January 13, 1999

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: National Discount Brokers Group, Inc.
      Report on Form 10-Q for the Three and Six Months Ended November 30, 1999

Gentlemen:

Enclosed please find the following material submitted on behalf of National
Discount Brokers Group, Inc.("Company"):

One  complete  copy of the  Company's  report on Form 10-Q for the Three and Six
Months Ended November 30, 1999 including financial statements and exhibits.

Thank you for your attention to this matter.

Very truly yours,

/s/ Daniel Fishbane
Daniel Fishbane
Chief Financial Officer and
Principal Accounting Officer

<PAGE>








                                                                      CONFORMED
                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


              [X] Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                       For Quarter Ended November 30, 1999
                                       OR
              [ ] Transition Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                        For the transition period from           to

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

                          Commission file number 1-9480

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


                      National Discount Brokers Group, Inc.

     ----------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


                                    Delaware
                                   22-2394480

     ----------------------------------------------------------------------
                     (State or other jurisdiction of (I.R.S.
                                    Employer
                  incorporation or organization) Identification
                                      No.)


             10 Exchange Place Centre, Jersey City, New Jersey 07302

  ----------------------------------------------------------------------------
                  (Address of principal executive offices) (Zip
                                     code)



--------------------------------------------------------------------------------
         (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  X    No
                                      ----    ----
        Indicate the number of shares outstanding of each of the issuer's
           classes of common stock, as of the latest practicable date.

          16,988,757 shares of Common Stock, par value $.01 per share,
                     were outstanding on December 31, 1999.


<PAGE>


                      NATIONAL DISCOUNT BROKERS GROUP, INC.
                                AND SUBSIDIARIES


                                      INDEX
<TABLE>
<CAPTION>

                                                                                                                PAGE




<S>                                                                                                              <C>
Part I - Financial Information

Item 1. - Financial Statements

  Condensed Consolidated Statements of Financial Condition -
     November 30, 1999 (Unaudited) and May 31, 1999...............................................................3

  Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) -
     Three and Six Months Ended November 30, 1999 and 1998........................................................4

  Condensed Consolidated Statements of Cash Flows (Unaudited) -
     Six Months Ended November 30, 1999 and 1998..................................................................6

  Notes to Condensed Consolidated Financial Statements (Unaudited) -
     November 30, 1999............................................................................................8

Item 2. - Management's Discussion and Analysis of
            Financial Condition and Results of Operations........................................................12

Item 3. - Quantitative and Qualitative Disclosures About Risk....................................................19

Part II - Other Information

Item 1. - Legal Proceedings......................................................................................20

Item 4. - Submission of Matters to a Vote of Security Holders....................................................20

Item 6. - Exhibits and Reports on Form 8-K.......................................................................21

Signatures.......................................................................................................22

</TABLE>


Forward Looking Statements

     Statements regarding the Company's expectations as to its future operations
and financial  condition and certain  other  information  contained in this Form
10-Q or in documents incorporated herein by reference constitute forward looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995.  Although  the  Company  believes  that  its  expectations  are  based  on
reasonable  assumptions  within the bounds of its  knowledge of its business and
operation,  there  can be no  assurance  that  actual  results  will not  differ
materially  from its  expectations.  Factors which could cause actual results to
differ from expectations  include a general downturn in the economy,  changes in
the level of activity of securities  markets in which the Company  participates,
changes  in  government  policy or  regulation  and  unforeseen  costs and other
effects  related to legal  proceedings or  investigations  of  governmental  and
self-regulatory organizations.



<PAGE>





PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS

             NATIONAL DISCOUNT BROKERS GROUP, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>

                                                         November 30,
                                                             1999             May 31,
ASSETS                                                     (Unaudited)         1999
                                                      -----------------------------------

<S>                                                   <C>                <C>
Cash and cash equivalents                             $     24,249,689   $       411,629
Receivables:
  Clearing brokers                                         107,635,769        86,509,122
  Other                                                      2,513,492         2,901,799
Securities owned, at market value                           69,360,004        38,048,489
U.S. Treasury Obligations ($954,940 and $8,418,260 held
  as collateral at November 30, 1999 and May 31, 1999,
  respectively)                                            103,675,588         8,418,260
Securities not readily marketable, at fair value               600,000           500,000
Investment in discontinued operations                                -        28,341,746
Loans and notes receivable                                     193,728         1,094,989
Furniture, fixtures, equipment and leasehold improvements -
  at cost, net of accumulated depreciation and
  amortization of $16,800,490 at November 30, 1999 and
  $15,304,535 at May 31, 1999                               18,903,121        14,837,114
Computer software - at cost, net of accumulated
  amortization of $4,375,940 at November 30, 1999 and
  $3,624,381 at May 31, 1999                                 8,246,884         4,996,223
Exchange membership (market value $1,520,000 at
  May 31, 1999)                                                      -           351,496
Secured demand notes receivable                                      -        27,000,000
Deferred tax asset, net of valuation allowance of
  $294,909 at November 30, 1999)                             1,101,164           825,797
Other (primarily deposits on leasehold improvements
  at November 30, 1999)                                     10,607,444         3,054,144
                                                      -----------------  ----------------
          Total assets                                $    347,086,883   $   217,290,808
                                                      -----------------  ----------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Securities sold, not yet purchased, at market value $     40,752,576   $    11,723,172
  Accrued compensation, accounts payable
    and accrued expenses                                    41,943,945        46,296,949
  Loan payable                                                       -        15,000,000
  Income taxes payable                                       5,438,726         2,275,481
                                                      -----------------  ----------------

          Total liabilities                                 88,135,247        75,295,602
                                                      -----------------  ----------------


Commitments and contingencies

Stockholders' equity:
  Preferred stock - $.01 par value;
    authorized 1,000,000 shares; none issued                         -                 -
  Common stock - $.01 par value; authorized
    50,000,000 shares; issued 17,333,201 shares at
   November 30, 1999 and 14,343,201 at May 31, 1999            173,332           143,432
  Additional paid-in capital                               157,403,873        65,828,938
  Retained earnings                                        105,526,436        80,181,611
                                                      -----------------  ----------------
                                                           263,103,641       146,153,981
  Less: Treasury stock - at cost, 347,710 shares
    at November 30, 1999 and 348,277 shares at
    May 31, 1999                                            (4,152,005)       (4,158,775)
                                                      -----------------  ----------------
          Total stockholders' equity                       258,951,636       141,995,206
                                                      -----------------  ----------------

          Total liabilites and stockholders' equity   $    347,086,883   $   217,290,808
                                                      -----------------  ----------------



</TABLE>





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

                                        3
<PAGE>


             NATIONAL DISCOUNT BROKERS GROUP, INC. AND SUBSIDIARIES
      CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                         Three Months Ended November 30,       Six Months Ended November 30,
                                                      -----------------------------------   --------------------------------
                                                              1999              1998              1999            1998
                                                      -----------------  ----------------   --------------  --------------
Revenue:
  <S>                                                 <C>                <C>                <C>             <C>
  Firm securities transactions, net                   $     50,794,610   $    31,233,445    $  85,269,761   $  50,789,416
  Commission income                                         13,753,615         9,555,198       26,068,794      18,399,292
  Interest and dividends                                     4,794,407         2,254,992        9,546,498       4,517,945
  Fee income                                                 1,474,833           999,479        2,808,718       1,894,139
  Other                                                         37,112         1,335,228          182,954       1,525,704
                                                      -----------------  ----------------   --------------  --------------

       Total revenue                                        70,854,577        45,378,342      123,876,725      77,126,496
                                                      -----------------  ----------------   --------------  --------------


Expenses:
  Compensation and benefits                                 26,655,094        15,903,960       45,004,103      28,525,291
  Clearing and related brokerage charges                    13,244,239        10,586,296       25,241,887      19,986,404
  Communications                                             4,484,951         3,578,586        8,365,834       7,333,388
  Selling and marketing:
    Advertising and marketing costs                          7,281,586         1,184,366       14,082,695       2,593,251
    Sales-related travel and entertainment                     583,691           327,663        1,357,786         717,874
  Technology development and other related costs:
    Depreciation and amortization                            2,809,292         1,802,553        6,686,814       3,487,414
    Equipment rental                                           677,830           135,831        1,210,480         261,597
    Technology consulting                                    1,666,142           351,534        2,824,229         570,623
    Repairs and maintenance                                  1,027,975           545,493        1,613,786       1,123,824
  Other:
    Professional fees                                          613,402         1,203,157        1,113,810       1,920,367
    Occupancy costs                                          1,683,736           661,199        3,421,430       1,269,476
    Other                                                    1,981,246         1,336,814        4,007,440       2,310,785
                                                      -----------------  ----------------   --------------  --------------

       Total expenses                                       62,709,184        37,617,452      114,930,294      70,100,294
                                                      -----------------  ----------------   --------------  --------------


   Income from continuing operations
     before income taxes                                     8,145,393         7,760,890        8,946,431       7,026,202

   Income taxes (benefit):
        Federal, currently payable                           2,034,304         2,288,752        2,299,864       2,146,335
        State and local, currently payable                   1,965,730         1,097,614        2,176,072       1,209,959
                                                      -----------------  ----------------   --------------  --------------

                  Total current income tax expense           4,000,034         3,386,366        4,475,936       3,356,294
                                                      -----------------  ----------------   --------------  --------------


        Federal, deferred                                      217,591           (38,077)         193,624         (76,409)
        State and local, deferred                             (383,151)          (20,283)        (468,991)        (36,125)
                                                      -----------------  ----------------   --------------  --------------

                  Total deferred income tax benefit           (165,560)          (58,360)        (275,367)       (112,534)
                                                      -----------------  ----------------   --------------  --------------


           Total income taxes from continuing operations     3,834,474         3,328,006        4,200,569       3,243,760
                                                      -----------------  ----------------   --------------  --------------


   Net  income from continuing operations                    4,310,919         4,432,884        4,745,862       3,782,442
                                                      -----------------  ----------------   --------------  --------------


   Discontinued operations:
     Income from discontinued operations,
        net of taxes                                                 -         1,450,529           82,994         765,648
     Gain on sale of discontinued operations,
        net of taxes                                           461,182                 -       20,515,969               -
                                                      -----------------  ----------------   --------------  --------------

                                                               461,182         1,450,529       20,598,963         765,648
                                                      -----------------  ----------------   --------------  --------------


   Net income                                         $      4,772,101   $     5,883,413    $  25,344,825   $   4,548,090
                                                      -----------------  ----------------   --------------  --------------


</TABLE>










                                   (Continued)
                                        4
<PAGE>

             NATIONAL DISCOUNT BROKERS GROUP, INC. AND SUBSIDIARIES
      CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                   (Unaudited)
                                   (Continued)

<TABLE>
<CAPTION>



                                                         Three Months Ended November 30,       Six Months Ended November 30,
                                                      -----------------------------------   --------------------------------
                                                             1999               1998               1999            1998
                                                      -----------------  ----------------   --------------  --------------

<S>                                                     <C>                  <C>            <C>              <C>
   Other comprehensive income (loss), before tax:
      Unrealized (gain) loss on investment securities
         available for sale:
           Unrealized holding gains (losses) arising
             during period                              $            -       $   482,815    $         -      $   (409,023)
           Less: reclassification adjustment for gains
             included in net income                                  -        (1,428,865)             -        (1,428,865)
                                                      -----------------  ----------------   --------------  --------------

  Other comprehensive loss before tax                                -          (946,050)             -        (1,837,888)
   Income tax benefit related to items of other
     comprehensive income (loss)                                     -          (416,262)             -          (719,487)
                                                      -----------------  ----------------   --------------  --------------

   Other comprehensive income loss, net of tax                       -          (529,788)             -        (1,118,401)
                                                      -----------------  ----------------   --------------  --------------


   Comprehensive income                               $      4,772,101   $     5,353,625    $  25,344,825   $   3,429,689
                                                      -----------------  ----------------   --------------  --------------




   Net  income per common and potential
      common share  (a)
     Basic:
        Net  income from continuing operations        $           0.25   $          0.32    $        0.29   $        0.27
        Net income from discontinued operations,
          net of taxes                                            0.00              0.10             0.00            0.05
        Gain on sale of discontinued operations,
          net of taxes                                                              0.00             1.24            0.00
                                                      -----------------  ----------------   --------------  --------------

            Net income                                $           0.28   $          0.42    $        1.53   $        0.32
                                                      -----------------  ----------------   --------------  --------------

Weighted average common shares outstanding                  16,985,288        13,991,923       16,593,030      14,041,304
                                                      -----------------  ----------------   --------------  --------------


     Diluted:
        Net  income from continuing operations        $           0.25   $          0.32    $        0.28   $        0.27
        Net income from discontinued operations,
          net of taxes                                            0.00              0.10             0.00            0.05
        Gain on sale of discontinued operations,
          net of taxes                                                              0.00             1.22            0.00
                                                      -----------------  ----------------   --------------  --------------


            Net income                                $           0.28   $          0.42    $        1.50   $        0.32
                                                      -----------------  ----------------   --------------  --------------

