As filed with the Securities and Exchange Commission on August 1, 2002

                                                      Registration No. 333-96605
================================================================================

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

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


                                 AMENDMENT NO. 1
                                       TO

                                    FORM S-3

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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

                             RATEXCHANGE CORPORATION
               (Exact name of registrant as specified in charter)

     Delaware (State or other jurisdiction of incorporation or organization)

                                   11-2936371
                      (I.R.S. Employee Identification No.)

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

                                 100 Pine Street
                                    Suite 500
                      San Francisco, California 94111-5101
                                 (415) 274-5650
                   (Address and telephone number of executive
                    offices and principal place of business)

                  D. Jonathan Merriman, Chief Executive Officer
                            RateXchange Corporation.
                                 100 Pine Street
                                    Suite 500
                      San Francisco, California 94111-5101
                                 (415) 274-5650
            (Name, address and telephone number of agent for service)

                        Copies of all communications to:

                               Barry Feiner, Esq.
                                170 Falcon Court
                            Manhasset, New York 11030
                                 (516) 484-6890


     Approximate  date of proposed  sale to the public:  From time to time or at
one time after the effective date of this Registration Statement.

     If the only  securities  being  registered  on this form are being  offered
pursuant to dividend or interest  reinvestment plans, please check the following
box. [ ]

     If any of the securities being registered on this Form are to be offered on
a delayed or continuous  basis  pursuant to Rule 415 under the Securities Act of
1933,  other  than  securities  offered  only in  connection  with  dividend  or
reinvestment plans, check the following box. [X]

     If this form is filed to  register  additional  securities  for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list  the  Securities  Act  registration  statement  number  of the  earlier
effective registration statement for the same offering. [ ]

     If this form is a  post-effective  amendment filed pursuant to 462(c) under
the  Securities  Act,  check  the  following  box and  list the  Securities  Act
registration number of the earlier effective registration statement for the same
offering. [ ]

     If delivery of the  prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

================================================================================


                                       ii


                         CALCULATION OF REGISTRATION FEE




======================================================================================================
                                                        Proposed          Proposed
                                                        Maximum           Maximum         Amount of
Title of Each Class of                Amount to be   Offering Price  Aggregate Offering  Registration
Securities to be Registered (1)      Registered (2)   Per Unit (3)        Price (3)           Fee
------------------------------------------------------------------------------------------------------
                                                                              
       Common Stock                     2,593,510        $ 0.29         $    752,118      $    69.19
       Common Stock (4)                 8,581,085        $ 0.37         $  3,175,001      $   292.10
       Common Stock (5)                   875,000        $ 0.37         $    323,750      $    29.79
       Common Stock (6)                   609,756        $ 0.41         $    250,000      $    23.00
       Common Stock (7)                   187,500        $ 0.41         $     76,875      $     7.07
       Common Stock (8)                   806,366        $ 0.29         $    233,846      $    21.51
       Common Stock (9)                   300,000        $ 4.47         $  1,341,000      $   123.34
       Common Stock (10)                  500,000        $ 4.70         $  2,350,000      $   216.20
       Common Stock (11)                  500,000        $ 4.92         $  2,460,000      $   226.32
       Common Stock (12)                  500,000        $ 5.14         $  2,570,000      $   236.44
       Common Stock (13)                  500,000        $ 5.37         $  2,685,000      $   247.02
       Common Stock (14)                  878,378        $ 0.44         $    390,000      $    35.88
       Common Stock (15)                  233,500        $ 1.25         $    291,875      $    26.85
       Common Stock (16)                  520,833        $ 0.48         $    250,000      $    23.00
       Common Stock (17)                  116,750        $ 0.40         $     46,700      $     4.30
       Common Stock (18)                  116,750        $ 0.38         $     44,365      $     4.08
       TOTAL                           17,819,428                       $ 17,240,529      $ 1,586.13
======================================================================================================



(1)  This Registration Statement covers offers, sales and other distributions of
     the  securities  listed  in this  table  from  time to time at prices to be
     determined.

(2)  Pursuant to Rule 416 of the  Securities  Act of 1933,  there are also being
     registered an indeterminate  number of additional shares of common stock as
     may  become  issuable  upon  conversion  of notes and  preferred  stock and
     exercise of warrants to prevent dilution resulting from stock splits, stock
     dividends or similar transactions.

(3)  Estimated  solely for the  purpose of  computing  the  registration  fee in
     accordance  with Rule 457(c) of the  Securities  Act as  follows:  (i) with
     respect to shares of common stock  currently  held by selling  stockholders
     and to be sold by them, by multiplying  the number of such shares by $0.31,
     the average of the high and low prices of the shares of common stock of the
     Registrant  reported on the American Stock Exchange on June 25, 2002;  (ii)
     with  respect  to  the  shares  of  common  stock  to be  sold  by  selling
     stockholders  which are issuable upon  conversion of notes,  by multiplying
     such  number of  shares by the  conversion  rates of the  notes,  which are
     higher than the $0.31  market  price;  (iii) with  respect to the shares of
     common stock to be sold by selling  stockholders  which are  issuable  upon
     exercise of warrants,  by multiplying such number of shares by the exercise
     prices of the warrants,  which are higher than the $0.31 market price;  and
     (iv) with  respect  to the  shares of  common  stock to be sold by  selling
     stockholders  which are issuable  upon  conversion of preferred  stock,  by
     multiplying  such number of shares by the $0.31  market  price  because the
     preferred stock is convertible at the rate of one share of common stock for
     each share of preferred stock.

(4)  Represents  common stock issuable upon  conversion of notes held by selling
     stockholders in the principal amount of $3,175,000 at the rate of $0.37 per
     share.

(5)  Represents  common stock issuable upon exercise of warrants held by selling
     stockholders at an exercise price of $0.37 per share.

(6)  Represents  common  stock  issuable  upon  conversion  of a note  held by a
     selling  stockholder  in the  principal  amount of  $250,000 at the rate of
     $0.41 per share.

(7)  Represents  common  stock  issuable  upon  exercise of  warrants  held by a
     selling stockholder at an exercise price of $0.41 per share.


                                       iii


(8)  Represents common stock issuable upon conversion of preferred stock held by
     selling  stockholders  at the rate one share of common stock for each share
     of preferred stock.

(9)  Represents  common  stock  issuable  upon  exercise of  warrants  held by a
     selling stockholder at an exercise price of $4.47 per share.

(10) Represents  common  stock  issuable  upon  exercise of  warrants  held by a
     selling stockholder at an exercise price of $4.70 per share.

(11) Represents  common stock issuable upon exercise of warrants held by selling
     stockholders at an exercise price of $4.92 per share.

(12) Represents  common  stock  issuable  upon  exercise of  warrants  held by a
     selling stockholder at an exercise price of $5.14 per share.

(13) Represents  common  stock  issuable  upon  exercise of  warrants  held by a
     selling stockholder at an exercise price of $5.37 per share.

(14) Represents  common stock issuable upon exercise of placement agent warrants
     held by selling stockholders at an exercise price of $0.44 per share.


(15) Represents  common  stock  issuable  upon  exercise of  warrants  held by a
     selling stockholder at an exercise price of $1.25 per share.

(16) Represents  common  stock  issuable  upon  exercise of  warrants  held by a
     selling stockholder at an exercise price of $0.48 per share.

(17) Represents  common  stock  issuable  upon  exercise of  warrants  held by a
     selling stockholder at an exercise price of $0.40 per share.

(18) Represents  common  stock  issuable  upon  exercise of  warrants  held by a
     selling stockholder at an exercise price of $0.38 per share.




                                       iv



                             RATEXCHANGE CORPORATION

                      Common stock by selling stockholders

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

     The selling  stockholders or their  successors may sell, from time to time,
in one or more offerings:

     o    2,593,510 shares of common stock currently held by them

     o    15,225,918  shares of common stock  issuable upon  conversion of notes
          and preferred stock and exercise of warrants currently held by them.


