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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2000
                        Commission File Number: 000-31577

                                 INFORMAX, INC.
             (Exact name of registrant as specified in its charter)
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             Delaware                                                                         52-1687783
<S>                                                                                       <C>
         (State or other jurisdiction of                                                     (IRS Employer
        incorporation or organization)                                                        Identification No.)
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                              7600 WISCONSIN AVENUE
                                   SUITE 1100
                               BETHESDA, MD 20814
                    (Address of principal executive offices)

                                 (240) 747-4000
              (Registrant's telephone number, including area code)

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

Securities registered pursuant to Section 12(b) of the Act: Not Applicable
Securities registered pursuant to Section 12(g) of the Act:

                     COMMON STOCK, PAR VALUE $.001 PER SHARE
                                (Title of class)

        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 and (2) has been subject to such filing
requirements for the past 90 days. [X]Yes [ ] No

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

        The aggregate market value of the common stock held by non-affiliates of
the registrant, based upon the closing price of the registrant's common stock as
of March 1, 2001 is approximately $103.9 million.

        As of March 1, 2001, there were 20,518,976 shares of the registrant's
common stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

        Portions of the definitive proxy statement for the Annual Meeting of
Stockholders to be held on May 23, 2001, to be filed within 120 days after the
end of the registrant's fiscal year, are incorporated by reference into Part
III, Items 11 - 13 of this Form 10-K.
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                                 INFORMAX, INC.
                                    FORM 10-K

                                TABLE OF CONTENTS

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                                                                                                      PAGE
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<S>          <C>        <C>                                                                           <C>
PART I
             Item 1.    Business.....................................................................      1
             Item 2.    Properties...................................................................     28
             Item 3.    Legal Proceedings............................................................     29
             Item 4.    Submission of Matters to a Vote of Security Holders..........................     29
PART II
             Item 5.    Market for Registrant's Common Equity and Related Stockholders Matters.......     30
             Item 6.    Selected Consolidated Financial Data.........................................     33
             Item 7.    Management's Discussion and Analysis of Financial Condition and Results of
                        Operations...................................................................     35
             Item 7A.   Quantitative and Qualitative Disclosures about Market Risk...................     57
             Item 8.    Consolidated Financial Statements and Supplementary Data.....................     58
             Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial
                        Disclosure...................................................................     81
PART III
             Item 10.   Directors and Executive Officers of the Registrant...........................     82
             Item 11.   Executive Compensation.......................................................     82
             Item 12.   Security Ownership of Certain Beneficial Owners and Management...............     82
             Item 13.   Certain Relationships and Related Transactions...............................     82
PART IV
             Item 14.   Exhibits, Consolidated Financial Statement Schedules and Reports on
                        Form 8-K.....................................................................     83
SIGNATURES...........................................................................................     84

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              CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        Except for any historical information, the matters we discuss in this
Form 10-K concerning our company contain forward-looking statements. Any
statements in this Form 10-K that are not statements of historical fact, are
intended to be, and are, "forward-looking statements" under the safe harbor
provided by Section 27(a) of the Securities Act of 1933, as amended. Without
limitation, the words "anticipates," "believes," "estimates," "expects,"
"intends," "plans" and similar expressions are intended to identify
forward-looking statements. The important factors we discuss below and under
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations," as well as other factors identified in our filings with the SEC
and those presented elsewhere by our management from time to time, could cause
actual results to differ materially from those indicated by the forward-looking
statements made in this Form 10-K. Such risks and uncertainties include those
set forth under Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Risk Factors" and elsewhere in this Form
10-K. The forward-looking statements contained in this Form 10-K represent our
outlook only as of the date of hereof and we assume no obligation to update the
forward-looking information contained in this Form 10-K to reflect actual
results or changes in the factors affecting such forward-looking information.


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                                 INFORMAX, INC.

                                     PART I

ITEM 1- BUSINESS

OVERVIEW

        We are a leading global provider of bioinformatic software solutions.
Bioinformatics involves the application of information technology to the
analysis of genomic, proteomic and other biomolecular data. Our bioinformatic
software solutions are designed to enable researchers to more efficiently
search, organize, share, analyze and interpret these data that form the genetic
blueprint of all organisms. As a result, our bioinformatic software solutions
enable researchers to reduce the time it takes to discover and validate
biological targets that may lead to new therapeutics, diagnostics or
biomolecular interventions to cure or prevent disease.

        We believe that our position as a leading global provider of
bioinformatic software is based upon the number of our customers, our revenues
and the scope of our product offerings and distribution channels. Since
introducing our Vector NTI Suite of software applications for desktop computers
in 1993, we have sold our products to over 1,650 organizations worldwide,
including over 650 biotechnology, pharmaceutical and agricultural biotechnology
companies, and over 1,000 academic and government research institutions. Our
customers include:

-       Merck & Company, Inc.,

-       Genzyme Corporation,

-       Procter & Gamble,

-       Johnson & Johnson,

-       Bristol-Myers Squibb Company,

-       Pfizer, Inc.

-       AstraZeneca UK Limited,

-       Diversa Corporation,

-       Novartis Agribusiness Biotechnology Research, Inc.,

-       Whitehead Institute for Biomedical Research,

-       Massachusetts Institute of Technology,

-       University of Tokyo, and

-       the National Institutes of Health.

        Our principal software products are our Vector NTI Suite for desktop
computers and our more powerful and expensive GenoMax enterprise platform for
integrated analysis of larger amounts of genomic, proteomic and other
biomolecular data. Driven primarily by increased sales of Vector NTI Suite and
the introduction of GenoMax in late 1998, our products and complementary
services generated $17.1 million in revenues in 2000, representing a five-year
compound annual growth rate of 98% and a 71% increase over 1999.

        Building on our existing market penetration, we intend to grow our
business through increased software sales and add new revenue through expanded
professional services, content channeling and distribution alliances, and
e-commerce offerings. In August 2000, we entered into a long-term strategic
relationship with Amersham Pharmacia Biotech, a subsidiary of Nycomed Amersham,
to jointly develop and market an expanded

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version of GenoMax to provide an enterprise-wide data analysis system for
pharmaceutical and biotechnology companies, for integrating and analyzing data
from genomics, proteomics and drug screening production laboratories.

        In January 2001, we entered into a strategic relationship with Biomax
Informatics AG, a German company that develops software and customized
bioinformatic solutions. Under our agreement, we were granted a four-year,
exclusive worldwide license to distribute Biomax's BioRS(TM) integration and
retrieval system. BioRS is a gene sequence and biological data retrieval system
that allows researchers to query and manage hundreds of biological databases
simultaneously through user friendly web interfaces. The addition of BioRS is a
strong complement to our existing GenoMax and Vector NTI Suite products and a
key component in the development of our High-Throughput Research environment.
Continuation of our exclusive distribution rights is contingent upon our
satisfaction of certain minimum sales thresholds and our agreement does not
restrict Biomax from distributing BioRS directly during the term of our
agreement. Under our agreement, we have agreed to work with Biomax to integrate
the capabilities of BioRS into our Vector NTI Suite and GenoMax products.

        As of March 1, 2001, we employed 244 people, including a sales and
marketing team of 73, a research and product development team of 97 and an
implementation and support staff of 24.

INDUSTRY BACKGROUND

        Bioinformatics combines the fields of molecular biology and information
technology. Bioinformatic software enables researchers, using automated
laboratory research techniques, to efficiently search, organize, share, analyze,
and interpret genomic, proteomic and other biomolecular data. Genomic and
proteomic factors dictate cellular functions, susceptibility to disease, and
physical characteristics. Researchers expect that analysis of such data will
lead to new ways to diagnose, treat, and ultimately prevent many of the
thousands of disorders that affect humans. Genomic research involving other
organisms, including plants, animals, bacteria, and viruses, could yield further
advances regarding human disorders, as well as improvements in agricultural
production, industrial processes and environmental management.

Research is Producing a Flood of Genomic and other Biomolecular Data

        Around the world, researchers in industry, academia, and government are
producing vast quantities of biomolecular data. Much of this data is related to:

-          DNA sequence: the order of chemical sub-units, called nucleotide
           bases, that make up strands of DNA found in the cells of every living
           organism and which encode genetic information;

-          gene variation, function and expression: the variation in specific
           sequences of nucleotide bases found on chromosomes, called genes,
           that control the presence of hereditary traits; the biological
           function of those sequences; and the degree to which a gene's
           information is translated into the production of proteins within a
           cell; and

-          protein structure and function: the sequence of chains of amino
           acids, the building blocks of proteins, their 3D structures and the
           means by which they direct the regulation, growth and repair of
           cells, tissues and organs.


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        Numerous emerging laboratory technologies, including biochips and
microarrays, are automating and accelerating the generation of much of this
data. The following examples indicate the rapid increase in available data:

        -  On February 15, 2001, the journal Nature published a
           collection of papers containing the draft of the complete human
           genome sequence. This publication was the culmination of more than 20
           years of work by thousands of scientists around the world.

        -  On June 26, 2000, the Human Genome Project, an international
           collaboration of academic and government research institutes, and
           Celera Genomics, each pursuing the parallel goal of deciphering the
           human genome, jointly announced that they had assembled the world's
           first working draft of the entire human genetic code, consisting of
           approximately 3.12 billion chemical nucleotide bases.

        -  GenBank, a National Institutes of Health sponsored public
           repository of genetic sequences of humans and over 55,000 other
           organisms, increased from approximately 555,000 complete sequences in
           1995 to over 10.8 million complete sequences as of February 2001.
           GenBank's database of nucleotide bases increased from approximately
           385 million bases in 1995 to over 11.7 billion bases as of February
           2001.

Bioinformatic Software Efficiently Stores, Organizes and Integrates Growing
Volumes of Biomolecular Data

        A central problem now facing researchers is how to store, organize and
integrate complex and rapidly growing data sets. Bioinformatic software can
incorporate a relational database, enabling researchers to efficiently store,
organize and search proteomic and genomic data according to the properties of
relevant data objects. Bioinformatic software can also provide a user-friendly
interface for efficient access to numerous in-house and Internet-based databases
of biomolecular information.

Bioinformatic Software Transforms  Data into Useful Knowledge

        The true value of the rapidly growing mass of genomic and proteomic data
lies in the transformation of these data into advances in drug discovery and
development, clinical diagnostics, agricultural production, environmental
management, and industrial processes. Bioinformatic software allows researchers
to incorporate proprietary and third party analytical algorithms and analysis
tools to interpret and translate data into useful knowledge for application
across a variety of disciplines. Bioinformatic software can also automate
database queries, analyses and reporting of research results. Automated analysis
is important because as biomolecular databases grow, researchers must
continuously update their analyses to reflect these new data.

Bioinformatic Software Facilitates Collaboration among Researchers

        Due to the volume and complexity of biomolecular data, efficient
collaboration among researchers within and across organizations is required to
accelerate productivity. Within large pharmaceutical companies, related research
efforts are often conducted across numerous research departments in different
locations. The Human Genome Project, carried out at academic and government
research institutes around the world, represents an example of
inter-organizational collaboration. Internet and intranet-enabled bioinformatic
software solutions such as our Vector NTI Suite, Vector Enterprise and GenoMax
enterprise platform serve as



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an information bridge allowing researchers to share data and results,
collaborate in analyses and better coordinate their efforts.

Bioinformatic Software Provides an Efficient Interface for Online Data Sources

        Currently, researchers can access over 500 public domain databases
containing genomic, proteomic and other biomolecular data over the Internet. For
example, the National Center for Biotechnology Information (NCBI) provides
access to GenBank and its other databases through its Internet website, which is
used on average by more than 140,000 users per weekday who initiate an average
of over 4.0 million queries per day. In addition, commercial providers of
genomic, proteomic and other biomolecular data often provide customers with
access to proprietary data through the Internet. Bioinformatic software can act
as a researcher's interface with diverse online databases. The Internet also
enables the distribution of bioinformatic software, the use of bioinformatic
software maintained on remote computers, and the online purchase of products
used in laboratory experiments.

MARKET OPPORTUNITIES IN BIOINFORMATICS

The Market for Bioinformatic Software is Large and Increasing

        An August 2000 independent industry report by Front Line Strategic
Management Consulting estimates the world-wide bioinformatics market, consisting
of sales by providers of analytical software, enterprise systems and data, at
approximately $468.0 million in 2000, growing to approximately $2.0 billion in
2005 and approximately $5.4 billion in 2010. We believe that this growth is
being driven in part by organizations increasingly turning to external vendors
of bioinformatic software solutions, allowing them to focus on their core
research competencies. We believe that market growth for bioinformatic software
solutions is driven by several factors common to all industries engaged in
biological research, including:

        -       the difficulty of managing and integrating the rapidly
                increasing volumes of available biomolecular data;

        -       increased demand for productivity and cost efficiency by
                researchers engaging in biological discovery;

        -       the advantages of making front-end technology investments to
                avoid costly failures later in the research and development
                process; and

        -       the opportunity to claim valuable patent rights on biomolecular
                information underlying diseases, human behavior, agricultural
                productivity, environmental management, industrial processes,
                and other areas.

        We believe that our software products provide researchers with an
efficient means by which to access disparate data sources and give them the
tools to rapidly interpret, analyze and translate such data for application in
numerous disciplines. Given the market opportunities created by the applications
of genomic, proteomic and other biomolecular data, and the efficiency and
productivity gains that can be achieved through the use of bioinformatic
software, we believe that the market for our software solutions will continue to
grow.

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Target Markets for Bioinformatic Software Applications

        Bioinformatic software facilitates increased research efficiency,
productivity and collaboration in the numerous disciplines that apply a data
driven, genomic approach to biological discovery. In 1997, there were
approximately 373,500 scientists and engineers engaged in research and
development in the life sciences and related science fields, including 171,700
in commercial organizations and 201,800 in academic and government research
institutions. We believe that the current and future markets for bioinformatic
software products include all of the industries participating in the genomic
revolution, including:

        Pharmaceutical and Biotechnology Companies. There are over 250
pharmaceutical companies and 2,500 biotechnology companies worldwide. In 1999,
pharmaceutical companies are estimated to have spent approximately $20.1 billion
in research and development in the United States alone. In addition, U.S.
biotechnology companies are estimated to have spent approximately $9.9 billion
in research and development. Current estimates suggest that over 90% of
potential drug candidates fail at some point in the development process and that
bringing a new drug to market costs approximately $500.0 million and requires an
average of 15 years in development. In an effort to increase the number and
quality of marketable drug candidates, pharmaceutical and biotechnology
companies are increasingly moving away from the trial-and-error approach of
conventional laboratory research to a more effective, data-intensive, genomic
approach to drug discovery.

        Academic and Government Research Institutions. Academic and government
research institutions, including the international institutions that make up the
Human Genome Project, have been significant participants in biomolecular
research and the advancement of genomics. Public spending on such research is
expected to increase rapidly over the next several years. In the fall of 2000,
then presidential candidate George W. Bush indicated that he supported
increasing the budget of the National Institutes of Health to approximately
$27.0 billion by 2003 and to continue to grow the budget at roughly 15% per year
thereafter. Government funding for the National Institutes of Health increased
from $13.6 billion in 1998 to an estimated $17.8 million in 2000. The National
Institutes of Health budget, over 65% of which is expected to fund grants to
researchers and support internal research efforts, is budgeted to be $18.8
billion in 2001.

        Agricultural, Environmental and Industrial Biotechnology Companies.
Greater knowledge about plant and animal genomes may enable researchers to
engineer stronger, more disease resistant plants and animals, resulting in
increased farming and livestock productivity. Researchers may use such knowledge
to develop more nutritious and pesticide free foods and cultivate enzymes that
aid in industrial processes and environmental management. By reducing discovery
and development costs, bioinformatic software may facilitate the creation and
commercialization of agricultural, environmental and industrial products and
technologies that might otherwise be cost prohibitive and therefore unable to
gain broad market acceptance.

        Emerging Clinical Genomics Industry. Industry participants expect
genomics and the study of genetic variation to play a central role in the market
for clinical diagnostics and the emerging market for customized drug therapies.
Through the analysis of genomic data, researchers are gaining improved
understanding of disease onset and progress and are working to translate these
findings into earlier-stage and more accurate diagnostic tests. In addition,
researchers engaged in the emerging pharmacogenomics field are seeking to
determine how the millions of tiny genetic variations among individuals impact
drug response, and thereby develop a more personalized approach to medicine.


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OUR SOLUTION

        In response to the challenges and market opportunities presented by the
genomic revolution, we develop and deliver to our customers a portfolio of
proprietary bioinformatic software products and complementary services.

        Our software products are flexible and scalable and are designed to
integrate with one another. Our software products provide access to public and
commercial databases and are designed to provide e-commerce connectivity with
vendors of laboratory reagents for use in actual experiments. Our products are
designed to be stand-alone applications or Internet-hosted applications provided
through application service providers. Our current and announced product
portfolio includes:

        -  Vector NTI Suite, a comprehensive desktop analysis and
           visualization toolset for the laboratory scientist engaged in genomic
           and protein sequence research. Vector NTI Suite contains modules that
           enable researchers to store, manage, assemble and analyze
           biomolecular data and improve their productivity through the
           simulation of certain key laboratory processes. Launched in 1993,
           Vector NTI Suite is offered for both Microsoft Windows and Apple
           Macintosh operating systems. To date we have sold over 9,000 licenses
           for Vector NTI Suite, with more than 22,000 estimated users, to over
           1,650 organizations engaged in genomic research.

        -  Vector Enterprise, designed for researchers working in larger
           groups, or who collaborate with others on sequence analysis projects.
           Using a shared Oracle relational database, Vector Enterprise is an
           enhancement to the Vector NTI Suite that allows users to share data
           and results in a secure environment. We commercially released Vector
           Enterprise in the third quarter of 2000.

        -  GenoMax, a large-scale modular, enterprise-wide data mining
           application that integrates multiple genomic data types and enables
           researchers to automate complex analysis tasks. GenoMax enables
           researchers to efficiently store, search, manage and analyze large
           amounts of biomolecular data. GenoMax facilitates research
           collaboration and is designed for a coordinated effort by a diverse
           team of scientists within or across organizations. From its launch in
           late 1998 through December 31, 2000, we made 26 sales of GenoMax.

        In addition to our proprietary software solutions above, we are licensed
to distribute Biomax's BioRS system, a powerful biological data retrieval system
that can integrate large heterogeneous public and proprietary databases. BioRS
is a significant component of our platform of bioinformatics product offerings
and the continuing development of our High-Throughput Research environment.
Through the continued expansion and enhancement of our product offerings to meet
the needs and preferences of our customers, we seek to establish our software
products as the leading industry standard for bioinformatic solutions.

OUR ADVANTAGES

        We believe that our competitive strengths, including those listed below,
position us to continue to be a global leader in bioinformatic software
solutions:


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Superior Products and a Broad Product Portfolio

        Benefiting from years of user feedback, we have tailored our product
portfolio to meet the current and anticipated needs and preferences of
biomolecular researchers. Our software solutions are flexible and scalable, can
integrate with each other and can incorporate proprietary and third party
analytical algorithms and data sets. Our products contain advanced analysis,
visualization and simulation tools and reflect the natural workflow of the
laboratory scientist. Our product portfolio includes Vector NTI Suite for
individual researchers or groups of researchers, via our Dynamic License Server
that provides numerous users concurrent access from a centralized server. Vector
Enterprise provides a Vector NTI Suite user group with the additional advantages
of a shared relational database. GenoMax is a modular enterprise platform that
can scale to meet the needs of smaller biotechnology or academic customers as
well as major pharmaceutical companies and research institutions. In addition to
our software products above, we market and distribute certain complementary
software products under license from Biomax Informatics AG and Media Cybernetics
L.P. We believe that our broad product offering and the sophisticated and
user-friendly functionality of our products give us a competitive advantage in
the market for bioinformatic solutions.

Superior Bioinformatic Engineering Staff

        Software engineering for commercial-grade bioinformatic applications
requires a high level of understanding of software programming, molecular
biology and market requirements. Our development teams are guided by experts in
molecular biology and include professional software engineers trained in
computer science, statistics, mathematics and physics. Our product development
staff has functional expertise in C/C++, Java, MS Windows, Apple OS, UNIX,
object-oriented design, system-level programming, relational database design and
development (including Oracle), graphical user interface programming,
bioinformatics and molecular biology. Our product development staff has played a
significant role in developing a customized data delivery platform for the
NCBI's GenBank, ENTREZ and PubMed/MEDLINE online genomic databases. As of March
1, 2001, we had 97 employees dedicated primarily to research and product
development.

Large Existing Customer Franchise

        We are currently a leading provider of bioinformatic software and have
attained a significant level of industry acceptance for our products. Introduced
in 1993, we have sold over 9,000 licenses for our Vector NTI Suite, with more
than 22,000 estimated users, to over 1,650 commercial, academic and government
research institutions, including almost all major pharmaceutical companies and
over 500 biotechnology companies. From its introduction in late 1998 through
December 31, 2000, we made 26 GenoMax sales to pharmaceutical, biotechnology,
and academic customers, including DuPont, Pioneer Hi-Bred International, Inc.,
Genzyme Corporation, BASF AG, the Whitehead Institute for Biomedical Research,
Massachusetts Institute of Technology and the University of Tokyo. Since October
1994, we have provided software development services to the NCBI at the National
Institutes of Health, the leading public sector provider of primary genomic and
biomolecular data.

Vector NTI Suite's Market Penetration which Creates Opportunities for New
Products and Business Lines

        Our Vector NTI Suite represents an important strategic and competitive
advantage, providing buyers with a lower cost means to validate the quality and
utility of our software solutions. Moreover, our desktop and enterprise
applications integrate with one another and allow researchers to share data and
research results


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between the applications. We believe that connectivity between desktop and
enterprise solutions and vendor familiarity are important factors in the
selection of an enterprise solution. We believe that for many of our 1,650
Vector NTI Suite customers, these considerations will give GenoMax an important
advantage over competing enterprise platforms. Of our 26 sales of GenoMax at
December 31, 2000, 20 were to existing users of our Vector NTI Suite. We believe
that we can leverage our significant Vector NTI Suite customer base to add
revenues through new products and business lines, including additional
professional services, content channeling and distribution alliances, and
e-commerce offerings.

Superior Sales and Marketing Capabilities

        We have funded our growth primarily with internally generated cash flow.
As a result, our sales and marketing team is focused on execution and committed
to achieving leadership in the markets we serve. We have built a 73 person sales
and marketing organization whose mission is to establish our products as the
standard in the bioinformatics industry. In an effort to gain further market
penetration and increase our brand awareness, we have co-marketed our products
with technology leaders, including Compaq, Oracle, and Sun Microsystems. In
August 2000, we entered into joint marketing and development agreements with
Amersham Pharmacia Biotech, a life sciences technology company with significant
sales and distribution channels. We currently maintain a staff of 24
representatives to provide software implementation and integration services and
technical and customer support to our existing customer base. In an effort to
ensure that our development pipeline satisfies evolving market needs and
preferences, leaders from our product development, implementation and support,
and sales and marketing teams regularly share customer feedback.

OUR STRATEGY

        Our goal is to become the leading provider of bioinformatic software
solutions and establish our products as the effective industry standard.
Elements of our strategy to achieve these goals include:

Expand Our Customer Franchise Through Sales of Vector NTI Suite

        We have expanded our Vector NTI Suite customer base to over 1,650
organizations. We intend to expand and further penetrate our existing Vector NTI
Suite customer base. To execute this strategy, we intend to continue to improve
our technologies and introduce advanced functionality to Vector NTI Suite. These
enhancements include the addition of our new Desktop Expression module and our
commercial release of Vector NTI Suite 7.0, each scheduled for the third quarter
of 2001. We also intend to broaden our sales and marketing efforts and establish
and expand upon our co-marketing and strategic relationships in order to expand
our desktop customer base.

Build on Vector NTI Suite's Market Penetration to Establish GenoMax as the
Leading Enterprise Platform

        We intend to leverage the market acceptance of Vector NTI Suite to build
recognition and penetration of our GenoMax enterprise platform. Of our 26
GenoMax sales at December 31, 2000, 20 were to existing users of our Vector NTI
Suite. We commercially released our Vector Enterprise product in the third
quarter of 2000 and we have begun to employ a similar strategy of leveraging the
existing acceptance of our Vector NTI Suite. We also intend to continue to
establish strategic industry relationships that validate the effectiveness and
utility of GenoMax and maximize market opportunities for our enterprise
bioinformatic products.

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Leverage Our Customer Base for New Business Lines

        We intend to leverage our significant customer base to add revenues
through various sources including new business lines and services. These
offerings include:

        Professional Services. We provide installation, integration,
customization, maintenance, support and user training to our GenoMax and larger
Vector NTI Suite customers on a fee for service basis. We believe that we will
be able to increase market penetration and customer loyalty for our software
solutions by increasing the value-added professional services that we provide to
our customers. We anticipate significantly expanding our professional service
efforts, particularly as they relate to contract development opportunities and
value-added consulting services related to bioinformatics technology including
discovery strategy services and IT implementation services.