Weighted average common shares outstanding                  17,217,926        13,994,535       16,852,766      14,049,294
                                                      -----------------  ----------------   --------------  --------------



<FN>
(a)  The sum of the  individual  quarters'  earnings  per common  share does not
     equal the total  amount  for the six  months  ended  November  30,  1999 or
     November  30, 1998 due to the effect of  averaging  the number of shares of
     potential common stock throughout the year.
</FN>

</TABLE>











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







                                        5
<PAGE>

             NATIONAL DISCOUNT BROKERS GROUP, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>


                                                          Six Months Ended November 30,
                                                      -----------------------------------
                                                               1999               1998
                                                      -----------------  ----------------

 Cash flows from operating activities:

  <S>                                                 <C>                <C>
  Net income from continuing operations               $      4,745,862   $     3,782,442
  Net income from discontinued operations                                       8765,648
  Gain on sale of discontinued operations, net of taxes     20,515,969                 -

 Non-cash items included in net income:
  Depreciation and amortization                              6,686,814         3,809,363
  Gain on sale of securities available for sale                      -        (1,348,984)
  Gain on sale of securities not readily marketable                  -           (79,881)
  Loss of Equitrade allocated to minority partners                   -           142,280
  Provision for deferred taxes                                (275,367)         (112,535)

 (Increase) decrease in operating assets:
  Receivables:
    Clearing brokers                                       (21,126,647)      (11,715,082)
    Other                                                      388,307          (151,540)
  Securities owned, at market value                        (31,311,515)        4,835,845
  Other assets (net of deposits made on furniture,
     fixtures, equipment, leasehold improvements
     and computer software)                                  1,450,060           487,056
 Increase (decrease) in operating liabilities:
  Securities sold, not yet purchased, at market value       29,029,404         1,766,889
  Accrued compensation, accounts payable and
     accrued expense                                        (4,353,004)        4,349,582
  Income taxes payable                                       3,163,245         1,777,641
(Increase) decrease in operating assets due to sale
  of Equitrade:
    Investment in discontinued operations                   28,341,746                 -
    Exchange membership                                        351,496                 -
                                                      -----------------  ----------------

     Net cash provided by operating activities              37,689,364         8,308,724
                                                      -----------------  ----------------


 Cash flows from investing activities:

  Net purchases of U.S. Treasury obligations               (95,257,328)         (234,018)
  Proceeds from sale of securities available for sale                -         1,348,984
  Proceeds from sale of securities not readily marketable            -            79,881
  Notes issued                                                (160,000)         (900,000)
  Principal collected on notes receivable                    1,061,261            57,822
  Net purchases of furniture, fixtures,
    equipment and leasehold improvements                    (8,836,921)         (308,242)
  Deposits made on furniture, fixtures, equipment,
    leasehold improvements and computer software            (9,003,360)       (1,040,736)
  Purchases of computer software                            (5,166,561)         (796,277)
  Payment for purchase of intangible asset                           -          (450,000)
  Purchase of investment securities not readily marketable    (100,000)                -
  Issuance of subordinated notes receivable                          -        (2,500,000)
  Principal collected on subordinated notes receivable      27,000,000                 -
  Repayment of loan                                        (15,000,000)                -
                                                      -----------------  ----------------

     Net cash used in investing activities            $   (105,462,909)  $    (4,742,586)
                                                      -----------------  ----------------


</TABLE>











                                   (Continued)
                                        6
<PAGE>

             NATIONAL DISCOUNT BROKERS GROUP, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                   (Continued)
<TABLE>
<CAPTION>

                                                          Six Months Ended November 30,
                                                      -----------------------------------

                                                             1999               1998
                                                      -----------------  ----------------

 Cash flows from financing activities:

  <S>                                                 <C>                <C>
  Proceeds from issuance of common stock              $     91,603,950   $             -
  Proceeds from exercise of options                              7,655                 -
  Purchase of treasury stock                                         -        (2,018,144)
  Capital withdrawals by minority interest                           -        (1,747,784)
                                                      -----------------  ----------------

     Net cash provided by (used in) financing activities    91,611,605        (3,765,928)
                                                      -----------------  ----------------

 Net increase (decrease) in cash and cash equivalents       23,838,060          (199,790)

 Cash and cash equivalents at beginning of period              411,629         1,039,121
                                                      -----------------  ----------------

 Cash and cash equivalents at end of period           $     24,249,689   $       839,331
                                                      -----------------  ----------------


</TABLE>


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














































                                        7

<PAGE>





             NATIONAL DISCOUNT BROKERS GROUP, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                                November 30, 1999

Note 1 - Business and organization

     National  Discount  Brokers Group,  Inc. ("NDB Group") is a holding company
whose  principal  wholly  owned   subsidiaries  are  National  Discount  Brokers
Corporation,  doing  business as NDB.com  ("NDB.com"),  and Sherwood  Securities
Corp.  ("Sherwood  Securities").  NDB Group and its  subsidiaries,  collectively
referred to as the "Company",  are primarily engaged in the securities  business
and in providing related financial services.

     NDB Group and another wholly owned  subsidiary,  SHD  Corporation  ("SHD"),
also owned  membership  interests  in  Equitrade  Partners,  L.L.C.,  a Delaware
limited liability company  ("Equitrade").  Equitrade was a registered specialist
on the New York Stock Exchange ("NYSE").  On June 18, 1999, the Company sold its
46.845%  membership  interest  in  Equitrade  to a  subsidiary  of Spear Leeds &
Kellogg, L. P. for cash. See Note 7, "Discontinued Operations".

Note 2 - Basis of presentation

     The accompanying  unaudited condensed  consolidated financial statements do
not include all of the  information  and notes  required by  generally  accepted
accounting  principles for complete consolidated  financial  statements.  In the
opinion  of  management,   all  adjustments  considered  necessary  for  a  fair
presentation  of  condensed  consolidated  financial  condition  and  results of
operations for the periods presented have been included.  All adjustments are of
a normal and recurring nature. It is suggested that these condensed consolidated
financial  statements  be read in  conjunction  with  the  audited  consolidated
financial statements and the related notes included in the Company's 1999 Annual
Report on Form  10-K.  Certain  prior year  amounts  have been  reclassified  to
conform to the three and six months ended November 30, 1999 presentations.

Note 3 - Net income per common share

     Net income per common share is computed  using the weighted  average number
of shares of common  stock and  potential  common stock  outstanding.  Potential
common stock  comprises  stock issuable under stock options.  The treasury stock
method  of  accounting  was used in  computing  potential  common  stock for the
computation of diluted earnings per common share.

Note 4 - Commitments and contingencies

     Certain significant legal proceedings and matters were previously disclosed
in Item 3, Legal  Proceedings,  of the Company's  Annual Report on Form 10-K for
the year ended May 31,  1999,  and the  disclosures  regarding  such matters are
incorporated  herein by  reference.  Many aspects of the business of the Company
involve  substantial risks of potential  liability.  In recent years,  there has
been an increasing  incidence of litigation  involving the securities  industry,
including class action suits that generally seek substantial damages.  Companies
engaged in the  underwriting  and  distribution  of  securities  are  exposed to
substantial  liability under federal and state  securities laws. The Company is,
from  time to  time,  involved  in  proceedings  with,  and  investigations  by,
governmental and self-regulatory agencies.

     The  Company  has been named as a  defendant  in a number of  lawsuits  and
arbitrations  and is the  subject of  investigations  that  allege,  among other
things,  violations  of Federal  and state  securities  laws and other  laws.  A
substantial  settlement or judgement in any of these cases could have a material
adverse  effect on the Company.  Except as described in Item 3 to the  Company's
Form 10-K for the year ended May 31, 1999 and this Form 10-Q,  management of the
Company  believes  that  none  of  these  pending  lawsuits,   arbitrations  and
investigations  is likely to have a  material  adverse  effect on its  financial
condition,  results of operations or liquidity,  although the Company  cannot be
certain of this.
                                       8
<PAGE>

     In connection with the NASD arbitration action against Sherwood  Securities
by Weiss, Peck & Greer, L.L.C.  ("WPG") reported in Item 3 to the Company's Form
10-K for the fiscal year ended May 31, 1999, WPG and Sherwood  Securities agreed
to non-binding  mediation by the NASD. A mediation session was held on September
24, 1999. The attempted mediation was not successful. Sherwood Securities, after
consultation with counsel,  believes it has valid defenses to the claims made by
WPG and intends to vigorously contest the claims.

Note 5 - Net capital requirements

     As registered  broker-dealers,  Sherwood Securities and NDB.com are subject
to the  Securities  Exchange  Act of 1934  Uniform Net Capital  Rule 15c3-1 (the
"Rule").  As of November 30, 1999,  the net capital of Sherwood  Securities  and
NDB.com  exceeded their  required net capital under the Rule by $59,343,000  and
$16,491,000, respectively.

     The Rule also  provides  that equity  capital may not be  withdrawn or cash
dividends  be paid if the  resulting  net capital  would be less than the amount
required  under the Rule.  Accordingly,  at November  30,  1999,  the payment of
dividends  and  advances to the Company by  Sherwood  Securities  and NDB.com is
limited to $59,143,000 and $16,441,000, respectively, under the most restrictive
of these requirements.

Note 6 - Segments

     Under the  provisions  of Statement of Financial  Accounting  Standards No.
131, "Disclosures about Segments of an Enterprise and Related Information",  the
Company has two  reportable  segments:  discount  brokerage  and market  making.
NDB.com  transacts all business that will be reported in the Company's  discount
brokerage segment. Its revenues are principally in the form of retail commission
income,  distribution  assistance  fees from mutual funds and interest earned on
its  customers'  balances  held  at its  clearing  broker.  Sherwood  Securities
represents  the  Company's  market  making  segment,   which  derives  its  firm
securities  transaction  revenues  either from the spread between the price paid
when a security is bought and the price received when a security is sold or from
proprietary  investments,  as well as limited interest and dividend income. "All
Other"  category   revenues   consist   principally  of  interest  and  realized
gains/losses on securities available for sale.

     Revenue  from the  transactions  with other  segments  within  the  Company
(referred to as  intersegment  revenues) is recorded at market value,  as if the
transactions were with third parties.

     The Company  evaluates the  performance  of its segments based on profit or
loss from operations before income taxes. No single customer  accounted for more
than  10% of the  Company's  condensed  consolidated  revenues.  Information  on
segment assets is not disclosed  because it is not used for  evaluating  segment
performance and deciding how to allocate resources to segments. However, capital
expenditures  are  used in  evaluating  segment  performance  and are  therefore
disclosed.  Capital  expenditures  are reported net of proceeds from the sale of
fixed assets, if any. Substantially all of the Company's revenues and assets are
attributable to or located in the U.S.

      Financial  information for the Company's  reportable segments is presented
in the following table,  which excludes the Company's  discontinued  operations,
Equitrade.

<TABLE>
<CAPTION>

                                                  Three Months Ended November 30, 1999
                                          Discount      Market
                                         Brokerage      Making           All Other          Total
<S>                                    <C>             <C>              <C>             <C>
Revenue from external sources          $16,735,000     $52,330,000      $ 1,790,000     $70,855,000
Intersegment revenue                     2,061,000               -          106,000       2,167,000
                                       -------------   -----------      -------------   -----------
Total revenue                          $18,796,000     $52,330,000      $ 1,896,000     $73,022,000
                                       -----------     -----------      -----------     -----------
Profit (loss) before income taxes      $(3,219,000)    $11,149,000      $   215,000     $ 8,145,000
Capital expenditures (1)               $ 6,651,000     $ 1,783,000      $ 6,212,000     $14,646,000

</TABLE>

                                       9
<PAGE>

<TABLE>
<CAPTION>


                                                  Three Months Ended November 30, 1998
                                          Discount      Market
                                         Brokerage      Making            All Other          Total
<S>                                    <C>             <C>               <C>            <C>
Revenue from external sources          $11,678,000     $32,192,000       $1,508,000     $45,378,000
Intersegment revenue                     1,484,000          26,000          588,000       2,098,000
                                       -------------   ------------   -------------   -------------
Total revenue                          $13,162,000     $32,218,000       $2,096,000     $47,476,000
                                       -----------     -----------      ------------    -----------
Profit (loss) before income taxes      $(1,141,000)   $  8,031,000      $   871,000    $  7,761,000
Capital expenditures (1)               $   449,000    $  1,124,000      $       -      $  1,573,000

</TABLE>
<TABLE>
<CAPTION>

                                                    Six Months Ended November 30, 1999
                                          Discount       Market
                                          Brokerage      Making            All Other          Total
<S>                                    <C>              <C>              <C>             <C>
Revenue from external sources          $ 32,133,000     $88,219,000      $ 3,525,000     $123,877,000
Intersegment revenue                      3,814,000            5,000         322,000        4,141,000
                                       --------------   -----------      -------------   ------------
Total revenue                          $ 35,947,000     $88,224,000      $ 3,847,000     $128,018,000
                                       ------------     -----------      -----------     ------------
Profit (loss) before income taxes      $(10,495,000)    $18,249,000      $ 1,192,000     $  8,946,000
Capital expenditures (1)               $ 11,225,000     $ 5,067,000      $ 6,715,000     $ 23,007,000
</TABLE>
<TABLE>
<CAPTION>