     We will not receive proceeds from the sale of shares by our stockholders or
the resale of our  stockholders'  shares  that are issued when our notes and our
preferred stock are converted and our warrants are exercised;  however,  we will
receive  proceeds  from the  exercise  of our  warrants,  if and  when  they are
exercised.

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

     Please  see the risk  factors  beginning  on page 4 to read  about  certain
factors you should consider before buying shares of our common stock.

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


     Our common stock is listed on the American  Stock Exchange under the symbol
RTX. The reported  last sale price on the  American  Stock  Exchange on July 30,
2002 was $0.35.


     Neither the Securities and Exchange  Commission,  nor any state  securities
commission has approved or disapproved of these securities or determined if this
prospectus  is truthful or  complete.  Any  representation  to the contrary is a
criminal offense.

                The date of this prospectus is               2002


                                        v


                               INSIDE FRONT COVER

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This  prospectus  contains  forward-looking   statements.   All  statements
regarding

     o    future events,
     o    our financial performance and operating results,
     o    our business strategy, and
     o    our financing plans

     are   forward-looking   statements.   In  some   cases  you  can   identify
forward-looking  statements  by  terminology,  such as "may,"  "will,"  "would,"
"should,"  "could,"  "expect,"   "intend,"  "plan,"   "anticipate,"   "believe,"
"estimate," "predict," "potential" or "continue," the negative of such terms, or
other comparable terminology.  These statements are only predictions.  Known and
unknown  risks,  uncertainties  and other factors could cause actual  results to
differ materially from those contemplated by the statements. In evaluating these
statements,  you should  specifically  consider various  factors,  including the
risks described in the "Risk Factors"  section and elsewhere in this prospectus.
These  factors  may cause our  actual  results  to  differ  materially  from any
forward-looking statements.


                                       vi


                               Prospectus Summary

     Because this is a summary,  it may not contain all information  that may be
important  to you.  You  should  read  this  entire  prospectus,  including  the
information  incorporated by reference and the financial data and related notes,
before making an investment  decision.  When used in this prospectus,  the terms
"we," "our" and "us" refer to RateXchange and not to the selling stockholders.

                                   RATEXCHANGE

     We are a brokerage  services  firm that combines our expertise in bandwidth
and other emerging  commodity  markets with securities  brokerage and investment
banking  activities.  Our  RTX  Securities  Corporation  subsidiary  is  a  NASD
licensed,  fully disclosed  broker-dealer offering sales and trading services to
institutions  and private  clients,  as well as advisory and investment  banking
services to our corporate clients.

     We expect to  generate  revenues  from  brokerage  and  investment  banking
activities  through RTX Securities and, to a lesser extent,  from consulting and
information  services  through our  emerging  commodities  division.  We receive
revenue from our investment banking and brokerage services in the form of

     o    commissions,
     o    transaction fees,
     o    capital markets services fees, and
     o    merger and acquisition advisory fees.

We believe that our  consulting  and  information  services  may, in the future,
generate revenues in the form of

     o    subscription fees,
     o    transaction fees,
     o    professional services fees, and
     o    mangement fees.

     The mailing address of our principal  executive offices is 100 Pine Street,
Suite 500, San Francisco,  California 94111-5101.  Our telephone number is (415)
274-5650 and our web site address is  www.ratexchage.com.  Information contained
on our web site is not part of this prospectus.

Recent Developments

     We held our annual stockholder meeting on May 30, 2002. At the meeting, the
members of our board of directors were reelected and the stockholders approved

     o    our 2002 Employee Stock Purchase Plan and
     o    our change of auditors from Arthur Andersen, LLP to Ernst & Young, LLP

                                  Risk Factors

     This offering  involves a high degree of risk.  Each  prospective  investor
should  carefully  consider the risks described  below and other  information in
this prospectus before making an investment decision.

It is difficult to evaluate our business and prospects because we have a limited
operating history in a new and rapidly changing industry.

     In December 2001 we acquired a securities  broker-dealer firm and created a
wholly-owned  subsidiary,  RTX  Securities  Corporation,   that  began  actively
engaging in providing  securities  brokerage and investment  banking services in
February 2002. Accordingly, we have a limited operating history on which to base
an evaluation of our business and prospects. Our prospects must be considered in
light  of  the  risks,  expenses  and  difficulties  frequently  encountered  by
companies in their early stage of development, particularly companies in new and
rapidly  evolving  markets.  We cannot


                                       1


assure you that we will be successful in addressing  these risks and our failure
to do so could have a material  adverse  effect on our  business  and results of
operations.

     Our ability to attain a positive cash flow and become profitable depends on
our ability to generate and maintain greater revenues while incurring reasonable
expenses.  This, in turn, depends, among other things, on the development of our
securities brokerage and investment banking business, as well as our ability to:

     o    establish, maintain and increase our client base;
     o    manage  the  quality  of  services  delivered  by  us  supporting  our
          securities brokerage and investment banking business;
     o    compete effectively with existing and potential competitors;
     o    further develop our business model;
     o    manage expanding operations; and
     o    attract and retain qualified personnel.

     If we do  achieve  a  positive  cash flow and  profitability,  we cannot be
certain  that we will be able to  sustain or  increase  them on a  quarterly  or
annual basis in the future.  Our inability to achieve or maintain  profitability
or positive cash flow could result in disappointing  financial  results,  impede
implementation  of our growth  strategy or cause the market  price of our common
stock to  decrease.  Accordingly,  we cannot  assure you that we will be able to
generate   the  cash  flow  and  profits   necessary  to  sustain  our  business
expectations,  which makes our ability to  implement  successfully  our business
plan uncertain.

     Because we are a developing company,  the factors upon which we are able to
base our  estimates  as to the gross  revenues  and the number of  participating
clients  that will be  required  for us to attain a  positive  cash flow and any
additional financing that may be needed for this purpose, are unpredictable.  In
addition,  the emerging  commodities part of our business is in an industry that
is new and rapidly changing.  For these and other reasons,  we cannot assure you
that we will not require higher gross revenues, and an increased number of

     o    clients,
     o    securities brokerage and investment banking transactions,
     o    emerging commodity transactions and/or

more time in order for us to complete the  development  of our business  that we
believe we need to be able to cover our operating expenses,  or obtain the funds
necessary  to finance  this  development.  It is more  likely  than not that our
estimates will prove to be inaccurate  because actual events more often than not
differ from  anticipated  events.  Furthermore,  in the event that  financing is
needed in addition  to the amount that we estimate  either may be or is required
for this development, we cannot assure you that such financing will be available
on acceptable terms, if at all. Accordingly, we can neither assure nor represent
to you  that  our  business  will  ever  generate  a  positive  cash  flow or be
profitable.

We have a history of operating  losses and negative  cash flow and we anticipate
losses and negative cash flow to continue for the foreseeable future.  Unless we
are  able to  generate  profits  and  positive  cash  flow we may not be able to
continue operations.

We have incurred net losses and generated only nominal  revenues from operations
since our  inception  and financed our  operations  primarily  through  sales of
equity and debt securities.  We incurred net losses of $30,072,000,  $44,729,000
and  $9,299,000  for  the  years  ended  December  31,  2001,   2000  and  1999,
respectively, and negative cash flow from operations of $11,762,000, $17,161,000
and $3,070,000 in 2001, 2000 and 1999, respectively. We have incurred net losses
of $1,616,000 and $7,641,000 for the three months ended March 31, 2002 and March
31, 2001,  respectively,  and negative cash flow from operations of $877,000 and
$5,608,000  for the  three  months  ended  March 31,  2002 and  March 31,  2001,
respectively.  At March 31, 2002, our  accumulated  deficit since  inception was
$89,429,000.  We expect  operating losses and negative cash flow to continue for
the  foreseeable  future.  We  may  never  achieve  a  positive  cash  flow  and
profitability  and  even if we do,  we may not  sustain  or  increase  them on a
quarterly or annual basis in the future. If we are unable to achieve and sustain
a  positive  cash  flow and  profitability,  we may be unable  to  continue  our
operations.


