OPTIMARK HOLDINGS INC - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

/x/ Annual report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934

For the fiscal year ended December 31, 2002
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 000-30527

OPTIMARK HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 22-3730995
(State or Other Jurisdiction of (I.R.S.-Employer
Incorporation or Organization) Identification No.)

1114 Avenue of the Americas, 22nd Floor,
New York, NY 10036
(Address of Principal Executive Offices) (Zip Code)

(212) 575-9314
(Registrant's telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

None

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, Par Value $.01 Per Share

Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes / / No / X /

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

No sales of the common equity of the Registrant have been
consummated within sixty days of this filing and the
Registrant's common equity is not publicly traded on an exchange
for purposes of establishing bid and ask prices. Therefore, the
Registrant is unable to state the aggregate market value of the
voting and non-voting common equity held by non-affiliates of
the Registrant.

As of March 31, 2003, there were 33,369,913 shares of the
Registrant's common stock outstanding.

Documents Incorporated by Reference

None.

OPTIMARK HOLDINGS, INC.
FORM 10-K
DECEMBER 31, 2002

TABLE OF CONTENTS

PART I

Item 1. Business

Item 2. Properties

Item 3. Legal Proceedings

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

PART II

Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters

Item 6. Selected Financial Data

Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations

Item 7A. Quantitative and Qualitative Disclosure
About Market Risk

Item 8. Financial Statements

Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure

PART III

Item 10. Directors and Executive Officers of the
Registrant

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial
Owners and Management

Item 13. Certain Relationships and Related
Transactions

Item 14. Controls and Procedures

PART IV

Item 15. Exhibits, Financial Statement Schedules and
Reports on Form 8-K

Signatures

FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K includes forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. These statements are based on
our beliefs and assumptions, and on information currently
available to us. Forward-looking statements include the
information concerning our possible or assumed future results of
operations set forth in Part II, Item 7 - " Management's
Discussion and Analysis of Financial Condition and Results of
Operations." Forward-looking statements also include statements
in which words such as "expect", "anticipate", "contemplate",
"intend", "plan", "believe", "estimate", "consider" or similar
expressions are used.

Forward-looking statements are not guarantees of future
performance. They involve risks, uncertainties and assumptions,
including the risks discussed under the heading, "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and elsewhere in this Form 10-K. Such risks,
uncertainties and assumptions include, but are not limited to,
those factors described in Part II, Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," under the sub-heading "Factors that may affect
future results." The factors described in that section are
incorporated herein by reference.

Our future results and stockholder values may differ
materially from those expressed in these forward-looking
statements. Many of the factors that will determine these
results and values are beyond our ability to control or predict.
Investors are cautioned not to put undue reliance on any
forward-looking statements. In addition, we disclaim any
intention or obligation to update forward-looking statements
after the filing of this Annual Report, even if new information,
future events or other circumstances have made them incorrect or
misleading. For these statements, we claim the protection of
the safe harbor for forward-looking statements contained in
Section 21E of the Exchange Act.

Statements made in this Annual Report on Form 10-K as to
the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each
such contract, agreement or other document filed as an exhibit
to this Annual Report on Form 10-K, we refer you to the exhibit
to this Annual Report on Form 10-K referencing the item for a
more complete description of the matter involved, and each such
statement is qualified in its entirety by such reference.

PART I

ITEM 1. BUSINESS

OptiMark Holdings, Inc. ("Holdings") was established as a
holding company on June 12, 2000 as the result of a
reorganization of the company formerly known as OptiMark
Technologies, Inc. OptiMark Technologies, Inc. was the successor
to the company founded in 1996 to begin development of software
for use in an electronic system for trading stocks and other
financial instruments, goods and services.

Holdings has two wholly-owned subsidiaries: (1) OptiMark,
Inc. ("OptiMark") and (2) OptiMark US Equities, Inc.
("Equities"). On December 28, 2001, OptiMark formed a majority-
owned subsidiary, OptiMark Innovations Inc. (formerly known as
OTSH, Inc. and referred to below as "Innovations"). Innovations
was capitalized on December 31, 2001, and OptiMark currently
holds 33% of the voting interests in Innovations as more fully
described below.

In this report, Holdings, OptiMark and Equities are
referred to collectively as the "Company," "our," and/or "we."

HOLDINGS

Holdings' principal business is to hold the securities of
OptiMark and, through OptiMark, Innovations. Until September
19, 2000, Holdings operated in two segments, the Exchange
Solutions Services Business and the US Equities Business. The
Exchange Solutions Services Business operated by OptiMark was
formerly referred to as the Electronic Markets Business and
developed software and provided design, development and
maintenance services for building and operating electronic
markets and exchanges. On or about January 30, 2002, OptiMark
effectively suspended development, sales and marketing efforts
related to its Exchange Solutions Services Business.

The second segment, the US Equities Business, was operated
by Equities. Prior to September 19, 2000, the US Equities
Business owned and operated exchanges or exchange facilities
which used the OptiMark software and services. This business
was discontinued on September 19, 2000 due to high fixed costs
and lack of revenue resulting from the failure of these
proprietary exchange facilities to attract users or liquidity.

As a result of the suspension of the Exchange Solutions
Services Business and the discontinuation of the US Equities
Business, the future value of Holdings' common stock will depend
principally on the value of the investment that Innovations made
in Vie Financial Group, Inc. ("Vie," formerly known as The Ashton
Technology Group, Inc.) on May 7, 2002 and on other transactions
that the Company may consummate.

OptiMark continues to attempt to solicit interest from or
opportunities with third parties concerning possible additional
investments or strategic alliances. However, no binding or
definitive arrangements have been reached with any third parties
and there can be no assurances that any such transactions will
be consummated.

In the event that the Company cannot obtain additional
financing or capital contributions by the end of May 2003,
Holdings would not have access to sufficient financial capital
to permit continued business operations. Accordingly, Holdings
would face the imminent and likely potential for bankruptcy or
liquidation. If Holdings is forced to declare bankruptcy or
pursue liquidation, the value of Holdings' assets may not be
sufficient to pay its creditors in full and, accordingly,
Holdings' common and preferred stock would have no value.

INNOVATIONS

Formation of Innovations

Innovations was incorporated in Delaware on December 28,
2001. Innovations has authorized capital stock of 7,000 shares
of common stock, par value $.01 per share (the "Innovations
Common Stock"), and 3,000 shares of preferred stock, par value
$.01 per share (the "Innovations Preferred Stock"). Innovations
has designated 2,000 shares of the Innovations Preferred Stock
as "Non-Qualified Preferred Stock," which has a cumulative
preferred dividend at an annual rate of $500 per share, payable
when and if declared by the Board of Directors of Innovations.
The liquidation preference of the Non-Qualified Preferred Stock
is equal to $10,000 per share plus the aggregate amount of
accrued and unpaid dividends or distributions. The Non-
Qualified Preferred Stock is also subject to a mandatory
redemption, at a price equal to the liquidation preference
amount, in four equal quarterly installments on December 31,
2016, March 31, 2017, June 30, 2017 and September 30, 2017.

Innovations has designated 1,000 shares of the Innovations
Preferred Stock as "Series B Preferred Stock," which has a
cumulative preferred dividend at an annual rate of $519.21 per
share, payable when and if declared by the Board of Directors of
Innovations. The liquidation preference of the Innovations
Series B Preferred Stock is equal to $10,389.61 per share plus
the aggregate amount of accrued and unpaid dividends or
distributions.

All of the Innovations Preferred Stock is non-voting.

Investment Structure

On December 31, 2001, OptiMark received 200 shares of
Innovations Common Stock in exchange for a cash payment of
$500,000 and 2,000 shares of Non-Qualified Preferred Stock in
exchange for the transfer to Innovations of certain intangible
assets consisting of software, a patent application and other
assets relating to a securities trading technology which is
under development (the "Assets"). The stated value of the Non-
Qualified Preferred Stock was the result of the evaluation by
the board of directors of Innovations of the value of the Assets
based, in part, upon preliminary discussions with independent
parties regarding an approximate $10,000,000 investment for a
one-third interest in Innovations (see below). SOFTBANK Capital
Partners LP, SOFTBANK Capital LP and SOFTBANK Capital Advisors
Fund LP (collectively, "SOFTBANK") received 100 shares of
Innovations Common Stock (the "SOFTBANK Shares") for $250,000
cash. Simultaneously, SOFTBANK's remaining obligation to
purchase shares of Series E Cumulative Preferred Stock ("Series
E Preferred Stock") from Holdings pursuant to that certain
Series E Preferred Stock Purchase Agreement, dated as of June
29, 2001 (as amended on August 16, 2001 and November 16, 2001),
by and among Holdings and SOFTBANK was reduced by $250,000.
Upon its formation and initial capitalization, Innovations'
aggregate assets consisted of the Assets and $750,000 in cash.

On April 30, 2002, Draper Fisher Jurvetson ePlanet
Ventures, L.P., Draper Fisher Jurvetson ePlanet Partners Fund,
L.L.C. and Draper Fisher Jurvetson ePlanet Ventures GmbH & Co.
KG (collectively, "Draper") purchased 150 shares of the
Innovations Common Stock for an aggregate cash purchase price of
$375,000. On May 7, 2002, Draper purchased 963 shares of the
Innovations Series B Preferred Stock for an aggregate cash
purchase price of $9,630,000.

In connection with the Series B Preferred Stock
subscription, Holdings, OptiMark, Innovations, Draper and
SOFTBANK entered into an amended and restated Investors' Rights
Agreement (the "Innovations Rights Agreement"). Pursuant to the
terms of the Innovations Rights Agreement, Draper received (i)
preemptive rights to subscribe for future sales by Innovations
of any shares of, or securities convertible into or exercisable
for any shares of, any class of Innovations capital stock, (ii)
registration rights and (iii) the right to designate two (2)
directors to Innovations' board of directors.

Through the subscription for Innovations Common Stock and
Series B Preferred Stock by Draper, Innovations obtained the
cash financing necessary to (a) pay the approximately $7.3
million portion of the purchase price for Vie's common stock and
(b) provide the principal amount of approximately $2.7 million
for the senior loan to Vie evidenced by Vie's secured
convertible note.

Put and Call Rights of SOFTBANK and Holdings

Pursuant to the terms of the Innovations Rights Agreement,
SOFTBANK and Holdings agreed to certain put and call rights
applicable to the SOFTBANK Shares as follows:

First Call Right of Holdings on SOFTBANK Shares

The Independent Committee (the "Independent Committee") of
Holdings' Board of Directors has the right commencing October
1, 2002 and exercisable until September 30, 2003, to recommend
to the Board of Directors that Holdings purchase all, but not
less than all, of the SOFTBANK Shares for $100,000 in cash and
13,334 shares of Series E Preferred Stock of Holdings. If the
Board of Directors accepts such recommendation, SOFTBANK would
be obligated to sell the SOFTBANK shares for that consideration.

Liquidity Event Discretionary Call of Holdings on SOFTBANK Shares

Upon the occurrence of a Liquidity Event (defined below) on
or before September 30, 2003, the SOFTBANK Shares will be
purchased by Holdings for $100,000 in cash and 13,334 shares of
Series E Preferred Stock of Holdings. A "Liquidity Event" means
any of the following: (i) Innovations' sale, conveyance or other
disposition of all or substantially all of its assets; (ii) the
acquisition of Innovations by another entity by means of merger
or consolidation resulting in the exchange of the outstanding
shares of Innovations for securities or other consideration
issued, or caused to be issued, by the acquiring entity or its
subsidiary, unless the stockholders of Innovations immediately
prior to the consummation of such transaction hold at least 50%
of the voting power of the surviving corporation as a result of
such transaction; (iii) the consummation by Innovations of a
transaction or series of related transactions, including the
issuance or sale of voting securities, if the stockholders of
Innovations immediately prior to such transaction (or, in the
case of a series of transactions, the first of such
transactions) hold less than 50% of the voting power of
Innovations immediately after the consummation of such
transaction (or, in the case of a series of transactions, the
last of such transactions); or (iv) any initial underwritten
public offering of Innovations Common Stock. Notwithstanding
the foregoing, Holdings will not exercise this call option in
the event that the Independent Committee recommends that
Holdings not purchase the SOFTBANK Shares.

Mandatory Call of Holdings on SOFTBANK Shares

In the event that: (i) the call rights of Holdings
described above have not been exercised on or before September
30, 2003, (ii) the Independent Committee no longer exists and
(iii) no independent directors serve on the Holdings Board of
Directors and, after reasonable good faith efforts by the
remaining members of the Holdings Board of Directors, no
independent persons qualified to serve on the Holdings Board of
Directors have been found or, if found, are not willing to serve
on the Holdings Board of Directors, then the Holdings Board of
Directors will engage an independent investment banking,
accounting or third party valuation firm to evaluate whether or
not it is in the best interests of Holdings that it purchase the
SOFTBANK Shares. If such third party determines it is in the
best interests of Holdings to purchase the SOFTBANK Shares,
Holdings will be obligated to purchase such shares on or before
December 31, 2003 for $100,000 in cash and 13,334 shares of
Series E Preferred Stock of Holdings.

First Put Right to Holdings of SOFTBANK Shares

SOFTBANK has the right, commencing on October 1, 2002 and
continuing until September 30, 2003, to put all, but not less
than all, of the SOFTBANK Shares to Holdings in exchange for
16,667 shares of Series E Preferred Stock of Holdings.

Second Put Right to Holdings of SOFTBANK Shares

In the event that no put of, or call on, the SOFTBANK
Shares has been exercised by October 31, 2003, then commencing
on November 1, 2003 and continuing until November 30, 2003,
SOFTBANK has the right to require Holdings to purchase all, but
not less than all, of the SOFTBANK Shares for 16,667 shares of
Series E Preferred Stock of Holdings.

Business of Innovations

The principal business of Innovations is to hold Vie's
common stock for the benefit of the shareholders of Holdings and
Innovations. Holdings believes that the future value of its
stock will depend principally on the value of Ashton's common
stock held by Innovations and its ability to consummate
financing and strategic transactions with other parties.

On February 4, 2002, Vie and Innovations entered into a
securities purchase agreement (as amended on March 6, 2002 and
May 3, 2002, the "Securities Purchase Agreement"). Pursuant
to the terms of the Securities Purchase Agreement, Innovations
agreed to purchase up to 633,433,600 shares of Vie common
stock, par value $.01 per share (the "Vie Common Stock"), in
exchange for $7,272,727 in cash and intellectual property and
other non-cash assets of Innovations valued by Vie and
Innovations for the purposes of the Securities Purchase Agreement
at $20 million. The value ascribed to the intellectual property
and other non-cash assets by OptiMark Innovations was based in
part on preliminary discussions with a potential investor in
Innovations. Vie did not obtain an appraisal or other third
party valuation of the fair market value of the intellectual
property and other non-cash assets. There can be no assurance
that the fair market value of the inellectual property and
other non-cash assets is equal to the value ascribed to these
assets by Innovations in the Securities Purchase Agreement.

On May 7, 2002 (the "Closing Date"), Innovations and Vie
closed the transactions contemplated by the Securities Purchase
Agreement.

In addition, pursuant to the terms of the Securities
Purchase Agreement, Innovations loaned approximately $2.7 million
in cash to Vie in exchange for a senior secured convertible note
(the "Note"). The Note will mature in five years, and may, at the
option of Innovations, be convertible into shares of Vie Common
Stock at a rate of $.0515838 per share (subject to customary
anti-dilution adjustments after the closing) and will accrue
interest at a rate of 7.5% per annum. Currently, The Note is
convertible into 52,870,757 shares of Vie Common Stock. The Note
is secured by a pledge and security agreement pursuant to which
Innovations has received a blanket lien on Vie's assets, including,
without limitation, the pledge of the equity interests of Vie and
Universal Trading Technologies Corporation, a Delaware
corporation and majority-owned subsidiary of Vie ("UTTC"), in
each of Vie Securities, LLC (formerly known as ATG Trading LLC),
wholly-owned subsidiary of Vie, Electronic Market Center, Inc., a
majority-owned subsidiary of Vie, Ashton Technology Canada, Inc.,
a majority-owned subsidiary of Vie, Vie Institutional Services,
Inc. (formerly known as Croix Securities, Inc.), a wholly-owned
subsidiary of UTTC, REB Securities Inc., a wholly-owned
subsidiary of UTTC; and NextExchange, Inc., a wholly-owned
subsidiary of UTTC.

As of the Closing Date, Innovations owned approximately 80%
of the fully-diluted outstanding shares of Vie Common Stock
calculated as of May 3, 2002. Fully-diluted shares include the
outstanding shares of Vie Common Stock and (i) shares of any
series of capital stock of Vie or its subsidiaries that vote
together with the Vie Common Stock, (ii) any outstanding options
issued to employees and third parties and (iii) shares of the
Vie Common Stock, or any securities described in clause (i)
above, issuable pursuant to or upon conversion or exercise of
all rights granted to any party. Assuming conversion of the
Note, Innovations would own approximately an additional 7% of
the fully-diluted shares of the Vie Common Stock, calculated as
of May 3, 2002.

The intellectual property and non-cash assets transferred
to Vie by Innovations as partial consideration to purchase the
Vie Common Stock are:

- - U.S. provisional patent application (No.
60/323,940 entitled "Volume Weighted Average
Price System and Method" filed on September 21,
2001) that relates to VWAP trading. The
provisional patent application relates to
processing orders for trading equity securities
at the VWAP and guaranteeing the price and
quantity of trades to users who submit orders.
The patent application will not provide any
exclusive rights to Ashton until such time as it
issues into a patent. There can be no assurance
that the patent application will issue into a
patent.

- - Trade secrets and know how relating to VWAP
trading.

- - An assignment to Vie of a license for technology
for use in a system for VWAP trading (the "VWAP
License").

- - An assignment to Vie of all rights, duties, and
obligations under a bilateral nondisclosure
agreement between the licensor of the technology
described above and Innovations.

- - Software developed to implement critical
components of the VWAP trading system, including
certain tools for testing, de-bugging and
building source code.

The intellectual property and non-cash assets described
above, with the exception of the VWAP License, constitute the
Assets transferred from OptiMark to Innovations on December 31,
2001.

While Innovations expects Vie to benefit from the cash and
non-cash assets transferred, Innovations cannot predict the
extent to which those benefits will occur. Specifically, there
can be no assurance that:

- - the performance characteristics of the software
and technology that is the subject of the VWAP
License will scale to the increased level of
operations anticipated in the New VWAP Service;

- - the intellectual property can achieve the desired
operational benchmarks; or

- - integration of the existing Vie technologies and
VWAP-related business models with the acquired
technologies and associated business models will
be feasible or possible.

As a result of obtaining the $10 million financing in
connection with the transactions contemplated by the Securities
Purchase Agreement, OptiMark's ownership percent of Innovations
was reduced to less than 50%. As a result, we will not be able
to include Innovations as a consolidated subsidiary, but will
account for our investment using the equity method of
accounting.

Vie

Because the future value of Holdings common stock is
principally dependent on the value of Innovations' investment in
transaction with Vie, a brief description of the current
business of Vie is provided.

The following description of Vie's business has been
adapted from the information contained in Vie's Quarterly Report
on Form 10-Q, filed with the SEC on February 14, 2003. We
conducted limited due diligence with respect to Vie's business.
Based solely on that limited review, we have no reason to
believe that Vie's description of its business is incorrect in
any material respect. The following description is not intended
to amend, modify or supplement Vie's disclosure regarding its
business contained in its public filings.

Vie Financial Group, Inc., formerly The Ashton Technology
Group, Inc., was formed as a Delaware corporation in 1994. Vie
Financial Group and its subsidiaries provide electronic trading
services to institutional investors and broker-dealers. Through
its automated trading platform Vie removes human elements of the
trading and order execution process, eliminating information
leakage. Vie's objective is to provide clients with high-
performance electronic trading that is fast, efficient and nearly
invisible to the market.

Vie conducts its business primarily through the following
operating subsidiaries:

- - Vie Securities, LLC (formerly ATG Trading, LLC)

- - Vie Institutional Services, Inc. (formerly Croix
Securities, Inc.)

Vie Institutional Services was formed in February 1999 as a
broker-dealer registered with the Philadelphia Stock Exchange and
the National Association of Securities Dealers (NASD). Vie
Institutional Services provides liquidity for block trades to its
buy-side institutional clients through its volume-weighted
average price (VWAP) trading products, direct access service, and
market-on-close products. Vie anonymously matches customers'
orders with liquidity from various providers, thereby protecting
its client trade information. Since May 2002, Vie launched four
new trading products including Limit VWAP, Point-to-Point VWAP,
Market on Close and Best Efforts VWAP. Vie operates Vie
Institutional Services as an agency broker that matches buy-side
institutional orders with other buy-side or liquidity provider
orders. Vie collects commissions from its customers and pay fees
to its liquidity providers on a per share basis.

Vie Securities was formed in July 2000 as a broker-dealer
engaged in proprietary trading. On September 19, 2002, Vie
Securities received approval to operate as a member of the NASD.
Through Vie Securities, Vie is implementing its proprietary
trading algorithm that allows Vie to minimize its cost of
providing guaranteed liquidity at the VWAP to its broker-dealer
customers, including Vie Institutional Services, and specialized
trading firms.

OPTIMARK

On or about January 30, 2002, OptiMark effectively
suspended development, sales and marketing efforts related to
its Exchange Solutions Services Business. As of that date,
OptiMark became a company whose primary purpose is to hold the
securities of Innovations and to consummate financing and
strategic transactions with other parties.

Prior to and since January 30, 2002, OptiMark has engaged
in discussions with a number of potential investors and
strategic partners concerning possible investments and/or
alliances relative to the Exchange Solutions Services Business.
To date, none of these discussions has resulted in any such
investment or alliance. OptiMark continues to engage in
discussions with third parties in an effort to secure funding
for the Exchange Solutions Services Business; however, there can
be no assurances that any such transactions will be consummated.
OptiMark's VWAP assets utilized in the Vie transaction were part
of a general effort to determine ways to utilize OptiMark's
technology for trading venues to be owned and operated by
OptiMark. OptiMark has suspended development of additional
trading venues. At such time that either a third party provides
funding or OptiMark can realize a gain in the value of its
holdings in Innovations, OptiMark will determine whether to
further develop these additional platforms. However, there are
no assurances that these transactions will be consummated or
that any further development will occur.

Clients of OptiMark

As of December 31, 2001, OptiMark had definitive agreements
with two clients -- Asset International, Inc. ("Asset
International") and The Nasdaq Stock Market, Inc. ("Nasdaq").
Under an agreement dated November 3, 2000 with Asset
International, OptiMark has not received any revenues. For
approximately the past twelve months, OptiMark has not
performed, nor has Asset International requested that any
services be performed under the agreement. The Nasdaq contract,
as amended on April 27, 2001, expired on December 31, 2001. The
agreement with Asset International was terminated on May 24,
2002. OptiMark does not anticipate receiving any additional
revenues from either Asset International or Nasdaq.

Competition

Vie, Innovations, OptiMark and Holdings executed a non-
competition agreement as of May 2, 2002. The parties currently
do not compete. The Agreement precludes Innovations, OptiMark,
Holdings or any entity that they control from competing on a
worldwide basis with Vie in offering VWAP trading systems or
related services in U.S. and Canadian securities. The agreement
has a five-year term from the date of its execution.

As holding companies, Holdings, OptiMark and Innovations
face no clearly defined competition, however, the value of
Innovations' investment in Vie is, in part, contingent upon
Vie's competing effectively in its industry and marketplace.

The following description relating to the competitive
aspects of Vie's business has been adapted from the information
contained in Vie's Quarterly Report on Form 10-Q, filed with the
SEC on February 14, 2003. We have conducted limited due
diligence with respect to Vie's business. Based solely on that
limited review, we have no reason to believe that Vie's
description of the competitive aspects of its business is
incorrect in any material respect. The following description is
not intended to amend, modify or supplement Vie's disclosure
regarding competition contained in its public filings.

The SEC's regulations governing alternative trading systems
have lowered the barriers to entering the securities trading
markets. Vie faces competition from traditional securities
exchanges, which could establish similar trading systems in an
attempt to increase or retain their respective trade volumes. Vie
also faces competition from other alternative trading systems and
leading brokerage firms offering similar trade execution
services. In particular, Vie's guaranteed liquidity program
competes with services provided by traditional broker-dealers,
proprietary trading firms such as Susquehanna,
Timberhill/Interactive Brokers, and alternative trading systems
established by companies such as Investment Technology Group,
Instinet and Bloomberg.

Many of Vie's competitors have substantially greater
financial, research, development, sales, marketing and other
resources than Vie has and many of their products have
established operating histories. While Vie believes that its
products and services offer certain competitive advantages, its
ability to maintain these advantages will require continued
investment in product development, additional marketing, and
customer support activities. Vie may not have sufficient
resources to continue to make these investments, while its
competitors may continue to devote significantly more resources
to their services. Also, Vie cannot be sure that its products
will result in a competitive advantage to our customers.

Intellectual property and proprietary rights

As of December 31, 2001, the Company owned or controlled
six issued United States patents and nine pending United
States patent applications. One of the pending United States
patent applications was transferred to Vie as part of the
consideration for the purchase of the Vie Common Stock. As
of that date, the Company also owned or controlled seven pending
international patent applications. The Company plans to file one
additional patent application domestically and may file related
patent applications internationally. The Company has
discontinued prosecution of patent applications and maintenance
of patents that were deemed to be strategically unimportant,
either because of geography or subject matter.

The Company seeks to protect its trade secrets, service
marks, trademarks and copyrights through a combination of laws
and contractual restrictions, such as confidentiality and
license agreements. The Company attempts to register our
trademarks and service marks in the United States and
internationally. The Company has registered a corporate logo
and the mark "OPTIMARK," among others, in the United States and
internationally in several countries. However, effective
trademark, service mark, trade secret, and copyright protection
may not be available in all countries. The Company also has
discontinued prosecution of trademark applications and
maintenance of trademarks that were deemed to be strategically
unimportant, either because of geography or subject matter.

Employees

As of December 31, 2002, the Company had five full-time and
one part time employee, all of whom were engaged in executive,
finance, administration and personnel functions.

The Company has never had a work stoppage and our employees
are not represented by any collective bargaining unit.

The Company plans to continue to retain personnel to carry
out its duties and obligations as a holding company, including
its administration and financial reporting obligations.

Financial information about industry segments

Please refer to the financial statements for financial
information about our industry segments.

Discontinued operations

Until September 19, 2000, Holdings operated in two
segments, the Exchange Solutions Services Business and the US
Equities Business. The first segment, the Exchange Solutions
Services Business, was formerly referred to as the Electronic
Markets Business. On or about January 30, 2002, OptiMark
effectively suspended development, sales and marketing efforts
related to its Exchange Solutions Services Business, which
developed software and provided design, development and
maintenance services for building and operating electronic
markets and exchanges. The second segment, the US Equities
Business, was operated by Equities. Holdings discontinued the
operations of the US Equities Business on September 19, 2000.
As of that date all criteria for the measurement date per APB
30, "Reporting the Results of Operations -- Reporting the
Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," had been met. The Company expects the process of
disposing of the net liabilities of the discontinued business to
be completed by December 31, 2003 as a result of the continuing
settlement negotiations with certain companies from which we had
previously leased equipment. Disposition includes negotiated
payments to be made after December 31, 2003.