                                                    Six Months Ended November 30, 1998
                                          Discount      Market
                                         Brokerage      Making            All Other          Total
<S>                                    <C>             <C>               <C>            <C>
Revenue from external sources          $22,596,000     $52,789,000       $1,741,000     $77,126,000
Intersegment revenue                     2,836,000          68,000        1,187,000       4,091,000
                                       -------------   ------------     ------------    -----------
Total revenue                          $25,432,000     $52,857,000       $2,928,000     $81,217,000
                                       -----------     -----------      ------------    -----------
Profit (loss) before income taxes      $(2,524,000)   $  8,045,000      $ 1,505,000     $ 7,026,000
Capital expenditures (1)               $ 1,185,000    $  1,356,000      $    54,000     $ 2,595,000

<FN>
(1) - includes deposits made on assets not yet placed in service.
</FN>
</TABLE>


     The following table is a reconciliation  of reportable profit (loss) before
income taxes to the Company's consolidated totals.
<TABLE>
<CAPTION>

                                                Three Months Ended                 Six Months Ended
                                                   November 30,                       November 30,
                                               1999             1998             1999              1998
                                               ----             ----             ----              ----
<S>                                      <C>               <C>            <C>               <C>
Total profit before income taxes
   for reportable segments               $  7,930,000      $  6,890,000   $  7,754,000      $    5,521,000
Other profit                                  215,000           871,000      1,192,000           1,505,000
                                         --------------    ------------    -------------    ---------------

Total consolidated profit before
income taxes                             $  8,145,000      $  7,761,000   $  8,946,000      $    7,026,000
                                         ------------      --------------   ------------    ---------------
</TABLE>


Note 7 - Discontinued Operation

     On June 18,  1999,  the  Company  sold its 46.845%  membership  interest in
Equitrade.  As  such,  the  operations  of  Equitrade  have  been  reflected  in
discontinued  operations for all periods reported.  Revenue and expenses for the
six months ended November 30, 1999  applicable to this  discontinued  operation,
prior  to  the   allocation  of  minority   interest  and  income  taxes,   were
approximately  $1,728,000 and $1,570,000,  respectively,  and for the six months
ended  November  30,  1998  were   approximately   $6,898,000  and   $5,311,000,
respectively.  The gain on the sale was approximately $20,516,000,  net of taxes
and other expenses directly related to the sale.

                                       10
<PAGE>


Note 8 - Subsequent Event

     Subsequent  to November 30, 1999,  the Company  decided that in  connection
with the move to 90 Hudson Street from New York City,  the Company  expects,  by
fiscal year end, to abandon and write-off  approximately  $3 million in net book
value of equipment and related  software that will be incompatible  with the new
network and  production  platform  established at 90 Hudson Street and write-off
approximately  $1.5 million in net book value of leasehold  improvement costs at
its current locations in New York City. Accordingly,  the estimated useful lives
of these  assets  have been  reduced  such that  their  book  value  will  fully
depreciate/amortize as of the end of the current fiscal year.




                                       11
<PAGE>


Item - 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS


Description of Business

      National  Discount Brokers Group,  Inc. ("NDB Group") and its subsidiaries
(collectively,  the "Company") are primarily engaged in the securities  business
and  in  providing  related  financial   services.   National  Discount  Brokers
Corporation   (formerly  Triak  Services  Corp.),   doing  business  as  NDB.com
("NDB.com"),  is an on-line deep discount  brokerage firm  specializing in trade
execution  for  individual  investors.   Sherwood  Securities  Corp.  ("Sherwood
Securities")  is  primarily  engaged in the  securities  business as a wholesale
market  maker in  Nasdaq  National  Market  System  and  other  over-the-counter
securities.

Results of Operations

     The results of  continuing  operations of the Company for the three and six
months ended  November 30, 1999 reflect  primarily the activities of NDB.com and
Sherwood Securities.

     We have  experienced and expect to continue to experience,  fluctuations in
quarterly operating results due to a variety of factors,  including the value of
our  market-making   securities  positions,  the  volume  of  our  market-making
activities,  volatility in the  securities  markets,  our ability to attract and
retain  personnel,  overhead and other  expenses,  the amount of revenue derived
from limit orders as a percentage of net trading  revenues,  changes in payments
for order  flow,  clearing  costs,  the  addition  or loss of sales and  trading
professionals,  regulatory  changes,  the  amount  and  timing  of  capital  and
advertising  expenditures  and general  economic  conditions.  If demand for our
market making and discount  brokerage  services  declines either due to changing
market conditions or to competitive  pressures,  and we are unable to adjust our
cost structure on a timely basis, our operating  results could be materially and
adversely affected. We have experienced,  and may experience in the future, some
seasonality in our business.

       Due to all of the foregoing factors,  period-to-period comparisons of our
revenues  and  operating  results  are  not  necessarily   meaningful  and  such
comparisons  cannot be relied upon as  indicators of future  performance.  There
also can be no  assurance  that we will be able to sustain  the rates of revenue
growth that we have experienced in the past, that we will be able to improve our
operating  results or that we will be able to  sustain  our  profitability  on a
quarterly basis.

     On June 18,  1999,  NDB Group and its wholly owned  subsidiary,  SHD Corp.,
sold their 46.845% aggregate membership  interests in Equitrade Partners,  L.L.C
("Equitrade").  As a result,  the results of operations  of Equitrade  have been
segregated   and   reflected  as   discontinued   operations  in  the  Condensed
Consolidated  Statements of Income and Comprehensive  Income. For the six months
ended  November  30,  1999,  the  Company has  recognized  a gain on the sale of
Equitrade of $20,516,000,  net of taxes and other expenses  directly  related to
the  sale.  The gain on sale of  discontinued  operations  of  $461,000  for the
quarter ended November 30, 1999  represents an adjustment to the taxes estimated
to be owed on the sale of Equitrade.

     The Company's  consolidated  net income from continuing  operations for the
quarter ended  November 30, 1999 was  $4,311,000  compared to $4,433,000 for the
quarter  ended  November  30,  1998, a decrease of $122,000 or 3%. For the three
months ended November 30, 1999, Sherwood Securities had net income of $6,075,000
compared to net income of  $4,516,000  for the three months  ended  November 30,
1998.  NDB.com had a net loss of $1,794,000  for the quarter ended  November 30,
1999,  compared to a net loss of $635,000  for the quarter  ended  November  30,
1998.

     The Company's  consolidated  net income from continuing  operations for the
six months ended November 30, 1999 was $4,746,000 compared to $3,782,000 for the
six months ended  November 30, 1998, an increase of $964,000 or 25%. For the six
months ended November 30, 1999, Sherwood Securities had net income of $9,853,000
compared to net income of $4,469,000 for the six months ended November 30, 1998.
NDB.com had a net loss of $6,043,000 for the six months ended November 30, 1999,
compared to a net loss of $1,550,000 for the six months ended November 30, 1998.

                                       12
<PAGE>

     Total  revenue  from  continuing  operations  of the Company  increased  by
$25,476,000,  or 56%, for the three months ended  November 30, 1999, as compared
with the quarter ended November 30, 1998, and increased $46,750,000, or 61%, for
the six months ended  November 30, 1999,  as compared  with the six months ended
November 30, 1998.  Total revenue for Sherwood  Securities was  $52,330,000  (or
$17.36 per trade)  and  $88,224,000  (or $16.83 per trade) for the three and six
months ended November 30, 1999,  respectively,  as compared to  $32,218,000  (or
$25.61 per trade)  and  $52,857,000  (or $21.85 per trade) for the three and six
months ended November 30, 1998, respectively.  Total revenue for NDB.com (before
elimination of the rebate received from Sherwood  Securities for order flow) was
$18,796,000  (or $29.89 per trade) and $35,947,000 (or $30.98 per trade) for the
three and six months  ended  November  30,  1999,  respectively,  as compared to
$13,163,000  (or $31.99 per trade) and $25,432,000 (or $32.15 per trade) for the
three and six months ended November 30, 1998, respectively.  The reasons for the
changes in total revenues are set forth below.

     Revenue from firm securities  transactions generated by Sherwood Securities
increased by $19,561,000,  or 63%, and by $34,480,000, or 68%, for the three and
six  months  ended  November  30,  1999,  respectively,  as  compared  with  the
equivalent  periods in 1998.  The  increased  activity  in the  equity  markets,
particularly  trading  volume in internet and high  technology  related  stocks,
resulted  in  increases  in  Sherwood   Securities'  ticket  and  share  volume,
respectively, for the quarter and six months ended November 30, 1999 as compared
to the same periods a year ago. These  increases in ticket and share volume were
more than enough to make up for the decrease in the trading profits per ticket.
<TABLE>
<CAPTION>


                                     Three Months Ended November 30,
                                                                               Percentage
                                      1999                 1998                  Change
                                      ----                 ----                  ------
<S>                                  <C>                  <C>                     <C>
Trading profit per ticket            $16.85               $24.83                  (33%)
Average daily trades                 47,800               20,000                  139%
Share volume (billions)               3.1                   1.6                    94%
Average   number   of   shares
  per ticket                          1,030                1,300                  (21%)

</TABLE>
<TABLE>
<CAPTION>

                                      Six Months Ended November 30,
                                                                               Percentage
                                     1999                  1998                   Change
                                     ----                  ----                  ------
<S>                                 <C>                   <C>                     <C>
Trading profit per ticket           $16.27                $21.00                  (23%)
Average daily trades                41,000                18,900                  117%
Share volume (billions)               5.5                  3.2                     72%
Average   number   of   shares
per ticket                           1,050                 1,350                  (22%)
</TABLE>


     The Company's commission income, primarily generated by NDB.com,  increased
by $4,198,000,  or 44%, and by $7,670,000,  or 42%, for the three and six months
ended  November 30, 1999,  respectively,  when compared with the same periods in
the prior year.  These increases  occurred  primarily due to a rise in NDB.com's
average daily ticket count. Increases in the volume of transactions for the U.S.
equity markets and an increase in the number of NDB.com's  customer accounts led
to the rise in NDB.com's ticket count. The percentage increases in average daily
ticket count outpaced the percentage  increases in commission  income,  however,
because a larger portion of NDB.com's  transactions were performed via its lower
costing website, rather than utilizing higher costing live representatives.
<TABLE>
<CAPTION>


                                      Three Months Ended November 30,
                                                                               Percentage
                                         1999                1998                Change
                                         ----                ----                ------
<S>                                    <C>                 <C>                     <C>
Average daily tickets                   10,000               6,500                 54%
Average number of customers            168,800             110,200                 53%
Average trades per customer               3.7                 3.7                   0%
Percentage of trades on-line              76%                 59%                  29%
</TABLE>

                                       13
<PAGE>
<TABLE>
<CAPTION>


                                       Six Months Ended November 30,
                                                                               Percentage
                                         1999                1998                Change
                                         ----                ----                ------
<S>                                    <C>                 <C>                     <C>
Average daily tickets                    9,100               6,200                 47%
Average number of customers            159,800             107,500                 49%
Average trades per customer               7.3                 7.4                  (1%)
Percentage of trades on-line              74%                 56%                  32%

</TABLE>



     Interest  and  dividend  income  increased  by  $2,539,000,  or  113%,  and
$5,029,000,  or 111%,  for the three and six months  ended  November  30,  1999,
respectively, as compared to the same periods in the prior year. These increases
are due principally to two factors.  First, there were larger average amounts of
cash available to earn interest. This was primarily due to the Company taking in
cash of approximately  $177,000,000 in connection with the  underwritten  public
offering  of its common  stock that  closed on June 25, 1999 and the sale of its
membership  interests in Equitrade  on June 18, 1999.  In addition,  the average
customer debit and credit balances that are held with NDB.com's  clearing broker
continued to rise.

     Fee  income  generated  by  NDB.com  increased  by  $475,000,  or 48%,  and
$915,000,  or 48%,  for the  three  and six  months  ended  November  30,  1999,
respectively,  as compared to the same periods in the prior year.  The increases
are principally due to NDB.com  receiving  higher  distribution  assistance fees
from money market funds,  as customers'  balances in those funds have  increased
since the prior year.

     Total  expenses  for the three months  ended  November  30, 1999  increased
approximately  $25,092,000,  or  67%,  from  $37,617,000  in the  quarter  ended
November 30, 1998 to  $62,709,000  during the quarter  ended  November 30, 1999.
Total   expenses  for  the  six  months  ended   November  30,  1999   increased
approximately $44,830,000,  or 64%, from $70,100,000 during the six months ended
November 30, 1998 to  $114,930,000  during the current year. The reasons for the
changes in expenses are set forth below.