                                       2


The markets for securities  brokerage and investment banking services are highly
competitive.  If we are not able to compete  successfully  against  current  and
future  competitors,  our business and results of  operations  will be adversely
affected.

     The  markets  for  securities   brokerage,   investment  banking  and  data
aggregation  for emerging  commodities  are highly  competitive.  Our ability to
compete  with other  companies  will depend  largely upon our ability to capture
market share by obtaining  sufficient customers for our securities brokerage and
investment banking services and participants for the RateXchange Trading System.

     Increased pressure created by any current or future competitors,  or by our
competitors collectively, could materially and adversely affect our business and
results of operations.  Increased  competition may result in reduced revenue and
loss of market  share.  Further,  as a  strategic  response  to  changes  in the
competitive environment,  we may from time to time make certain pricing, service
or marketing  decisions or acquisitions that also could materially and adversely
affect our business and results of operations. We cannot assure you that we will
be able to compete  successfully  against  current  and future  competitors.  In
addition,  new  technologies  and the  expansion  of existing  technologies  may
increase the competitive pressures on us.

We have registered one of our subsidiaries as a securities broker-dealer and, as
such,  are subject to substantial  regulations.  If we fail to comply with these
regulations, our business will be adversely affected.

     Because we have  registered  RTX Securities  Corporation,  our wholly owned
subsidiary,  with  the  Securities  and  Exchange  Commission  and the  National
Association of Securities Dealers, Inc., or NASD, as a securities broker-dealer,
we are  subject to  extensive  regulation  under  federal  and state  laws.  The
principal  purpose  of  regulation  and  discipline  of  broker-dealers  is  the
protection of customers and the  securities  markets  rather than  protection of
creditors  and  stockholders  of  broker-dealers.  The  Securities  and Exchange
Commission  is the federal  agency  charged with  administration  of the federal
securities  laws. Much of the regulation of  broker-dealers,  however,  has been
delegated  to  self-regulatory  organizations,  such as the  NASD  and  national
securities  exchanges.  The NASD is our  primary  self-regulatory  organization.
These self-regulatory organizations adopt rules, which are subject to Securities
and Exchange Commission approval,  that govern the industry and conduct periodic
examinations  of  member  broker-dealers.  Broker-dealers  are also  subject  to
regulation  by state  securities  commissions  in the  states in which  they are
registered.  The  regulations  to which  broker-dealers  are  subject  cover all
aspects of the securities business,  including net capital  requirements,  sales
methods, trading practices among broker-dealers, capital structure of securities
firms, record keeping and the conduct of directors,  officers and employees. The
Securities and Exchange  Commission and the  self-regulatory  bodies may conduct
administrative  proceedings,  which can result in censure,  fine,  suspension or
expulsion of a  broker-dealer,  its officers or employees.  If we fail to comply
with these rules and  regulations,  our business may be materially and adversely
affected.

Our business may suffer if we lose the services of our executive officers, or if
we cannot  retain  existing  skilled  personnel and recruit  additional  skilled
personnel.

     We  depend  on  the  continued  services  and  performance  of D.  Jonathan
Merriman,  our Chairman and Chief Executive  Officer for our future success.  We
currently have an employment agreement with Mr. Merriman,  which ends on October
8, 2003 but can be terminated by either party on 60 day's notice.  The agreement
contains  provisions  that obligate us to make certain  payments to Mr. Merriman
and substantially  reduce vesting periods of options granted to him if we should
terminate him without cause or certain  events  resulting in a change of control
of our board were to occur.  Pursuant to an  amendment to the  agreement,  which
became  effective as of  September  28, 2001,  Mr.  Merriman  reduced his annual
salary from $300,000 to $1.00.  Upon the  consummation of the sale of the assets
of our futures  trading  subsidiary and the  consummation  of our recent private
financing, Mr. Merriman's annual salary has increased to $150,000.

     In addition to Mr. Merriman,  we are currently managed by a small number of
key management and operating  personnel.  We do not maintain "key man" insurance
on any employee.  Our future success depends,  in part, on the continued service
of our key executive, management and technical personnel, many of whom have only
recently been hired,  and our ability to attract highly skilled  employees.  Our
business could be harmed if any key officer or employee were unable or unwilling
to  continue  in his or  her  current  position.  From  time  to  time  we  have
experienced,  and we expect to continue to experience,  difficulty in hiring and
retaining highly skilled employees. Competition for employees in our industry is
intense.  If we are unable to retain our key employees or attract,  integrate or
retain other highly


                                       3


qualified  employees  in the future,  such  failure may have a material  adverse
effect on our business and results of operations.

     We have a number of revenue producers employed by our securities  brokerage
and investment  banking  subsidiary.  We do not have  employment  contracts with
these  employees.  The loss of one or more of these  employees  could  adversely
affect our business and results of operations.

We may be unable to  effectively  manage  rapid  growth that we may  experience,
which  could  place a  continuous  strain  on our  resources  and,  accordingly,
adversely affect our business.

     We plan to expand our  operations.  Our growth,  if it occurs,  will impose
significant demands on our management, financial, technical and other resources.
We must adapt to changing  business  conditions and improve  existing systems or
implement  new systems for our  financial  and  management  controls,  reporting
systems and procedures and expand,  train and manage a growing  employee base in
order to manage our future growth.  Furthermore,  we may acquire technologies or
products or enter into  strategic  alliances,  in order to achieve rapid growth.
For us to succeed,  we must make our existing  technology,  business and systems
work  effectively  with those of any strategic  partners  without undue expense,
management  distraction or other disruptions to our business. We may be required
to maintain and expand our relationships with various software vendors, Internet
and other online  service  providers  and other third  parties  necessary to our
business in order for us to succeed.  We may be unable to implement our business
plan if we fail to manage any of the above growth challenges  successfully.  Our
financial  results may suffer and we could be materially and adversely  affected
if that occurs.

We may not be able to protect  and  enforce  our  intellectual  property  rights
relating to our RateXchange  Trading  System,  which could result in the loss of
these rights, loss of business or increased costs.

     We generally have entered into agreements  containing  confidentiality  and
non-disclosure  provisions  with our employees and  consultants who have limited
access to and distribution of our software,  documentation and other proprietary
information.  We  cannot  assure  you  that  the  steps  we  take  will  prevent
misappropriation  of our  technology  or that  agreements  entered into for that
purpose will be enforceable.  Notwithstanding  the precautions we have taken, it
might be  possible  for a third  party to copy or  otherwise  obtain and use our
software   independently.   Policing  unauthorized  use  of  our  technology  is
difficult,  particularly  because  the global  nature of the  Internet  makes it
difficult to control the ultimate  destination  or security of software or other
data  transmitted.  The laws of other  countries  may  afford  us  little  or no
effective protection of our intellectual property.  Effective trademark, service
mark,  copyright  and trade  secret  protection  may not be  available  in every
country where our services are made available online.

     In  the  future,  we  may  also  need  to  file  lawsuits  to  enforce  our
intellectual  property  rights,  protect  our trade  secrets and  determine  the
validity and scope of the proprietary rights of others. Such litigation, whether
successful or unsuccessful,  could result in substantial  costs and diversion of
resources,  which could materially  adversely affect our business and results of
operations.

     Third  parties may claim that our business  activities  infringe upon their
proprietary  rights. From time to time in the ordinary course of business we may
be subject to claims of  infringement  of third  parties'  trademarks  and other
intellectual  property  rights.  Such  claims  could  subject us to  significant
liability and result in  invalidation of our  proprietary  rights.  These claims
could also be time-consuming and expensive to defend,  even if we ultimately are
not found liable.  In addition,  these claims could divert our management's time
and attention from the operation of our business.

Our  RateXchange  Trading System  business is dependent on the  development  and
maintenance of the Internet infrastructure.