ITEM 2. PROPERTIES

The Company's headquarters are located in Jersey City, New
Jersey. We sublease approximately 32,000 square feet under a
sublease that expires in February 2014 and approximately 3,300
square feet with a remaining term to September 30, 2008. The
foregoing space consists of standard commercial office premises
in a metropolitan area. We believe that our present facilities
exceed our current needs and are attempting to reduce our office
space commitments.

ITEM 3. LEGAL PROCEEDINGS

Holdings and/or its subsidiaries are subject to
the following legal proceedings which the Company
believes arise out of the discontinuation of the
business of Optimark Equities in September 2000:

1. Finova Capital Corporation (Plaintiff) v.
OptiMark Technologies, Inc., OptiMark, Inc. and OptiMark
Holdings, Inc. (Defendants), Superior Court of New Jersey -
Hudson County. Plaintiff filed this action on June 15,
2001, asserting claims that allegedly arise out of an
equipment lease agreement pursuant to which it is alleged
that OptiMark Technologies, Inc. (now known as OptiMark US
Equities, Inc.) agreed to lease certain equipment.
Plaintiff contends that OptiMark Technologies, Inc.
breached the equipment lease by, among other things,
failing to pay the amounts due under the equipment lease.
Based on these allegations, Plaintiff has made claims for
breach of contract, tortuous interference, fraudulent
conveyance of such equipment lease agreement and/or the
related equipment and/or other assets from OptiMark
Technologies, Inc. to OptiMark, Inc. and/or OptiMark
Holdings, Inc. and damages in unspecified amounts exceeding
$6,000,000, plus interest, late charges, litigation costs
and expenses, and reasonable counsel fees. In the fourth
quarter of 2001, most, if not all, of the equipment that
was the subject of the equipment lease was returned
consensually to Plaintiff. Pursuant to motions filed by
the Plaintiff, Innovations and Vie were added as defendants
in the case. On February 14, 2002, Plaintiff made a motion
to add Innovations as a defendant in the case.

On March 19, 2003, subject to execution of definitive
documentation, we reached a settlement with Finova. The
terms of this settlement provide that we will pay Finova
the combined sum of $1,000,000 in the following manner: a)
$200,000 within thirty (30) days of the execution of the
written settlement agreement; b) $400,000 in January 2004;
and c) $400,000 in June 2004. We will provide Finova with
a consent judgment for the outstanding balance due on the
lease agreements in dispute - to be used only in the event
of a default under the terms of the settlement agreement.
The exact amount of the consent judgment shall be agreed to
by the parties based upon the amount due and owing under
the subject leases. In consideration of the foregoing,
Finova, upon receipt of the first payment of $200,000, will
provide all defendants to the litigation (namely, Optimark
U.S. Equities, Inc., Optimark, Inc., Optimark Holdings,
Inc., Optimark Innovations, Inc. (plead as OTSH, Inc.) and
Vie Financial Group (plead as Ashton Technology Group,
Inc.)) a release for all claims arising out of the lease
transaction between the parties as well as those additional
claims asserted, or those that could have been asserted, by
Finova against all defendants in the pending litigation.
Additionally, Finova also shall cause a Stipulation of
Dismissal, with prejudice, to be filed in the pending
action.

2. Comdisco, Inc. (Plaintiff) v. OptiMark Technologies, Inc.
(now known as OptiMark US Equities, Inc.) (Defendant) and
Avnet, Inc. State of Connecticut Superior Court, Judicial
District of Fairfield at Bridgeport. Plaintiff filed a
Complaint on December 18, 2000. The action seeks possession
of leased equipment, proceeds from the sale of
leased equipment, a deficiency judgment in an
unspecified amount, and fees and costs and interest. Since
the complaint was filed, most, if not all, of the equipment
was returned consensually to Plaintiff. Based on the
complaint filed in a related action in New Jersey
(described below) and on other information received from
Comdisco, it is believed that amount of damages claimed is
approximately $6,500,000. On March 30, 2001, the parties
agreed to consolidate a related case captioned Comdisco,
Inc. v. OptiMark Technologies, Inc., Superior Court of New
Jersey Law Division Hudson County (filed on January 23,
2001) with the Connecticut proceeding. To effect the
consolidation, on or about April 2, 2001, the parties filed
a stipulation withdrawing Defendant's motion to dismiss
Comdisco's Complaint filed in the Superior Court of New
Jersey. That motion had sought dismissal principally on
grounds that an identical action alleging breach of
contract had previously been filed by Comdisco in
Connecticut State Court. In exchange for Defendant's
agreement to withdraw its motion, Comdisco agreed to
withdraw its New Jersey Complaint without prejudice. In
June 2001, Comdisco made a motion for summary judgment with
respect to a claim against Avnet relating to a guaranty by
Avnet of Defendant's obligations under a Master Lease
Agreement for computer equipment leased from Comdisco.
Avnet responded to Comdisco's motion by denying liability
under the guaranty and asserting a variety of special
defenses. In addition, Avnet filed a cross claim against
Defendant. The cross claim alleges that if Avnet is found
liable under the guaranty, then Avnet becomes subrogated to
Comdisco's rights under the Master Lease Agreement to the
extent of the payments Avnet makes to Comdisco and that
OptiMark is liable to Avnet for any such payments.
Defendant has responded to the complaint and cross-claim
by denying its material allegations and asserting special
defenses. In December of 2002, Avnet, Inc. amended its
cross claim to include a claim for subrogation relating to
a payment made on OptiMark's behalf on a guaranty to Finova
and now also seeks to collect additional sums against
Defendant in an unspecified amount. Defendant intends to
defend this action vigorously. In the event a settlement
is not reached, the case is scheduled for a jury trial
commencing the week of of June 25, 2003. The outcome of
this litigation cannot be predicted at this time, although
it may have a material affect on the Company's financial
condition and results of operations.

3. The Company entered into a ten (10) year lease (the
"Lease") with Montgomery Associates, L.P. ("Montgomery") on June
26, 1998, with respect to a data center at 30 Montgomery Street,
Jersey City, New Jersey (the "Premises"). In December 2002, the
Company defaulted on the Lease when it failed to pay its monthly
rent. Montgomery commenced an action against the Company in the
Superior Court of New Jersey to collect the outstanding rent due
under the Lease.

On January 6, 2003, the Company and Montgomery entered into
a Stipulation of Settlement to resolve this litigation. Pursuant
to the terms of the Stipulation of Settlement, the Company agreed to
cure its default under the Lease by paying Montgomery the sum of
$15,000.00 by January 10, 2003 and the sum of $5,549.68 by
January 31, 2003 (collectively, the "Back Rent"). The Company
also agreed to continue to make future rental payments to
Montgomery as they became due. The Stipulation of Settlement
further provided that in the event the Company failed to timely
remit the Back Rent, Montgomery could declare the Stipulation of
Settlement void and immediately obtain an entry of Judgment
for Possession and a Warrant for Removal.

The Company did not pay Montgomery the Back Rent as required
by the Stipulation of Settlement. Accordingly, Montgomery obtained
a Judgment for Possession and Warrant for Removal for the Premises,
which denied the Company assess to the Premises. The Company does
not have any present need for this space. There is, however,
certain computer equipment located at the Premises. The Company
is presently negotiating with Montgomery to recover this Equipment.

Although it has obtained a Judgment for Possession for the
Premises, Montgomery may also seek monetary damages with respect
to the Company's alleged breach of the Lease. However, as of the
date hereof, Montgomery has not commenced an action against the
Company to obtain such monetary damages.

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

None.

PART II

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

There is no established public trading market for the
shares of our common stock and we do not currently intend to
seek inclusion of the shares of common stock in any established
public trading market. As of December 31, 2002, we had
33,369,913 outstanding shares of common stock, including 740,000
shares of non-voting common stock, owned by approximately 860
holders.

Including shares of common stock issuable on conversion of
outstanding shares of the Company's various series of preferred
stock, there are 54,442,645 outstanding shares of common stock
on an as converted basis that can be sold currently pursuant to
Rule 144. As of December 31, 2002, we have

- - issued options to purchase an aggregate of 1,996,600
shares of common stock and 3,470,199 shares of
Series F Preferred Stock to our directors, officers
and current and former employees;
- - issued warrants to purchase an aggregate of
12,710,900 shares of common stock to investors,
consultants and strategic partners; and
- - granted registration rights to holders of
approximately 40,113,000 shares of common stock, on
an as converted basis.

Equity Compensation Plan Information

The following table provides, as of December 31, 2002,
information with respect to compensation plans (including
individual compensation arrangements) under which our equity
securities are authorized for issuance.

Number of securities to be Weighted-average exercise Number of securities
issued upon exercise of price of outstanding remaining available for
outstanding options, options, warrants and future issuance under
warrants and rights rights equity compensation plans
(excluding securities
reflected in column (a))
Plan Category (a) (b) (c)
- ------------- -------------------------- ------------------------- -------------------------

Equity compensation
plans approved by
security holders:
Common Stock:... 1,478,100 $1.27 12,672,624

Series F Preferred
Stock:.......... 2,138,012 $ .10 3,929,801

Equity compensation
plans not approved by
security holders.. -0- -0- -0-

Total............. 3,616,112 .45 16,602,425

Since our inception, we have not declared any dividends or
other distributions on our shares of common stock. We do not
anticipate paying any other cash dividends in the foreseeable
future and anticipate that future earnings would be retained to
finance operations.

On June 29, 2001, Holdings and certain stockholders entered
into a Preferred Stock Purchase Agreement whereby the
stockholders agreed to purchase up to an aggregate of 1,000,000
shares of the Series E Preferred Stock at a price of $15.00 per
share. The purchase of shares took place at approximately one-
month intervals from June 2001 through January 2002.

In monthly closings from June 2001 through January 2002,
investors purchased 983,335 shares of the Series E Preferred
Stock for an aggregate amount of approximately $14,750,000.

The Series E Preferred Stock is entitled to certain
preferences over existing classes of the Company's stock in the
event of liquidation, sale of assets or merger involving the
Company equal to twice its purchase price plus 80% of proceeds
above that amount up to $200 million, plus 76.56% of proceeds
above $200 million up to and including $304.5 million, plus 56%
of amounts in excess of $304.5 million. The Series E Preferred
Stock will vote together with the Company's common stock and
have 32 votes per share. Calculated based on shares outstanding
as of December 31, 2002, the Series E Preferred Stock represents
36.9 % of the votes of the outstanding common stock (and shares
entitled to vote with the common stock) and, in the aggregate,
if fully subscribed to, could represent up to 37.3% of the votes
of the outstanding common stock (and shares entitled to vote
with the common stock). Holders of the Series E Preferred are
entitled to preemptive and registration rights.

In 2001, the Company adopted a new stock option plan under
which employees and others may receive options to acquire the
Company's Series F Preferred Stock. The Series F Preferred
Stock is entitled to certain preferences over existing classes
of the Company's stock in the event of liquidation, sale of
assets or merger involving the Company, equal to 20% of proceeds
greater than $30 million up to and including $200 million,
19.14% of proceeds in excess of $200 million up to and including
$304.5 million and 14% of proceeds in excess of $304.5 million.
Holders of Series F Preferred Stock will be entitled to one vote
per share. No options on the Series F Preferred Stock have been
exercised.

In connection with the settlement of litigation of the
action captioned "Transamerica Business Credit Corporation,
Wells Fargo Equipment Finance, Inc., Diamond Lease (U.S.A.),
Inc. and Linc Capital, Inc. v. OptiMark US Equities, Inc. f/k/a
OptiMark Technologies, Inc., OptiMark, Inc. and OptiMark
Holdings, Inc.", Holdings authorized and issued 300,000 shares
of a new Series G Preferred Stock of the Company, par value $.01
per share (the "Series G Preferred Stock") to the plaintiffs
that ranks junior to the existing Series E Preferred Stock and
Series F Preferred Stock but senior to all other classes or
series of capital stock with respect to liquidation. In
particular, the Series G Preferred Stock is entitled to receive
an amount, in the event of a liquidation, sale of assets or
merger involving the Company, equal to 4.30% of the total amount
distributed in excess of $200,000,000 up to and including
$304,500,000.

The issuance of the Series E Preferred Stock and the Series
G Preferred Stock was solely to accredited investors and exempt
from registration pursuant to Rule 506 of Regulation D of the
Securities Act of 1933, as amended.

ITEM 6. SELECTED FINANCIAL DATA

Our selected financial data for and as of the end of
each of the years ended December 31, 2002, 2001, 2000, 1999 and
1998 have been derived from our audited consolidated financial
statements, including notes thereto. The information set forth
below is qualified in its entirety by reference to, and should
be read in conjunction with, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements and notes thereto included
elsewhere in this Form 10-K.

Years Ended December 31,
2002 2001 2000 1999 1998
---- ---- ---- ---- ----

Revenue....................... $ 706,118 $ 11,425,722 $ 15,234,063 $ 1,620,454 -

Operating expenses............ 6,832,882 28,615,352 53,285,111 63,811,183 $ 9,924,040

Other expense (income), net... 6,024,213 40,335 (1,206,432) (3,497,459) (2,159,512)

Loss from continuing operations (12,150,977) (17,229,965) (36,844,616) (58,693,270) (7,764,528)

Loss from continuing operations
per share (basic and diluted). $ (0.36) $ (0.49) $ (1.00) $ (1.67) $ (0.25)

Weighted average common shares
outstanding (basic and diluted) 33,369,913 35,004,561 36,603,854 35,193,208 31,067,059

Cash and cash equivalents..... $ 135,668 $ 1,624,017 $ 2,919,548 $ 62,637,410 $63,839,270

Working (deficit) capital..... (14,889,532) (13,671,141) (2,942,555) 59,127,384 61,803,570

Property and equipment - net.. 22,692 1,381,435 5,845,760 12,881,116 6,085,506

Intangible assets - net....... - 59,347 120,748 26,733,541 -

Total assets.................. 605,291 5,122,962 13,841,498 114,511,939 63,806,571

Redeemable preferred stock.... 14,440,427 13,633,854 - - -

Stockholders' (deficiency)
equity........................ (29,023,234) (25,027,141) 4,561,688 106,524,760 59,318,827

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

The following discussion should be read in conjunction with
the accompanying audited financial statements and related
footnotes. This document contains, in addition to historical
information, forward-looking statements that involve risk and
uncertainties. Our actual results could differ materially from
the results discussed in the forward-looking statements.
Factors that could cause or contribute to such differences
include those discussed below, as well as those discussed
elsewhere in this document. See "Item 1 - Business."

Discontinued and Suspended Operations

On September 19, 2000, the Company discontinued its US
Equities Business. The Company has discontinued all operations
of the equities trading system for the US Equities Business and
terminated all communications networks and other related systems
that were necessary to support that business. Accordingly,
results of this operation have been classified as discontinued
operations in the consolidated financial statements and prior
periods have been reclassified to conform to this presentation.
The discussion of results of operations in this section relates
only to the Company's Exchange Solutions Services Business, its
only business segment in 2002. The Company expects the process
of disposing of the net liabilities of the discontinued business
to be completed by December 31, 2003 as a result of the
continuing settlement negotiations with certain companies from
which we had previously leased equipment. This disposition
includes negotiated payments to be made after December 31, 2003.

In January 2002, the Company effectively suspended
development, sales and marketing efforts related to its Exchange
Solutions Services Business. As of that date, OptiMark became a
company whose primary purpose is to hold the securities of
Innovations and to consummate financing and strategic
transactions with other parties. OptiMark continues to engage
in discussions with third parties in an effort to secure funding
for the Exchange Solutions Services Business; however, there can
be no assurances that any such transactions will be consummated.
OptiMark's VWAP assets utilized in the Vie transaction were part
of a general effort to determine ways to utilize OptiMark's
technology for trading venues to be owned and operated by
OptiMark. OptiMark has suspended development of additional
trading venues. At such time that either a third party provides
funding or OptiMark can realize a gain in the value of its
holdings in Innovations, OptiMark will determine whether to
further develop these additional platforms. However, there are
no assurances that these transactions will be consummated or
that any further development will occur.

Continuation as a Going Concern

The accompanying financial statements have been prepared on
a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course
of business. The Company has realized net losses from
operations each year since inception. The Company's current
cash and cash equivalents, plus the expected cash flows for
2003, are not expected to be sufficient to meet its 2003
operating and financial commitments. Accordingly, if the
Company is unable by the end of May 2003 to raise additional
cash either directly or through sale or borrowing against
Innovations' holdings of Vie stock, the Company would face the
imminent and likely potential for bankruptcy or liquidation. If
the Company is forced to declare bankruptcy or pursue
liquidation, the value of the Company's assets may not be
sufficient to pay its creditors in full and, accordingly, the
Company's common and preferred stock would have no value.

Critical Accounting Policies

As a result of the Company's having discontinued its US
Equities Business and suspended its Exchange Solutions Services
Business, the Company considers the two critical policies
described below to be most important to the portrayal of its
financial condition and that require the most subjective
judgment and, as a result decrease the inherent level of
precision in our financial statements.

Reserve Related to Contract Renegotiations and
Terminations. At the time we discontinued the US Equities
Business, this reserve was recorded to reflect the contingent
liability to those companies from which we had previously
contracted for leased equipment and related services. The
reserve balance is substantially less than the gross claims made
by the former suppliers and management must use substantial
judgment based on, among other factors, disputing the size of
the gross claims based on contractual provisions, asserting
counterclaims and affirmative defenses, mitigating the claims
through returns or sales of leased equipment and negotiating
substantial reductions in the net amounts claimed after
mitigation.

Impairment of Property and Equipment. As a result of the
Company having discontinued its US Equities Business in
September 2000 and having suspended its Exchange Solutions
Services Business in January 2002, certain property and
equipment is no longer in use and must be considered impaired.
Some of these assets may be directly identifiable to the
discontinued business; however many others are shared and/or
non-specific and careful judgment is required to determine the
appropriate impairment reserve.

History of Losses

We have experienced losses each quarter since our
inception. Because we have discontinued one business segment
and suspended operations in our other business segment, losses
will continue for the foreseeable future. As of December 31,
2002, our accumulated deficit was approximately $375,247,000.

Results of Operations

Year ended December 31, 2002 compared to year ended December 31,
2001

Revenue. Total revenue for the year ended December 31,
2002 was approximately $706,000 as compared to approximately
$11,426,000 for the year ended December 31, 2001. Of these
amounts, approximately $0 and $2,818,000 were derived from
development services provided to our affiliate, Japan OptiMark
Systems, Inc. ("JOS"), for the years ended December 31, 2002 and
2001, respectively. The balance in 2002 was derived from the
recognition of revenue previously deferred and from services
rendered to Vie. The balance in 2001 was derived from services
to The Nasdaq Stock Market, Inc. ("Nasdaq") and the recognition
of revenue previously deferred. The reduction in services to
JOS resulted from completion of the development phase and
initiation of an enhancement and maintenance phase with a lower
level of monthly billing. Billings for enhancement and
maintenance ceased as of August 31, 2001. The development
contract with Nasdaq and the related billings terminated on
December 31, 2001.

All of the approximately $706,000 in revenue that was
earned for the twelve months ended December 31, 2002 was from
development services. Of the approximately $11,426,000 in
revenue that was earned for the twelve months ended December 31,
2001, $9,287,000 was from development services, $2,139,000 was
from maintenance and support fees.

Operating Expenses. Operating expenses for the twelve
months ended December 31, 2002 totaled approximately $6,833,000
as compared to approximately $28,615,000 for the twelve months
ended December 31, 2001. The following is a discussion of the
decrease as it relates to each of the expense components:

Cost of Sales. Cost of sales includes expenses incurred in
order to develop and implement our products. Cost of sales for
the twelve months ended December 31, 2002 totaled $0 as compared
to approximately $6,417,000 for the twelve months ended December
31, 2001. The decrease of $6,417,000 is due to the absence of
revenue generating projects in 2002.

Sales and Marketing. Sales and marketing expense for the
twelve months ended December 31, 2002 totaled approximately
$395,000 as compared to approximately $1,738,000 for the twelve
months ended December 31, 2001. The decrease of $1,343,000 is
primarily due to a decrease in personnel related expenses,
communication expense, travel and entertainment expense and
public relations expenses in connection with the decrease in
resources utilized in promoting the company's products and
headcount reductions within the marketing department.

Research and Development. Research and development expense
totaled approximately $1,861,000 for the twelve months ended
December 31, 2002 as compared to approximately $5,842,000 for
the twelve months ended December 31, 2001. The decrease of
$3,981,000 is primarily due to reduced expenditures to customize
and develop OptiMark's proprietary matching technology for use
in future applications. The decrease consists primarily of
personnel related expenses and communication expense.

General and Administrative. General and administrative
expense totaled approximately $3,213,000 for the twelve months
ended December 31, 2002 as compared to approximately $9,122,000
for the twelve months ended December 31, 2001. The decrease of
$5,909,000 is primarily due to a decrease in the cost of
OptiMark's bonus program and decreases in personnel related
expenses, corporate insurance expense, professional fees,
recruiting expense, communication expense and other general
office expenses, offset by an increase in rent expense. The
cost of the bonus program was $0 for the twelve months ended
December 31, 2002 and approximately $2,216,000 for the twelve
months ended December 31, 2001.

Depreciation and Amortization. Depreciation and
amortization expense totaled approximately $798,000 for the
twelve months ended December 31, 2002 as compared to
approximately $4,035,000 for the twelve months ended December
31, 2001. The decrease of $3,237,000 is primarily due to the
write off of assets deemed permanently impaired during the
latter part of 2001 and the first quarter of 2002.

Impairment of Fixed Assets. The Company recorded charges
of approximately $566,000 and $1,147,000 in 2002 and 2001,
respectively, representing an impairment of various property and
equipment in its continuing operations for items that no longer
provided economic value.

Restructuring Expense. We recorded a restructuring charge
of approximately $316,000 for the twelve months ended December
31, 2001, representing severance costs associated with a
workforce reduction of forty employees.

Other Income and Expense. Other income and expense
includes interest income on cash and cash equivalents, interest
expense on loans and capital leases, loss on equity investment,
gain realized by the recovery of an investment previously
written off and equity in the loss of an investee. Other
expense, net, was approximately $6,024,000 for the twelve months
ended December 31, 2002 as compared to other expense, net, of
approximately $40,000 for the twelve months ended December 31,
2001. The increase of $5,984,000 is primarily due to the equity
in the loss of an investee, OptiMark Innovations, Inc., an
increase in interest expense generated by shareholder loans, the
financing of insurance policies and the beneficial conversion
feature of the loans with certain of the Company's shareholders,
loss realized on the partial disposal of an equity investment
and a decrease in interest income and the gain on the recovery
on an investment realized in 2001.

Year ended December 31, 2001 compared to year ended December 31,
2000

Revenue. Total revenue for the year ended December 31,
2001 was approximately $11,426,000 as compared to approximately
$15,234,000 for the year ended December 31, 2000. Of these
amounts, approximately $2,818,000 and $11,684,000 were derived
from development services provided to our affiliate, Japan
OptiMark Systems, Inc. ("JOS"), for the years ended December 31,
2001 and 2000, respectively. The balance in 2001 was derived
from services to The Nasdaq Stock Market, Inc. ("Nasdaq") and
the recognition of revenue previously deferred. The reduction
in services to JOS resulted from completion of the development
phase and initiation of an enhancement and maintenance phase
with a lower level of monthly billing. Billings for enhancement
and maintenance ceased as of August 31, 2001. The development
contract with Nasdaq and the related billings terminated on
December 31, 2001.

Of the approximately $11,426,000 in revenue that was earned
for the twelve months ended December 31, 2001, $9,287,000 was
from development services, $2,139,000 was from maintenance and
support fees. Of the approximately $15,234,000 in revenue that
was earned for the twelve months ended December 31, 2000,
$15,033,000 was from development services, $201,000 was from
maintenance and support fees.

Operating Expenses. Operating expenses for the twelve
months ended December 31, 2001 totaled approximately $28,615,000
as compared to approximately $53,285,000 for the twelve months
ended December 31, 2000. The following is a discussion of the
decrease as it relates to each of the expense components:

Cost of Sales. Cost of sales includes expenses incurred in
order to develop and implement our products. Cost of sales for
the twelve months ended December 31, 2001 totaled approximately
$6,417,000 as compared to approximately $8,256,000 for the
twelve months ended December 31, 2000. The decrease of
$1,839,000 was primarily due to the decrease in resources
utilized in the JOS project. The decrease consisted of lower
personnel related expenses incurred in connection with JOS and
equipment lease expense due to the termination of the majority
of the Company's operating leases in the third quarter of 2000,
offset by increases in warranty expense, communication expense
and rent expense allocated to the Nasdaq project.

Sales and Marketing. Sales and marketing expense for the
twelve months ended December 31, 2001 totaled approximately
$1,738,000 as compared to approximately $1,893,000 for the
twelve months ended December 31, 2000. The decrease of $155,000
was attributable to a decrease in costs associated with JOS.
The decrease consisted primarily of personnel related expenses
and travel and entertainment expenses offset by increases in
public relations expenses and communication expense associated
with marketing the Company's new product offerings.

Research and Development. Research and development expense
totaled approximately $5,842,000 for the twelve months ended
December 31, 2001 compared to approximately $3,460,000 for the
twelve months ended December 31, 2000. The increase of
$2,382,000 was primarily due to expenditures to customize and
develop OptiMark's proprietary matching technology for use in
future applications. The increase consisted primarily of
personnel related expenses.

General and Administrative. General and administrative
expense totaled approximately $9,122,000 for the twelve months
ended December 31, 2001 as compared to approximately $9,601,000
for the twelve months ended December 31, 2000. The decrease of
$479,000 was primarily due to a decrease in professional fees,
personnel related expenses, travel and entertainment expenses
and other general office expenses offset by an increase in
corporate insurance expense, recruiting expense, communication
expense and rent expense. In addition to general and
administrative expenses, OptiMark also includes the total cost
of its employee bonus program in this cost classification. The
cost of this program was approximately $2,216,000 for the twelve
months ended December 31, 2001 and approximately $2,169,000 for
the twelve months ended December 31, 2000.

Depreciation and Amortization. Depreciation and
amortization expense totaled approximately $4,035,000 for the
twelve months ended December 31, 2001 as compared to
approximately $3,950,000 for the twelve months ended December
31, 2000. The increase of $85,000 was primarily due to the
Company's decision to identify assets, chiefly computer
equipment, previously used in the discontinued business, and
redeploy them in the continuing business, offset by the absence
in 2001 of amortization from certain non-securities industries
rights, which were written off in the fourth quarter of 2000 as
well as lower depreciation resulting from certain property and
equipment, written off in the second half of 2000.

Impairment of Fixed Assets. The Company recorded charges
of approximately $1,147,000 and $1,879,000 in 2001 and 2000,
respectively, representing an impairment of various property and
equipment in its continuing operations for items that no longer
provided economic value.

Write-off of Intangible Asset. The Company recorded a
charge of $23,940,000 in 2000 to write off the net book value of
an intangible asset. The write off was based on the Company's
analysis, which indicated that the asset presented no future
economic value.

Restructuring Expense. We recorded a restructuring charge
of approximately $316,000 for the twelve months ended December
31, 2001, representing severance costs associated with a
workforce reduction of forty employees. We had taken a
restructuring charge of approximately $292,000 for the twelve
months ended December 31, 2000. Included in this amount was
approximately $1,890,000 representing charges associated with
the revaluation of employee options, $750,000 related to a
settlement payment to a vendor, approximately $4,000 related to
the write off of security deposits and the remaining
approximately $268,000 included notice period salaries of
approximately $167,000, severance of approximately $68,000 and
vacation pay and other related employee costs of approximately
$33,000. The restructuring charges were reduced by
approximately $2,620,000 from a net reduction in vendor
obligations.

