Weighted average common shares outstanding
    
    
    9,732
    
    
    
    9,942
    
    
    
    10,525Dilutive effect of outstanding warrants and options
    
    
    8
    
    
    
    18
    
    
    
    55Adjusted for dilutive computation
    
    
    9,740
    
    
    
    9,960
    
    
    
    10,580Basic income per share
    
    
    $.53
    
    
    
    $.29
    
    
    
    $.28Diluted income per share
    
    
    $.53
    
    
    
    $.29
    
    
    
    $.28
 
  
 M. QUARTERLY RESULTS OF OPERATIONS
(UNAUDITED)
 **First**
    
    **Second**
    
    **Third**
    
    **Fourth****Quarter**
    
    **Quarter**
    
    **Quarter**
    
    **Quarter**(in thousands, except per share)**2004**Revenues
    
    $
    10,773
    
    
    $
    9,822
    
    
    $
    9,222
    
    
    $
    10,276Net income (loss)
    
    
    1,124
    
    
    
    693
    
    
    
    (76
    )
    
    
    3,459
    (A)Basic and diluted income per share
    
    
    $.11
    
    
    
    $.07
    
    
    
    $.01
    
    
    
    $.36
    (A)**2003**Revenues
    
    $
    10,695
    
    
    $
    10,324
    
    
    $
    9,872
    
    
    $
    9,990Net income
    
    
    190
    
    
    
    474
    
    
    
    793
    
    
    
    1,389
    (B)Basic and diluted income per share
    
    
    $.02
    
    
    
    $.05
    
    
    
    $.08
    
    
    
    $.14
    (B)**2002**Revenues
    
    $
    13,136
    
    
    $
    13,239
    
    
    $
    14,765
    
    
    $
    16,048
    (C)Net income
    
    
    73
    
    
    
    444
    
    
    
    708
    
    
    
    1,766Basic and diluted income per share
    
    
    $.01
    
    
    
    $.04
    
    
    
    $.07
    
    
    
    $.17
 (A)
    Includes $3,085, or $.32 per share, from the sale of Innodata common
      stock.
 (B)
    Includes $599, or $.06 per share, from the sale of Innodata common
      stock.
 (C)
    Includes $2,168 of revenues from Track ECN for services rendered in
      prior quarters.
 
 II-28
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES
 
 
 
 ITEM 9A. CONTROLS AND PROCEDURES
 
     
  
   II-29
   PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE
OFFICERS OF REGISTRANT
 
 Officers and Directors
 
  
 **Name**
    
    **Age**
    
    **Position**Barry Hertz
    
    55
    
    Chairman of the Board, Chief Executive OfficerMartin Kaye
    
    57
    
    Chief Operating Officer, Chief Financial Officer,Secretary and DirectorStanley Stern
    
    54
    
    Senior Vice President - Customer Relations, DirectorAlbert Drillick
    
    59
    
    Senior Systems Analyst, DirectorAbraham Biderman
    
    56
    
    DirectorE. Bruce Fredrikson
    
    66
    
    DirectorPhilip Ort
    
    55
    
    DirectorShaya Sofer
    
    56
    
    Director
 
 Barry Hertz
 
 Martin Kaye
 
 Stanley
Stern
 
 Albert
Drillick
 
 III-1
 Abraham
Biderman
 
 Dr. E. Bruce
Fredrikson
 
 Philip Ort
 
 Shaya Sofer
 
 
 
 Audit Committee
 
 
 
 Code of Ethics
 
 
 
  III-2
 
 Compliance With Section 16(a) of the Securities Exchange Act of
1934
 
 
 
 ITEM 11. EXECUTIVE COMPENSATION
 
 
 
 Summary Compensation Table
 
 **Fiscal**
    
    **Annual**
    
    
    
    **Number of Stock****Name and Position**
    ****
    **Year**
    ****
    **Salary**
    
    **Bonus**
    
    **Options Awarded**Barry Hertz
    
    2004
    
    $450,000
    
    00-000
    
    -0000Chairman, CEO
    
    2003
    
    $450,000
    
    00-000
    
    100,000
    (A)2002
    
    $450,000
    
    $9,000
    
    100,000
    (B)Martin Kaye
    
    2004
    
    $300,000
    
    00-000
    
    -0000Chief Operating Officer,
    
    2003
    
    $300,000
    
    00-000
    
    40,000
    (A)Chief Financial Officer
    
    2002
    
    $300,000
    
    $6,000
    
    40,000
    (B)Stanley Stern
    
    2004
    
    $153,000
    
    00-000
    
    -0000Senior Vice President
    
    2003
    
    $153,000
    
    00-000
    
    4,000
    (A)2002
    
    $153,000
    
    $3,060
    
    4,000
    (B)
 (A)
    Granted in March, 2004 for the 2003 calendar
  year.
 (B)
    Granted in January, 2003 for the 2002 calendar
  year.
 