    Compensation and benefits increased by $10,751,000, or 68%, and $16,479,000,
or 58%, for the three and six months ended November 30, 1999,  respectively,  as
compared  to the  equivalent  periods  in the prior  year.  As a  percentage  of
revenue,  employee  compensation  and benefits was 38% and 36% for the three and
six months ended  November 30,  1999,  respectively,  versus 35% and 37% for the
comparable  periods in the prior fiscal year. The increases in this expense were
primarily  due to a rise in  compensation  to Sherwood  Securities'  traders and
salesmen resultant from the increase in Sherwood Securities' net trading revenue
and  profitability.  Similarly,  based on the  increasing  profitability  of the
Company, management and employee bonuses have increased.  Finally, the number of
employees  increased  to 399 for Sherwood  Securities  and 340 for NDB.com as of
November 30, 1999, from 291 and 219, respectively,  as of November 30, 1998. The
increase in employees  was  necessitated  by the  significant  increase in trade
volume and  technological  needs that the Company has experienced  over the last
year.  The Company  expects  compensation  and  benefits  expense to continue to
increase in support of expected increases in customer accounts,  customer assets
and trades.

    Clearing and related brokerage charges increased by $2,658,000,  or 25%, and
$5,255,000,  or 26%,  for the three and six  months  ended  November  30,  1999,
respectively,  as compared to same periods in the prior year. As a percentage of
revenue, clearing and related brokerage charges decreased to 19% and 20% for the
three and six months ended November 30, 1999, respectively, from 23% and 26% for
the  comparable  periods in fiscal  1998.  The  increase in clearing and related
charges for the three and six months  ended  November 30, 1999 was mainly due to
increases in Sherwood  Securities' and NDB.com's  ticket counts of 131% and 53%,
respectively,  for the  quarter  ended  November  30,  1999  and  117%  and 47%,
respectively,  for the six months ended November 30, 1999.  Partially offsetting
these increases,  and leading to the decrease in clearing and related  brokerage
charges  as a  percentage  of  revenue,  were  decreases  in  per  ticket  rates
negotiated with NDB.com's clearing broker as of February 1999.

     Communications  increased by $906,000, or 25%, and $1,032,000,  or 14%, for
the three and six months ended November 30, 1999,  respectively,  as compared to
the same periods in the prior year.  The  increases  are mainly due to a rise in
the cost associated with obtaining market data and quotation services.  Usage of
such  services  has  increased  as the number of users has risen since the prior
fiscal year.

                                       14
<PAGE>

     Advertising  costs increased by $6,097,000,  or 515%, and  $11,489,000,  or
443%,  for the three and six months ended  November 30, 1999,  respectively,  as
compared to the  comparable  periods in the prior year. The increases are due to
additional  media  buys and the costs to  produce  a new line of  advertisements
designed  to  strengthen  NDB.com  brand  awareness  and to put a  focus  on its
products  and  services.  The Company  uses a  combination  of network and cable
television,  local radio and print media to attract new customers.  NDB.com also
attains new customers  through its affinity  relationship  program.  Acquisition
costs per customer  account for NDB.com were $379 and $378 for the three and six
months  ended  November  30, 1999 as compared to $107 and $156 for the three and
six months ended November 30, 1998.  Increased media spending by NDB.com, and by
its  competitors  in the  online  brokerage  industry,  has  led to the  overall
increases in the average cost to acquire an account.  NDB.com continues to focus
on  attracting  further  affinity  partnerships  to help abate these  escalating
acquisition costs.

     Sales-related travel and entertainment  increased by $256,000,  or 78%, and
$640,000,  or 89%,  for the  three  and six  months  ended  November  30,  1999,
respectively,  as compared to the same periods in the prior year.  The increases
are  due  mainly  to  an  increase   in  the  number  of  Sherwood   Securities'
institutional and broker-dealer  sales personnel and additional  efforts by this
sales force to attract new customers and maintain existing relationships.

       Depreciation  and  amortization  increased  by  $1,007,000,  or 56%,  and
$3,199,000,  or 92%,  for the three and six  months  ended  November  30,  1999,
respectively,  as compared to the  equivalent  periods in the prior year.  These
increases can be attributed to two main factors. NDB.com and Sherwood Securities
incurred additional charges for the write-off of obsolete computer equipment and
software  in  connection  with  upgrades  of their  brokerage  operations.  Also
contributing to the increase is depreciation and amortization  incurred on fixed
asset,  leasehold  improvement  and  computer  software  additions  by  Sherwood
Securities and NDB.com  aggregating  approximately  $5,018,000  and  $9,050,000,
respectively, during the period from June 1999 through November 1999.

     Equipment  rental costs  increased by $542,000,  or 399%, and $949,000,  or
363%,  for the three and six months ended  November 30, 1999,  respectively,  as
compared to the same periods in the prior year. The Company has begun to lease a
larger portion of the equipment used in connection  with NDB.com's  WebstationTM
and Sherwood Securities' trading operations as the useful lives for much of this
equipment has decreased due to the rapidly changing technologies involved.

     Technology  consulting  expense  increased  by  $1,314,000,  or  374%,  and
$2,254,000,  or 395%,  for the three and six months  ended  November  30,  1999,
respectively,  as compared  to the  comparable  periods in the prior  year.  The
increases are primarily due to rising fees paid to  consultants in order to test
and maintain  NDB.com's  website and Sherwood  Securities'  proprietary  trading
system.

     Repairs and maintenance costs increased by $482,000,  or 88%, and $490,000,
or 44%, for the three and six months ended November 30, 1999,  respectively,  as
compared to the same periods in the prior year. These  increases,  primarily for
NDB.com,  are due to maintenance service contract fees paid in order to maintain
infrastructures  as the original  warranties on the various systems  continue to
expire.

     Professional fees decreased by $590,000,  or 49%, and $807,000, or 42%, for
the three and six months ended November 30, 1999,  respectively,  as compared to
the equivalent  periods in the prior year,  primarily due to a decrease in legal
fees.

     Occupancy costs increased by $1,023,000,  or 155%, and $2,152,000, or 170%,
for the three and six months ended November 30, 1999, respectively,  as compared
to the same periods in the prior year. The increases are  principally due to the
signing of two additional  leases for office  locations to house NDB.com and the
Company's forthcoming clearing operations.

      Other expenses increased by $643,000, or 48%, and $1,613,000,  or 70%, for
the three and six months ended November 30, 1999,  respectively,  as compared to
the equivalent  periods in the prior year. The increases are due primarily to an
increase  in fees  paid to  employment  agencies  for the  placement  of new and
temporary  employees,  and fees for tuition and  conferences  for  employees  of
Sherwood  Securities  and  NDB.com.  The  remainder  of the  increases  in other
expenses is due to the overall growth in the volume of business and the increase
in staff size.

                                       15
<PAGE>


     The Company's  effective tax rate was approximately 47% for the three month
period  ended  November  30, 1999 as compared to 43% for the three  months ended
November  30,  1998 and was  approximately  47% for the six month  period  ended
November 30, 1999 as compared to 46% for the six months ended November 30, 1998.

    For the three and six months ended November 30, 1999, included in income tax
expense are  deferred  tax  benefits of  approximately  $166,000  and  $275,000,
respectively.  These  deferred tax benefits  relate to the future  taxability of
certain  temporary  book to tax basis  differences  and to the  carryforward  of
NDB.com's  taxable  loss to future  periods for certain  tax  jurisdictions.  In
conjunction  with the deferred  tax asset,  the Company has recorded a valuation
allowance of $295,000 because, in management's  judgment,  it was concluded that
it was more likely  than not that a portion of the benefit may not be  realized.
Absent this  valuation  allowance,  the Company's  effective tax rate would have
been  approximately  43% and 44% for the three and six months ended November 30,
1999, respectively.


Liquidity

     The  Company's  tangible  assets are highly  liquid,  but subject to market
price  fluctuation,  with more  than 87%  consisting  of cash or assets  readily
convertible into cash  (principally  firm securities  positions,  U.S.  Treasury
obligations  receivables from brokers and cash).  The Company's  operations have
generally been financed by internally  generated funds and the proceeds from the
sale of its common stock and its interest in Equitrade.

     From time to time,  the Company has borrowed  funds in connection  with its
trading  activities.  The Company currently has no committed lines of credit and
such  borrowings  were done on an "as needed"  basis.  Management  is  reviewing
alternatives to meeting these funding requirements.

  NDB Group's broker-dealer  subsidiaries,  Sherwood Securities and NDB.com, are
subject to the SEC's  minimum  net  capital  requirement,  which is  designed to
measure the general financial  soundness and liquidity of broker-dealers.  As of
November 30, 1999, Sherwood Securities and NDB.com had approximately $59,343,000
and  $16,491,000,  respectively,  in  excess  of the SEC  required  minimum  net
capital.  The net capital  rule imposes  financial  restrictions  upon  Sherwood
Securities' and NDB.com's  businesses,  which are more severe than those imposed
on most other businesses.

     Cash  flows from  operations  will vary on a daily  basis as the  Company's
portfolio of marketable  securities  changes.  The Company's  ability to convert
marketable  securities  owned into cash is determined by the depth of the market
and the size of the Company's  securities positions in relation to the market as
a whole.  The portfolio  mix also affects the  regulatory  capital  requirements
imposed on Sherwood Securities and NDB.com, which directly affects the amount of
funds available for operating, investing and financing activities.

  As a result of the sale of Equitrade on June 18,  1999,  the Company  received
approximately  $85,000,000  in net  cash  proceeds  comprised  principally  of a
pre-tax gain of approximately $42,000,000 (before a bonus to the Company's chief
executive  officer),  the return of capital of  approximately  $28,000,000,  the
repayment of subordinated  notes  receivable of $27,000,000 and the repayment of
other notes and interest receivable of approximately  $3,000,000. As part of the
sale, the Company also repaid its $15,000,000 loan to Spear, Leeds & Kellogg, LP
from the above mentioned proceeds.

   On June 25,  1999,  the Company  closed an  underwritten  public  offering of
2,990,000  shares  of  its  common  stock,  which  resulted  in its  receipt  of
approximately  $91,600,000  in  proceeds,  net of  underwriters'  discounts  and
commissions and expenses related to the offering.

     The  Company's  capital  expenditures  were $23.0  million and $2.1 million
during the six months ended November 30, 1999 and 1998, respectively,  including
deposits made on assets not yet placed in service.  Capital  expenditures during
the first six months of fiscal 2000 were  primarily  related to the expansion of
Sherwood  Securities'  trading  floor and  offices  and the build out of the new
facilities  at 90 Hudson  Street in Jersey  City,  as well as for the  continued
upgrading of the Company's information technology systems and telecommunications
equipment.  The Company  expects  that it will spend an  additional  $25 million
during the  remaining  two quarters of fiscal year 2000 in capital  expenditures
for its new  facilities  (including  the data center) at 90 Hudson  Street for a

                                       16
<PAGE>

total of $35 million. 65% of these assets are expected to be  leased/depreciated
over an average life of 24 to 36 months in accordance with the Company's leasing
or, if purchased,  depreciation policies. The remainder will be depreciated over
the 15-year term of the 90 Hudson Street facilities lease. Moreover, the Company
expects to spend an additional $5-$7 million in capital  expenditures on ongoing
technological  improvements  and product  enhancements  during the remaining two
quarters and intends to finance these upgrades,  as it did during the six months
ended  November 30,  1999,  with funds  received  from the  underwritten  public
offering  of its  common  stock  that  closed  on June 25,  1999 and the sale of
Equitrade.  As  NDB.com  expends  money on new  technology  during the third and
fourth  fiscal  quarters of fiscal year 2000,  maintenance  costs  (estimated at
about 16% to 18%  annually of the  hardware  costs  incurred)  will  increase in
proportion to these capital  expenditures.  The new space at 90 Hudson Street is
currently  expected to be placed in  operation  by  mid-calendar  year 2000.  In
connection  with the move to 90 Hudson  Street  from New York City,  the Company
expects to abandon and write-off  approximately  $3 million in net book value of
equipment and related  software that will be  incompatible  with the new network
and  production   platform   established  at  90  Hudson  Street  and  write-off
approximately  $1.5 million in net book value of leasehold  improvement costs at
its current locations in New York City.

     The  Company  expects to spend  approximately  $16,000,000  on  advertising
during  the two  remaining  fiscal  quarters  of fiscal  year  2000.  NDB.com is
currently concentrating its advertising campaign on branding with some potential
for  direct  account  acquisition.  With the  continued  increase  in  marketing
spending by its  competitors,  NDB.com also  continues  to look for  alternative
methods  of account  acquisition  through  business  to  business  associations.
NDB.com,  however,  expects account acquisition costs to remain at approximately
$300 to $400 per account  during the  remainder of fiscal  2000,  absent any new
business to business associations.

     Cash flows from the Company's investment activities are directly related to
market conditions.