Warrant Compensation Expense. We incurred a non-cash
warrant compensation expense for the twelve months ended
December 31, 2000 of approximately $15,000. This amount was
attributable to certain warrants being charged to expense in
accordance with the Emerging Issues Task Force 96-18,
"Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with, Selling Goods
or Services."

Other Income and Expense. Other income and expense
includes interest income on cash and cash equivalents, interest
expense on capital leases, corporate insurance vendor financing
and stockholder notes, writedown of an investment and gain
realized by the recovery of an investment previously written
off. Other expense, net, was approximately $40,000 for the
twelve months ended December 31, 2001 as compared to other
income, net, of approximately $1,206,000 for the twelve months
ended December 31, 2000. The decrease of $1,246,000 was due to
(a) a reduction in interest bearing deposits over the course of
the prior twelve months, (b) payments on capital leases over the
same period of time, which reduced the interest portion of
current payments (c) interest incurred on financing provided by
a vendor in connection with the Company's corporate insurance
policy and (d) interest incurred on the stockholder notes. In
addition, the Company wrote off its investment in a customer.
These were offset by a gain realized by the recovery of an
investment written off in a prior year.

Liquidity and Capital Resources

As of December 31, 2002, our principal sources of liquidity
consisted of approximately $136,000 of cash and cash equivalents
as compared to approximately $1,624,000 of cash and cash
equivalents as of December 31, 2001.

Net cash used in continuing operating activities was
approximately $5,629,000 and approximately $11,061,000 for the
twelve months ended December 31, 2002 and 2001, respectively.
The change in net operating cash flows was attributable to net
losses in both periods, partially reduced by non-cash charges
including depreciation and amortization, non-cash loan
repayment, equity in loss of unconsolidated subsidiary,
impairment of fixed assets, non-cash interest expense, loss on
equity investment and gain/loss on disposal of assets. The
fluctuation between periods was also affected by net changes in
working capital.

Net cash provided by investing activities was approximately
$454,000 for the twelve months ended December 31, 2002 and net
cash used in investing activities was approximately $696,000 for
the twelve months ended December 31, 2001. The cash provided by
investing activities in 2002 primarily consisted of the proceeds
received from the sale of assets, chiefly computer equipment.
The uses of cash in 2001 for investing activities primarily
consisted of the purchase of a mainframe computer as part of a
settlement of all amounts owed to a company from which OptiMark
had previously leased equipment and the purchase of software
licenses.

Net cash provided by financing activities was approximately
$4,231,000 and approximately $14,161,000 for the twelve months
ended December 31, 2002 and 2001, respectively. In 2002, cash
was provided from the sale of Series E Preferred Stock and
shareholder loans. In 2001, cash was provided from the sale of
Series E Preferred Stock, stockholder loans, the recovery of an
investment previously written off and the issuance of a minority
interest in a subsidiary of the Company. Uses of cash in 2001
consisted of principal payments on capital leases. On June 29,
2001, the obligation to repay the stockholder loans was
cancelled in exchange for shares of Series E Preferred Stock.

On March 21, 2002, the Company entered into a loan
agreement with certain of its shareholders (SOFTBANK). Under
the terms of the agreement, the Company borrowed $500,000 for a
period of 180 days at an interest rate of 10% per annum
compounded every ninety days. The loan is secured by
substantially all of the assets of the Company. In lieu of
repayment of principal in cash, the lenders had the right to
require the Company to repay the principal amount of the loan
by causing OptiMark to transfer eight shares of Innovations
Common Stock and forty-eight shares of the Non-Qualified
Preferred Stock of Innovations subject to adjustment as
provided in the loan agreement with accrued interest payable
in cash at maturity.

On April 11, 2002, the Company entered into a second loan
agreement with these shareholders. Under this second loan
agreement, the Company borrowed $570,000 for a period of 180
days at an interest rate of 10% per annum compounded every
ninety days. The second loan is secured by substantially all of
the assets of the Company. In lieu of repayment of principal in
cash, the lenders had the right to require the Company to repay
the principal amount of the loan by causing OptiMark to transfer
twelve shares of Innovations Common Stock and fifty-four shares
of the Non-Qualified Preferred Stock of Innovations subject to
adjustment as provided in the second loan agreement with
accrued interest payable in cash at maturity. The value of the
securities transferred at the time of repayment for the loan
exceeded the value of the loan by $570,000, which was recorded
as a beneficial conversion feature. This amount was charged as
interest expense ratably over the life of the loan.

On May 31, 2002, the Company entered into a third loan
agreement with these shareholders. Under this third loan
agreement, the Company borrowed $1,650,000 for a period of 180
days at an interest rate of 10% per annum compounded every
ninety days. The third loan is secured by substantially all of
the assets of the Company. In lieu of repayment of principal in
cash, the lenders had the right to require the Company to repay
the principal amount of the loan by causing OptiMark to transfer
twenty-eight shares of Innovations Common Stock and one hundred
fifty-eight shares of the Non-Qualified Preferred Stock of
Innovations subject to adjustment as provided in the third
loan agreement with accrued interest payable in cash at maturity.
The value of the securities transferred at the time of repayment
for the loan exceeded the value of the loan by $1,640,000, which
was recorded as a beneficial conversion feature. This amount
was charged as interest expense ratably over the life of the loan.

On September 17, 2002, the loan the Company executed with
these shareholders on March 21, 2002, came due. In accordance
with the terms of the agreement, the lenders caused the Company
to transfer eight shares of Innovations' common stock and forty-
eight shares of Innovations' Non-Qualified Preferred Stock. The
Company recorded a loss of approximately $945,000 on the
exchange, which is included in loss on equity investment on the
accompanying statement of operations and other comprehensive
loss.

On October 8, 2002, the loan the Company executed with
these shareholders on April 11, 2002, came due. In accordance
with the terms of the agreement, the lenders caused the Company
to transfer twelve shares of Innovations' common stock and
fifty-four shares of Innovations' Non-Qualified Preferred Stock.

On November 27, 2002, the loan the Company executed with
these shareholders on May 31, 2002, came due. In accordance
with the terms of the agreement, the lenders caused the Company
to transfer twenty-eight shares of Innovations' common stock and
one hundred fifty-eight shares of Innovations' Non-Qualified
Preferred Stock.

The repayment of the loans resulted in additional paid in
capital of $1,433,150.

On November 27, 2002, the Company entered into a fourth
loan agreement with these shareholders. Under this fourth loan
agreement, the Company borrowed $750,000 for a period of 180
days at an interest rate of 10% per annum compounded every
ninety days. The fourth loan is secured by substantially all of
the assets of the Company. In lieu of repayment of principal in
cash, the lenders may require the Company to repay the principal
amount of the loan by causing OptiMark to transfer twelve shares
of Innovations Common Stock and seventy-two shares of the Non-
Qualified Preferred Stock of Innovations subject to adjustment
as provided in the fourth loan agreement with accrued interest
payable in cash at maturity. The value of the securities
to be given in consideration at the time of repayment for the loan
will exceed the value of the loan by $92,000, which was recorded
as a beneficial conversion feature. This amount is being charged
as interest expense ratably over the life of the loan.

On December 17, 2002, the lenders and the Company executed
a Letter Agreement pursuant to which the lenders will receive
three shares of Innovations Common Stock and fifteen shares of
Innovations Non-Qualified Preferred Stock in lieu of cash
payment of all remaining obligations, including accrued and
unpaid interest, the Company owed the lenders under the terms of
the first three loan agreements.

On February 6, 2003, the Company entered into a fifth loan
agreement with these shareholders. Under this fifth loan
agreement, the Company borrowed $940,000 for a period of 180
days at an interest rate of 10% per annum compounded every
ninety days. The fifth loan is secured by substantially all of
the assets of the Company. In lieu of repayment of principal in
cash, the lenders may require the Company to repay the principal
amount of the loan by causing OptiMark to transfer eighty-nine
shares of the Non-Qualified Preferred Stock of Innovations and
the reduction of the Company's First Call Right by twenty shares
subject to adjustment as provided in the fifth loan agreement
with accrued interest payable in cash at maturity.

Pursuant to the Innovations Rights Agreement, Holdings and
SOFTBANK have certain call and put rights described below. The
Independent Committee of the Board has the right commencing
October 1, 2002 and exercisable until September 30, 2003, to
recommend to the Board that Holdings purchase all, but not less
than all, of the SOFTBANK Shares for $100,000 in cash and 13,334
shares of Series E Preferred Stock of Holdings. If the Board of
Directors accepts such recommendation, SOFTBANK would be
obligated to sell the SOFTBANK shares for that consideration.

Upon the occurrence of a Liquidity Event (defined below) on
or before September 30, 2003, the SOFTBANK Shares will be
purchased by Holdings for $100,000 in cash and 13,334 shares of
Series E Preferred Stock of Holdings. A "Liquidity Event" means
any of the following: (i) Innovations' sale, conveyance or other
disposition of all or substantially all of its assets; (ii) the
acquisition of Innovations by another entity by means of merger
or consolidation resulting in the exchange of the outstanding
shares of Innovations for securities or other consideration
issued, or caused to be issued, by the acquiring entity or its
subsidiary, unless the stockholders of Innovations immediately
prior to the consummation of such transaction hold at least 50%
of the voting power of the surviving corporation as a result of
such transaction; (iii) the consummation by Innovations of a
transaction or series of related transactions, including the
issuance or sale of voting securities, if the stockholders of
Innovations immediately prior to such transaction (or, in the
case of a series of transactions, the first of such
transactions) hold less than 50% of the voting power of
Innovations immediately after the consummation of such
transaction (or, in the case of a series of transactions, the
last of such transactions); or (iv) any initial underwritten
public offering of Innovations Common Stock. Notwithstanding
the foregoing, Holdings will not exercise this call option in
the event that the Independent Committee recommends that
Holdings not purchase the SOFTBANK Shares.

In the event that: (i) the call rights of Holdings
described above have not been exercised on or before September
30, 2003, (ii) the Independent Committee no longer exists and
(iii) no independent directors serve on the Holdings Board of
Directors and, after reasonable good faith efforts by the
remaining members of the Holdings Board of Directors, no
independent persons qualified to serve on the Holdings Board of
Directors have been found or, if found, are not willing to serve
on the Holdings Board of Directors, then the Holdings Board of
Directors will engage an independent investment banking,
accounting or third party valuation firm to evaluate whether or
not it is in the best interests of Holdings that it purchase the
SOFTBANK Shares. If such third party determines it is in the
best interests of Holdings to purchase the SOFTBANK Shares,
Holdings will be obligated to purchase such shares on or before
December 31, 2003 for $100,000 in cash and 13,334 shares of
Series E Preferred Stock of Holdings.

SOFTBANK has the right, commencing on October 1, 2002 and
continuing until September 30, 2003, to put all, but not less
than all, of the SOFTBANK Shares to Holdings in exchange for
16,667 shares of Series E Preferred Stock of Holdings.

In the event that no put of, or call on, the SOFTBANK Shares
has been exercised by October 31, 2003, then commencing on
November 1, 2003 and continuing until November 30, 2003,
SOFTBANK has the right to require Holdings to purchase all, but
not less than all, of the SOFTBANK Shares for 16,667 shares of
Series E Preferred Stock of Holdings.

During 2001, the Company raised additional capital and
settled certain liabilities through the sale or issuance of its
Series E and Series G Preferred Stock. These issuances
contained certain provisions and rights for the preferred
stockholder that required that they be classified as redeemable
stock on our balance sheet. These terms were part of the
negotiated provisions of these preferred stock financings.

Factors that may affect future results

The following factors may affect our future results:

WE ARE DEPENDENT ON THE SUCCESS OF VIE AND/OR FUTURE
TRANSACTIONS

Holdings, OptiMark and Innovations do not have any revenue
generating operations. The business of Equities was
discontinued in September 2000. As such, the Company believes
that the future value of Holdings' stock will depend principally
on the value of the Vie Common Stock held by Innovations or on
other transactions that the Company can consummate.

The Company's investment in Vie is subject to additional
risks including the risks attendant to Vie's business.
Innovations has conducted limited due diligence with respect to
Vie's business. Based solely on that limited review,
Innovations has no reason to believe that Vie's description of
its business is incorrect in any material respect.

There may be additional risks of which we and/or Vie do not
currently know or of which are deemed to be immaterial based on
the information available. All of these risks may impair
business operations.

There are no assurances that the value of the Vie Common
Stock will appreciate or other transactions will occur.

The Company continues to attempt to solicit interest from
or opportunities with third parties concerning possible
additional investments or strategic alliances. However, no
binding or definitive arrangements have been reached with any
third parties and there can be no assurances that any such
transactions will be consummated. OptiMark's VWAP assets
utilized in the Vie transaction were part of a general effort to
determine ways to utilize OptiMark's technology for trading
venues to be owned and operated by OptiMark. OptiMark has
suspended development of additional trading venues. At such
time that either a third party provides funding or OptiMark can
use a gain in the value of its holdings in Innovations, OptiMark
will determine whether to further develop these additional
platforms. However, there are no assurances that these
transactions will be consummated or that any further development
will occur.

WE DO NOT HAVE SUFFICIENT WORKING CAPITAL TO CONTINUE AS A GOING
CONCERN

The Company's current cash and cash equivalents, plus the
expected cash flows for 2003, are not expected to be sufficient
to meet its 2003 operating and financial commitments. We will
need working capital to fund the relatively limited operations
necessary to carry out our duties and obligations as a holding
company, including the administration and financial reporting
obligations. We currently do not generate any revenues from
continuing operations in order to provide this working capital.
We will need to raise additional capital to meet our operating
requirements. Accordingly, if the Company is unable by the end
of May 2003 to raise additional cash either directly or
through sale or borrowing against Innovations' holdings of
shares of the Vie Common Stock or the Note, the Company would
face the imminent and likely potential for bankruptcy or
liquidation. If the Company is forced to declare bankruptcy or
pursue liquidation, the value of the Company's assets may not be
sufficient to pay its creditors in full and, accordingly, the
Company's common stock and preferred stock would have no value.
The Company will continue to seek additional funding both to
support its operation as a holding company as well as its very
limited efforts related to potential new product development.
While the Company hopes to be able to obtain additional
financing for these limited product development activities,
continue to borrow money from SOFTBANK or raise capital through
the sale or borrowing against the shares of Innovations related
to its holdings of shares of the Vie Common Stock and the Note,
the Company may not be able to raise this capital before it runs
out of cash. In addition, the Company has pledged a portion of
its shares of Capital Stock in Innovations to SOFTBANK as
payment for loans that have already been provided. In the event
that the Company does not have enough cash to pay the principal
and interest on these loans as they come due, the Company's
holdings in Innovations would be reduced accordingly. This
would reduce the Company's ability to utilize these assets to
raise additional capital necessary to ensure continuation as a
going concern. There is no assurance that the Company's
holdings in Innovations, as represented by Innovations' holdings
of shares of the Vie Common Stock, will have any value as
collateral for a loan or that could be sold to raise cash at any
time or in a time frame that would let the Company continue as a
going concern.

If we raise additional funds through the issuance of
securities, these securities may have rights, preferences or
privileges senior to those of our common stock and existing
series of preferred stock, and our stock holders may experience
dilution to their equity ownership.

WE DO NOT GENERATE REVENUES FROM CLIENTS

We currently do not have any clients who generate revenues
for the Company. We may not seek to re-start the development,
sales, and marketing efforts related to our Exchange Solutions
Services Business and therefore may not have clients from whom
we can generate revenues in the future. As such, there are no
assurances that we can generate revenues to support operations.

WORKOUT AND DEBT RESTRUCTURING

We are currently engaged in litigation and/or settlement
negotiations with, or may face unasserted claims from, certain
large creditors of Equities. The aggregate gross claims of these
creditors are approximately $14,500,000. The Company is
attempting to conclude the negotiations in a manner which allows
the Company as a whole to continue to pursue its business. The
negotiated settlements are attempting to be achieved through a
combination of disputing the size of the gross claims based on
contractual provisions, asserting counterclaims and affirmative
defenses, mitigating the claims through returns or sales of
leased equipment, negotiating substantial reductions in the net
amounts claimed after mitigation, agreeing on deferred payment
of the net claims and converting some of the debt into equity.
To the extent that we can and do settle with these creditors,
the ability to make payments to them under any settlement
agreement would depend upon securing additional financing.
There can be no assurance that these negotiations will be
successful or that the creditors will not seek to put Equities
or the Company into bankruptcy in the near future. A bankruptcy
proceeding will materially and negatively affect the ability of
the Company to continue operations.

On January 25, 2002, OptiMark Holdings, Inc. and its
subsidiaries, OptiMark US Equities, Inc. (f/k/a OptiMark
Technologies, Inc.) and OptiMark, Inc. (collectively, "OptiMark
Parties"), settled, without any admission of liability, the
arbitration captioned International Exchange Networks, Ltd.
("IXNET") against OptiMark Technologies, Inc., OptiMark
Holdings, Inc., OptiMark, Inc. and OptiMark US Equities, Inc.,
(American Arbitration Association Case No. 131170016601). Under
the terms of the settlement, the OptiMark Parties agreed to pay
IXNET, on or before eleven (11) business days after December 31,
2006, the amount of $6,000,000. However, if the OptiMark
Parties have paid to IXNET (a) $500,000 immediately upon
execution of a settlement agreement (which it did on January 30,
2002), and pay (b) $1,000,000 on or before December 31, 2003 and
(c) $1,000,000 on or before December 31, 2004, then in that
event, IXNET has agreed to accept such payments as full and
complete satisfaction of the OptiMark Parties' obligations under
the settlement and to forgo and forgive irrevocably any and all
other sums due to IXNET under the settlement. The OptiMark
Parties currently intends to make payments to IXNET in
accordance with this payment schedule. However, our ability to
make the two payments of $1 million dollars on or before
December 31, 2003 and 2004, respectively, will depend on the
Company securing additional financing or realizing additional
value from our current assets.

On March 19, 2003, subject to execution of definitive
documentation, we reached a settlement with Finova Capital
Corporation ("Finova") in the litigation captioned Finova
Capital Corporation v. Optimark Technologies, Inc. Optimark,
Inc. and Optimark Holdings, Inc., which is described in "Item 3
- - Legal Proceedings." The terms of this settlement provide as
follows. We will pay Finova the combined sum of $1,000,000 in
the following manner: a) $200,000 within thirty (30) days of
the execution of the written settlement agreement; b) $400,000
in January 2004; and c) $400,000 in June 2004. We will provide
Finova with a consent judgment for the outstanding balance due
on the lease agreements in dispute - to be used only in the
event of a default under the terms of the settlement agreement.
The exact amount of the consent judgment shall be agreed to by
the parties based upon the amount due and owing under the
subject leases. In consideration of the foregoing, Finova, upon
receipt of the first payment of $200,000, will provide all
defendants to the litigation (namely, Optimark U.S. Equities,
Inc., Optimark, Inc., Optimark Holdings, Inc., Optimark
Innovations, Inc. (plead as OTSH, Inc.) and Vie Financial Group
(plead as Ashton Technology Group, Inc.)) a release for all
claims arising out of the lease transaction between the parties
as well as those additional claims asserted, or those that could
have been asserted, by Finova against all defendants in the
pending litigation. Additionally, Finova also shall cause a
Stipulation of Dismissal, with prejudice, to be filed in the
pending action.

Recent Accounting Pronouncements

Management does not believe any recently issued, but not
yet effective, accounting standards, if currently adopted, would
have a material effect on the accompanying financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK

Our only exposure to market risk is related to changes in
interest rates and foreign currency exchange rates. As of
December 31, 2002, we did and do not consider these risks to be
material. This discussion contains forward-looking statements
that are subject to risks and uncertainties. Actual results
could vary materially as a result of a number of factors
including those mentioned in Part I above.

Interest Rate Risk. As of December 31, 2002, we had cash
and cash equivalents of $135,668 that consisted of cash and
highly liquid short-term investments. These investments may be
subject to interest rate risk and would decrease in value if
interest rates increased in the marketplace. A hypothetical
increase or decrease of 10 percent from market interest rates in
effect at December 31, 2002 would have caused the fair value of
these short-term investments to change by an immaterial amount.
Declines in interest rates over time would, however, reduce our
interest income.

Equity Price Risk. As of December 31, 2002, we were not
subject to equity price risk.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the accompanying consolidated financial statements.

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

On September 26, 2002, Deloitte & Touche LLP ("D&T")
resigned as the independent auditors for the Company. The
reports of D&T on the balance sheets of the Company as of
December 31, 2001 and 2000 and the related statements of
operations, stockholders' equity and cash flows for each of the
years in the two-year period ended December 31, 2001 did not
contain any adverse opinion or disclaimer of opinion, nor were
they modified as to uncertainty, audit scope or accounting
principles, except for disclosures of going concern
uncertainties.

In connection with the audits by D&T of the periods
described above, and the subsequent interim period through
September 26, 2002, there were no disagreements between the
Company and D&T on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to D&T's
satisfaction, would have caused D&T to make reference to the
subject matter of the disagreement(s) in connection with its
reports.

The Company has selected Goldstein Golub Kessler LLP as
independent auditors for the year ending December 31, 2002. The
decision to change independent auditors and the selection of
Goldstein Golub Kessler LLP as independent auditors for the year
ending December 31, 2002 was approved by the Board of Directors.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following list sets forth certain biographical
information concerning the Board of Directors of OptiMark
Holdings, Inc. ("OptiMark" or the "Company") as of December 31,
2002.

WILLIAM A. LUPIEN (61), Chairman of the Board of
Directors since 2000. Mr. Lupien was the founder and co-
inventor of the OptiMark matching engine technology. Mr. Lupien
has served as Chairman of the Board of Directors of OptiMark
Technologies, Inc. and its predecessor, MJT Holdings, Inc.,
since its formation in 1988. From inception through November
1998, Mr. Lupien served as the Chief Executive Officer of
OptiMark Technologies, Inc. Mr. Lupien also serves as a
Director of Broker Tec Futures Exchange, L.L.C. Mr. Lupien
received his Bachelor of Science degree from San Diego State
University.

RONALD D. FISHER (55), Director since November 1999. Mr.
Fisher is the Vice Chairman of SOFTBANK Holdings Inc. and a
Managing Partner of SOFTBANK Capital Partners. Mr. Fisher also
serves as a member of the boards of directors of SOFTBANK Corp.,
E*Trade Group, InsWeb Corporation, GSI Commerce, Key3Media and
Vie Financial Group. Mr. Fisher received his M.B.A. from Columbia
University, New York and Bachelor of Commerce degree from the
University of Witwatersand in South Africa.

ROBERT J. WARSHAW (49), Chief Executive Officer since
March 2001. Mr. Warshaw also serves as Chief Executive Officer
of OptiMark, Inc. Mr. Warshaw previously served as Co-Chief
Executive Officer, Executive Vice President and Chief Technology
Officer of OptiMark, Inc. From November 1999 to June 2000, Mr.
Warshaw served as Executive Vice President and Chief Technology
Officer of OptiMark Technologies, Inc. From October 1993 to
October 1999, Mr. Warshaw was Chief Information Officer at
Lazard Freres & Co. LLC., an international investment banking
firm. Mr. Warshaw received his bachelor's degree in English
from the University of Pennsylvania and a Masters in Management
from Northwestern University's Kellogg School of Management.
The executive officers serve at the discretion of the Board
of Directors. The following table sets forth certain
information concerning the executive officers of the Company as
of December 31, 2002 (none of whom has a family relationship
with another executive officer).

Name Age Position
- ---- --- --------
Robert J. Warshaw 49 President, Chief Executive Officer
and Director

Matthew L. Morgan 31 Secretary

Information regarding the business experience of Mr.
Warshaw is set forth above.

MATTHEW L. MORGAN (31), Controller and Corporate Secretary
since July 10, 2002. Prior to joining OptiMark, Mr. Morgan was
an auditor with Deloitte and Touche LLP from 1998 to 2000 and
Richard A. Eisner LLP from 1997 to 1998. While at these firms,
Mr. Morgan concentrated on the technology and service-related
industries. Mr. Morgan has an undergraduate degree from the City
University of New York, Queens College and is a certified public
accountant.

Section 16(a) Beneficial Ownership Reporting Compliance

The Company's executive officers, directors and ten percent
shareholders are required under Section 16(a) of the Securities
Exchange Act of 1934 as amended (the "Exchange Act"), to file
reports of ownership and changes in ownership on Forms 3, 4 and
5 with the Commission. Copies of these reports must also be
furnished to the Company. Based upon its review of copies of
such reports furnished to the Company through the date hereof,
or written representations that no reports were required to be
filed, the Company believes that during the year ended December
31, 2002, all filing requirements applicable to its officers,
directors and ten percent shareholders were complied within a
timely manner, with the exception of one Form 4 for Mr. William
A. Lupien and one Form 4 for Ronald D. Fisher, which were not
filed in a timely manner.

ITEM 11. EXECUTIVE COMPENSATION

Compensation of Directors

Upon initial election to the Board of Directors, each non-
employee Director was granted an option to purchase 50,000
shares of common stock, par value $.01 per share (the "Common
Stock"), pursuant to the OptiMark Holdings, Inc. 1999 Stock Plan
(the "Common Stock Plan"). In addition, on the first business
day following each annual meeting of OptiMark's shareholders,
each non-employee Director was granted an option to purchase
10,000 shares of Common Stock pursuant to the Common Stock Plan.
Options granted under the Common Stock Plan to non-employee
Directors vest ratably over five years, subject to continuing
service on the Board of Directors, and have a term of ten years.

In November 2001, the Company adopted OptiMark Holdings,
Inc. 2001 Series F Preferred Stock Plan (the "Series F Stock
Plan") pursuant to which certain individuals would receive
grants of options to purchase Series F Preferred Stock.
Following the adoption of the Series F Stock Plan in November
2001, no further options have been or will be granted to non-
employee Directors under the Common Stock Plan. In November
2001, each current non-employee Director (Messrs. Fisher, Lupien
and Riese) was granted an option to purchase 25,000 shares of
Series F Preferred Stock pursuant to the Series F Stock Plan,
which vested immediately following stockholder approval of the
Series F Stock Plan and has a term of ten years. Thereafter,
upon initial election to the Board of Directors and on the first
business day following each annual meeting of OptiMark's
shareholders, each non-employee Director will be granted an
option to purchase 10,000 shares of Series F Preferred Stock
pursuant to the Series F Stock Plan. Options granted under the
Series F Stock Plan to non-employee Directors in accordance with
the preceding sentence shall fully vest on the first anniversary
of the date of grant, subject to continuing service on the Board
of Directors, and have a term of ten years. In addition, each
non-employee Director shall have one year from resignation or
expiration of his term as a Director to exercise vested options
granted under the Series F Stock Plan.

Directors do not receive cash compensation for service as
members of the Board of Directors or committees thereof. All
Directors are reimbursed for out-of-pocket expenses.