  
 Option Grants In Last Fiscal Year
 Individual Grants
 
 **Percent of**
    
    
    
    
    
    **Potential Realized****Total Options**
    
    
    
    
    
    **Value at Assumed****Granted to**
    
    
    
    
    
    **Annual Rates of****Number of**
    
    **Employees**
    
    
    
    
    
    **Stock Appreciation****Options**
    
    **in Fiscal**
    
    **Exercise**
    
    **Expiration**
    
    **for Option Term*****Name**
    
    **Granted(A)**
    
    **Year**
    
    **Price**
    
    **Date**
    
    **5%**
    
    **10%**Barry Hertz
    
    100,000
    
    37%
    
    $7.50
    
    3/11/09
    
    $10,000
    
    $210,000Martin Kaye
    
    40,000
    
    15%
    
    $7.50
    
    3/11/09
    
    $4,000
    
    $84,000Stanley Stern
    
    4,000
    
    1%
    
    $7.50
    
    3/11/09
    
    $400
    
    $8,400
 
 (A)
    Granted in March, 2004 for the 2003 calendar year. The
      options vest one-half on December 31, 2004 and one-half on December 31,
      2005.
 
  
  III-3
  Aggregate Option Exercises In Last Fiscal
Year;
 Fiscal Year End Option Values
 
 **Number of****Securities****Underlying****Unexercised**
    
    **Value of Unexercised In-****Options at Fiscal**
    
    **the-Money Options at****Shares**
    
    
    
    **Year End**
    
    **Fiscal Year End****Acquired on**
    
    **Value**
    
    **Exercisable/**
    
    **Exercisable/****Name**
    
    **Exercise**
    
    **Realized**
    
    **Unexercisable**
    
    **Unexercisable**Barry Hertz
    
    None
    
    -
    
    620,000/50,000
    
    $-0-/$-0-Martin Kaye
    
    None
    
    -
    
    144,000/20,000
    
    $-0-/$-0-Stanley Stern
    
    None
    
    -
    
    19,000/2,000
    
    $-0-/$-0-
 
 
 
 Directors Compensation
 
 
 
 
 
 Compensation Committee Interlocks and Insider
Participation
 
 
 
  III-4
  ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
 
 
 **Shares Owned Beneficially (1)****Name**
    
    **No.** **of Shares**
    
    **% of Class**Barry Hertz (2)
    
    5,622,775
    
    
    54.
    9%Martin Kaye (3)
    
    151,680
    
    
    1.
    6%Stanley Stern (4)
    
    28,953
    
    
    *Albert Drillick (5)
    
    40,480
    
    
    *Abraham Biderman (6)
    
    10,000
    
    
    *E. Bruce Fredrikson (7)
    
    17,000
    
    
    *Philip Ort (6)
    
    4,000
    
    
    *Shaya Sofer (6)
    
    4,000
    
    
    *All Officers and Directors as a Group(eight persons)(8)
    
    5,878,888
    
    
    56.
    3%
    (1)
    Unless otherwise indicated, (i) each person has sole
      investment and voting power with respect to the shares indicated and (ii)
      the shares indicated are currently outstanding shares. For purposes of
      this table, a person or group of persons is deemed to have "beneficial
      ownership" of any shares as of a given date which such person has the
      right to acquire within 60 days after such date. For purposes of computing
      the percentage of outstanding shares held by each person or group of
      persons named above on a given date, any security which such person or
      persons has the right to acquire within 60 days after such date is deemed
      to be outstanding for the purpose of computing the percentage ownership of
      such person or persons, but is not deemed to be outstanding for the
      purpose of computing the percentage ownership of any other person. Subject
      to the foregoing, the percentages are calculated based on 9,627,047 shares
      outstanding.
 
 (2)
    Consists of 4,423,906 shares owned by Mr. Hertz, 559,880
      shares owned by Trusts established in the names of Mr. Hertz’s children
      and 18,989 shares held by a family LLC managed by Mr. Hertz who owns 8% of
      such LLC. Mr. Hertz disclaims beneficial interest in shares owned by the
      Trust and 92% of the family LLC not owned by him. Also includes 620,000
      shares issuable upon the exercise of presently exercisable options under
      the Company’s Stock Option Plans.
 
 (3)
    Consists of 7,680 shares owned of record and 144,000 shares
      issuable upon the exercise of presently exercisable options granted under
      the Company's Stock Option Plans.
 
 (4)
    Consists of 9,953 shares owned of record and 19,000 shares
      issuable upon the exercise of presently exercisable options granted under
      the Company's Stock Option Plans.
 
 (5)
    Consist of 30,220 shares owned of record jointly with his
      wife, 660 shares owned by a trust in the name of his child, and 9,600
      shares issuable upon the exercise of presently exercisable options granted
      under the Company's Stock Option Plans.
 
 (6)
    Consists of shares issuable upon the exercise of presently
      exercisable options granted under the Company’s Stock Option
    Plans.
 
