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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES  EXCHANGE ACT OF 1934For the quarterly period ended September 30, 2002

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: 000-30267

ORCHID BIOSCIENCES,
  INC.
    (Exact name of registrant as specified in its charter)

|DELAWARE
        (State or other jurisdiction
        of incorporation or organization)   |  | 22-3392819
      (I.R.S. Employer
      Identification No.)
|----------------------------------------------------------------------------------------- |  | -----------------------------------------------------------
|                                                                                          |  |                                                            
|4390
        US ROUTE ONE, PRINCETON, NJ
        (Address of principal executive offices) |  | 08540
      (Zip Code)                                     

Registrants telephone number,
  including area code: (609) 750-2200

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

The number of shares outstanding of the registrants
  Common Stock, $.001 par value, as of November 1, 2002, was 55,738,781.

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ORCHID BIOSCIENCES, INC. AND SUBSIDIARIES INDEX TO FORM 10-Q

|                                            |                                                                                                                                             |    | PAGE | 
|------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | -- | ---- | 
|                                            |                                                                                                                                             |    |      | 
|PART I     
          FINANCIAL INFORMATION |                                                                                                                                             | 3  |     
|                                            |                                                                                                                                             |    |      | 
|Item 1.                                     | Financial Statements                                                                                                                        |    | 3    | 
|                                            |                                                                                                                                             |    |      | 
|                                            | Condensed
        Consolidated Balance Sheets as of September 30, 2002 (unaudited) and December 31,
        2001                            |    | 3    | 
|                                            |                                                                                                                                             |    |      | 
|                                            | Condensed
        Consolidated Statements of Operations for the three and nine months ended
        September 30, 2002 and 2001 (unaudited) |    | 4    | 
|                                            |                                                                                                                                             |    |      | 
|                                            | Condensed
        Consolidated Statements of Cash Flows for the nine months ended September
        30, 2002 and 2001 (unaudited)           |    | 5    | 
|                                            |                                                                                                                                             |    |      | 
|                                            | Notes
        to Condensed Consolidated Financial Statements (unaudited)                                                                    |    | 6    | 
|                                            |                                                                                                                                             |    |      | 
|Item 2.                                     | Managements
        Discussion and Analysis of Financial Condition And Results Of Operations                                               |    | 16   | 
|                                            |                                                                                                                                             |    |      | 
|Item 3.                                     | Quantitative and Qualitative Disclosures about Market Risk                                                                                  |    | 27   | 
|                                            |                                                                                                                                             |    |      | 
|Item 4.                                     | Controls
        and Procedures                                                                                                             |    | 27   | 
|                                            |                                                                                                                                             |    |      | 
|PART
          II      OTHER INFORMATION    |                                                                                                                                             | 29 |     
|                                            |                                                                                                                                             |    |      | 
|Item 1.                                     | Legal
        Proceedings                                                                                                                   |    | 29   | 
|                                            |                                                                                                                                             |    |      | 
|Item 2.                                     | Changes in Securities and Use of Proceeds                                                                                                   |    | 29   | 
|                                            |                                                                                                                                             |    |      | 
|Item 3.                                     | Defaults
        upon Senior Securities                                                                                                     |    | 29   | 
|                                            |                                                                                                                                             |    |      | 
|Item 4.                                     | Submission
        of Matters to a Vote of Security Holders                                                                                 |    | 29   | 
|                                            |                                                                                                                                             |    |      | 
|Item 5.                                     | Other Information                                                                                                                           |    | 29   | 
|                                            |                                                                                                                                             |    |      | 
|Item 6.                                     | Exhibits
        and Reports on Form 8-K                                                                                                    |    | 30   | 

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PART I     FINANCIAL
  INFORMATION

ITEM 1.     FINANCIAL
  STATEMENTS

ORCHID BIOSCIENCES, INC.
  AND SUBSIDIARIES
  CONDENSED CONSOLIDATED BALANCE SHEETS
  (In thousands, except share and per share data)

|Assets                                                                                                                                                                 | September 30,
      2002 |          | December 31, 2001 |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------ | -------- | ----------------- | -
|                                                                                                                                                                       |                          |          |                   |  
|                                                                                                                                                                       | (unaudited)              |          |                   |  
|Current assets:                                                                                                                                                        |                          |          |                   |  
|Cash and cash equivalents                                                                                                                                              | $                        | 8,465    |                   | $
|Short-term investments                                                                                                                                                 |                          | 609      |                   |  
|Restricted cash                                                                                                                                                        |                          | 1,084    |                   |  
|Accounts receivable, net                                                                                                                                               |                          | 12,761   |                   |  
|Inventory                                                                                                                                                              |                          | 4,233    |                   |  
|Other current assets                                                                                                                                                   |                          | 1,881    |                   |  
|                                                                                                                                                                       |                          |          |                   |  
|Total current assets                                                                                                                                                   |                          | 29,033   |                   |  
|Equipment and leasehold improvements, net                                                                                                                              |                          | 21,077   |                   |  
|Goodwill, net                                                                                                                                                          |                          | 4,029    |                   |  
|Other intangibles, net                                                                                                                                                 |                          | 35,502   |                   |  
|Restricted cash                                                                                                                                                        |                          | 2,301    |                   |  
|Other assets                                                                                                                                                           |                          | 2,706    |                   |  
|                                                                                                                                                                       |                          |          |                   |  
|Total assets                                                                                                                                                           | $                        | 94,648   |                   | $
|                                                                                                                                                                       |                          |          |                   |  
|Liabilities and Stockholders
          Equity                                                                                                                         |                          |          |                   |  
|Current liabilities:                                                                                                                                                   |                          |          |                   |  
|Current portion of long-term debt                                                                                                                                      | $                        | 3,372    |                   | $
|Accounts payable                                                                                                                                                       |                          | 4,071    |                   |  
|Accrued expenses                                                                                                                                                       |                          | 8,854    |                   |  
|Deferred revenue                                                                                                                                                       |                          | 1,756    |                   |  
|                                                                                                                                                                       |                          |          |                   |  
|Total current liabilities                                                                                                                                              |                          | 18,053   |                   |  
|                                                                                                                                                                       |                          |          |                   |  
|Long-term debt, less current portion                                                                                                                                   |                          | 3,720    |                   |  
|Other liabilities                                                                                                                                                      |                          | 1,504    |                   |  
|                                                                                                                                                                       |                          |          |                   |  
|Commitments and contingencies                                                                                                                                          |                          |          |                   |  
|                                                                                                                                                                       |                          |          |                   |  
|Stockholders equity:                                                                                                                                                  |                          |          |                   |  
|Preferred stock, $.001 par value. Authorized 5,000,000 shares, noshares issued or outstanding                                                                          |                          |         |                   |  
|Series A junior participating stock, $.001 par value,1,000,000 shares designated; no shares issued or outstanding                                                      |                          |         |                   |  
|Common stock, $.001 par value. Authorized 150,000,000 shares,issued and outstanding 55,738,781 and 46,180,450 at September 30,2002 and December 31, 2001, respectively |                          | 56       |                   |  
|Additional paid-in capital                                                                                                                                             |                          | 304,406  |                   |  
|Deferred compensation                                                                                                                                                  |                          | (4,402   | )                 |  
|Accumulated other comprehensive income/(loss)                                                                                                                          |                          | (62      | )                 |  
|Surrender shares for guaranteed value                                                                                                                                  |                          | (308     | )                 |  
|Accumulated deficit                                                                                                                                                    |                          | (228,319 | )                 |  
|                                                                                                                                                                       |                          |          |                   |  
|Total stockholders equity                                                                                                                                             |                          | 71,371   |                   |  
|                                                                                                                                                                       |                          |          |                   |  
|Total liabilities and stockholders equity                                                                                                                             | $                        | 94,648   |                   | $
|                                                                                                                                                                       |                          |          |                   |  

See accompanying notes to condensed consolidated financial statements.



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ORCHID BIOSCIENCES, INC.
  AND SUBSIDIARIES
  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  (In thousands, except share and per share data)
  (unaudited)

|                                                                                                                                                                                             | Three months ended |            | Nine months ended |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | ---------- | ----------------- | -
|                                                                                                                                                                                             | September 30,      |            | September 30,     |  
|                                                                                                                                                                                             | 2002               |            | 2001              |  
|                                                                                                                                                                                             |                    |            |                   |  
|Revenues:                                                                                                                                                                                    |                    |            |                   |  
|Products revenue                                                                                                                                                                             | $                  | 3,021      |                   | $
|Services revenue                                                                                                                                                                             |                    | 13,307     |                   |  
|Collaboration, license and other revenues                                                                                                                                                    |                    | 664        |                   |  
|                                                                                                                                                                                             |                    |            |                   |  
|Total revenues                                                                                                                                                                               |                    | 16,992     |                   |  
|                                                                                                                                                                                             |                    |            |                   |  
|Operating expenses:                                                                                                                                                                          |                    |            |                   |  
|Cost
        of products revenue (includes write-down       of discontinued product inventory of
        $811       during the three and nine months ended
              September 30, 2002) |                    | 2,290      |                   |  
|Cost of services revenue                                                                                                                                                                     |                    | 7,182      |                   |  
|Research and development                                                                                                                                                                     |                    | 7,312      |                   |  
|Marketing and sales                                                                                                                                                                          |                    | 2,402      |                   |  
|General and administrative                                                                                                                                                                   |                    | 10,608     |                   |  
|Impairment of assets                                                                                                                                                                         |                    | 6,061      |                   |  
|Restructuring                                                                                                                                                                                |                    | 2,279      |                   |  
|Amortization of intangible assets                                                                                                                                                            |                    | 955        |                   |  
|                                                                                                                                                                                             |                    |            |                   |  
|Total operating expenses                                                                                                                                                                     |                    | 39,089     |                   |  
|                                                                                                                                                                                             |                    |            |                   |  
|Operating loss                                                                                                                                                                               |                    | (22,097    | )                 |  
|                                                                                                                                                                                             |                    |            |                   |  
|                                                                                                                                                                                             |                    |            |                   |  
|Other income (expense):                                                                                                                                                                      |                    |            |                   |  
|Interest income                                                                                                                                                                              |                    | 32         |                   |  
|Interest expense                                                                                                                                                                             |                    | (205       | )                 |  
|Other expense                                                                                                                                                                                |                    | (9         | )                 |  
|                                                                                                                                                                                             |                    |            |                   |  
|Total
        other income (expense)                                                                                                                                                         |                    | (182       | )                 |  
|                                                                                                                                                                                             |                    |            |                   |  
|                                                                                                                                                                                             |                    |            |                   |  
|Loss before income taxes                                                                                                                                                                     |                    | (22,279    | )                 |  
|Income tax benefit                                                                                                                                                                           |                    |           |                   |  
|                                                                                                                                                                                             |                    |            |                   |  
|Net loss allocable to common stockholders                                                                                                                                                    | $                  | (22,279    | )                 | $
|                                                                                                                                                                                             |                    |            |                   |  
|Basic and diluted net loss per share allocable to common stockholders                                                                                                                        | $                  | (0.40      | )                 | $
|                                                                                                                                                                                             |                    |            |                   |  
|Shares used in computing basic and diluted net loss per share allocable to common stockholders                                                                                               |                    | 55,530,230 |                   |  
|                                                                                                                                                                                             |                    |            |                   |  

See accompanying notes to condensed consolidated financial statements.