Effects of Inflation

     The Company's assets are not  significantly  affected by inflation  because
they are primarily  monetary in nature.  Management  believes  that  replacement
costs of furniture,  equipment and leasehold  improvements  will not  materially
affect  operations.  However,  the  rate  of  inflation  affects  the  Company's
principal expenses such as employee compensation, rent and communications, which
may not be readily recoverable from increased revenues. Because of market forces
and competitive  conditions in the securities  industry,  a broker-dealer may be
unable to  restructure  its profit margins in order to recover  increased  costs
related to inflation.  Consequently,  the Company must rely on increased  volume
for this purpose.  However, the Company has significant cash balances on deposit
with financial  institutions,  including money market accounts,  as well as with
its principal  clearing  brokers on which  interest is paid which,  in the event
there are higher  interest rates which  normally  result from  inflation,  would
offset some of the costs.

Year 2000 Compliance

     This  material  is  subject  to the Year  2000  Information  and  Readiness
Disclosure Act of 1998.

     State of Readiness. The Company prepared for the issues associated with the
year 2000,  including changes in the programming of internal and vendor computer
systems.  The year 2000 problem was  pervasive  and complex as  virtually  every
computer  operation will be affected by the rollover of the two-digit year value
to 00.  The issue is whether  computer  systems  will  properly  recognize  date
sensitive  information  when  the year  changes  to  2000.  Systems  that do not
properly  recognize such  information  could generate  erroneous data or cause a
system  to fail.  The  Company's  plan to deal  with the year  2000  issue was a
five-step  plan,   which  included  both  information   technology   ("IT")  and
non-information  technology ("non-IT") systems. IT systems include the Company's
trading system, the Company's accounting software and the NDB.com  WebstationTM.
Non-IT systems include the Company's headquarters' water, sprinkler and elevator
systems. The five steps were awareness, assessment,  renovation,  validation and
implementation.   Awareness   required  the   notification   to  all  employees,
particularly senior management,  of the potential year 2000 problem.  Assessment
included  taking  inventory of every product or service  produced or used by the
Company  that  relies  on the use of  dates.  The date  could be used to  store,
search,  retrieve or calculate information.  The awareness and assessment phases
of the plan were 100%  complete as of November 30, 1999.  Renovation,  which had
also  been  substantially  completed  as of  November  30,  1999,  included  the

                                       17
<PAGE>

conversion of year 2000 non-compliant  systems into year 2000 compliant systems.
The  Company  believes  that  internal  software  and  hardware   identified  as
non-compliant have been made compliant or replaced, in all material respects, as
of the date of this report.  The Company has internally  verified  compliance of
its new NDB.com WebstationTM. Validation comprises the testing of all systems by
using test data with dates that include the year 2000. This is the certification
phase of the Company's production  platforms.  Implementation was a final review
of all year 2000  production  systems,  IT and non-IT,  in service.  The Company
completed,  in all material respects,  the validation and implementation phases.
The  Company is  dependent  upon  services  rendered by third  parties,  such as
telecommunications,  electric and clearance, which may have a material effect on
operations. These essential service providers indicated to the Company that they
were year 2000 compliant.  The Company did not experience any year 2000 problems
with its production systems through the date of this report.

     Costs. Through November 30, 1999, the Company spent approximately  $434,000
for software  modifications,  hardware and testing related to year 2000 of which
$91,000 was incurred  during the quarter  ended  November 30, 1999.  The Company
does not track  internal  costs  related  to year  2000  issues,  which  consist
primarily  of payroll  expenses  and, as a result,  the  foregoing  estimate and
actual expenditures do not include such internal costs. The Company has assessed
that business  interruption is the most  reasonably  likely worst case year 2000
scenario,  although  the  effect  upon  the  Company's  results  of  operations,
liquidity and financial condition is unknown.

     Contingency Plan. The Company formulated  contingency plans should internal
systems,  vendors or customers fail to become  compliant or fail to operate as a
result of year 2000 problems.


Looking Ahead

     The Company expects that it will spend an additional $25 million during the
remaining two quarters of fiscal year 2000 in capital  expenditures  for its new
facilities  (including  the data center) at 90 Hudson  Street for a total of $35
million.  Moreover,  the Company expects to spend an additional $5-$7 million in
capital   expenditures  on  ongoing   technological   improvements  and  product
enhancements  during  the  remaining  two  quarters.  The new space at 90 Hudson
Street is currently expected to be placed in operation by mid-calendar year.

     The  Company  expects to spend  approximately  $16,000,000  on  advertising
during  the two  remaining  fiscal  quarters  of fiscal  year  2000.  NDB.com is
currently concentrating its advertising campaign on branding with some potential
for  direct  account  acquisition.  With the  continued  increase  in  marketing
spending by its  competitors,  NDB.com also  continues  to look for  alternative
methods of account acquisition through business to business associations.

     During the fiscal year ending May 31, 2000,  Sherwood  Securities has added
and is expected to add an  aggregate of  approximately  60 new trading and sales
positions  to  its   facilities   nationwide,   bringing  the  total  number  to
approximately  310  nationwide.  It is also expected that the upcoming change to
decimalization  in the NASDAQ  trading  market  will  further  narrow the spread
between "bid" and "ask" prices on the stocks in which Sherwood  Securities makes
markets and may adversely affect profitability per ticket.  Management believes,
however,  that Sherwood  will be able to capitalize on the increased  volatility
and liquidity in the markets that decimalization may bring about.

     In connection with the growth of both Sherwood Securities and NDB.com,  the
Company's  employee  count  has  grown  from 702 at  August  31,  1999 to 739 at
November  30,  1999.  During  the fiscal  year  ending  May 31,  2000,  Sherwood
Securities has added and is expected to add an aggregate of approximately 60 new
trading and sales  positions to its  facilities  nationwide,  bringing the total
number to  approximately  310  nationwide.  The  Company  intends to continue to
expand its  workforce  during  the  remainder  of the  current  fiscal  year and
believes  competition for employees in the brokerage and technology  fields will
put upward pressure on average employee  compensation.  Separately,  the Company
estimates that it will begin  self-clearing  NDB.com and Sherwood  Securities at
the end of calendar year 2000.

                                       18
<PAGE>


Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT RISK

      The Company's  principal business  activities are, by their nature,  risky
and  volatile  and are  directly  affected by many  national  and  international
factors.  Any one of  these  factors  may  cause a  substantial  decline  in the
securities  markets,  which  could  materially  adversely  affect the  Company's
business.  Managing  risk is  critical  to the  Company's  profitability  and to
reducing the likelihood of earnings  volatility.  The Company's risk  management
policies and procedures have been established to continually  identify,  monitor
and manage risk.  The major types of risk that the Company faces include  credit
risk, legal risk, operating risk and market risk.

      Credit risk is the  potential  for loss due to a customer or  counterparty
failing  to  perform  its  contractual  obligations.   The  Company  clears  its
securities transactions through unaffiliated clearing agents. Under the terms of
its clearing agent agreements,  the Company's  clearing agents have the right to
charge it for losses that result from its  customers'  failure to fulfill  their
contractual  obligations.  In order to mitigate risk, the Company's policy is to
monitor the credit standing of its customers and maintain  collateral to support
margin loans to customers.  Further, a significant  portion of the Company's and
its customer assets are held at one or more clearing agents. Therefore, it would
incur substantial  losses if one of the Company's clearing agents were to become
insolvent or otherwise unable to meet its financial obligations.

     Operating  risk is the  potential for loss due to  deficiencies  in control
processes or computer and technological  systems.  The Company relies heavily on
various computer and communications  systems to operate its business,  including
NDB.com's web site.  The Company  relies  particularly  on third parties such as
Nasdaq,  telephone  companies,  online service providers,  clearing agents, data
processors and software and hardware  vendors.  The Company's  business could be
negatively impacted by unanticipated disruptions in service to customers, slower
response  times,  delays in  trading,  failed  settlement  of trades,  decreased
customer  service and  satisfaction,  incomplete  or  inaccurate  accounting  or
processing of trades,  and delays in the Company's  introduction of new products
and  services.  The Company  attempts to mitigate  operating  risk by  employing
experienced  personnel,  maintaining an internal control system, and maintaining
backup and recovery functions.

     Legal  risk is the risk  associated  with  non-compliance  with  legal  and
regulatory requirements,  and counterparty non-performance based upon non-credit
related  conditions,  such as legal  authority or capacity.  The SEC,  NASD, and
other agencies extensively regulate the U.S. securities industry. The Company is
required to comply  strictly with the rules and  regulations of these  agencies.
Further,  there are frequent  changes in the laws and regulations  affecting the
securities  industry and the securities  markets. If the Company fails to comply
with any of these laws, rules, or regulations,  it is subject to censure, fines,
cease-and-desist  orders or suspensions of its business.  Additionally,  the SEC
and NASD have strict rules that require it to maintain  sufficient  net capital.
If it  fails to  maintain  the  required  net  capital,  the SEC or the NASD may
suspend or revoke its broker-dealer  licenses.  In addition,  the Company may be
subject to lawsuits or arbitration claims by customers, employees or other third
parties in the different  jurisdictions in which it conducts  business (see Part
II, Item 1, below).  The Company has  established  procedures in accordance with
legal  and  regulatory  requirements  that are  designed  to  reasonably  ensure
compliance in these matters.

     Market  risk is the risk of loss that may result  from  changes in interest
and foreign  exchange rates,  equity and commodity  prices and the  correlations
among them.  The Company's  current  operations  and trading  activity limit its
exposure to the interest  rate and equity price  exposure  components  of market
risk.

     Interest rate risk is the  possibility  of a loss in the value of financial
instruments  from changes in interest rates.  The Company's  primary exposure to
interest rate risk arises from its interest  earning assets (mainly  deposits at
clearing brokers,  loans and notes receivable and U.S. Treasury obligations) and
funding sources (loans  payable).  The Company attempts to mitigate this risk by
only holding U.S. Treasury  obligations with maturities of one year or less. For
the other interest earning assets and funding sources, the interest rate risk is
not  material,  as the  underlying  value will not vary with changes in interest
rates.

     Equity price risk generally means the risk of loss that may result from the
potential change in the value of a financial  instrument as a result of absolute
and relative price  movements,  price  volatility or changes in liquidity,  over
which the Company has no control.  The Company's market making activities expose

                                       19
<PAGE>

its capital to  significant  equity price risk.  To mitigate  this risk,  senior
management  monitors  profits and losses on a  real-time  basis  throughout  the
trading  day.  Further,  from the  Company's  system-generated  reports,  senior
management reviews positions,  mark-to-market  valuations, and daily profits and
losses on individual security positions.  Additionally,  traders are required to
maintain  positions meeting a specified  potential  profit/loss  ratio, which is
monitored by management.

     The Company maintains  inventories for trading purposes in exchange-listed,
Nasdaq and other over-the-counter securities on both a long and short basis. The
fair value of these  securities  at November 30, 1999 was $69.4  million in long
positions  and $40.8  million in short  positions.  The  potential  loss in fair
value,  using a  hypothetical  10% decline in prices,  is  estimated  to be $2.9
million  as of  November  30,  1999.  A 10%  hypothetical  decline  was  used to
represent a significant yet plausible market change.

     Other  financial  instruments  exposed  to  equity  rate  risk are held for
purposes other than trading.  This includes  investments by the Company in three
privately held corporations.  These investments were valued at their fair value,
$600,000 at November 30, 1999, in the Company's condensed consolidated financial
statements under the heading "Securities not readily marketable".  The potential
loss in fair value,  using a hypothetical 10% decline in prices, is estimated to
be $60,000 as of November 30, 1999.



PART II - OTHER INFORMATION

Item 1 - LEGAL PROCEEDINGS

     Certain significant legal proceedings and matters were previously disclosed
in Item 3, Legal  Proceedings,  of the Company's  Annual Report on Form 10-K for
the year ended May 31,  1999,  and the  disclosures  regarding  such matters are
incorporated  herein by  reference.  Many aspects of the business of the Company
involve  substantial risks of potential  liability.  In recent years,  there has
been an increasing  incidence of litigation  involving the securities  industry,
including class action suits that generally seek substantial damages.  Companies
engaged in the  underwriting  and  distribution  of  securities  are  exposed to
substantial  liability under federal and state  securities laws. The Company is,
from  time to  time,  involved  in  proceedings  with,  and  investigations  by,
governmental and self-regulatory agencies.

     The  Company  has been named as a  defendant  in a number of  lawsuits  and
arbitrations  and is the  subject of  investigations  that  allege,  among other
things,  violations  of Federal  and state  securities  laws and other  laws.  A
substantial  settlement  or judgment in any of these cases could have a material
adverse  effect on the Company.  Except as described  disclosed in Item 3 to the
Company's  Form 10-K for the year ended May 31, 1999,  Form 10-Q for the quarter
ended  August 31, 1999 and this Form 10-Q,  management  of the Company  believes
that none of these pending lawsuits,  arbitrations and  investigations is likely
to have a  material  adverse  effect  on its  financial  condition,  results  of
operations or liquidity, although the Company cannot be certain of this.

     On November 8, 1999,  the  settlement  agreement in the case In Re:  Nasdaq
Market  Makers  Antitrust  Litigation  became final when an  application  for an
extension  of time to  petition  for  certiorari  was denied by a justice of the
United States Supreme Court.