 (7)
    Consists of 5,600 shares owned of record and 11,400 shares
      issuable upon the exercise of presently exercisable options granted under
      the Company's Stock Option Plans.
  (8)
    Consists of 5,056,888 outstanding shares and 822,000 shares
      issuable upon exercise of options described in footnotes 2 through 7
      above.
   III-5
  Potential Change in Control
 
 
 
 Equity Compensation Plan Information
 
 
 
 At December 31, 2004a)
    Number of securities to be issued upon exercise of
      outstandingoptions
    1,340,000b)
    Weighted-average exercise price of outstanding options
    $7.47c)
    Number of securities remaining available for future issuanceunder equity compensation plans (excluding securities reflectedin (a) above)
    1,480,000
 
 ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
 
 
 
 
  
  
 
 
  III-6
  
 
 ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
 Audit Fees.
  
 Tax Fees.
  
 Audit Committee Pre-Approval Policies and
Procedures.
  
   
  
  
  
 
   III-7
   PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES, AND REPORTS ON FORM 8-K
 
 (a)
    1.
    Financial Statements. See Item 8. Index to Financial
      Statements.2.
    Financial Statement Schedules. Not applicable3.
    **Exhibits**
    
    **Description**3.1
    
    Certificate of Incorporation, as amended (1)3.2
    
    By-Laws (1)4.2
    
    Specimen of Common Stock certificate (1)10.1
    
    1994 Stock Option Plan (1)10.2
    
    Form of indemnity agreement with directors (1)10.3
    
    Fully Disclosed Clearing Agreement with Penson Financial
      Services, Inc.,dated October 13, 2000 (2)10.4
    
    1995 Stock Option Plan (3)10.5
    
    1995 Disinterested Directors’ Stock Option Plan (4)10.6
    
    1996 Stock Option Plan (5)10.7
    
    1998 Stock Option Plan (6)10.8
    
    2001 Stock Option Plan (7)10.9
    
    2002 Stock Option Plan (8)10.10
    
    No Action Letter issued by Securities Exchange Commission dated
      January 6, 2005to operate Track ECN through October 6, 200523
    
    Consent of Grant Thornton LLP filed herewith31.1
    
    Certification of Barry Hertz pursuant to Rule 13a-14(a) of the
      Securities Exchange Act of 1934.31.2
    
    Certification of Martin Kaye pursuant to Rule 13a-14(a) under
      the Securities Exchange Act of 1934.32
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 ofthe Sarbanes-Oxley Act of 2002
  
 (1)
    Incorporated
      by reference to Exhibits 3.1, 3.2, 4.2, 10.3 and 10.4 to Form S-1
      Registration Statement No. 33-78570.
 
 (2)
    Incorporated
      by reference to Exhibit 10.3 to 10-K Annual Report for the year ended
      December 31, 2001
 
 (3)
    Incorporated
      by reference to Exhibit A to Definitive Proxy for August 10, 1995, Annual
      Meeting of Stockholders
 
 (4)
    Incorporated
      by reference to Exhibit B to Definitive Proxy for August 10, 1995, Annual
      Meeting of Stockholders
 
 (5)
    Incorporated
      by reference to Appendix A to Definitive Proxy for November 7, 1996,
      Annual Meeting of Stockholders
 
 (6)
    Incorporated
      by reference to Appendix A to Definitive Proxy for November 5, 1998,
      Annual Meeting of Stockholders
 
 (7)
    Incorporated
      by reference to Appendix A to Definitive Proxy for November 1, 2001,
      Annual Meeting of Stockholders
 
 (8)
    Incorporated
      by reference to Appendix A to Definitive Proxy for August 13, 2002, Annual
      Meeting of Stockholders
 
 (b)
    Reports
      on Form 8-K during fourth quarter
 
  
  IV-1
  SIGNATURES
 
 
 
 **TRACK DATA CORPORATION**By
    /s/ Barry HertzBarry Hertz, Chairman of the Board
 
 
 
 
 **Signature**
    
    **Title**
    
    **Date**/s/ Barry Hertz
    
    Chairman of the Board and
    
    March 28, 2005Barry Hertz
    
    ****Chief Executive Officer/s/ Martin Kaye
    
    Chief Operating Officer, Chief
    
    March 28, 2005Martin Kaye
    
    Financial Officer, Secretary and Director(Principal Financial and Accounting Officer)/s/ Stanley Stern
    
    Senior Vice President - Customer
    
    March 28, 2005Stanley Stern
    
    Relations and Director/s/ Albert Drillick
    
    Senior Systems Analyst and Director
    
    March 28, 2005Albert Drillick/s/ Abraham Biderman
    
    Director
    
    March 28, 2005Abraham Biderman/s/ E. Bruce Fredrikson
    
    Director
    
    March 28, 2005E. Bruce Fredrikson/s/ Philip Ort
    
    Director
    
    March 28, 2005Philip Ort/s/ Shaya Sofer
    
    Director
    
    March 28, 2005Shaya Sofer