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ORCHID BIOSCIENCES, INC.
  AND SUBSIDIARIES
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  (in thousands)
  (unaudited)

|                                                                            | Nine months ended September 30, |        
|--------------------------------------------------------------------------- | ------------------------------- | -------
|                                                                            |                                 |        
|                                                                            | 2002                            |        
|                                                                            |                                 |        
|Cash flows from operating activities:                                       |                                 |        
|Net loss                                                                    | $                               | (45,016
|Adjustments to reconcile net loss to net cash used in operating activities: |                                 |        
|Noncash compensation expense                                                |                                 | 1,984  
|Depreciation and amortization                                               |                                 | 7,847  
|Impairment of assets                                                        |                                 | 6,266  
|Bad debt expense                                                            |                                 | 2,725  
|Changes in assets and liabilities:                                          |                                 |        
|Accounts receivable                                                         |                                 | (3,156 
|Inventory                                                                   |                                 | 1,121  
|Other current assets                                                        |                                 | (26    
|Other assets                                                                |                                 | 835    
|Accounts payable                                                            |                                 | (2,090 
|Accrued expenses                                                            |                                 | (1,342 
|Deferred revenue                                                            |                                 | 535    
|Other liabilities                                                           |                                 | (113   
|                                                                            |                                 |        
|Net cash used in operating activities                                       |                                 | (30,430
|                                                                            |                                 |        
|Cash flows from investing activities:                                       |                                 |        
|Cash paid to acquire Cellmark, including acquisition costs                  |                                 |       
|Acquisition of Affymetrix patent and license                                |                                 |       
|Capital expenditures                                                        |                                 | (2,888 
|Increase in restricted cash                                                 |                                 | (3,385 
|Cash paid for intangible assets                                             |                                 | (417   
|Maturities of short-term investments                                        |                                 | 27,785 
|Purchase of short-term investments                                          |                                 | (11,198
|                                                                            |                                 |        
|Net cash provided
        by investing activities                           |                                 | 9,897  
|                                                                            |                                 |        
|Cash flows from financing activities:                                       |                                 |        
|Repayment of debt on lines of credit                                        |                                 | (2,632 
|Proceeds from issuance of debt from line of credit                          |                                 |       
|Net proceeds from issuance of common stock                                  |                                 | 21,223 
|Payments on patent obligation                                               |                                 | (475   
|                                                                            |                                 |        
|Net cash provided by financing activities                                   |                                 | 18,116 
|                                                                            |                                 |        
|Effect of foreign currency translation on cash and cash equivalents         |                                 | 136    
|                                                                            |                                 |        
|Net increase (decrease) in cash and cash equivalents                        |                                 | (2,281 
|Cash and cash equivalents at beginning of period                            |                                 | 10,746 
|                                                                            |                                 |        
|Cash and cash equivalents at end of period                                  | $                               | 8,465  
|                                                                            |                                 |        
|Supplemental disclosure of noncash financing and investing activities:      |                                 |        
|Changes in deferred compensation from grant, forfeiture and                 |                                 |        
|remeasurement of common stock options                                       | $                               | 1,297  
|Issuance of common stock in connection with the acquisition of Cellmark     |                                 |       
|Issuance of common stock for services                                       |                                 |       
|Issuance of note payable and common stock for patent                        |                                 | 1,500  
|Issuance of common stock for patent                                         |                                 | 500    
|Incremental Lifecodes liability recorded as incremental goodwill            |                                 | 525    
|Supplemental disclosure of cash flow information:                           |                                 |        
|Cash paid during the period for interest                                    |                                 | 651    

See accompanying notes to condensed
  consolidated financial statements.





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ORCHID BIOSCIENCES, INC. AND SUBSIDIARIES  Notes to Condensed Consolidated Financial Statements  September 30, 2002 and 2001  (Dollars in thousands, except per share data)  (Unaudited)



|(1) | Basis of
      Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The accompanying unaudited condensed consolidated
      financial statements of Orchid BioSciences, Inc. and its subsidiaries (the
      Company) have been prepared in accordance with accounting principles
      generally accepted in the United States of America (US) for
      interim financial information and with the instructions to Form 10-Q and
      Article 10 of Regulation S-X. Accordingly, they do not include all of the
      information and footnotes required by accounting principles generally accepted
      in the US for complete annual financial statements. In the opinion of management,
      all adjustments, consisting of normal recurring adjustments, considered
      necessary for a fair presentation have been included. Interim results are
      not necessarily indicative of results that may be expected for a full year.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

| | The accompanying unaudited condensed consolidated
      financial statements include the results of the Company and its wholly owned
      subsidiaries. All intercompany accounts and transactions have been eliminated.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                          

| | The accompanying unaudited condensed consolidated
      financial statements should be read in conjunction with the audited consolidated
      financial statements and footnotes thereto included in the Companys
      Annual Report on Form 10-K for the year ended December 31, 2001, as filed
      with the Securities and Exchange Commission.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                       

| | The Company has not yet achieved profitable
      operations or positive cash flow from operations. There is no assurance
      that profitable operations, if ever achieved, could be sustained on a continuing
      basis. In addition, development and commercialization activities will require
      significant additional financing. The Company has an aggregate accumulated
      deficit of $228,319 through September 30, 2002 and expects to incur additional
      losses over at least the next year. The Company also expects the need to
      raise additional cash to fund operations until it becomes profitable, which
      is anticipated in late 2003.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| | Certain reclassifications were made to prior
      year amounts to conform to the current year presentation.
| | ------------------------------------------------------------------------------------------------------------
| |                                                                                                             



|(2) | Acquisition
      of Cellmark Diagnostics                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | On February 12, 2001, the Company completed
      its acquisition of certain assets of AstraZenecas business division,
      Cellmark Diagnostics (Cellmark), a leading provider of genoprofiling
      testing services in the UK which also sells kits for and conducts tests
      for genetic diseases, including cystic fibrosis. The acquisition has been
      accounted for under the purchase method of accounting and accordingly, the
      assets and liabilities acquired have been recorded at their fair values.
      The results of operations of Cellmark have been included in the Companys
      consolidated statement of operations since the date of acquisition by the
      Company on February 12, 2001. The pro forma results of operations of Cellmark
      have not been presented because they are immaterial to the Companys
      results of operations for 2001.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        



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|(3) | Acquisition of Lifecodes Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | On December 5, 2001, the Company acquired
      all of the outstanding equity securities of Lifecodes Corporation (Lifecodes).
      The following unaudited pro forma financial information presents the combined
      results of operations of the Company and Lifecodes as if the acquisition
      had occurred as of January 1, 2001, after giving effect to certain pro forma
      adjustments, including amortization of other intangibles and elimination
      of transaction related costs incurred by Lifecodes prior to the acquisition.
      The pro forma financial information does not necessarily reflect the results
      of operations that would have occurred had the Company and Lifecodes constituted
      a single entity during this period or the results of operations which may
      occur in the future.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|                                                                      | Three months ended September 30, 2001 |         | Nine months ended September 30, 2001 |  
|--------------------------------------------------------------------- | ------------------------------------- | ------- | ------------------------------------ | -
|                                                                      |                                       |         |                                      |  
|                                                                      | (unaudited)                           |         | (unaudited)                          |  
|Revenues                                                              | $                                     | 15,390  |                                      | $
|Net loss allocable to common stockholders                             |                                       | (42,809 | )                                    |  
|Basic and diluted net loss per share allocable to common stockholders | $                                     | (0.93   | )                                    | $



|(4) | Inventory                                                                                               
|--- | --------------------------------------------------------------------------------------------------------
|    |                                                                                                         
|    | Inventory is comprised of the following at
      September 30, 2002 and December 31, 2001, respectively:
|    |                                                                                                         

|                 | September 30, 2002 |       | December 31, 2001 |  
|---------------- | ------------------ | ----- | ----------------- | -
|                 |                    |       |                   |  
|Raw materials    | $                  | 957   |                   | $
|Work in progress |                    | 1,346 |                   |  
|Finished goods   |                    | 1,930 |                   |  
|                 |                    |       |                   |  
|                 | $                  | 4,233 |                   | $
|                 |                    |       |                   |  

| | Raw materials consist mainly of reagents,
      enzymes, chemicals and plates used in SNP scoring, genotyping and to manufacture
      SNPware consumables. Work in progress consists mainly of case work not yet
      completed and kits that are in the production process. Finished goods consist
      mainly of kits and equipment that have been produced, but have not been
      shipped.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                   



|(5) | Segment Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The Company had historically operated in two
      segments, the Products segment and the Services segment, each of which represented
      activities of strategic businesses that were historically managed separately
      because each business provided distinct products and services. The Products
      segment marketed and sold equipment and consumables for SNP scoring and
      other genetic analyses, whereas the Services segment included genotyping,
      or genoprofiling, services including DNA laboratory analysis for paternity,
      forensic and transplantation testing and SNP scoring services. The Company
      continues to market and sell these products and provide these services to
      its customers; however, in early 2002, the Company completed an internal
      process of realigning its business into four business units. These business
      units consist of Orchid Identity Genomics, Orchid Diagnostics, Orchid GeneShield
      and Orchid Life Sciences. A brief description of all of the business units
      which have been determined to be reportable segments is as follows:
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



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| |  | Orchid Identity Genomics provides DNA testing
      for paternity and forensics determinations to state and local governmental
      authorities as well as to individuals and organizations, through Orchid
      GeneScreen and Orchid Cellmark;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

| |  | Orchid Diagnostics provides products and services
      for genetic testing, including HLA genotyping, disease susceptibility testing
      and immunogenetics, or the study of the relationship between an individuals
      immune response and their genetic makeup;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

| |  | Orchid GeneShield is developing pharmacogenetics-based
      programs designed to accelerate the adoption and use of personalized medicine
      by patients and physicians; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

| |  | Orchid Life Sciences develops and markets
      products, services and technologies for SNP genotyping, or scoring, to life
      sciences and biomedical researchers as well as pharmaceutical, agricultural,
      diagnostic and biotechnology companies.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

|The chief operating decision maker of the Company measures segment profit/(loss) using operating income/(loss), which excludes other income (expense) and allocation of corporate expenditures. These costs which include treasury, human resources, finance, restructuring costs and certain other corporate functions, are included in corporate and all other. The accounting policies of the segments are the same as those described in the summary of significant accounting policies, as discussed in Note 1 to the consolidated financial statements included in the Companys Annual Report on Form 10-K filed for the year ended December 31, 2001.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|Goodwill has been allocated to each reportable segment as shown below.
|----------------------------------------------------------------------
|                                                                      

|Prior period information presented below has been restated to the current segment presentation.
|-----------------------------------------------------------------------------------------------
|                                                                                               

|                                                                | Identity
      Genomics |        | Diagnostics |   | Life
      Sciences |   | Corporate
      and all other |         | Total |  
|--------------------------------------------------------------- | ----------------------- | ------ | ----------- | - | ------------------- | - | ----------------------------- | ------- | ----- | -
|                                                                |                         |        |             |   |                     |   |                               |         |       |  
|Three
        months ended September 30, 2002:                  |                         |        |             |   |                     |   |                               |         |       |  
|Revenues                                                        | $                       | 10,341 |             | $ | 3,649               |   | $                             | 3,002   |       |  
|Impairment
        of assets                                    |                         |       |             |   |                    |   |                               | 6,061   |       |  
|Segment
        operatingIncome/(loss)                          |                         | 1,439  |             |   | (2,347              | ) |                               | (10,391 | )     |  
|                                                                |                         |        |             |   |                     |   |                               |         |       |  
|As
        of and for the nine months ended September 30, 2002: |                         |        |             |   |                     |   |                               |         |       |  
|Revenues                                                        |                         | 29,584 |             |   | 11,824              |   |                               | 7,844   |       |  
|Impairment
        of assets                                    |                         |       |             |   |                    |   |                               | 6,266   |       |  
|Segment
        operating Income/(loss)                         |                         | 2,114  |             |   | (920                | ) |                               | (18,149 | )     |  
|Goodwill                                                        |                         | 2,417  |             |   | 1,612               |   |                               |        |       |  
|Total
        assets                                            | $                       | 39,523 |             | $ | 17,880              |   | $                             | 14,330  |       | $