        Channeling and Distribution Alliances. We seek to enter into alliances
with selected data content and technology providers and to integrate and market
their biomolecular data and specialized bioinformatic hardware along with our
software products. In October 2000, we entered into a strategic relationship
with Media Cybernetics L.P. to market and distribute their Gel-Pro and Array-Pro
biomolecular analysis software products for distribution in connection with
Vector NTI Suite or as a stand-alone product. In January 2001, we entered into a
strategic relationship with Biomax Informatics AG to license and distribute
their BioRS data integration and retrieval system. In March 2001, we began a
seminar series to introduce our GenoMax Protein-Protein Interaction module along
with Axcell's ProChart proteomic database. We are scheduled to commercially
release our Protein-Protein Interaction in the second quarter of 2001.

        e-Commerce Offerings. Vector NTI Suite allows researchers to design and
simulate laboratory experiments and provides researchers with recommendations
for reagents, enzymes and other specific genomic material necessary to execute
actual laboratory experiments. We intend to incorporate Internet hyperlinks into
Vector NTI Suite that will enable users to purchase these materials directly
from partnered vendors. We expect to generate transaction fees from our
partnered vendors for providing them access to our user base at the point of
their research decisions.

Enhance and Expand our Technology

        We intend to continue to enhance and expand our bioinformatic software
products and technology to meet evolving customer needs and preferences. We
intend to aggressively attract and retain additional personnel for our research
and product development group including skilled software engineers, information
technology professionals and experts in molecular biology. In the third quarter
of 2000, we commercially released GenoMax 3.0, containing significant product
enhancements, and launched our Vector Enterprise product for use in
collaborative sequence analysis projects. We are scheduled to commercially
release Vector NTI Suite 7.0, with enhanced database connectivity and
functionality, and our Desktop Expression model in the third quarter of 2001. We
are scheduled to commercially release GenoMax 3.1, our Protein-Protein
Interaction module and our Genome Analysis module, each in the second quarter
of 2001. We intend to pursue opportunities to develop products for new
applications, including clinical diagnostics and personalized drug therapy.


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Establish Strategic Relationships to Maximize our Revenues

        We intend to enter into strategic relationships with selected partners
to expand our customer base and product distribution channels, including:

        -  Co-Marketing Relationships. We intend to continue to
           establish and expand our co-marketing relationships with leading
           organizations in our target markets. We believe that these
           relationships will significantly increase global market awareness of
           and receptivity to our software products. We have established
           co-marketing relationships with technology leaders including Compaq,
           Oracle, and Sun Microsystems. In August 2000, we entered into joint
           marketing and development agreements with Amersham Pharmacia Biotech,
           a life sciences technology company.

        -  Internet-hosted Software Delivery Alliances. We intend to
           provide our customers with access to our software products through
           Internet-hosted services. We expect that by providing our software
           through an application service provider's Internet-based network, we
           will be able to accelerate the deployment and facilitate the
           management of our software solutions. In January 2000, we entered
           into an agreement with an application service provider and, in the
           third quarter of 2000, we made our bioinformatic software solutions
           available through its Internet-based hosting network.

Engage in Acquisitions and Strategic Investments

        Where appropriate, we will pursue acquisitions and strategic
investments, both domestically and internationally, to enter new markets and
accelerate the development of comprehensive solutions to our customers' needs.
We believe that through acquisitions and strategic investments, we may be able
to add complementary technologies, products and services, and expand our
customer base.


                                       10
<PAGE>   13


OUR PRODUCT AND SERVICE LINES
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                              SOFTWARE PRODUCTS
---------------------------------------------------------------------------------------------------------------

VECTOR NTI SUITE:         suite of desktop applications designed to simulate key laboratory processes for
                          individual scientists engaged in genomic and proteomic research
-------------------------------- ----------------------------- ------------------------------------------------
<S>                              <C>                           <C>
VERSION                          MODULES                       FUNCTIONS
-------------------------------- ----------------------------- ------------------------------------------------

VECTOR NTI SUITE 6.0             VECTOR NTI                    data analysis and visualization
(released Q2 2000)               BIOPLOT                       sequence analysis
                                 ALIGNX                        multiple sequence alignments
                                 CONTIGEXPRESS                 sequence fragment assembly
                                 3D MOL                        structure analysis and visualization

FUTURE VECTOR NTI SUITE MODULE   DESKTOP EXPRESSION            desktop analysis of microarray expression data
-------------------------------- ----------------------------- ------------------------------------------------
</TABLE>

<TABLE>
<S>                                        <C>
VECTOR ENTERPRISE (released Q3 2000):       incorporates a shared relational database into a network of Vector
                                            NTI Suite applications to enable real-time collaboration among
                                            multiple researchers in a secure environment
---------------------------------------------------------------------------------------------------------------

GENOMAX ENTERPRISE:              large-scale, modular, enterprise-wide data mining and analysis application
-------------------------------- ----------------------------- -----------------------------------------------
<S>                              <C>                           <C>
VERSIONS                         MODULES                       FUNCTIONS
-------------------------------- ----------------------------- -----------------------------------------------

GENOMAX 3.0                      SEQUENCE ANALYSIS             similarity searches, sequence alignments and
                                                               annotation


(released Q3 2000)               GENE EXPRESSION ANALYSIS      management and visualization of microarray
                                 PROTEIN 3-D STRUCTURE         data analysis and prediction of protein molecular
                                                               structure

FUTURE GENOMAX MODULES           GENOME ANALYSIS               chromosome and expressed sequenced tag (EST)
                                                               mapping

                                 PROTEIN-PROTEIN INTERACTION   analysis of protein intracellular behavior
                                 SNP ANALYSIS                  genetic variation analysis
--------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>

                                               PROFESSIONAL SERVICES
--------------------------------------------------------------------------------------------------------------
<S>                             <C>
SOFTWARE DEVELOPMENT             Consulting and software development services provided under contract
IMPLEMENTATION AND SUPPORT       Software installation, integration and customization for GenoMax customers
SERVICES
---------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                    CHANNELING AND DISTRIBUTION ALLIANCES
---------------------------------------------------------------------------------------------------------------
<S>                              <C>
CONTENT CHANNELING AND           Partnerships to integrate and distribute third party data content and to
HARDWARE RESELLING               distribute specialized bioinformatic hardware with our software
---------------------------------------------------------------------------------------------------------------
e-COMMERCE PARTNERING            Partnerships to enable Vector NTI Suite customers to use hyperlinks to make
                                 online purchases of laboratory reagents, including those specified by
                                 Vector NTI Suite's decision support functions
---------------------------------------------------------------------------------------------------------------
</TABLE>



                                       11
<PAGE>   14




Software Products

        Our portfolio of proprietary software products currently includes our
Vector NTI Suite desktop application, our Vector Enterprise product and our
GenoMax enterprise platform.

        Vector NTI Suite

        Vector NTI Suite is a comprehensive, integrated analysis and
visualization software toolset for scientists working with genomic and proteomic
data. We launched our first desktop application in 1993 and released Vector NTI
Suite 6.0, our sixth generation desktop product, in June 2000. Vector NTI Suite
consists of five modules, each of which is described below:

        -       Vector NTI. Vector NTI enhances the laboratory researcher's
                productivity with bioinformatic tools to create, analyze, map,
                manage, and graphically represent biological data and simulate
                key laboratory processes. Vector NTI incorporates an
                object-oriented database for the storage and organization of DNA
                and protein sequence data and biomolecular materials used in the
                cloning of disparate DNA molecules called recombinant cloning.
                These recombinant cloning materials include vectors, plasmids,
                oligonucleotides, gel markers, and restriction enzymes, which
                can be organized and stored. The database can be sorted,
                customized, and searched according to the properties of relevant
                data objects. Vector NTI has the ability to design recombinants
                based on built-in biological knowledge and selected user
                preferences which accelerates the complex and time-consuming
                process of designing cloning experiments. By developing cloning
                strategies before performing actual laboratory work, users save
                valuable research time, reduce reagent costs, and enhance the
                prospects for a successful cloning experiment. Through its
                simulation function, Vector NTI recommends necessary protocols
                and reagents to complete the experiment. Vector NTI includes
                tools for cutting DNA sequences known as restriction enzyme
                analysis and for amplifying a DNA sequence called PCR primer
                design. Vector NTI also enables the study and induction of
                mutations known as mutagenesis analysis and the separation of
                DNA fragments and proteins called gel electrophoresis. Through
                Vector NTI's sophisticated graphical user interface, researchers
                can visualize their data and results of analysis.

        -       BioPlot. BioPlot is a protein and nucleic acid sequence analysis
                tool that plots more than fifty different pre-defined physical
                and chemical protein analysis types and links them with feature
                maps and actual sequences. Amino acid scaling allows
                visualization of the distribution of the structural and chemical
                properties of amino acids along a molecular chain, providing
                clues as to the functional properties of protein regions or
                domains. These functional properties allow researchers to more
                quickly identify and understand regions of interest in molecules
                under study.

        -       AlignX. AlignX allows researchers to create and edit multiple
                sequence alignments of proteins or nucleotides. The multi-pane
                view allows relevant domains in individual sequences to be
                linked, localized and compared in their alignment and in plots
                of similarity and sequence complexity, referred to as homology.
                AlignX integrates actively with Vector NTI and can read a
                multitude of data formats, a capability common to every module
                in the Vector NTI Suite.




                                       12
<PAGE>   15

        -       ContigExpress. ContigExpress allows the user to take small,
                analyzed sequence fragments, either in text format or from
                sequencing chromatograms, the output from automated sequencing
                equipment, and visually assemble them together into a longer,
                contiguous sequence. ContigExpress further allows the user to
                edit the fragments directly, with the chromatograms in full
                view, while it tracks all the changes made. The ability to
                simultaneously show sequence and trace data allows the
                researcher to inspect the relative intensity of the sequencing
                chromatogram and modify the called base, if needed.

        -       3D MOL. Released as part of Vector NTI Suite 6.0, this tool
                enables researchers to analyze and visualize molecule structures
                using numerous display modes. 3D MOL enables researchers to
                manipulate the 3D structure of protein and DNA sequences
                correlated to their constituent to amino acids and nucleotide
                sequences. The analytical features of 3D MOL enable researchers
                to measure distances and angles within molecules.

        Features of Vector NTI Suite

        The benefits of our Vector NTI Suite include:

        -       Integrated Software Suite. Vector NTI Suite includes a fully
                searchable database template that allows researchers to store
                and manage DNA sequences, protein molecules, enzymes, and other
                biomolecular data. Vector NTI Suite allows users to perform
                analyses involving several integrated applications and to store
                and move data objects between the components of the desktop
                suite without reformatting between applications.

        -       Open Architecture. Vector NTI Suite is offered for both Windows
                and Macintosh operating systems and can accommodate data in
                numerous text formats used in the research world including
                FASTA, GenBank, EMBL, SWISS-PROT, GenPept and ASCII. The
                software can run from a single static license for one machine or
                with our Dynamic License Server that can allocate a pre-defined
                number of users running the software on a centralized server.
                The Dynamic License Server creates an easily scalable
                environment, where the number of concurrent licenses can be set
                according to the expected usage.

        -       Research Logic System Reflects Scientists' Natural Workflow.
                Vector NTI Suite eliminates many of the time-consuming
                laboratory design and execution processes by generating
                protocols and suggestions for cloning strategies, PCR primers
                and DNA fragment assembly called oligo design, restriction
                fragment analysis, mutagenesis analysis, protein and DNA/RNA
                analyses, multiple sequence alignments, and contig assembly.
                Researchers are also able to use the graphical features of
                Vector NTI Suite to produce presentation quality materials
                describing the results of their research.

        -       Internet Connectivity. Vector NTI Suite provides connectivity to
                over 20 Internet sites for searching and importing fully
                annotated molecules back into Vector NTI Suite for further
                manipulation and analysis. Vector NTI Suite can analyze these
                data along with data collected from internal research as well as
                data from other publicly available sources. Vector NTI Suite 6.0
                incorporates enhanced Internet connectivity, providing users
                with e-commerce capability directly through our software. We
                intend to enter into partnering arrangements by which this
                feature will allow users to purchase



                                       13
<PAGE>   16

                through the Internet reagents suggested by Vector NTI Suite and
                other biomolecular material necessary to conduct actual
                laboratory experiments.

        -       Transparent Data Searching. Vector NTI Suite 6.0 allows
                researchers to conduct BLAST homology searches and query the
                ENTREZ and PubMed/MEDLINE databases at the NCBI through the
                desktop application without the need for a web browser. BLAST is
                the NCBI's basic local alignment search tool and involves the
                use of an algorithm to search online databases to compare any
                newly discovered DNA or protein sequence with known sequences.
                The results of this algorithm, which allows the identification
                of regions of similarity between sequence data, can be stored
                and managed by Vector NTI Suite. The ENTREZ and PubMed/MEDLINE
                search system allows researchers to search the NCBI databases of
                biomolecular data and perform scientific literature searches.
                Results of such searches can be stored and managed by Vector NTI
                Suite for later use or presentation.

        -       Application Facilitates Research Collaboration. Vector NTI Suite
                allows researchers to share and exchange data and research
                results from their individual databases between several
                installations of Vector NTI Suite. In addition, Vector NTI Suite
                supports special document types that can be used as "packagers"
                for heterogeneous data and research results. Geographically
                distributed users may exchange these documents and use Vector
                NTI Suite's graphical viewers to visualize each other's research
                results.

        Vector NTI Suite 7.0

        Vector NTI Suite 7.0, our seventh generation desktop product scheduled
for commercial release in the third quarter of 2001 will include enhanced
functions for sequence importing, searching and display. The ContigExpress
module will include a new, faster assembly algorithm along with improved editing
and viewing capabilities. Vector NTI Suite 7.0 also incorporates our response to
scientists and users requiring enhanced polymerase chain reaction functionality.

        In addition, we will be launching our desktop expression analysis
package in the third quarter of 2001. The software brings the power of the
GenoMax Gene Expression Analysis module, with key enhancements, to the desktop
user and laboratory biologist.

        Vector Enterprise

        Our Vector Enterprise database software is designed for biologists
working in larger research groups, or those who need to work collaboratively
with others on sequence analysis projects. Vector Enterprise is an enhancement
to the basic Vector NTI Suite and relies on a shared Oracle relational database
to store user data and results. This product is coupled with the desktop
database already present in the Vector NTI Suite and permits multi-user access
and data sharing across entire companies or organizations by all researchers
using Vector NTI Suite, with secure data storage and analysis. We commercially
released the first version of Vector Enterprise in the third quarter of 2000.

        GenoMax Enterprise Solutions

        GenoMax is a large-scale, enterprise-wide, data mining and analysis
solution that enables research organizations to manage and analyze large amounts
of genomic and proteomic data from disparate sources.


                                       14
<PAGE>   17

GenoMax incorporates proprietary and third party analytical tools that perform
complex integrated analyses across multiple experiment types that are not
possible on desktop programs. GenoMax relies upon our user-friendly, Java-based
Research Logic interface system and maintains an open architecture that allows
new tools and proprietary algorithms to be incorporated into the GenoMax
framework. The GenoMax architecture supports access to the system through
Intranet, wide area network or dedicated Internet connectivity, while preserving
data security and integrity. GenoMax enables multiple users to collaborate in
the design and execution of research ranging from molecule analysis and
annotation to complex bioinformatic algorithms. The combination of a
collaborative environment and sophisticated data-mining and management
capabilities makes GenoMax an effective tool for coordinated genomics research
and an efficient tool for determining targets for further expenditure of
research efforts and resources.

        GenoMax was originally launched under the brand name Software Solution
for Bio-Medicine in September 1998. GenoMax 3.0, which was commercially released
in the third quarter of 2000, includes a gene sequence analysis module with
functionality including database similarity searches, multiple sequence
alignments, sequence annotation and visualization, and restriction enzyme
analysis. GenoMax 3.0 also includes enhancements such as fully distributed
computing for analyses, data management and storage in order to achieve improved
scalability and to fully utilize a client's existing computing infrastructure.

        GenoMax Enterprise Solutions Modules

        The following describes modules that are included in GenoMax 3.0 as well
those modules that are currently in development and expected to be included in
future versions of our GenoMax enterprise solution:

        -       Sequence Analysis: for database similarity searches including
                BLAST and FASTA, multiple sequence alignments, sequence
                annotation and visualization, restriction enzyme analysis,
                automated search agents and proprietary sequence comparison
                tools. This module is available as part of GenoMax 3.0.

        -       Gene Expression Analysis: for management, analysis and
                visualization of microarray data. This module is available as
                part of GenoMax 3.0.

        -       Protein 3D Structure: for prediction and analysis of tertiary
                structures of proteins including molecular structure. This
                module is available as part of GenoMax 3.0.

        -       Genome Analysis: for visualization and analysis of chromosome
                maps and mapping of expressed sequence tag (EST) clusters,
                transcripts, and genomic sequences. This module is currently in
                development and is scheduled for commercial release in the
                second quarter of 2001.

        -       Protein-Protein Interactions: for analysis of protein
                intracellular behavior. This module is currently in development
                and is scheduled for commercial release in the second quarter of
                2001.

        -       Single Nucleotide Polymorphism (SNP) Analysis: designed to
                manage rapidly growing volumes of data on these tiny genetic
                variations, this module is a key analysis tool for research in
                pharmacogenomics. This module is currently in development.

        Features of GenoMax

        The features of our GenoMax enterprise solution include:




                                       15
<PAGE>   18

        -       Collaboration-Oriented Architecture. GenoMax is a client-server
                software solution that allows collaboration within and across
                organizations. Multiple users may simultaneously search and
                analyze large quantities of data and share their results.
                Computationally intensive algorithms run on the server side,
                while the results are delivered on the client side through an
                intuitive Java-based graphical user interface, enabling
                real-time feedback with the central server, other users, and
                with third parties. GenoMax secures research analyses behind a
                corporate firewall and incorporates a flexible hierarchy of user
                rights, giving managers control of research projects and
                permitting administrators to customize their security needs by
                adding and deleting authorized users as necessary.

        -       Large-Scale Data Processing High Throughput Research. GenoMax is
                designed to accommodate the needs of research institutions that
                analyze large amounts of genomic, proteomic and biomolecular
                data from multiple sources. The Oracle relational database
                system that is integrated into GenoMax automatically updates
                databases from public and subscription sources and includes
                alert mechanisms that notify users when new data has been
                imported. Data can be accessed and analyzed by researchers
                manually or automatically through GenoMax's High Throughput
                Research system that allows researchers to create sophisticated
                analysis protocols and apply them to process data on a 24-hour
                basis.

        -       Flexible Bioinformatic Framework. GenoMax supports a wide range
                of data-mining algorithms, including BLAST, FASTA, HMM, flexible
                pattern search, ORF analysis, and homology blocks search.
                GenoMax's architecture is open, scalable, secure, and easily
                extended so that our customers may incorporate client-developed
                and publicly available algorithms and solutions. To enhance
                efficiency, GenoMax includes data management tools for organized
                storage and analysis and employs results filtering to select the
                most useful results according to user specifications.

        -       Advanced Data Integration Capabilities. The Biomax BioRS system
                integrates data from a variety of large, heterogeneous public
                and proprietary databases irrespective of their original
                formats. The system enables researchers to manage and query
                hundreds of biological databases through a user friendly web
                interface. Our distribution of BioRS adds this important
                database cross linking ability to our enterprise bioinformatics
                solution, GenoMax, extending its data integration capabilities.
                GenoMax and BioRS can be integrated so that search query results
                from BioRS can be imported into GenoMax for analysis. We
                distribute Biomax's BioRS system under the terms of our
                exclusive, four year worldwide license more fully described
                below.

        GenoMax 3.1

        GenoMax 3.1 is an enhanced version to our GenoMax 3.0 release that
integrates new modules for Genome Analysis (scheduled for commercial release in
the second quarter of 2001) and Protein-Protein Interaction (scheduled for
commercial release in the second quarter of 2001), with a feature upgraded
version of our core product. The Genome Analysis module enables researchers to
organize, cluster and map genomic sequence information, including the data
generated by the Human Genome Project used by researchers worldwide. The
Protein-Protein Interaction module analyzes interaction between proteins
allowing one to elucidate the protein pathways that underlie disease processes.
The first version of this module is intended particularly to allow users to
exploit the ProChart database product, co-developed by our company and AxCell.



                                       16
<PAGE>   19

Professional Services

        Software Development. As part of our growth strategy, we have developed,
and intend to expand, our partnerships with genomic content providers. These
relationships provide us with additional revenue opportunities, and broaden,
validate, and reinforce our bioinformatic capabilities and brand recognition.
Since October 1994, we have provided software development services to the NCBI,
a division of the National Library of Medicine at the National Institutes of
Health. NCBI maintains the world's largest public databases of genomic and other
biomolecular data, which are available via the Internet to all participants
engaged in genetic and biological research. We have played a significant role in
the development of the public content delivery interfaces for the NCBI's
databases, including GenBank, ENTREZ, and PubMed/MEDLINE. Our relationship with
NCBI allows us to work with the world's largest public genomic and biomolecular
databases, covering diverse sets of information. NCBI contracts for these
services through intermediaries for whom InforMax is a subcontractor. These
government contracts may be terminated on the behalf of the NCBI at any time.

        Implementation and Support Services. Our implementation and support
services group provides installation, integration, customization, and
maintenance support to our customers. We provide professional services on a fee
for service basis for our GenoMax and larger Vector NTI Suite customers. Our
implementation and support group includes professionals experienced in
implementing our software in conjunction with systems manufactured by leading
technology companies including Compaq, Oracle, and Sun Microsystems. We respond
to requests for customer support through numerous channels. Our service group
also provides training and educational programs to researchers using our
products. We intend to significantly expand the efforts of these professional
services as they relate to contract development opportunities and value-added
consulting services related to bioinformatics technology.

Channeling and Distribution Alliances.

        Channeling Relationships. We have entered into and intend to continue,
where appropriate, to seek distribution or reselling agreements with various
software and biomolecular data content providers to sell subscriptions to their
data sets to our GenoMax and Vector NTI Suite customers. These alliances
leverage our market presence and use our software as an integration and analysis
tool for the data content of our partners.

        Through such arrangements, we seek to share in ongoing subscription
content revenues and receive a portion of milestone payments and royalties
resulting from end-user discoveries derived from this content. No significant
revenues related to these alliances were generated in 2000. To date, we have
entered into alliances with the following organizations:

        -       AxCell Biosciences Corporation. In August 1999, we entered into
                an agreement with AxCell Biosciences, a wholly owned subsidiary
                of Cytogen Corporation, to market AxCell's proprietary
                protein-protein interaction database, ProChart, with our GenoMax
                enterprise product. AxCell is a leader in the production of
                protein-protein interaction data. Under this agreement, we will
                develop and market, on a subscription basis, a Protein-Protein
                Interaction module that integrates AxCell's proprietary protein
                databases with our GenoMax enterprise platform, including data
                from the WW Domain, the first human protein family to be mapped
                successfully. Under this agreement, we will receive a portion of
                subscription revenues, and in some cases milestone payments and
                royalties associated with discoveries based on data delivered
                via our content platform. Our Protein-Protein



                                       17
<PAGE>   20


           Interaction module, which will initially be used primarily to
           enable use of the ProChart database, is scheduled to be commercially
           released in the second quarter of 2001.


        -  Structural Bioinformatics. In August 2000, we entered into an
           agreement with Structural Bioinformatics, to market their proprietary
           three-dimensional protein structure database with our GenoMax
           enterprise product. Structural Bioinformatics is a leader in the
           production of three-dimensional protein structure data. Under this
           agreement, we will develop and market, on a subscription basis, a
           product that couples Structural Bioinformatics' three-dimensional
           protein structure databases with our GenoMax enterprise platform. As
           resellers of this data, we will receive a portion of subscription
           revenues.

        -  Biomax Informatics AG. In January 2001, we entered into a
           strategic relationship with Biomax Informatics AG, a German company
           that develops software and customized bioinformatic solutions. Under
           our agreement, we were granted a four-year, exclusive worldwide
           license to distribute Biomax's BioRS(TM) integration and retrieval
           system. BioRS is a gene sequence and biological data retrieval system
           that allows researchers to query and manage hundreds of biological
           databases simultaneously through user friendly web interfaces. BioRS
           serves as an efficient tool for integrating and retrieving genomic
           data available from disparate sources and is a strong complement to
           our existing GenoMax and Vector NTI Suite products as well as the
           development of our High-Throughput Research environment. Biomax is
           paid a fixed fee for each BioRS license sold. Continuation of our
           exclusive distribution right is contingent upon our satisfaction of
           certain minimum sales thresholds and our agreement does not restrict
           Biomax from distributing BioRS directly during the term of our
           agreement. Under our agreement, we have agreed to work with Biomax to
           integrate the capabilities of BioRS into our Vector NTI Suite and
           GenoMax products.