Executive Summary Compensation Table

The following table provides a summary of compensation
earned by the named executive officers of the Company, which
include the Company's Chief Executive Officer and the other
former executives whose total salary and bonus for 2002 exceeded
$100,000, for services rendered in all capacities to the Company
and its subsidiaries for each of the last three fiscal years:

Long Term
Compensation
Annual Compensation Awards
------------------------ ------------
Securities
Other Underlying
Fiscal Salary Bonus Compensation Options
Name and Principal Position Year ($) ($) ($) (#)
- --------------------------- ---- ------ ----- ------------ ------------

Robert J. Warshaw 2002 250,000 325,000 - -
Chief Executive Officer 2001 257,291 175,000 - 1,950,000
2000 225,000 175,000 - 250,000

Matthew L. Morgan 2002 127,000 - - -
Secretary & Controller 2001 104,374 8,063 - 30,000
2000 48,747 - - 25,000

Neil G. Cohen 2002 92,948 50,000 - -
Former Secretary & 2001 200,000 38,374 - 185,000
General Counsel 2000 162,500 21,875 - 55,000

Options to purchase shares of Series F Preferred Stock.

Options to purchase shares of Common Stock.

All outstanding options on Common Stock of Executive Officer
were repriced to an exercise price of $0.50 per share in
December 2000 upon the execution of Amendment No. 1 to Stock
Option Agreements.

Mr. Cohen resigned as Secretary and General Counsel effective
May 31, 2002.

Option Grants

During fiscal year 2002 there were no options granted to
any of the Company's executive officers.

Fiscal 2002 Year End Option Values

No options were exercised during fiscal year 2002 by the
named executive officers. The following table describes the
named executive officers' exercisable and unexercisable options
held as of December 31, 2002. The "Value of Unexercised In-the-
Money Options at Fiscal Year End" is the value as of December
31, 2002, in each case as determined by the Board of Directors,
less the exercise price. All options were granted under either
the Series F Stock Plan or the Common Stock Plan as indicated.

Number of Securities Value of Unexercised
Underlying Unexercised Options at In-the-Money Options at
Fiscal Year End (#) Fiscal Year End ($)
--------------------------------- -------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------

Robert J. Warshaw 853,125 1,096,875 -0- -0-
460,000 290,000 -0- -0-

Matthew L. Morgan 13,125 16,875 -0- -0-
10,000 15,000 -0- -0-

Neil G. Cohen 92,500 185,000 -0- -0-
34,000 41,000 -0- -0-

Options to purchase shares of Series F Preferred Stock.

Options to purchase Common Stock.

Repricing Discussion

On September 19, 2000, the Company's Board of Directors
authorized a repricing of options on Common Stock. The
repricing reduced the exercise price of all outstanding options
on Common Stock that had been granted to those employees,
officers, and directors who remained with the Company after that
date from exercise prices ranging from $1.50-$14.00 per share to
$0.50 per share.

The options on Common Stock were intended to provide
incentives for option holders to continue as employees,
officers, and directors of the Company based on the potential
for appreciation of the stock price of the Company to a level in
excess of the exercise price of the options. The Board of
Directors determined that the fair market value as of September
19, 2000 of a share of Common Stock of the Company was $0.50 per
share, which was significantly below the prices at which options
on Common Stock had originally been granted. The Board of
Directors further determined that the fair market value caused
the stock options to lose much of their intended motivating
effect on employees, officers, and directors. The repricing was
intended to reinstate the original intent of the options on
Common Stock.

Options to purchase 500,000 shares of Common Stock at an
exercise price of $12.00 per share and options to purchase
250,000 shares of Common Stock at an exercise price of $10.00
per share held by Mr. Warshaw were repriced to an exercise price
of $0.50 per share and have remaining terms of one year and two
years, respectively.

Management Contracts

On August 16, 2001, OptiMark entered into a written
employment agreement with Robert J. Warshaw that replaced an
earlier oral agreement reached on September 19, 2000. On August
8, 2002, OptiMark amended the agreement dated August 16, 2001.
Under the terms of the amended agreement, Mr. Warshaw retained
the position of Chief Executive Officer of the Company, received
a base salary of $250,000 per year, and was granted a bonus in
the amount of $200,000, , which was to be paid bi-monthly through
August, 2003. In addition, the amendment provided Mr. Warshaw
with the right to receive a bonus in the amount of $45,000 upon
execution of the agreement and a bonus in the amount of $80,000
upon the employment of a full- time Chief Executive Officer of
Vie. These bonus amounts were paid in full by December 16, 2002.
On January 31, 2003, OptiMark further amended the agreement dated
August 16, 2001 to change Mr. Warshaw's employment status to
part-time as of January 15, 2003. Mr. Warshaw retains the
position of Chief Executive Officer and will work the equivalent
of one day per week. Under the terms of the agreement, Mr.
Warshaw is to receive $125,000 in cash and make himself available
for service to the Company for ten days from February 1, 2003 to
March 31, 2003. After the tenth day of service during this
period, Mr. Warshaw is entitled to receive $2,000 per day.
Commencing April 1, 2003, Mr. Warshaw will receive a salary
$2,000 per week and will receive $2,000 per day if he works more
than one day in any given week. Under the terms of the
agreement, the Company will pay for the continued coverage of Mr.
Warshaw and each of his dependents in the Company's medical,
dental, vision and hospitalization programs until December 31,
2003.

The Company, on May 31, 2002, made a loan to Mr. Warshaw in
the amount of $45,000. The principal and accrued interest (at
6% per annum) on such loan is due and payable on May 31, 2003.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The following tables set forth, as of December 31, 2002,
certain information regarding the beneficial ownership of the
Common Stock, Series A Convertible Participating Preferred
Stock, $.01 par value (the "Series A Preferred Stock"), Series B
Convertible Participating Preferred Stock, $.01 par value (the
"Series B Preferred Stock"), Series C Convertible Preferred
Stock, $.01 par value (the "Series C Preferred Stock"), Series D
Convertible Preferred Stock, $.01 par value (the "Series D
Preferred Stock"), the Series E Preferred Stock and the Series G
Preferred Stock (collectively, the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stock, the Series E Preferred Stock, the
Series F Preferred Stock and the Series G Preferred Stock are
referred to herein as the "Preferred Stock") for (i) each of
the Company's executive officers named in the Executive Summary
Compensation Table in Item 11; (ii) each current Director of the
Company; (iii) each person who is known to the Company to own
beneficially more than 5% of the voting securities of the
Company of any class; and (iv) all executive officers and
Directors of the Company as a group. Such information is based,
in part, upon the information provided by certain shareholders
of the Company. In the case of persons other than executive
officers and Directors of the Company, such information is based
solely on an internal review of the Company's files, the filings
made by such shareholders pursuant to the Exchange Act and
information received from the Company's transfer agent.

Except as indicated in the footnotes to these tables, all
persons listed have sole voting and investment power for all
shares shown as beneficially owned. With respect to each series
of Preferred Stock, only those executive officers and Directors
who beneficially own shares of that series are named in the
tables. Unless otherwise indicated, the address of each person
named in the following tables is c/o OptiMark Holdings, Inc., 10
Exchange Place, 24th Floor, Jersey City, New Jersey 07302.

COMMON STOCK

Number of
Name and Address of Beneficial Owners Shares Percent
- ------------------------------------- ------------ -------

The Nasdaq Stock Market, Inc. 11,250,000(1) 25.6
Ronald D. Fisher 8,270,000(2) 20.2
SOFTBANK Affiliates 8,250,000(2) 20.2
William A. Lupien 5,624,914(3) 17.2
Dow Jones & Company, Inc. 5,459,592(4) 15.3
Richard W. Jones 4,767,427(5) 14.6
American Century Companies, Inc. 2,800,000(6) 8.4
Robert J. Warshaw 460,000(7) 1.4
Neil G. Cohen 34,000(8) *
Matthew L. Morgan 10,000(9) *

All current directors and executive
officers as a group (4 persons) 14,364,914(10) 34.7
_______
* Less than one percent

(1) Represents shares of Common Stock issuable on exercise of
warrants exercisable within 60 days of December 31, 2002. The
address of The Nasdaq Stock Market, Inc. is 1735 K Street, N.W.,
Washington, D.C. 20006.

(2) Represents 4,101,264, 4,030,761, and 117,975 shares of Common
Stock issuable currently on conversion of 4,101,264, 4,030,761,
and 117,975 shares of Series C Preferred Stock held by SOFTBANK
Capital Partners L.P. ("SOFTBANK Partners"), SOFTBANK Capital
L.P. ("SOFTBANK Capital") and SOFTBANK Capital Advisors Fund
L.P. ("SOFTBANK Advisors"), respectively. SOFTBANK Partners,
SOFTBANK Capital and SOFTBANK Advisors are referred to
collectively herein as the "SOFTBANK Affiliates." In addition,
Mr. Fisher's amount includes 20,000 shares of Common Stock which
could be acquired upon exercise of options within 60 days of
December 31, 2002 held by him. Mr. Fisher, a Director of the
Company, is a managing director of the general partner of each
of the SOFTBANK Affiliates. Mr. Fisher disclaims beneficial
ownership of these shares, except to the extent of his pecuniary
interest. The address of the SOFTBANK Affiliates is 1188 Centre
Street, Newton Center, MA 02459.

(3) Includes 4,725,676 shares held jointly by Mr. Lupien and his
spouse, 792,400 shares held by a family partnership controlled
by Mr. Lupien and 52,419 shares held by Mr. Lupien's spouse.
Mr. Lupien disclaims beneficial ownership of the shares held by
his spouse.

(4) Includes 3,157,028 shares of Common Stock issuable currently
on conversion of 789,257 shares of Series A Preferred Stock.
The address of Dow Jones & Company, Inc. is 200 Liberty Street,
New York, NY 10281.

(5) Includes 3,772,047 shares held by a trust of which Mr. Jones
is the trustee and 90,004 shares held in an IRA of which Mr.
Jones is the beneficiary. Mr. Jones' term as a Director of the
Company expired on May 21, 2001. The address of Mr. Jones is
442 S. Marengo Avenue, Pasadena, CA 91101.

(6) Includes 740,000 shares of Common Stock issuable currently on
conversion of 740,000 shares of non-voting Common Stock. The
address of American Century Companies, Inc. is 4500 Main Street,
Kansas City, MO 64141.

(7) Represents 460,000 shares of Common Stock issuable on
exercise of options exercisable within 60 days of December 31,
2002.

(8) Represents 34,000 shares of Common Stock issuable on exercise
of options exercisable within 60 days of December 31, 2002.

(9) Represents 10,000 shares of Common Stock issuable on exercise
of options exercisable within 60 days of December 31, 2002.

(10) Includes 524,000 shares of Common Stock issuable upon
exercise of options exercisable within 60 days of December 31,
2002.

SERIES A CONVERTIBLE PARTICIPATING PREFERRED STOCK

Number of
Name and Address of Beneficial Owners Shares Percent
- ------------------------------------- ---------- -------

Alice L. Walton 136,426(1) 14.7
Dow Jones & Company, Inc. 789,257 85.3
__________

(1) The address of Alice L. Walton is 10587 Highway 281, South
Mineral Wells, TX 76067.

SERIES B CONVERTIBLE PARTICIPATING PREFERRED STOCK

Number of
Name and Address of Beneficial Owners Shares Percent
- ------------------------------------- ----------- -------

Merrill Lynch affiliates 1,500,000(1) 17.5
PaineWebber Capital, Inc. 1,060,000(2) 12.4
Credit Suisse First Boston 1,000,000(3) 11.7
The Goldman Sachs Group, Inc. 1,000,000(4) 11.7
CIBC Wood Gundy Capital Corp. 850,000(5) 10.0
Nihon Keizai Shimbun, Inc. 800,000(6) 9.3
Bankers Trust Investment Partners 500,000(7) 5.8
__________

(1) Represents 750,000 shares held by ML IBK Positions, Inc.,
562,500 shares held by Merrill Lynch KECALP L.P. 1997 and
187,500 shares held by Merrill Lynch KEKALP International L.P.
1997. The address of the Merrill Lynch entities is 250 Vesey
Street, 5th Floor, New York, NY 10281.

(2) The address of PaineWebber Capital, Inc., is 1285 Avenue of
the Americas, 14th Floor, New York, NY 10019.

(3) The address of Credit Suisse First Boston is c/o OptiMark
Investors, Inc. 11 Madison Avenue, 3rd Floor, New York, NY
10004.

(4) The address of The Goldman Sachs Group, Inc. is 85 Broad
Street, 12th Floor, New York, NY 10004.

(5) The address of CIBC Wood Gundy Capital Corp. is 425 Lexington
Avenue, 9th Floor, New York, NY 10017.

(6) The address of Nihon Keizai Shimbun, Inc. is 9-5, Ohtemachi
1-chome, Chiyoda-ku Tokyo 100-0004, Japan.

(7) The address of Bankers Trust Investment Partners is 130
Liberty Street, 24th Floor, New York, New York 10006.

SERIES C CONVERTIBLE PREFERRED STOCK

Number of
Name and Address of Beneficial Owners Shares Percent
- ------------------------------------- ----------- -------

SOFTBANK Affiliates 8,250,000(1) 100
Ronald D. Fisher 8,250,000(1) 100
All directors and executive officers
as a group (1 person) 8,250,000 100
__________

(1) Represents 4,101,264, 4,030,761, and 117,975 shares held by
SOFTBANK Partners, SOFTBANK Capital and SOFTBANK Advisors,
respectively. Each share of Series C Preferred Stock is
convertible into one share of Common Stock. Mr. Fisher, a
Director of the Company, is a managing director of the general
partner of each of these SOFTBANK Affiliates. Mr. Fisher
disclaims beneficial ownership of these shares, except to the
extent of his pecuniary interest.

SERIES D CONVERTIBLE PREFERRED STOCK

Number of
Name and Address of Beneficial Owners Shares Percent
- ------------------------------------- --------- -------
BancBoston Capital 250,000(1) 100
__________

(1) Represents shares held by BancBoston Capital Inc., whose
address is 175 Federal Street, Boston, MA 02110.

SERIES E CUMULATIVE PREFERRED STOCK

Number of
Name and Address of Beneficial Owners Shares Percent
- ------------------------------------- ---------- -------

SOFTBANK Affiliates 973,333(1) 99.0
Ronald D. Fisher 973,333(1) 99.0
All directors and executive officers
as a group (1 person) 983,333 100.0
__________

(1) Represents 486,647 shares held by SOFTBANK Partners, 478,286
shares held by SOFTBANK Capital and 8,400 shares held by
SOFTBANK Advisors. Ronald D. Fisher, a Director of the Company,
is a managing director of the general partner of each of the
SOFTBANK Affiliates. Mr. Fisher disclaims beneficial ownership
of these shares, except to the extent of his pecuniary interest.

SERIES G PREFERRED STOCK

Number of
Name and Address of Beneficial Owners Shares Percent
- ------------------------------------- ---------- -------

Transamerica Technology Finance Co. 249,330(1) 83.1
Linc Equipment Receivables Trust 1999-1 20,820(2) 6.9
Diamond Lease (U.S.A.), Inc. 17,040(3) 5.7
__________

(1) Represents shares held by Transamerica Technology Finance
Co., whose address is 76 Batterson Park Road, Farmington, CT
06032.

(2) Represents shares held by Linc Equipment Receivables Trust
1999-1, whose address is c/o Cash Recovery LLC, 180 N. LaSalle
#3120, Chicago, IL 60601.

(3) Represents shares held by Diamond Lease (U.S.A.), Inc., whose
address is 350 5th Ave., Empire State Building, Suite 616, New
York, NY 10118.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On June 29, 2001, OptiMark and the SOFTBANK Affiliates
entered into a Preferred Stock Purchase Agreement whereby the
SOFTBANK Affiliates agreed to purchase up to an aggregate of
1,000,000 shares of Series E Preferred Stock at a price of
$15.00 per share (as amended on August 16, 2001 and November 16,
2001, the "Series E Preferred Stock Purchase Agreement"). The
purchase of shares took place at approximately one-month
intervals from June 2001 through January 2002. The SOFTBANK
Affiliates purchased 983,333 shares of Series E Preferred Stock
for an aggregate amount of approximately $14,750,000.

On December 31, 2001, OptiMark, Inc. received 200 shares of
Innovations Common Stock in exchange for a cash payment of
$500,000 and 2,000 shares of Innovations Preferred Stock, in
exchange for the transfer to Innovations of the Assets. The
stated value of the Innovations Preferred Stock was the result
of the evaluation by the board of directors of Innovations of
the value of the Assets based, in part, upon preliminary
discussions with independent parties regarding a $10,000,000
investment for a one-third interest in Innovations. The
SOFTBANK Affiliates received 100 shares of Innovations Common
Stock for $250,000 cash. Simultaneously, the SOFTBANK
Affiliates' remaining obligation to purchase shares of Series E
Preferred Stock from OptiMark pursuant to the Series E Preferred
Stock Purchase Agreement was reduced by $250,000. Upon
completion of the transaction, Innovations' aggregate assets
consisted of the Assets and $750,000 in cash.

The Company and the SOFTBANK Affiliates agreed to certain
put and call rights applicable to the SOFTBANK Shares as more
fully described in "Item 1 - Business."

On April 30, 2002, Draper purchased 150 shares of the
Innovations Common Stock for an aggregate cash purchase price of
$375,000. On May 3, 2002, Draper purchased 963 shares of the
Innovations Series B Preferred Stock for an aggregate cash
purchase price of $9,630,000.

During fiscal year 2002, SOFTBANK loaned the Company an
aggregate of $3,470,000. These lending transactions are more
fully described under "Item 7 - Management's Discussion and
Analysis of Financial Condition and Results of Operation -
Liquidity and Capital Resources."

ITEM 14. CONTROLS AND PROCEDURES

(a) Within 90 days prior to the date of the filing of this
report, our principal financial and accounting officer reviewed
and evaluated the effectiveness of the design and operations of
our disclosure controls and procedures, with the participation of
our management. Based on his evaluation, he concluded that our
disclosure controls and procedures are effective and sufficient
to ensure that we record, process, summarize and timely report
information required to be disclosed by the Company under the
Securities Exchange Act of 1934.

(b) There have not been any significant changes in our internal
controls or in other factors that could significantly affect
these controls, including any corrective actions with regard to
significant deficiencies and material weaknesses subsequent to
the date of our most recent evaluation of our internal controls.
Internal controls and procedures are designed with the objective
of providing reasonable assurance that (1) our transactions are
properly authorized; (2) our assets are safeguarded against
unauthorized or improper use; and (3) our transactions are
properly recorded and reported, all to permit the preparation of
our financial statements in conformity with generally accepted
accounting principles.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K

(a) The following documents are filed as part of this
report:

1. FINANCIAL STATEMENTS

Consolidated Financial Statements and Financial Statement
Schedules are contained in the financial statements and
accompanying notes.

2. REPORTS ON FORM 8-K

The Company filed a Current Report on Form 8-K on October 3,
2002, reporting the resignation of Deloitte and Touche LLP
as the Company's auditors and the selection of Goldstein
Golub Kessler LLP as auditors for the year ending December
31, 2002 under Item 4.

3. EXHIBITS

The exhibits listed on the accompanying index to exhibits
immediately following are filed as part of, or incorporated by
reference into, this Form 10-K and are numbered in accordance
with the Exhibit Table of Item 601 of regulation S-K:

EXHIBIT NO. DESCRIPTION
- ----------- -----------

2.1 Agreement and Plan of Merger dated June 12, 2000
(incorporated by reference to Exhibit 2.1 to
Registrant's Registration Statement on Form 10/A-1
(No. 000-30527)).

2.2 Subscription Agreement dated December 31, 2001 between
SOFTBANK Capital Partners LP, SOFTBANK Capital LP,
SOFTBANK Capital Advisors Fund LP and OptiMark
Innovations Inc. (f/k/a OTSH, Inc.) (incorporated by
reference to Exhibit 2.1 to Registrant's Current
Report on Form 8-K dated December 31, 2001 (Commission
File No. 000-30527).

2.3 Subscription Agreement dated December 31, 2001 between
OptiMark, Inc. and OptiMark Innovations Inc. (f/k/a
OTSH, Inc.) (incorporated by reference to Exhibit 2.2
to Registrant's Current Report on Form 8-K dated
December 31, 2001 (Commission File No. 000-30527)).

2.4 Investors' Rights Agreement dated December 31, 2001 by
and among OptiMark Innovations Inc. (f/k/a OTSH,
Inc.), OptiMark Holdings, Inc., OptiMark, Inc.,
SOFTBANK Capital Partners LP, SOFTBANK Capital LP and
SOFTBANK Capital Advisors Fund LP (incorporated by
reference to Exhibit 2.3 to Registrant's Current
Report on Form 8-K dated December 31, 2001 (Commission
File No. 000-30527)).

2.5 Novation to Series E Preferred Stock Purchase
Agreement dated as of June 29, 2001 (as amended on
August 16, 2001 and November 16, 2001), dated December
31, 2001, by and among OptiMark Holdings, Inc.,
SOFTBANK Capital Partners LP, SOFTBANK Capital LP and
SOFTBANK Capital Advisors Fund LP (incorporated by
reference to Exhibit 2.4 to Registrant's Current
Report on Form 8-K dated December 31, 2001 (Commission
File No. 000-30527)).

2.6 Securities Purchase Agreement, dated as of February 4,
2002, by and between The Ashton Technology Group, Inc.
and OptiMark Innovations Inc. (f/k/a OTSH, Inc.)
(incorporated by reference to Exhibit 2.1 to
Registrant's Current Report on Form 8-K dated February
4, 2002 (Commission File No. 000-30527)).

2.7 Amendment No. 1 to Securities Purchase Agreement,
dated as of March 6, 2002, by and between The Ashton
Technology Group, Inc. and OptiMark Innovations Inc.
(f/k/a OTSH, Inc.) (incorporated by reference to
Exhibit 2.2 to Registrant's Current Report on Form 8-K
filed May 23, 2002 (Commission File No, 000-30527)).

2.8 Amendment No. 2 to Securities Purchase Agreement,
dated as of May 3, 2002, by and between The Ashton
Technology Group, Inc. and OptiMark Innovations Inc.
(f/k/a OTSH, Inc.) (incorporated by reference to
Exhibit 2.3 to Registrant's Current Report on Form 8-K
filed May 23, 2002 (Commission File No, 000-30527)).

3.1 Certificate of Incorporation of OptiMark Holdings,
Inc. as amended to December 14, 2001 (incorporated by
reference to Exhibit 3(i) to Registrant's Current
Report on Form 8-K dated December 20, 2001 (Commission
File No. 000-300527)).

3.2 By-Laws of OptiMark Holdings, Inc. (incorporated by
reference to Exhibit 3.2 to Registrant's Registration
Statement on Form 10/A-1 (No. 000-30527)).

4.1 Specimen Common Stock Certificate (incorporated by
reference to Exhibit 4.1 to Registrant's Registration
Statement on Form 10 (No. 000-30527)).

4.2 Specimen Preferred Stock Certificate (incorporated by
reference to Exhibit 4.2 to Registrant's Registration
Statement on Form 10 (No. 000-30527)).

4.3 Series A Preferred Stock Purchase Agreement, dated
August 27, 1996, by and among OptiMark and the parties
named therein (incorporated by reference to Exhibit
4.3 to Registrant's Registration Statement on Form 10
(No. 000-30527)).

4.4 Registration Rights Agreement, dated August 27, 1996,
by and among OptiMark and the parties names therein
(incorporated by reference to Exhibit 4.4 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

4.5 Amendment to Stock Purchase Agreement and Registration
Rights Agreement, dated March 19, 1997, by and among
OptiMark and the parties named therein (incorporated
by reference to Exhibit 4.5 to Registrant's
Registration Statement on Form 10 (No. 000-30527)).

4.6 Amendment to Stock Purchase Agreement, Stockholders
Agreement and Registration Rights Agreement, dated May
29, 1997, by and among OptiMark and the parties named
therein (incorporated by reference to Exhibit 4.6 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

4.7 Amendment to Series A Registration Rights Agreement,
dated January 1999, by and among OptiMark and the
parties named therein (incorporated by reference to
Exhibit 4.7 to Registrant's Registration Statement on
Form 10 (No. 000-30527)).

4.8 Series B Preferred Stock Purchase Agreement, dated
December 22, 1998, by and among OptiMark and parties
named therein (incorporated by reference to Exhibit
4.8 to Registrant's Registration Statement on Form 10
(No. 000-30527)).

4.9 Registration Rights Agreement, dated April 23, 1998,
by and among OptiMark and the parties named therein
(incorporated by reference to Exhibit 4.9 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

4.10 Series C Preferred Stock Purchase Agreement, dated
June 11, 1999, by and among OptiMark and the parties
named therein (incorporated by reference to Exhibit
4.10 to Registrant's Registration Statement on Form 10
(No. 000-30527)).

4.11 Registration Rights Agreement, dated July 26, 1999, by
and among OptiMark and the parties named therein
(incorporated by reference to Exhibit 4.11 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

4.12 Series D Preferred Stock Purchase Agreement, dated
July 30, 1999, by and between OptiMark and BancBoston
Capital Inc. (incorporated by reference to Exhibit
4.12 to Registrant's Registration Statement on Form 10
(No. 000-30527)).

4.13 Registration Rights Agreement dated, July 30, 1999, by
and between OptiMark and BancBoston Capital Inc.
(incorporated by reference to Exhibit 4.13 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

4.14 Registration Rights Agreement, dated September 19,
1998, by and between OptiMark and The NASDAQ Stock
Market, Inc. (incorporated by reference to Exhibit
4.14 to Registrant's Registration Statement on Form 10
(No. 000-30527)).

4.15 Amended and Restated Stockholders Agreement, dated
April 23, 1998, by and among OptiMark and the parties
named therein (incorporated by reference to Exhibit
4.15 to Registrant's Registration Statement on Form 10
(No. 000-30527)).

4.16 Series E Preferred Stock Purchase Agreement, dated as
of June 29, 2001, by and among OptiMark Holdings, Inc.
and the entities set forth in the Schedule of
Purchasers thereto (incorporated by reference to
Exhibit 4.1 to Registrant's Quarterly Report on Form
10-Q for the period ended June 30, 2001 (Commission
File No. 000-30527)).

4.17 Registration Rights Agreement, dated as of June 29,
2001, by and among OptiMark Holdings, Inc. and the
holders of Series E Cumulative Preferred Stock
(incorporated by reference to Exhibit 4.2 to
Registrant's Quarterly Report on Form 10-Q for the
period ended June 30, 2001 (Commission File No. 000-
30527)).

4.18 Amendment to the Series E Preferred Stock Purchase
Agreement, dated as of August 16, 2001, by and among
OptiMark Holdings, Inc. and the entities set forth in
the Schedule of Purchasers thereto (incorporated by
reference to Exhibit 4.1 to Registrant's Quarterly
Report on Form 10-Q for the period ended September 30,
2001 (Commission File No. 000-30527)).

4.19 Amendment to the Registration Rights Agreement, dated
as of August 16, 2001, by and among OptiMark Holdings,
Inc. and the holders of Series E Cumulative Preferred
Stock (incorporated by reference to Exhibit 4.2 to
Registrant's Quarterly Report on Form 10-Q for the
period ended September 30, 2001 (Commission File No.
000-30527)).

4.20 Loan Agreement, dated as of March 21, 2002, by and
among OptiMark Holdings, Inc., SOFTBANK Capital
Partners LP, SOFTBANK Capital LP and SOFTBANK Capital
Advisors Fund LP (incorporated by reference to Exhibit
4.1 to Registrant's Current Report on Form 8-K filed
April 30, 2002 (Commission File No. 000-30527)).