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|                                                                | Identity
      Genomics |         | Diagnostics |   | Life
      Sciences |  | Corporate
      and all other |         | Total |  
|--------------------------------------------------------------- | ----------------------- | ------- | ----------- | - | ------------------- |  | ----------------------------- | ------- | ----- | -
|                                                                |                         |         |             |   |                     |  |                               |         |       |  
|Three
        months ended September 30, 2001:                  |                         |         |             |   |                     |  |                               |         |       |  
|                                                                |                         |         |             |   |                     |  |                               |         |       |  
|Revenues                                                        | $                       | 5,381   |             | $ |                    |  | $                             | 2,050   |       | $
|Impairment
        of assets                                    |                         | 27,256  |             |   |                    |  |                               |        |       |  
|Segment
        operating loss                                  |                         | (29,446 | )           |   |                    |  |                               | (8,403  | )     |  
|                                                                |                         |         |             |   |                     |  |                               |         |       |  
|As
        of and for the nine months ended September 30, 2001: |                         |         |             |   |                     |  |                               |         |       |  
|                                                                |                         |         |             |   |                     |  |                               |         |       |  
|Revenues                                                        |                         | 14,096  |             |   |                    |  |                               | 5,688   |       |  
|Impairment
        of assets                                    |                         | 27,256  |             |   |                    |  |                               |        |       |  
|Segment
        operating loss                                  |                         | (33,456 | )           |   |                    |  |                               | (22,591 | )     |  
|                                                                |                         |         |             |   |                     |  |                               |         |       |  
|Total
        assets                                            | $                       | 25,826  |             | $ |                    |  | $                             | 20,147  |       | $



|(6) | Issuance of Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | On March 5, 2002, the Company completed an
      offering through which an aggregate of 9.0 million shares were sold, including
      an overallotment, to a group of new and existing shareholders. The shares
      of common stock were offered through a prospectus supplement pursuant to
      the Companys effective shelf registration statement. The Company generated
      net proceeds as a result of this offering of approximately $21,200.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(7) | Restructuring                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | During the second and third quarters of 2002,
      the Company formalized and announced a plan to restructure certain operations
      of the Company in order to reduce costs. As a result, over 110 positions
      which cover certain areas of the Companys operations were eliminated.
      Most of these terminations were from the Companys Princeton, New Jersey
      facility. During the quarter ended September 30, 2002, the Company recorded
      a restructuring charge of approximately $2,279 which included additional
      employee related charges such as severance, benefits and outplacement services
      of approximately $910 and incremental facility costs for approximately $1,369.
      During the second quarter of 2002, the Company recorded approximately $1,725
      as a restructuring charge, which consisted of employee related charges such
      as severance, benefits and outplacement services of approximately $1,030
      and facility charges related to lease exit costs of approximately $695.
      During the second quarter of 2002, the Company recorded leasehold improvements
      impairment charges of approximately $205 which has been reflected as an
      impairment charge during the nine months ended September 30, 2002. During
      the nine months ended September 30, 2002 approximately $4,004 has been charged
      to restructuring of which approximately $2,094 remains as an accrual as
      of September 30, 2002. The Company expects to pay most of the existing liability
      as it relates to severance during the fourth quarter of 2002. Facility related
      accruals are expected to be paid out during the remainder of 2002 and throughout
      2003.
|   



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|(8) | Impairment of assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | During the nine months ended September 30,
      2002, the Company recorded an impairment charge related to certain assets
      of approximately $6,266. As a result of continuing losses incurred by the
      Companys Life Sciences business segment, which prompted the restructuring
      efforts discussed above, the Company prepared an internal evaluation of
      the Life Sciences segments long-lived assets. Based on this internal
      evaluation, approximately $2,742 of laboratory equipment was determined
      to be idle and not able to be utilized in the Companys other facilities
      and therefore determined to be permanently impaired. In addition, the Company
      currently has estimated an impairment loss of approximately $3,524 for leasehold
      improvements related to a facility currently utilized by the Life Sciences
      business unit. The impairment charge was calculated as the amount by which
      the carrying value of these leasehold improvements exceeded its fair value
      as calculated using a present value of future cashflows approach.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(9) | Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Effective January 2000, the Company entered
      into three-year employment agreements with two executives of the Company.
      In certain cases, the Company may be obligated to pay the executives
      salary and benefits for up to eighteen months after leaving the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    | On or about November 21, 2001, the Company
      was made aware of a complaint filed in the United States District Court
      for the Southern District of New York naming the Company as defendants,
      along with certain of its officers and underwriters. An amended complaint
      was filed on April 19, 2002. The complaint, as amended, purportedly is filed
      on behalf of persons purchasing the Companys stock between May 4,
      2000 and December 6, 2000, and alleges violations of Sections 11 and 15
      of the Securities Act of 1933, as amended, and Sections 10(b) and 20(a)
      of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated
      thereunder. The amended complaint alleges that, in connection with the Companys
      May 5, 2000 initial public offering, the defendants failed to disclose additional
      and excessive commissions purportedly solicited by and paid to the underwriter
      defendants in exchange for allocating shares of the Companys stock
      to preferred customers and alleged agreements among the underwriter defendants
      and preferred customers tying the allocation of IPO shares to agreements
      to make additional aftermarket purchases at pre-determined prices. Plaintiffs
      claim that the failure to disclose these alleged arrangements made the Companys
      registration statement on Form S-1 filed with the SEC in May 2000 and the
      prospectus, a part of the registration statement, materially false and misleading.
      Plaintiffs seek unspecified damages. The Company has not reserved any amount
      related to this case as the Company believes that the allegations are without
      merit and intends to vigorously defend against the plaintiffs claims.
      In this regard, on or about July 15, 2002, the Company filed a motion to
      dismiss all of the claims against it and its officers. Though the court
      heard oral argument on the motion on November 1, 2002, a decision has not
      yet been rendered. On October 9, 2002, the court dismissed without prejudice
      only the Companys individual officers, Dale R. Pfost and Donald R.
      Marvin, from the litigation in exchange for the Company entering into a
      tolling agreement with the plaintiffs executive committee which suspends
      the statue of limitations for a period of time for claims against such officers.
|   
|    | The Company had been in a litigation with
      St. Louis University of St. Louis, Missouri regarding its belief that the
      Companys SNP scoring technology infringes certain claims under US
      patent 5,846,710, which was controlled by the University. On August 7, 2002,
      the parties dismissed the litigation and the Company acquired the subject
      patent. St. Louis University has assigned both the patent and all license
      agreements related thereto to the Company. In connection with the patent
      assignment, the Company issued shares of common stock and signed a promissory
      note which is in part secured by shares issued for the acquisition of the
      patent. To the extent that the fair value of the shares issued declines
      below $500 and are sold by St. Louis University, the Company is obligated
      to pay the difference in cash or securities. As of September 30, 2002, the
      value of the shares issued was approximately $308 and is reflected in stockholders
      equity as surrender shares for guaranteed value. Changes in
      the fair value of the underlying shares are reflected and will be reflected
      as changes in other comprehensive income/(loss) until all of the underlying
      shares are sold. Subsequent to September 30, 2002, St. Louis University
      sold all of its shares in the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   



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| | Companys common stock. The Company is
      currently in the process of determining the amount and the manner in which
      it expects to pay St. Louis University as it relates to this obligation
      for the shortfall of the value of the shares sold.                                                                                                                                                    
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Additionally, the Company has other certain claims against it arising from the normal course of its business. The ultimate resolution of such matters, in the opinion of management, will not have a material effect on the Companys financial position or results of operations.                                                                                                                                
|
| | In connection with the Companys acquisition of certain patents in 2001, the Company assumed an obligation to pay future amounts over the next four years. The obligation has been recorded in the accompanying condensed consolidated balance sheet as of September 30, 2002, at the net present value of the future obligations. The payments which are to be made to the original patent holder are as follows:
|

|2002                                    | $ | 187   |  
|--------------------------------------- | - | ----- | -
|2003                                    |   | 930   |  
|2004                                    |   | 1,178 |  
|2005                                    |   | 310   |  
|                                        |   |       |  
|Total                                   |   | 2,605 |  
|Less amount that represents interest    |   | (255  | )
|                                        |   |       |  
|Net present value of future obligations | $ | 2,350 |  
|                                        |   |       |  

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | The Company is also obligated to pay minimum
      royalties related to these patents of $1.2 million for 2005, $1.6 million
      for 2006 and $1.9 million for 2007 and each year thereafter until the expiration
      of the agreement.                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(10) | Comprehensive Loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     | SFAS No. 130, Reporting Comprehensive
      Income (SFAS 130) requires reporting and displaying comprehensive
      income (loss) and its components which, for the Company, includes net loss
      and unrealized gains and losses on available-for-sale securities and foreign
      currency translation gains and losses. In accordance with SFAS 130, the
      accumulated balance of other comprehensive income (loss) is displayed as
      a separate component of stockholders equity. The following table reconciles
      net loss to comprehensive loss for the three and nine months ended September
      30, 2002 and 2001:
|    

|                                                                        | Three
      months ended
      September 30, |         | Nine
      months ended
      September 30, |  
|----------------------------------------------------------------------- | -------------------------------------------- | ------- | ------------------------------------------- | -
|                                                                        | 2002                                         |         | 2001                                        |  
|                                                                        |                                              |         |                                             |  
|Net
        loss                                                        | $                                            | (22,279 | )                                           | $
|Other
        comprehensive income (loss):                              |                                              |         |                                             |  
|Unrealized
        holding gain (loss) arising during the period        |                                              | 92      |                                             |  
|Less
        reclassification adjustment for gains included in net loss |                                              | 102     |                                             |  
|                                                                        |                                              |         |                                             |  
|Unrealized
        holding gain (loss) on available-for-sale securities |                                              | (10     | )                                           |  
|Foreign
        currency translation adjustments                        |                                              | 88      |                                             |  
|Other
        adjustments                                               |                                              | (192    | )                                           |  
|                                                                        |                                              |         |                                             |  
|Other
        comprehensive income/(loss)                               |                                              | (114    | )                                           |  
|                                                                        |                                              |         |                                             |  
|Comprehensive
        loss                                              | $                                            | (22,393 | )                                           | $
|                                                                        |                                              |         |                                             |  



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|(11) | Debt Covenants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | Pursuant to the Companys line of credit
      which was amended in December 2000, the Company is required to provide a
      cash security deposit or letter of credit equal to an amount defined in
      the agreement, if the Company does not maintain minimum unrestricted cash,
      as defined in the agreement, equal to the greater of $35,000 or twelve months
      cash needs (calculated by taking the trailing three months net cash
      used in operations multiplied by four) not to exceed 50% of outstanding
      amounts on draws made on or subsequent to December 30, 2000. As of December
      31, 2001 and just prior to the follow-on offering (See Note 6), the Company
      did not maintain the minimum unrestricted cash defined in the agreement.
      The Company received a waiver from its lender regarding its non-compliance
      with this covenant for this period. Subsequent to March 31, 2002, the Company
      was not in compliance with this financial covenant. The Company has also
      received written notice from the lender stating that the lender waived the
      financial covenant violation as a result of not maintaining a pledge of
      cash security deposit or letter of credit under this agreement for the period
      of non-compliance through June 19, 2002. On June 19, 2002, the Company obtained
      a letter of credit in the amount of approximately $2,682 as required by
      the amended line of credit, which was supported by a cash restriction on
      certain securities held by the Company. As such, this cash restriction,
      in addition to cash restricted under two of the Companys operating
      leases is reflected as restricted cash in the condensed consolidated balance
      sheet as of September 30, 2002 of $3,385, of which $2,301 is classified
      as a long term asset.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(12) | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | In July 2001, the Financial Accounting Standards
      Board (FASB) issued SFAS No. 141, Business Combinations
      (SFAS 141), and SFAS No. 142, Goodwill and Other Intangible
      Assets (SFAS 142). SFAS 141 requires that the purchase
      method of accounting be used for all business combinations initiated after
      June 30, 2001 as well as all purchase method business combinations completed
      after June 30, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | SFAS 141 also specifies criteria that intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill, noting that any purchase price allocable to an assembled workforce may not be accounted for separately. SFAS 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of SFAS 142. SFAS 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 121.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|     | The Company adopted certain provisions of SFAS 141 during 2001 for the Lifecodes acquisition and fully adopted SFAS 141 on January 1, 2002. The Company has adopted SFAS 142 effective January 1, 2002 as well. As such, goodwill acquired in a purchase business combination completed after June 30, 2001, but before SFAS 142 was adopted in full was not amortized, but continued to be evaluated for impairment in accordance with the appropriate pre-SFAS 142 accounting literature. Goodwill and intangible assets acquired in business combinations completed before July 1, 2001, continued to be amortized and tested for impairment in accordance with the appropriate pre-SFAS 142 accounting requirements prior to the adoption of SFAS 142.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|     | SFAS 141 requires, upon adoption of SFAS 142, that the Company evaluate its existing intangible assets and goodwill that were acquired in a prior purchase business combination, and to make any necessary reclassifications in order to conform with the new criteria in SFAS 141 for recognition apart from goodwill. In connection with its evaluation of intangible assets arising from business combinations prior to the adoption of SFAS 141, the Company has reclassified its workforce intangible asset with a net book value as of December 31, 2001 of approximately $1,073 to goodwill. Upon adoption of SFAS 142, the Company was required to reassess the useful lives and residual values of all intangible assets acquired, and make any necessary amortization period adjustments by the end of the first interim period after adoption. In addition,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    