        -  Media Cybernetics L.P.  In October 2000, we entered into an
           agreement with Media Cybernetics, a leading scientific image
           informatics software provider. Under this agreement, we were granted
           a two-year worldwide license to sell and distribute their Gel-Pro and
           Array-Pro analysis tools. Gel-Pro enables acquisition, analysis and
           reporting for electrophoretic images and complements the functions of
           our Vector NTI Suite. Array-Pro allows, acquisition, analysis and
           reporting of gene expression data from microarrays, and will provided
           a key link between gene expression experiments , visualization and
           analysis using GenoMax. Under our agreement, we are permitted to
           distribute these software solutions in connection with our Vector NTI
           Suite or on a stand-alone basis. In January 2001, we began selling
           the Media Cybernetics products through our Vector NTI Suite sales
           team.

        Hardware Reselling Alliance. We believe that we can further leverage our
market presence and increase our product offerings to our customers by entering
into distribution and reselling agreements with selected bioinformatic hardware
companies. As part of our continuing assessment of potential strategic
collaboration and relationship opportunities, we may enter into alliances with
leading providers of bioinformatic hardware complementary to the functionality
our software solutions in an effort to increase our product offerings and
revenue opportunities.

        e-Commerce Opportunities. Researchers use our Vector NTI Suite to design
and simulate laboratory experiments. Vector NTI Suite provides researchers with
specific experimental protocols and recommendations for reagents, enzymes, and
other specific genomic material necessary to execute actual laboratory
experiments.



                                       18
<PAGE>   21

To extend this functionality, we intend to incorporate Internet hyperlinks into
our Vector NTI Suite product to enable users to purchase genomic products and
materials relevant to their research directly from online, partnered reagent
vendors. We expect to generate transaction fees from partnered vendors for
providing them access to our user base at the point of their research decisions.

        In September 2000, we entered into an agreement with Incyte Genomics,
Inc., a manufacturer and provider of genomic and other biomolecular databases.
Under our agreement we will incorporate hyperlinks into Vector NTI Suite that
will direct researchers to Incyte's website. These hyperlinks are intended to
allow researchers to register with Incyte and to purchase access to certain of
its genomic databases that can be used with the searching and analysis functions
of our Vector NTI Suite. These hyperlinks will also enable researchers to
purchase reagents from Incyte for their laboratory research.

        Under this agreement, we will receive a portion of the net revenues
associated with sales of Incyte's database and reagent products and a fee based
on the number of registrations with Incyte, each as generated through the
hyperlinks to be contained in Vector NTI Suite.

CUSTOMERS

        We license our desktop software solutions to pharmaceutical,
biotechnology and agricultural biotechnology companies, academic and government
research institutions, and individual researchers. We have sold over 9,000
licenses to our Vector NTI Suite, with more than 22,000 estimated users, to over
1,650 organizations, including over 650 pharmaceutical, biotechnology and
agricultural biotechnology companies and 1,000 academic and government research
institutions. From its introduction in late 1998 through December 31, 2000, we
made 26 sales of GenoMax. Our major customers include:


<TABLE>
<CAPTION>

        Pharmaceutical and Agricultural Biotechnology Companies


<S>            <C>                                         <C>     <C>
       -       AstraZeneca UK Limited                      -       Johnson & Johnson

       -       E.I. du Pont de Nemours and Company         -       Eli Lilly and Company

       -       Pioneer Hi-Bred International, Inc.         -       Bristol-Myers Squibb Company

       -       Aventis Pharmaceuticals, Inc.               -       Merck & Company, Inc.

       -       Hoechst Marion Roussel                      -       Novartis Agribusiness Biotechnology
                                                                   Research, Inc.
       -       Procter & Gamble

       -       BASF AG                                     -       Pfizer, Inc.
<CAPTION>

        Biotechnology Companies
<S>            <C>                                         <C>     <C>
       -       Amgen Inc.                                  -       Aurora Biosciences Corporation

       -       Biofrontera Pharmaceuticals GmbH            -       Diversa Corporation

       -       Genzyme Corporation                         -       Microbia Incorporated

<CAPTION>

        Academic and Government Research Institutions
<S>            <C>                                         <C>     <C>
       -       Katholieke Universiteit Leuven               -       Washington University in St. Louis

       -       National Institutes of Health                -       Laboratory (EMBL)

       -       University of Pennsylvania                   -       Massachusetts Institute of Technology

       -       European Molecular Biology                   -       University of Tokyo

       -       The Whitehead Institute for Biomedical
               Research
</TABLE>

MARKETING AND SALES

        Our marketing and sales force consists of 73 employees. Our marketing
team uses a variety of strategies to increase brand recognition for our products
and reach a broader base of potential customers for our bioinformatic software
solutions. In addition, the efforts of our service and implementation group to
educate, convert, and train researchers on our enterprise and desktop products
support our marketing efforts.

                                       19
<PAGE>   22

        Our sales force is divided into revenue teams assigned to specific
territories. Each territory is headed by an experienced regional sales vice
president and includes a team dedicated to direct sales efforts for our GenoMax
enterprise software solutions. GenoMax enterprise sales involve a significantly
longer and more complex sales cycle than our desktop applications, often
involving many levels of procurement and purchasing decisions by a customer
organization.

        Each revenue team also includes a tele-sales team focused on sales of
our Vector NTI Suite of desktop applications. Historical experience shows the
typical sales cycle to be 30 to 90 days from an indication of interest to a
purchase order. In addition, Vector NTI Suite consists of a number of component
modules, which allows us to market to new users at a low initial price and sell
additional modules later. We also offer flexible licensing alternatives that
allow us to price consistently across customer organizations of different sizes.

CO-MARKETING ALLIANCES

        In connection with our sales and marketing efforts, we seek to establish
strategic alliances and co-marketing relationships to accelerate market
penetration of our bioinformatic software. We believe that purchasers of
bioinformatic software often look to market leaders in technology to keep them
abreast of possible emerging industry standards. We also believe that customers
often select technology leaders because of a perception that there is a reduced
risk in making a technology commitment. We have established relationships with
the following leaders in the technology industry:

        -          Compaq. We jointly market our software products with
                   Compaq technology and benefit from a financing arrangement
                   in which Compaq leases computer hardware that is coupled
                   together with our software to its customers. This turnkey
                   approach reduces financial barriers, and streamlines the
                   installation of our enterprise software solutions by
                   pre-loading it onto Compaq servers. Compaq also has agreed
                   to feature our GenoMax enterprise software in its Center
                   for Excellence in Bioinformatics, one of its technology
                   demonstration sites targeted to the biotechnology
                   industry. In June 2000, we jointly conducted a nine-city
                   seminar series with Compaq on enhanced biological data
                   mining and integrated genomic analysis. A six-city seminar
                   series was launched with Compaq and AxCell Biosciences in
                   March 2001.

           -       Oracle. We jointly market our software products with
                   Oracle databases and cooperate in the re-selling of Oracle
                   database technology. We are also working with Oracle to
                   streamline the installation of our enterprise software
                   solutions and maximize the functionality and cooperative
                   features of our technologies.

           -       Sun Microsystems. We jointly market our software products
                   in connection with the sale of Sun Microsystems servers to
                   industry participants. Sun also has agreed to install our
                   GenoMax enterprise platform in one of its key technology
                   demonstration sites. In October 2000, we jointly conducted
                   a seven-city seminar series on data mining and integrated
                   genomic analysis.

        Web-based Provision of Bioinformatic Software Applications. In January
2000, we entered into an alliance with an application service provider
specializing in Internet-hosted research informatics solutions for the
biopharmaceutical market, to offer our GenoMax and Vector NTI Suite software
solutions as Web-based, hosted applications. We made our bioinformatic software
solutions available through this Internet-hosted method in the third quarter of
2000.


                                       20
<PAGE>   23

STRATEGIC COLLABORATION WITH AMERSHAM PHARMACIA BIOTECH

        In August 2000, we entered into a 20-year strategic relationship with
Amersham Pharmacia Biotech under which we will jointly develop and market an
expanded version of GenoMax to provide an enterprise-wide data analysis system
for pharmaceutical and biotechnology companies for integrating and analyzing
data from genomics, proteomics and drug screening production laboratories. The
primary use of the data analysis system is to enable pharmaceutical and
biotechnology companies to accelerate and lower the cost of development of new
drugs and therapies. Under the agreement establishing this relationship, we will
jointly own, with Amersham, the jointly developed code for the data analysis
system and all related intellectual property rights. In connection with this
relationship, we have granted a license to Amersham for its internal use of our
GenoMax software, as part of the data analysis system.

        Under the agreement, we will receive a portion of the revenues resulting
from the sale, license or maintenance fees associated with the jointly developed
data analysis system. We will receive 60% of the license and maintenance fees
for every license of the data analysis system to a life science or biotechnology
company whose principal place of business is outside of the United States,
Canada and Western Europe, or any such company whose principal place of business
is in the United States, Canada or Western Europe and had revenues among the top
fifty life science and biotech companies for the last calendar year (the "Life
Sciences Market"). We will receive 80% of the license and maintenance fees for
every license of the data analysis system to a life science or biotechnology
company whose principal place of business is in the United States, Canada and
Western Europe that did not have revenues among the top fifty life science and
biotech companies for the last calendar year (the "Biotech Market"). In the
event that, in connection with the marketing of the jointly developed data
analysis system, a customer elects to purchase our software on a standalone
basis and not as part of the data analysis system, we will pay Amersham a
one-time fee equal to 10% or 15% of the license fee for our software depending
upon whether the customer is in the Biotech Market or the Life Sciences Market.
We will recognize revenues from the sale of our standalone products that result
from joint marketing of the data analysis system on a gross basis equal to the
license fee of our software and will record the one-time fee equal to 10% or 15%
of the license fee as a cost of sale. Amersham will also pay us a portion of any
recurring annual maintenance fees for the relevant markets above equal to the
percentages described above.

        The agreement prohibits either party from contacting a customer that was
initially approached to market the data analysis system for the purpose of
selling one of its standalone products or services, until the earlier of the
date such customer states that it is not interested in licensing the data
analysis system or a date six months from the initial presentation of the data
analysis system to such customer.

        We have agreed to use commercially reasonable efforts to develop the
data analysis system in accordance with mutually agreed upon specifications. If
we do not use commercially reasonable efforts to develop the data analysis
system, Amersham can terminate the agreement. The agreement can also be
terminated prior to the end of the term by mutual agreement of the parties or by
one party upon a breach by the other party.



                                       21
<PAGE>   24

        In connection with this strategic relationship, Amersham purchased
950,747 shares of our Series B preferred stock for aggregate proceeds to us of
$10.0 million in cash. These shares converted into 1,587,747 shares of our
common stock upon the closing of our initial public offering in October 2000.

RESEARCH AND DEVELOPMENT

        Recruiting and retaining skilled personnel for our research and product
development group is a critical component of our current and future competitive
success. As of December 31, 2000, we had 97 employees dedicated primarily to
research and product development. Our research and development team consists of
applications and systems programmers, database administrators, and
bioinformatics designers, numerous of which have experience in both computer
science and molecular biology. To date, we have not encountered any significant
turnover in our research and product development group, and we believe that our
products and services have benefited from this level of continuity. Our research
and development expenditures in 1998, 1999 and 2000 were $1.2 million, $2.6
million and $5.3 million, respectively.

        Our research and product development group possesses core competencies
in C/C++, Java, MS Windows, Apple OS, UNIX, object-oriented design, system-level
programming, relational database design and development, including Oracle,
graphical user interface programming, bioinformatics, and molecular biology. Our
team has a significant level of aptitude in working with a wide array of
biomolecular data, including DNA and protein sequences and structures, gene
expression, genetic maps, protein-protein interaction, and SNPs. We continue to
enhance our existing products in an effort to expand their functionality and
utility, including the commercial release of Vector NTI Suite 7.0, scheduled for
commercial release in the third quarter of 2001, and GenoMax 3.1, scheduled for
the second quarter of 2001. Our research and product development team seeks to
develop new products that use computational methods to further understand
biological processes and enable users of genomic data to realize efficiency and
productivity gains.

COMPETITION

        We believe that the principal competitive factors in the evolving
bioinformatic software industry include:

        -       functionality and ease of use of software products;

        -       rapid incorporation of technological and biomolecular
                innovations;

        -       product flexibility, scalability, and integration;

        -       level of customer service, product implementation, and support
                functions;

        -       existing market penetration and brand awareness;

        -       alliances with strategic partners and technology market leaders;
                and

        -       competitive pricing.

        We face, or expect to face, competition for market leadership from
industry participants, including:

                                       22
<PAGE>   25

        -       third party commercial software vendors;

        -       bioinformatic developers; and

        -       internal bioinformatics departments of some of our customers and
                potential customers.


        We believe that we compete most often with LION biosciences, Rosetta
Inpharmatics, NetGenics, Compugen, Genomica, DNA Star, DoubleTwist and GCG, a
unit of Pharmacopeia acquired from Oxford Molecular. We intend to compete with
such organizations on the basis of scope of products and services, functionality
of products, quality of service, strength of organization and support and
training.

        We believe that in response to existing and future market opportunities,
there is a strong likelihood of additional market participants. Many of our
current and potential competitors have longer operating histories, stronger name
recognition, and significantly greater financial, technical, and marketing
resources than we do. As a result of these advantages, these competitors may be
better able to adopt more aggressive pricing policies and better positioned to
respond to changes in customer preference or technology.

INTELLECTUAL PROPERTY

        We believe that the proprietary protection of our bioinformatic software
products is critical to the success of our business and our ability to compete
effectively. We rely upon a combination of trade secret, patent, copyright and
trademark laws, license agreements, nondisclosure and other contractual
provisions to protect our proprietary rights in our products, technology, and
processes. In January 2000, Dr. Vadim Babenko, formerly our Chief Technology
Officer, assigned to us an application for a United States patent directed to
InforMax's approach to integrated access to biomedical resources. Dr. Babenko
has previously assigned to us two copyrights relating to our Vector NTI Suite of
desktop applications. To date, we have been issued U.S. trademark registrations
for the marks InforMax (word mark), InforMax and Double Helix Design, Vector
NTI, AlignX, BioPlot, ContigExpress and SSBM. We have filed trademark
applications in the U.S. for the marks GenoMax, InforMax, HTR, HTR Partners
Program, High-Throughput Research and Software Solution for Bio-Medicine. We
have been issued Community Trademark ("CTM") registrations in the European Union
for AlignX (Stylized), BioPlot (Stylized), ContigExpress (Stylized), Software
Solution for Bio-Medicine (SSBM) (Stylized) and Vector NTI Suite (Stylized). We
have pledged our trademarks to PNC Bank, National Association as a security for
the facilities under our loan agreement.

        An opposition has been filed against our pending application for
INFORMAX for computer software by Informix Software, Inc. This opposition was
filed on October 26, 2000 and Informix believes that our pending application is
likely to be confused with its registrations for the marks "INFORMIX". An
extension of our time to answer has been granted and we are working to settle
this matter with Informix.

        Additional trademark registrations in France for the marks Align.X,
Vector.NTI, Software Solution For Bio-Medicine, BioSuite, Informodus, and
Seqen-I have been assigned to us by our wholly-owned French subsidiary.

        We believe that the source code for our proprietary software solutions
is protected under applicable copyright and trade secret law in the United
States. Comparable and effective copyright and trade secret protection may not
be available in each country where we distribute our products.

                                       23
<PAGE>   26

        We regularly enter into confidentiality agreements with our employees,
consultants, and strategic partners and generally seek to control access to and
distribution of our software, documentation, and other proprietary information.
We may nonetheless be subject to unauthorized access to, and use of, our
software products. In addition, third parties may be able to develop technology
substantially similar to our existing and future software solutions. These
events could materially affect our business, financial condition and results of
operations.

EMPLOYEES

        As of March 1, 2001, we had 244 full-time employees, including 97
employees primarily engaged in research and product development, 73 in sales and
marketing and 24 in implementation and support. We believe that our future
success will depend in part on our continued ability to attract and retain
qualified personnel. Competition for these personnel is intense, and there can
be no assurance that we will be successful in attracting or retaining these
personnel in the future. None of our employees is currently represented under a
collective bargaining agreement, and we consider relations with our employees to
be good.

DIRECTORS AND EXECUTIVE OFFICERS

        The following table presents information about each of our executive
officers, key employees and directors.

<TABLE>
<CAPTION>
                  NAME                       AGE                    POSITION(s) WITH COMPANY
---------------------------------          ------    ------------------------------------------------------
<S>                                        <C>       <C>
Alexander V. Titomirov, Ph.D. (1)              41    Chairman of the Board of Directors and Chief Executive
                                                     Officer
James E. Bernstein, M.D. (1)                   62    Director and President
John M. Green                                  49    Chief Financial Officer, Sr. Vice President, Finance
                                                     and Administration
Timothy D. Sullivan                            41    Sr. Vice President, Marketing and Sales
Stephen E. Lincoln                             36    Sr. Vice President of Product Development
Richard Melzer                                 45    Vice President, Global Sales
Peter Covitz, Ph.D.                            36    Vice President, Professional Services
Hooks Johnston (1)(2)(3)                       38    Director
Harry D'Andrea (1)(2)(3)                       44    Director
Andrew Whiteley (1)                            42    Director
Wei-Wu He, Ph.D. (1)(2)                        35    Director
</TABLE>

(1) Directors hold staggered three year terms of office, expiring as follows:
    Mr. D'Andrea and Dr. He in 2001; Dr. Bernstein and Mr. Johnston in 2002; and
    Dr. Titomirov and Mr. Whiteley in 2003.

(2) Member of the Audit Committee

(3) Member of the Compensation Committee

        ALEXANDER V. TITOMIROV, PH.D., is the founder of InforMax and has served
as our Chief Executive Officer and Chairman of the Board of Directors since our
inception in 1990. Dr. Titomirov also served as our President from our inception
until December 2000. Dr. Titomirov is also the Chairman of the Board of
Directors of Pluvita Corporation (formerly RealTimeHealth.com, Inc.), a
development stage company


                                       24
<PAGE>   27

monitoring genetic profiles over the Internet. Prior to founding InforMax, Dr.
Titomirov participated in research on the developmentally regulated expression
of mammalian cells for gene targeting at the Laboratory of Mammalian Genes and
Development at the National Institutes of Health. Upon his arrival in the United
States in 1989, Dr. Titomirov served as a visiting scientist at the Department
of Microbiology at Columbia University. While in the former Soviet Union, Dr.
Titomirov served as Group Leader of a research team in the field of DNA transfer
technology at the Institute of Molecular Biology in Moscow, and served as Head
of Theoretical Seminars at the Laboratory of Functional Morphology of
Chromosomes. Dr. Titomirov has also served as a member of the Grant Committee of
the Russian Academy of Sciences and an instructor at the Moscow Physical
Technical Institute. Dr. Titomirov earned his Ph.D. in Molecular Genetics in
1986 from the Institute of Cytology, Russian Academy of Sciences in St.
Petersburg, Russia, and his M.S. in Molecular Genetics in 1982 from St.
Petersburg State University.

        JAMES BERNSTEIN, M.D., has served as a director since our inception and
as our President since December 2000. Dr. Bernstein previously served as our
Chief Operating Officer and Executive Vice President of Strategic Development
from 1998 to December 2000. Dr. Bernstein is a founder and director of Age Wave,
L.L.C., a holding company that develops businesses driven by population aging,
and Chairman of Age Wave Impact, Inc., a relationship marketing company focusing
on the 50+ population. From 1995 to 1997, Dr. Bernstein served as a consultant
at Age Wave, L.L.C. From 1989 to 1994, Dr. Bernstein was engaged in the
development of a private company for the distribution of pharmaceuticals and
over-the-counter medicines in the former Soviet Union. Dr. Bernstein is a
founder and former Chief Executive Officer of General Health, Inc., an
information publishing company in the field of health risk assessment and
management. Dr. Bernstein has served as a special consultant to the National
Heart, Lung and Blood Institute of the National Institutes of Health (NIH) with
a focus on disease prevention, control and physician education. Prior to his
tenure at NIH, he was a Deputy Director of the Georgetown University Health
Policy Center. From 1972 to 1974, Dr. Bernstein headed the office of the
Chairman of the Board of Supervisors of San Diego County, California. Prior to
his government service, Dr. Bernstein was a research associate and Assistant to
the President of the Salk Institute. Dr. Bernstein received his M.D. in 1964
from Cornell University Medical College and his Bachelor's degree in 1960 from
Harvard University.

        JOHN M. GREEN has served as our Chief Financial Officer and Senior Vice
President of Finance and Administration since March 2001. Prior to joining
InforMax, Mr. Green was Executive Vice President, Operations, North America for
HMSHost Corporation (formerly Host Marriott Services Corporation), the world's
largest food, beverage, and retail merchandise concessionaire, where he was
responsible for field finance and human resource functions as well as the
company's senior operations team from 1998 to 2000. Mr. Green was previously
Senior Vice President, Finance - Lodging, for Marriott International, Inc. from
1997 to 1998. Prior to his tenure at HMS Host Corporation, Mr. Green was
Executive Vice President and Chief Operating Officer of PGI, Inc., a provider of
business communications and event management services, where he led operations,
business development, finance and human resource functions from 1996 to 1997.
Mr. Green previously held senior financial management positions with Marriott
International, Inc., including Senior Vice President and Corporate Controller,
where he led the company's strategic and financial planning, analysis and budget
processes from 1991 to 1996. In addition, Mr. Green has held senior management
positions with PepsiCo, Inc., including Director, Business/Corporate Planning
and Chief Financial Officer for beverage operations in Germany, Switzerland and
Austria. Mr. Green received a master of science degree in Economics from The
London School of Economics in 1975 and a Bachelor of Arts degree in Political
Science/International Relations from Tufts University in 1973.

                                       25
<PAGE>   28

        TIMOTHY D. SULLIVAN has served as our Senior Vice President of Marketing
and Sales since January 1999. Prior to joining InforMax, Mr. Sullivan held
positions in product management, alliance management, and major accounts
management at Manugistics, Inc., a supply-chain decision support software
vendor, from 1995 to 1999. Prior to his tenure at Manugistics, Mr. Sullivan
served as product manager at TSI Software International, an electronic commerce
vendor, from 1993 to 1995. Mr. Sullivan previously served as a management
consultant with Andersen Consulting and Booz-Allen & Hamilton. Prior to entering
the private sector in 1988, Mr. Sullivan was a Platoon Commander in the United
States Marine Corps. He received an M.B.A. in Marketing in 1992 and a Bachelor's
degree in Classics in 1984, each from Columbia University.

        STEPHEN E. LINCOLN has served as our Senior Vice President of Product
Development since March 2001, and served as our Senior Vice President of Life
Science Informatics from October 2000 to March 2001. Mr. Lincoln coordinates our
strategic and corporate product development. Prior to joining InforMax, Mr.
Lincoln served as Vice President of Bioinformatics Research and Development at
Incyte Genomics from 1995 to 2000. From 1993 to 1995, Mr. Lincoln directed
bioinformatics efforts supporting SNP genotyping at Molecular Tool, Inc. (now
Orchid BioSciences, Inc.). In 1993, Mr. Lincoln was a visiting scientist at the
Cold Spring Harbor Laboratory. From 1986 to 1993, Mr. Lincoln was a scientist
working with Dr. Eric Lander at the Whitehead Institute at the Massachusetts
Institute of Technology and was a founding member of the MIT/Whitehead Genome
Center. Mr. Lincoln received a Bachelor's degree in computer science from MIT in
1986.

        RICHARD MELZER has served as our Vice President of Global Sales since
January 2000. Mr. Melzer previously served as our enterprise account manager
from April 1999 to December 1999. Prior to joining InforMax, Mr. Melzer served
as a senior account manager for Manugistics, Inc., a supply-chain decision
support vendor, from April 1994 to March 1999. From April 1984 to March 1994,
Mr. Melzer served in a number of positions including Vice President and Managing
Director of European, Middle Eastern and African operations and Vice President
of Sales and Operations for DISC, Inc., a NYNEX Company that sold application
software to major banks, corporations and insurance companies. Mr. Melzer
received Bachelor's degrees in International Relations and Multinational
Enterprise from the Wharton School of the University of Pennsylvania in 1978.