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

(a) The Company held an Annual Meeting of its Stockholders on October 20, 1999.

          (b) (i) The  following  persons were elected  directors  for a term of
three years:

                                       20
<PAGE>


<TABLE>
<CAPTION>


                                                                              Votes          Votes
                                                                               For         Withheld
                             <S>                                              <C>             <C>
                             John P. Duffy                                    13,788,448      153,422
                             Thomas W. Neumann                                13,788,448      153,422
                             Charles Kirkland Kellogg                         13,788,348      153,522



               The following persons continued as directors:
               Arthur Kontos, James H. Lynch, Jr., Dennis Marino and Ralph N. Del Deo.
</TABLE>
<TABLE>
<CAPTION>

          (ii)   The shareholders ratified the 2000 National Discount Brokers Group, Inc. Compensation Plan.
                 The following was the shareholder vote on this matter:

                            <S>                                          <C>
                            For:                                         12,695,869
                            Against:                                      1,179,192
                            Withheld:                                        66,809
                            Broker Non-Vote:                                      0
</TABLE>
<TABLE>
<CAPTION>


         (iii)   The    shareholders    ratified   the    appointment   of
PricewaterhouseCoopers  LLP as the Company's independent auditors for the fiscal
year ending May 31, 2000. The following was the shareholder vote on this matter:

                            <S>                                          <C>
                            For:                                         13,841,401
                            Against:                                         48,070
                            Withheld:                                        52,399
                            Broker Non-Vote:                                      0
</TABLE>




Item 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits:

                       Exhibit 10(a) - Employment Agreement dated as of
                                       November 8, 1999 between Daniel
                                       Fishbane and the Company

                       Exhibit 10(b) - 2000 National Discount Brokers Group,
                                       Inc. Compensation Plan incorporated
                                       by reference to Exhibit A to the National
                                       Discount Brokers Group, Inc. Proxy
                                       Statement dated September 9, 1999

                       Exhibit 11 - Computation of Net Income Per Common Share

                       Exhibit 27 - Financial Data Schedule

(b) The Company filed no reports on Form 8-K during the quarter  ended  November
    30, 1999.


<PAGE>


                                   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.



                                           National Discount Brokers Group, Inc.

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

      Date: January 11, 2000               By: Arthur Kontos
      ----------------------               -------------------------------------
                                           Arthur Kontos
                                           Chief Executive Officer


      Date: January 11, 2000               By: Daniel Fishbane
      ----------------------               -------------------------------------
                                           Daniel Fishbane
                                           Chief Financial Officer and
                                           Principal Accounting Officer

<PAGE>



                                                                   EXHIBIT 10(a)


                              EMPLOYMENT AGREEMENT

        AGREEMENT  dated November 8, 1999 effective as of January 1, 2000 by and
between NATIONAL DISCOUNT BROKERS GROUP, INC., a Delaware corporation,  with its
principal offices located at Ten Exchange Place Centre,  Jersey City, New Jersey
07302 (the "Company"), and Daniel Fishbane, with an address at 18 Lakeside Road,
Mt Kisco, New York 10549 ("Employee");

                                R E C I T A L S:

        WHEREAS,  the Company desires to employ Employee and Employee desires to
accept employment on the terms and conditions hereinafter set forth;

        NOW, THEREFORE, it is agreed as follows:

1.  DEFINITIONS

        As used in this  Agreement,  the following terms shall have the meanings
set forth below:

        1.1  "Affiliate"  with  respect to a person  shall  mean a  corporation,
partnership  or  limited  liability  company  which,   directly  or  indirectly,
controls,  is controlled by or is under common control with such person, and for
purposes hereof, "control" shall mean the ownership of 20% or more of the Voting
Stock of the entity in question or a trust with  respect to which such person is
the sole trustee.

        1.2  "Basic Salary" shall have the meaning assigned to that term in
Section 5.1 of this Agreement.

        1.3  "Board"  shall mean the Board of  Directors  of the Company as duly
constituted from time to time. Any action of the Board hereunder with respect to
this  Agreement  shall  require the approval of a majority of the whole Board of
Directors of the Company.

        1.4 "Business"  shall mean the business  conducted by the Company or any
Subsidiary, directly or indirectly.

        1.5  "Cause" shall mean any of the following:

                  (a) The  conviction  of Employee for a felony,  or the willful
commission  by  Employee of a criminal  act or other act that in the  reasonable
judgment of the Board causes or will likely cause substantial economic damage to
the Company or substantial injury to the business reputation of the Company;

                  (b) The  commission by Employee of an act of fraud in the
performance  of  Employee's  duties on behalf of the Company;

                  (c) The continuing  willful failure of Employee to perform the
substantive  duties of  Employee to the  Company  (other  than any such  failure
resulting from  Employee's  incapacity due to physical or mental  illness) after
written notice thereof (specifying the particulars thereof in reasonable detail)
and a  reasonable  opportunity  to be heard and cure such  failure  are given to
Employee by the compensation committee of the Board;

                  (d) the loss of, or suspension by, a regulatory  body or court
of  competent  jurisdiction  of  Employee's  right  to  serve  as the  financial
principal for any subsidiary of the Company which is a broker dealer; or

                  (e) the order of a  federal  or state  regulatory  agency or a
court  of  competent   jurisdiction  requiring  the  termination  of  Employee's
employment.

                For  purposes  of this  subparagraph  1.5, no act, or failure to
act, on Employee's part shall be considered "willful" unless done, or omitted to
be done, by him not in good faith and without  reasonable belief that his action
or omission was in the best interests of the Company or a Subsidiary.

         1.6  "Change of Control" shall mean:

         (A) any "person"  (as such term is used in Sections  13(d) and 14(d) of
the  Securities  Exchange  Act of 1934,  as amended (the  "Act")),  other than a
trustee or other fiduciary holding  securities under an employee benefit plan of
the Company,  Mr.  Arthur Kontos and any  Affiliate of Mr.  Kontos,  or a person
engaging in a transaction of the type described in clause (C) of this subsection
but which does not  constitute  a change in control  under  such  clause,  is or
becomes  the  "beneficial  owner"  (as  defined  in Rule  13d-3  under the Act),
directly or indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding  securities entitled
to vote in the election of directors;

         (B) during any period of two consecutive  years during the term of this
Agreement,  individuals who at the beginning of such period constitute the Board
and any new  director  (other  than a  director  designated  by a person who has
entered into as agreement with the Company to effect a transaction  described in
clauses  (A),  (C) or (D) of this  subsection)  whose  election  by the Board or
nomination for election by the Company shareholders was approved by a vote of at
least two-thirds of the directors then still in office who either were directors
at the beginning of the period or whose  election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof;

         (C) the  shareholders  of the  Company  approve,  or if no  shareholder
approval is required or  obtained,  the Company or a  subsidiary  of the Company
completes a merger,  consolidation  or similar  transaction  of the Company or a
subsidiary of the Company with or into any other corporation, or a binding share
exchange  involving  the  Company's  securities  occurs,  other  than  any  such
transaction  which  would  result  in  the  voting  securities  of  the  Company
outstanding  immediately  prior  thereto  continuing  to  represent  (either  by
remaining  outstanding  or by being  converted  into  voting  securities  of the
surviving  entity)  at least  51% of the  combined  voting  power of the  voting
securities of the Company or such surviving entity outstanding immediately after
such transaction; or

         (D)  the  shareholders  of  the  Company  approve  a plan  of  complete
liquidation  of the Company or an agreement for the sale or  disposition  by the
Company of all or substantially all the Company's assets.

        1.7 "Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules, regulations and interpretations issued thereunder.

        1.8 "Commencement Date" shall be January 1, 2000.

        1.9  "Confidential  Information"  shall include,  without  limitation by
reason of specification,  any information,  including, without limitation, trade
secrets,  operational methods,  methods of doing business,  technical processes,
formulae, designs and design projects, inventions,  research projects, strategic
plans,  possible  acquisition  information  and other  business  affairs  of the
Company or its Affiliates, which (i) is or are designed to be used in, or are or
may be useful in connection with, the Business of the Company, any Subsidiary or
any Affiliate of any thereof,  or which,  in the case of any of these  entities,
results from any of the research or  development  activities of any such entity,
or  (ii) is  private  or  confidential  in that  it is not  generally  known  or
available to the public,  except as the result of unauthorized  disclosure by or
information supplied by Employee,  or (iii) gives the Company or a Subsidiary or
any Affiliate an opportunity  or the  possibility of obtaining an advantage over
competitors  who may not know or use such  information  or who are not  lawfully
permitted to use the same.

        1.10 "Date of  Termination"  shall mean the Term Date,  or any date upon
which this Agreement shall terminate pursuant to Section 7 hereof.

        1.11  "Disability"  shall  mean the  inability  of  Employee  to perform
Employee's duties of employment for the Company, if employed by the Company or a
Subsidiary,  pursuant to the terms of this  Agreement and by-laws of the Company
as hereinafter  provided,  because of physical or mental disability,  where such
disability  shall have existed for a period of more than 180 consecutive days or
an  aggregate of 270 days in any 365 day period.  The  existence of a Disability
means that Employee's mental and/or physical condition substantially  interferes
with Employee's performance of his substantive duties for the Company and/or its
Subsidiaries  as  specified  in this  Agreement.  The fact of  whether  or not a
Disability  exists  hereunder  shall be determined by  professionally  qualified
medical experts  selected by the Board and reasonably  acceptable to Employee or
his agent.

        1.12  "Dispute" shall have the meaning assigned to that term in Section
7.8 of this Agreement.

        1.13  "Duties" shall have the meaning assigned to that term in Section
2.1 of this Agreement.

        1.14  "Employment  Year" shall mean each  twelve-month  period,  or part
thereof,  during  which  Employee  is  employed  hereunder,  commencing  on  the
Commencement  Date and on the same day of the subsequent  calendar year and each
consecutive 12 month period thereafter.

        1.15 "Good  Reason"  shall have the  meaning  given such term in Section
7.6.

1.16 "Normal  Retirement  Date" shall mean the month in which Employee turns age
62.

        1.17 "Panel" shall have the meaning given such terms in Section 8.

        1.18  "Person"   shall  mean  any   individual,   sole   proprietorship,
partnership,  joint venture, trust,  unincorporated  organization,  association,
corporation, limited liability company, institution, public benefit corporation,
entity or  government  (whether  federal,  state,  county,  city,  municipal  or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).

        1.19  "Subsidiary"  shall mean a  corporation,  partnership,  or limited
liability company of which 50% or more of the Voting Stock is owned, directly or
indirectly, by the Company.

        1.20 "Term"  shall mean the term of  employment  of Employee  under this
Agreement.

        1.21  "Term Date" shall have the meaning assigned to that term in
Section 3 of this Agreement.

        1.22 "Voting Stock" shall mean in case of a  corporation,  capital stock
of a corporation  or in the case of a limited  liability  company,  a membership
interest or in the case of a partnership,  an interest in a partnership which in
case of capital  stock  gives the holder  the right to vote in the  election  of
directors for such corporation in the ordinary course of business and not as the
result of, or contingent  upon, the happening of any event,  or in the case of a
limited  liability  company,  the  right to elect  persons  serving  in the same
capacity as a director of a corporation or performing such functions,  or in the
case of a  partnership,  the  right  to  participate  in the  management  of the
partnership or select the persons who perform such functions.

        Wherever  from the context it appears  appropriate,  each word or phrase
stated in either the singular or the plural  shall  include the singular and the
plural,  and each pronoun  stated in the  masculine,  feminine or neuter  gender
shall include the masculine, feminine and neuter.

2.  EMPLOYMENT AND DUTIES OF EMPLOYEE

        2.1 Employment;  Title; Duties. The Company hereby employs Employee, and
Employee  hereby  accepts  appointment,  as  Senior  Vice  President,  and Chief
Financial  Officer  of the  Company.  The  duties of  Employee  shall be to have
general  supervisory  authority over the preparation of financial  statements of
the Company and its Subsidiaries,  those responsibilities assigned to him by the
Board or the Chief Executive  Officer of the Company,  and to render services as
are necessary and desirable to protect and to advance the best  interests of the
Company  and its  Subsidiaries  (collectively,  the  "Duties"),  acting,  in all
instances,  under the  supervision of and in accordance with the policies set by
the Board or the Chief Executive Officer of the Company.

        2.2 Performance of Duties.  Employee shall devote  substantially all his
working  time to perform the Duties as an  executive  of the Company and for the
performance  of  such  other  executive  duties  as are  assigned  to  him  from
time-to-time by the Board or the Chief Executive Officer of the Company.  During
the Term, Employee: (i) shall comply with all laws, statutes,  ordinances, rules
and regulations relating to the Business, and (ii) shall not engage in or become
employed,  directly or  indirectly,  in any business,  without the prior written
consent of the Board or the Chief Executive Officer of the Company, nor shall he
act as a consultant  to or provide any services  to,  whether on a  remunerative
basis or otherwise, the commercial or professional business of any other Person,
without such prior written  consent,  which, in both instances,  may be given or
withheld  by the Board or the Chief  Executive  Officer of the Company in its or
his absolute discretion.