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| | to the extent an intangible asset is identified
      as having an indefinite useful life, the Company was required to test the
      intangible asset for impairment in accordance with the provisions of SFAS
      142. Any impairment loss would be measured as of the date of adoption and
      recognized as the cumulative effect of a change in accounting principle
      in the first interim period. The Company has reassessed the useful lives
      and residual values of all of its intangible assets in accordance with its
      adoption of SFAS 142 and determined that the existing useful lives for its
      intangible assets are appropriate. No identifiable intangible assets were
      determined to have indefinite lives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | In connection with SFAS 142s transitional goodwill impairment evaluation, the statement required the Company to perform an assessment of whether there is an indication that goodwill is impaired as of the date of adoption. To accomplish this, the Company had to identify its reporting units and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units as of the date of adoption. The Company then had to determine the fair value of each reporting unit and compare it to the reporting units carrying amount. Upon the completion of this step, to the extent a reporting units carrying amount exceeds its fair value, an indication exists that the reporting units goodwill may be impaired, then the Company would have to perform the second step of the transitional impairment test, in which the Company must compare the implied fair value of the
	 reporting units goodwill, determined by allocating the reporting units fair value to all of its assets (recognized and unrecognized) and liabilities in a manner similar to a purchase price allocation in accordance with SFAS 141, to its carrying amount, both of which would be measured as of the date of adoption. This second step is required to be completed as soon as possible, but no later than the end of the year of adoption. Any transitional impairment loss would be recognized as the cumulative effect of a change in accounting principle in the Companys statement of operations. During the second quarter of 2002, the Company identified its reporting units and performed the transitional impairment test. Based on a discounted cash flow model to determine reporting unit fair value, the Company determined that the fair values of its reporting units exceeded the respective carrying values and therefore goodwill was in fact not impaired and performance of the second step noted above is not required. The

Company has unamortized goodwill as of September 30, 2002 of $4,029, which is allocated to its reportable segments (see Note 5).
|
| | SFAS 142 requires disclosure of what reported net loss and net loss per share allocable to common stockholders would have been in all periods presented exclusive of amortization expense recognized in those periods related to goodwill and intangible assets that will no longer be amortized and changes in amortization periods for intangible assets that will continue to be amortized. This disclosure is reflected in the table below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|

|                                                                               | For
      the three months
      ended September 30, |         | For
      the nine months
      ended September 30, |  
|------------------------------------------------------------------------------ | ---------------------------------------------------- | ------- | --------------------------------------------------- | -
|                                                                               | 2002                                                 |         | 2001                                                |  
|                                                                               |                                                      |         |                                                     |  
|Net
        loss:                                                              |                                                      |         |                                                     |  
|Net
        loss as reported                                                   | $                                                    | (22,279 | )                                                   | $
|Add
        back: Goodwill amortization                                        |                                                      |        |                                                     |  
|                                                                               |                                                      |         |                                                     |  
|Net
        loss, as adjusted                                                  | $                                                    | (22,279 | )                                                   | $
|                                                                               |                                                      |         |                                                     |  
|Basic
        and diluted net loss per share allocable to common stockholders: | $                                                    | (0.40   | )                                                   | $
|Goodwill
        amortization per share                                        |                                                      |        |                                                     |  
|                                                                               |                                                      |         |                                                     |  
|Net
        loss per share, as adjusted                                        | $                                                    | (0.40   | )                                                   | $

| |                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Goodwill amortization in the table below includes
      amortization of the workforce intangible asset, which was reclassified to
      goodwill upon the adoption of SFAS 142.
| |                                                                                                                                                                                



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|(13) | Goodwill and Other Intangible Assets                                                             
|---- | -------------------------------------------------------------------------------------------------
|     |                                                                                                  
|     | The following table sets forth the Companys
      other intangible assets at September 30, 2002:
|     |                                                                                                  

|Base technology                               | $ | 9,615  |  
|--------------------------------------------- | - | ------ | -
|Customer list                                 |   | 5,040  |  
|Trademark/tradename                           |   | 3,998  |  
|Patents and know-how                          |   | 18,251 |  
|Developed technology                          |   | 4,080  |  
|Other                                         |   | 1,254  |  
|                                              |   |        |  
|Total                                         |   | 42,238 |  
|Less accumulated amortization                 |   | (6,736 | )
|                                              |   |        |  
|                                              | $ | 35,502 |  
|                                              |   |        |  
|Aggregate amortization expense:               |   |        |  
|For the three months ended September 30, 2002 | $ | 955    |  
|For the nine months ended September 30, 2002  | $ | 2,916  |  
|                                              |   |        |  
|Estimated amortization expense:               |   |        |  
|For the three months ended December 31, 2002  | $ | 1,211  |  
|For the year ending December 31, 2003         |   | 4,482  |  
|For the year ending December 31, 2004         |   | 4,435  |  
|For the year ending December 31, 2005         |   | 4,394  |  
|For the year ending December 31, 2006         |   | 4,194  |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As of September 30, 2002, the Company does
      not have any intangible assets other than goodwill which are not subject
      to amortization. In addition, the change in goodwill from $3,265 as of December
      31, 2001 to $4,029 as of September 30, 2002 was primarily the result of
      the Company accruing for an additional liability of approximately $525 related
      to the acquisition of Lifecodes which was acquired in December of 2001.
      The remaining increase of $239 is due to foreign currency translation adjustments
      during the nine months ended September 30, 2002.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|(14) | Increase in Authorized Shares of Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                  
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     | In March 2002, the Board of Directors of the
      Company approved, subject to stockholder approval, an increase of the Companys
      authorized shares of common stock to 150,000,000 shares. The stockholders
      approved this increase in authorized shares at its annual meeting in June
      of 2002, and the Company filed an Amendment to its Certificate of Incorporation
      on June 17, 2002 effectuating the increase in authorized shares.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                



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|(15) | Income Tax Benefit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     | The Company participates in the State of New
      Jerseys corporation business tax benefit certificate transfer program
      (the Program), which allows certain high technology and biotechnology
      companies to sell unused net operating loss carryovers to other New Jersey
      corporation business taxpayers. During 2000, the Company submitted an application
      to the New Jersey Economic Development Authority (the EDA) to
      participate in the Program, and the application was approved. The EDA then
      issued a certificate certifying the Companys ability to participate
      in the Program and the amount of New Jersey net operating loss carryovers
      the Company has available to transfer. Since New Jersey law provides that
      net operating losses can be carried over for up to seven years, the Company
      may be able to transfer its New Jersey net operating losses from the last
      seven years. The Program requires that the purchaser pay at least 75% of
      the amount of the surrendered tax benefit.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     | During January 2002, the Company completed
      the sale of approximately $11,000 of its New Jersey tax loss carryforwards
      and received $894, which was recorded as an income tax benefit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



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ORCHID BIOSCIENCES, INC.

ITEM 2.      MANAGEMENTS DISCUSSION
  AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Managements Discussion and Analysis
  of Financial Condition as of September 30, 2002 and the Results of Operations
  for the three and nine months ended September 30, 2002 and 2001 should be read
  in conjunction with our Consolidated Financial Statements and related Notes
  to Condensed Consolidated Financial Statements included elsewhere in this Quarterly
  Report on Form 10-Q. This Quarterly Report on Form 10-Q contains forward-looking
  statements within the meaning of Section 21E of the Securities Exchange Act
  of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended.
  For a more detailed discussion of such forward-looking statements and the potential
  risks and uncertainties that may impact upon the accuracy of such statements
  in this section, see the Forward-Looking Statements section of this
  Quarterly Report on Form 10-Q and also the potential risks and uncertainties
  set forth in the Overview section hereof and in the Risk Factors
  section of our Annual Report on Form 10-K filed with the Securities and Exchange
  Commission for the year ended December 31, 2001. Except as required by law,
  we undertake no obligation to update any forward-looking statements. You should
  also carefully consider the factors set forth in other reports or documents
  that we file from time to time with the Securities and Exchange Commission.

OVERVIEW

We are engaged in the provision of services and products for profiling genetic uniqueness. Since we began operations in  March 1995, we have devoted substantially all of our resources to the provision of DNA testing and the development and  application of a portfolio of products and services using our proprietary biochemistry for scoring single nucleotide  polymorphisms, or SNPs, as well as microfluidics technologies for applications, principally in the field of high volume  SNP scoring and pharmacogenetics analysis.

In 2001, our business focused on our SNP scoring
  products and services that used our proprietary SNP-IT primer extension technology,
  and on our identity genomics services in paternity and forensics. During 2001,
  we entered into various agreements. These agreements had varying terms and included
  but were not limited to: (i) services agreements whereby we agreed to provide
  genetic analysis services; (ii) services agreements under which we would provide
  SNP genotyping services; (iii) license agreements pursuant to which we granted
  third parties royalty bearing, non-exclusive and exclusive licenses to use our
  SNP-IT single base primer extension technology to produce and sell reagent kits
  and software incorporating our technology; and (iv) agreements under which we
  agreed to provide various Orchid products under the proprietary labels such
  as SNPstream instruments, SNPware and ELUCIGENE consumables. Since late 1999,
  following our acquisition of GeneScreen, Inc. (GeneScreen) and,
  our subsequent acquisitions of Cellmark and Lifecodes, both in 2001, we also
  have been a leading provider of DNA testing services in the paternity, forensics
  and human leukocyte antigen, or HLA, transplantation typing fields.

During 2002, we conducted a strategic review of
  our business and, as a result, we are focusing on our high growth services businesses
  where we are a market leader in profiling genetic uniqueness, including forensics,
  paternity, agriculture, HLA testing for organ transplantation, as well as personalized
  medicine. We intend to dispose of our SNP genotyping instruments and related
  consumables business offered by our Orchid Life Sciences business unit by late
  2002 or early 2003. We plan to continue to provide advanced clinical-quality
  SNP genotyping services to the pharmaceutical industry under the aegis of our
  other business units. We intend to continue to leverage our leading SNP technology
  in providing genoprofiling services offered by our other business units. The
  completion of the disposition of the assets of the SNP genotyping instruments
  and related consumables business will effectively cease the operation of our
  Orchid Life Sciences business unit.



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Our ability to achieve profitability will depend largely on our ability to continue to provide genoprofiling services for the  forensics, paternity, agricultural and personalized healthcare markets. Our provision of genoprofiling services depends, in  part, on our ability to leverage our leading SNP technology where it provides us a competitive advantage.

We have incurred losses since inception, and, as of September 30, 2002, we had total stockholders equity of  approximately $71.4 million, including an accumulated deficit of approximately $228.3 million. We anticipate incurring  additional losses over at least the next year. We expect the need to raise additional cash to fund operations until we  become profitable which is anticipated to be in late 2003. We are currently in negotiations with a commercial lender to  secure a line of credit. In addition, we are also evaluating other sources of cash including the sale and divestiture of non-core assets, corporate debt options and special purpose equity issuances. We cannot make any assurance that any of  these prospective arrangements to secure cash to fund future operations will be successful.