        PETER COVITZ, PH.D., has served as our Vice President of Professional
Services since August 2000 and previously served as our Director of
Implementation and Support Services since September 1999. Dr. Covitz coordinates
our software integration, customization, maintenance, support and training
efforts. Prior to joining InforMax, Dr. Covitz led the microarray gene
expression software team at Molecular Applications Group, a bioinformatic
software company, from September 1998 to August 1999. From March 1997 to August
1998, Dr. Covitz served as a senior product scientist for Incyte
Pharmaceuticals, Inc. where he worked with the development of a classification
system for their sequence databases. Dr. Covitz received a Ph.D. in Microbiology
from Columbia University in 1993 and a Bachelor's degree in Biology from Colgate
University in 1986.

        HOOKS JOHNSTON has served as a director since June 1999. Mr. Johnston
has been Managing Director of FBR Technology Venture Partners, a venture capital
investment firm, since December 1998. From November 1997 to December 1998, Mr.
Johnston served as the President of Descartes Systems Group, a leading supply
chain software company, which he assisted in taking public in early 1998. From
September 1995 to November 1997, Mr. Johnston served as the President and Chief
Executive Officer of Roadshow International, Inc., a transportation software
company that was acquired by Descartes. From August 1993 to September 1995, Mr.
Johnston was the Chief Operating Officer of ALG, Inc., a design, pre-press and
web development services company. Mr. Johnston currently serves on the boards of
directors of Intranets.com, Inc., MarketSwitch


                                       26
<PAGE>   29

Corporation, B2Emarkets, Inc., Shop2u, Inc., Radiowave.com, Inc., Collaborex,
Inc., Global Logistics Technologies, Inc. and Shelflink, Inc. Mr. Johnston
received an M.B.A. from Harvard Business School in 1988, and a Bachelor of
Science degree in Applied Mathematics and Economics from Brown University in
1984.

        HARRY D'ANDREA has served as a director since June 1999. Mr. D'Andrea
has been the Chief Financial Officer of Advanced Switching Communications, Inc.,
a telecommunications equipment provider, since June 1999. From August 1998 to
June 1999, Mr. D'Andrea served as Chief Financial Officer of Call Technologies,
Inc., a telecommunications software provider. From June 1997 to July 1998, Mr.
D'Andrea served as Chief Financial Officer of Yurie Systems, Inc., a provider of
networking and telecommunications equipment. In 1996, Mr. D'Andrea served as
Chief Financial Officer of American Communications Services, Inc., now e.spire
Communications, Inc., a telecommunications service provider. Prior to that Mr.
D'Andrea served as Executive Vice President, Chief Financial Officer and
Treasurer of Caterair International Corporation, a provider of catering services
for commercial airlines. Mr. D'Andrea currently serves on the Board of Directors
of Coagulation Diagnostics, Inc. and ECUTEL, Inc. Mr. D'Andrea received an
M.B.A. in Finance from Drexel University in 1980 and a Bachelor's degree in
Foreign Service from The Pennsylvania State University in 1978.

        ANDREW WHITELEY has served as a director since August 2000. Mr. Whiteley
has been the Vice President of Bioinformatics for Amersham Pharmacia Biotech,
Inc., a provider of integrated drug discovery solutions, since January 2000.
From October 1997 to December 1999, Mr. Whiteley served as Vice President of
Amersham Pharmacia Biotech's sequencing business. For a portion of the period
above, Mr. Whiteley also served as site director for Amersham International
PLC's Cleveland facility. From April 1995 to March 1997, Mr. Whiteley was the
head of Amersham International's group marketing. Mr. Whiteley serves on the
Board of Directors of Cimarron Software Services, Inc. and Imaging Research,
Inc. Mr. Whiteley received Bachelor's degrees in Chemistry and Biochemistry from
Nottingham University in the U.K. in 1980.

        WEI-WU HE, PH.D., has served as a director since August 2000. Since
March 2000, Dr. He has served as the General Partner of Emerging Technology
Partners, L.L.C., a venture capital fund he founded that is dedicated to
investing in genomics technology companies. In 1996, Dr. He founded OriGene
Technologies, Inc., a provider of genomics technologies for the pharmaceutical
industry and served as President from June 1996 to March 2000. From 1993 to 1996
Dr. He was a scientist at Human Genome Sciences, Inc. and prior to that he was a
research fellow at Massachusetts General Hospital. Additionally, Dr. He serves
on the Board of Directors of numerous non-profit organizations such as the
Chinese Pharmaceutical Association, of which he was elected President in 2000,
and the Monte Jade Association. Dr. He also serves as a director for Aptus
Genomics Inc., Clairus Technologies, Inc., Fasgen, Inc. and MithraTech, Inc. Dr.
He received his Ph.D. in Molecular Biology from the Baylor College of Medicine
in 1991 and a Bachelor's degree in Biochemistry from Nanjing University in 1985.
Dr. He also received an M.B.A. from The Wharton School of the University of
Pennsylvania in 1999.

                                       27
<PAGE>   30



SCIENTIFIC ADVISORY BOARD

        We have recruited a scientific advisory board consisting of individuals
with expertise in genomics, bioinformatics, information technology and
pharmaceutical discovery. Our scientific advisory board was assembled during the
second quarter of 2000 and we anticipate consulting with our scientific advisory
board regarding industry and scientific developments.

<TABLE>
<CAPTION>
                      NAME                                        POSITION AND ORGANIZATION
                     ------                                      ---------------------------
<S>                                               <C>
Leroy Hood, M.D., Chairman......................  Founder, Institute for Systems Biology

Michael N. Liebman, Ph.D........................  Global Head, Computational Genetics, Roche Biosciences

F. Raymond Salemme, Ph.D........................  President and Chief Scientific Officer, 3-Dimensional
                                                  Pharmaceuticals, Inc.

John N. Weinstein, M.D., Ph.D...................  Group Chief of National Cancer Institute, National
                                                  Institutes of Health

George Maalouf, Ph.D............................  Vice President of Bioinformatics, NeoGenesis Drug
                                                  Discovery, Inc.

Wei-Wu He, Ph.D.................................  General Partner, Emerging Technologies, L.L.C.
</TABLE>

ITEM 2 - PROPERTIES

        On September 21, 2000, we entered into a sublease for approximately
36,190 square feet of office space for our new headquarters in Bethesda,
Maryland. This agreement, which expires on October 31, 2012, does not require
rental payments during the initial 90 days of possession after which we are
required to make rental payments of $1,357,125 a year, subject to a 2.5% annual
escalation clause. Rental payments may also be adjusted as a result of our pro
rata share of increases in building expenses as defined in the lease. The lease
requires that we maintain a security deposit of $1,380,600 of which $460,200 was
due upon execution of the lease agreement and an additional $920,400 was issued
in November 2000. This security deposit may be reduced subject to our meeting
certain minimum financial requirements. To satisfy the security deposit
requirement of the lease, PNC Bank, NA has issued irrevocable standby letters of
credit for a total of $1,380,600, which can be drawn in the event that we are in
default under the sublease. The amounts under the irrevocable standby letters of
credit are secured by our deposit with PNC Bank of an equal amount of cash that
is designated solely for use under the irrevocable standby letter of credit. The
irrevocable standby letters of credit expire on September 8, 2001 and November
22, 2001, respectively. We took possession of our new headquarters facility and
relocated our operations in March 2001.

        On March 1, 2001, we entered into a sublease for approximately 34,849
square feet of additional office space in Bethesda, Maryland. This agreement
which expires on July 31, 2004, requires rental payments of $1,463,658 a year,
subject to a 3% annual escalation clause. Rental payments may also be adjusted
as a result of our pro rata share of increases in building expenses as defined
in the lease. The lease requires that we maintain a security deposit of $243,943
of which $121,972 will be applied to the first month's rent and the


                                       28
<PAGE>   31

remaining $121,971 will be held as a security deposit until one month after the
expiration of the lease term. We took possession of this space in March 2001.

        We leased approximately 24,400 square feet of office space for our
previous headquarters in Rockville, Maryland for approximately $620,000 per
year, subject to an annual three percent rent escalation. The term of this lease
expires in July 2006. We are currently pursuing opportunities to sublease this
space to another lessee.

        In addition to relocating to our two facilities in Bethesda, Maryland,
we have recently leased space to establish offices in San Diego and Boston. We
maintain additional offices in Annapolis, Denver, San Francisco and Oxford,
England.

ITEM 3 - LEGAL PROCEEDINGS

        Although we are a party to legal proceedings incidental to our business,
in the opinion of our management, the ultimate liability with respect to these
actions will not materially affect our operating results or financial position.

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

        No matters were submitted to a vote of security holders during the
fourth quarter of our fiscal year 2000.


                                       29
<PAGE>   32


                                 INFORMAX, INC.

                                     PART II

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

A.      MARKET INFORMATION

        Our common stock has been quoted on the Nasdaq National Market under the
symbol "INMX" since our initial public offering on October 3, 2000. The
following table reflects the high and low sales prices reported on the Nasdaq
National Market for each quarter listed:

<TABLE>
<CAPTION>
                                                                                  HIGH            LOW
                                                                                 ------         ------
<S>                                                                            <C>            <C>
Fiscal Year 2000
-----------------
Fourth Quarter (beginning October 3, 2000)                                       $31.75          $6.625

Fiscal Year 2001
----------------
First Quarter (through March 1, 2001)                                           $14.6875         $7.125
</TABLE>

        The closing sale price for our common stock on March 1, 2001 was $10.00
per share.

        The market price of our common stock has fluctuated significantly and
may be subject to significant fluctuations in the future. See Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Risk Factors."

B.      RECENT SALES OF UNREGISTERED SECURITIES

        The information presented reflects our issuance of unregistered
securities during the period covered by this Annual Report:

        (a) In March 2001, we issued warrants exercisable for 25,000 shares of
our common stock to Emerging Technology Fund LLC, for which Dr. Wei-Wu He, one
of our directors, serves as general partner. The warrants were issued in
consideration of certain strategic consulting services provided and are
exercisable for a five year term at $8.00 per share, the closing price on the
date of the grant.

        (b) In August 2000, we issued 950,747 shares of our Series B preferred
stock to Amersham Pharmacia Biotech, Inc., in exchange for approximately $10.0
million in cash.

        (c) In June 2000, we issued 313,909 shares of our common stock to an
accredited investor for approximately $2.0 million, or $6.37 per share. In
exchange for the rendering of certain consulting services, we also issued to the
same accredited investor warrants exercisable for 25,050 shares of our common
stock at $6.37 per share, subject to certain adjustments.

        (d) In June 2000, we issued an aggregate of 243,282 shares of our common
stock to three accredited investors for approximately $1.55 million, or $6.37
per share.

                                       30
<PAGE>   33

        (e) In June 2000, we issued warrants exercisable for 15,030 shares of
our common stock with an exercise price of $5.99 per share. The warrants were
issued in connection with a $3.0 million bridge loan financing and we received
$0.006 per warrant.

        (f) In connection with an equipment line, a revolving line of credit and
a bridge loan each executed and or amended in 2000 as indicated in Item 7,
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations -- Liquidity and Capital Resources" below, we have issued notes to
the lender covering any outstanding amounts under the credit facilities.

        (g) For the year ended December 31, 2000, we granted options and
restricted stock grants to employees, consultants and directors as indicated in
the table below:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
       Period of Issuance                  Number of Underlying Shares      Range of Exercise Price
       ------------------                  ---------------------------      -----------------------
-------------------------------------------------------------------------------------------------------
<S>                                        <C>                              <C>
       January 1 - December 31, 2000                  2,050,791                  $0.30 to $29.38
-------------------------------------------------------------------------------------------------------
       </TABLE>


        The sale and issuance of securities in the transactions described above
were exempt from registration under the Securities Act in reliance on Section
4(2) thereof or Regulation D promulgated thereunder as transactions by an issuer
not involving a public offering, where the purchasers were sophisticated
investors who represented their intention to acquire securities for investment
only and not with a view to distribution and received or had access to adequate
information about our company.

        None of the foregoing transactions was effected with an underwriter.

C.      HOLDERS

        As of March 1, 2001, there were approximately 1,680 holders of our
common stock and 20,518,976 shares of our common stock outstanding.

D.      DIVIDENDS

        We have never declared or paid any cash dividends on our common stock.
We intend to retain future earnings, if any, to finance the expansion of our
business, and do not expect to pay any cash dividends in the foreseeable future.
Please see Item 7, "Management's Discussion and Analysis of Financial Conditions
and Results of Operations -- Liquidity and Capital Resources" below. The
declaration of dividends is within the discretion of our Board of Directors and
subject to limitations set forth in the Delaware General Corporation Law. Our
certificate of incorporation provides that if dividends are paid, they must be
paid equally on each share of outstanding common stock. Payment of any dividends
on our common stock is subject to the rights of any preferred stock then
outstanding.

E.      USE OF PROCEEDS FROM INITIAL PUBLIC OFFERING

        On October 2, 2000, our Registration Statement on Form S-1 (333-41194)
covering our initial public offering of 5,750,000 shares of common stock, par
value $.001 per share, was declared effective by the Securities and Exchange
Commission. On October 3, 2000, shares of our common stock began trading on the


                                       31
<PAGE>   34

Nasdaq National Market. On October 6, 2000, we completed our initial public
offering of 5,750,000 shares of common stock, including 750,000 shares purchased
by the underwriters pursuant to their exercise of an overallotment option on
October 5, 2000. The shares were sold to the public at $16.00 per share for
gross proceeds of approximately $92.0 million. Net proceeds to us from the
offering were approximately $84.0 million after deducting estimated expenses
associated with the issuance and distribution of the common stock of $8.3
million, including underwriting discounts and commissions of $6.4 million. The
managing underwriter of this offering was Bear, Stearns & Co. Inc.

        As of March 1, 2001, we have used approximately $5.0 million of our net
offering proceeds toward consideration of certain strategic relationships and
collaboration opportunities, the improvement of our resources and infrastructure
including new office space and additional satellite offices to support the
growth of our operations and personnel, and the recruitment and hiring of
additional personnel, particularly related to expansion of our research and
development and sales and marketing teams. We have placed the remaining net
proceeds from the offering principally in money market funds as well as other
interest bearing, investment-grade securities. We expect to use the net proceeds
from the offering to consider opportunities to expand our business through the
acquisition of additional businesses, products and technologies and to establish
joint ventures or other collaborative arrangements which we believe complement
our current or future business. We also expect to use net proceeds to expand our
research and development and sales and marketing efforts as well as for working
capital and general corporate purposes.

                                       32
<PAGE>   35


ITEM 6 - SELECTED CONSOLIDATED FINANCIAL DATA

        You should read our selected consolidated financial data together with
our consolidated financial statements and their related notes and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," which we have included elsewhere in this report. We have derived
the statement of operations data for the years ended December 31, 1998, 1999 and
2000 and the balance sheet data as of December 31, 1998, 1999 and 2000 from our
audited consolidated financial statements included elsewhere in this report.
These consolidated financial statements have been audited by Deloitte & Touche
LLP. We have derived the statement of operations data for the year ended
December 31, 1996 from our unaudited consolidated financial statements that are
not included in this report. The balance sheet data as of December 31, 1996 are
derived from our unaudited consolidated financial statements that are not
included in this report. The statement of operations data for the year ended
December 31, 1997 and the balance sheet data as of December 31, 1997 are derived
from our audited consolidated financial statements that are not included in this
report.

The historical results presented below are not necessarily indicative of future
results.

<TABLE>
<CAPTION>

                                                                  Year Ended December 31,
                                                                  -----------------------
                                                          1996     1997    1998      1999     2000
                                                          ----     ----    ----      ----     ----

                                                            (In Thousands Except Per Share Data)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
<S>                                                    <C>        <C>     <C>      <C>      <C>
Revenues:
       Software license and customer support.........     $382    $1,335  $2,732    $7,277   $13,907
       Professional services (1).....................      636       867   1,394     2,737     3,240
                                                        ------    ------  ------    ------   -------
          Total revenues.............................    1,018     2,202   4,126    10,014    17,147

Cost of revenues:
       Software license and customer support.........       19        38     190       405       697
       Professional services.........................      309       716   1,081     1,612     1,737
                                                        ------    ------  ------    ------   -------
          Total cost of revenues.....................      328       754   1,271     2,017     2,434

Gross profit.........................................      690     1,448   2,855     7,997    14,713

Operating expenses:
       Selling, general and administrative (2).......      507     1,075   2,476     7,000    18,764
       Research and development (3)..................      161       365   1,162     2,597     5,311
       Stock based compensation......................       -        211      18       138     1,574
       Depreciation and amortization.................        3        18      94       273       940
                                                        ------    ------  ------    ------   -------
          Total operating expenses...................      671     1,669   3,750    10,008    26,589

Income (loss) from operations........................       19      (221)   (895)   (2,011)  (11,876)
Other income (expense)
       Investment earnings...........................        -         -       -        66     1,476
       Interest expense..............................       (4)      (19)    (60)      (86)     (285)
       Other.........................................        -       (12)     (3)      (10)      (40)
                                                        ---------------------------------------------
          Total other income (expense)...............       (4)      (31)    (63)      (30)    1,151

Income (loss) before income taxes....................       15      (252)   (958)   (2,041)  (10,725)

</TABLE>

                                       33
<PAGE>   36

<TABLE>
<S>                                                    <C>        <C>     <C>      <C>      <C>
Income tax expense (benefit).........................       11      (118)   (391)     (726)      (51)

Net income (loss)....................................       $4    $ (134) $ (567)  $(1,315) $(10,674)

Beneficial conversion................................        -         -       -        (8)   (9,982)

Increase to carrying value of redeemable
    convertible preferred stock......................        -         -       -      (168)     (387)

Net income (loss) applicable to common
     shares..........................................       $4    $ (134) $ (567)  $(1,491) $(21,043)
                                                            ---    ------  ------  -------- ---------

Basic and diluted net income (loss)
    per common share.................................       $-    $(0.04) $(0.16)  $ (0.38) $  (2.25)
                                                            ==    ------- -------  ------=  ---------
</TABLE>


(1)     Cost of revenues - professional services includes stock-based
        compensation of $-0-, $105,539, $-0-, $-0-, and $4,810 for the years
        ended December 31, 1996, 1997, 1998, 1999 and 2000.

(2)     Selling, general and administrative expense excludes stock-based
        compensation of $-0-, $76,189, $-0-, $111,019 and $1,432,504 for the
        years ended December 31, 1996, 1997, 1998, 1999 and 2000.

(3)     Research and development expense excludes stock-based compensation of
        $-0-, $134,506, $17,782, $27,166 and $141,549 for the years ended
        December 31, 1996, 1997, 1998, 1999 and 2000.

<TABLE>
<CAPTION>

                                                             YEAR ENDED DECEMBER 31,

                                                  1996      1997      1998       1999        2000
                                                                        (IN THOUSANDS)
CONSOLIDATED BALANCE SHEET DATA:
<S>                                              <C>       <C>      <C>       <C>        <C>
Cash and cash equivalents......................    $35       $382     $296      $1,399     $82,656
Working capital (deficit)......................     62        371     (419)      1,040      85,503
Total assets...................................    250      1,114    2,883       7,265     100,950
Capital lease obligations, less current
         portion...............................      8         55      182          92          14
Equipment loan facility, less current
         portion...............................      -          -       -          623         688
Total liabilities..............................    174        974   3,288        4,887       9,281
Redeemable convertible preferred stock.........      -          -       -        4,095           -
Common stock and additional paid-in
        capital................................    233        550     588          975     105,936
Stockholders' equity (deficit).................     76        139    (405)      (1,717)     91,669

</TABLE>

        See our consolidated financial statements and notes included elsewhere
in this report for a description of the computation of the net loss per share
and the number of shares used in the per share calculations in statement of
operations data above.


                                       34
<PAGE>   37


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

OVERVIEW

        We are a leading global provider of bioinformatic software solutions.
Our bioinformatic software enables the analysis and interpretation of genomic,
proteomic and other biomolecular data that form the genetic blueprint of all
living organisms. Since beginning commercial operations in 1993, we have
dedicated substantial resources to expand and enhance our software product
lines, increase our sales and marketing efforts, and enlarge and diversify our
customer base.

        We believe that our position as a leading global provider of
bioinformatic software is based upon the number of our customers, our revenues,
and the size of our organization. In 1993, we commercially released our first
desktop software product, the current version of which is marketed as our Vector
NTI Suite 6.0 for desktop computers. In September 1998, we commercially released
our GenoMax enterprise computing platform (formerly known as Software Solution
for Bio-Medicine), the version 3.0 of which was commercially released on
September 15, 2000. On September 30, 2000, we commercially released Vector
Enterprise, a networked version of our Vector NTI Suite that incorporates a
shared relational database.

        To date, we have sold over 9,000 licenses for our Vector NTI Suite of
software applications for desktop computers, with more than 22,000 estimated
users. As of December 31, 2000, we have also made 26 sales of our GenoMax
enterprise platform for use by a network of computers linked together for
sharing data and computation. Our customer base includes over 1,650
organizations worldwide, including over 650 biotechnology, pharmaceutical and
agricultural biotechnology and life science companies and over 1,000 academic
and government research institutions. Our 10 largest customers accounted for
less than 34% and 37% of our total software license revenues for the years ended
December 31, 2000 and 1999, respectively.

        We have continued to execute our corporate strategy of establishing key
alliances and marketing relationships with other leading companies in an effort
to expand the scope of our product offerings and increase market penetration of
our software solutions.

        In August 2000, we entered into a strategic relationship with Amersham
Pharmacia Biotech to jointly develop and market an expanded version of GenoMax
to provide an enterprise-wide data analysis system for pharmaceutical and
biotechnology companies, for integrating and analyzing data from genomics,
proteomics and drug screening production laboratories. In connection with this
relationship, Amersham purchased 950,747 shares of our preferred stock in
exchange for $10.0 million in cash. These shares were converted into 1,587,747
shares of our common stock upon the closing of our initial public offering.

        In October 2000, we entered into an agreement with Media Cybernetics, a
leading scientific image informatics software provider. Under this agreement, we
were granted a two-year worldwide license to sell and distribute their Gel-Pro
and Array-Pro analysis tools. Gel-Pro enables acquisition, analysis and
reporting for electrophoretic images and complements the functions of our Vector
NTI Suite. Array-Pro allows, acquisition, analysis and reporting of gene
expression data from microarrays, and provides a key link between gene
expression experiments, visualization and analysis using GenoMax. Under our
agreement, we are permitted to distribute these software solutions in connection
with our Vector NTI Suite or on a stand-alone basis. In January 2001, we began
selling these Media Cybernetics products through our Vector NTI Suite sales
team.


                                       35
<PAGE>   38

        In January 2001, we entered into a strategic relationship with Biomax
Informatics AG, a German company that develops customized bioinformatic
solutions. Under our agreement, we were granted a four year, exclusive worldwide
license to distribute Biomax's BioRS(TM) integration and retrieval system. BioRS
is an efficient tool for integrating and retrieving large amounts of gnomic data
available from heterogeneous public and private databases. The addition of BioRS
is a strong complement to our existing GenoMax and Vector NTI Suite products as
well as for the development of our High-Throughput Research environment. Under
our agreement, we have agreed to work with Biomax to integrate the capabilities
of BioRS into our Vector NTI Suite and GenoMax products.

REVENUE

        Our revenue has increased substantially in recent years. Revenue for the
year ended December 31, 2000 represents a five-year compound annual growth rate
of 98% and a 71% increase over the prior year. We provide sales, marketing,
implementation and support services for our products. Our Vector NTI Suite,
Vector Enterprise and GenoMax software products are considered off-the-shelf
products that require only routine installation to be fully functional by the
end user.

        We currently generate revenues from software sales and software-related
professional services. Software sales consist of software license fees,
maintenance fees, and related customer training.

        Software sales have historically been made under perpetual license
agreements. Under perpetual arrangements, the customer assumes ownership of the
software license, and upgrades and enhancements are available provided that the
customer's maintenance agreement is current. It has been customary to include
the maintenance renewal rate in our perpetual arrangements. Under these
circumstances, provided there are no other elements bundled with the
arrangement, the revenue related to the software element under a perpetual
arrangement is recognized at the time of delivery of the software, using the
residual method. During 2000, we also began generating software sales under one
to three year term arrangements. Under a term arrangement, the customer does not
assume ownership of the software license at delivery. Instead, they use the
software over the term period and are required to return it upon the non-renewal
of the term arrangement. In these specific term arrangements, no separate
renewal rate for maintenance is stated, instead there is a bundled renewal rate
for both the software and maintenance. Under these circumstances, the revenue
related to the software element, as well as any bundled maintenance, under term
arrangements is recognized evenly over the term period. The nature of software
license arrangements will therefore affect our recognition of software license
revenues in a given fiscal quarter. We expect that if our customers commit to
more term arrangements having bundled elements than perpetual license
arrangements having separate elements, we may encounter a reduction in near-term
revenue. Term arrangements, however, will enable us to obtain the benefit of a
consistent stream of revenue throughout the term of the license and in many
cases will serve to generate more long-term economic value for our company.