4.21 Promissory Note, dated March 21, 2002, of OptiMark
Holdings, Inc. in favor of SOFTBANK Capital Partners
LP in the principal amount of $249,990 (incorporated
by reference to Exhibit 4.2 to Registrant's Current
Report on Form 8-K filed April 30, 2002 (Commission
File No. 000-30527)).

4.22 Promissory Note, dated March 21, 2002, of OptiMark
Holdings, Inc. in favor of SOFTBANK Capital LP in the
principal amount of $245,695 (incorporated by
reference to Exhibit 4.3 to Registrant's Current
Report on Form 8-K filed April 30, 2002 (Commission
File No. 000-30527)).

4.23 Promissory Note, dated March 21, 2002, of OptiMark
Holdings, Inc. in favor of SOFTBANK Capital Advisors
Fund LP in the principal amount of $4,315
(incorporated by reference to Exhibit 4.4 to
Registrant's Current Report on Form 8-K filed April
30, 2002 (Commission File No. 000-30527)).

4.24 Loan Agreement, dated as of April 11, 2002, by and
among OptiMark Holdings, Inc., SOFTBANK Capital
Partners LP, SOFTBANK Capital LP and SOFTBANK Capital
Advisors Fund LP (incorporated by reference to Exhibit
4.5 to Registrant's Current Report on Form 8-K filed
April 30, 2002 (Commission File No. 000-30527)).

4.25 Promissory Note, dated April 11, 2002, of OptiMark
Holdings, Inc. in favor of SOFTBANK Capital Partners
LP in the principal amount of $284,989 (incorporated
by reference to Exhibit 4.6 to Registrant's Current
Report on Form 8-K filed April 30, 2002 (Commission
File No. 000-30527)).

4.26 Promissory Note, dated April 11, 2002, of OptiMark
Holdings, Inc. in favor of SOFTBANK Capital LP in the
principal amount of $280,092 (incorporated by
reference to Exhibit 4.7 to Registrant's Current
Report on Form 8-K filed April 30, 2002 (Commission
File No. 000-30527)).

4.27 Promissory Note, dated April 11, 2002, of OptiMark
Holdings, Inc. in favor of SOFTBANK Capital Advisors
Fund LP in the principal amount of $4,919
(incorporated by reference to Exhibit 4.8 to
Registrant's Current Report on Form 8-K filed April
30, 2002 (Commission File No. 000-30527)).

4.28 Investors' Rights Agreement, dated as of May 3, 2002,
by and between The Ashton Technology Group, Inc. and
OptiMark Innovations Inc. (incorporated by reference
to Exhibit 4.1 to Registrant's Current Report on Form
8-K filed May 23, 2002 (Commission File No, 000-
30527)).

4.29 Amended and Restated Investors' Rights Agreement,
dated May 3, 2002, by and between OptiMark Innovations
Inc., Draper Fisher Jurvetson ePlanet Ventures, L.P.,
Draper Fisher Jurvetson ePlanet Partners Fund, L.L.C.,
Draper Fisher Jurvetson ePlanet Ventures GmbH & Co.
KG, SOFTBANK Capital Partners LP, SOFTBANK Capital LP
and SOFTBANK Capital Advisors Fund LP (incorporated by
reference to Exhibit 4.2 to Registrant's Current
Report on Form 8-K filed May 23, 2002 (Commission File
No, 000-30527)).

4.30 Senior Secured Convertible Note of The Ashton
Technology Group, Inc. in favor of OptiMark
Innovations Inc., dated May 3, 2002 (incorporated by
reference to Exhibit 4.3 to Registrant's Current
Report on Form 8-K filed May 23, 2002 (Commission File
No, 000-30527)).

4.31 Loan Agreement, dated as of November 27, 2002, by
and among OptiMark Holdings, Inc., SOFTBANK Capital
Partners LP, SOFTBANK Capital LP and SOFTBANK Capital
Advisors Fund LP with respect to Loan of $750,000
(incorporated by reference to Exhibit 10.3 to
Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2002 filed December 19, 2002
(Commission File No. 000-30527)).

4.32 Loan Agreement, dated as of May 31, 2002, by and
among OptiMark Holdings, Inc., SOFTBANK Capital
Partners LP, SOFTBANK Capital LP and SOFTBANK Capital
Advisors Fund LP with respect to loan of $1,650,000.

4.33 Loan Agreement, dated as of February 3, 2003, by
and among OptiMark Holdings, Inc., SOFTBANK Capital
Partners LP, SOFTBANK Capital LP and SOFTBANK Capital
Advisors Fund LP with respect to $940,000 loan
(incorporated by reference to Exhibit 10.1 to Registrant's
Current Report on Form 8-K filed March 12, 2003
(Commission File No. 000-30527)).

4.34 Promissory Note from Robert J. Warshaw to OptiMark,
Inc. dated May 31, 2002 in the principal amount of
$45,000.

10.1 OptiMark 1999 Stock Plan (adopted November 29, 1999)
(incorporated by reference to Exhibit 10.5(a) to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

10.2 Amendment No. 1 to OptiMark 1999 Stock Plan
(incorporated by reference to Exhibit 10.5(b) to
Registrant's Registration Statement on Form 10/A-1
(No. 000-30527)).

10.3 Amendment No. 2 to OptiMark 1999 Stock Plan
(incorporated by reference to Exhibit 10.5(c) to
Registrant's Amendment No. 2 to Annual Report on Form
10-K for the year ended December 31, 2000 (Commission
File No. 000-30527)).

10.4 OptiMark Stock Option Plan (Amended & Restated January
27, 1999) (incorporated by reference to Exhibit 10.6
to Registrant's Registration Statement on Form 10 (No.
000-30527)).

10.5 Form of Stock Option Agreement (1999 Stock Plan)
(incorporated by reference to Exhibit 10.7 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

10.6 Form of Stock Option Agreement (Amended and Restated
Stock Option Plan) (incorporated by reference to
Exhibit 10.8 to Registrant's Registration Statement on
Form 10 (No. 000-30527)).

10.7 Form of Amendment No. 1 to Stock Option Agreements
(incorporated by reference to Exhibit 10.8(b) to
Registrant's Amendment No. 2 to Annual Report on Form
10-K for the year ended December 31, 2000 (Commission
File No. 000-30527)).

10.8 Form of Non-Employee Director Option
Agreement(incorporated by reference to Exhibit 10.9 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

10.9 Employment, Trade Secret and Non-Competition
Agreement, dated August 27, 1996, by and between
OptiMark and William A. Lupien (incorporated by
reference to Exhibit 10.11 to Registrant's
Registration Statement on Form 10 (No. 000-30527)).

10.10 Severance Agreement dated January 5, 2001 by and
between John T. Rickard and OptiMark, Inc.
(incorporated by reference to Exhibit 10.12(b) to
Registrant's Amendment No. 2 to Annual Report on Form
10-K for the year ended December 31, 2000 (Commission
File No. 000-30527)).

10.11 Consulting Agreement dated January 15, 2001 by and
among Orincon Industries, Inc., John T. Rickard and
OptiMark, Inc. (incorporated by reference to Exhibit
10.12(c) to Registrant's Amendment No. 2 to Annual
Report on Form 10-K for the year ended December 31,
2000 (Commission File No. 000-30527)).

10.12 Restricted Stock Purchase Agreement, dated December 1,
1998, by and between OptiMark and Phillip J. Riese
(incorporated by reference to Exhibit 10.14 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

10.13 Stock Purchase Agreement, dated December 18, 1998, by
and between OptiMark and Phillip J. Riese
(incorporated by reference to Exhibit 10.15 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

10.14+ Services Agreement, dated January 1, 1999, by and
between OptiMark and ISM Information Systems
Management Corporation (incorporated by reference to
Exhibit 10.18 to Registrant's Registration Statement
on Form 10/A-1 (No. 000-30527)).

10.15+ OptiMark/IBM Ops Agreement, dated February 2, 1999, by
and between OptiMark and the parties named therein
(incorporated by reference to Exhibit 10.19 to
Registrant's Registration Statement on Form 10/A-1
(No. 000-30527)).

10.16 License Termination Agreement, dated March 19, 1999,
by and between OptiMark and High Performance Markets,
Ltd. (incorporated by reference to Exhibit 10.21 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

10.17 Common Stock Purchase Warrant, dated August 27, 1996,
in favor of The Pacific Exchange, Inc. (incorporated
by reference to Exhibit 10.22 to Registrant's
Registration Statement on Form 10 (No. 000-30527)).

10.18 Common Stock Purchase Warrant, dated December 31,
1996, in favor of The Chicago Board Options Exchange,
Inc. (incorporated by reference to Exhibit 10.23 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

10.19 Common Stock Purchase Warrant, dated April 23, 1998,
in favor of Virginia Surety Company, Inc.
(incorporated by reference to Exhibit 10.24 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

10.20 Common Stock Purchase Warrant, dated June 19, 1998, in
favor of Transamerica Business Credit Corporation
(incorporated by reference to Exhibit 10.25 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

10.21 Common Stock Purchase Warrant, dated August 24, 1998,
by and between OptiMark and Francis X. Egan
(incorporated by reference to Exhibit 10.26 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

10.22 NASDAQ Warrant Agreement, dated September 1, 1998, by
and between OptiMark and The NASDAQ Stock Market, Inc.
(incorporated by reference to Exhibit 10.27 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

10.23 Common Stock Purchase Warrant, dated January 27, 1999,
by and between OptiMark and BIOS Group LP
(incorporated by reference to Exhibit 10.28 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

10.24 Warrant Agreement, dated October 27, 1999, by and
between OptiMark and Knight/Trimark Group, Inc.
(incorporated by reference to Exhibit 10.29 to
Registrant's Registration Statement on Form 10 (No.
000-30527)).

10.25+ Development, Subcontract, and Operations Agreement,
dated May 17, 1999, by and among OptiMark, Inc. and
Japan OptiMark Systems, Inc., as amended (incorporated
by reference to Exhibit 10.31) to Registrant's
Amendment No. 2 to Annual Report on Form 10-K for the
year ended December 31, 2000 (Commission File No. 000-
30527)).

10.26 Letters, dated May 23, 2001, amending OptiMark, Inc.'s
agreement with Japan OptiMark Systems, Inc.
(incorporated by reference to Exhibit 9.1 to
Registrant's Quarterly Report on Form 10-Q for the
period ended June 30, 2001 (Commission File No. 000-
30527)).

10.27 Employment Agreement, dated August 16, 2001, by and
between OptiMark Holdings, Inc. and Robert J. Warshaw
(incorporated by reference to Exhibit 10.1 to
Registrant's Quarterly Report on Form 10-Q for the
period ended September 30, 2001 (Commission File No.
000-30527)).

10.28 Amendment No.1 to Employment Agreement, dated August
16, 2001, by and between OptiMark Holdings, Inc. and
Robert J. Warshaw (incorporated by reference to
Exhibit 10.2 to Registrant's Quarterly Report on Form
10-Q for the period ended September 30, 2001
(Commission File No. 000-30527)).

10.29 Separation Agreement, dated August 15, 2001, by and
between OptiMark, Inc. and James G. Rickard
(incorporated by reference to Exhibit 10.3 to
Registrant's Quarterly Report on Form 10-Q for the
period ended September 30, 2001 (Commission File No.
000-30527)).

10.30 OptiMark Holdings, Inc. 2001 Series F Preferred Stock
Plan (incorporated by reference to Registrant's
Registration Statement on Form S-8 (No. 333-73356)).

10.31 Second Amended and Restated Promissory Note, dated
October 12, 2002, executed by OptiMark Holdings, Inc.
in favor of Robert J. Warshaw (incorporated by
reference to Exhibit 10.31 to Registrant's Annual
Report on Form 10-K for the year ended December 31,
2001 (Commission File No. 000-30527)).

10.32 Employment Letter, dated June 19, 2001, from OptiMark,
Inc. to Neil G. Cohen (incorporated by reference to
Exhibit 10.32 to Registrant's Annual Report on Form
10-K for the year ended December 31, 2001 (Commission
File No. 000-30527)).

10.33 Employee Agreement, dated December 1, 2002, by and
between OptiMark, Inc. and James Pak (incorporated by
reference to Exhibit 10.33 to Registrant's Annual
Report on Form 10-K for the year ended December 31,
2001 (Commission File No. 000-30527)).

10.34 Employment Letter, dated April 9, 2001, from OptiMark,
Inc. to Trevor B. Price (incorporated by reference to
Exhibit 10.34 to Registrant's Annual Report on Form
10-K for the year ended December 31, 2001 (Commission
File No. 000-30527)).

10.35 Employee Agreement, dated May 16, 2001, by and between
OptiMark, Inc. and Trevor B. Price (incorporated by
reference to Exhibit 10.35 to Registrant's Annual
Report on Form 10-K for the year ended December 31,
2001 (Commission File No. 000-30527)).

10.36 Amendment to Employee Agreement, dated June 19, 2001,
by and between OptiMark, Inc. and Trevor B. Price
(incorporated by reference to Exhibit 10.36 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 2001 (Commission File No. 000-
30527)).

10.37 Employment Letter, dated April 17, 2001, by and
between OptiMark, Inc. and Gary Meshell (incorporated
by reference to Exhibit 10.37 to Registrant's Annual
Report on Form 10-K for the year ended December 31,
2001 (Commission File No. 000-30527)).

10.38 Employee Agreement, dated May 15, 2001, by and between
OptiMark, Inc. and Gary B. Meshell (incorporated by
reference to Exhibit 10.38 to Registrant's Annual
Report on Form 10-K for the year ended December 31,
2001 (Commission File No. 000-30527)).

10.39 Amendment to Employee Agreement, dated June 19, 2001,
by and between OptiMark, Inc. and Gary B. Meshell
(incorporated by reference to Exhibit 10.39 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 2001 (Commission File No. 000-
30527)).

10.40 Separation Agreement, dated February 16, 2002, by and
between OptiMark, Inc. and Gary B. Meshell
(incorporated by reference to Exhibit 10.40 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 2001 (Commission File No. 000-
30527)).

10.41 Employment Letter, dated January 16, 2002, from
OptiMark, Inc. to James Pak (incorporated by reference
to Exhibit 10.41 to Registrant's Annual Report on Form
10-K for the year ended December 31, 2001 (Commission
File No. 000-30527)).

21.1 Subsidiaries of OptiMark Holdings, Inc. (incorporated
by reference to Exhibit 21.1 to Registrant's Annual
Report on Form 10-K for the year ended December 31,
2001 (Commission File No. 000-30527)).

23.1 Consent of Deloitte & Touche LLP dated April 23, 2003.

+ Confidential treatment has been requested for certain
confidential portions of this exhibit pursuant to Rule 24b-2
under the Exchange Act. In accordance with Rule 24b-2, these
confidential portions have been omitted from this exhibit and
filed separately with the Commission.

SIGNATURES

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

OPTIMARK HOLDINGS, INC.

/s/ Robert J. Warshaw
Dated April ____, 2003 By:__________________________
Name: Robert J. Warshaw
Title: Chief Executive Officer,
Principal Financial and
Accounting Officer

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

/s/ Robert J. Warshaw
Dated April ____, 2003 By:__________________________
Name: Robert J. Warshaw
Title: Chief Executive Officer,
Director and Principal Financial
and Accounting Officer

/s/ William A. Lupien
By:__________________________
Name: William A. Lupien
Title: Chairman

/s/ Ronald D. Fisher
By:__________________________
Name: Ronald D. Fisher
Title: Director

CERTIFICATION
BY PRINCIPAL EXECUTIVE AND
FINANCIAL OFFICER
PURSUANT TO RULE 13a-14

I, Robert J. Warshaw, Certify that:

1. I have reviewed this annual report on Form 10-K of
Optimark Holdings, Inc.;

2. Based on my knowledge, this annual report does not
contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and
other financial information included in this annual report,
fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report;

4. I am responsible for establishing and maintaining
disclosure controls and procedures (as defined in the Securities
Exchange Act of 1934 Rules 13a-14 and 15d-14) for the registrant
and have:

(a) designed such disclosure controls and procedures
to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to me by
others within those entities, particularly during the period in
which this annual report is being prepared;

(b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this annual report (the "Evaluation
Date"); and

(c) presented in this annual report my conclusions
about the effectiveness of the disclosure controls and
procedures based on my evaluation as of the Evaluation Date.

5. I have disclosed, based on my most recent evaluation,
to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the
equivalent functions):

(a) all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's auditors
any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls.

6. I have indicated in this annual report whether there
were any significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of my most recent evaluation, including
any corrective actions with regard to significant deficiencies
and material weaknesses.

Date: April , 2003

/s/ Robert J. Warshaw
_______________________________
Robert J. Warshaw
Chief Executive Officer,
Director and Principal Financial
and Accounting Officer

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
OptiMark Holdings, Inc.
New York, New York

We have audited the accompanying consolidated balance sheet of
OptiMark Holdings, Inc. and subsidiaries as of December 31,
2002, and the related consolidated statements of operations and
comprehensive loss, cash flows, and stockholders' deficiency for
the year then ended. These financial statements are the
responsibility of the company's management. Our responsibility
is to express an opinion on these financial statements based
on our audit.

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

In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Optimark Holdings, Inc. and subsidiaries as of
December 31, 2002, and the results of their operations and their
cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States of America.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in Note 2 to the financial statements, the Company's
recurring losses from operations and stockholders' capital
deficiency raise substantial doubt about its ability to continue
as a going concern. Management's plans concerning these matters
are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of
this uncertainty.

/s/ GOLDSTEIN GOLUB KESSLER LLP

New York, New York
March 25, 2003

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
OptiMark Holdings, Inc.
New York, New York

We have audited the accompanying consolidated balance sheet of
OptiMark Holdings, Inc. and subsidiaries (the "Company") as of
December 31, 2001, and the related consolidated statements of
operations and comprehensive loss, stockholders' equity
(deficiency), and cash flows for each of the two years in the
period ended December 31, 2001. These financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the
Company as of December 31, 2001, and the results of its
operations and its cash flows for each of the two years in the
period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note 2 to the financial statements, the Company's recurring
losses from operations and stockholders' capital deficiency raise
substantial doubt about its ability to continue as a going
concern. Management's plans concerning these matters are also
described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.

/s/ DELOITTE & TOUCHE LLP

New York, New York
May 31, 2002

OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2002 December 31, 2001
----------------- -----------------

ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................ $ 135,668 $ 1,624,017
Accounts receivable, less allowance for doubtful
accounts of $0 at 2002 and $73,002 at 2001......... 95,808 774,180
Other current assets................................. 67,090 446,911
------------ ------------
Total current assets........................... 298,566 2,845,108

PROPERTY AND EQUIPMENT - NET........................... 22,692 1,381,435

SOFTWARE LICENSES - NET................................ - 59,347

OTHER ASSETS........................................... 284,033 837,072
------------ ------------
TOTAL ASSETS........................................... $ 605,291 $ 5,122,962
============ ============

LIABILITIES, MANDATORILY REDEEMABLE STOCK
AND STOCKHOLDERS' DEFICIENCY
LIABILITIES:
CURRENT LIABILITIES:
Accounts payable and accrued liabilities......... $ 711,429 $ 678,901
Accrued compensation............................. 229,024 1,141,246
Loan payable..................................... 682,003 -
Net liabilities of discontinued
operations (Note 3).............................. 13,460,791 13,816,260
Other current liabilities........................ 104,851 879,842
------------ -----------
TOTAL CURRENT LIABILITIES...................... 15,188,098 16,516,249

COMMITMENTS AND CONTINGENCIES:
(Notes 10 and 15)

MANDATORILY REDEEMABLE STOCK:
Series E preferred stock, convertible, $0.01 par value;
1,000,000 shares authorized; 983,335 and
926,665 issued and outstanding at December 31, 2002
and December 31, 2001, respectively................ 14,437,427 13,630,854
Series F preferred stock, $0.01 par value;
7,400,000 shares authorized and no shares issued
and outstanding at December 31, 2002............... - -
Series G preferred stock, $0.01 par value;
300,000 shares authorized, issued and outstanding.. 3,000 3,000
------------ -----------
TOTAL MANDATORILY REDEEMABLE STOCK........... 14,440,427 13,633,854

STOCKHOLDERS' DEFICIENCY:
Preferred stock, authorized and unissued 8,577,932
Series A preferred stock, convertible
and participating, $0.01 par value; 3,222,068
shares authorized; 925,683 shares issued and
outstanding at December 31, 2002 and December 31,
2001, respectively................................. 9,257 9,257
Series B preferred stock, convertible, $0.01 par value;
11,000,000 shares authorized; 8,570,000 and
10,820,000 shares issued and outstanding at December
31, 2002 and December 31, 2001, respectively....... 85,700 108,200
Series C preferred stock, convertible, $0.01 par value;
8,250,000 shares authorized, issued and outstanding
at December 31, 2002 and December 31, 2001......... 82,500 82,500
Series D preferred stock, convertible, $0.01 par value;
250,000 shares authorized, issued and outstanding
at December 31, 2002 and December 31, 2001......... 2,500 2,500
Common stock, $0.01 par value; 150,000,000 shares
authorized; issued 36,612,057 shares at December 31,
2002 and December 31, 2001, respectively, of which
3,242,644 shares are held as treasury stock at
December 31, 2002 and December 31, 2001............ 366,126 366,126
Warrants, common stock............................... 35,686,523 35,686,523
Additional paid-in capital........................... 310,074,976 301,687,065
Accumulated deficit.................................. (375,247,045) (362,906,807)
Accumulated other comprehensive income............... (83,770) (62,504)
Treasury stock, at cost; 3,242,644 shares at December
31, 2002 and December 31, 2001, respectively....... (1) (1)
------------- -------------
TOTAL STOCKHOLDERS' DEFICIENCY.................. (29,023,234) (25,027,141)
------------- -------------
TOTAL LIABILITIES, MANDATORILY REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS' DEFICIENCY..................... $ 605,291 $ 5,122,962

The accompanying notes and independent auditor's report should
be read in conjunction with the consolidated financial
statements.

OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000

2002 2001 2000
-----------------------------------------

REVENUE:
Revenue....................................... $ 706,118 $ 8,607,881 $ 3,549,999
Revenue from affiliate........................ - 2,817,841 11,684,064
Total revenue........................... 706,118 11,425,722 15,234,063

EXPENSES:
Cost of sales................................. - 6,416,634 8,255,553
Sales and marketing........................... 395,053 1,738,235 1,893,389
Research and development...................... 1,860,949 5,841,592 3,459,558
General and administrative.................... 3,212,804 9,121,735 9,600,923
Depreciation and amortization................. 797,612 4,034,887 3,949,551
Impairment of fixed assets.................... 566,464 1,146,656 1,878,961
Write off of intangible asset................. - - 23,940,000
Restructuring expense......................... - 315,613 292,634
Warrant compensation expense.................. - - 14,542
Total operating expenses................ 6,832,882 28,615,352 53,285,111
------------ ------------ -------------
OTHER (INCOME) EXPENSE:
Interest income............................... (9,335) (51,024) (1,518,932)
Interest expense.............................. 1,842,123 121,368 312,500
Writedown of investment....................... 2,062,125 499,991 -
Gain on recovery of investment................ - (530,000) -
Equity in loss of investee.................... 2,129,300 - -
------------ ------------ -------------
Total other expense (income)............ 6,024,213 40,335 (1,206,432)
------------ ------------ -------------

LOSS FROM CONTINUING OPERATIONS................. (12,150,977) (17,229,965) (36,844,616)

DISCONTINUED OPERATIONS:
Loss from discontinued operations............. - - (51,205,297)
Gain (loss) on disposal of discontinued operations (189,261) (12,306,451) (16,036,155)
------------ ------------ -------------
Gain (loss) from discontinued operations...... (189,261) (12,306,451) (67,241,452)
------------ ------------ -------------

NET LOSS........................................ (12,340,238) (29,536,416) (104,086,068)

OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustments...... (21,266) (53,410) 27,817
------------ ------------ -------------

COMPREHENSIVE LOSS.............................. $(12,361,504) $(29,589,826) $(104,058,251)
------------ ------------ -------------

LOSS PER SHARE - BASIC AND DILUTED:
Continuing operations......................... $ (0.36) $ (0.49) $ (1.00)
Discontinued operations....................... (0.01) (0.36) (1.84)
----------- ----------- -----------
Basic and diluted loss per share.............. $ (0.37) $ (0.85) $ (2.84)
=========== =========== ===========

Weighted average number of common
shares outstanding - basic and diluted...... 33,369,913 35,004,561 36,603,854
----------- ----------- -----------

The accompanying notes and independent auditor's report should
be read in conjunction with the consolidated financial
statements.

OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000

2002 2001 2000
---------------------------------------------

CASH FLOWS FROM CONTINUING OPERATING ACTIVITIES
Net loss.................................................. $(12,340,238) $(29,536,416) $(104,086,068)
Deduct loss from discontinued operations.................. (189,261) (12,306,451) (67,241,452)
------------ ------------ -------------
Loss from continuing operations........................... (12,150,977) (17,229,965) (36,844,616)
Adjustments to reconcile net loss from continuing
operations to net cash used in continuing operations:
Value assigned to warrants issued as compensation..... - - 14,542
Value assigned to options in connection
with restructuring.................................. - - 1,890,315
Value assigned to preferred shares issued in
connection with settlement.......................... - 3,000 -
Depreciation and amortization......................... 797,612 4,034,887 3,949,551
Non-cash loan repayment............................... (500,000) - -
Equity in loss of unconsolidated subsidiary........... 2,129,300 - -
Write off of intangible asset......................... - - 23,940,000
Write-down of investment.............................. - 499,991 -
Gain on recovery of investment........................ - (530,000) -
Allowance for doubtful accounts....................... - 73,002 -
Impairment of fixed assets............................ 566,464 1,146,656 1,878,961
Non-cash interest expense............................. 1,831,888 - -
Loss on equity investment............................. 2,062,125 - -
(Gain)/Loss on disposal of assets..................... (400,441) 39,773 171,484
Changes in operating assets and liabilities:
Receivables........................................... 678,372 1,519,231 (1,844,833)
Other assets.......................................... 1,032,140 805,055 425,318
Accounts payable and accrued liabilities.............. (900,960) (1,243,163) 598,200
Accrued restructuring................................. - - (1,360,761)
Other liabilities..................................... (774,991) (179,844) 580,774
------------ ------------ -------------
Net cash used in continuing operating activities.......... (5,629,468) (11,061,377) (6,601,065)
------------ ------------ -------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment....................... (27,000) (503,582) (857,707)
Purchase of software licenses............................. - (204,560) (293,331)
Proceeds from disposal of assets.......................... 481,456 12,520 57,060
------------ ------------ -------------
Net cash used in investing activities................. 454,456 (695,622) (1,093,978)
------------ ------------ -------------

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of preferred stock............. 806,572 9,630,854 -
Proceeds from stockholders' notes......................... 3,470,000 4,000,000 -
Payments on capital leases................................ - (249,437) (1,403,351)
Proceeds from the issuance of minority interest........... - 250,000 -
Proceeds from recovery of investment...................... - 530,000 -
Payments for issuance costs............................... (42,677) - -
Payments for purchases of preferred stock................. (2,502) (2) -
Proceeds from exercise of options for common stock........ - - 205,864
------------ ------------ -------------
Net cash provided by (used in) financing activities... 4,231,393 14,161,415 (1,197,487)
------------ ------------ -------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ (943,619) 2,404,416 (8,892,530)

NET CASH USED IN DISCONTINUED OPERATIONS.................... (544,730) (3,699,947) (50,825,332)

CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR............ 1,624,017 2,919,548 62,637,410
------------ ------------ -------------

CASH AND CASH EQUIVALENTS, END OF THE YEAR.................. $ 135,668 $ 1,624,017 $ 2,919,548
============ ============ =============

Supplemental disclosure of cash flow information:
Cash payments for interest - continuing operations........ $ 10,325 $ 121,368 $ 317,249
Cash payments for interest - discontinued operations...... - - 406,063

Non-cash financing activities:
Conversion of stockholders' notes to Series E preferred stock $ - $ 4,000,000 -

Supplemental schedule of non-cash investing and
financing activities:
Net reduction in vendor obligations....................... - - $ 2,619,608

The accompanying notes and independent auditor's report should
be read in conjunction with the consolidated financial
statements.

OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES
STOCKHOLDERS' EQUITY (DEFICIENCY)
PERIOD ENDED DECEMBER 31, 2002

Series A Series B Series C Series D
Convertible Convertible Convertible Convertible
Preferred Stock Preferred Stock Preferred Stock Preferred Stock
Shares Amount Shares Amount Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------

BALANCE, JANUARY 1, 2000 3,472,068 34,721 11,000,000 110,000 8,250,000 82,500 250,000 2,500

Retirement of Treasury Stock (250,000) (2,500)

Warrants forfeited

Options exercised

Restructuring charge

Net loss

Other comprehensive loss
--------------------------------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2000 3,222,068 32,221 11,000,000 110,000 8,250,000 82,500 250,000 2,500

Purchase of Preferred Shares (2,296,385) (22,964) (180,000) (1,800)

Purchase of Common Shares

Net loss

Other comprehensive loss
--------------------------------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2001 925,683 9,257 10,820,000 108,200 8,250,000 82,500 250,000 2,500

Legal fees in connection with
Softbank loan

Disposal of majority interest

Enhancement of equity investment

Purchase of Preferred Shares (2,250,000) (22,500)

Beneficial conversion feature
of loans

Non cash loan repayment

Net loss

Other comprehensive loss
--------------------------------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2002 925,683 $9,257 8,570,000 $85,700 8,250,000 $82,500 250,000 $2,500

OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES
STOCKHOLDERS' EQUITY (DEFICIENCY)
PERIOD ENDED DECEMBER 31, 2002

Common Stock
---------------------------------------------------------------------------------------
Voting Non-Voting Total
Shares Amount Shares Amount Shares Amount
---------------------------------------------------------------------------------------

BALANCE, JANUARY 1, 2000 35,756,057 357,561 740,000 7,400 36,496,057 364,961

Retirement of Treasury Stock

Warrants forfeited

Options exercised 116,500 1,165 116,500 1,165

Restructuring charge

Net loss

Other comprehensive loss
--------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2000 35,872,557 358,726 740,000 7,400 36,612,557 366,126

Purchase of Preferred Shares

Purchase of Common Shares

Net loss

Other comprehensive loss
---------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2001 35,872,557 358,726 740,000 7,400 36,612,557 366,126

Legal fees in connection with
Softbank loan

Disposal of majority interest

Enhancement of equity investment

Purchase of Preferred Shares

Beneficial conversion feature
of loans

Non cash loan repayment

Net loss

Other comprehensive loss
--------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2002 35,872,557 $358,726 740,000 $7,400 36,612,557 $366,126
======================================================================================

OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES
STOCKHOLDERS' EQUITY (DEFICIENCY)
PERIOD ENDED DECEMBER 31, 2002

Common Stock
Warrants Additional Notes
---------------------------- Paid-In Accumulated Receivable-
Shares Amount Capital Deficit Officer
-----------------------------------------------------------------------------

BALANCE, JANUARY 1, 2000 46,389,819 35,686,523 309,564,789 (229,284,323) -

Retirement of Treasury Stock (9,997,500)

Warrants forfeited (124,000)

Options exercised 204,699

Restructuring charge 1,890,315

Net loss (104,086,068)

Other comprehensive loss
-----------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2000 46,265,819 35,686,523 301,662,303 (333,370,391) -

Purchase of Preferred Shares 24,762

Purchase of Common Shares

Net loss (29,536,416)

Other comprehensive loss
-----------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2001 46,265,819 35,686,523 301,687,065 (362,906,807) -

Legal fees in connection with
Softbank loan (42,677)

Disposal of majority interest 4,290,705

Enhancement of equity investment 944,800

Purchase of Preferred Shares 19,998

Beneficial conversion feature
of loans 2,302,000

Non cash loan repayment 1,433,150

Net loss (12,340,238)

Other comprehensive loss
-----------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2002 46,265,819 $35,686,523 310,635,041 $(375,247,045) $ -
=============================================================================

OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES
STOCKHOLDERS' EQUITY (DEFICIENCY)
PERIOD ENDED DECEMBER 31, 2002

Treasury Stock
------------------------------------------------------ Accumulated
Series A Series A Other Total
Preferred Preferred Common Common Comprehensive Stockholders'
Shares Amount Shares Amount Loss Equity
-------------------------------------------------------------------------------------

BALANCE, JANUARY 1, 2000 (250,000) (10,000,000) - - (36,911) 106,524,760

Retirement of Treasury Stock 250,000 10,000,000 -

Warrants forfeited -

Options exercised 205,864

Restructuring charge 1,890,315

Net loss (104,086,068)

Other comprehensive loss 27,817 27,817
-------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2000 - - - - (9,094) 4,562,688

Purchase of Preferred Shares (2)

Purchase of Common Shares (3,242,644) (1) (1)

Net loss (29,536,416)

Other comprehensive loss (53,410) (53,410)
--------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2001 - - (3,242,644) (1) $(62,504) $(25,027,141)

Legal fees in connection with
Softbank loan (42,677)

Disposal of majority interest 4,290,705

Enhancement of equity investment 944,800

Purchase of Preferred Shares (2,502)

Beneficial conversion feature
of loans 2,302,000

Non cash loan repayment 1,433,150

Net loss (12,340,238)

Other comprehensive loss (21,266) (21,266)
--------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2002 - $ - (3,242,644) (1) $(83,770) $(29,023,234)
======================================================================================

OPTIMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

1. BASIS OF PRESENTATION AND REORGANIZATION

OptiMark Holdings, Inc. ("Holdings") was established
on May 19, 2000, and became the sole stockholder of two
operating subsidiaries on June 12, 2000 pursuant to the
reorganization of the legal structure of the company
formerly known as OptiMark Technologies, Inc. ("OTI"). OTI
was the successor to a company that had been founded in
1996 to begin development of the OptiMark matching engine
technology for use in an electronic trading system for
equity securities and related technologies. The
reorganization was effected pursuant to which (i) OTI
formed Holdings as a direct wholly-owned subsidiary of OTI,
(ii) Holdings formed OTI Acquisition Corporation ("OTIA")
as a direct wholly-owned subsidiary of Holdings, (iii) OTI
merged with OTIA pursuant to Section 251(g) of the Delaware
General Corporation Law, with the name of the surviving
company becoming OptiMark US Equities, Inc. ("UEI"), and
with stockholders of UEI being deemed to have received
shares of Holdings by operation of law. As a result of
such merger, UEI became a direct wholly-owned subsidiary of
Holdings. References herein to the "Company" refer to
Holdings and its subsidiaries, with respect to periods
following the reorganization, and to OTI and its
subsidiaries, with respect to periods prior to the
reorganization.

Until September 19, 2000, the Company had operated in
two segments, the Exchange Solutions Services Business
(formerly referred to as the Electronic Markets Business)
and the US Equities Business, under two separate wholly
owned subsidiaries, OptiMark, Inc. ("OptiMark"), and
OptiMark US Equities, Inc., respectively. Effective
September 19, 2000, the US Equities Business was
discontinued.

On December 28, 2001, OptiMark formed a then majority-
owned subsidiary, OptiMark Innovations Inc. (formerly known
as OTSH, Inc. and referred to below as "Innovations").
Innovations was capitalized on December 31, 2001, and at
that time OptiMark held a 67% voting interest and the
remaining interest was held by SOFTBANK Capital Partners
LP, SOFTBANK Capital LP and SOFTBANK Capital Advisors' Fund
LP (collectively, "SOFTBANK"). Innovations has authorized
capital stock of 7,000 shares of common stock, par value
$.01 per share (the "Innovations Common Stock"), and 3,000
shares of preferred stock, par value $.01 per share (the
"Innovations Preferred Stock"). Innovations has designated
2,000 shares of Innovations Preferred Stock, as "Non-
Qualified Preferred Stock," which has a cumulative
preferred dividend at an annual rate of $500 per share,
payable when and if declared by the Board of Directors of
Innovations. The liquidation preference of the Non-
Qualified Preferred Stock is equal to $10,000 per share
plus the aggregate amount of accrued and unpaid dividends
or distributions. The Non-Qualified Preferred Stock is
also subject to a mandatory redemption, at a price equal to
the liquidation preference amount, in four equal quarterly
installments on December 31, 2016, March 31, 2017, June 30,
2017 and September 30, 2017. Innovations designated 1,000
shares of Innovations Preferred Stock as "Series B
Preferred Stock," which has a cumulative preferred dividend
at an annual rate of $519.21 per share, payable when and if
declared by the Board of Directors of Innovations. The
liquidation preference of the Series B Preferred Stock is
equal to $10,389.61 per share plus the aggregate amount of
accrued and unpaid dividends or distributions. On December
31, 2001, OptiMark received 200 shares of Innovations
Common Stock in exchange for a cash payment of $500,000 and
2,000 shares of Non-Qualified Preferred Stock in exchange
for the transfer to Innovations of certain intangible
assets consisting of software, a patent application and
other assets relating to a securities trading technology
which is under development (the "Assets"). The stated
value of the Non-Qualified Preferred Stock was the result
of the evaluation by the Board of Directors of Innovations
of the value of the Assets based, in part, upon preliminary
discussions with independent parties regarding an
approximate $10,000,000 investment for a one-third interest
in Innovations. SOFTBANK received 100 shares of
Innovations Common Stock (the "SOFTBANK Shares") for
$250,000 cash. Simultaneously, SOFTBANK's remaining
obligation to purchase shares of Series E Cumulative
Preferred Stock ("Series E Preferred Stock") from Holdings
pursuant to that certain Series E Preferred Stock Purchase
Agreement, dated as of June 29, 2001 (as amended on August
16, 2001 and November 16, 2001), by and among Holdings and
SOFTBANK was reduced by $250,000. Upon its formation and
initial capitalization, Innovations' aggregate assets
consisted of the Assets and $750,000 in cash. The
principal business of Innovations is to hold an interest
in Vie Financial Group, Inc. ("Vie", formerly known as
The Ashton Technology Group, Inc.) for the benefit of the
shareholders of Holdings and Innovations.

On February 4, 2002, Vie and Innovations entered into a
securities purchase agreement (as amended on March 6, 2002 and
May 3, 2002, the "Securities Purchase Agreement"). Pursuant
to the terms of the Securities Purchase Agreement, Innovations
agreed to purchase up to 633,433,600 shares of Vie common
stock, par value $.01 per share (the "Vie Common Stock"), in
exchange for $7,272,727 in cash and intellectual property and
other non-cash assets of Innovations valued by Vie and
Innovations for the purposes of the Securities Purchase Agreement
at $20 million. The value ascribed to the intellectual property
and other non-cash assets by OptiMark Innovations was based in
part on preliminary discussions with a potential investor in
Innovations. Vie did not obtain an appraisal or other third
party valuation of the fair market value of the intellectual
property and other non-cash assets. There can be no assurance
that the fair market value of the inellectual property and
other non-cash assets is equal to the value ascribed to these
assets by Innovations in the Securities Purchase Agreement.

On May 7, 2002 (the "Closing Date"), Innovations and Vie
closed the transactions contemplated by the Securities Purchase
Agreement.

In addition, pursuant to the terms of the Securities
Purchase Agreement, Innovations loaned approximately $2.7 million
in cash to Vie in exchange for a senior secured convertible note
(the "Note"). The Note will mature in five years, and may, at the
option of Innovations, be convertible into shares of Vie Common
Stock at a rate of $.0515838 per share (subject to customary
anti-dilution adjustments after the closing) and will accrue
interest at a rate of 7.5% per annum. Currently, The Note is
convertible into 52,870,757 shares of Vie Common Stock. The Note
is secured by a pledge and security agreement pursuant to which
Innovations has received a blanket lien on Vie's assets, including,
without limitation, the pledge of the equity interests of Vie and
Universal Trading Technologies Corporation, a Delaware
corporation and majority-owned subsidiary of Vie ("UTTC"), in
each of Vie Securities, LLC (formerly known as ATG Trading LLC),
wholly-owned subsidiary of Vie, Electronic Market Center, Inc., a
majority-owned subsidiary of Vie, Ashton Technology Canada, Inc.,
a majority-owned subsidiary of Vie, Vie Institutional Services,
Inc. (formerly known as Croix Securities, Inc.), a wholly-owned
subsidiary of UTTC, REB Securities Inc., a wholly-owned
subsidiary of UTTC; and NextExchange, Inc., a wholly-owned
subsidiary of UTTC.

As of the Closing Date, Innovations owned approximately 80%
of the fully-diluted outstanding shares of Vie Common Stock
calculated as of May 3, 2002. Fully-diluted shares include the
outstanding shares of Vie Common Stock and (i) shares of any
series of capital stock of Vie or its subsidiaries that vote
together with the Vie Common Stock, (ii) any outstanding options
issued to employees and third parties and (iii) shares of the
Vie Common Stock, or any securities described in clause (i)
above, issuable pursuant to or upon conversion or exercise of
all rights granted to any party. Assuming conversion of the
Note, Innovations would own approximately an additional 7% of
the fully-diluted shares of the Vie Common Stock, calculated as
of May 3, 2002.

OptiMark also had an approximately 15% voting interest
in Japan OptiMark Systems, Inc. ("JOS"), a Japanese
corporation. The investment in JOS previously accounted
for on the equity method does not have any carrying value
in financial statements of the Company as of December 31,
2002. JOS has realized continuing losses since its
inception in 1998. Since the Company has not provided any
guarantees and is not committed to provide any future
funding to JOS it has not recorded its equity share of JOS'
losses, as the investment cannot have a carrying value
below $0. On May 31, 2002, the shareholders of JOS elected
to dissolve the company.

Effective in January 2002 the development, sales and
marketing efforts of the Exchange Solutions Services
Business was suspended. As of that date, the primary
purpose of the Company was to hold the securities of
Innovations and to consummate financing and strategic
transactions with other parties.

As a result of the capitalization of Innovations,
Holdings and SOFTBANK have certain call and put rights
described below. The Independent Committee of the Board of
Directors has the right commencing October 1, 2002 and
exercisable until September 30, 2003, to recommend to the
Board of Directors that Holdings purchase all, but not less
than all, of the SOFTBANK Shares for $100,000 in cash and
13,334 shares of Series E Preferred Stock of Holdings. If
the Board of Directors accepts such recommendation,
SOFTBANK would be obligated to sell the SOFTBANK shares for
that consideration.

Upon the occurrence of a Liquidity Event (defined
below) on or before September 30, 2003, the SOFTBANK Shares
will be purchased by Holdings for $100,000 in cash and
13,334 shares of Series E Preferred Stock of Holdings. A
"Liquidity Event" means any of the following: (i)
Innovations' sale, conveyance or other disposition of all
or substantially all of its assets, (ii) the acquisition of
Innovations by another entity by means of merger or
consolidation resulting in the exchange of the outstanding
shares of Innovations for securities or other consideration
issued, or caused to be issued, by the acquiring entity or
its subsidiary, unless the stockholders of Innovations
immediately prior to the consummation of such transaction
hold at least 50% of the voting power of the surviving
corporation as a result of such transaction, (iii) the
consummation by Innovations of a transaction or series of
related transactions, including the issuance or sale of
voting securities, if the stockholders of Innovations
immediately prior to such transaction (or, in the case of a
series of transactions, the first of such transactions)
hold less than 50% of the voting power of Innovations
immediately after the consummation of such transaction (or,
in the case of a series of transactions, the last of such
transactions), or (iv) any initial underwritten public
offering of Innovations Common Stock. Notwithstanding the
foregoing, Holdings will not exercise this call option in
the event that the Independent Committee of the Board of
Directors recommends that Holdings not purchase the
SOFTBANK Shares.

In the event that: (i) the call rights of Holdings
described above have not been exercised on or before
September 30, 2003, (ii) the Independent Committee of the
Board of Directors no longer exists and (iii) no
independent directors serve on the Holdings Board of
Directors and, after reasonable good faith efforts by the
remaining members of the Holdings Board of Directors, no
independent persons qualified to serve on the Holdings
Board of Directors have been found or, if found, are not
willing to serve on the Holdings Board of Directors, then
the Holdings Board of Directors will engage an independent
investment banking, accounting or third party valuation
firm to evaluate whether or not it is in the best interests
of Holdings that it purchase the SOFTBANK Shares. If such
third party determines it is in the best interests of
Holdings to purchase the SOFTBANK Shares, Holdings will be
obligated to purchase such shares on or before December 31,
2003 for $100,000 in cash and 13,334 shares of Series E
Preferred Stock of Holdings.

SOFTBANK has the right, commencing on October 1, 2002
and continuing until September 30, 2003, to put all, but
not less than all, of the SOFTBANK Shares to Holdings in
exchange for 16,667 shares of Series E Preferred Stock of
Holdings.

In the event that no put of, or call on, the SOFTBANK
Shares has been exercised by October 31, 2003, then
commencing on November 1, 2003 and continuing until
November 30, 2003, SOFTBANK has the right to require
Holdings to purchase all, but not less than all, of the
SOFTBANK Shares for 16,667 shares of Series E Preferred
Stock of Holdings.

2. GENERAL INFORMATION AND SUMMARY OF ACCOUNTING POLICIES

General - The Exchange Solutions Services Business is
comprised of the development and operation of trading
platforms and environments for existing and emerging
electronic marketplaces through a combination of
consulting, servicing, licensing and equity agreements. The
Company commenced these activities after termination of the
license agreement with High Performance Markets, Ltd.
("HPM") (Note 7). The OptiMark technology, as adapted for
these marketplaces, allows a broad array of auction and
exchange activities, including the trading of goods and
services whose value is determined by factors in addition
to quantity and price; trading among many buyers and many
sellers; and broker facilitated trading.

Basis of Preparation - The accompanying financial
statements have been prepared on a going concern basis,
which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of
business. The Company's current cash and cash equivalents,
plus the expected cash flows for 2003, are not expected to
be sufficient to meet its 2003 operating and financial
commitments. The Company is currently exploring financing
opportunities including borrowing cash from certain of its
shareholders that would be secured by shares of Innovations
Common Stock and/or Non-Qualified Preferred Stock owned by
OptiMark. Accordingly, if the Company is unable to raise
additional cash, the Company will face the imminent and
likely potential for bankruptcy or liquidation. If the
Company is forced to declare bankruptcy or pursue
liquidation, the value of the Company's assets may not be
sufficient to pay its creditors in full and, accordingly,
the Company's common stock and preferred stock would have
no value. The Company will continue to seek additional
funding both to support its operation as a holding company
as well as its very limited efforts related to potential
new product development. While the Company hopes to be
able to obtain additional financing for these limited
product development activities and continue to borrow money
or raise capital, the Company may not be able to raise this
capital before it runs out of cash. In addition, the
Company has pledged a portion of its shares of capital
stock in Innovations to SOFTBANK as payment for loans that
have already been provided. In the event that the Company
does not have enough cash to pay the principal and interest
on these loans as they come due, the Company's holdings in
Innovations will be reduced accordingly. This will reduce
the Company's ability to utilize these assets to raise
additional capital necessary to ensure continuation as a
going concern. There is no assurance that the Company's
holdings in Innovations will have any value useable as
collateral for a loan or sellable to raise cash at any time
or in a time frame that would let the Company continue as a
going concern. The financial statements do not include any
adjustments relating to the recoverability and
classification of recorded asset amounts, or the amounts
and classification of liabilities that might be necessary,
should the Company be unable to continue as a going
concern.

Principles of Consolidation - The accompanying
consolidated financial statements include the accounts of
the Company and its controlled subsidiaries. Companies in
which OptiMark has equity investments of 50% or less and
has the ability to exercise significant influence are
accounted for using the equity method. Intercompany
accounts and transactions have been eliminated.

Cash and Cash Equivalents - The Company considers
highly liquid investments with an original maturity of
three months or less to be cash equivalents.

Foreign Currency Translation - Assets and liabilities
of the Company's foreign operations are translated into
U.S. dollars at fiscal year-end exchange rates; revenues
and expenses are translated at weighted average exchange
rates for the year. Gains and losses arising from
translation are recorded as a cumulative translation
adjustment within accumulated other comprehensive loss, a
component of stockholders' equity (deficiency).

Property and Equipment - Property and equipment are
recorded at cost. For financial reporting purposes,
depreciation is provided for using the straight-line method
over the estimated useful lives of the related assets,
which range from three to seven years. Leasehold
improvements had been amortized over the lesser of the life
of the asset or the life of the lease; however remaining
leasehold improvements will be amortized over a twelve-
month period. During 2002 and 2001, the Company wrote down
the value of certain assets by approximately $566,000 and
$1,147,000, respectively, in accordance with FAS 144
"Accounting for the Impairment or Disposal of Long-Lived
Assets" which supercedes FAS 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" (See Note 6).

Intangible Assets - Intangible assets consist of
software licenses amortized using the straight-line method
over periods of 24 to 36 months. During 2000, certain non-
securities industries rights and other software licenses
were written off (See Note 7).

Income Taxes - The Company files a consolidated
Federal income tax return, which includes all eligible
United States subsidiary companies. Foreign subsidiaries
are taxed according to regulations existing in the
countries in which they do business. Deferred income taxes
are provided for temporary differences between income tax
bases and financial reporting bases of the Company's assets
and liabilities utilizing currently enacted tax laws and
rates.

Revenue Recognition - Consulting, maintenance and
support, licensing fees and development services revenue
are recorded as services are performed.

Long-Lived Assets - The Company accounts for the
impairment of long-lived assets and for long-lived assets
to be disposed of by evaluating the carrying value of its
long-lived assets in relation to the operating performance
and future undiscounted cash flows of the underlying
businesses when indications of impairment are present.
Long-lived assets to be disposed of, if any, are evaluated
in relation to the net realizable value. The Company has
determined that, as of December 31, 2002 and 2001,
respectively, there had been no impairment in the carrying
value of long-lived assets except as discussed in Notes 3
and 6.

Accounting For Stock Option Plans - SFAS No. 123,
"Accounting for Stock-Based Compensation" encourages, but
does not require, companies to record compensation cost for
stock-based employee compensation plans at fair value. The
Company has chosen to continue to account for stock-based
compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees and Related Interpretations".
Accordingly, compensation cost for stock options is
measured as the excess, if any, of the fair value of the
Company's stock at the date of grant over the amount an
employee must pay to acquire the stock. Had compensation
cost for the 1999 Plan been determined at the fair value on
the grant dates under the method of SFAS No. 123, the
Company's net loss for the years ended December 31, 2002,
2001 and 2000, would have increased to approximately
$12,341,000, $29,571,000 and $104,424,000 respectively.
The increase in net loss would have no effect on the loss
per share reported on the Company's consolidated financial
statements for the years ended December 31, 2002, 2001 and
2000, respectively.

Options held by an optionee will generally become
exercisable as to 20% of the shares covered by such options
on the first anniversary of the date of hire for initial
grants and 20% of the shares on the first anniversary date
of the grant date for subsequent issues and with an
additional 20% of the shares covered by such options on
each of the four succeeding anniversaries of the date of
the hire or grant date if the optionee continues to be
employed by the Company, on each such date.

The fair value of each option grant in 2002, 2001 and
2000 was estimated on the date of grant using the Black-
Scholes option-pricing model, with the following
assumptions: weighted-average risk-free interest rates of
1.15%, 3.60%, and 5.00% in 2002, 2001 and 2000,
respectively; no dividend yield, expected life of 3 years
in 2002, 2001 and 2000 and volatility of 1%. All options
were granted at the then fair market value.

Use of Estimates - The preparation of financial
statements in conformity with accounting principles
generally accepted in the United States requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.

Recent Accounting Pronouncements - Management does not
believe any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a
material effect on the accompanying financial statements.

3. DISCONTINUED OPERATIONS

On September 19, 2000, the Company announced its
intention to discontinue its US Equities Business. The
Company has discontinued all operations of the equities
trading system for the US Equities Business and terminated
all communications networks and other related systems that
were necessary to support that business. Accordingly,
results of this operation have been classified as
discontinued operations in the consolidated financial
statements and prior periods have been reclassified to
conform to this classification.

The Company recorded a loss on disposal of segment of
$16,036,155 in 2000 associated with the discontinuation of
the US Equities Business. This amount was comprised of
approximately $2,371,000, representing a workforce
reduction of 99 employees and approximately $13,665,000,
representing the impairment of various assets and
liabilities. The amount related to the impairment of
various assets and liabilities includes the write off of
capitalized software and other intangibles of approximately
$8,533,000, a write down in the value of fixed assets of
approximately $5,091,000, security deposits of
approximately $1,142,000 and other expenses related to
office closings and other matters of approximately $874,000
offset by a net reduction in lease obligations and other
accrued expenses of approximately $1,975,000. The Company
expects the process of disposing of the net liabilities of
the discontinued business to be completed by December 31,
2003 as a result of the continuing settlement negotiations
with certain companies from which we had previously leased
equipment. Disposition includes negotiated payments to be
made after December 31, 2003.

Included in the charge in 2000 for net asset
impairment, the Company has provided a $4,595,000 reserve
related to contract renegotiations and terminations in
connection with certain capital and operating leases and
certain service and maintenance agreements, including
telecommunications network services and computer software
and hardware services which were entered into by a
subsidiary, US Equities, Inc., in connection with the
creation, maintenance and operation of facilities for
trading equity securities. This amount is significantly
less than the approximate termination charges of
approximately $39,800,000 provided in the relevant
agreements. The Company believes there are several
mitigating factors that would enable it to substantially
reduce its outstanding obligations to these creditors.
These factors include: (a) certain termination charges are
the subject of bona fide disputes which are expected to be
resolved in the Company's favor as a result of negotiation
or arbitration; (b) certain service charges included in
payments made by the service provider to third parties for
services and equipment needed to provide the primary
service; (c) the Company may purchase certain equipment
outright which is the subject of capital or operating
leases thereby substantially mitigating contractual
termination charges; (d) the Company may be able to
identify potential third party purchasers or lessees or
certain equipment having an estimated salvage value of
approximately $1,300,000, which is the subject of capital
or operating leases, thereby substantially mitigating
contractual termination charges; (e) the Company may be
able to reach settlements and accords with lessors and
service providers based on some combination of partial
payments, extended payments, reduced payments or exchanges
of equity in lieu of payments. In addition, The Company
has forfeited approximately $1,142,000 of security deposits
held by certain creditors in connection with the contract
renegotiations and terminations. The amount provided
represents management's best estimate of the Company's
restructured obligations with the lessors and service
providers based on currently available information (Note
15).