Payments under strategic alliances, collaborations and licensing arrangements will be subject to significant fluctuation in  both timing and amount and therefore our results of operations for any period may not be comparable to the results of  operations for any other period.

Acquisitions

On December 30, 1999, we acquired GeneScreen, Inc. as a wholly owned subsidiary, which operates DNA testing  laboratories in Dallas, Texas and Dayton, Ohio. Orchid GeneScreen performs DNA laboratory analyses for paternity,  transplantation and forensic testing. Orchid GeneScreens primary source of revenue is paternity testing under contracts  with various state and county government agencies.

On February 12, 2001, we acquired Cellmark Diagnostics, a division of AstraZeneca, in an asset acquisition, for a  combination of cash and 222,980 shares of our common stock. Cellmark is a leading provider of genetic testing services in  the UK and sells kits and conducts testing for genetic diseases, including cystic fibrosis.

On December 5, 2001, we acquired all of the outstanding equity securities of Lifecodes Corporation, in a tax-free  transaction. Lifecodes, now a wholly owned subsidiary of Orchid, is a leading provider of DNA testing for forensics and  paternity in the US. We acquired Lifecodes in order to strengthen our position in the clinical grade testing market.  Lifecodes also maintains a diagnostic kit business which adds to our current products. We view this acquisition, in  addition to the two previous acquisitions of GeneScreen and Cellmark, as a significant step in providing cost efficient,  high throughput clinical testing businesses which form the core focus of our company.

GeneScreens, Cellmarks, and Lifecodes
  businesses in paternity and forensics testing support our goal of extending
  our business in genoprofiling. We intend to apply our SNP technology to the
  paternity and forensics businesses of GeneScreen, Cellmark, and Lifecodes where
  it enables us to reduce the cost of providing these identity genomics services.
  We also plan to use our laboratories to conduct pharmacogenetic SNP scoring
  services that we plan to offer to subscribers in the future through a number
  of distribution channels. Our DNA testing business is dependent upon our ability
  to successfully and competitively bid and qualify for contracts with various
  governmental entities to provide paternity and forensics testing services. We
  expect revenues from the respective forensics businesses of GeneScreen, Cellmark,
  and Lifecodes to increase as DNA analyses are increasingly being used by the
  authorities within the criminal justice system to identify perpetrators and
  exonerate the innocent.

Our GeneShield business, established in 2001, is developing a number of innovative pharmacogenetic-based programs  designed to accelerate the adoption of personalized medicine. These programs are focused on health outcomes,  specifically how a persons individual genetic makeup can affect responses to many prescription and over-the-counter  medicines. Orchid GeneShield expects to launch the commercialization of and generate revenues from one of its  programs, RxShield, in 2003.



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Compensation Charges

In prior years, we recorded deferred compensation resulting from the granting of stock options to employees, directors or  consultants with exercise prices below the fair market value of the underlying common stock at the date of their grant.  During 2001 and through September 30, 2002, all stock options were granted with grant prices equal to the fair value of  our common stock at the grant date. The portion of these amounts which results from grants to consultants is subject to  re-measurement at the end of each reporting period based upon the changes in the fair value of our common stock until  the consultant completes performance under his or her respective option agreement.

Critical Accounting Policies

Our critical accounting policies are as follows:

| |  | revenue recognition
| | - | -------------------
|

| |  | valuation of long-lived and intangible assets
      and goodwill.
| | - | -----------------------------------------------------------------
|

Revenue Recognition. We have had, and expect in the future to have, several sources of revenues. Prior to our  acquisitions of GeneScreen, Cellmark, and Lifecodes, we derived substantially all of our revenues from research and  development collaborations, technology grants and awards from several governmental agencies. In 1999, we derived our  first revenues from the placement of our first commercial SNPstream hardware system, and throughout 2000, 2001 and  through September 30, 2002, we derived increased amounts of revenues from the sale of SNP-IT-based consumables. We  also derived license revenues beginning in 2000. In 2000, we derived our first revenues from the performance of  laboratory DNA testing services by GeneScreen, our wholly owned subsidiary in the US. In 2001, we derived our first  revenues from the sale of testing kits and laboratory DNA testing services from our Cellmark division in the UK.

In connection with the research and development collaborations that provided the majority of our revenues in the early  years of our corporate history, we recognize revenues when related research expenses are incurred and when we satisfy  specific performance obligations under the terms of the respective research contracts. We defer up-front licensing fees  obtained in connection with such agreements and amortize them over the estimated performance period of the respective  research contract. We recognize milestone payments as revenues upon the completion of the milestone event or  requirement, if it represents the achievement of a significant step in research and development or performance process.

We recognize DNA laboratory and SNP scoring services revenues on a completed contract basis at the time test results  are completed and reported. Deferred revenues represent the unearned portion of payments received in advance of tests  being completed and reported.

To date, we have offered our SNPstream system hardware in two basic types of transactions, either a purchase and sale  transaction or an arrangement in which the customer takes possession of the system and pays an access fee for its use.  We record revenues on the sale of the hardware upon transfer of title and after we have met all of our significant  performance obligations. We defer access fee payments that we receive when a system is initially placed with a customer,  and recognize revenues on a straight-line basis over the term of the agreement.

Revenues from the sale of consumables are recognized upon the transfer of title, generally when our products are  shipped to our customers from our facilities.

Revenues from license arrangements, including license fees creditable against potential future royalty obligations of the  licensee, are recognized when an arrangement is entered into if we have no significant continuing involvement under the  terms of the arrangement. If we have significant continuing involvement under such an arrangement, license fees are  deferred and recognized over the estimated performance period. Management has



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made estimates and assumptions relating to the performance period which are subject to change. Changes in these  estimates and assumptions could affect the amount of revenues from licenses reported in any given period.

Valuation of long-lived and intangible assets and goodwill. We assess the impairment of amortizable identifiable  intangibles and long-lived assets whenever events or changes in circumstances indicate that the carrying value may not  be recoverable. Factors we consider important which could trigger an impairment review include the following:

| |  | significant underperformance relative to expected
      historical or projected future operating results;
| | - | ---------------------------------------------------------------------------------------------------------
|

| |  | significant changes in the manner of our use
      of the acquired assets or the strategy for our overall business;
| | - | -------------------------------------------------------------------------------------------------------------------
|

| |  | significant negative industry or economic
      trends; and
| | - | -----------------------------------------------------------
|

| |  | significant decrease in market value of assets.
| | - | -----------------------------------------------

When we determine that the carrying value of amortizable intangibles and other long-lived assets may not be recoverable  based upon the existence of one or more of the above indicators of impairment, we measure any impairment based on a  projected discounted cash flow method using a discount rate determined by our management to be commensurate with  the risk inherent in our current business. Net amortizable intangible assets and long-lived assets, excluding goodwill,  amounted to $35.5 million as of September 30, 2002.

Recently Issued Accounting Pronouncements. On January 1, 2002, Statement of Financial Accounting Standards No. 142,  Goodwill and Other Intangible Assets, became effective and, as a result, we ceased to amortize approximately $3.3  million of net goodwill recorded as of December 31, 2001. We had recorded approximately $1.9 million of amortization  during 2001. In connection with our adoption of SFAS 141, Business Combinations, which became effective on January  1, 2002, and our evaluation of intangible assets arising from business combinations prior to the adoption of SFAS 141, we  have reclassified our work force intangible asset with a net book value as of December 31, 2001 of approximately $1.1  million to goodwill. For further discussion of our implementation of these two new accounting pronouncements, see  Note 12 to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Additional Risk Factors. In addition
  to those risk factors in our Annual Report on Form 10-K for the year ended December
  31, 2001. You should be aware of the following risk factors:

We may be delisted from the Nasdaq National Market,
  which would result in a limited public or private market for our common stock,
  which would adversely affect our financial condition. On October 10, 2002, we
  received a notice from the Nasdaq National Market that our common stock had
  failed to maintain the required minimum closing bid price of $1.00 for a period
  of 30 consecutive trading days. As a result, Nasdaq has provided us 90 calendar
  days, or until January 8, 2003, to regain compliance with this requirement or
  be delisted from trading. In order to regain compliance, the closing bid price
  of the common stock must stay above $1.00 for 10 consecutive days. If we are
  unable to regain compliance with this requirement during this time period, and
  any appeal to Nasdaq for relief from this requirement is unsuccessful, our common
  stock will be delisted from trading by the Nasdaq National Market. If this were
  to happen, trading in our common stock would decrease substantially, or cease
  altogether, the market price of the common stock may decline further, potentially
  to zero, and stockholders may lose some or all of their investment. Furthermore,
  delisting of our common stock from the Nasdaq National Market would inhibit,
  if not preclude, our ability to raise additional working capital on acceptable
  terms, if at all.

If we fail to secure additional capital to fund our current and future operating plans then we may have to discontinue certain operations and activities. In addition, if we raise additional funds through the sale of non-core assets, equity or convertible debt or equity-linked securities, your percentage ownership in the company will be reduced. Furthermore, the securities we may issue in connection with such a financing may have rights, preferences and privileges senior to our common stock. We may be unable to raise additional funds on terms acceptable to us.



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RESULTS OF OPERATIONS

Three Months Ended September 30, 2002 and 2001

Revenues. Revenues for the three
  months ended September 30, 2002 of approximately $17.0 million represents an
  increase of approximately $9.6 million as compared to revenues of approximately
  $7.4 million for the corresponding period of 2001. This increase is primarily
  attributable to an increase of approximately $8.3 million in services revenues,
  which primarily relates to an increase in services revenues from our Cellmark
  business and our acquisition of Lifecodes, which we acquired in December of
  2001. Lifecodes had services revenues during the three months ended September
  30, 2002 of approximately $6.0 million. Our Cellmark business also experienced
  an increase in service revenues related to an increase in agricultural SNP genotyping
  services performed in the third quarter of 2002. Products revenues also increased
  by approximately $1.2 million, which relates primarily to an increase in SNPware
  consumable sales and our acquisition of Lifecodes. We also recognized approximately
  $0.7 million in collaboration, license and other revenues during the three months
  ended September 30, 2002.

Cost of products revenues. Cost of products revenues for the three months ended September 30, 2002 was approximately  $2.3 million, or 76% of products revenues, compared to approximately $1.1 million, or 61% of products revenues for the  corresponding period of 2001. The increase in cost of products revenues as a percent of products revenues is attributable  to an inventory charge of approximately $0.8 million which relates to inventory held to support a discontinued product  line. As adjusted, without the effect of this inventory charge, the cost of products revenues would have been  approximately $1.5 million, or 49% of products revenues. This 12% decrease in cost of products revenues as a percentage  of products revenues, excluding the effect of the inventory charge, is attributable to an increase in SNPware consumables which had a higher gross margin than SNPstream systems products for the three months ended September 30, 2002. In  addition, our Lifecodes
 business products revenues had gross margins that are consistent with the overall historical gross  margins of our consumables products business. Included in the total costs of products revenues for the three months  ended September 30, 2002 is approximately $0.9 million related to Lifecodes which was not included in our results of  operations in the corresponding period of 2001.

Cost of services revenues. Cost of services revenues was approximately $7.2 million, or 54% of services revenues, for the  three months ended September 30, 2002 compared to approximately $3.6 million, or 72% of services revenues, in the  corresponding period of 2001. The increase in costs of services revenues, in dollars, was primarily attributable to  increased costs of approximately $3.4 million associated with corresponding Lifecodes revenues. The decrease in cost of  services revenues as a percent of services revenues is attributed to the inclusion of Lifecodes in the quarterly results for a  full three-month period, which generates a higher gross margin on services revenues than our previous services  business. In addition, Cellmark has experienced significant growth in higher margin services which also contributed to the improved cost of services revenues on a percentage basis.