     Our  RateXchange  Trading  System  success will depend,  in part,  upon the
development and maintenance of the Internet infrastructure as a reliable network
backbone  with the  necessary  speed,  data  capacity and  security,  and timely
development  of enabling  products,  such as  high-speed  modems,  for providing
reliable  Internet  access and services.  We cannot assure you that the Internet
infrastructure  will continue to effectively support the demands placed on it as
the  Internet  continues  to  experience  increased  numbers  of users,  greater
frequency  of use or  increased  bandwidth  requirements  of users.  Even if the
necessary  infrastructure  or technologies are developed,  we may have to expend
considerable resources to adapt our offerings accordingly.  Furthermore,  in the
past,  the Internet has  experienced a


                                       4


variety of outages and other delays.  Any future  outages or delays could affect
our  ability  to use  the  Internet  as a  successful  trading  medium  for  our
broker-dealer  and emerging  commodities  businesses.  Our business,  results of
operations and financial condition could be materially and adversely affected if
any of these events occur.

Our business and operations would suffer in the event of system failures.

     Our  success,   in  particular  our  ability  to  successfully   facilitate
securities  brokerage  transactions and provide  high-quality  customer service,
largely depends on the efficient and uninterrupted operation of our computer and
communications  hardware  systems.  Our systems and operations are vulnerable to
damage or interruption from fire, flood, power loss, telecommunication failures,
break-ins,  earthquake and similar events. Despite the implementation of network
security measures,  our servers are vulnerable to computer viruses,  physical or
electronic break-ins and similar disruptions, which could lead to interruptions,
delays, loss of data or the inability to accept and fulfill customer orders. Any
of the foregoing  problems  could  materially  adversely  affect our business or
future results of operations.

We may incur  liability for information  retrieved from or transmitted  over the
Internet because our business involves the transmission of information.

     We may be subject to claims relating to information  that is posted or made
available  on  our  web  site,  including  claims  for  defamation,   obscenity,
negligence,  or copyright or trademark  infringement.  We also may be subject to
claims based on the nature,  publication or distribution of our content or based
on errors or false or  misleading  information  provided on our web site.  These
types of claims  have  been  brought,  sometimes  successfully,  against  online
services in the past.  We could also be sued for the content that is  accessible
from  our web site  through  links to other  Internet  sites.  Although  we have
commercial  general liability  insurance with $1 million coverage per occurrence
and $2 million in the aggregate,  an umbrella policy with $5 million of coverage
and errors and omissions and directors and officers coverage,  awards may exceed
these  amounts.  Our insurance may not provide for coverage for certain of these
types of claims and,  therefore,  may not adequately protect us against them. In
addition,  we could incur  significant costs in investigating and defending such
claims,  even if we ultimately  are not found liable.  Our business,  results of
operations and financial condition could be materially and adversely affected if
any of these events occur.

Computer viruses may cause our systems to incur delays or interruptions  and may
increase our expenses or liabilities.

     Computer  viruses  may cause our systems to incur  delays or other  service
interruptions,  which may cause us to incur  additional  operating  expenses  to
correct problems we may experience. In addition, the inadvertent transmission of
computer  viruses could expose us to a material  risk of loss or litigation  and
possible  liability.  Moreover,  if a  computer  virus  affecting  our system is
publicly  disclosed,  our reputation could be materially damaged and our visitor
traffic may decrease.

Your ability to sell your shares may be  restricted  because  there is a limited
trading market for our common stock.

     Although  our  common  stock is  currently  traded  on the  American  Stock
Exchange, a trading market in our stock has been sporadic.  Accordingly, you may
not be able to sell your shares when you want or at the price you want.

Our common stock price may be volatile,  which could adversely  affect the value
of your shares.

     The market price of our common  stock has in the past been,  and may in the
future continue to be, volatile.  A variety of events may cause the market price
of our common stock to fluctuate significantly, including:

     o    variations in quarterly operating results;
     o    our announcements of significant contracts, milestones, acquisitions;
     o    our relationships with other companies;
     o    our ability to obtain needed capital commitments;
     o    additions or departures of key personnel;
     o    sales of common stock or termination of stock transfer restrictions;
     o    general economic  conditions,  including  conditions in the securities
          brokerage and investment banking and telecommunications markets;
     o    changes in financial estimates by securities analysts; and
     o    fluctuations in stock market price and volume.


                                       5


     The last four factors are beyond our control.  Any one of the factors noted
herein could have an adverse effect on the value of our common stock.

     In addition,  the stock market in recent years has experienced  significant
price and volume fluctuations that have particularly  affected the market prices
of equity securities of many companies and that often have been unrelated to the
operating  performance  of  such  companies.   These  market  fluctuations  have
adversely impacted the price of our common stock and may do so in the future.

     In the past,  following  periods of  volatility  in the  market  price of a
company's  securities,   securities  class  action  litigation  often  has  been
instituted  against that  company.  Such  litigation  is  expensive  and diverts
management's  attention and resources.  We cannot assure you that we will not be
subject to such litigation.

Your  ability to sell your  shares  could be  significantly  adversely  affected
because our common stock could be delisted  from  trading on the American  Stock
Exchange.

     Although  our common  stock is listed for  trading  on the  American  Stock
Exchange,  it could be  delisted  because  we may be unable to  satisfy  certain
American Stock Exchange listing guidelines  including earnings per share, market
price and  stockholder's  equity criteria.  We cannot assure you that we will be
able to satisfy these guidelines on a continuing basis. Accordingly, although we
have received no communication  from the American Stock Exchange with respect to
this matter,  we cannot  represent to you that our common stock will continue to
be listed.  If the listing is not retained  and our common  stock is  thereafter
quoted only on the OTC Electronic  Bullentin Board, a significantly  less liquid
market than the American Stock  Exchange,  a stockholder  will find it even more
difficult to dispose of, or to obtain  accurate  quotations  as to the price of,
the common stock.  In addition,  depending on several factors  including,  among
others,  the future market price of our common  stock,  these  securities  could
become subject to the so-called "penny stock" rules that impose additional sales
practice and market making requirements on broker-dealers who sell and/or make a
market in such securities. These factors could affect the ability or willingness
of  broker-dealers  to sell  and/or  make a market in our  common  stock and the
ability of  purchasers of our common stock to sell their shares in the secondary
market. A delisting could also negatively affect our ability to raise additional
capital in the future.

Anti-takeover   provisions  of  the  Delaware  General   Corporation  Law  could
discourage  a merger or other type of  corporate  reorganization  or a change in
control even if it could be favorable to the interests of our stockholders.

     The Delaware  General  Corporation Law contains  provisions that may enable
our  management  to retain  control and resist our  takeover.  These  provisions
generally  prevent us from  engaging in a broad  range of business  combinations
with an owner of 15% or more of our  outstanding  voting  stock  for a period of
three  years  from  the  date  that  such  person  acquires  his or  her  stock.
Accordingly,  these  provisions could discourage or make more difficult a change
in  control  or a merger or other type of  corporate  reorganization  even if it
could be favorable to the interests of our stockholders.

Because our board can issue common stock without stockholder approval, you could
experience substantial dilution.

     Our board of directors has the authority to issue up to 300,000,000  shares
of common  stock and to issue  options and  warrants  to purchase  shares of our
common stock without stockholder approval.  Future issuance of additional shares
of our common  stock could be at values  substantially  below the price at which
you may purchase our stock and,  therefore,  could represent further substantial
dilution to investors in this offering. In addition, our board could issue large
blocks  of our  common  stock to fend off  unwanted  tender  offers  or  hostile
takeovers without further stockholder approval.

Our  ability to issue  preferred  stock may  adversely  affect  your rights as a
common stockholder and be used as an anti take-over device.

     Our Articles of Incorporation  authorize our board of directors to issue up
to 60 million shares of preferred stock without approval from our  stockholders.
If you purchase our common stock, this means that the board of directors has the
right, without your approval as a common stockholder, to fix the relative rights
and  preferences  of the  preferred  stock.  This would  affect your rights as a
common stockholder regarding, among other things, dividends and liquidation.  We
could also use the preferred  stock to deter or delay a change in control of our
company that may be opposed by our management even if the  transaction  might be
favorable to you as a common stockholder.