During 2001 and January 2002, the Company entered into
agreements with three of the companies from which we had
previously leased equipment settling all amounts owed by
OptiMark to those companies. Settlements took the form of
a combination of immediate and deferred cash payments, new
preferred stock and, in one case, the purchase of a
computer previously leased. At December 31, 2002, the
reserve related to contract renegotiations and terminations
totaled $13,025,000. This amount is significantly less
than the termination charges of approximately $26,981,000
provided in the relevant agreements. The December 31, 2002
reserve represents management's best estimate of the
probable and reasonably estimable losses based on the
mitigating factors described above and our experience
negotiating those settlements already completed.

Changes in Net Liabilities of Discontinued Operations
from December 31, 2001 are summarized below.

Paid or Additional
Balance at Charged Accruals Balance
December 31, Against And Other December 31,
2001 Liability Adjustments 2002
------------ --------- ----------- ------------

Net Liabilities of
Discontinued
Operations $(13,816,260) $544,730 $(189,261) $(13,460,791)
============= ======== ========== =============

Results of operations from discontinued operations for
the year ended December 31, 2000 are as follows:

Revenues............................. $ 321,258
------------
Operating expenses (excluding
depreciation and amortization)....... 41,409,888
Depreciation and amortization........ 9,711,431
---------
Total expenses....................... 51,121,319
----------
Net non-operating expense............ 405,236
-------
Loss from discontinued operations.... $(51,205,297)
=============

Net liabilities from discontinued operations are
composed of the following at December 31:

2002 2001
---- ----

Current assets...................... $ 17,459 $ 112,414
Other assets........................ - 12,256
Current liabilities................. (13,478,250) (13,940,930)
------------ ------------
Net liabilities from
discontinued operations............. $(13,460,791) $(13,816,260)
============= =============

4. RELATED PARTY TRANSACTIONS

In September 1998, the Company entered into the Japan
Joint Venture to develop and implement the System for the
trading of equity securities in Japan. As of December 31,
1998, OptiMark had made its capital contribution of
approximately $69,000 for a 15% interest. It is
management's belief that the Company has the ability to
exercise significant influence over the Japan Joint Venture
through veto power and membership on the board and
therefore accounts for its investment in the Japan Joint
Venture using the equity method. At December 31, 1999, the
Company, in accordance with the equity method of
accounting, realized losses up to its capital contribution.
In connection with the Japan Joint Venture, the Company
entered into a development agreement in principle, whereby
the Company provided services on a time and materials basis
and was reimbursed at fully allocated cost. On May 23,
2001, OptiMark amended its agreement with Japan OptiMark
Systems, Inc. ("JOS") in connection with a proposed
restructuring of JOS. Among other terms in the amendment,
(a) OptiMark approved the suspension of JOS' trading system
operating on the Osaka Securities Exchange in Japan and (b)
JOS agreed to pay to OptiMark maintenance and support
amounts through August 31, 2001. On May 31, 2002, the
shareholders of JOS elected to dissolve the company.
Amounts earned from the Japan Joint Venture are reported as
"Revenue from affiliate" in the Consolidated Statements of
Operations and Comprehensive Loss.

Included in Other Current Assets are loans to an
officer of approximately $45,000 at December 31, 2002 and
approximately $240,000 at December 31, 2001. The loans to
the officers at December 31, 2002 and 2001 incur interest
at 6% in each year. On February 7, 2002, a loan to an
officer in the amount of $150,000 plus accrued interest was
forgiven in accordance with the terms and conditions of the
officer's employment agreement. This amount was recorded as
additional compensation during the current year. In
accordance with the terms of a separation agreement with
one of the officers, $50,000 of the loans outstanding as
of December 31, 2000 were forgiven in 2001.

On August 16, 2002, the Company entered into a new
one-year employment agreement with an officer of the
Company, which provides for annual compensation of
$250,000, a guaranteed bonus of $200,000, to be paid
ratably over the term of the agreement, a guaranteed bonus
of $45,000, paid upon the execution of the agreement and a
guaranteed bonus of $80,000, to be paid upon the employment
of a full time Chief Executive Officer of Vie. The bonuses
of $45,000 and $80,000 were paid in full by December 16, 2002.

In September 2001, the Company received proceeds of
$530,000 from the sale of an investment in a related
company. The investment had previously been written off
and therefore the proceeds were recorded as a gain on
recovery of an investment.

5. OTHER CURRENT ASSETS AND OTHER ASSETS

Other Current Assets Other Assets
2002 2001 2002 2001
---------------------- ----------------------

Prepaid expenses........ $13,026 $123,504 $ - $ -
Security deposits....... 1,603 18,403 259,435 837,007
Restricted cash......... - 33,736 - -
Interest receivable..... 1,605 9,155 - -
Due from affiliate...... - - 24,533 -
Loan to officer......... 45,000 240,000 - -
Other 5,856 22,113 65 65
----- ------ -- --
$67,090 $446,911 $284,033 $837,072
======= ======== ======== ========

Prepaid expenses as of December 31, 2002 and 2001,
consists primarily of warranty, support and service
agreements for purchased hardware and software. Security
deposits consist primarily of deposits with respect to
rental property and operating leases (Note 11). Included
in restricted cash at December 31, 2001 is a guarantee of
approximately $34,000 related to an employee loan.
Interest receivable relates to interest earned, but not yet
received, on the Company's loans to the officer.

6. PROPERTY AND EQUIPMENT

2002 2001
---- ----

Computer equipment.............................. $3,714,326 $ 7,427,276
Furniture and fixtures.......................... 973,787 692,797
Software........................................ 1,336,469 1,676,584
Leasehold improvements.......................... 2,238,891 1,636,292
--------- ---------
Total........................................... 8,263,473 11,432,949
Less accumulated depreciation and amortization.. 8,240,781 10,051,514
--------- ----------
Net property and equipment $ 22,692 $ 1,381,435
========== ===========

As of December 31, 2000 the Company recorded an
impairment of fixed assets in the amount of approximately
$1,879,000. The impaired assets consisted principally of
computers and related equipment that were specifically
identified as not used in the Company's continuing
operations.

As of December 31, 2001 the Company recorded an
impairment of fixed assets in the amount of approximately
$1,147,000. The impaired assets consisted principally of
computers and related equipment, furniture and fixtures,
computer software and leasehold improvements that were
specifically identified as not used in the Company's
continuing operations.

As of December 31, 2002 the Company recorded an
impairment of fixed assets in the amount of approximately
$566,000. The impaired assets consisted principally of
computers and related equipment, furniture and fixtures,
computer software and leasehold improvements that were
specifically identified as not used in the Company's
continuing operations.

7. INTANGIBLE ASSETS

Intangible assets consist of the following at December
31:

2002 2001
---- ----

Software licenses $452,654 $452,654
Less: accumulated amortization 452,654 393,307
------- -------
Intangible assets - net $ - $ 59,347
======== ========

In May 1996, the Company sold to HPM, a newly formed
limited partnership controlled by the then stockholders of
the Company, a royalty-free, perpetual, worldwide license
to make, have made, use, sell and distribute products,
systems and services, outside of the securities industry
field, under the issued OptiMark patent and one other
patent application (the "HPM License"), in exchange for a
nonrecourse subordinated promissory note in the amount of
$650,000 (which was fully reserved for in 1996). In March
1999, the Company entered into a license termination
agreement with HPM to terminate the HPM License. In
consideration for the termination of the license, the
Company issued to HPM 2,000,000 shares of common stock of
the Company at $14 per share (fair market value at date of
issuance). In connection with the issuance of common
stock, the Company recorded an intangible asset in the
amount of $28,000,000 to be amortized over a 15-year life.
During 1999 HPM paid the Company an aggregate of $767,700
representing full repayment on the note (which represents a
portion of amounts previously written off) and interest
income of $117,700.

As of September 30, 2000, the Company reevaluated the
useful life of the HPM License and concluded that a more
appropriate useful life would be five years effective
October 1, 2000. The reduced useful life determination was
based on recent developments in the business-to-business
industry, as well as the success by competing firms in
obtaining new electronic business and the rapid development
of their competing technologies. At that time, the Company
stated it would continually evaluate the use of this
license relative to competing technologies and the need to
upgrade and customize its own technology and may, if
necessary and appropriate, further revise the useful life
of the license.

As of December 31, 2000, the Company updated its
reevaluation performed as of September 30, 2000 and
concluded that it could not justify maintaining any related
cost in its financial statements for the HPM license. As a
result, the Company recorded $23,940,000 as a write off of
intangible assets on the consolidated statements of
operations and comprehensive loss. The write off was
deemed necessary based on (1) the use of new innovative
customized technology improvements and concepts now being
used by the Company in non-securities industry
applications, (2) the increased pace of technology
innovation in the exchange solution market and (3) the
likelihood that the Company will use its new customized
technology to respond to future client proposals. At the
current time, the Company has no current or long-term plan
or intention to utilize in the future any component of the
underlying code or technology of the license in the
development of non-securities industry applications.

8. ACCRUED COMPENSATION

Accrued compensation includes accrued bonuses of
approximately $147,000 and accrued vacation of
approximately $82,000 as of December 31, 2002 and accrued
bonuses of approximately $591,000 and accrued vacation of
approximately $550,000 as of December 31, 2001.

9. FINANCING ACTIVITIES

On March 21, 2002, the Company entered into a loan
agreement with certain of its shareholders (SOFTBANK). Under
the terms of the agreement, the Company borrowed $500,000 for a
period of 180 days at an interest rate of 10% per annum
compounded every ninety days. The loan is secured by
substantially all of the assets of the Company. In lieu of
repayment of principal in cash, the lenders had the right to
require the Company to repay the principal amount of the loan
by causing OptiMark to transfer eight shares of Innovations
Common Stock and forty-eight shares of the Non-Qualified
Preferred Stock of Innovations subject to adjustment as
provided in the loan agreement with accrued interest payable
in cash at maturity.

On April 11, 2002, the Company entered into a second loan
agreement with these shareholders. Under this second loan
agreement, the Company borrowed $570,000 for a period of 180
days at an interest rate of 10% per annum compounded every
ninety days. The second loan is secured by substantially all of
the assets of the Company. In lieu of repayment of principal in
cash, the lenders had the right to require the Company to repay
the principal amount of the loan by causing OptiMark to transfer
twelve shares of Innovations Common Stock and fifty-four shares
of the Non-Qualified Preferred Stock of Innovations subject to
adjustment as provided in the second loan agreement with accrued
interest payable in cash at maturity. The value of the
securities transferred at the time of repayment for the loan
exceeded the value of the loan by $570,000, which was recorded
as a beneficial conversion feature. This amount was charged as
interest expense ratably over the life of the loan.

On May 31, 2002, the Company entered into a third loan
agreement with these shareholders. Under this third loan
agreement, the Company borrowed $1,650,000 for a period of 180
days at an interest rate of 10% per annum compounded every
ninety days. The third loan is secured by substantially all of
the assets of the Company. In lieu of repayment of principal in
cash, the lenders had the right to require the Company to repay
the principal amount of the loan by causing OptiMark to transfer
twenty-eight shares of Innovations Common Stock and one hundred
fifty-eight shares of the Non-Qualified Preferred Stock of
Innovations subject to adjustment as provided in the third loan
agreement with accrued interest payable in cash at maturity.
The value of the securities transferred at the time of repayment
for the loan exceeded the value of the loan by $1,640,000, which
was recorded as a beneficial conversion feature. This amount
was charged as interest expense ratably over the life of the loan.

On September 17, 2002, the loan the Company executed with
these shareholders on March 21, 2002, came due. In accordance
with the terms of the agreement, the lenders caused the Company
to transfer eight shares of Innovations' common stock and forty-
eight shares of Innovations' Non-Qualified Preferred Stock. The
Company recorded a loss of approximately $945,000 on the
exchange, which is included in loss on equity investment on the
accompanying statement of operations and other comprehensive
loss.

On October 8, 2002, the loan the Company executed with
these shareholders on April 11, 2002, came due. In accordance
with the terms of the agreement, the lenders caused the Company
to transfer twelve shares of Innovations' common stock and
fifty-four shares of Innovations' Non-Qualified Preferred Stock.

On November 27, 2002, the loan the Company executed with
these shareholders on May 31, 2002, came due. In accordance
with the terms of the agreement, the lenders caused the Company
to transfer twenty-eight shares of Innovations' common stock and
one hundred fifty-eight shares of Innovations' Non-Qualified
Preferred Stock.

The repayment of the loans resulted in additional paid in
capital of $1,433,150.

On November 27, 2002, the Company entered into a fourth
loan agreement with these shareholders. Under this fourth loan
agreement, the Company borrowed $750,000 for a period of 180
days at an interest rate of 10% per annum compounded every
ninety days. The fourth loan is secured by substantially all of
the assets of the Company. In lieu of repayment of principal in
cash, the lenders may require the Company to repay the principal
amount of the loan by causing OptiMark to transfer twelve shares
of Innovations Common Stock and seventy-two shares of the Non-
Qualified Preferred Stock of Innovations subject to adjustment
as provided in the fourth loan agreement with accrued interest
payable in cash at maturity. The value of the securities to be
given in consideration at the time of repayment for the loan
will exceed the value of the loan by $92,000, which was recorded
as a beneficial conversion feature. This amount is being charged
as interest expense ratably over the life of the loan.

On December 17, 2002, the lenders and the Company executed
a Letter Agreement pursuant to which the lenders will receive
three shares of Innovations Common Stock and fifteen shares of
Innovations Non-Qualified Preferred Stock in lieu of cash
payment of all remaining obligations, including accrued and
unpaid interest, the Company owed the lenders under the terms of
the first three loan agreements.

10. ACCRUED RESTRUCTURING

The Company recorded approximately $7,693,000 of
restructuring charges in 1999 associated with a workforce
reduction of 72 employees. Included in this amount was
approximately $5,811,000, representing charges associated
with the revaluation of employee options and the remaining
balance of approximately $1,882,000 included notice period
salaries of approximately $876,000, severance of
approximately $706,000 and vacation pay and other related
employee costs of approximately $300,000. As of December
31, 1999, approximately $522,000 of such amount had been
paid and the remaining accrued restructuring costs were
paid in 2000.

In November 1999, the Company entered into an
agreement with an officer of the Company in connection with
that officer's termination as an officer and director of
the Company. The agreement called for cash payments of
$450,000 between November 1999 and June 2000, the vesting
of 50% of any nonvested options as of November 1999 and the
extension of the date on which all vested options can be
exercised until November 2002. These costs, approximating
$2,355,000, are included in the amounts above.

During 2000, the Company recorded restructuring
charges of approximately $292,000. Included in this amount
was approximately $1,890,000 representing charges
associated with the revaluation of employee options,
$750,000 related to a settlement payment to a vendor,
approximately $4,000 related to the write off of security
deposits and the remaining balance of approximately
$268,000 included notice period salaries of approximately
$167,000, severance of approximately $68,000 and vacation
pay and other related employee costs of approximately
$33,000. The restructuring charges were reduced by
approximately $2,620,000 from a net reduction in vendor
obligations. As of December 31, 2000, all the
restructuring costs had been paid.

During 2001, the Company recorded restructuring
charges of approximately $316,000 representing severance
costs associated with a workforce reduction of forty
employees. As of December 31, 2001, all the restructuring
costs had been paid.

11. LEASE COMMITMENTS

Operating Leases - The Company has operating lease
obligations for office space, office equipment and computer
equipment, which expire at various dates through 2014. The
future minimum rental payments under operating leases at
December 31, 2002 are as follows:

2003.......................... $ 1,081,998
2004.......................... 1,134,513
2005.......................... 1,153,800
2006.......................... 1,152,147
2007.......................... 1,152,147
Thereafter.................... 7,025,288
---------
Total......................... $12,699,893
===========

Total rent expense for real estate amounted to
approximately $1,324,000, $1,113,000 and $679,000 (net of
sublease income of approximately $0, $3,700 and $4,100) for
the years ended December 31, 2002, 2001 and 2000,
respectively.

Total rent expense for equipment amounted to
approximately $85,000, $167,000 and $728,000 for the years
ended December 31, 2002, 2001 and 2000, respectively.

12. SEGMENTS

As of December 31, 1998, the Company operated in one
industry segment, the US Equities Business. As of December
31, 1999, the Company operated in two industry segments,
the US Equities Business and the Exchange Solutions
Services Business. As a result of the discontinuation of
the US Equities Business, effective September 30, 2000, the
Company currently operates in one industry segment, the
Exchange Solutions Services Business. Effective in January
2002 the development, sales and marketing efforts of the
Exchange Solutions Services Business were suspended. As of
that date, the Company's principal business was to hold the
securities of OptiMark and, through OptiMark, Innovations
and to solicit interest from or opportunities with third
parties concerning possible investments and/or strategic
alliances, including such transactions with regard to the
Exchange Solutions Services Business. OptiMark's VWAP
assets utilized in the Vie transaction were part of a
general effort to determine ways or utilize OptiMark's
technology for trading venues to be owned and operated by
OptiMark. OptiMark has continued to develop additional
concepts with a very limited team. There is no assurance
that these limited development efforts will result in new
products or receive the funding necessary for them to
continue.

13. INCOME TAXES

The tax effected components of deferred income tax
assets and liabilities at December 31, 2002 and 2001 are as
follows:

2002 2001
---- ----
Deferred income tax assets:
Net operating loss and R&D
credit carryforwards............. $111,818,000 $107,818,000
Tax basis of fixed assets,
capitalized research and
development costs of other
intangibles in excess of book
basis............................ 7,933,000 7,707,000
Loss contingency and other reserves 5,426,000 9,823,000
Other.............................. 405,000 405,000
------- -------
Total deferred tax assets.......... 125,582,000 125,753,000

Less valuation in allowance.......... (125,582,000) (125,753,000)
------------- -------------
- -
============= =============

Realization of the future tax benefits related to the
deferred income tax assets is dependent on many factors,
including the Company's ability to generate taxable income
within the net operating loss carryforward period.
Management has considered these factors in reaching its
conclusion as to the valuation allowance for financial
reporting purposes.

The Company had net operating loss carryforwards of
approximately $279,546,000 and $267,103,000 at December 31,
2002 and 2001. The Company also has research and
development (R&D) credits available of $3,647,000 at
December 31, 2002. The net operating loss carryforward and
the research and development credits will expire for
federal purposes in 2004 through 2022; the expiration of
the net operating loss carryforward for states varies.

In 1998, as a result of the issuance of additional
shares of stock, the Company incurred a change in ownership
for tax purposes, which may limit future use of the net
operating loss and research and development credit
carryforwards. The Company may have incurred a second
change of ownership in 2001 which would preclude the use of
virtually all of the net operating loss carryforward and
research and development credits that arose prior to the
change.

14. 401(K) EMPLOYEE BENEFIT PLAN

OptiMark has a 401(k) defined contribution plan (the
"Plan"), which covers all full-time employees over the age
of 21 as of their initial date of employment. The Plan has
no matching requirement. Any future matching will be at the
discretion of the Board of Directors. The amounts charged
to expense related to the administration of the Plan were
approximately $16,200, $19,700 and $12,600 for the years
ended December 31, 2002, 2001 and 2000, respectively.

15. COMMITMENTS AND CONTINGENCIES

Holdings and/or its subsidiaries are subject
to the following legal proceedings:

Finova Capital Corporation (Plaintiff) v. OptiMark
Technologies, Inc., OptiMark, Inc. and OptiMark Holdings,
Inc. (Defendants), Superior Court of New Jersey - Hudson
County. Plaintiff filed this action on June 15, 2001,
asserting claims that allegedly arise out of an equipment
lease agreement pursuant to which it is alleged that
OptiMark Technologies, Inc. (now known as OptiMark US
Equities, Inc.) agreed to lease certain equipment.
Plaintiff contends that OptiMark Technologies, Inc.
breached the equipment lease by, among other things,
failing to pay the amounts due under the equipment lease.
Based on these allegations, Plaintiff has made claims for
breach of contract, tortuous interference, fraudulent
conveyance of such equipment lease agreement and/or the
related equipment and/or other assets from OptiMark
Technologies, Inc. to OptiMark and/or the Company and
damages in unspecified amounts exceeding $6,000,000, plus
interest, late charges, litigation costs and expenses, and
reasonable counsel fees. In the fourth quarter of 2001,
most, if not all, of the equipment that was the subject of
the equipment lease was returned consensually to Plaintiff.
The parties currently are engaged in exchanging responses
to written discovery requests. On February 14, 2002,
Plaintiff made a motion to add Innovations as a defendant
in the case. In the motion, Plaintiff alleges that the
transfer of certain assets from OptiMark to Innovations on
December 31, 2001 constituted a fraudulent conveyance of
such assets. On March 25, 2002, the court granted Finova
permission to amend its complaint to include Innovations.
The amended complaint was served on Innovations on April
22, 2002. Innovations filed a response to the complaint on
August 15, 2002. On June 13, 2002, Finova amended the
complaint to include Vie. The Defendants, Innovations and
Vie intend to defend this action and the motion vigorously.
The outcome of this litigation cannot be predicted at this
time, although it may have a material affect on the
Company's financial condition and results of operations.

Comdisco, Inc. (Plaintiff) v. OptiMark Technologies, Inc.
(now known as OptiMark US Equities, Inc.) (Defendant) and
Avnet, Inc. State of Connecticut Superior Court, Judicial
District of Fairfield at Bridgeport. Plaintiff filed a
Complaint on December 18, 2000. The action seeks possession
of leased equipment, proceeds from the sale of
leased equipment, a deficiency judgment in an
unspecified amount, and fees and costs and interest. Since
the complaint was filed, most, if not all, of the equipment
was returned consensually to Plaintiff. Based on the
complaint filed in a related action in New Jersey
(described below) and on other information received from
Comdisco, it is believed that amount of damages claimed is
approximately $6,500,000. On March 30, 2001, the parties
agreed to consolidate a related case captioned Comdisco,
Inc. v. OptiMark Technologies, Inc., Superior Court of New
Jersey Law Division Hudson County (filed on January 23,
2001) with the Connecticut proceeding. To effect the
consolidation, on or about April 2, 2001, the parties filed
a stipulation withdrawing Defendant's motion to dismiss
Comdisco's Complaint filed in the Superior Court of New
Jersey. That motion had sought dismissal principally on
grounds that an identical action alleging breach of
contract had previously been filed by Comdisco in
Connecticut State Court. In exchange for Defendant's
agreement to withdraw its motion, Comdisco agreed to
withdraw its New Jersey Complaint without prejudice. In
June 2001, Comdisco made a motion for summary judgment with
respect to a claim against Avnet relating to a guaranty by
Avnet of Defendant's obligations under a Master Lease
Agreement for computer equipment leased from Comdisco.
Avnet responded to Comdisco's motion by denying liability
under the guaranty and asserting a variety of special
defenses. In addition, Avnet filed a cross claim against
Defendant. The cross claim alleges that if Avnet is found
liable under the guaranty, then Avnet becomes subrogated to
Comdisco's rights under the Master Lease Agreement to the
extent of the payments Avnet makes to Comdisco and that
OptiMark is liable to Avnet for any such payments.
Defendant has responded to the complaint and cross-claim
by denying its material allegations and asserting special
defenses. In December of 2002, Avnet, Inc. amended its
cross claim to include a claim for subrogation relating to
a payment made on OptiMark's behalf on a guaranty to Finova
and now also seeks to collect additional sums against
Defendant in an unspecified amount. Defendant intends to
defend this action vigorously. In the event a settlement
is not reached, the case is scheduled for a jury trial
commencing the week of of June 25, 2003. The outcome of
this litigation cannot be predicted at this time, although
it may have a material affect on the Company's financial
condition and results of operations.

The Company entered into a ten (10) year lease (the
"Lease") with Montgomery Associates, L.P. ("Montgomery") on June
26, 1998, with respect to a data center at 30 Montgomery Street,
Jersey City, New Jersey (the "Premises"). In December 2002, the
Company defaulted on the Lease when it failed to pay its monthly
rent. Montgomery commenced an action against the Company in the
Superior Court of New Jersey to collect the outstanding rent due
under the Lease.

On January 6, 2003, the Company and Montgomery entered into
a Stipulation of Settlement to resolve this litigation. Pursuant
to the terms of the Stipulation of Settlement, the Company agreed to
cure its default under the Lease by paying Montgomery the sum of
$15,000.00 by January 10, 2003 and the sum of $5,549.68 by
January 31, 2003 (collectively, the "Back Rent"). The Company
also agreed to continue to make future rental payments to
Montgomery as they became due. The Stipulation of Settlement
further provided that in the event the Company failed to timely
remit the Back Rent, Montgomery could declare the Stipulation of
Settlement void and immediately obtain an entry of Judgment
for Possession and a Warrant for Removal.

The Company did not pay Montgomery the Back Rent as required
by the Stipulation of Settlement. Accordingly, Montgomery obtained
a Judgment for Possession and Warrant for Removal for the Premises,
which denied the Company assess to the Premises. The Company does
not have any present need for this space. There is, however,
certain computer equipment located at the Premises. The Company
is presently negotiating with Montgomery to recover this Equipment.

Although it has obtained a Judgment for Possession for the
Premises, Montgomery may also seek monetary damages with respect
to the Company's alleged breach of the Lease. However, as of the
date hereof, Montgomery has not commenced an action against the
Company to obtain such monetary damages.

Management intends to vigorously contest these suits
and threatened suits; however, the likelihood that these
claims will result in loss or impairment of an asset is
probable with the exception of one matter subject to
arbitration as to which the likelihood that this claim will
result in loss or impairment of an asset is reasonably
possible. Any loss or impairment resulting from any of
these suits may have a material impact on the Company's
financial position, results of operations and cash flows in
future years. An accrual of $13,025,000 with respect to
these and other loss contingencies has been recorded by the
Company as part of its loss on discontinued operations, which
represents management's best estimate of the outcome of the
negotiations (Note 3).

On August 16, 2002, the Company entered into a new
one-year employment agreement with an officer of the
Company, which provides for annual compensation of $250,000,
a guaranteed bonus of $200,000, to be paid ratably over the
term of the agreement, a guaranteed bonus of $45,000, paid
upon the execution of the agreement and a guaranteed bonus
of $80,000, to be paid upon the employment of a full- time
Chief Executive Officer of Vie. On October 9, 2002, Vie
hired a full time Chief Executive Officer. The bonus
amounts were paid in full by December 16, 2002.

16. REDEEMABLE PREFERRED STOCK

Series E Preferred Stock - In June 2001, the Company
and certain stockholders entered into a Preferred Stock
Purchase Agreement whereby the stockholders agreed to
purchase up to an aggregate of 1,000,000 shares of the
Series E Preferred Stock at a price of $15.00 per share.
The purchase of shares took place at approximately one-
month intervals from June 2001 through January 2002. The
first such closing occurred on June 29, 2001 at which time
the stockholders purchased an aggregate of 403,332 shares
of the Series E Preferred Stock. In payment for the
shares, the stockholders cancelled two outstanding
promissory notes due from the Company in 2001 and paid the
balance in cash. The proceeds to OptiMark were
approximately $5,781,000 net of legal fees of approximately
$269,000. Such legal fees were not accreted as redemption
is not certain.