3.  TERM OF EMPLOYMENT

        The term of this Agreement  shall commence as of the  Commencement  Date
and shall end two years thereafter,  unless Employee's employment by the Company
is terminated sooner pursuant to Section 7 (the "Term Date").

4.  COMPENSATION AND BENEFITS

        The Company shall pay Employee,  as compensation for all of the services
to be rendered by him hereunder  during the Term,  and in  consideration  of the
various  restrictions  imposed upon Employee  during the Term and the Restricted
Period, and otherwise under this Agreement,  the Basic Salary and other benefits
as provided for and determined pursuant to Sections 5 and 6, inclusive,  of this
Agreement;  provided,  however,  that no compensation  shall be paid to Employee
under this Agreement for any period  subsequent to the termination of employment
of Employee for any reason whatsoever, except as provided in Section 7.

5.  BASIC SALARY/BONUS

        5.1 Basic Salary.  The Company shall pay Employee,  as compensation  for
all of the services to be rendered by him hereunder for the Company  during each
Employment Year, a salary of $275,000 per Employment Year (as adjusted upward by
the Board  from time to time) (the  "Basic  Salary"),  payable in  substantially
equal bi-weekly payments,  less such deductions or amounts as are required to be
deducted or withheld by applicable laws or regulations,  deductions for employee
contributions to welfare  benefits  provided by the Company to Employee and such
other  deductions or amounts,  if any, as are authorized by Employee.  The Basic
Salary shall be prorated for the month in which  employment  by the Company or a
Subsidiary  commences or terminates,  and for any Employment  Year which is less
than twelve (12) months in  duration.  The Basic  Salary may be  increased  from
time-to-time by the Board and, once increased,  shall not thereafter be reduced.
The Basic Salary shall be reviewed at least once in every  Employment  Year by a
committee  of the  Board  responsible  for  determining  compensation  of senior
management   of   the   Company,   each   of  the   members   of   which   is  a
"non-employee-director"  as defined in Rule 16b-3 of the Securities and Exchange
Commission under the Act (the  "Committee").  Any increase in Basic Salary shall
not serve to  offset or reduce  any other  obligation  to  Employee  under  this
Agreement.

        5.2 Bonus.  Employee will be awarded and,  unless  deferred by Employee,
paid a cash bonus (the  "Bonus")  for each  Employment  Year within  ninety days
after the close of the  Employment  Year in an amount  determined  in accordance
with the  Company's  then-current  bonus or  incentive  compensation  plan in an
amount appropriate for the chief financial officer of the Company,  but not less
than $125,000  (pro rated for any portion of an Employment  Year of less than 12
months).  It shall be a condition  to the payment of the first Bonus to Employee
that he be actively  employed  by the  Company at the end of the  twelfth  month
after the Commencement Date.

        5.3 Equity Participation.  The Company hereby grants to Employee a stock
option in the form  attached  as Exhibit A hereto  for  10,000  shares of common
stock of the Company as adjusted for  recapitalizations  of the Company  between
the date of signing of this Agreement and the Commencement Date.

6.  ADDITIONAL BENEFITS AND REIMBURSEMENT FOR EXPENSES

        6.1  Additional  Benefits.  The  Company  shall  provide  the  following
additional benefits to Employee during the Term:

                (i) provision of a comprehensive  medical  indemnity  policy for
Employee and his family  having terms no less  favorable  than the coverage made
available to other executives of the Company;

                (ii) a comprehensive disability policy for Employee having terms
no less  favorable  than  coverage  made  available to other  executives  of the
Company;

                (iv)  twenty working days of paid vacation; and

                (v) such other  benefits as the Board shall  lawfully  adopt and
approve for Employee.

        6.2  Reimbursement  for  Expenses.  The Company  shall pay or  reimburse
Employee for all reasonable expenses actually incurred or paid by him during the
Term in the performance of his services under this Agreement,  upon presentation
of such bills, expense statements, vouchers or such other supporting information
as the Board may reasonably  require. In the event the Company requires Employee
to travel on business  during the Term,  Employee  shall be  reimbursed  for any
travel expenses in accordance with this Section 6.2.

7.  TERMINATION OF EMPLOYMENT

        7.1 Death.  If  Employee  dies  during the Term,  this  Agreement  shall
terminate,  except that the Company  shall pay accrued and unpaid  Bonus for any
completed  Employment  Year, the Bonus for the Employment Year in which Employee
dies pro rated to the date of death,  and  provide  for the  payment of the life
insurance benefit provided to him by the Company.

        7.2  Disability.  If, during the Term,  Employee has a  Disability,  the
Company may, at any time after Employee has a Disability,  terminate  Employee's
employment by written notice to him. In the event that Employee's  employment is
terminated  because  Employee has a Disability,  this Agreement  shall terminate
except that the Company  shall pay  accrued and unpaid  Bonus for any  completed
Employment Year, pay the Bonus for the Employment Year in which Employee becomes
Disabled  pro  rated  to the Date of  Termination,  and pay or  provide  for the
payment of the  disability  benefit  provided for him as provided by  disability
plans of the Company.

        7.3 Voluntary Termination.  This Agreement may be terminated by Employee
at any time with or without cause upon sixty (60) days prior  written  notice to
the  Company.  After such sixty day period,  the  Company  shall have no further
liability to make payments hereunder except those required by law.

        7.4  Termination  for  Cause.  The  Company  may  terminate   Employee's
employment  hereunder for Cause at any time by written  notice given to Employee
by the Board. Upon such termination Employee shall not have any right to receive
any further payments hereunder except as provided in Section 7.8.

        7.5 Termination Without Cause.  Employee's employment by the Company may
be terminated by the Company  without Cause.  If his employment is terminated by
the Company  without Cause,  Employee shall be entitled to continued  payment of
the Basic Salary for the balance of the stated Term of this Agreement as if this
Agreement had not been  terminated or one year  whichever is less and to receive
the  benefits  described  in Section  6.1 for lesser of the  balance of the then
stated Term as if this Agreement had not been terminated or one year.

        7.6  Termination for Good Reason.  In the event Employee  terminates his
employment  with the Company for Good Reason,  Employee  shall  receive the same
payments and benefits as he would have received if his employment by the Company
were terminated  without Cause pursuant to Section 7.5. Good Reason for purposes
of this Agreement means:

                (a) (i) The  assignment  by the  Company to  Employee  of duties
which are materially  different than those of the chief financial officer of the
Company as described in this  Agreement,  (ii) the removal of Employee  from, or
any failure to  reappoint  or reelect  Employee  to, the  highest  title held by
Employee,  except in connection  with a termination of Employee's  employment by
the Company for Cause, or by reason of Employee's death or Disability;

                (b) A reduction or  non-payment  of  Employee's  Basic Salary or
failure to review  Employee's  Basic  Salary as  required in this  Agreement  or
failure to pay the Bonus;

                (c) A breach by the Company of this Agreement which is not cured
within thirty (30) days after written notice thereof to the Board by Employee;

                (d)  Requiring  Employee  to be based  anywhere  other  than the
Company's then current principal  executive office except for required travel on
the Company's business or relocation of the Company's principal executive office
outside northern New Jersey or the Borough of Manhattan, City of New York;

                (e)  The  failure  by  the  Company  to  provide  Employee  with
substantially  the same welfare  benefits  (which for purposes of this Agreement
shall mean  benefits  under all welfare plans as that term is defined in Section
3(1) of Employee  Retirement  Income  Security Act of 1974, as amended) in which
executives of the Company of comparable title and salary participate,  or with a
package of welfare  benefits that,  though one or more of such benefits may vary
from those, is substantially comparable in all material respects to such welfare
benefits taken as a whole;

                (f) The  failure of the  Company to obtain the  express  written
assumption  of and  agreement  to perform  this  Agreement  by any  successor as
contemplated in Section 13 hereof; or

                (h)  A Change of Control shall occur.

        7.7 Notice of  Termination.  Any  purported  termination  of  Employee's
employment by the Company by reason of Employee's Disability or for Cause, or by
Employee for Good Reason shall be  communicated by written Notice of Termination
to the other  party  hereto.  For  purposes  of this  Agreement,  a  "Notice  of
Termination"  shall mean a notice given by Employee or the Company,  which shall
indicate the specific basis for termination of employment and shall set forth in
reasonable  detail  the facts and  circumstances  claimed to provide a basis for
determination of any payments under this Agreement.

        7.8  Date of  Termination.  For  purposes  of this  Agreement,  "Date of
Termination"  shall mean the date of termination of employment  specified in the
Notice of Termination,  which shall not be more than ninety (90) days after such
Notice of  Termination  is given,  as such date may be modified  pursuant to the
following  two  sentences.  If  within  thirty  (30) days  after  any  Notice of
Termination is given, the party who receives such Notice of Termination notifies
the other  party  that a Dispute  exists (a "Notice  of  Dispute"),  the Date of
Termination shall be the date on which the Dispute is finally determined, either
by  mutual  written  agreement  of the  parties,  by the  Panel,  or by a  final
judgment,  order or decree of a court of  competent  jurisdiction  (the time for
appeal therefrom  having expired and no appeal having been perfected);  provided
that the Date of  Termination  shall be extended by a Notice of Dispute  only if
such notice is given in good faith and the party giving such notice  pursues the
resolution of such Dispute with reasonable diligence,  and provided further that
pending the  resolution of any such Dispute,  the Company shall  continue to pay
Employee  the  same  Basic  Salary  and to  provide  Employee  with  the same or
substantially comparable welfare benefits to the extent then so available at the
date of such  determination,  and  provided  to the extent  that such  continued
participation  is  possible  under  the  general  terms and  provisions  of such
benefits but in no event beyond the Term Date;  provided  however that the Basic
Salary payment shall be reduced by any compensation  earned by Employee after he
ceased employment by the Company until the Date of Termination. Should a Dispute
ultimately  be  determined  in favor of the  Company,  then all sums (net of tax
withholdings by the Company from such sums) paid by the Company to Employee from
the Date of  Termination  specified  in the Notice of  Termination  until  final
resolution of the Dispute pursuant to this paragraph shall be repaid promptly by
Employee to the Company.  Employee  shall not be obligated to pay to the Company
the cost of providing Employee with welfare benefits for such period, unless the
final  judgment,  order or decree  of a court  arbitration  panel or other  body
resolving the Dispute  determines  that Employee  acted in bad faith in giving a
Notice  of  Dispute.  Should a  Dispute  ultimately  be  determined  in favor of
Employee,  then  Employee  shall be entitled to retain all sums paid to Employee
under this subparagraph  pending resolution of the Dispute and shall be entitled
to receive, in addition, the payments and other benefits provided for in Section
7 to the extent not  previously  paid  hereunder  and the payment of  Employee's
reasonable  legal fees  incurred as a result of such Dispute upon  submission to
the Company of a detailed statement of fees from Employee's attorneys.  The term
"Dispute"  means that the Company finds that Employee may be dismissed for Cause
or Disability  and Employee  disputes  such finding or Employee  finds that Good
Reason exists and the Company disputes such finding.

8.  ARBITRATION

         Except as otherwise  provided herein, the parties hereby agree that any
Dispute or any dispute  regarding the rights and  obligations of any party under
this  Agreement  or under any law  governing  the  relationship  created by this
Agreement,  including  without  limitation  Employee's  challenge of a purported
termination for Cause or Disability,  must be resolved  pursuant to this Section
8. Within seven (7) days of either party's written notice to the other of his or
its desire to submit any  Dispute or  arbitrable  matter as set forth  herein to
arbitration,  the  parties  will  meet to  attempt  to  amicably  resolve  their
differences  and,  failing  such  resolution,  either or both of the parties may
submit the  matter to  mandatory  and  binding  arbitration  with the Center for
Public  Resources  ("CPR").   The  issue(s)  in  dispute  shall  be  settled  by
arbitration  in  accordance  with the  Center  for  Public  Resources  Rules for
Non-Administered   Arbitration  of  Business  Disputes,  by  a  panel  of  three
arbitrators (the "Panel").  The only issue(s) to be determined by the Panel will
be those issues specifically  submitted to the Panel. The Panel will not extend,
modify or suspend any of the terms of this Agreement.  The arbitration  shall be
governed by the United States  Arbitration Act, 9 U.S.C.  ss.1-16,  and judgment
upon the  award  rendered  by the  Panel  may be  entered  by any  court  having
jurisdiction thereof. A determination of the Panel shall be by majority vote.

         Promptly  following  receipt of the request for arbitration,  CPR shall
convene  the  parties  in person  or by  telephone  to  attempt  to  select  the
arbitrators  by  agreement of the  parties.  If  agreement  is not reached,  the
Company  shall  select  one  arbitrator  and  Employee  shall  select  one other
arbitrator.  These two arbitrators shall select a third arbitrator. If these two
arbitrators are unable to select the third arbitrator by mutual  agreement,  CPR
shall submit to the parties a list of not less than eleven (11) candidates. Such
list shall include a brief statement of each  candidate's  qualifications.  Each
party  shall  number  the  candidates  in order of  preference,  shall  note any
objection they may have to any  candidate,  and shall deliver the list so marked
back to CPR. Any party failing  without good cause to return the candidate  list
so marked within ten (10) days after receipt shall be deemed to have assented to
all candidates  listed thereon.  CPR shall  designate the arbitrator  willing to
serve for whom the parties  collectively  have indicated the highest  preference
and who does not appear to have a conflict of interest.  If a tie should  result
between two candidates, CPR may designate either candidate.