Research and development expenses. Research and development expenses consist primarily of salaries and related  personnel costs, fees paid to consultants and outside service providers for development, laboratory supplies and other  expenses related to the design, development, testing and enhancement of our products. Research and development  expenses for the three months ended September 30, 2002 were approximately $7.3 million, a decrease of approximately  $2.4 million, as compared to approximately $9.7 million for the corresponding period of 2001. During the quarter ended  September 30, 2002, we incurred approximately $1.4 million of software development costs associated with our  GeneShield business unit and $1.6 million of research and development costs associated with an internal decision to utilize inventory previously held for sale in the research and development of our ultra-high throughput genotyping  product for use in our other business units. Without g

iving effect to these charges, the decrease in research and  development would have been approximately $5.4 million. The decrease in research and development expense was  primarily attributable to a decrease in purchases of laboratory supplies of approximately $3.3 million as well as a  decrease in salary costs associated with research and development personnel of approximately $1.5 million, primarily  related to our Life Sciences business unit. During the three months ended September 30, 2001, we had incurred a  significant amount of



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research and development costs in connection with the expansion of our internal and collaborative efforts, including our  collaboration with the SNP Consortium which was not incurred during the three months ended September 30, 2002.  During 2002, we have also seen a reduction in salary expense from the restructuring efforts taken during the nine months  ended September 30, 2002.

Marketing and sales expenses. Marketing and sales expenses consist of salaries and benefits for salespeople within our  company and all related costs of selling and marketing our products and services. These costs include travel, advertising,  market research costs and certain professional fees. Marketing and sales expense for the three months ended September  30, 2002 was approximately $2.4 million as compared to approximately $1.4 million during the comparable period of  2001. The increase in these costs of approximately $1 million was directly related to Lifecodes costs of $1.1 million during  the current period which were not included in the previous periods results of operations.

General and administrative expenses. General and administrative expenses consist primarily of salaries and related  expenses for executive, finance and administrative personnel, professional fees, general legal and intellectual property  expenses and other corporate expenses. General and administrative expenses for the three months ended September 30,  2002 were approximately $10.6 million, an increase of approximately $5.2 million, as compared to approximately $5.4  million for the corresponding period of 2001. The increase in overall general and administrative expenses is attributed to  (i) Lifecodes, which accounted for $1.7 million of general and administrative expenses during the three months ended  September 30, 2002 and was not included in the previous periods quarterly results of operations (ii) a bad debt expense  related to a certain customer from the Lifecodes acquisition for approximately $2.4 million and (iii) to legal costs  associated with our

 litigation with St. Louis University which was settled during August of 2002.

Impairment of assets. We recorded
  approximately $6.1 million in impairment of asset charges during the quarter
  ended September 30, 2002 as compared to approximately $27.3 million during the
  same period of 2001. As a result of continuing losses incurred by our Life Sciences
  business segment, we prepared an internal evaluation of this segments
  long-lived assets. Based on this internal evaluation, approximately $2.7 million
  of laboratory equipment was determined to be idle and not able to be utilized
  in our other facilities and therefore determined to be permanently impaired.
  In addition, we estimated an impairment loss of approximately $3.4 million as
  it relates to leasehold improvements related to a facility currently utilized
  by the Life Sciences business unit. The impairment of assets of $27.3 million
  recorded during the quarter ended September 30, 2001 relates to goodwill recorded
  in connection with our acquisition of GeneScreen in December of 1999.

Restructuring. During the third quarter of 2002, we continued to restructure certain operations of our business in order to  reduce costs. As a result, positions which cover certain areas of our operations were eliminated. Most of these  terminations were from our Princeton, New Jersey facility. During the quarter ended September 30, 2002, we recorded an  additional restructuring charge of approximately $2.3 million which related to additional employee related charges such  as severance, benefits and outplacement services of approximately $0.9 million and facility costs for approximately $1.4  million.

Amortization of intangible assets. During the quarter ended September 30, 2002, we recorded approximately $1.0 million  of amortization of intangible assets as compared to approximately $1.2 million during the same period of 2001. During  the prior period, a significant portion of the amortization of intangible assets related to goodwill recorded on previously  acquired businesses which, effective January 1, 2002 are no longer amortized. Also, during the current period ended  September 30, 2002, we have recorded amortization expense associated with intangible assets acquired pursuant to our  acquisition of Lifecodes in December of 2001.

Interest income. Interest income for the three months ended September 30, 2002 was approximately $0.03 million,  compared to approximately $0.5 million for the corresponding period of 2001. This decrease was primarily due to interest  received on larger cash, cash equivalent and short-term investment balances which we held during 2001. This decrease is  also attributable to lower interest rates during 2002 compared to 2001.



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Interest expense. Interest expense for the three months ended September 30, 2002 was approximately $0.2 million, which  was comparable to the approximately $0.2 million in the corresponding period in 2001. Interest expense during these  periods was consistent because of the comparable levels of long term debt.

Net loss allocable to common stockholders. For the three months ended September 30, 2002, we reported a net loss  allocable to common stockholders of approximately $22.3 million as compared to approximately $41.9 million in the  corresponding period in 2001.

Nine Months Ended September 30, 2002 and 2001

Revenues. Revenues for the nine months ended September 30, 2002 of approximately $49.3 million represents an  increase of approximately $29.5 million as compared to revenues of approximately $19.8 million for the corresponding  period of 2001. This increase is primarily attributable to an increase of approximately $25.1 million in services revenues,  which primarily relates to an increase in services revenues from our Cellmark business and our acquisition of Lifecodes,  which we acquired in December 2001. Lifecodes had services revenues during the nine months ended September 30,  2002 of approximately $18.7 million. Our Cellmark business experienced an increase in services revenues related to an  increase in agricultural SNP genotyping services performed in 2002. Products revenues also increased by approximately  $4.3 million, which relates primarily to an increase in SNPware consumable sales and our acquisition of Lifecodes. We  also recognized approximately $2.5

 million in collaboration, license and other revenues during the nine months ended  September 30, 2002, which is consistent with the comparable period of 2001.

Cost of products revenues. Cost of products revenues for the nine months ended September 30, 2002 was approximately  $4.8 million, or 57% of products revenues, compared to approximately $2.8 million, or 70% of products revenues, for the  corresponding period of 2001. Cost of products revenues includes an inventory charge of approximately $0.8 million  which relates to inventory held to support a discontinued product line. As adjusted, without the effect of this inventory  charge, the cost of products revenues would have been approximately $4.0 million, or 47% of products revenues. This  23% decrease in cost of products revenues as a percentage of products revenues, excluding the effect of the inventory  charge, is attributable to an increase in SNPware consumables which had a higher gross margin than SNPstream systems  products for the nine months ended September 30, 2002. In addition, our Lifecodes business products revenues had  gross margins that are consistent

 with the overall historical gross margins of our consumables products business.  Included in the total costs of products revenues for the nine months ended September 30, 2002 is approximately $2.8  million related to Lifecodes which was not included in our results of operations in the corresponding period of 2001.

Cost of services revenues. Cost of services revenues was approximately $22.6 million, or 59% of services revenues, for the  nine months ended September 30, 2002 compared to approximately $9.3 million, or 70% of services revenues, in the  corresponding period of 2001. The increase in cost of services revenues, in dollars, was primarily attributable to increased  costs of approximately $10.5 million associated with corresponding Lifecodes revenues. The decrease in cost of services  revenues as a percent of services revenues is attributed to the inclusion of Lifecodes in the results of operations for a full  nine-month period, which generates a higher gross margin on services revenues than our previous services business. In  addition, Cellmark has experienced significant growth in higher margin services which also contributed to the improved  cost of services on a percentage basis.

Research and development expenses. Research and development expenses consist primarily of salaries and related  personnel costs, fees paid to consultants and outside service providers for development, laboratory supplies and other  expenses related to the design, development, testing and enhancement of our products. Research and development  expenses for the nine months ended September 30, 2002 were approximately $18.4 million, a decrease of approximately  $6.9 million, as compared to approximately $25.3 million for the corresponding period of 2001. During the nine months  ended September 30, 2002, we incurred approximately $1.4 million of software development costs associated with our  GeneShield business unit and $1.6 million of research and development costs associated with an internal decision to  utilize inventory previously held for sale in



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the research and development of our ultra-high throughput genotyping product for use in our other business units.  Without giving effect to these research and development charges and $0.7 million attributed to Lifecodes, the decrease in  research and development expenses would have been approximately $10.6 million. The decrease in research and  development expense for the nine months ended September 30, 2002 as compared to the comparable previous period  was primarily attributable to a decrease in purchases of laboratory supplies of approximately $5.2 million. There was also  a reduction in research and development personnel, primarily related to our Life Sciences business unit, and facility costs  which contributed to the overall decrease during the nine months ended September 30, 2002 as compared to the prior  period. During the nine months ended September 30, 2001, we had a significant amount of research and development  costs in connection with the expansion of our internal

 and collaborative efforts, including our collaboration with the SNP  Consortium which was not incurred during the nine months ended September 30, 2002, except for an insignificant  amount during early 2002. During 2002, we have also seen a reduction in salary expense from the restructuring efforts  taken during the nine months ended September 30, 2002.

Marketing and sales expenses. Marketing and sales expenses consist of salaries and benefits for salespeople within our  company and all related costs of selling and marketing our products and services. These costs include travel, advertising,  market research costs and certain professional fees. Marketing and sales expense for the nine months ended September  30, 2002 was approximately $7.7 million as compared to approximately $4.5 million during the comparable period of  2001. The increase in these costs of approximately $3.2 million was directly related to Lifecodes costs of $2.6 million  during the current period which were not included in the previous periods results of operations.

General and administrative expenses. General and administrative expenses consist primarily of salaries and related  expenses for executive, finance and administrative personnel, professional fees, general legal and intellectual property  and other corporate expenses. General and administrative expenses for the nine months ended September 30, 2002 were  approximately $28.2 million, an increase of approximately $11.1 million, as compared to approximately $17.1 million for  the corresponding period of 2001. We attribute the increase in overall general and administrative expenses to Lifecodes  which accounted for approximately $7.6 million in general and administrative expenses which were not included in the  previous periods results of operations. In addition, our Cellmark business had general and administrative expenses of  approximately $3.3 million during the nine months ended September 30, 2002 as compared to approximately $2.0 million  during the corresponding p

eriod of 2001 which was caused by the growth of that business and the inclusion of the results  of operations for a full nine-month period. The remaining increase is attributable to a bad debt expense related to a  certain customer from our Lifecodes acquisition for approximately $2.4 million and to legal costs associated with our  litigation with St. Louis University which was settled during August of 2002.

Impairment of assets. We recorded approximately $6.3 million in impairment of asset charges during the nine months  ended September 30, 2002 as compared to approximately $27.3 million during the same period of 2001. As a result of  continuing losses incurred by our Life Sciences business segment, we prepared an internal evaluation of this segments  long-lived assets. Based on this internal evaluation, approximately $2.7 million of laboratory equipment was determined  to be idle and not able to be utilized in our other facilities and therefore determined to be permanently impaired. In  addition, we estimated an impairment loss of approximately $3.6 million as it relates to leasehold improvements related  to a facility currently utilized by the Life Sciences business unit. The impairment of assets of $27.3 million recorded during  the quarter ended September 30, 2001 relates to goodwill recorded in connection with our acquisition of GeneScreen in  December of

1999.

Restructuring. During the nine months ended September 30, 2002, we formalized and announced plans to restructure  certain operations in order to reduce costs. As a result, over 110 positions which cover certain areas of our operations  were eliminated. Most of these terminations were from our Princeton, New Jersey facility. During the nine months ended  September 30, 2002, we recorded a restructuring charge of approximately $4.0 million which consisted of employee  related charges such as severance, benefits and outplacement services of approximately $1.9 million and approximately  $2.1 million of facility charges related to lease exit costs. We



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expect to pay most of the existing liability as it relates to severance during the fourth quarter of 2002. Facility related  accruals are expected to be paid out during the remainder of 2002 and throughout 2003.