        Professional services have historically consisted of software
development services provided under contracts to the National Center for
Biotechnology Information (NCBI) at the National Institutes of Health and
beginning in 2000 have also included customer-specified software installation,
integration and customization services related to our commercial software
products. NCBI contracts for professional services through intermediaries for
whom we serve as a subcontractor. These agreements are generally for one year
terms and may be terminated on behalf of NCBI at anytime, however, we have had a
successful and long standing service relationship with NCBI dating back to 1995.
We anticipate significantly expanding our professional service


                                       36
<PAGE>   39

efforts, particularly as they relate to contract development opportunities and
value-added consulting services related to bioinformatics technology, including
discovery strategy services and IT implementation services.

        We expect to generate future revenues from our channeling and
distribution alliances and from e-commerce offerings. Channeling alliances
include agreements with data content providers to integrate their biomolecular
databases with our software products and to resell subscriptions to these
databases to our customers. Distribution alliances include agreements with
providers of specialized bioinformatic hardware to integrate and resell their
hardware with our software products. Under our content channeling and hardware
distribution alliances, we intend to generate transaction fees and realize a
portion of the revenues for the products we resell.

        E-commerce offerings will include incorporating Internet hyperlinks into
our Vector NTI Suite and entering into related partnerships with laboratory
reagent vendors to generate transaction fees on sales we facilitate. In
September 2000, we entered into an agreement with Incyte Genomics, Inc., a
manufacturer and provider of genomic and other biomolecular databases. Under our
agreement we will incorporate hyperlinks into Vector NTI Suite that will direct
researchers to Incyte's website. These hyperlinks are intended to allow
researchers to register with Incyte and to purchase access to certain of its
genomic databases that can be used with the searching and analysis functions of
our Vector NTI Suite. These hyperlinks will also enable researchers to purchase
reagents from Incyte for their laboratory research. Under this agreement, we
will receive a portion of the net revenues associated with sales of Incyte's
database and reagent products and a fee based on the number of registrations
with Incyte, each as generated through the hyperlinks to be contained in Vector
NTI Suite.

Revenue Recognition

        We recognize software license revenues based on the provisions of
Statement of Position ("SOP") No. 97-2, Software Revenue Recognition, as amended
and interpreted. Under our perpetual software license arrangements, software
license fees are recognized as revenue upon the customer's execution of a
non-cancelable license agreement and delivery of the software, provided that the
license fee is fixed and determinable, collectibility is probable, and no
customization of the software is required. The revenue related to the software
element under our perpetual arrangements is recognized immediately at the time
of delivery of the software. Under our term software license arrangements,
software license fees are also recognized as revenue upon the customer's
execution of a non-cancelable license agreement and delivery of the software,
provided that the license fee is fixed and determinable, collectibility is
probable, and no customization of the software is required. However, software
license revenue from our term license arrangements is recognized evenly over the
term period.

        In circumstances where the above criteria were not met and the fair
value for undelivered elements of a multiple element contract were not
determinable, revenue on the contract was entirely deferred until either fair
value was determinable or when all elements were delivered. If we were unable to
establish vendor specific objective evidence of fair value on the undelivered
elements and the only undelivered element was maintenance, then all revenue was
recognized ratably over the maintenance period.

        In connection with our software licenses, we also enter into maintenance
contracts that provide for technical support and periodic unspecified upgrades.


                                       37
<PAGE>   40

        During 1997 and 1998, we recognized maintenance revenue together with
the initial licensing fee upon delivery of the software when all of the
following were met:

        -       the maintenance fee was included with the initial licensing fee,

        -       the maintenance revenue to be recognized was for one year or
                less,

        -       the estimated cost of providing maintenance during the
                arrangement was insignificant, and

        -       any unspecified upgrades were expected to be minimal.

        Due to the introduction of new modules, product enhancements, and
product versions, we increased our maintenance support staff and, as a result,
the estimated cost of providing maintenance services to our customers was no
longer deemed insignificant. Therefore, beginning in January 1999, revenues from
all software maintenance contracts were unbundled from software licenses based
upon vendor specific objective evidence of fair value and recognized ratably
over the maintenance period. Vendor specific objective evidence for maintenance
contracts is determined by the list price established by management of relevant
authority or by the renewal rate specified in the contract. We use the residual
method to recognize revenue on delivered elements when vendor specific objective
evidence of fair value has been determined for all undelivered elements.
Discounts, if any, are applied to the delivered elements if the residual method
is used. Amounts received in advance of the delivery of products or performance
of services are classified as deferred revenues.

        Training is provided on a daily fee basis and we recognize revenue as
the services are provided.

        Beginning in 2000, we have provided customer-specified software
installation, integration and customization services related to our commercial
software products on a time and materials basis and recognize revenue as the
services are provided. During 1997, 1998 and 1999 our professional services
revenue was derived from contracts related to software development services
provided to NCBI under time and materials subcontracts and a cost-plus-fixed-fee
subcontract. During 1999 the cost-plus-fixed-fee subcontract was converted upon
its renewal to a time and materials contract. We recognize revenue under the
time and materials subcontracts as the services are provided based upon
contractual rates. We recognized revenue under the cost-plus-fixed-fee
subcontract as recoverable costs were incurred, including a proportionate amount
of the fixed fee.

Quarterly Fluctuations

        Our quarterly operating results have historically fluctuated and we
anticipate such results to continue to fluctuate significantly. Factors that may
cause our quarterly results to fluctuate include the timing, commencement,
delay, cancellation or completion of our:

        -       software licensing agreements;

        -       product delivery schedules;

        -       strategic relationships; and

        -       professional service activities, including installation and
                software modification.

                                       38
<PAGE>   41

Our results of operations may also fluctuate as a result of the number and
timing of orders for our GenoMax enterprise product, which may have a
significant effect on revenues for a particular quarter.

        The manner in which we recognize revenue, in accordance with the
generally accepted accounting principles, including as such revenue recognition
relates to our mix of term and perpetual software arrangements in a given
quarter, may also cause our quarterly operating results to fluctuate
substantially. In accordance with these principles, we may be required to defer
all or a portion of the revenue from some of our software licenses sold in a
particular quarter to a later quarter. Expenses associated with software
licenses are not typically so deferred. For our maintenance contracts and
professional services, we typically recognize revenues over the term of the
contract.

        As a result of the academic calendar, European business practices and
commercial information technology procurement practices, we generally experience
a reduction in sales in the third quarter of each calendar year which typically
results in a corresponding reduction in operating revenues. Due to the factors
described above and other risks, you should not rely upon quarterly comparisons
of our financial results as these comparisons are not necessarily meaningful nor
are they a reliable indicator of our future performance.

OPTIONS AND AMORTIZATION OF STOCK BASED COMPENSATION

        During 2000, we granted 2,020,791 qualified options to employees and
30,000 non-qualified options to non-employee advisors. Deferred compensation
related to the qualified options is $1,196,000, which will be amortized over a
four year vesting period using the declining balance method. There is no
deferred compensation related to the non-employee options, which vested
immediately.

                                       39
<PAGE>   42



RESULTS OF OPERATIONS FOR YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000

        The following table summarizes our consolidated results of operations
for the years ended December 31, 1998, 1999 and 2000, as a percentage of our
total revenue for the respective  periods.

<TABLE>
<CAPTION>
                                                               Year Ended December 31,
                                                               -----------------------
                                                             1998        1999        2000
                                                          ----------  ----------  ----------
<S>                                                       <C>         <C>         <C>
Revenues
       Software license and customer support...........        66%         73%         81%
       Professional services...........................        34          27          19
                                                            -----       -----       -----
          Total revenues...............................       100         100         100

Cost of revenues:
       Software license and customer support...........         5           4           4
       Professional services...........................        26          16          10
                                                            -----       -----       -----
          Total cost of revenues.......................        31          20          14

Gross profit...........................................        69          80          86

Operating expenses
       Selling, general and administrative.............        60          70         109
       Research and development........................        29          26          31
       Stock based compensation........................         -           1           9
       Depreciation and amortization...................         2           3           5
                                                            -----       -----       -----

     Total operating expenses..........................        91         100         154
Loss from operations...................................       (22)        (20)        (68)
Other income (expense)
       Investment earnings.............................         -           1           9
       Interest expense................................        (1)         (1)         (2)
       Other...........................................         -           -           -
                                                            -----       -----       -----
          Total other income (expense).................        (1)          -           7

Loss before income taxes...............................       (23)        (20)        (61)

Income tax benefit.....................................        (9)         (7)          -
                                                            -----       -----

Net loss...............................................       (14%)       (13)%       (61)%
                                                            -----       -----       -----
</TABLE>



                                       40
<PAGE>   43


YEAR ENDED DECEMBER 31, 2000 COMPARED TO 1999

        Revenues. For the year ended December 31, 2000, revenues increased 71%
to $17.1 million from $10.0 million in 1999.

        Software sales revenue increased 91% to $13.9 million for the year ended
December 31, 2000 from $7.3 million in the corresponding period of 1999. This
increase is attributable to continued increase in Vector NTI Suite sales and
increased demand for our GenoMax enterprise product.

        Professional services revenue increased 18% to $3.2 million for the year
ended December 31, 2000 from $2.7 million in the corresponding period of 1999.
Increased professional services revenue at year-end resulted primarily from
increased demand for services related to our software products. In 2000,
services provided to the NCBI under subcontracts accounted for 88% of
professional services revenue and 17% of consolidated revenues.

        Cost of Revenues. For the year ended December 31, 2000, cost of revenues
increased 21% to $2.4 million from $2.0 million in the corresponding period of
1999.

        Costs of software license and customer support revenue increased 72% to
$0.70 million for the year ended December 31, 2000 from $0.40 million in the
corresponding period of 1999. This increase resulted primarily from increased
sales of our Vector NTI Suite and sales of our GenoMax enterprise system. Costs
of software revenues consist primarily of manufacturing costs incurred on an as
needed basis, cost of shipping products, and the cost of providing training and
customer support.

        Costs of professional services revenues increased 8.0% to $1.7 million
for the year ended December 31, 2000 from $1.6 million in the corresponding
period of 1999. The increase at year-end resulted primarily from increased
personnel servicing our software products. Costs of professional services
revenues consist primarily of salaries, benefits, and related expenses of our
professional services personnel.

        Margin on our software license and customer support and professional
services revenues improved for the year ended December 31, 2000 compared to the
prior year primarily as a result of economies of scale related to the increasing
size of our customer base.

        Selling, General and Administrative Expenses. For the year ended
December 31, 2000, selling, general and administrative expenses increased 168%
to $18.8 million from $7.0 million in the corresponding period of 1999. This
increase primarily reflects salary and benefits expenses for additional
personnel, and related expenses including increased rent and travel costs to
support our business and revenue growth, along with costs associated with a
significantly increased marketing effort. Of this increase, headcount and
resources devoted to sales and marketing experienced a disproportionately large
increase. We expect this escalation of investment in our sales and marketing
force to continue in 2001. Overall headcount for the year ended December 31,
2000 was 236 compared to 117 at December 31, 1999.

        Research and Development Expenses. For the year ended December 31, 2000,
research and development expenses increased 104% to $5.3 million from $2.6
million in the corresponding period of 1999. The increase reflects expense
associated with an increase in the headcount of our research and product
development team to support our expanded our product development efforts. We
expect this acceleration of research and


                                       41
<PAGE>   44

development cost to continue in 2001. Overall research and development headcount
for the year ended December 31, 2000 was 95 compared to 61 at December 31, 1999.

        Stock Based Compensation. For the year ended December 31, 2000, stock
based compensation expenses increased 1039% to $1.6 million from $0.14 million
in the corresponding period of 1999. The increase reflects compensation related
to discounted stock option grants and restricted stock awards.

        Income Taxes. We incurred net losses for the years ended December 31,
2000 and 1999. At present, we have an accumulated net operating loss
carryforward of $28.0 million of which $21.0 million is a result of the exercise
of non-qualified stock options. The tax benefit recognized for the years ended
December 31, 2000 and 1999 was $0.05 million and $0.7 million, respectively,
reflecting an effective tax benefit rate of .50% and a tax rate of 35.6%,
respectively. The provisions reflect a valuation allowance recorded against the
increase in net operating losses and the change in book basis versus tax basis
of deferred revenue and stock based compensation.

        Net Loss. We incurred a net loss of $10.7 million for the year ended
December 31, 2000, compared with a net loss of $2.0 million for the year ended
December 31, 1999.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO 1998

        Revenues. For the year ended December 31, 1999, revenues increased 143%
to $10.0 million from $4.1 million for the year ended December 31, 1998.

        Software sales revenue increased 166% to $7.3 million from 2.7 million
in the year ended December 31, 1998 due to increased sales of our Vector NTI
Suite desktop software and the introduction of our GenoMax enterprise system in
the late 1998.

        Professional services revenue increased 96% to $2.7 million from $1.4
million in the prior year. In 1999, services provided to the NCBI under
subcontracts accounted for 100% of professional services revenue and 27% of
consolidated revenues.

        Cost of Revenues. For the year ended December 31, 1999, overall cost of
revenues increased 59% to $2.0 million from $1.3 million in the prior year.

        Cost of software license and customer support revenue increased 113% to
$0.4 million from $0.2 million in the prior year. This increase resulted
primarily from increase manufacturing, shipping costs as a result of increased
software license sales and costs of providing training and customer support.

        Costs of professional services revenues increased 49% of $1.6 million
from $1.1 million in the prior year. This increase resulted primarily from the
increase in personnel on the NCBI subcontracts.

        Selling, General and Administrative Expenses. For the year ended
December 31, 1999, selling, general and administrative expenses increased 183%
to $7.0 million from $2.5 million in the year ended December 31, 1998. This
increase primarily reflects our large investment in sales and marketing
personnel and includes salary and benefits for an increase in headcount, and
increased rent and travel costs to support our revenue growth.

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<PAGE>   45

        Research and Development Expenses. For the year ended December 31, 1999,
research and development expenses increased 123% to $2.6 million from $1.2
million in the year ended December 31, 1998. This increase reflects increases in
the headcount for our research and product development team reflecting expanded
product development efforts.

        Stock Based Compensation. For the year ended December 31, 1999, stock
based compensation expenses increased 677% to $0.1 million from $0.02 million in
the year ended December 31, 1998. The increase reflects discounted stock option
grants and restricted stock awards.

        Income Taxes. We incurred net losses for each of the years ended
December 31, 1999 and 1998. At December 31,1999, we had an accumulated net
operating loss carryforward of $1.3 million. The tax benefit for the years ended
December 31, 1998 and 1999 was $0.4 million and $0.7 million, respectively,
using an effective rate of 40.8% and 35.6%, respectively. The decrease in the
effective tax rate is attributable to a reduction in research and development
tax credits, a rate differential in the utilization of net operating losses
carried back to 1997, and compensation expense associated with qualified stock
options in 1999, which is not deductible for tax purposes. The increase in the
tax benefit primarily reflects the increase in net operating losses and the
change in book basis versus tax basis of deferred revenue, which is included in
taxable income at the date of sale but deferred for book purposes.

        Net Loss. We incurred a net loss of $1.3 million for the year ended
December 31, 1999 and a net loss of $0.6 million for the year ended December 31,
1998.

MARKETS

        Geographically, North America, Europe, and Japan represent our largest
markets, accounting for 76%, 18% and 2%, respectively, of sales in 2000, and
79%, 17%, and 1%, respectively, of sales in 1999. All sales to foreign-based
customers are invoiced and paid in U.S. Dollars. Our customer base is comprised
of companies in the pharmaceutical, biotechnology, and agricultural-life science
sectors, as well as academic and government research institutes.

LIQUIDITY AND CAPITAL RESOURCES

        From our commencement of commercial operations in 1993 until June 1999,
we funded our growth primarily with internally generated cash flow. On June 22,
1999, we entered into a purchase agreement with FBR Technology Venture Partners,
LP for the sale of 2,161,265 shares of our series A redeemable convertible
preferred stock, $0.01 par value. The shares were sold for an aggregate price of
approximately $4.0 million, or $1.85 per share. In June 2000, we issued, in the
aggregate, 557,191 shares of our common stock in private sale transactions with
four accredited investors and received cash compensation totaling approximately
$3.6 million. On August 16, 2000, we sold 950,747 shares of our Series B
redeemable convertible preferred stock to Amersham Pharmacia Biotech, Inc. for
aggregate proceeds of approximately $10.0 million in cash. At the time of
issuance, the deemed fair market value of the underlying common stock was $15.00
per share. Therefore, the net proceeds of $9.9 million were allocated to
additional paid-in capital as a beneficial conversion feature and such entire
amount was immediately accreted to the Series B redeemable convertible preferred
stock on August 16, 2000.

        On July 11, 2000, we filed a registration statement on Form S-1 (File
No. 333-41194) to register our initial public offering, on a firm commitment
basis, of up to 5,750,000 shares of our common stock, par value


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<PAGE>   46

$.001 per share, including 750,000 shares covered by an overallotment option
granted to our underwriters. Our registration statement was declared effective
with the Securities and Exchange Commission on October 2, 2000. On October 5,
2000, our underwriters informed us of their intention to exercise their
overallotment option to purchase an additional 750,000 shares. On October 6,
2000, we completed our initial public offering of common stock, selling
5,750,000 shares of common stock at $16.00 per share, for net proceeds to us,
after deducting estimated expenses and underwriting discounts and commissions,
of approximately $84.0 million. All of our then outstanding shares of preferred
stock were converted into common stock upon the closing of our initial public
offering.

        At December 31, 2000, we had $83.0 million in cash and cash equivalents,
a net increase of $81.0 million from December 31, 1999, and an increase of $82.0
million from December 31, 1998. Net cash provided by financing activities was
$96.7 million for the year ended December 31, 2000 compared to net cash provided
by financing activities of $5.1 million for the comparable period in 1999.

        We believe that the net proceeds from our initial public offering, our
cash flows from operations and our existing capital resources will be adequate
to fund our operations for the next 24 months, although we may seek to raise
additional capital during that period. We may require additional funding to
execute our business strategy. If that funding is not available, or not
available on terms acceptable to us, we may be required to curtail certain
marketing and product development efforts.

        During the years ended December 31, 2000 and 1999, we generated $15.7
million and $9.0 million of cash receipts from operating activity, respectively.
Gross cash used by operations for the year ended December 31, 2000 was $27.1
million compared to $11.6 million for the year ended December 31, 1999. The net
increase in cash disbursements for costs of revenue and operating expenses over
these periods reflects the continued growth of our business, particularly as
related to personnel and related infrastructure expenses.

        Net cash used in investing activities was $4.0 million for the year
ended December 31, 2000 compared to net cash used in investing activities of
$1.4 million for the comparable period in 1999. The cash used in investing
activities over those periods were for the purchase of furniture and equipment.

        In May 1999, we entered into a loan agreement and a security agreement
with PNC Bank, National Association, in connection with the creation of a credit
facility consisting of a secured revolving credit line and an equipment line of
credit. In February 2000, we entered into a fourth amendment to such loan
agreement increasing the maximum availability under each of the secured
revolving credit line and equipment line of credit to $3.0 million, for a total
of $6.0 million. As of the period ending December 31, 2000, the revolving credit
line and equipment line of credit had available facilities of $3.0 million and
$1.5 million, respectively. In connection with this amendment, we entered into
an amended and restated revolving credit note and an amended and restated
equipment line of credit note. We repaid the principal and accrued interest
outstanding under the revolving credit note in October 2000. The equipment line
of credit note allows us to borrow the principal amount thereunder until
February 2, 2001. An amount equal to our qualified equipment is available for
borrowing under this note. Amounts outstanding under the equipment line of
credit note accrue interest at the prime rate as reported in the Wall Street
Journal plus one and one-quarter percent. With respect to advances made prior to
November 6, 1999, principal and interest


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<PAGE>   47

accrued thereon are payable in monthly principal amounts of $19,727 through and
including April 15, 2002. For advances made after November 6, 1999, principal
and interest accrued thereon shall be made in monthly principal payments of
$35,607 through October 15, 2002 and $15,833 through March 15, 2003.

        We have pledged our personal property, including our equipment,
trademarks and accounts receivable, to PNC Bank as security for any amounts owed
by us under these facilities. Under the loan agreement, we are generally
restricted from incurring additional indebtedness without the consent of PNC
Bank. We must also maintain various financial covenants, including minimum cash
balance and certain financial ratios. In addition, we may not declare or pay
dividends or, make any distribution with respect to any equity security during
the term of the loan agreement without the consent of PNC Bank.

         In September and November 2000 respectively, PNC Bank established
irrevocable standby letters of credit in favor of Pacific Gas & Electric
Generating Company, in connection with our execution of a sublease with Pacific
Gas & Electric for our new Bethesda, Maryland headquarters. The amounts of the
irrevocable standby letter of credits will not exceed $460,200 and $920,400, and
such amounts can be drawn in the event that we are in default under the
sublease. The amounts of the irrevocable standby letters of credit are secured
by our deposit with PNC Bank of an equal amount of cash that is designated
solely for use under the irrevocable standby letter of credits. The irrevocable
standby letters of credit expire on September 8, 2001 and November 22, 2001,
respectively.

         On September 21, 2000, we entered into a sublease for approximately
36,190 square feet of office space for our new headquarters in Bethesda,
Maryland. This agreement, which expires on October 31, 2012, does not require
rental payments during the initial 90 days of possession after which we are
required to make rental payments of $1,357,125 a year, subject to a 2.5% annual
escalation clause. Rental payments may also be adjusted as a result of our pro
rata share of increases in building expenses as defined in the lease. The lease
requires that we maintain a security deposit of $1,380,600 of which $460,200 was
due upon execution of the lease agreement and an additional $920,400 was issued
in November 2000. This security deposit may be reduced subject to our meeting
certain minimum financial requirements. To satisfy the security deposit
requirement of the lease, PNC Bank, NA has issued irrevocable standby letters of
credit for a total of $1,380,600, which can be drawn in the event that we are in
default under the sublease. The amounts under the irrevocable standby letters of
credit are secured by our deposit with PNC Bank of an equal amount of cash that
is designated solely for use under the irrevocable standby letter of credit. The
irrevocable standby letters of credit expire on September 8, 2001 and November
22, 2001, respectively. We took possession of our new headquarters facility and
relocated our operations in March 2001.


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<PAGE>   48


                                  RISK FACTORS

                          RISKS RELATED TO OUR BUSINESS

WE MUST KEEP PACE WITH RAPID TECHNOLOGICAL ADVANCES AND DEVELOPMENTS NOW
OCCURRING IN BIOINFORMATIC SOFTWARE. IF WE ARE UNABLE TO DO SO, OUR PRODUCTS AND
SERVICES WILL BE LESS ATTRACTIVE TO CUSTOMERS AND OUR REVENUES AND COMPETITIVE
POSITION WILL SUFFER.

        The market for our products and services is in the midst of rapid
technological change. In order for us to maintain a competitive position in our
industry and develop and market products that are attractive to customers, we
must:

        -       continue to enhance and expand the functions of our existing
                products; and

        -       develop and introduce new software products and complementary
                services that meet evolving customer needs and preferences and
                incorporate new technologies.

        Our products and services may not be able to keep pace with
technological change. We may not be able to identify in a timely manner
important evolving industry standards and may invest considerable resources in
technologies that rapidly become obsolete. Our products or product versions may
also become obsolete due to our competitors' introduction of products or
services containing advanced technology and functions. If we do not keep pace
with technological change, our products will not be as attractive to our
customers and our competitive position and sales of our products would be
seriously harmed.

WE MUST ADD NEW CUSTOMERS AND RETAIN AND EXPAND UPON EXISTING CUSTOMER
RELATIONSHIPS IN ORDER TO GENERATE REVENUES TO SUPPORT THE GROWTH OF OUR
BUSINESS.

        In order to generate additional revenues sufficient to support our
continued growth, we must add new customers and retain, and expand upon, our
existing customer relationships. These efforts depend significantly upon our
successful development of new products, product versions and services that
respond to the evolving needs of the genomic research community, as well as the
success of our sales and marketing efforts. In addition, much of our expectation
for future growth of revenues is based upon continued and increased sales of our
GenoMax product and the establishment of our GenoMax brand. We expect to
continue to derive a significant portion of our future professional services
revenue from a relationship with the National Center for Biotechnology
Information (NCBI) at the National Institutes of Health and that relationship,
which is based on subcontractor arrangements, could be terminated in the future.

THE CONTINUED ENHANCEMENT AND DEVELOPMENT OF OUR BIOINFORMATIC PRODUCTS AND
SERVICES DEPEND UPON THE RETENTION AND EXPANSION OF OUR RESEARCH AND PRODUCT
DEVELOPMENT GROUP.