        This agreement to arbitrate is specifically  enforceable.  Judgment upon
any award rendered by the Panel may be entered in any court having jurisdiction.
The  decision  of the  Panel  within  the scope of the  submission  is final and
binding on all parties,  and any right to judicial  action on any matter subject
to  arbitration  hereunder  hereby  is  waived  (unless  otherwise  provided  by
applicable law),  except suit to enforce this arbitration  award or in the event
arbitration  is not  available  for any reason or in the event the Company shall
seek equitable  relief to enforce Section 9 of this  Agreement.  If the rules of
the CPR differ from those of this  Section 8, the  provisions  of this Section 8
will control.  The Company shall pay all the costs of arbitration  including the
fees of the arbitrators,  and the arbitrators  shall award reasonable legal fees
to Employee,  unless the arbitrators or a judicial forum shall finally determine
that Employee acted in bad faith.  In no event is the Panel  empowered to make a
punitive  damage award to any party hereto or to make an award of  consequential
damages to any party hereto.

9.  CONFIDENTIAL INFORMATION AND PROPRIETARY INTERESTS

        9.1  Acknowledgment  of   Confidentiality.   Employee   understands  and
acknowledges that he may obtain  Confidential  Information  during the course of
his employment by the Company.  Accordingly,  Employee agrees that he shall not,
either  during  the  Term or at any  time  within  one  year  after  the Date of
Termination (the "Restricted Period"), (i) use or disclose any such Confidential
Information outside the Company, its Subsidiaries and Affiliates; or (ii) except
as required in the proper performance of his services  hereunder,  remove or aid
in the  removal of any  Confidential  Information  or any  property  or material
relating  thereto from the premises of the Company or any of its Subsidiaries or
Affiliates.

        The foregoing confidentiality provisions shall cease to be applicable to
any Confidential  Information  which becomes  generally  available to the public
(except  by  reason  of or as a  consequence  of a  breach  by  Employee  of his
obligations under this Section 9).

        In the event  Employee  is  required by law or a court order to disclose
any such Confidential Information,  he shall promptly notify the Company of such
requirement and provide the Company with a copy of any court order or of any law
which in his opinion requires such disclosure and, if the Company so elects,  to
the extent that he is legally able, permit the Company an adequate  opportunity,
at its own expense, to contest such law or court order.

        9.2 Delivery of Material.  Employee shall promptly,  and without charge,
deliver to the Company on the termination of his employment hereunder, or at any
other time the Company may so request, all memoranda,  notes, records,  reports,
manuals,  computer disks, videotapes,  drawings,  blueprints and other documents
(and  all  copies  thereof)  relating  to  the  Business  of  the  Company,  its
Subsidiaries and its Affiliates, and all property associated therewith, which he
may then possess or have under his control.

11.  SURVIVAL

        The  provisions of Sections 7, 8, 9, 10 and 14 shall  survive
termination  of this  Agreement and remain enforceable according to their terms.

11.  SEVERABILITY

        The  invalidity or  unenforceability  of any provision of this Agreement
shall in no way affect the validity or  enforceability  of any other  provisions
hereof.

12.  NOTICES

        All  notices,  demands and  requests  required or  permitted to be given
under the  provisions  of this  Agreement  shall be deemed duly given if made in
writing and  delivered  personally  or mailed by postage  prepaid  certified  or
registered mail, return receipt requested,  accompanied by a second copy sent by
ordinary mail, which notices shall be addressed as follows:

                If to the Company:

                National Discount Brokers Group, Inc.
                10 Exchange Place Centre
                15th Floor
                Jersey City, New Jersey 07302

                Attention:  Frank E. Lawatsch, Jr.


                If to Employee:

                Daniel Fishbane
                18 Lakeside Road
                Mt. Kisco, New York 10549

        By notifying the other parties in writing, given as aforesaid, any party
may from  time-to-time  change  its  address  or the name of any person to whose
attention  notice is to be given,  or may add another person to whose  attention
notice is to be given, in connection with notice to any party.

13.  ASSIGNMENT AND SUCCESSORS

        Neither this Agreement nor any of his rights or duties  hereunder may be
assigned or delegated  by Employee.  This  Agreement  is not  assignable  by the
Company, including, without limitation, to any successor in interest which takes
over all or substantially all of the business of the Company, as it is conducted
at the time of such  assignment,  without the written  consent of Employee.  Any
corporation  into or with which the Company is merged or  consolidated  or which
takes over all or  substantially  all of the  business of the  Company  shall be
deemed to be a  successor  of the Company  for  purposes  hereof and the Company
shall require as a condition thereof that such corporation assume this Agreement
in form and substance satisfactory to Employee.  This Agreement shall be binding
upon and,  except as  aforesaid,  shall  inure to the benefit of the parties and
their respective successors and permitted assigns.


14.  ENTIRE AGREEMENT, WAIVER AND OTHER

        14.1.  Integration.  This Agreement contains the entire agreement of the
parties  hereto on its subject  matter and  supersedes  all previous  agreements
between the parties hereto,  written or oral,  express or implied,  covering the
subject matter hereof. No representations,  inducements, promises or agreements,
oral or otherwise, not embodied herein, shall be of any force or effect.

        14.2. No Waiver.  No waiver or  modification of any of the provisions of
this  Agreement  shall be valid  unless in writing and signed by or on behalf of
the party  granting such waiver or  modification.  No waiver by any party of any
breach or default  hereunder  shall be deemed a waiver of any repetition of such
breach or  default or shall be deemed a waiver of any other  breach or  default,
nor shall it in any way  affect  any of the other  terms or  conditions  of this
Agreement or the enforceability  thereof.  No failure of the Company to exercise
any power given it  hereunder  or to insist upon strict  compliance  by Employee
with any  obligation  hereunder,  and no custom or practice at variance with the
terms  hereof,  shall  constitute a waiver of the right of the Company to demand
strict compliance with the terms hereof.

        Employee shall not have the right to sign any waiver or  modification of
any provisions of this Agreement on behalf of the Company,  nor shall any action
taken by Employee reduce his obligations under this Agreement.

        This Agreement may not be supplemented or rescinded except by instrument
in writing signed by both of the parties  hereto after the date hereof.  Neither
this  Agreement  nor any of the rights of any of the  parties  hereunder  may be
terminated except as provided herein.

15.  MISCELLANEOUS

        15.1 Governing  Law. This Agreement  shall be governed by and construed,
and the rights and  obligations  of the parties hereto  enforced,  in accordance
with the laws of the State of New Jersey.

        15.2 Headings.  The Section and Subsection headings contained herein are
for  reference  purposes  only and shall not in any way  affect  the  meaning or
interpretation of this Agreement.

        15.3 Severability.  The invalidity or  unenforceability of any provision
of this Agreement shall in no way affect the validity or  enforceability  of any
other provisions hereof.

        15.4  Obligations of Company.  The Company's  obligation to pay Employee
the compensation and to make the arrangements  provided herein shall be absolute
and  unconditional  and shall not be affected by any  circumstances,  including,
without limitation, any setoff, counterclaim, recoupment, defense or other right
which the Company may have against  Employee or anyone else. All amounts payable
by the  Company  hereunder  shall be paid  without  notice or demand.  Except as
expressly  provided herein,  the Company waives all rights which it may now have
or may hereafter have conferred upon it, by statute or otherwise,  to terminate,
cancel or rescind  this  Agreement  in whole or in part.  Except as  provided in
Section 7.8 herein,  each and every payment made  hereunder by the Company shall
be final and the Company will not seek to recover for any reason all or any part
of such payment from Employee or any person entitled thereto. Except as provided
in Section 7.8  Employee  shall not be  required  to mitigate  the amount of any
payment  or other  benefit  provided  for in this  Agreement  by  seeking  other
employment or otherwise.

        15.5 Rights of Beneficiaries of Employee.  This Agreement shall inure to
the  benefit  of,  and  be  enforceable   by,   Employee's   personal  or  legal
representatives,  executors,  administrators,  successors,  heirs, distributees,
devisees and legatees.  If Employee  should die while any amounts would still be
payable to Employee  hereunder if he had  continued to live,  all such  amounts,
unless otherwise provided herein,  shall be paid in accordance with the terms of
this Agreement to Employee's devisee,  legatee or other designee or, if there be
no such designee, to Employee's estate.

        IN WITNESS  WHEREOF,  the parties have executed this Agreement as of the
date first written above, to be effective as of the Commencement Date.

                                           National Discount Brokers Group, Inc.


                                           By:
                                           Name:  Arthur Kontos
                                           Title: President and Chief
                                                  Executive Officer




                                            ----------------------------------
                                            Daniel Fishbane
<PAGE>
                                                                      EXHIBIT 11


             NATIONAL DISCOUNT BROKERS GROUP, INC. AND SUBSIDIARIES
                   COMPUTATION OF NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>


                                                                           Three Months Ended November 30,
                                                                      Basic                             Diluted
                                                      -----------------------------------   --------------------------------
                                                              1999               1998             1999           1998
                                                      -----------------  ----------------   --------------  ----------------

<S>                                                   <C>                 <C>               <C>               <C>
Common stock and potential common stock:
  Average common stock outstanding                          16,985,288        13,991,923       16,985,288      13,991,923
  Average potential common stock
    issuable under stock options                                     -           232,638                -           2,612
                                                      -----------------  ----------------   --------------  --------------


Total average common stock and potential common
  stock used for earnings per share computation             16,985,288        13,991,923       17,217,926      13,994,535
                                                      -----------------  ----------------   --------------  --------------


Income:
    Net income from continuing operations             $      4,310,919   $     4,432,884    $   4,310,919   $   4,432,884
    Net income from discontinued operations,
      net of taxes                                                   -         1,450,529                -       1,450,529
    Gain on sale of discontinued operations,
      net of taxes                                             461,182                 -          461,182               -
                                                      -----------------  ----------------   --------------  --------------


            Net income                                $      4,772,101   $     5,883,413    $   4,772,101   $   5,883,413
                                                      -----------------  ----------------   --------------  --------------


Net income per common and potential common share:
    Net income from continuing operations             $           0.25   $          0.32    $        0.25   $        0.32
    Net income from discontinued operations,
      net of taxes                                                0.00              0.10             0.00            0.10
    Gain on sale of discontinued operations,
      net of taxes                                                0.03              0.00             0.03            0.00
                                                      -----------------  ----------------   --------------  --------------

            Net income                                $           0.28   $          0.42    $        0.28   $        0.42
                                                      -----------------  ----------------   --------------  --------------
</TABLE>
<TABLE>
<CAPTION>



                                                                           Six Months Ended November 30,
                                                                      Basic                            Diluted
                                                      -----------------------------------   ------------------------------
                                                              1999               1998            1999            1998
                                                      -----------------  ----------------   --------------  --------------

<S>                                                   <C>                <C>              <C>               <C>
Common stock and potential common stock:
  Average common stock outstanding                          16,593,030        14,041,304       16,593,030      14,041,304
  Average potential common stock
    issuable under stock options                                     -           259,736                -           7,990
                                                      -----------------  ----------------   --------------  --------------


Total average common stock and potential common
  stock used for earnings per share computation             16,593,030        14,041,304       16,852,766      14,049,294
                                                      -----------------  ----------------   --------------  --------------


Income:
    Net income from continuing operations             $      4,745,862   $     3,782,442    $   4,745,862   $   3,782,442
    Net income from discontinued operations,
      net of taxes                                              82,994           765,648           82,994         765,648
    Gain on sale of discontinued operations,
      net of taxes                                          20,515,969                 -       20,515,969               -
                                                      -----------------  ----------------   --------------  --------------


            Net income                                $     25,344,825   $     4,548,090    $  25,344,825   $   4,548,090
                                                      -----------------  ----------------   --------------  --------------


Net income per common and potential common share (a):
    Net income from continuing operations             $           0.29   $          0.27    $        0.28   $        0.27
    Net income from discontinued operations,
      net of taxes                                                0.00              0.05             0.00            0.05
    Gain on sale of discontinued operations,
      net of taxes                                                1.24              0.00             1.22            0.00
                                                      -----------------  ----------------   --------------  --------------


            Net income                                $           1.53   $          0.32    $        1.50   $        0.32
                                                      -----------------  ----------------   --------------  --------------


<FN>
(a)  The sum of the  individual  quarters'  earnings  per common  share does not
     equal the total  amount  for the six  months  ended  November  30,  1999 or
     November  30, 1998 due to the effect of  averaging  the number of shares of
     potential common stock throughout the year.
</FN>
</TABLE>

<PAGE>