                                       6


Our officers and directors exercise significant control over our affairs,  which
could result in their taking actions of which other stockholders do not approve.

     Our  executive  officers  and  directors,  current and past,  and  entities
affiliated with them,  currently  control  approximately  25% of our outstanding
common stock prior to any conversion of any outstanding notes and/or exercise of
options and warrants. These stockholders,  if they act together, will be able to
exercise  substantial  influence  over all  matters  requiring  approval  by our
stockholders,  including the election of directors  and approval of  significant
corporate  transactions.  This  concentration  of  ownership  may also  delay or
prevent a change in  control  of us and might  affect  the  market  price of our
common stock.

Any  exercise of  outstanding  options and  warrants  will dilute  then-existing
stockholders' percentage of ownership of our common stock.

     We have a significant  number of outstanding  options and warrants.  Shares
issuable  upon the exercise of these  options and  warrants,  at prices  ranging
currently from approximately $0.25 to $14.40 per share, represent  approximately
71% of our total outstanding stock on a fully diluted basis. The exercise of all
of  the  outstanding   options  and  warrants  would  dilute  the  then-existing
stockholders' percentage ownership of our common stock. Any sales resulting from
the exercise of options and warrants in the public market,  such as sales by the
selling  stockholders  pursuant  to  this  prospectus,  could  adversely  affect
prevailing market prices for our common stock.  Moreover,  our ability to obtain
additional  equity  capital  could be  adversely  affected  since the holders of
outstanding  options and warrants may exercise them at a time when we would also
wish to enter the market to obtain  capital on terms more  favorable  than those
provided by such  options and  warrants.  We lack control over the timing of any
exercise or the number of shares issued or sold if exercises occur.

Members of our Advisory  Board may have  conflicting  interests and may disclose
data and technical knowledge to our competitors.

     Some of our Advisory  Board members are employed by other  entities,  which
may include our  competitors.  Although we require  each of our  Advisory  Board
members to sign a non-disclosure and  non-competition  agreement with respect to
the data and  information  that he or she receives from us, we cannot assure you
that members will abide by them. If a member were to reveal this  information to
outside sources,  accidentally or otherwise,  our operations could be negatively
affected.  Since our  business  depends in large part on our ability to keep our
technology  confidential,  any revelation of this information to a competitor or
other source could have an adverse effect on our operations.

                                 Dividend Policy

     We have  not  paid  any  cash  dividends  since  our  inception  and do not
anticipate paying cash dividends in the foreseeable future.

                                 Use of Proceeds

     We will not receive any of the  proceeds  from the sale of common  stock by
the  selling  stockholders  or the resale by them of the shares of common  stock
issuable  on  conversion  of the notes and  preferred  stock or  exercise of the
warrants except for  commissions  which selling  stockholders  may pay for sales
effected by them through our broker-dealer subsidiary. We will, however, receive
proceeds  from the  exercise  of  warrants,  which we intend to use for  general
corporate purposes.

                              Selling Stockholders


The registration  statement,  of which this prospectus forms a part,  relates to
the  registration  for the account of selling  stockholders  of an  aggregate of
17,819,428  shares of common stock.  The following table sets forth the names of
the  selling  stockholders,  the number of shares of common  stock  beneficially
owned by them as of July 31,  2002,  the number of shares of common  stock being
offered by them,  the number of shares of common stock each selling  stockholder
will  beneficially  own if  the  stockholder  sells  all  of  the  shares  being
registered  and the selling  stockholder's  percentage  ownership  of our common
stock if all the  shares in the  offering  are sold.  The shares  being  offered
hereby are being registered to permit public  secondary  trading and the selling
stockholders  may offer all or part of the shares for



                                       7


resale  from  time to time.  However,  the  selling  stockholders  are  under no
obligation  to sell  all or any  portion  of  such  shares  or are  the  selling
stockholders obligated to sell any shares immediately under this prospectus. All
information  with respect to share  ownership has been  furnished by the selling
stockholders.  Because  the selling  stockholders  may sell all or part of their
shares,  no  estimates  can be given as to the number of shares of common  stock
that will be held by the selling  stockholders  upon termination of any offering
made hereby.

     The shares being offered for resale by the selling  stockholders consist of
shares of common stock  currently  owned by them and common stock  issuable upon
conversion of the selling  stockholders'  notes and preferred stock and exercise
of their warrants.

     We believe, based on information supplied by the selling stockholders, that
except as may  otherwise be  indicated in the notes to the table below,  each of
them has sole voting and  investment  power with respect to the shares of common
stock owned by them and issuable on conversion of the notes and preferred  stock
and exercise of the warrants.

     To our  knowledge,  none of the selling  stockholders  has had any position
with, held any office of, or had any other material  relationship with us except
for

     o    Robert E. Ford, who is our President and Chief Operating Officer;
     o    Gregory S.  Curhan,  who is our  Executive  Vice  President  and Chief
          Financial Officer;
     o    Kenneth R. Werner,  trustee of the Kenneth R. Werner  Revocable Trust,
          who is our Senior Vice President, Trading;
     o    Sanjay Lillaney,  who was the Chairman and Chief Executive  Officer of
          our subsidiary RMG Partners Corporation until its sale in April 2002;
     o    Mark  Burger,  who was the  President of our  subsidiary  RMG Partners
          Corporation until its sale in April 2002; and
     o    Patrick Arbor,  Donald H. Sledge,  Ronald Spears, John E. McConnaughy,
          Jr., and Steven W. Town, who are members of our board of directors.

Mr. Town is also the  co-chief  executive  officer of Amerex  Bandwidth,  Ltd, a
selling stockholder and a brokerage services firm that executed bandwidth trades
for us pursuant to an agreement under which,  among other things,  we reimbursed
Amerex for expenses  approximating  $699,000 in 2001. We also issued warrants to
Amerex to purchase  2,300,000  shares of our common stock at prices ranging from
$4.70 to $5.37 per share and terminate on December 17, 2005. Amerex is a selling
stockholder and pursuant to this prospectus is offering the shares issuable upon
exercise of these warrants.


     We have determined beneficial ownership in accordance with the rules of the
Securities  and  Exchange   Commission,   which  generally  includes  voting  or
investment  power with  respect to  securities  and also  includes  common stock
issuable upon  conversion of notes and preferred  stock and exercise of warrants
and options which are convertible  and/or exercisable within 60 days of the date
hereof.  Percentage  calculations are based upon 20,875,859 shares of our common
stock outstanding as of July 31, 2002.



                                       8



                                                                                                        Common         Percent of
                                           Common Stock          Percent of                           Stock Owned     Stock Common
           Name of Selling                  Owned Prior       Stock Owned Prior    Common Stock      After Common      Owned after
             Stockholder                  to Offering (1)      to Offering (1)      Offered (1)     Offering (1)(2)  Offering (1)(2)
------------------------------------      ------------------ ------------------   --------------    ---------------- ---------------
                                                                                                           
Amerex Bandwidth, Ltd.                      1,985,000(3)(4)          8.7(3)(4)      1,985,000(3)(4)         -0-(4)         -0-(4)
Patrick Arbor                                 331,318(3)             1.6(3)           153,818(3)       177,500(3)           *
Mark Burger                                   322,600                1.5              322,600               -0-            -0-
Barry W. Blank, Trustee, Barry W
  Blank Trust dated 11/13/96                1,254,899(3)             5.7(3)         1,254,899(3)            -0-            -0-
Richard E. Boerke                             397,878(5)             1.9(5)           397,878(5)            -0-            -0-
Gregory S. Curhan                              45,000                   *              40,000            5,000              *
Courtland Gates                                 5,305(5)               *(5)             5,305(5)            -0-            -0-
Don and Gayle Canada                           73,818(3)               *(3)            73,818(3)            -0-            -0-
CQG, Inc.                                     369,088(3)             1.8(3)           369,088(3)            -0-            -0-
Dorsey Ventures                               590,541(3)             2.8(3)           590,541(3)            -0-            -0-
Richard Fels and Carla Fels                    73,818(3)               *(3)            73,818(3)            -0-            -0-
Ford Investors Limited                        295,270(3)             1.4(3)           295,270(3)            -0-            -0-
Rob Ford and Lindsey Ford Joint