        The number of technical personnel with experience in the field of
bioinformatics is limited and competition for qualified employees is intense.
Our software was developed by an internal team that has had little turnover, but
that may not be the case in the future. We may not be successful in retaining
our technical employees or recruiting and training additional skilled personnel.
The loss of a significant number of employees in our research and product
development group, occurring at one instance or over a period of time, could
seriously harm our product development and enhancement efforts. We could also
incur significant costs associated with any resulting litigation or disputes to
protect our proprietary information.

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<PAGE>   49


PART OF OUR BUSINESS STRATEGY IS TO DEVELOP STRATEGIC RELATIONSHIPS WITH LARGER
ORGANIZATIONS AND PROVIDERS OF COMPLEMENTARY PRODUCTS AND SERVICES. IF WE ARE
NOT SUCCESSFUL IN DOING SO OUR ABILITY TO COMPETE COULD BE HARMED.

        A component of our business strategy is to develop strategic
relationships, including co-marketing arrangements, content channeling and
distribution alliances, e-commerce offerings and Internet-hosted delivery
partnerships. We believe that through such relationships we can add revenues,
expand our distribution channels, improve our competitive position and increase
market awareness and acceptance of our products. To date, we have entered into
only a few of these strategic relationships with providers of complementary
products and services. If we are unable to successfully develop these and other
similar relationships, or if these relationships do not yield the results we
anticipate, our ability to compete and to generate future revenues could be
materially harmed. In addition, many of our strategic relationships, including
our co-marketing relationships with Oracle, Compaq and Sun Microsystems, are
based on oral arrangements that are not enforceable and can be terminated by
either party at any time.

        In August 2000, we entered into a long-term strategic relationship with
Amersham Pharmacia Biotech to jointly develop and market an expanded version of
GenoMax for pharmaceutical and biotech companies for integrating and analyzing
data from genomics, proteomics and drug screening production laboratories. The
agreement with Amersham can be terminated prior to the end of the term by mutual
agreement of the parties or by one party upon a breach by the other party. In
addition, if we do not use commercially reasonable efforts to develop the data
analysis system, Amersham can terminate the agreement. If the agreement is
terminated for any reason prior to the end of the term or if the relationship
otherwise does not result in the successful marketing of GenoMax to new customer
groups, we may be unable to recoup all of the substantial investment we will be
making in this collaboration and there would be a material adverse impact on our
anticipated future revenues.

WE HAVE INCURRED OPERATING LOSSES IN THE PAST RESULTING IN AN ACCUMULATED
DEFICIT. WE MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY IN THE FUTURE.

        We have incurred operating losses in most periods since our inception.
We incurred net losses of approximately $10.7 million for the year ended
December 31, 2000 and approximately $1.3 million for the year ended December 31,
1999. We incurred a net loss of approximately $2.4 million for the three months
ended December 31, 2000. As of December 31, 2000, we had an accumulated deficit
of approximately $12.8 million. We expect to continue to incur net losses for
the foreseeable future. We expect to invest substantial financial and other
resources to:

        -       develop and introduce new products, product versions and
                services;

        -       expand our research and product development and sales and
                marketing groups; and

        -       consider appropriate acquisitions and strategic relationships.

        As a result, we expect that our expenses will increase significantly. We
cannot assure you that we will be able to generate sufficient additional
revenues stemming from these investments in new products and personnel in order
to  achieve profitability. Even if we are able to achieve profitability, we may
not be able to


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<PAGE>   50

sustain profitability on a quarterly or annual basis. Failure to achieve
consistent profitability may limit our growth potential and the value of our
common stock.

REVENUE RECOGNITION RULES APPLICABLE TO SOFTWARE MAY REQUIRE THAT WE DEFER
RECOGNIZING REVENUES UNDER CERTAIN LICENSES UNTIL QUARTERS AFTER LICENSES ARE
EXECUTED OR FEES ARE RECEIVED. THIS CAN CAUSE OUR QUARTERLY RESULTS TO FLUCTUATE
SUBSTANTIALLY.

        We may not be able to recognize revenue associated with a particular
software license in the same quarter in which we enter into the agreement or in
which we collect licensing fees. Under some of our licenses we must deliver to a
customer an enhanced product version or additional module, and therefore we must
defer recognizing any payment previously received until delivery of all contract
elements are made. For example, in several of our GenoMax sales, our contracts
with customers stipulated future delivery of a gene expression analysis module.
In accordance with generally accepted accounting principles, we deferred
recognition of revenue on these contracts until delivery of the gene expression
analysis module. This module, included in GenoMax 3.0, was delivered on
September 15, 2000. If we are not able to release future modules as scheduled,
we will be required to defer the recognition of a significant amount of revenues
to quarters after those in which we collect licensing fees.

        Our software sales have historically been made under perpetual license
agreements. Under perpetual arrangements, the customer assumes ownership of the
software, and upgrades and enhancements are available provided that the
customer's maintenance agreement is current. The revenue related to the software
element under a perpetual arrangement is recognized at the time of delivery of
the software. During 2000, we also began generating software contracts under one
to three-year term arrangements. Under a term arrangement, our customer does not
assume ownership of the software at delivery. Instead, they use the software
over the term period and are required to return it upon the non-renewal of the
term arrangement. The revenue related to the software element under the term
arrangement is recognized evenly over the term period. Our ability to recognize
software license revenues in a given fiscal quarter will therefore be affected
by the mix of perpetual and term contracts entered into during that period. We
expect that if our customers commit to more term than perpetual license
arrangements, we may encounter a reduction in the near-term recognizable
revenue, however, these term arrangements will enable us to obtain the benefit
of a consistent stream of recognizable revenue throughout the term of the
license.

        Expenses associated with software licenses, unlike revenues, are not
typically deferred. The manner in which we recognize revenue, in accordance with
the revenue recognition rules applicable to software under generally accepted
accounting principles, may cause our quarterly operating results to fluctuate
substantially.

WE EXPECT OUR RESULTS OF OPERATIONS TO VARY FROM QUARTER TO QUARTER IN FUTURE
PERIODS AS A RESULT OF THE TIMING AND SEASONALITY OF OUR SOFTWARE SALES. THESE
FLUCTUATIONS MAKE IT DIFFICULT TO EVALUATE OUR BUSINESS AND COULD CAUSE
INSTABILITY IN OUR STOCK PRICE.

        We anticipate that our operating results will fluctuate on a quarterly
basis as a result of a number of factors, many of which are outside of our
control. Factors that may cause our quarterly results to fluctuate include the
following:

        -       the number and timing of orders for our GenoMax enterprise
                product;

        -       the seasonal fluctuations of software procurement, particularly
                for bioinformatics software;

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<PAGE>   51

        -       the timing of, commencement, delay, cancellation or completion
                of our software licensing agreements, strategic relationships
                and professional service activities;

        -       the timing of license, royalty and other payments received under
                our agreements;

        -       the introduction or cancellation of products and services by us
                and our competitors; and

        -       the timing of expenses associated with increased product
                development, expanded sales and marketing efforts, and
                acquisitions and strategic investments.

        In particular, as a result of the academic calendar, European business
practices and commercial information technology procurement practices, we
generally experience a reduction in sales in the third quarter of each calendar
year that typically results in a corresponding reduction in operating revenues.

        Due to the factors described above and other risks discussed herein, you
should not rely upon quarterly comparisons of our financial results. These
comparisons are not necessarily meaningful nor are they a reliable indicator of
our future performance. As a result of fluctuations in our quarterly results,
the market price of our common stock may be subject to significant fluctuation
and volatility.

OUR PRODUCTS AND SERVICES, PARTICULARLY OUR ENTERPRISE SOFTWARE SOLUTIONS,
REQUIRE A LENGTHY SALES CYCLE. THIS SALES CYCLE OFTEN REQUIRES US TO EXPEND
CONSIDERABLE RESOURCES. IF WE DEVOTE SIGNIFICANT RESOURCES TO SALES THAT DO NOT
MATERIALIZE, OUR REVENUES AND ABILITY TO ACHIEVE PROFITABILITY WOULD BE HARMED.

        The sales cycle for our products and services, particularly our
enterprise software solutions on which much of our expectation for future growth
is based, is a lengthy and involved process. Our sales cycle is typically long
for a number of reasons, including:

        -  the decision to license and deploy enterprise-wide software,
           by its nature, is an organization-wide procurement decision, often
           requiring an evaluation by a significant number of constituencies in
           various functional and geographic areas, each often having specific
           and possibly conflicting requirements; and

        -  the significant resources that are committed to an evaluation
           of our software solutions by a potential customer organization
           require us to expend substantial time, effort and money educating
           them about the value and comparative advantages of our products.

        In addition, our agreements with customers and strategic partners often
contain terms that are unique to that customer or partner and require extensive
negotiation. As a result, we may expend substantial funds and effort to
negotiate agreements for these products, but may ultimately be unable to
consummate a sale of our products and services.

THE LOSS OF THE SERVICES OF, OR THE DEVELOPMENT OF SUBSTANTIAL EXTERNAL TIME
COMMITMENTS BY, OUR SENIOR MANAGEMENT COULD HAVE A NEGATIVE EFFECT ON OUR
GROWTH.

        The continued growth of our business is substantially dependent on the
performance of our senior management and key employees. We carry key person life
insurance on only Dr. Titomirov, our Chief Executive Officer. In addition, we
have employment agreements with only Mr. Green, our Chief Financial Officer and
Senior Vice President of Finance and Administration, and Mr. Sullivan, our
Senior Vice President


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of Marketing and Sales. The loss of the services of any member of our senior
management or key personnel may significantly delay or prevent the
implementation of our business strategy and could have a material adverse effect
on the growth of our business.

        Dr. Titomirov is also the chairman and a significant stockholder of an
unrelated company named Pluvita Corporation (formerly RealTimeHealth.com, Inc.).
Pluvita is currently a development stage company that intends to allow health
care consumers to establish individual baseline genetic profiles and then
monitor them for a pattern variance over time through the Internet. Dr.
Titomirov currently anticipates that his duties as chairman of Pluvita will be
limited to setting its strategic direction and being involved in fundamental
decisions and activities of the Board of Directors generally. In August 2000, we
received a commitment letter regarding the continued services of Dr. Titomirov.
Although Dr. Titomirov's commitment letter states that he currently intends to
devote a majority of his professional working time to his duties as our Chief
Executive Officer, there could be periods where his activities with Pluvita
substantially reduce the time devoted to our operations.

WE MAY INCUR SIGNIFICANT COSTS IN PROTECTING OUR INTELLECTUAL PROPERTY RIGHTS OR
RESPONDING TO CLAIMS OF INFRINGEMENT FROM OTHERS.

        We currently rely upon a combination of trademark, patent, copyright and
trade secret laws, employee and third party non-disclosure agreements and other
contracts to protect our proprietary rights. Nevertheless, our efforts to
protect our intellectual property may be inadequate and we may be unable to
prevent others from offering products and services substantially similar to
ours. We also need to secure and maintain adequate protection of our
intellectual property outside of the United States, because our sales are
global. The laws of some foreign countries do not protect proprietary rights to
the same extent as the laws of the United States, and many companies engaging in
international business have encountered considerable difficulties in
safeguarding their proprietary rights in foreign jurisdictions.

        Moreover, third parties may claim that our current or future products or
services infringe upon their intellectual property. Litigation over these issues
could be a significant distraction and we may incur significant costs, including
several damages. In the event that it is determined that one of our products
infringe upon another's proprietary rights, we may be required to obtain a
license in order to continue selling our products. That license may not be
available to us on favorable terms, or at all.

OUR SOFTWARE FACILITATES RESEARCH COLLABORATION AND THEREFORE SECURITY IS
IMPORTANT TO OUR CUSTOMERS. WE COULD BE EXPOSED TO LIABILITY AND A LOSS IN
CUSTOMER CONFIDENCE IF OUR PRODUCTS FAIL TO PROVIDE THAT SECURITY.

        Our software facilitates collaboration among researchers and the sharing
of research results. If there is a breach or failure of the security functions
in our software, researchers' proprietary work product and data may be
compromised and our customers would lose confidence in our software. We may be
exposed to considerable liability from defects or breaches of security in our
products.

IF WE CANNOT EFFECTIVELY MANAGE OUR GROWTH, AND SPECIFICALLY THE TRANSITION OF
OUR BUSINESS RELATED TO AN EMPHASIS ON THE SALE OF ENTERPRISE PRODUCTS, OUR
FUTURE PROSPECTS WOULD BE HARMED.

        In recent years, we have experienced significant growth in the size of
our customer base and the scope of our products and services. We have also
expanded and intend to continue to expand our research and product


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development, marketing and sales, and professional services organizations. These
factors have placed, and will continue to place, a significant strain on our
management systems and resources and have resulted in increased expenditures
necessary provide resources and an expanded infrastructure sufficient to support
the growth of our personnel and operations. We have only recently become a
public company, which will also place additional strain on our administrative,
financial and operational systems and may result in increased expenses. Our
ability to manage effectively our growth, and our expenses related to this
growth, will depend upon the ability of our officers and key employees to
continue to implement and improve our operational, administrative and financial
control systems and to expand, train and manage our workforce, and implement
necessary changes to our information systems, including our accounting
information system.

        Historically, we have focused on the development and sale of our Vector
NTI Suite of desktop products. We are currently seeking to increase market
penetration and brand recognition of our GenoMax enterprise software platform
and, accordingly are devoting an increasing portion of our resources to GenoMax
related marketing and sales and professional services efforts. Failure to
successfully manage that transition effectively would materially and adversely
affect nearly every aspect of our business and cause our financial condition and
results of operations to suffer.

        WE SIGNIFICANTLY DEPEND UPON HOLDERS OF H-1B NON-IMMIGRANT VISAS TO
STAFF OUR RESEARCH AND PRODUCT DEVELOPMENT TEAM. OUR PRODUCT DEVELOPMENT AND
ENHANCEMENT EFFORTS COULD BE HARMED IF WE ARE NOT ABLE TO ADEQUATELY STAFF OUR
TEAM BECAUSE OF THE LIMITATIONS OF U.S. IMMIGRATION LAWS.

        We recruit professionals to staff our research and product development
group on an international basis and, therefore, must comply with the immigration
laws of the United States. Most of our research and product development team are
citizens of other countries, with most of those working in the U.S. under H-1B
temporary visas. Under the American Competitiveness in the 21st Century Act of
2000, there is a statutory limit of 195,000 new H-1B visas that may be issued in
fiscal years 2001 and 2002, with such limits decreasing in future periods
beginning in fiscal year 2003. In any year in which this limit is reached, we
may be unable to obtain a sufficient number of H-1B visas to employ those
persons we would like to add to our research and product development group. If
we are unable to obtain H1-B visas for our employees in sufficient quantities or
in a timely manner, our product development and enhancement efforts could be
hampered. As a result, we may be unable to deliver products that satisfy
customer preferences and keep pace with technological change.

WE MAY CONSIDER ACQUISITIONS OR STRATEGIC INVESTMENTS. WE HAVE LIMITED
EXPERIENCE WITH THESE ACTIVITIES AND THE COSTS AND DISTRACTIONS FROM THESE
ACTIVITIES COULD HARM OUR FUTURE GROWTH.

        We may consider acquiring businesses, technologies or products that we
believe are a strategic fit with our business and strategy. We only have limited
experience with these activities and our assessment of such opportunities could
cause us to incur increased expenditures. If appropriate opportunities become
available, we could also issue additional equity securities that would dilute
current stockholders' ownership, or incur substantial debt to finance such
transactions. Methods of financing any acquisitions or strategic investments
could result in a negative impact on our financial condition. We may have
difficulties integrating the businesses, products, technologies or personnel
involved in any acquisition or strategic investment. Our integration efforts may
result in significant expenditures of operating, financial and management
resources that could materially and adversely affect our business. Acquisitions
involve many other risks, including potential loss of key employees or
customers, the assumption of significant liabilities, and the amortization of
the


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intangible assets of acquired companies. As a result of these and other risks,
any acquisitions or strategic investments may ultimately have a negative impact
on our business, results of operation and financial condition.

DEFECTS OR MALFUNCTIONS IN OUR SOFTWARE PRODUCTS, OR IN THE PRODUCTS OF OUR
TECHNOLOGY PARTNERS, COULD HURT OUR REPUTATION AMONG CUSTOMERS AND EXPOSE US TO
LIABILITY.

        Our business and the level of customer acceptance of our bioinformatic
software products are dependent upon the continuous, effective and reliable
operation of our computer software and related tools and functions. Software
defects could occur in our current or future products. To the extent that our
software malfunctions and our customers' use of our products is interrupted, our
reputation and business could suffer. We may also be subject to liability for
the defects and malfunctions of third party technology partners and others with
whom our products and services interoperate.

WE MAY REQUIRE ADDITIONAL FUNDING TO EXECUTE OUR BUSINESS STRATEGY. IF THAT
FUNDING IS NOT AVAILABLE, OR NOT AVAILABLE ON TERMS ACCEPTABLE TO US, WE MAY BE
REQUIRED TO CURTAIL CERTAIN MARKETING AND PRODUCT DEVELOPMENT EFFORTS.

        We expect that the proceeds from our initial public offering, our cash
flow from operations and our existing capital resources will be sufficient to
fund our operations for the next 24 months but it is possible that our growth
will require us to seek additional financing during this period. We may seek to
satisfy any additional capital needs through public or private equity offerings,
debt financings and other means. If we raise capital through the issuance of
additional equity securities, our existing stockholders' ownership may be
diluted. We may not be able to obtain additional financing when we need capital
on terms favorable to us, if at all. If we cannot obtain such financing, we may
be required to curtail our marketing and sales activities and product
development efforts.

                          RISKS RELATED TO OUR INDUSTRY

THE MARKET FOR BIOINFORMATIC PRODUCTS AND SERVICES IS INTENSELY COMPETITIVE AND
EVOLVING AND WE MAY NOT ACHIEVE OR MAINTAIN MARKET LEADERSHIP FOR A VARIETY OF
REASONS.

        We face, or expect to face, intense competition from:

        -       third party commercial software vendors;

        -       bioinformatics developers;

        -       internal bioinformatics departments of some of our customers and
                potential customers;

        -       organizations engaging in the provision of Internet-hosted,
                bioinformatic software; and

        -       companies facilitating Internet-based e-commerce between
                participants in our industry.

        We believe that we competed most often with LION biosciences, NetGenics,
Compugen, Genomica, DNA Star, Rosetta Inpharmatics, DoubleTwist and GCG, a unit
of Pharmacopeia acquired from Oxford Molecular in 2000. Others, including large,
well-established software vendors, could readily enter this market. Many of our
competitors have longer operating histories, stronger name recognition and
significantly greater financial, technical and marketing resources than we do.
As a result of these advantages, our competitors may



                                       52
<PAGE>   55

be better able to adopt more aggressive pricing policies and better positioned
to respond to changes in customer preference or technology.

        In order to remain competitive, we believe that we must continue to
expand and enhance the functionality of our bioinformatic software products and
respond timely and effectively to evolving industry standards or technology. In
an intensely competitive, technology driven business like ours, there is no
certainty that market leadership can be obtained or maintained for any
sustainable period.

NUMEROUS EXISTING CUSTOMERS AND POTENTIAL CUSTOMERS FOR OUR BIOINFORMATIC
SOFTWARE MAY ELECT TO INTERNALLY DEVELOP, OR USE OTHER COMPANIES TO DEVELOP
THEIR OWN SOFTWARE WHICH COULD HURT OUR SALES EFFORTS.

        Our customers and potential customers, including providers of genomic
and proteomic data, may elect to internally develop, or continue to develop
their own bioinformatic software. Potential customers for our products may be
unwilling to abandon their prior internal efforts to look to an outside, third
party source to provide their bioinformatic software solutions. Even if
potential customers look to an outside, third party source, there can be no
assurance that they will choose us to provide their bioinformatic software
solutions. The market to provide bioinfomatic software solutions and related
professional services is highly competitive. As a result our efforts to add new
customers could be hampered.

IF GROWTH IN THE USE OF GENOMIC DATA DOES NOT OCCUR AS WE EXPECT, THE TARGET
MARKETS FOR OUR PRODUCTS AND SERVICES MAY NOT BE AS LARGE AS EXPECTED.

        The application of genomic information to pharmaceutical discoveries,
agricultural production, environmental management and industrial processes is an
evolving and unproven practice. Few products have been developed and
commercialized resulting from recent genomic discoveries. If researchers do not
use genomic information in their discovery and development efforts at the level
we project, the target markets for our products and services will not
materialize and our prospects would be materially harmed.

OUR SALE OF BIOINFORMATIC PRODUCTS AND SERVICES COULD SUFFER IF THERE ARE
REDUCTIONS IN RESEARCH AND DEVELOPMENT EXPENDITURES OF OUR CUSTOMERS AND PUBLIC
FUNDING RELATED TO GENOMIC RESEARCH.

        Sales of our products and services could suffer as a result of
reductions in customer research and development expenditures and public funding
related to genomic research. Our continued services to the NCBI and sales of our
products to other government and academic institutions could be negatively
affected by reductions in such public funding.

THE PRODUCTS AND THE ACTIVITIES OF OUR CUSTOMERS, INCLUDING THOSE IN THE
PHARMACEUTICAL AND BIOTECHNOLOGY INDUSTRIES, MAY BE SUBJECT TO CHANGING
REGULATION THAT COULD ADVERSELY AFFECT GENOMIC RESEARCH AND REDUCE MARKET DEMAND
FOR OUR PRODUCTS.

        Because our customers' products potentially touch on areas involving
human health, they are affected by current or future government regulation,
including regulation by the U.S. Food and Drug Administration. In 2000, the
Clinton administration proposed legislation regarding oversight of the sale of
medical products over the Internet and announced its intention to implement a
set of regulatory initiatives governing genetically engineered agricultural
products. In addition, numerous laws covering genetic testing of humans, the
privacy


                                       53
<PAGE>   56

and security of human genetic information, and the storage and transmission of
individually identifiable health care information have been introduced or passed
at the state and federal levels. Our sales may indirectly be affected by changes
in government regulation covering our customers in these industries, including
regulation relating to drug development, genomic research, genetic testing,
healthcare reform and the sale of products and transfer of healthcare data over
the Internet.

        We cannot assure you that customers and potential customers for our
bioinformatic software products and related services will not curtail or defer
technology investments in response to the proposal or institution of these
governmental efforts. Moreover, any exposure by us to liability or increased
government scrutiny resulting from regulatory or legal changes would distract
the efforts of our organization and require us to spend significant time and
resources in connection with any resulting litigation or regulatory compliance.

OUR BUSINESS MAY BE MATERIALLY AND ADVERSELY AFFECTED AS A RESULT OF ETHICAL,
LEGAL AND SOCIAL CONCERNS SURROUNDING THE USE OF GENOMIC INFORMATION.

        A number of ethical, legal and social concerns, including issues related
to privacy, confidentiality and fairness, have arisen as a result of the
increased availability of genomic information. Government and private entities
are currently exploring issues, including:

        -       ownership and control of genomic information;

        -       definition of normal conditions, disabilities and disorders; and

        -       determination of access rights to resulting expensive
                technologies and responsibility for payment for treatment based
                on these technologies.

        As a result of these and numerous other ethical, legal and social
issues, government authorities may limit, or increasingly regulate biomolecular
research and the use of products resulting from such research. Such restrictions
could reduce the number of markets and potential customers for our products and
could materially and adversely affect our business.

CONSOLIDATION WITHIN THE PHARMACEUTICAL AND BIOTECHNOLOGY INDUSTRIES MAY LEAD TO
FEWER CUSTOMERS FOR OUR PRODUCTS AND SERVICES. CONSOLIDATION COULD INCREASE
COMPETITION AND HARM OUR MARKETING AND SALES EFFORTS.

        A significant portion of our customer base consists of pharmaceutical
and biotechnology companies. Mergers between large multinational pharmaceutical
companies have accelerated in recent years. Continued consolidation within the
pharmaceutical and biotechnology industries may result in fewer customers for
our products and services. If one of the parties to a consolidation uses the
products or services of our competitors, we may lose existing customers as a
result of such consolidation.

WE INTEGRATE THIRD PARTY DATABASES INTO OUR BIOINFORMATIC SOFTWARE PRODUCTS AND
MAY BE EXPOSED TO LIABILITY FOR CONTENT ERRORS IN THOSE DATABASES.

        Available genomic, proteomic and other biomolecular data is vast and
complex, and errors in databases containing this information are inevitable. We
integrate data housed on public and private content databases into our
bioinformatic software products. We could be subject to claims of liability
associated with damages


                                       54
<PAGE>   57

resulting from any erroneous third party data that we integrate into our
products or for which we facilitate delivery and analysis, even if not
integrated into our products.

            RISKS RELATED TO OUR CORPORATION AND HOLDERS OF OUR STOCK

THE TRADING PRICE OF OUR COMMON STOCK MAY FLUCTUATE WIDELY.