Amortization of intangible assets. During the nine months ended September 30, 2002, we recorded approximately $2.9  million of amortization of intangible assets as compared to approximately $3.1 million during the same period of 2001.  During the prior period, a significant portion of the amortization of intangible assets related to goodwill recorded on  previously acquired businesses which, effective January 1, 2002 are no longer amortized. Also, during the nine months  ended September 30, 2002, we have recorded amortization expense associated with intangible assets acquired pursuant  to our acquisitions of Lifecodes in December of 2001 and Cellmark in February of 2001.

Interest income.Interest income for the nine months ended September 30, 2002 was approximately $0.5 million,  compared to approximately $2.4 million for the corresponding period of 2001. This decrease was primarily due to interest  received on larger cash, cash equivalent and short-term investment balances which we held during 2001. This decrease is  also attributable to lower interest rates during 2002 compared to 2001.

Interest expense. Interest expense for the nine months ended September 30, 2002 was approximately $0.7 million  compared to approximately $0.6 million in the corresponding period in 2001. Interest expense during these periods was  comparable because of the comparable level of long term debt.

Income tax benefit. During the nine months ended September 30, 2002, we recorded an income tax benefit of  approximately $0.9 million. This was related to the sale of some of our state net operating loss carryforwards to another  company, which is authorized by the New Jersey Economic Development Authority.

Net loss allocable to common stockholders. For the nine months ended September 30, 2002, we reported a net loss  allocable to common stockholders of approximately $45.0 million as compared to approximately $67.6 million in the  corresponding period in 2001.

LIQUIDITY AND CAPITAL RESOURCES

In March 2002, we completed a follow-on offering
  of our common stock for approximately $21.2 million. At September 30, 2002,
  we had borrowings of approximately $6.6 million outstanding related to a loan
  which was entered into primarily for equipment financing. If we do not maintain
  minimum unrestricted cash, as defined in the loan agreement, equal to the greater
  of $35.0 million or twelve months cash needs (calculated by taking the
  trailing three months net cash used in operations multiplied by four), we are
  required to provide a cash security deposit or letter of credit equal to an
  amount defined in the loan agreement, not to exceed 50% of outstanding amounts
  on draws made in or subsequent to December 2000. As of December 31, 2001, and
  just prior to our March equity offering (See Note 6 to the condensed consolidated
  financial statements), we did not maintain the minimum unrestricted cash defined
  in the loan agreement. We received a waiver from our lender regarding our non-compliance
  with this covenant for this period. Subsequent to March 31, 2002, we did not
  maintain the minimum cash defined in the loan agreement. We have also received
  written notice from the lender stating that the lender waived the financial
  covenant violation as a result of not maintaining a pledge of cash security
  deposit or letter or credit under this loan agreement for the period of non-compliance
  through June 19, 2002. On June 19, 2002, we obtained a letter of credit in the
  amount of approximately $2.7 million as required by the loan agreement, which
  was supported by a cash restriction on certain securities held by us. As such,
  this cash restriction, in addition to cash restricted under two of our operating
  leases is reflected as restricted cash in the condensed consolidated balance
  sheet as of September 30, 2002 of $3.4 million, of which approximately $2.3
  million is classified as a long term asset.

On May 10, 2001, we filed a Registration Statement on Form S-3 with the Securities and Exchange Commission. Subject  to our ongoing obligations under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as  amended, the Registration Statement permits us to offer and sell various types of securities, up to an aggregate value of  approximately $75.0 million, of which approximately $16.8 million remains available for



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future use. The sale of common stock in June 2001 for gross proceeds of approximately $35.7 million was registered  under this Registration Statement. The subsequent sale of common stock in February and March 2002 for gross proceeds  of approximately $22.5 million was also registered under a Prospectus Supplement to this Registration Statement.

As of September 30, 2002, we had approximately $9.1 million in cash and cash equivalents and short-term investments,  as compared to approximately $27.9 million as of December 31, 2001. This decrease is due to our follow-on offering of  common stock in February and March 2002 which generated net proceeds of approximately $21.2 million offset by cash  used to fund operations through September 30, 2002.

Net cash used in operations for the nine months ended September 30, 2002 was approximately $30.4 million compared  with approximately $32.4 million for the comparable period in 2001. Investing activities included capital expenditures of  approximately $2.9 million, and approximately $16.6 million of proceeds from maturities, net of purchases, of short term  investments. Financing activities primarily consisted of approximately $21.2 million of net proceeds from our offering of  common stock in February and March 2002 and repayment of debt of $2.6 million.

Working capital decreased to approximately $11.0 million at September 30, 2002 from approximately $27.5 million at  December 31, 2001. The decrease in working capital resulted from cash used in operations, cash paid to acquire fixed  assets and repay debt obligations during the nine months ended September 30, 2002 and the long term restriction on the  use of our cash of approximately $2.3 million, all of which were offset by an increase as it related to our offering of  common stock in February and March 2002.

We expect our restructuring efforts in the second and third quarters of 2002 will reduce future cash expenditures. We  believe that the result of these efforts, coupled with anticipated divestitures of certain non-core assets, expected increases  in both revenues and gross margins in our remaining business units and anticipated financings in the form of a  commercial line of credit and other financing instruments in the near term, will enable us to operate our ongoing  business activities until we reach profitability, expected in late 2003.

We cannot assure you that our business or operations will not change in a manner that would consume available  resources more rapidly than anticipated. Our capital requirements depend on numerous factors, including the following:

| |  | our ability to enter into strategic alliances
      or make acquisitions;
| | - | -------------------------------------------------------------------------
| |   |                                                                          

| |  | our ability to divest non-core assets;
| | - | --------------------------------------
|

| |  | regulatory changes and competing technological
      and market developments;
| | - | -----------------------------------------------------------------------------
|

| |  | changes in our existing collaborative relationships;
| | - | ----------------------------------------------------
|

| |  | the cost of filing, prosecuting, defending
      and enforcing patent claims and other intellectual property rights;       
| | - | ---------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                            
| |  | the application of our SNP technologies to
      our other business areas, including paternity and pharmacogenetic testing;
|

| |  | our ability to successfully secure contracts
      for high volume genotyping services from pharmaceutical and agricultural
      companies;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
|

| |  | the success rate of establishing new contracts,
      and renewal rate of existing contracts, for identity genomics services in
      the areas of paternity, forensics and transplantation;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

| |  | the progress of our existing and future milestone
      and royalty producing activities; and
| | - | ---------------------------------------------------------------------------------------------
|



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| |  | the availability of additional funding at
      favorable terms.
| | - | ----------------------------------------------------------------
|

As of December 31, 2001, our net operating loss carryforwards were approximately $134.2 million and $123.5 million for  Federal and state income tax purposes, respectively, as adjusted for the sale of our state tax loss carryforwards in January  2002. If not utilized, our Federal and state tax loss carryforwards will begin to expire in 2003 and 2002, respectively.  Utilization of our net operating losses to offset future taxable income, if any, may be substantially limited due to change  of ownership provisions in the Internal Revenue Code of 1986. We have not yet determined the extent to which  limitations were triggered as a result of past financings or may be triggered as a result of future financings. This annual  limitation is likely to result in the expiration of certain net operating losses prior to their use.

Contractual Commitments. We maintain multiple contractual commitments as of September 30, 2002, which will support  our future business operations. Such commitments relate to non-cancelable operating lease arrangements, long term  debt, minimum supply purchases, and future patent and minimum royalty obligations. We have identified and quantified  the significant commitments in the following table.

Payments Due by Period
  (in thousands)

|                                                               | Three
      months
      ending
      December 31, |       | Years
      ending December 31, |   |       |  |     
|-------------------------------------------------------------- | -------------------------------------------------- | ----- | ------------------------------- | - | ----- |  | ----
|Contractual
        Obligations                                | 2002                                               |       | 2003                            |   | 2004  |  | 2005
|                                                               |                                                    |       |                                 |   |       |  |     
|Noncancelable
        operating lease
        arrangements (1) | $                                                  | 925   |                                 | $ | 3,653 |  | $   
|Long-term
        debt (2)                                     |                                                    | 765   |                                 |   | 3,498 |  |     
|Future
        patent obligations (3)                          |                                                    | 187   |                                 |   | 1,430 |  |     
|Minimum
        purchase
commitments
        (4)               |                                                    |      |                                 |   | 880   |  |     
|Future
        minimum royalties (5)                           |                                                    |      |                                 |   |      |  |     
|                                                               |                                                    |       |                                 |   |       |  |     
|Total
        contractual obligations                          | $                                                  | 1,877 |                                 | $ | 9,461 |  | $   
|                                                               |                                                    |       |                                 |   |       |  |     

|    |                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Such amounts represent future minimum rental
      commitments for office space leased under non-cancelable operating lease
      arrangements. We lease approximately 208,000 square feet for operations
      in the US and approximately 75,000 square feet in Abingdon, UK to support
      foreign operations.
|    |                                                                                                                                                                                                                                                                                                                    

|(2) | Such amounts primarily consist of amounts
      payable pursuant to our equipment loan line. Also included in such amounts
      are notes payable to former employees (net of unamortized discount) and
      capital lease obligations for certain machinery and equipment (including
      interest).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                         

|(3) | Such amounts represent obligations to
      pay future amounts over the next four years in conjunction with our acquisition
      of US Patent No. 5,856,092 and its foreign counterparts from Affymetrix
      in July 2001 as well as our obligation to pay St. Louis University up to
      $1.2 million in 2003 and 2004.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                              

|(4) | Such amounts represent minimum purchase
      commitments of terminators from PerkinElmer (formerly known as NEN Life
      Science Products, Inc.) pursuant to the License and Supply Agreement for
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                     



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| | Terminators, effective February 21, 2000.
| | -----------------------------------------
| |                                          

|(5) | In connection with our acquisition of US
      Patent No. 5,856,092, we are also obligated to pay quarterly future minimum
      royalties commencing for 2005 which increases up to $1.9 million for 2007
      and continues through the expiration of the agreement.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                        

ITEM 3.      QUANTITIVE AND QUALITATIVE
  DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk is principally confined to our cash equivalents, short-term investments, and restricted cash  which are conservative in nature, with a focus on preservation of capital and all of which have maturities of less than one  year which limit their exposure to market fluctuations. We maintain a non-trading investment portfolio of investment  grade, liquid debt securities that limit the amount of credit exposure to any one issue, issuer or type of instrument.

Market risk refers to the risk of loss arising from adverse changes in foreign currency exchange rates. As a result of our  acquisition of Cellmark in February 2001, the acquisition of Lifecodes in December 2001 and a limited number of  agreements with foreign companies we may be affected by fluctuations in currency exchange rates.

We have a minimal amount of long-term debt recorded on our books. The interest rates applicable to such debt are not  variable with respect to market conditions.

ITEM 4.      CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and
  Procedures. Our principal executive officer and principal financial
  officer, after evaluating the effectiveness of our disclosure controls and procedures
  (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) have concluded that,
  based on such evaluation, our disclosure controls and procedures were adequate
  and effective to ensure that material information relating to us, including
  our consolidated subsidiaries, was made known to them by others within those
  entities, particularly during the period in which this Quarterly Report on Form
  10-Q was being prepared.

(b) Changes in Internal Controls. There were no significant changes in our internal controls or in other factors that could  significantly affect these controls subsequent to the date of their evaluation, nor were there any significant deficiencies or  material weaknesses in our internal controls. Accordingly, no corrective actions were required or undertaken.