  Tenants (6)                                 938,818(3)(7)          4.3(3)(7)        103,818(3)       835,000(3)(7)      3.8(3)(7)
Forsythe McArthur Associates, Inc.           987,833(3)                4.5(3)        987,833(3)             -0-            -0-
Soledad Garcia                                 28,500                   *              28,500               -0-            -0-
Kenneth S. Hammer                              73,818(3)               *(3)            73,818(3)            -0-            -0-

HSBC Global Custody Nominee (UK)
  Limited                                     885,811(3)             4.2(3)           885,811(3)            -0-            -0-
Larry G. Kirk and Judy G. Kirk
  Tenants in Common                           147,635(3)               *(3)           147,635(3)            -0-            -0-
Stephen C. Lehman                             295,270(3)             1.4(3)           295,270(3)            -0-            -0-
Maryon D. Lewis                               295,270(3)             1.4(3)           295,270(3)            -0-            -0-
Sanjay Lillaney                               673,776                3.2              673,776               -0-            -0-
John E. McConnaughy, Jr                       935,811(3)             4.3(3)           885,811(3)        50,000(3)         *(3)
Julian Mann                                   115,000                   *             115,000               -0-            -0-
Timothy Meckel                                  5,305(5)               *(5)             5,305(5)            -0-            -0-
Richard Michaelson                             73,818(3)               *(3)            73,818(3)            -0-            -0-
MicroCapital LLC (8)                          928,904(3)             4.4(3)           928,904(3)            -0-            -0-
Morgens Waterfall Holdings, LLC             1,476,351(3)             6.6(3)         1,476,351(3)            -0-            -0-
M.H. Capital Partners, L.P.                   147,635(3)               *(3)           147,635(3)            -0-            -0-
Rob Nixon Trustee for the Rob
  Nixon Trust                                  73,818(3)               *(3)            73,818(3)            -0-            -0-
Derrick Parkhill                              315,000(3)             1.5(3)           315,000(3)            -0-            -0-
Jon M. Plexico                                147,635(3)               *(3)           147,635(3)            -0-            -0-
PWREF/MCC-China Basin, LLC                     50,000                   *              50,000               -0-            -0-
Ramsey Financial                              397,878(5)             1.9(5)           397,878(5)            -0-            -0-
Earl S. Rivers                                 73,818(3)               *(3)            73,818(3)            -0-            -0-
Malcolm Rogers, Jr. and
  Janet L Rogers                              955,635(3)             4.5(3)           147,635(3)       808,000(3)         3.8
SACC Partners, Ltd                            590,541(3)             2.8(3)           590,541(3)            -0-            -0-
Alan Shoup and Kathleen Shoup                 147,635(3)               *(3)           147,635(3)            -0-            -0-
Ronald Spears                                 210,000(3)             1.0(3)            10,000          200,000(3)           *
Lynn Stiefeling                                10,000                 *                10,000               -0-            -0-
Theodore H. Swindells                       1,151,604(3)(9)          5.5(3)(9)        147,635(3)     1,003,969(3)         4.6
Switch & Data Facilities Company, LLC         200,000                1.0              200,000               -0-            -0-
Tenaire Inc. P/S/Tr Dtd 1/30/69
  Thomas Babington Trustee                    147,635(3)               *(3)           147,635(3)            -0-            -0-
Leonard Toboroff                               73,818(3)               *(3)            73,818(3)            -0-            -0-
Steven W. Town                                 231,318(3)(10)        1.1(3)(10)        73,818(3)       157,500(3)           *
Kenneth R. Werner Revocable Trust             813,200(3)             3.8(3)           400,000          413,200(3)         2.0
John V. Winfield                            1,653,432(3)             7.8(3)         1,535,432(3)       118,000              *
Murphy & Durieu                               590,540(3)             2.8(3)           590,540(3)            -0-            -0-



                                       9


----------
*    Less than 1%

(1)  This  information  is based on  information  provided  to us by the selling
     stockholders.

(2)  Assumes the sale of all shares offered in this prospectus.

(3)  Includes  shares of our common  stock held by the selling  stockholder,  as
     well as, common stock issuable upon  conversion of notes and/or exercise of
     warrants or options that are  exercisable  or vested  within 60 days of the
     date hereof.

(4)  Excludes shares of our common stock owned by Steven W. Town.

(5)  Includes  shares of our common stock issuable upon conversion of our Series
     A Convertible Preferred stock.

(6)  45,000 of these  shares are owned in the name of Robert E. Ford and Lindsey
     P. Ford JTTEN.

(7)  820,000 of these shares are issuable  upon exercise of options owned by Mr.
     Ford.

(8)  411,862 of these shares are owned in the name of MicroCapital  Fund, LP and
     221,772 of these shares are owned in the name of  MicroCapital  Fund,  Ltd.
     MicroCapital  LLC  is  the  general  partner  and  investment   advisor  to
     MicroCapital  Fund,  LP and  MicroCapital  Fund,  Ltd.  Ian P. Ellis is the
     principal owner of  MicroCapital  LLC and has sole  responsibility  for the
     selection,  acquisition  and  disposition  of the  portfolio  securities by
     MicroCapital LLC on behalf of its funds.

(9)  150,000 of these shares are held indirectly by Mr. Swindells.

(10) Excludes shares of our common stock owned by Amerex Bandwidth, Ltd.

                              Plan of Distribution

     The selling  stockholders  may sell shares of our common  stock  offered by
this prospectus from time to time to purchasers  directly by them in one or more
transactions  at a fixed  price,  which may be  changed,  or at  varying  prices
determined  at the time of sale or at  negotiated  prices.  Such  prices will be
determined  by the  holders of such  securities  or by  agreement  between  such
holders  and  underwriters  or dealers who may receive  fees or  commissions  in
connection with such sales.

     Each of the selling  stockholders  may, from time to time,  offer shares of
our common stock beneficially owned by him or her through underwriters,  dealers
or agents, who may receive  compensation in the form of underwriting  discounts,
commissions or concessions  from the selling  stockholder  and the purchasers of
the shares for whom they may act as agent. Each of the selling stockholders will
be  responsible  for payment of any  commissions,  concessions  and discounts of
underwriters,   dealers  or  agents.  The  aggregate  proceeds  to  the  selling
stockholders  from the sale of the  shares of our common  stock  offered by them
will be the purchase  price of such shares less  discounts and  commissions,  if
any. Each of the selling stockholders reserves the right to accept and, together
with his or her agents,  from time to time to reject,  in whole or in part,  any
proposed   purchase  of  shares  to  be  made   directly   or  through   agents.
Alternatively,  the selling stockholders may sell all or a portion of the shares
of our common stock  beneficially owned by them and offered from time to time on
any exchange on which the securities are listed on terms to be determined at the
times of such  sales.  The  selling  stockholders  may also make  private  sales
directly or through a broker or brokers.

     From time to time, the selling stockholders may transfer, pledge, donate or
assign  shares of our common  stock to  lenders or others.  The number of shares
beneficially owned by a selling stockholder who transfers,  pledges,  donates or
assigns  shares of our common  stock will  decrease  as and when he or she takes
such actions.  The plan of  distribution  for shares sold under this  prospectus
will otherwise remain unchanged,  except that the transferees,  pledgees, donees
or other successors will be selling  stockholders  under this prospectus and may
sell their shares in the same manner as the selling stockholders.