        The trading price of our common stock may fluctuate widely as a result
of a large number of factors. The stock market has experienced extreme price and
volume fluctuations that have affected the market prices of many companies
involved in the software and biotechnology industries, which have often been
unrelated to the operating performance of these companies.

SUBSTANTIAL SALES OF OUR COMMON STOCK COULD DEPRESS OUR MARKET PRICE.

        If our stockholders sell substantial amounts of our common stock,
including shares issuable upon the exercise of outstanding options or warrants,
or if the market perceives that such sales may occur, the market price of our
common stock may fall. We had 20,518,976 shares outstanding as of March 1, 2001.
This includes the 5,750,000 shares of common stock that were registered for sale
in our initial public offering and approximately 1,044,664 shares of stock that
have been issued pursuant to our registration statement covering shares issuable
under our Amended Equity Incentive Compensation Plan. The remaining shares of
common stock are not registered but are eligible for resale in the public marked
subject to compliance with Rule 144 or Rule 701 under the Securities Act of
1933, as amended. The lock up agreements entered into by substantially all of
our officers, directors and holders of common stock, or securities exercisable
for common stock, equal or greater to 1.5% of our outstanding shares at the time
of our initial public offering expire on April 2, 2001, and subject to
compliance with the Securities Act provisions above, will become available for
sale in the public market at such time. In addition, holders of 8,541,276 shares
of our common stock, or warrants exercisable for our common stock, are entitled
to certain registration rights. If these holders, by exercising their
registration rights, cause a large number of shares to be registered and sold in
the public market, these sales could cause a decline in the market price of our
common stock. If we were to include, in a registration statement initiated by
us, shares held by these holders in accordance with their registration rights,
the inclusion of such shares may reduce our ability to raise capital.

OUR EXECUTIVE OFFICERS AND DIRECTORS AND THEIR AFFILIATES OWN A LARGE PERCENTAGE
OF OUR COMMON STOCK AND HAVE THE ABILITY TO INFLUENCE DECISIONS THAT COULD
ADVERSELY AFFECT OUR STOCK PRICE.

        At March 1, 2000, our executive officers, directors and their affiliates
owned approximately 61.2% of the outstanding shares of common stock. As a
result, these stockholders are able to substantially influence all matters
requiring stockholder approval and, thereby, our management and affairs. Matters
that require stockholder approval include:

        -       election of directors;

        -       approval of certain mergers or consolidations;

        -       sale of all or substantially all of our assets; and

        -       issuance of large amounts of our shares in private transactions
                or acquisitions.

                                       55
<PAGE>   58



        This concentration of ownership may delay, deter or prevent acts that
would result in a change of control of our company, which in turn could reduce
the market price of our common stock. This concentration may also prevent new
investors from influencing significant corporate decisions.

OUR CHARTER AND BYLAWS AND DELAWARE LAW CONTAIN PROVISIONS THAT COULD DISCOURAGE
A TAKEOVER EVEN IF BENEFICIAL TO STOCKHOLDERS.

        Our restated certificate of incorporation and bylaws, and portions of
Delaware law, contain provisions that could make it more difficult for a third
party to obtain control of our company, even if doing so would be beneficial to
stockholders. For example, our restated certificate of incorporation provides
for a classified Board of Directors, allows the Board of Directors to expand its
size and fill any vacancies without stockholder approval, and allows the Board
of Directors to classify and issue preferred stock without stockholder approval.
Our bylaws restrict the ability of stockholders to call a special meeting and
require advance notice of stockholder proposals. Delaware law makes it difficult
for us to be acquired by a significant stockholder that is not approved in
advance by our Board of Directors.

SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD
UNDERLYING ASSUMPTIONS PROVE INCORRECT, OUR ACTUAL RESULTS MAY VARY MATERIALLY
FROM THOSE ANTICIPATED.


                                       56
<PAGE>   59


ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK

        Our exposure to market risk for changes in interest rates relates
primarily to the increase or decrease in the amount of interest income we can
earn on our initial public offering proceeds and any investment portfolio. Our
exposure to changes in interest rates also relates to the increase or decrease
in the amount of interest expense we must pay with respect to our various
outstanding debt instruments. Our risk associated with fluctuating interest
expense is limited, however, to credit facilities that are closely tied to
market rates. Under our current policies, we do not use interest rate derivative
instruments to manage exposure to interest rate changes. We ensure the safety
and preservation of our invested principal funds by limiting default risks,
market risk and reinvestment risk. We reduce default risk by investing in
investment grade securities. Declines in interest rates over time will, however,
reduce our interest income and expense while increases in interest rates over
time will increase our interest income and expense.




















                                       57
<PAGE>   60


ITEM 8 - CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following is an index to the consolidated financial statements:

                                                                     PAGE

INDEPENDENT AUDITORS' REPORT                                           59

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
  DECEMBER 31, 2000, 1999, AND 1998:

  Consolidated Balance Sheets                                          60
  Consolidated Statements of Operations                                62
  Consolidated Statements of Stockholders' Equity (Deficit)            63
  Consolidated Statements of Cash Flows                             64 - 65
  Notes to Consolidated Financial Statements                        66 - 80











































                                       58
<PAGE>   61
INDEPENDENT AUDITORS' REPORT


To the Board of Directors of
   InforMax, Inc., and Subsidiary
Bethesda, Maryland

We have audited the accompanying consolidated balance sheets of InforMax, Inc.,
and subsidiary as of December 31, 2000 and 1999, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for
each of the three years in the period ended December 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of InforMax, Inc. and subsidiary as of
December 31, 2000 and 1999, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States of
America.


McLean, Virginia

February 7, 2001




                                       59
<PAGE>   62

INFORMAX, INC.

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ASSETS                                                                     2000             1999
<S>                                                                   <C>               <C>

CURRENT ASSETS:
    Cash and cash equivalents                                         $  82,656,386     $ 1,398,937
    Accounts receivable (net of allowance for doubtful accounts of
        $20,000 and $15,000 for 2000 and 1999, respectively)              9,063,015       2,640,485
    Deferred tax asset, net                                                     -           676,379
    Prepaid expenses                                                      1,187,588         222,473
    Other current assets                                                     56,278         151,283
                                                                      -------------     -----------

                      Total current assets                               92,963,267       5,089,557
                                                                      -------------     -----------

PROPERTY AND EQUIPMENT:
    Computer equipment                                                    3,873,648       1,060,435
    Purchased software                                                      280,826          58,306
    Office furniture and equipment                                        1,285,033         537,908
    Leasehold improvements                                                  408,249         155,122
                                                                      -------------     -----------

                                                                          5,847,756       1,811,771

    Less:  Accumulated depreciation and amortization                     (1,308,926)       (375,472)
                                                                      -------------     -----------

                      Property and equipment - net                        4,538,830       1,436,299
                                                                      -------------     -----------


OTHER ASSETS:
    Deposits                                                                574,349          67,996
    Loan to shareholder                                                         -            69,360
    Deferred tax asset, net                                               1,300,000         601,500
    Restricted cash                                                       1,574,021             -
                                                                      -------------     -----------

                      Total other assets                                  3,448,370         738,856
                                                                      -------------     -----------

TOTAL ASSETS                                                          $ 100,950,467     $ 7,264,712
                                                                      =============     ===========
</TABLE>



See notes to consolidated financial statements.







                                       60
<PAGE>   63

INFORMAX, INC.

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                   2000             1999
<S>                                                                         <C>               <C>

CURRENT LIABILITIES:
    Accounts payable                                                        $     971,534     $   404,016
    Accounts payable to related parties                                           139,395          21,806
    Accrued liabilities                                                         1,269,891         933,125
    Line of credit                                                                    -           550,000
    Equipment loan facility - current portion                                     854,000         337,302
    Capital lease obligation - current portion                                     77,729         113,293
    Deferred revenue                                                            4,147,760       1,689,997
                                                                            -------------     -----------

                      Total current liabilities                                 7,460,309       4,049,539
                                                                            -------------     -----------

LONG-TERM LIABILITIES:
    Capital lease obligations - less current portion                               13,988          92,208
    Equipment loan facility - less current portion                                688,307         623,245
    Deferred revenue                                                            1,118,852         121,673
                                                                            -------------     -----------

                      Total long-term liabilities                               1,821,147         837,126
                                                                            -------------     -----------

COMMITMENTS AND CONTINGENCIES (NOTE 9)

SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK ,
    $.01 par value - authorized 2,161,265 shares; issued and outstanding
    -0- and 2,161,265 shares for 2000 and 1999, respectively                          -         4,095,054
                                                                            -------------     -----------

STOCKHOLDERS' EQUITY (DEFICIT):
    Common stock, voting; $.001 par value - authorized 100,000,000
        shares; issued and outstanding 19,510,792 and 2,505,000
        shares for 2000 and 1999, respectively                                     19,511           2,505
    Common stock, nonvoting, $.001 par value - authorized 14,931,864
        shares; issued -0- and 2,034,060 shares for 2000 and 1999,
        respectively; outstanding -0- and 1,716,760 shares for
        2000 and 1999, respectively                                                   -             2,034
    Additional paid-in capital                                                105,916,528         970,806
    Deferred compensation                                                      (1,420,354)       (400,208)
    Accumulated deficit                                                       (12,846,674)     (2,173,144)
    Treasury stock, at cost, -0- and 567,800 shares
        for 2000 and 1999, respectively                                               -          (119,000)
                                                                            -------------     -----------

                      Total stockholders' equity (deficit)                     91,669,011      (1,717,007)
                                                                            -------------     -----------

TOTAL LIABILITIES AND STOCKHOLDERS'
    EQUITY (DEFICIT)                                                        $ 100,950,467     $ 7,264,712
                                                                            =============     ===========
</TABLE>



See notes to consolidated financial statements.



                                       61
<PAGE>   64

INFORMAX, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
THREE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                          2000              1999            1998
<S>                                                   <C>              <C>              <C>

REVENUES:
    Software license and customer support             $ 13,907,344     $  7,277,627     $ 2,732,382
    Professional services                                3,240,245        2,736,798       1,393,863
                                                      ------------     ------------     -----------

                      Total revenues                    17,147,589       10,014,425       4,126,245
                                                      ------------     ------------     -----------


COST OF REVENUES:
    Software license and customer support                  696,769          404,848         190,144
    Professional services (1)                            1,736,980        1,612,167       1,081,021
                                                      ------------     ------------     -----------

                      Total cost of revenues             2,433,749        2,017,015       1,271,165
                                                      ------------     ------------     -----------

GROSS PROFIT                                            14,713,840        7,997,410       2,855,080
                                                      ------------     ------------     -----------

OPERATING EXPENSES:
    Selling, general and administrative (2)             18,763,886        6,999,916       2,475,840
    Research and development (3)                         5,311,223        2,597,281       1,162,471
    Stock-based compensation                             1,574,051          138,185          17,782
    Depreciation and amortization                          939,992          272,548          93,809
                                                      ------------     ------------     -----------

                      Total operating expenses          26,589,152       10,007,930       3,749,902
                                                      ------------     ------------     -----------

LOSS FROM OPERATIONS                                   (11,875,312)      (2,010,520)       (894,822)
                                                      ------------     ------------     -----------

OTHER INCOME (EXPENSE):
    Investment earnings                                  1,475,892           66,342             -
    Interest expense                                      (284,777)         (86,538)        (59,910)
    Other                                                  (40,336)         (10,642)         (3,313)
                                                      ------------     ------------     -----------

                      Total other income (expense)       1,150,779          (30,838)        (63,223)
                                                      ------------     ------------     -----------

LOSS BEFORE INCOME TAXES                               (10,724,533)      (2,041,358)       (958,045)

INCOME TAX BENEFIT                                         (51,003)        (726,343)       (391,291)
                                                      ------------     ------------     -----------

NET LOSS                                               (10,673,530)      (1,315,015)       (566,754)

    Beneficial conversion                               (9,981,888)             -               -

    Increase in carrying value of redeemable
        convertible preferred stock                       (387,442)        (176,439)            -
                                                      ------------     ------------     -----------

NET LOSS APPLICABLE TO COMMON
  SHARES                                              $(21,042,860)    $ (1,491,454)    $  (566,754)
                                                      ============     ============     ===========


BASIC AND DILUTED NET LOSS
     PER COMMON SHARE                                 $      (2.25)    $      (0.38)    $     (0.16)
                                                      ============     ============     ===========

WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING - Basic and diluted                        9,337,764        3,874,122       3,611,626
                                                      ============     ============     ===========
</TABLE>

(1)  Cost of revenues - professional services includes stock-based compensation
     of $4,810, $-0-, and $-0- for 2000, 1999, and 1998, respectively.
(2)  Selling, general and administrative expenses include related party legal
     expenses of $397,466, $21,256, and $4,571, and excludes stock-based
     compensation of $1,432,502, $110,019, and $-0- for 2000, 1999, and 1998,
     respectively.
(3)  Research and development expenses excludes stock-based compensation of
     $141,549, $227,000, and $21,256 for 2000, 1999, and 1998, respectively.


See notes to consolidated financial statements.



                                       62
<PAGE>   65

INFORMAX, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
THREE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                 COMMON STOCK - VOTING             COMMON STOCK - NONVOTING
                                                           -----------------------------------     ------------------------
                                                             ISSUED      OUTSTANDING                ISSUED      OUTSTANDING
                                                             SHARES        SHARES      AMOUNT       SHARES        SHARES
<S>                                                        <C>           <C>          <C>         <C>           <C>

BALANCE, JANUARY 1, 1998                                    1,914,822     1,664,322   $  1,915     1,652,131     1,334,831
    Share options exercised                                       -             -          -         734,967       734,967
    Issuance of stock options                                     -             -          -             -             -
    Stock-based compensation                                      -             -          -             -             -
    Net loss                                                      -             -          -             -             -
                                                           ----------    ----------   --------    ----------    ----------

BALANCE, DECEMBER 31, 1998                                  1,914,822     1,664,322      1,915     2,387,098     2,069,798
    Conversion - non-voting shares to voting                  590,178       590,178        590      (590,178)     (590,178)
    Issuance of common stock                                      -             -          -         100,200       100,200
    Share options exercised                                       -             -          -         136,940       136,940
    Issuance of stock options                                     -             -          -             -             -
    Stock-based compensation                                      -             -          -             -             -
    Increase in carrying value of redeemable
        convertible preferred stock                               -             -          -             -             -
    Net loss                                                      -             -          -             -             -
                                                           ----------    ----------   --------    ----------    ----------

BALANCE, DECEMBER 31, 1999                                  2,505,000     2,254,500      2,505     2,034,060     1,716,760
    Conversion - nonvoting shares to voiting                6,206,168     6,206,168      6,206    (6,206,168)   (6,206,168)
    Issuance of common stock, net of offering costs         5,750,000     5,750,000      5,750       557,193       557,193
    Share options exercised                                   103,065       103,065        103     3,932,215     3,932,215
    Issuance of stock options                                     -             -          -             -             -
    Issuance of warrants                                          -             -          -             -             -
    Conversion of Series A redeemable convertible
        preferred stock to voting common stock              3,609,312     3,609,312      3,609           -             -
    Conversion of Series B redeemable convertible
        preferred stock to voting common stock              1,587,747     1,587,747      1,588           -             -
    Beneficial conversion feature of Series B
        redeemable convertible preferred stock                    -             -          -             -             -
    Accretion of beneficial conversion feature of
        Series B redeemable convertible preferred stock           -             -          -             -             -
    Warrant interest amortization                                 -             -          -             -             -
    Adjustment of deferred compensation for options,
        for variable stock options and restricted stock           -             -          -             -             -
    Amortization of deferred compensation
        on stock options and restricted stock                     -             -          -             -             -
    Increase in carrying value of redeemable
        convertible preferred stock                               -             -          -             -             -
    Retirement of treasury stock                             (250,500)          -         (250)     (317,300)          -
    Net loss                                                      -             -          -             -             -
                                                           ----------    ----------   --------    ----------    ----------

BALANCE, DECEMBER 31, 2000                                 19,510,792    19,510,792   $ 19,511           -             -
                                                           ==========    ==========   ========    ==========    ==========
</TABLE>

<TABLE>
<CAPTION>
                                                              COMMON
                                                              STOCK -
                                                             NONVOTING     ADDITIONAL
                                                             ---------       PAID-IN          DEFERRED
                                                               AMOUNT        CAPITAL        COMPENSATION
<S>                                                           <C>        <C>              <C>

BALANCE, JANUARY 1, 1998                                      $ 1,652    $     546,199    $       -
    Share options exercised                                       735            3,666
    Issuance of stock options                                     -             34,000        (34,000)
    Stock-based compensation                                      -                -           17,782
    Net loss                                                      -                -              -
                                                              -------    -------------    -----------

BALANCE, DECEMBER 31, 1998                                      2,387          583,865        (16,218)
    Conversion - non-voting shares to voting                     (590)             -              -
    Issuance of common stock                                      100          101,914        (87,014)
    Share options exercised                                       137           26,305            -
    Issuance of stock options                                     -            435,161       (435,161)
    Stock-based compensation                                      -                -          138,185
    Increase in carrying value of redeemable
        convertible preferred stock                               -           (176,439)           -
    Net loss                                                      -                -              -
                                                              -------    -------------    -----------

BALANCE, DECEMBER 31, 1999                                      2,034          970,806       (400,208)
    Conversion - nonvoting shares to voiting                   (6,206)             -              -
    Issuance of common stock, net of offering costs               557       87,236,636            -
    Share options exercised                                     3,932        1,197,222            -
    Issuance of stock options                                     -            712,803       (712,803)
    Issuance of warrants                                          -             12,716            -
    Conversion of Series A redeemable convertible
        preferred stock to voting common stock                    -          4,349,079            -
    Conversion of Series B redeemable convertible
        preferred stock to voting common stock                    -         10,047,108            -
    Beneficial conversion feature of Series B
        redeemable convertible preferred stock                    -          9,981,888            -
    Accretion of beneficial conversion feature of
        Series B redeemable convertible preferred stock           -         (9,981,888)           -
    Warrant interest amortization                                 -              9,826            -
    Adjustment of deferred compensation for options,
        for variable stock options and restricted stock           -          1,886,207     (1,886,207)
    Amortization of deferred compensation
        on stock options and restricted stock                     -                -        1,578,864
    Increase in carrying value of redeemable
        convertible preferred stock                               -           (387,442)           -
    Retirement of treasury stock                                 (317)        (118,433)           -
    Net loss                                                      -                -              -
                                                              -------    -------------    -----------

BALANCE, DECEMBER 31, 2000                                    $   -      $ 105,916,528    $(1,420,354)
                                                              =======    =============    ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                              TREASURY STOCK
                                                           ACCUMULATED     ---------------------
                                                             DEFICIT        SHARES       AMOUNT         TOTAL
<S>                                                       <C>             <C>         <C>          <C>

BALANCE, JANUARY 1, 1998                                  $   (291,375)     567,800   $ (119,000)   $    139,391
    Share options exercised                                        -            -            -             4,401
    Issuance of stock options                                      -            -            -               -
    Stock-based compensation                                       -            -            -            17,782
    Net loss                                                  (566,754)         -            -          (566,754)
                                                          ------------     --------      -------    ------------

BALANCE, DECEMBER 31, 1998                                    (858,129)     567,800     (119,000)       (405,180)
    Conversion - non-voting shares to voting                       -            -            -               -
    Issuance of common stock                                       -            -            -            15,000
    Share options exercised                                        -            -            -            26,442
    Issuance of stock options                                      -            -            -               -
    Stock-based compensation                                       -            -            -           138,185
    Increase in carrying value of redeemable
        convertible preferred stock                                -            -            -          (176,439)
    Net loss                                                (1,315,015)         -            -        (1,315,015)
                                                          ------------     --------      -------    ------------

BALANCE, DECEMBER 31, 1999                                  (2,173,144)     567,800     (119,000)     (1,717,007)
    Conversion - nonvoting shares to voiting                       -            -            -               -
    Issuance of common stock, net of offering costs                -            -            -        87,242,943
    Share options exercised                                        -            -            -         1,201,257
    Issuance of stock options                                      -            -            -               -
    Issuance of warrants                                           -            -            -            12,716
    Conversion of Series A redeemable convertible
        preferred stock to voting common stock                     -            -            -         4,352,688
    Conversion of Series B redeemable convertible
        preferred stock to voting common stock                     -            -            -        10,048,696
    Beneficial conversion feature of Series B
        redeemable convertible preferred stock                     -            -            -         9,981,888
    Accretion of beneficial conversion feature of
        Series B redeemable convertible preferred stock            -            -            -        (9,981,888)
    Warrant interest amortization                                  -            -            -             9,826
    Adjustment of deferred compensation for options,
        for variable stock options and restricted stock            -            -            -               -
    Amortization of deferred compensation
        on stock options and restricted stock                      -            -            -         1,578,864
    Increase in carrying value of redeemable
        convertible preferred stock                                -            -            -          (387,442)
    Retirement of treasury stock                                   -       (567,800)     119,000             -
    Net loss                                               (10,673,530)         -            -       (10,673,530)
                                                          ------------     --------      -------    ------------

BALANCE, DECEMBER 31, 2000                                $(12,846,674)         -        $   -      $(91,669,011)
                                                          ============     ========      =======    ============
</TABLE>



See notes to consolidated financial statements.



                                       63
<PAGE>   66


INFORMAX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                 2000            1999           1998
<S>                                                          <C>             <C>            <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                 $(10,673,530)   $(1,315,015)   $  (566,754)
    Adjustments to reconcile net loss to net cash
        used in operating activities:
        Depreciation expense                                      939,992        272,548         93,809
        Loss on sale of property and equipment                      6,403          9,840            -
        Expense related to stock options and
            restricted stock and warrants                       1,601,317        138,185         17,782
        Deferred income tax benefit                               (22,121)      (623,223)      (391,291)
        Changes in assets and liabilities:
            Accounts receivable                                (6,422,530)    (1,090,157)    (1,184,462)
            Prepaid expenses                                     (965,115)      (222,473)           -
            Other current assets                                   95,005       (146,208)        (1,362)
            Deposits                                             (506,353)       (57,113)        (4,046)
            Accounts payable                                      685,107         11,020        346,669
            Accrued liabilities                                   336,766        360,061        235,172
            Deferred revenue                                    3,454,942         72,395      1,388,375
                                                              -----------     ----------    -----------

                      Cash flows from operating activities    (11,470,117)    (2,590,140)       (66,108)
                                                              -----------     ----------    -----------

CASH FLOW FROM INVESTING ACTIVITIES:
    Purchase of property and equipment                         (4,054,657)    (1,342,908)       (71,505)
    Proceeds from sale of property and equipment                    5,730          9,621            -
    Decrease (increase) in loan to shareholder                     69,360        (65,000)           -
                                                              -----------     ----------    -----------

                      Cash flows from investing activities     (3,979,567)    (1,398,287)       (71,505)
                                                              -----------     ----------    -----------
</TABLE>


                                                                     (Continued)




                                       64
<PAGE>   67

INFORMAX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                  2000             1999         1998
<S>                                                          <C>             <C>            <C>

CASH FLOWS FROM FINANCING ACTIVITIES:
    Repayments on capital lease obligations                      (113,784)      (105,532)     (88,390)
    Proceeds from line of credit                                1,500,000        618,239      140,509
    Repayments on line of credit                               (2,050,000)      (268,239)         -
    Proceeds from notes payable                                       -           92,363       29,415
    Proceeds from equipment loan facility                       1,135,000        960,547          -
    Repayments on equipment loan facility                        (553,240)      (156,778)     (35,000)
    Restricted cash                                            (1,574,021)           -            -
    Proceeds from sale of  Series A redeemable
        convertible preferred stock, net of expenses                  -        3,918,615          -
    Proceeds from sale of  Series B redeemable
        convertible preferred stock, net of expenses            9,918,888            -            -
    Proceeds from initial public offering, net of
        offering costs                                         83,692,932            -            -
    Proceeds from issuance of common stock                      3,550,011         15,000          -
    Proceeds from issuance of warrants                                 90            -            -
    Proceeds from share options exercised                       1,201,257         17,480        4,401
                                                             ------------    -----------    ---------
                      Cash flows from financing activities     96,707,133      5,091,695       50,935
                                                             ------------    -----------    ---------

NET INCREASE (DECREASE) IN CASH
   AND CASH EQUIVALENTS                                        81,257,449      1,103,268      (86,678)

BEGINNING CASH AND CASH EQUIVALENTS                             1,398,937        295,669      382,347
                                                             ------------    -----------    ---------
ENDING CASH AND CASH EQUIVALENTS                             $ 82,656,386    $ 1,398,937    $ 295,669
                                                             ============    ===========    =========
SUPPLEMENTAL INFORMATION ON NONCASH
    INVESTING AND FINANCING TRANSACTIONS:
    Acquisition of equipment through capital
        leases                                               $        -      $    14,581    $ 296,814
                                                             ============    ===========    =========

SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash paid for income taxes                               $        -      $   151,296    $     -
                                                             ============    ===========    =========

    Cash paid for interest                                   $    280,093    $    83,995    $  59,910
                                                             ============    ===========    =========
</TABLE>

                                                                     (Concluded)

See notes to consolidated financial statements.