On August 16, 2001, the Company amended the Preferred
Stock Purchase Agreement to permit an additional investor
to purchase shares of the Series E Preferred Stock. The
shares to be purchased by the additional investor come from
those originally allocated to the initial purchasers of the
Series E Preferred Stock. In monthly closings during the
remainder of the year, the investors purchased 523,333
additional shares of the Series E Preferred Stock for an
aggregate amount of $7,850,000.

The Series E Preferred Stock is entitled to certain
preferences over existing classes of the Company's stock in
the event of any voluntary liquidation, dissolution or
winding up of the affairs of the Company or any Deemed
Liquidation Event (as defined below) involving the Company,
equal to twice its purchase price, plus 80% of proceeds
above that amount up to $200 million, plus 76.56% of
proceeds above $200 million up to and including $304.5
million, plus 56% of amounts in excess of $304.5 million.
For the purposes of this paragraph, the term "Deemed
Liquidation Event" shall mean any of the following: (i) the
Company's sale, conveyance or other disposition of all or
substantially all of its assets, (ii) the acquisition of
the Company by another entity by means of merger or
consolidation resulting in the exchange of the outstanding
shares of the Company for securities or consideration
issued, or caused to be issued, by the acquiring entity or
its subsidiary, unless the stockholders of the Company
immediately prior to the consummation of the transaction
hold at least 50% of the voting power of the surviving
corporation in such a transaction, (iii) the consummation
by the Company of a transaction or series of related
transactions, including the issuance or sale of voting
securities, if the stockholders of the Company immediately
prior to such transaction (or, in the case of a series of
transactions, the first of such transactions) hold less
than 50% of the voting power of the Company immediately
after the consummation of such transaction (or, in the case
of a series of transactions, the last of such
transactions); or (iv) a merger or consolidation of any of
the Company's subsidiaries unless, immediately after the
effectiveness thereof, the Company or one of its wholly-
owned subsidiaries owns all of the outstanding capital
stock of the surviving corporation. The Series E Preferred
Stock will vote together with the Company's common stock
and have 32 votes per share. Calculated based on shares
outstanding as of December 31, 2002, the Series E Preferred
Stock represents 36.9% of the votes of the outstanding
common stock (and shares entitled to vote with the common
stock) and, in the aggregate, when fully subscribed for,
represents 37.3% of the votes of the outstanding common
stock (and shares entitled to vote with the common stock).
Holders of the Series E Preferred Stock are entitled to
receive, when and if declared by the Board of Directors,
cumulative cash dividends at the annual rate of $1.20 per
share as well as certain preemptive and registration
rights.

Series F Preferred Stock - In 2001, the Company
adopted a new stock option plan under which employees and
others may receive options to acquire the Company's Series
F Preferred Stock (the "Series F Preferred Stock"). The
Series F Preferred Stock is entitled to certain preferences
over existing classes of the Company's stock in the event
of any voluntary liquidation, dissolution or winding up of
the affairs of the Company or any Deemed Liquidation Event
(as defined below) involving the Company, equal to 20% of
proceeds greater than $30 million up to and including $200
million, 19.14% of proceeds in excess of $200 million up to
and including $304.5 million, and 14% of proceeds in excess
of $304.5 million. For the purposes of this paragraph, the
term "Deemed Liquidation Event" shall mean any of the
following: (i) a merger or consolidation of the Company
unless, immediately after the effectiveness thereof, the
stockholders of the Company immediately prior to such
effectiveness hold a majority of the voting power in the
surviving corporation (or the parent of the surviving
corporation, in the event of a merger of the Company with
any other corporation in which the holders of the Company's
capital stock receive, in whole or in part, shares of
common stock of a direct or indirect parent corporation of
such other corporation), (ii) a merger or consolidation of
any of the Company's subsidiaries unless, immediately after
the effectiveness thereof, the Company or one of its
wholly-owned subsidiaries owns all of the outstanding
capital stock of the surviving corporation or (iii) a sale
of all or substantially all of the Company's assets.
Holders of Series F Preferred Stock will be entitled to one
vote per share.

Series G Preferred Stock - In December 2001, the
Company issued 300,000 shares of Series G Preferred Stock
(the "Series G Preferred Stock") in connection with the
settlement agreement with a former supplier of leased
equipment. The Series G Preferred Stock ranks junior to
the existing Series E Preferred Stock and Series F
Preferred Stock but senior to all other classes or series
of capital stock in the event of any voluntary liquidation,
dissolution or winding up of the affairs of the Company or
any Deemed Liquidation Event (as defined below). The
liquidation preference of the Series G Preferred Stock is
equal to 4.3% of proceeds in excess of $200 million up to
and including $304.5 million. For the purposes of this
paragraph, the term "Deemed Liquidation Event" shall mean
any of the following: (i) a merger or consolidation of the
Company unless, immediately after the effectiveness
thereof, the stockholders of the Company immediately prior
to such effectiveness hold a majority of the voting power
in the surviving corporation (or the parent of the
surviving corporation, in the event of a merger of the
Company with any other corporation in which the holders of
the Company's capital stock receive, in whole or in part,
shares of common stock of a direct or indirect parent
corporation of such other corporation), (ii) a merger or
consolidation of any of the Company's subsidiaries unless,
immediately after the effectiveness thereof, the Company or
one of its wholly-owned subsidiaries owns all of the
outstanding capital stock of the surviving corporation or
(iii) a sale of all or substantially all of the Company's
assets. The Series G Preferred Stock will vote together
with the Company's common stock and have one vote per
share.

17. EQUITY

Authorized Stock - During 1998, the Board of Directors
and the stockholders of the Company increased the
authorized shares of common stock and preferred stock of
the Company by 70,000,000 and 30,000,000 shares,
respectively. The Board of Directors has designated
3,547,068 shares of preferred stock as Series A Convertible
Participating Preferred Stock, 11,000,000 shares of
preferred stock as Series B Convertible Participating
Preferred Stock, 8,250,000 shares of preferred stock as
Series C Convertible Preferred Stock, 250,000 shares of
preferred stock as Series D Convertible Preferred Stock,
1,000,000 shares of preferred stock as Series E Preferred
Stock, 7,400,000 shares of preferred stock as Series F
Preferred Stock and 300,000 shares of preferred stock as
Series G Preferred Stock. As of December 31, 2002 and
2001, the Company had 8,577,932 undesignated shares of
preferred stock, respectively, authorized for issuance.

Common Stock - During 1998, the Company issued 350,000
shares of common stock to an officer at $10 per share (fair
market value at date of issuance) of which 183,000 shares
were issued out of treasury stock. The Company received
cash of $2,500,000 and received a 4.33% interest-bearing
note receivable for $1,000,000. On November 1, 1999, the
principal amount plus interest of $39,742 on the note was
repaid to the Company.

During 1999, the Company issued 2,000,000 shares of
common stock to HPM (See Note 7) at $14 per share (fair
market value at date of issuance) in exchange for the
termination of the non-securities industry licenses
previously granted to HPM. In addition, 4,167 shares of
common stock were issued to a consultant at $12 (fair
market value at date of issuance) in exchange for
approximately $50,000 in cash.

Common Stock (Non-Voting) - During 1998, the Company
created a new class of non-voting common stock. 1,500,000
shares were authorized and 740,000 shares were issued
during 1998 to an investor in exchange for 740,000 shares
of voting common stock. Such amounts are included in common
stock on the consolidated balance sheets.

Series A Convertible Participating Preferred Stock -
Each share of Series A Convertible Participating Preferred
Stock (the "Series A Preferred Stock")is currently
convertible into four shares of common stock, subject to
certain adjustments.

In March 1999, a Series A Preferred Stockholder
converted 75,000 shares of Series A Preferred Stock into
300,000 shares of the Company's common stock.

Series B Convertible Preferred Stock - Between April
and December 1998, in a series of closings, the Company
issued 11,000,000 shares of Series B Convertible Preferred
Stock (the "Series B Preferred Stock") at a price of $10
per share (fair market value at date of issuance) to
investors. In connection therewith, the Company issued
25,000 shares of Series B Preferred Stock (included in the
11,000,000 shares above) and paid a $150,000 fee to an
investor who served as a placement agent on behalf of the
Company. The Company also granted to the initial investor
in the Series B Preferred Stock a warrant to purchase
500,000 shares of common stock at $10 per share (fair
market value at date of grant) and granted that investor a
license to use, sell and distribute products, systems and
services using the OptiMark technology within the insurance
industry field (see "Warrants" below). In advance of
granting this license, the Company purchased the rights to
the OptiMark technology in the insurance industry field
from HPM for $500,000 in cash. HPM had a license to the
rights to the OptiMark technology in all non-securities
industry markets (See Note 7). Legal and other costs of
approximately $68,000 were incurred in connection with
these transactions.

Each share of Series B Preferred Stock is currently
convertible into one share of common stock, subject to
certain adjustments.

Series C Convertible Preferred Stock - In July 1999,
the Company issued 8,250,000 shares of Series C Convertible
Preferred Stock (the "Series C Preferred Stock") at a price
of approximately $11.76 per share (fair market value at
date of issuance) to two investors. Legal and other costs
of approximately $11,000 were incurred in connection with
this transaction.

Each share of Series C Preferred Stock is currently
convertible into one share of common stock, subject to
certain adjustments.

Series D Convertible Preferred Stock - In July 1999,
the Company issued 250,000 shares of Series D Convertible
Preferred Stock (the "Series D Preferred Stock") at a price
of $12 per share (fair market value at date of issuance) to
an investor.

Each share of Series D Preferred Stock is currently
convertible into one share of common stock, subject to
certain adjustments.

The Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred
Stock are entitled to a liquidation preference equal to
$7.33 per share, $10 per share, approximately $11.76 per
share and $12 per share, respectively, (aggregating
approximately $226 million) plus all declared and unpaid
dividends thereon to the date fixed for liquidation,
dissolution or winding up. Holders of the Series A
Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock are entitled
to receive dividends equal to any dividends received by the
holders of the Company's common stock, as if the Series A
Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock had been
converted into common stock.

The holders of the Series A Preferred Stock, one of
the holders of Series B Preferred Stock, certain officers
and directors of the Company, and the Company, have
previously entered into agreements relating to certain
preemptive rights, rights of first refusal and tag-along
rights. Pursuant to four separate registration rights
agreements, the holders of Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock have certain rights, subject to certain
restrictions and limitations, to have the Company register
their shares with the Securities and Exchange Commission
for resale. Holders of the Series E Preferred Stock are
entitled to preemptive and registration rights.

Warrants - During 1998, the Company issued warrants to
purchase up to 11,837,500 shares of its common stock. In
September 1998, in connection with the Company's agreement
with the Nasdaq to implement the Nasdaq Application, the
Company entered into a warrant agreement (the "Nasdaq
Warrant Agreement") with The Nasdaq Stock Market, Inc.
("Nasdaq") whereby the Nasdaq has the ability to earn
warrants to purchase up to 11,250,000 shares of the
Company's common stock (the "Nasdaq Warrants"). The Nasdaq
Warrants are exercisable in tranches based upon the
achievement of certain milestones, as defined by the Nasdaq
Warrant Agreement. In connection with the launch of the
Nasdaq Application in October 1999, an aggregate of
4,500,000 warrants were earned. Of the 4,500,000 warrants,
2,250,000 are exercisable at $5 per share and the remaining
2,250,000 are exercisable at $7 per share. In connection
with the above 4,500,000 warrants, the Company recorded an
expense of $33,800,000 in 1999 (the value using the Black-
Scholes Model). As of September 19, 2000, the business
related to the Nasdaq Warrants was discontinued and
consequently, no additional Nasdaq Warrants can be earned
in the future under the original Nasdaq Warrant Agreement.

In 1998, a warrant to acquire 42,500 shares of common
stock was issued in connection with a master equipment
lease agreement with a third party and expires in June
2003. The remaining warrants to acquire 45,000 shares of
common stock were granted in 1998 to two consultants of the
Company and have an exercise price of $10 (fair market
value at date of grant). Of these warrants, 40,000 expire
in August 2003 and the remaining 5,000 were exercised in
August 1999. The effect of the above warrants in 1998 was
an expense of approximately $109,000 (the value using the
Black-Scholes Model).

During 1999, the Company issued to five holders of
Series B Preferred Stock, warrants to acquire an aggregate
of 1,666,667 shares of its common stock at $10 per share
(fair market value at the date of grant). In connection
with such issuance, the Company recorded an expense of
approximately $6,786,300 (the value using the Black-Scholes
Model) in 1999. All of these warrants expired unexercised
in June 1999. Additionally, warrants to acquire 25,000
shares of common stock were granted to two consultants of
the Company. Of these warrants, 5,000 were issued at $10
and expired in January 2002. The effect of this warrant in
1999 was an expense of approximately $6,300 (the value
using the Black-Scholes Model). The remaining 20,000,
granted to a former board member in consideration for
contracted consulting services, were issued at $14 and
expire in February 2009. The charge associated with this
warrant (utilizing the Black-Scholes Model) was
approximately $38,800, to be amortized over the life of the
contract. The amount expensed in 1999 was approximately
$24,300 and the balance of $14,500 was expensed in 2000.

Additionally, in October 1999, the Company entered
into a strategic alliance with Knight/Trimark Group, Inc.
("Knight") under which Knight can earn warrants to acquire
common stock of up to a maximum of 25% of the Company, but
not in excess of 31,037,491 common shares. The warrants are
earned in tranches based on the number of shares traded by
Knight in the OptiMark System, with progressively larger
amounts of trades required to earn each tranche. As of
September 19, 2000, the business related to the Knight
warrants was discontinued. As of that date, no warrants
had been earned and, as a result of the discontinuation of
that business, no warrants can be earned in the future.

On October 2, 2000, the Company and Nasdaq executed a
new agreement whereby the Company entered into a new
development effort for Nasdaq and amended the terms of the
Nasdaq Warrant Agreement. The amended warrant agreement
maintained the remaining number of unearned warrants that
could be issued under the prior agreement, but changed the
criteria for earning each tranche to defined critical
milestones of the new development effort. In addition, the
exercise date for all warrants was extended by 3 years. As
of December 31, 2000, the first critical milestone was
achieved and 500,000 of the warrants which had a fair
market value of $.50 per share were earned. The warrants
are exercisable at $7.00 per share. At December 31, 2000,
the warrants had no fair market value as calculated using
the Black-Scholes Model. In April 2001, OptiMark and
Nasdaq amended the October 2, 2000 agreement and provided,
among other terms, that the balance of the Nasdaq warrants
would vest in 2001 if OptiMark earned a defined cumulative
billing amount in 2001. The defined cumulative billing
amount was reached in 2001 and the balance of the warrants,
6,250,000, was earned.

In March 2000, 124,000 warrants granted to three
former employees of an affiliate expired.

As discussed above, a warrant to acquire 500,000
shares of common stock was issued in connection with the
Series B Preferred Stock financing and expires in June
2003. The effect of the above warrant in 1998 was a
reduction in additional paid-in capital of approximately
$915,000 (the value using the Black-Scholes Model).

Treasury Stock - During 1997, the Company purchased
208,000 shares of common stock at $2.56 per share from an
individual investor and held these shares as treasury
shares. In 1998, these shares were sold to two consultants
and an officer of the Company at $10 per share (fair market
value at date of sale).

Additionally, during 1998, the Company purchased
250,000 shares of Series A Preferred Stock at $40 per share
from an investor and held these shares as treasury shares
at December 31, 1998 and 1999. In January 2000, the
Company's board of directors retired these Series A
Preferred shares and the shares were returned to the
authorized but unissued preferred shares.

During 2001, the Company purchased 3,242,644 common
shares and 2,296,385 shares of Series A Preferred Stock
from one investor and 180,000 shares of Series B Preferred
Stock from a second investor for a total cost of $2.00.
The common shares are being held in treasury. The Series A
Preferred Stock and Series B Preferred Stock were returned
to the authorized but unissued preferred shares.

During 2002, the Company purchased 2,250,000 shares of
Series B Preferred Stock from three investors for a total
cost of $2,503. The Series B Preferred Stock was returned
to the authorized but unissued preferred shares.

18. STOCK OPTION PLANS

Common Stock Option Plan

During 1998, the Company provided for the granting of
1,200,000 options to an officer of the Company with an
exercise price of $10 (fair market value at the date of
grant), and an exercise period of 10 years from the date of
grant under the plan. Of the 1,200,000 options, 200,000
vested immediately and the remaining 1,000,000 options vest
ratably over a five-year period on the anniversary of the
date of hire. The officer resigned from the Company in
2000 and all options were cancelled.

Prior to November 1999, the Company maintained a stock
option plan (the "1996 Plan"), which provided for the
issuance of stock options to employees. Under the 1996
Plan, options that were intended to be incentive stock
options were granted at prices not less than fair market
value per share on the date of grant, as determined by the
Board of Directors. The options granted were exercisable in
accordance with the vesting schedule not to exceed ten
years. No further stock options may be granted under the
1996 Plan.

In November 1999, the Company adopted the 1999 Stock
Plan (the "1999 Plan"), which made 14,669,224 shares of
common stock available for issuance. This amount included
8,669,224 shares under the 1996 Plan and an additional
6,000,000 shares under the 1999 Plan. All options
outstanding under the 1996 Plan, as of the date of adoption
of the 1999 Plan, continued in effect under their original
terms. The 1999 Plan provided for the issuance of non-
statutory and incentive stock options (as defined in the
Internal Revenue Code of 1986, as amended), restricted
stock and stock equivalent rights to employees, directors
and consultants. Options granted under the 1999 Plan that
were intended to be incentive stock options were granted at
prices not less than fair market value per share on the
date of grant. Non-Statutory stock options granted under
the 1999 Plan were granted at prices not less than 85% of
fair market value per share on the date of grant. No
portion of any option could be exercised beyond 10 years
from the grant date.

In May 2000, the Company amended the 1999 Plan to
increase the number of shares authorized for issuance by
3,000,000, which made 17,669,224 shares available for
issuance.

On September 19, 2000, the Company's board of
directors authorized a repricing, which reduced to $.50 per
share, the exercise price of all outstanding stock options
that had been granted to those employees who remained with
the Company after that date. The original options were
granted at amounts ranging from $1.83 to $14.00 per share,
over several grant dates. A total of 6,298,300 shares
related to those employees were repriced. Options for
863,500 shares related to certain eligible employees who
did not execute an agreement related to all repriced
shares, were not repriced. All outstanding stock options
that had been granted to employees who either left the
Company prior to September 19, 2000 or whose employment was
terminated by the Company as a result of the September 2000
restructuring were not repriced and remain at the original
exercise price set at the time of grant. The new exercise
price of $.50 per share was based on a determination of the
fair market value of the Company's common stock by its
board of directors at that date. The repriced options are
subject to variable plan accounting. No expense was
required for the years ended 2002, 2001 and 2000 as a
result of this repricing.

On voluntary termination an employee has thirty days
in which to exercise his or her vested options.

At December 31, 2002, 2001 and 2000, the components of
the Plan consisted of the following:

AVERAGE
WEIGHTED EXERCISE
SHARES PRICE
------ -----

Options outstanding at January 1, 2000.......... 6,967,060 $ 6.32

Options granted during 2000..................... 9,120,600 5.85
Options exercised during 2000................... (116,500) 1.75
Options canceled during 2000.................... (7,153,490) 8.55

Options outstanding at December 31, 2000........ 8,817,670 $ 2.39

Options granted during 2001..................... 673,000 $ .50
Options exercised during 2001................... 0
Options canceled during 2001.................... (4,564,531) $ 3.34

Options outstanding at December 31, 2001........ 4,926,139 $ 1.27

Options granted during 2002..................... 20,000 $ .50
Options exercised during 2002................... 0
Options canceled during 2002.................... (3,025,639) $ 1.27

Options outstanding at December 31, 2002........ 1,920,500 $ 1.23

Weighted-average fair value of options
granted during the year 2002.................... $ .02

Weighted-average fair value of options
granted during the year 2001.................... $ .50

Weighted-average fair value of options
granted during the year 2000.................... $ 1.67

Number of options exercisable at December 31, 2000 2,582,177 $ 3.04

Number of options exercisable at December 31, 2001 2,333,229 $ 1.27

Number of options exercisable at December 31, 2002 1,478,100 $ 1.27

The following table summarizes information about
stock options outstanding at December 31, 2002:

OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- --------------------------------------------------------------------------------------------------
WEIGHTED
RANGE OF NUMBER OF AVERAGE WEIGHTED NUMBER WEIGHTED
AVERAGE REMAINING NO. OF AVERAGE OF AVERAGE
EXERCISE SHARES CONTRACTUAL EXERCISE SHARES EXERCISE
PRICES OUTSTANDING LIFE PRICE OUTSTANDING PRICE
------ ----------- ---- ----- ----------- -----

$ .50 - $ 1.50 1,755,900 6.63 $ .50 1,350,200 $ .50
$ 1.83 - $ 7.50 25,400 4.56 2.71 25,400 2.71
$10.00 - $14.00 139,200 7.01 10.61 102,500 10.82
------- -------
$ .50 - $14.00 1,920,500 6.63 $ 1.26 1,478,100 $ 1.27
========= =========

Series F Preferred Stock Option Plan

On November 13, 2001, the stockholders of the Company
approved the OptiMark Holdings, Inc. 2001 Series F
Preferred Stock Plan (the "2001 Plan"). The 2001 Plan
provides for the granting of awards to acquire up to
7,400,000 shares of Series F Preferred Stock to officers,
employees, or directors of or consultants to the Company.
Awards may take the form of options, rights to purchase or
unfunded and unsecured rights to receive Series F Preferred
Stock in the future. Options granted under the 2001 Plan
may be either incentive stock options or non-qualified
options. The options have a term of ten years and vest
cumulatively at a rate no less than twenty five percent per
year over four years.

At December 31, 2002, the components of the 2001 Plan
consisted of the following:

Weighted-
Average
Exercise
Shares Price
------ -----

Options granted during 2001..................... 5,613,398 $ .10
Options cancelled during 2001................... (10,000) $ .10
Options outstanding at December 31, 2001........ 5,603,398 $ .10
Options granted during 2002..................... 20,000 $ .10
Options cancelled during 2002................... (2,153,199) $ .10
Options outstanding at December 31, 2002........ 3,470,199 $ .10

Weighted-average fair value of options
granted during 2002............................. $ .01
Weighted-average fair value of options
granted during 2001............................. $ .10

Number of options exercisable at December
31, 2001........................................ 627,840 $ .10
Number of options exercisable at December
31, 2002........................................ 2,138,012 $ .10

The weighted-average remaining contractual life for
options outstanding at December 31, 2002 as 8.60 years and
the weighted-average exercise price of options exercisable
at December 31, 2002 was $.10.

19. FAIR VALUE OF FINANCIAL INSTRUMENTS

In the opinion of management, the carrying value of
cash and cash equivalents, receivables, notes, other assets
and current liabilities are a reasonable estimate of their
fair value.

20. LOSS PER SHARE ("EPS")

Basic and diluted EPS for 2002, 2001 and 2000 was
calculated using 33,369,913, 35,004,561 and 36,603,854
weighted-average shares outstanding for the years ended
December 31, 2002, 2001 and 2000, respectively. Due to the
net losses incurred in each year, all options and
convertible preferred stock were anti-dilutive and
therefore excluded from the basic and diluted earnings per
share calculation.

21. SUBSEQUENT EVENTS

On January 31, 2003, OptiMark amended the employment
agreement dated August 16, 2001 to change its chief
executive officer's employment status to part-time as of
January 15, 2003. Under the terms of the agreement, the
chief executive officer is to receive $125,000 in cash and
make himself available for service to the Company for ten
days from February 1, 2003 to March 31, 2003. After the
tenth day of service during this period, the chief
executive officer is entitled to receive $2,000 per day.
Commencing April 1, 2003, the chief executive officer will
receive a salary $2,000 per week and will receive $2,000
per day if he works more than one day in any given week.
Under the terms of the agreement, the Company will pay for
the continued coverage of the chief executive officer and
each of his dependents in the medical, dental, vision and
hospitalization programs until December 31, 2003.

On April 10, 2003 the Company extended the maturity
date of a $45,000 loan to its Chief Executive Officer to
May 31, 2003.

On February 6, 2003, the Company entered into a fifth
loan agreement with certain of its shareholders. Under
this fifth loan agreement, the Company borrowed $940,000
for a period of 180 days at an interest rate of 10% per
annum compounded every ninety days. The fifth loan is
secured by substantially all of the assets of the Company.
In lieu of repayment of principal in cash, the lenders may
require the Company to repay the principal amount of the
loan by causing OptiMark to transfer eighty-nine shares of
the Non-Qualified Preferred Stock of Innovations and the
reduction of the Company's First Call Right by twenty
shares subject to adjustment as provided in the fifth loan
agreement with accrued interest payable in cash at
maturity.

On March 19, 2003, subject to execution of definitive
documentation, the Company reached a settlement with Finova
with respect to the litigation captioned Finova Capital
Corporation (Plaintiff) v. OptiMark Technologies, Inc.,
OptiMark, Inc. and OptiMark Holdings, Inc. (Defendants),
Superior Court of New Jersey - Hudson County. The
terms of this settlement provide that the Company will pay
Finova the combined sum of $1,000,000 in the following
manner: a) $200,000 within thirty (30) days of the execution
of the written settlement agreement; b) $400,000 in January 2004;
and c) $400,000 in June 2004. The Company will provide Finova with
a consent judgment for the outstanding balance due on the
lease agreements in dispute - to be used only in the event
of a default under the terms of the settlement agreement.
The exact amount of the consent judgment shall be agreed to
by the parties based upon the amount due and owing under
the subject leases. In consideration of the foregoing,
Finova, upon receipt of the first payment of $200,000, will
provide all defendants to the litigation (namely, Optimark
U.S. Equities, Inc., Optimark, Inc., Optimark Holdings,
Inc., Optimark Innovations, Inc. (plead as OTSH, Inc.) and
Vie Financial Group (plead as Ashton Technology Group,
Inc.)) a release for all claims arising out of the lease
transaction between the parties as well as those additional
claims asserted, or those that could have been asserted, by
Finova against all defendants in the pending litigation.
Additionally, Finova also shall cause a Stipulation of
Dismissal, with prejudice, to be filed in the pending
action.

22. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following table presents unaudited quarterly
results of operations for 2002 and 2001. This unaudited
information has been prepared on the same basis as the
audited consolidated financial statements. In the opinion
of management, this table includes all adjustments,
consisting of only normal recurring adjustments, that are
considered necessary for a fair presentation of the
Company's financial position and results of operations for
the quarters presented.

First Second Third Fourth
----- ------ ----- ------

2002
- ----
Total revenue........... $ - $ 514,991 $ - $ 191,127
Loss from continuing
operations.............. (3,291,840) (1,164,291) (4,551,357) (3,143,489)
Loss from continuing
operations per share.... $ (0.10) $ (0.03) $ (0.14) $ (0.09)
Weighted average number
of common shares
outstanding - basic and
diluted................. 33,369,913 33,369,913 33,369,913 33,369,913

2001
- ----
Total revenue........... $ 3,417,965 $ 3,256,355 $ 2,563,682 $ 2,187,720
Loss from continuing
operations.............. (5,015,167) (4,429,067) (2,698,036) (5,087,695)
Loss from continuing
operations per share.... $ (0.14) $ (0.12) $ (0.08) $ (0.15)
Weighted average number
of common shares
outstanding - basic and
diluted................. 36,612,557 36,612,557 33,475,651 33,369,913