                                       10


     A  selling   stockholder   may  enter  into   hedging   transactions   with
broker-dealers,  and the  broker-dealers may engage in short sales of the shares
of our common stock in the course of hedging the positions they assume with such
selling stockholder, including in connection with the distribution of the shares
of our common stock by such  broker-dealers.  In addition, a selling stockholder
may, from time to time,  sell short the shares of our common stock,  and in such
instances,  this prospectus may be delivered in connection with such short sales
and the  shares  offered  may be used to cover  such short  sales.  The  selling
stockholders   may  also  enter  into   options  or  other   transactions   with
broker-dealers  that  involve the  delivery of the shares of our common stock to
the  broker-dealers,  who may then resell or otherwise transfer such shares. The
selling  stockholders may also loan or pledge the shares to a broker-dealer  and
the  broker-dealer  may sell the shares as loaned or upon a default  may sell or
otherwise transfer the pledged shares.

     The  selling  stockholders  and any  underwriters,  dealers or agents  that
participate  in the  distribution  of the shares of our common stock  offered by
this  prospectus  may be deemed to be  underwriters  within  the  meaning of the
Securities Act, and any discounts,  commissions or concessions  received by them
and any  provided  pursuant  to the sale of shares by them might be deemed to be
underwriting discounts and commissions under the Securities Act.

     In addition,  any securities covered by this prospectus,  which qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities  Act, may be sold under
Rule 144 or Rule 144A rather than pursuant to this prospectus.  We cannot assure
you that any  selling  stockholder  will  sell any or all of the  shares  of our
common  stock  described in this  prospectus,  and any selling  stockholder  may
transfer,  devise or gift such  securities  by other means not described in this
prospectus.

     If necessary,  we will set forth the specific shares of our common stock to
be  sold  in  this  prospectus,  the  names  of the  selling  stockholders,  the
respective  purchase prices and public offering  prices,  the name of any agent,
dealer or underwriter,  and any applicable commissions or discounts with respect
to  a  particular  offer  in  an  accompanying   prospectus  supplement  or,  if
appropriate,  a post-effective  amendment to the registration statement of which
this prospectus is a part.

     We will pay  substantially  all of the  expenses  incurred  by the  selling
stockholders  and us  incident  to the  offering  and sale of the  shares of our
common stock pursuant to this prospectus.

     Under the Exchange Act and the regulations  thereunder,  any person engaged
in the  distribution of shares of common stock, or securities  convertible  into
common  stock,  offered  by this  prospectus  may not  simultaneously  engage in
market-making  activities with respect to the common stock during the applicable
"cooling  off"  period  prior  to the  commencement  of  this  distribution.  In
addition,  and without limiting the foregoing,  the selling stockholders will be
subject  to  applicable  provisions  of the  Exchange  Act  and  the  rules  and
regulations  thereunder,  including without limitation  Regulation M promulgated
under the Exchange Act, in connection  with  transactions  in the shares,  which
provisions may limit the timing of purchases and sales of shares of common stock
by the selling stockholders.

     Sales of any shares of common stock by the selling stockholders may depress
the price of the common stock.

                            Description of Securities

     The  following  section does not purport to be complete and is qualified in
all  respects by  reference to the detailed  provisions  of our  certificate  of
incorporation and by-laws, as amended,  copies of which have been filed with the
Securities and Exchange Commission.

Capital Stock

     Our  authorized  capital  stock  consists of 300  million  shares of common
stock,  $0.0001 par value per share,  and 60 million shares of preferred  stock,
$0.0001 par value per share.

Common Stock

     Under our certificate of incorporation, our board is authorized, subject to
limitations  prescribed by law and certain rules of the American State Exchange,
without  further  stockholder  approval,  from  time to time to  issue  up to an
aggregate of 300 million  shares of common stock.  There are  20,875,859  shares
issued and  outstanding  as of the date hereof.  Holders of our common stock are
entitled to:


                                       11


     o    one vote per share;
     o    share in all dividends  that our board,  in its  discretion,  declares
          from legally available funds; and
     o    participate  pro rata in all  assets  subject  to the prior  rights of
          creditors  and  holders of any  preferred  stock,  in the event of our
          liquidation, dissolution or winding up.

     Holders  of our  common  stock  have no  cumulative  voting  rights  and no
conversion, preemptive or other subscription rights, and there are no redemption
provisions applicable to our common stock.

     We have reserved an aggregate of 16,900,000  shares of our common stock for
issuance to directors,  officers and other key employees  pursuant to four stock
option plans and one employee  stock  purchase  plan. We have issued  options to
purchase  12,871,370  shares of our  common  stock  under  these  plans of which
options  to  purchase  9,413,167  shares  of  our  common  stock  are  currently
exercisable.  The exercise prices of these options range from $0.34 per share to
$7.00 per share.

     In addition, we have notes and preferred stock that are convertible into an
aggregate  of  10,345,361  shares  and  warrants  that  are  exercisable  for an
aggregate of 7,973,129 shares of our common stock. The selling  stockholders who
are offering the underlying  shares for sale pursuant to this prospectus own the
preferred  stock and certain of the notes and warrants.  We have also issued one
convertible  promissory  note in the  principal  amount  of  $5,949,042  that is
convertible  at the rate of 80% of the average  market price of our common stock
for the five trading days preceding the date of conversion. This note matures on
August 31, 2006.

Preferred Stock

     Our board has the authority, without further stockholder approval, to issue
up to 60 million  shares of preferred  stock in one or more series.  Each series
may have different  rights,  preferences and  designations  and  qualifications,
limitations and restrictions.

     There are 806,366 shares of non-redeemable  Series A Convertible  Preferred
Stock currently issued and outstanding.  The Series A is convertible into common
stock on a share for share  basis,  subject  to change  pursuant  anti  dilution
provisions. Holders of the Series A are entitled to

     o    dividends in kind at the rate of 6% per annum;
     o    a liquidation preference equal to $2.75 per share;
     o    one vote for each  share of common  stock  into  which the Series A is
          convertible; and
     o    elect two directors as long as no less than 500,000 shares of Series A
          stock is outstanding.

     Our amended certificate of incorporation authorizes our board of directors,
without  any  vote or  action  by the  holders  of our  common  stock,  to issue
preferred stock from time to time in one or more series. Our board is authorized
to determine the number of shares and to fix the

     o    powers,
     o    designations,
     o    preferences, and
     o    relative, participating, optional or other special rights

of any series of  preferred  stock.  Depending on the terms  established  by our
board,  any or all series of  preferred  stock  could have  preference  over the
common  stock with  respect to dividends  and other  distributions  and upon our
liquidation as well as other matters.


                                       12


Transfer Agent and Registrar

     The  transfer  agent  and  registrar  for our  common  stock  is OTC  Stock
Transfer, Inc., Salt Lake City, Utah.

                                  Legal Matters

     Barry Feiner, Esq., Manhasset,  New York 11030 has passed upon the legality
of the common stock offered in this prospectus for us.

                                     Experts

     The consolidated  financial  statements of RateXchange  Corporation and its
subsidiaries as of December 31, 2001 and 2000 and for each of the three years in
the period ended December 31, 2001 have been  incorporated  by reference in this
prospectus  and in the  registration  statement in reliance  upon the reports of
Arthur Andersen LLP,  independent public accountants,  and upon the authority of
said firm as experts in accounting and auditing. We have not been able to obtain
the  written  consent of Arthur  Andersen  LLP as  required  by Section 7 of the
Securities Act after reasonable efforts. Accordingly, investors will not be able
to sue Arthur  Andersen LLP pursuant to Section  11(a)(4) of the  Securities Act
and  therefore  may have  their  recovery  limited  as a  result  of the lack of
consent.

              Disclosure of Commission Position on Indemnification
                         for Securities Act Liabilities

     Delaware General  Corporation Law Section 145 provides for  indemnification
of  directors  and  officers  in  terms   sufficiently   broad  to  permit  such
indemnification,   under  certain  circumstances,  for  liabilities,   including
reimbursement  for  expenses  incurred,  arising  under the  Securities  Act. In
addition,  Delaware law provides  that a  corporation  may purchase and maintain
insurance on behalf of an officer or director against liability  incurred by the
officer or director as an officer or director.