FORWARD-LOOKING STATEMENTS

This report may contain forward-looking statements. Such statements are based on managements current expectations  and are subject to a number of factors and uncertainties that could cause actual results or outcomes to differ materially  from those described in such forward-looking statements. These statements address or may address the following  subjects: our expectation of incurring additional losses in future periods; our expectation to pay most of the existing  liability as it relates to severance during the fourth quarter of 2002; our expectation to pay facility related accruals during  the remainder of 2002 and throughout 2003; our intention to vigorously defend against lawsuits; our belief that the  resolution of certain claims will not have a material effect on our financial position or results of operations; our intention  to dispose of our SNP genotyping instruments and related consumables offered by our Orchid Life Sciences strategic  business unit by late 2002

 or early 2003; our plan to continue to provide advanced clinical-quality SNP genotyping  services to the pharmaceutical industry under the aegis of our other business units; our intention to continue to leverage  our leading SNP technology in providing genoprofiling services offered by our other business units; our expectation of  incurring additional losses over at least the next year; our expectation of the need to raise additional cash to fund  operations until we become profitable which is anticipated to be in late 2003; our intention to apply our SNP technology  to the paternity and forensics businesses of GeneScreen, Cellmark, and Lifecodes where it enables us to reduce the cost  of providing these identity genomics services; our plan to use our laboratories to conduct pharmacogenetic SNP scoring



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services that we plan to offer to subscribers in the future through a number of distribution channels; our expectation that  revenues from the respective forensics businesses of GeneScreen, Cellmark, and Lifecodes to increase as DNA analyses  are increasingly being used by the authorities within the criminal justice system to identify perpetrators and exonerate the  innocent; our expectation that Orchid GeneShield will launch the commercialization of one of its programs, RxShield, and  to commence generating revenues in 2003; our expectation of having several sources of revenues in the future; our  expectation that our restructuring efforts in the second and third quarters of 2002 will reduce future cash expenditures;  and our belief that the result of these efforts, coupled with anticipated divestitures of certain non-core assets, expected  increases in both revenues and gross margins in our remaining business units and anticipated financings in the form of a  commercial line

of credit and other financing instruments in the near term, will enable us to operate our ongoing  business activities until we reach profitability, expected in late 2003. For further information, refer to the more specific  factors and uncertainties discussed throughout this report and in the Risk Factors section of our Annual Report on Form  10-K for the year ended December 31, 2001.



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PART II OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS

On or about November 21, 2001, we were made aware of a complaint filed in the United States District Court for the  Southern District of New York naming us as defendants, along with certain of our officers and underwriters. An amended  complaint was filed on April 19, 2002. The complaint, as amended, purportedly is filed on behalf of persons purchasing  our stock between May 4, 2000 and December 6, 2000, and alleges violations of Sections 11 and 15 of the Securities Act of  1933, as amended, and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5  promulgated thereunder. The amended complaint alleges that, in connection with our May 5, 2000 initial public offering,  the defendants failed to disclose additional and excessive commissions purportedly solicited by and paid to the  underwriter defendants in exchange for allocating shares of our stock to preferred customers and alleged agreements  among the underwriter defendants and preferred

customers tying the allocation of IPO shares to agreements to make  additional aftermarket purchases at pre-determined prices. Plaintiffs claim that the failure to disclose these alleged  arrangements made our registration statement on Form S-1 filed with the SEC in May 2000 and the prospectus, a part of  the registration statement, materially false and misleading. Plaintiffs seek unspecified damages. We have not reserved  any amount related to this case as we believe that the allegations are without merit and intend to vigorously defend  against the plaintiffs claims. In this regard, on or about July 15, 2002, we have filed a motion to dismiss all of the claims  against us and our officers. Though the court heard oral argument on the motion on November 1, 2002, a decision has not  yet been rendered. On October 9, 2002, the court dismissed without prejudice only our individual officers, Dale R. Pfost  and Donald R. Marvin, from the litigation in exchange for our entering into a tolling agreement with the plaintiffs  executive committee.

We had been in a litigation with St. Louis University of St. Louis, Missouri regarding its belief that our SNP scoring  technology infringes certain claims under US patent 5,846,710, which was controlled by the University. On August 7,  2002, the parties dismissed the litigation and we acquired the subject patent. St. Louis University has assigned both the  patent and all license agreements related thereto to us.

ITEM 2.      CHANGES IN SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

Not applicable.

ITEM 5.      OTHER INFORMATION

On October 10, 2002, we received a notice from the Nasdaq National Market that our common stock had failed to maintain  the required minimum closing bid price of $1.00 for a period of 30 consecutive trading days. As a result, Nasdaq has  provided us 90 calendar days, or until January 8, 2003, to regain compliance with this requirement or be delisted from  trading. In order to regain compliance, the closing bid price of the common stock must stay above $1.00 for 10  consecutive trading days.



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ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

The following is a list of exhibits filed as part of this Quarterly Report on Form 10-Q.

|ExhibitNumber | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3.1           | Restated Certificate
      of Incorporation of the Registrant, dated May 10, 2000 (filed as Exhibit
      3.1 to the Registrants Quarterly Report on Form 10-Q for the quarter
      ended June 30, 2002 and incorporated herein by reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3.2           | Certificate of Amendment
      to the Restated Certificate of Incorporation of the Registrant, dated June
      12, 2001 (filed as Exhibit 3.2 to the Registrants Quarterly Report
      on Form 10-Q for the quarter ended June 30, 2002 and incorporated herein
      by reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3.3           | Certificate of Amendment
      to the Restated Certificate of Incorporation of the Registrant, dated June
      17, 2002 (filed as Exhibit 3.3 to the Registrants Quarterly Report
      on Form 10-Q for the quarter ended June 30, 2002 and incorporated herein
      by reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3.4           | Certificate of Designation,
      Preferences, and Rights of Series A Junior Participating Preferred Stock
      of the Registrant, dated August 1, 2001 (filed as Exhibit 3.4 to the Registrants
      Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 and incorporated
      herein by reference)                                                                                                                                                                                                                                                                                                                                                                                                                
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3.5           | Second Amended and
      Restated Bylaws of the Registrant (filed as Exhibit 3.4 to the Registrants
      Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated
      herein by reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.1           | Specimen certificate
      for shares of common stock (filed as Exhibit 4.1 to the Registrants
      Quarterly Report on Form 10-Q for the quarter ended September 30, 2001 and
      incorporated herein by reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.2           | Rights Agreement,
      dated as of July 27, 2001, by and between the Registrant and American Stock
      Transfer & Trust Company, which includes the form of Certificate of
      Designations setting forth the terms of the Series A Junior Participating
      Preferred Stock, $0.001 par value, as Exhibit A, the form of rights certificate
      as Exhibit B and the summary of rights to purchase Series A Junior Participating
      Preferred Stock as Exhibit C. Pursuant to the Rights Agreement, printed
      rights certificates will not be mailed until after the Distribution Date
      (as defined in the Rights Agreement) (filed as Exhibit 4.1 to the Registrants
      Registration Statement on Form 8-A)

(b) Reports on Form 8-K

Not applicable.



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SIGNATURES

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

|                        | ORCHID BIOSCIENCES, INC.                               
|----------------------- | -------------------------------------------------------
|                        |                                                        
|Date: November 14, 2002 | By:/s/ Andrew P. Savadelis                             
|                        |                                                        
|                        | ANDREW P. SAVADELIS                                    
|                        | Senior Vice President and Chief Financial
      Officer
|                        | (principal financial and accounting officer)           

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Certification  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Dale R. Pfost, President and Chief Executive Officer of Orchid BioSciences, Inc. (the Registrant), certify that:

|1. | I have reviewed this quarterly report on
      Form 10-Q of the Registrant;                                                                                                                                                                                                                                                                           
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                       
|2. | Based on my knowledge, this quarterly 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 quarterly report;
|  
|3. | Based on my knowledge, the financial statements,
      and other financial information included in this quarterly 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 quarterly report;                   
|  

|4. | The Registrants other certifying officers
      and I are responsible for establishing and maintaining disclosure controls
      and procedures (as defined in Exchange Act 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 us by others within those
      entities, particularly during the period in which this quarterly 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 quarterly report (the Evaluation Date);
      and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

| | c. | presented in this quarterly report our conclusions
      about the effectiveness of the disclosure controls and procedures based
      on our evaluation as of the Evaluation Date;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

|5. | The Registrants other certifying officers
      and I have disclosed, based on our 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; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

|6. | The Registrants other certifying officers
      and I have indicated in this quarterly report whether there were significant
      changes in internal controls or in other factors that could significantly
      affect internal controls subsequent to the date of our most recent evaluation,
      including any corrective actions with regard to significant deficiencies
      and material weaknesses.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: November 14, 2002

|/s/
      Dale R. Pfost                                                                | 
|-------------------------------------------------------------------------------------- | 
|Dale
      R. Pfost, President and Chief Executive Officer of Orchid BioSciences, Inc.





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Certification  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Andrew P. Savadelis, Senior Vice President and Chief Financial Officer of Orchid BioSciences, Inc., (the Registrant)  certify that:

|1. | I have reviewed this quarterly
      report on Form 10-Q of the Registrant;                                                                                                                                                                                                                                                                                                                                     
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|2. | Based on my knowledge, this quarterly
      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 quarterly report;                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|3. | Based on my knowledge, the financial
      statements, and other financial information included in this quarterly 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 quarterly report;                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|4. | The Registrants other certifying
      officers and I are responsible for establishing and maintaining disclosure
      controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
      for the Registrant and have:                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | a.                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | b.                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | c.                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|5. | The Registrants other certifying
      officers and I have disclosed, based on our 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.                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | b.                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|6. | The Registrants other certifying
      officers and I have indicated in this quarterly report whether there were
      significant changes in internal controls or in other factors that could
      significantly affect internal controls subsequent to the date of our most
      recent evaluation, including any corrective actions with regard to significant
      deficiencies and material weaknesses.

Date: November 14, 2002

|/s/
      Andrew P. Savadelis                                                                                  | 
|-------------------------------------------------------------------------------------------------------------- | 
|Andrew
      P. Savadelis, Senior Vice President and Chief Financial Officer of Orchid
      BioSciences, Inc.



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The following is a list of exhibits are incorporated be reference in this Quarterly Report on Form 10-Q.

|ExhibitNumber | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3.1           | Restated Certificate
      of Incorporation of the Registrant, dated May 10, 2000 (filed as Exhibit
      3.1 to the Registrants Quarterly Report on Form 10-Q for the quarter
      ended June 30, 2002 and incorporated herein by reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3.2           | Certificate of Amendment
      to the Restated Certificate of Incorporation of the Registrant, dated June
      12, 2001 (filed as Exhibit 3.2 to the Registrants Quarterly Report
      on Form 10-Q for the quarter ended June 30, 2002 and incorporated herein
      by reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3.3           | Certificate of Amendment
      to the Restated Certificate of Incorporation of the Registrant, dated June
      17, 2002 (filed as Exhibit 3.3 to the Registrants Quarterly Report
      on Form 10-Q for the quarter ended June 30, 2002 and incorporated herein
      by reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3.4           | Certificate of Designation,
      Preferences, and Rights of Series A Junior Participating Preferred Stock
      of the Registrant, dated August 1, 2001 (filed as Exhibit 3.4 to the Registrants
      Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 and incorporated
      herein by reference)                                                                                                                                                                                                                                                                                                                                                                                                                
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3.5           | Second Amended and
      Restated Bylaws of the Registrant (filed as Exhibit 3.4 to the Registrants
      Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated
      herein by reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.1           | Specimen certificate
      for shares of common stock (filed as Exhibit 4.1 to the Registrants
      Quarterly Report on Form 10-Q for the quarter ended September 30, 2001 and
      incorporated herein by reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.2           | Rights Agreement,
      dated as of July 27, 2001, by and between the Registrant and American Stock
      Transfer & Trust Company, which includes the form of Certificate of
      Designations setting forth the terms of the Series A Junior Participating
      Preferred Stock, $0.001 par value, as Exhibit A, the form of rights certificate
      as Exhibit B and the summary of rights to purchase Series A Junior Participating
      Preferred Stock as Exhibit C. Pursuant to the Rights Agreement, printed
      rights certificates will not be mailed until after the Distribution Date
      (as defined in the Rights Agreement) (filed as Exhibit 4.1 to the Registrants
      Registration Statement on Form 8-A)



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