     Our  Certificate  of  Incorporation  and  Amended  Bylaws  require  that we
indemnify  our  directors  and  officers to the  fullest  extent  allowed  under
Delaware law. Our Amended  Bylaws also provide that we may purchase and maintain
insurance on behalf of our officers and directors against any liability asserted
against  them as officers  and  directors.  Currently,  we carry  directors  and
officers  liability  insurance,  which may insure  against  officer or  director
liability arising under the Securities Act.

     Insofar as indemnification for liabilities arising under the Securities Act
may be  permitted  to our  directors,  officers,  and  controlling  persons,  or
otherwise,  we have been  advised  that in the  opinion of the  Commission  this
indemnification  is against public policy as expressed in the Securities Act and
the Securities  Exchange Act of 1934 and is,  therefore,  unenforceable.  In the
event that a claim for indemnification against these liabilities, other than our
payment of  expenses  incurred  or paid by one of our  directors,  officers,  or
controlling persons in the successful defense of any action, suit or proceeding,
is asserted by that director,  officer or controlling  person in connection with
the securities being  registered,  we will, unless in the opinion of our counsel
the matter has been  settled by a  controlling  precedent,  submit to a court of
appropriate  jurisdiction  the question  whether this  indemnification  by us is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of this issue.

                           Incorporation by Reference

     The  Securities  and  Exchange  Commission  allows  us  to  incorporate  by
reference  the  information  we file with it,  which means that we can  disclose
important  information  to  you  by  referring  you  to  those  documents.   The
information  incorporated  by  reference  is  considered  to  be  part  of  this
prospectus,  and later information that we file with the Securities and Exchange
Commission  will  automatically  update  and  supercede  this  information.   We
incorporate  by reference the documents  listed below and any future  filings we
may make with the Commission  under Sections  13(a),  13(c),  14 or 15(d) of the
Securities  Exchange  Act of  1934  until  this  offering  is  terminated.  This
prospectus is part of a registration  statement we filed with the Securities and
Exchange Commission, Registration No. 333-96605.


                                       13


(a)  Annual  Report on Form 10-K for our fiscal  year ended  December  31,  2001
     filed March 28, 2002;

(b)  Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002
     filed May 1, 2002;

(c)  Current Report on Form 8-K filed on April 8, 2002;

(d)  amended Current Report on Form 8-KA filed on April 15, 2002; and

(e)  Notice of Annual Meeting and Proxy Statement filed on May 3, 2002.

     You may  request  a copy of  these  filings,  at no  cost,  by  writing  or
telephoning  us at the  following  address:  RateXchange  Corporation,  100 Pine
Street, Suite 500, San Francisco, California 94111-5101,  telephone number (415)
274-5650.

     You  should  rely only on the  information  incorporated  by  reference  or
provided in this  prospectus or any  supplement.  We have not authorized  anyone
else to provide you with different  information.  You should not assume that the
information  in this  prospectus  or any  supplement  is accurate as of any date
other than the date on the front of those documents.

                              Available Information

     We have filed a registration statement on Form S-3 under the Securities Act
with the Securities and Exchange  Commission  with respect to the shares offered
hereby.  This prospectus is filed as a part of the  registration  statement.  It
does not contain all of the information  included in the registration  statement
and exhibits and we refer you to such omitted  information.  Statements  made in
this  registration  statement  are  summaries  of the terms of these  referenced
contracts,  agreements or documents and are not necessarily  complete.  We refer
you to each exhibit for a more complete  description of the matters involved and
these statements shall be deemed qualified in their entirety by this reference.

     In  addition,  we  file  annual,  quarterly,  and  special  reports,  proxy
statements, and other information with the Securities and Exchange Commission.

     You may read and copy our registration  statement on Form S-3, the exhibits
thereto, any reports, statements and other information we file at the Securities
and Exchange  Commission's  public  reference  room at 450 Fifth  Street,  N.W.,
Washington,  D.C. 20549.  Please call the Securities and Exchange  Commission at
1-800-SEC-0330 for further information on the operations of the public reference
room. Our filings with Securities and Exchange  Commission are also available on
the   Securities   and   Exchange   Commission's   Internet   site,   which   is
http://www.sec.gov.  Our common stock is traded on the American  Stock  Exchange
where you can inspect reports and other information about us.

     We intend to  furnish  our  stockholders  with  annual  reports  containing
financial statements audited by our independent accountants.


                                       14


================================================================================


     No  dealer,  salesman  or any other       2,593,510 SHARES OFFERED BY
person   is   authorized   to  give  any          SELLING STOCKHOLDERS,
information or to represent anything not       9,997,207 SHARES OFFERED BY
contained in this  prospectus.  You must          SELLING STOCKHOLDERS
not rely on any unauthorized information                  UPON
or  representations.  This prospectus is           CONVERSION OF NOTES
an offer to sell these securities and it                   AND
is not a solicitation of an offer to buy             PREFERRED STOCK
these  securities in any state where the                   AND
offer  or  sale  is not  permitted.  The       5,228,711 SHARES OFFERED BY
information contained in this Prospectus        SELLING STOCKHOLDERS UPON
is current only as of this date.                  EXERCISE OF WARRANTS

                                                 RATEXCHANGE CORPORATION
            TABLE OF CONTENTS
                                    Page

     Summary .......................  1
     Risk Factors ..................  1
     Dividend Policy ...............  7
     Use of Proceeds ...............  7
     Selling Stockholders ..........  7
     Plan of Distribution .......... 10              _______________
     Description of Securities ..... 11
     Legal Matters ................. 13                PROSPECTUS
     Experts ....................... 13              _______________
     Disclosure of Commission ...... 13
     Position on Indemnification                     August 1, 2002
     for Securities Act Liabilities
     Incorporation by Reference .... 13
     Available Information ......... 14

================================================================================


                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.


                SEC Registration Fee               $  1,586.13
                Printing                           $  3,500.00*
                Legal Fees and Expenses            $ 30,000.00*
                Listing fees                       $ 10,000.00
                Miscellaneous Expenses             $  1,000.00*
                                                   -----------
                         TOTAL                     $ 46,086.13*
                                                   ===========


                *Estimated

     The  Selling  Stockholders  will  not  pay  any  portion  of the  foregoing
expenses.



                                        I


                                   SIGNATURES


     Pursuant  to  the  requirements  of  the  Securities  Act,  the  registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements of filing this Form S-3 and has duly caused this Amendment No. 1 to
this  registration  statement to be signed on its behalf by the undersigned,  in
the City of San Francisco, State of California, on July 31, 2002.


                                RATEXCHANGE CORPORATION


                                By: /s/ D. Jonathan Merriman
                                    --------------------------------------------
                                    D. Jonathan Merriman Chief Executive Officer


     In accordance  with the  requirements of the Securities Act, this Amendment
No. 1 to this Registration  statement was signed by the following persons in the
capacities and on the dates stated.

/s/ D. Jonathan Merriman          Chairman of the Board and        July 31, 2002
---------------------------       Chief Executive Officer
D. Jonathan Merriman

/s/ Gregory S. Curhan             Executive Vice President and     July 31, 2002
---------------------------       Chief Financial Officer
Gregory S. Curhan

/s/ Patrick Arbor                 Director                         July 31, 2002
---------------------------
Patrick Arbor

/s/ John E. McConnaughy, Jr.      Director                         July 31, 2002
---------------------------
John E. McConnaughy, Jr.

                                  Director                         July   , 2002
---------------------------
Donald H. Sledge

/s/ Ronald E. Spears              Director                         July 31, 2002
---------------------------
Ronald E. Spears

/s/ Steven W. Town                Director                         July 31, 2002
---------------------------
Steven W. Town



                                       II