                                       65
<PAGE>   68


INFORMAX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000, 1999, AND 1998
--------------------------------------------------------------------------------


1.    SIGNIFICANT ACCOUNTING POLICIES

      Nature of the Business - InforMax, Inc., ("InforMax" or the "Company") is
      a global provider of bioinformatic software solutions for genomic and
      biomolecular research. InforMax was incorporated in Delaware in May 1990
      and its subsidiary, InforModus SARL, was organized under the tax laws of
      France in 1997. The Company is headquartered in Rockville, Maryland, and
      has sales offices in Rockville, Maryland; San Francisco, California; San
      Diego, California; Denver, Colorado; Boston, Massachusetts; and Oxford,
      England.

      In October 2000, the Company completed its initial public offering (IPO)
      and realized proceeds of approximately $83,693,000, net of underwriting
      discounts and commissions and related expenses, from the sale of 5,750,000
      shares of its common stock.

      Principles of Consolidation - The accompanying consolidated financial
      statements include the accounts of InforMax, Inc., and its wholly owned
      subsidiary. All significant intercompany accounts and transactions have
      been eliminated.

      Basis of Accounting - The accompanying financial statements have been
      prepared on the accrual basis of accounting and in conformity with
      accounting principles generally accepted in the United States of America.

      Revenue Recognition - The Company derives revenue principally from four
      sources: software licensing, maintenance fees, training, and consulting
      services primarily under government contracts. Software licensing,
      maintenance fees, and training are presented as software license and
      customer support on the Consolidated Statements of Operations. Consulting
      services are presented as professional services on the Consolidated
      Statements of Operations.

      The Company recognizes revenue based on the provision of Statement of
      Position (SOP) No. 97-2, Software Revenue Recognition (as amended and
      interpreted). Except as noted below, software license fees are recognized
      as revenue upon the customer's execution of a noncancelable license
      agreement and delivery of the software, provided that the fee is fixed and
      determinable, collectibility is probable, and no customization of the
      software is required. During 1998, maintenance revenue was recognized
      together with the initial licensing fee, on delivery of the software when
      all of the following were met: (1) the maintenance fee was included with
      the initial licensing fee, (2) the maintenance revenue to be recognized
      was for one year or less, (3) the estimated cost of providing maintenance
      during the arrangement was insignificant, and (4) any unspecified upgrades
      were expected to be minimal. Revenues from software maintenance contracts
      that extended beyond one year were recognized ratably over the maintenance
      period. During 1999, due to the introduction of and increased sales of new
      products, the Company increased its maintenance support staff, and as a
      result, the estimated cost of providing maintenance during the arrangement
      was no longer deemed insignificant. Therefore beginning in January 1999,
      revenues from all software maintenance contracts were recognized ratably
      based upon vendor-specific objective evidence of fair value and recorded
      over the maintenance period.

      In circumstances where fair market values for undelivered elements of a
      multiple element contract are not determinable, revenue on the contract is
      deferred until either fair value is determinable or when all



                                       66
<PAGE>   69

      elements are delivered, unless the only undelivered element is
      maintenance, in which case revenue is recognized ratably over the
      remaining maintenance period. Maintenance contracts provide for technical
      support and periodic unspecified upgrades. Amounts received in advance of
      the delivery of products or performance of services are classified as
      deferred revenues.

      Training is provided on a daily fee basis with revenue recognized as the
      services are provided.

      During 1998, the Company's consulting services revenue under government
      contracts related to services provided under a time and material
      subcontract and a cost-plus-fixed-fee subcontract. During 1999, the
      cost-plus-fixed-fee subcontract was converted at the time of renewal to a
      time-and-materials contract. The time-and-materials subcontract was
      renewed in 2000. Revenue under the time-and-materials subcontracts is
      recognized based on contractual rates as the services are provided.
      Revenue under the cost-plus-fixed-fee subcontract is recognized as
      recoverable costs are incurred, including a proportionate amount of the
      fixed fee. Billings under cost reimbursement contracts are based on
      provisional rates.

      Unbilled Receivables - The Company has unbilled receivables of
      approximately $1,614,000 included in accounts receivable. Unbilled
      receivables consist of amounts owed to InforMax for which product has been
      delivered; but for which contractual billing criteria have not yet been
      met. All amounts are billable in one year or less.

      Property and Equipment - Property and equipment are stated at cost, less
      accumulated depreciation and amortization. Depreciation on property and
      equipment is computed on a straight-line basis over the estimated useful
      lives of the assets ranging from three to ten years. Leasehold
      improvements are depreciated over the shorter of the estimated useful life
      of the assets or the terms of the related lease. Repairs and maintenance
      are expensed as incurred; major improvements and betterments are
      capitalized.

      Software Development Costs - Development costs incurred in the research
      and development of new software products and enhancements to existing
      software products are expensed as incurred until technological feasibility
      has been established. The Company considers technological feasibility to
      be established when all planning, designing, coding, and testing has been
      completed according to design specifications. After the technological
      feasibility has been established, any additional costs would be
      capitalized in accordance with Statement of Financial Accounting Standards
      No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased
      or Otherwise Marketed." Through December 31, 2000, software development
      has been substantially completed concurrently with the establishment of
      technological feasibility, and accordingly, no costs have been capitalized
      to date.

      Income Taxes - The income tax provision includes income taxes currently
      payable plus the net change during the year in deferred tax assets or
      liabilities. Deferred tax assets and liabilities reflect the differences
      between the carrying value in conformity with accounting principles
      generally accepted in the United States of America and tax values of
      assets and liabilities using enacted tax rates for the period in which the
      differences are expected to reverse. Valuation allowances are provided
      when the expected realization of tax assets does not meet a more likely
      than not criterion.

      Cash and Cash Equivalents - Cash and cash equivalents consist of cash and
      money market accounts. For purposes of the statement of cash flows, the
      Company considers all highly liquid investments with original maturities
      of three months or less to be cash equivalents.

      Restricted Cash - The Company has cash that is restricted in use. The
      restricted cash is collateral for letters of credit related to certain
      operating leases. Accordingly, these amounts are classified as restricted
      cash in the accompanying balance sheet.




                                       67
<PAGE>   70

      Concentration of Credit Risk - Financial instruments that potentially
      subject the Company to a concentration of credit risks consist principally
      of cash, cash equivalents, and accounts receivable. The Company generally
      does not require collateral on accounts receivable as the majority of its
      customers are well-established companies, colleges, universities, and
      government entities.

      Stock-Based Compensation - In February 1999, the Board of Directors
      instituted an Equity Incentive Plan (the Plan) intended to qualify as such
      under the provisions of Section 422 of the Internal Revenue Code of 1986,
      as amended. In addition, the Company has issued nonqualified stock
      options.

      The Company accounts for stock-based compensation to employees in
      accordance with APB Opinion No. 25, and accordingly, recognizes
      compensation expense for fixed stock option grants only when the exercise
      price is less than the fair value of the shares on the date of the grant.
      Pro forma information is provided for employee stock option grants made in
      2000, 1999, and 1998, as if the fair value based method defined in SFAS
      No. 123 had been applied.

      The Company accounts for options granted to nonemployees in accordance
      with SFAS 123, and accordingly, recognizes the related expense based upon
      the fair value of the option.

      Evaluation of Long-lived Assets - The Company evaluates the potential
      impairment of long-lived assets based upon projections of undiscounted
      cash flows whenever events or changes in circumstances indicate that the
      carrying amount of an asset may not be fully recoverable. Management
      believes no impairment of these assets exists at December 31, 2000 and
      1999.

      Fair Value of Financial Instruments - The following disclosures of
      estimated fair value were determined by management using available market
      information and appropriate valuation methodologies. The fair values of
      the Company's financial instruments, including cash equivalents, accounts
      receivable, accounts payable, accrued expenses, lines of credit, notes
      payable, and long-term debt approximate their carrying values. Disclosure
      about fair values of financial instruments is based on pertinent
      information available to management as of December 31, 2000 and 1999.
      Although management is not aware of any factors that would significantly
      affect the reasonable fair value amounts, current estimates of fair value
      may differ significantly from the amounts presented herein.

      Advertising - The Company expenses all advertising costs as incurred.
      Total advertising expense was approximately $830,000, $612,000, and
      $83,000 for the years ended December 31, 2000, 1999, and 1998,
      respectively.

      Estimates and Assumptions - The preparation of financial statements in
      conformity with accounting principles generally accepted in the United
      States of America requires management to make estimates and assumptions.
      These estimates and assumptions affect the reported amounts of assets and
      liabilities, the disclosure of contingent assets and liabilities at the
      date of the financial statements, as well as the reported amounts of
      revenues and expenses during the year. Actual results could vary from the
      estimates that were used.

      Redeemable Convertible Preferred Stock - The Company accreted the increase
      in the carrying value of its Series A and B Redeemable Convertible
      Preferred Stock through a charge to additional paid-in capital based upon
      the redemption dates prescribed in the Series A and B Preferred Stock
      Agreement. The period of accretion began on the June 1999 and August 2000
      issue dates for Series A and B, respectively, and ended with the
      conversion of both classes to common stock prior to the closing of the
      IPO.




                                       68
<PAGE>   71

      Reclassifications - Certain reclassifications have been made to the
      prior-year financial statements to conform to the current-year
      presentation.

      Comprehensive Income - The Company has no elements of comprehensive income
      other than net loss.

      Net Loss Per Share - Basic earnings per share is computed by dividing net
      income available to common shareholders by the weighted average number of
      common shares outstanding for the period. Diluted earnings per share
      reflects the potential dilution that could occur if securities or other
      contracts to issue common shares were exercised or converted into common
      shares for all periods presented. The weighted average number of common
      shares outstanding and potential dilutive shares were 18,133,304,
      17,261,716 and 4,685,323 relating to stock options and redeemable
      convertible preferred stock in 2000, 1999, and 1998, respectively. For the
      years ended December 31, 2000, 1999, and 1998, the Company incurred a net
      loss; therefore, potential common shares are not included in the
      calculation of the diluted net loss per common share.

      New Accounting Pronouncements - In June 1998, the Financial Accounting
      Standards Board issued Statement of Financial Accounting Standards (SFAS)
      No. 133, "Accounting for Derivative Investments and Hedging Activities,"
      which establishes accounting and reporting standards for derivative
      instruments and hedging activities. As amended by Statement of Financial
      Accounting Standards No. 137, this standard will be effective for the
      Company for fiscal years and quarters beginning after December 31, 2000,
      and requires that an entity recognize all derivatives as either assets or
      liabilities in the statement of financial position and measure those
      instruments at fair value. Management has evaluated the impact of the
      adoption of SFAS No. 133 and determined that the application of this new
      standard will not have a material impact on the Company's financial
      position or results of operations.

      In December 1999, the Securities and Exchange Commission issued Staff
      Accounting Bulletin (SAB) No.101, "Revenue Recognition in Financial
      Statements". This SAB expresses the SEC's views on applying generally
      accepted accounting principles to revenue recognition in financial
      statements. The application of this SAB did not have a material impact on
      the Company's financial statements.

2.    INCOME TAXES

      The components of the benefit for income taxes for the years ended
      December 31 were as follows:

<TABLE>
<CAPTION>
                                                Year Ended December 31,
                                       -----------------------------------------
                                         2000            1999             1998
<S>                                    <C>            <C>             <C>

Current benefit:
    Federal                            $(21,946)      $ (86,495)      $     -
    State                                (6,936)        (16,625)            -
                                       --------       ---------       ---------

           Total current benefit        (28,882)       (103,120)            -
                                       --------       ---------       ---------

Deferred benefit:
    Federal                             (22,121)       (504,380)       (324,627)
    State                                   -          (118,843)        (66,664)
                                       --------       ---------       ---------

           Total deferred benefit       (22,121)       (623,223)       (391,291)
                                       --------       ---------       ---------

Total benefit for income taxes         $(51,003)      $(726,343)      $(391,291)
                                       ========       =========       =========
</TABLE>



                                       69
<PAGE>   72

      At December 31 the components of the Company's deferred tax assets and
      deferred tax liabilities were as follows:

<TABLE>
<CAPTION>
                                                    2000               1999             1998
<S>                                             <C>                <C>               <C>

Deferred tax assets:
    Deferred revenue                            $  2,033,966       $   699,667       $ 449,643
    Compensation relating to stock options           148,093            84,838          64,341
    Net operating losses                          10,862,625           493,401         110,450
    Other assets                                      84,374            36,232          29,293
                                                ------------       -----------       ---------

           Total deferred tax assets              13,129,058         1,314,138         653,727
                                                ------------       -----------       ---------

Deferred tax liabilities:
    Accelerated depreciation                         (64,537)          (36,259)         (8,033)
                                                ------------       -----------       ---------

           Total deferred tax liabilities            (64,537)          (36,259)         (8,033)
                                                ------------       -----------       ---------

Net deferred tax assets before
    valuation allowance                           13,064,521         1,277,879         645,694

Valuation allowance                              (11,764,521)              -               -
                                                ------------       -----------       ---------

Net deferred tax assets                         $  1,300,000       $ 1,277,879       $ 645,694
                                                ============       ===========       =========
</TABLE>


        At December 31, 2000 and 1999, respectively, the Company had net federal
        operating loss carryforwards of approximately $28,127,000, expiring in
        2020 and $1,277,600 expiring in 2019. Approximately $21,000,000 of net
        operating loss carryforwards which expire in 2020 are the result of the
        exercise of non-qualified stock options. A valuation allowance was
        provided in 2000 to account for deferred tax assets for which
        realization is not more likely than not.

        The provision for income taxes differs from the amount computed by
        applying the statutory U.S. Federal income taxes as a result of the
        following:

<TABLE>
<CAPTION>
                                                            2000        1999        1998

<S>                                                        <C>         <C>         <C>
Statutory U.S. Federal rate                                (34.0)%     (34.0)%     (34.0)%

    (Increase) decrease in taxes resulting from:
        State income taxes - net of Federal benefit         (4.6)       (4.3)       (4.6)
        Stock options                                      (66.8)        -           -
        R&D credits                                           -          -          (2.4)
        Other                                               (4.8)        2.8         0.2
        Valuation allowance                                109.7         -           -
                                                           -----       -----       -----

Effective tax rate                                          (0.5)%     (35.5)%     (40.8)%
                                                           =====       =====       =====
</TABLE>



                                       70
<PAGE>   73

3.    STOCKHOLDERS' EQUITY

      Common Stock - In February 1999, the Board of Directors approved a 100:1
      stock split of all of the shares of the common stock of the Company issued
      and outstanding. Further, the Board of Directors approved the exchange of
      590,178 shares of nonvoting common stock for 590,178 shares of voting
      common stock by the President/Chief Executive Officer. In September 2000,
      the Board of Directors approved a 1.67:1 stock split of all of the shares
      of the common stock of the Company issued and outstanding. In connection
      with this stock split, the Board of Directors approved the increase in the
      number of authorized shares of voting common stock to 100 million shares.
      Shares issued and outstanding have been adjusted retroactively for all
      periods presented to reflect the stock splits.

      In 1999, the Board of Directors granted 100,200 shares of restricted stock
      to two consultants of the Company. The restricted stock vests over a
      four-year period and is subject to service and performance requirements.
      At the time of grant, the restricted stock and deferred compensation
      relating to the issuance of the restricted stock was recorded based on the
      estimated fair market value of the Company's common stock. The Company
      recognizes compensation expense related to the restricted stock on a
      monthly basis as the stock is earned and vests, based upon the difference
      between the price paid at the original date of issuance and the estimated
      fair market value of the common stock at the end of each subsequent month.
      Deferred compensation expense is adjusted monthly to reflect the amount of
      compensation expense recognized and the change in the estimated fair
      market value of the Company's common stock with respect to the unvested
      restricted stock. In relation to the issuance of this restricted stock,
      the Company received $15,000 in cash and recorded compensation expense of
      approximately $283,000 and $32,000 during 2000 and 1999, respectively, and
      deferred compensation of approximately $222,000 and $55,000 for 2000 and
      1999, respectively.

      Stock Warrants - In 2000, the Company issued 40,080 warrants under two
      separate agreements to nonemployee advisors. In relation to the issuance
      of these warrants, the Company recorded consulting expense of $12,626 and
      warrant interest amortization of $9,826 (see Note 6). At December 31,
      2000, all of the 40,080 warrants were outstanding.

      Stock Options - On February 10, 1999, the Board of Directors also
      instituted an Equity Incentive Plan (the Plan). The Plan, as amended,
      provides for up to 8,179,000 shares of common stock of the Company for the
      granting of restricted stock and incentive stock options to purchase
      common stock. The exercise price per share for an incentive stock option
      must be equal to or greater than the estimated fair market value, as
      determined by the Plan Committee, on the date of grant.

      Unless otherwise approved by the Board of Directors, all stock options and
      other stock equivalents issued pursuant to agreements executed by the
      Company to employees, Directors, consultants, and other service providers
      shall be subject to vesting as follows: (a) twenty-five percent (25%) of
      such stock shall vest at the end of the first year following the earlier
      of the date of issuance or such person's service commencement date with
      the Company, and (b) seventy-five (75%) of such stock shall vest ratably
      over the remaining three year period subsequent to the end of the first
      year described in (a).

      During 1999, the Company granted 175,350 stock options under three
      separate nonqualified stock option agreements, one of which is with a
      nonemployee director, the other two were with nonemployee advisors. The
      nonemployee director compensation expense was determined based upon the
      difference between the exercise price and the estimated fair market value
      of the common stock at the date of grant. The Company recognized
      compensation expense related to the nonemployee advisors nonqualified
      stock options on a monthly basis as the options are earned and vest, based
      upon the fair value of the options earned calculated using the
      Black-Scholes pricing model. Deferred compensation expense is adjusted
      monthly to reflect the amount of compensation expense recognized and the
      change in the estimated fair



                                       71
<PAGE>   74

      value for the unvested nonqualified stock options. Changes in the fair
      value of the unvested nonqualified stock options could result in an
      increase in future compensation changes. All of these options were granted
      for a ten-year period and vest over either three, four, or five years
      which coincides with the period of performance. During 2000, both of the
      nonemployee advisors terminated their service agreements; 95,080 options
      were forfeited and 55,220 options were exercised. As of December 31, 2000,
      the number of remaining options to vest in each year is as follows:

<TABLE>
<S>                                                                         <C>
                          2001                                                4,968
                          2002                                                2,950
                          2003                                                1,524
                          2004                                                  418
</TABLE>

      In relation to the issuance of the options to the nonemployee director,
      the Company recorded compensation expense of approximately $2,600 and
      $2,000 during 2000 and 1999, respectively, and deferred compensation of
      approximately $3,000 and $6,000 was included in stockholders' equity
      (deficit) at 2000 and 1999, respectively. In relation to the issuance of
      options to the nonemployee advisors, the Company recorded compensation
      expense of approximately $121,000 and $51,000 during the years ended 2000
      and 1999, respectively, and deferred compensation of approximately $-0-
      and $81,000, was included in stockholders' equity (deficit) at 2000 and
      1999, respectively.

      In 2000, the Company granted 30,000 stock options under seven separate
      nonqualified stock option agreements to nonemployee advisors. These grants
      were fully vested, nonforfeitable and fully exercisable. In relation to
      the issuance of the options, the Company recorded compensation expense of
      approximately $62,000 in 2000.

      The Company recorded compensation expense related to employee options
      granted during 2000 and 1999, respectively, with exercise prices below the
      estimated fair market value at the dates of grant in the amount of
      approximately $1,110,000 and $36,000, and deferred compensation in the
      amount of $1,196,000 and $259,000, which was included in stockholders'
      equity (deficit) at 2000 and 1999, respectively.


                                       72
<PAGE>   75

      Option transactions are summarized as follows:

<TABLE>
<CAPTION>
                                                                                            WEIGHTED AVERAGE
                                                                             SHARES           EXERCISE PRICE
                                                                           -----------     -------------------
<S>                                                                        <C>             <C>
Options outstanding, January 1, 1998                                         1,676,847          $ 0.006
    Options granted                                                            167,000            0.006
    Options exercised                                                         (734,967)           0.006
                                                                            ----------

Options outstanding, December 31, 1998                                       1,108,880            0.006
    Options granted                                                         14,932,487            0.299
    Options forfeited or cancelled                                            (111,624)           0.299
    Options exercised                                                         (136,940)           0.128
                                                                            ----------

Options outstanding, December 31, 1999                                      15,792,803            0.280
    Options granted                                                          2,050,791            8.390
    Options forfeited or cancelled                                            (142,788)           1.260
    Options exercised                                                       (4,035,286)           0.300
                                                                            ----------

Options outstanding, December 31, 2000                                      13,665,520            0.370
                                                                            ==========

Options exercisable as of December 31, 1998                                    942,000
                                                                            ==========

Options exercisable as of December 31, 1999                                 13,176,000
                                                                            ==========

Options exercisable as of December 31, 2000                                 11,314,000
                                                                            ==========

Options available for future grant at December 31, 2000                      2,304,967
                                                                            ==========
</TABLE>

      At December 31, 2000, options outstanding were as follows:

<TABLE>
<CAPTION>
                                                                         WEIGHTED AVERAGE
                                               NUMBER                    AVERAGE REMAINING
     EXERCISE PRICE                          OUTSTANDING                 CONTRACTUAL LIFE

<S>                                         <C>                         <C>
     $0.006                                      983,720                     6.8 years
     $0.30                                    11,204,016                     8.2 years
     $1.20 - $1.80                               133,579                     9.0 years
     $2.99                                        83,500                     9.1 years
     $5.99                                       211,338                     9.3 years
     $6.37                                       165,330                     9.4 years
     $8.56 - $13.00                               26,170                     9.9 years
     $15.00 - $29.38                             857,867                     9.8 years
                                             -----------
                                              13,665,520
                                             ===========
</TABLE>

      The Company has computed the pro forma disclosures required under SFAS No.
      123 for all stock options granted as of December 31, 2000, 1999, and 1998.
      The Company used the minimum value method permitted by SFAS No. 123 for
      nonpublic entities for 1998. The weighted average fair value at the date
      of grant for options granted during 1998 was $0.21. The weighted average
      exercise price and



                                       73
<PAGE>   76


      weighted average fair value at the date of grant for options granted
      during 2000 and 1999 was as follows:

<TABLE>
<CAPTION>
                                                           2000                                1999
                                              -------------------------------     -------------------------------
                                              EXERCISE PRICE   EXERCISE PRICE     EXERCISE PRICE   EXERCISE PRICE
                                                EQUALS FAIR    LESS THAN FAIR      EQUALS FAIR     LESS THAN FAIR
                                               MARKET VALUE     MARKET VALUE       MARKET VALUE      MARKET VALUE

<S>                                           <C>                <C>              <C>               <C>
Weighted average exercise price per share      $   11.989         $   1.618       $     0.299         $   0.299
Weighted average fair value per share          $   11.989         $   4.196       $     0.299         $   0.968
Options granted                                 1,339,313           711,478        14,171,081           758,406
</TABLE>

      The weighted average assumptions used for options granted during fiscal
      years 2000, 1999, and 1998, were as follows:

<TABLE>
<CAPTION>
                                                                2000           1999           1998

<S>                                                          <C>            <C>            <C>
Risk-free interest rate                                         5.94 %         5.20%          6.50%
Expected dividend yield                                         0.00 %         0.00%          0.00%
Expected life                                                  1 year        4 years        5 years
Volatility factor                                                 80%            71%             0%
</TABLE>

      The pro forma effects of applying SFAS No. 123 for fiscal years 2000,
      1999, and 1998 would be as follows:

<TABLE>
<CAPTION>
                                                                     2000                1999              1998

<S>                                                              <C>                 <C>                <C>
Pro forma net loss                                               $(12,589,959)       $(2,265,691)       $(566,897)
Pro forma net loss applicable to common shares                   $(22,959,289)       $(2,442,130)       $(566,897)
Pro forma net loss per common share - basic
    and diluted                                                  $      (2.46)       $     (0.63)       $   (0.16)
</TABLE>

4.    REDEEMABLE CONVERTIBLE PREFERRED STOCK

      On June 22, 1999, the Company entered into a Series A Preferred Stock
      Purchase Agreement (the Agreement) with a purchaser. The Company
      authorized, issued, and sold 2,161,265 shares of Series A Redeemable
      Convertible Preferred Stock (Series A Shares), $.01 par value, for
      approximately $3,919,000, net of expenses.

      The holder of any of such Series A Shares had the right, at its option at
      any time, to convert any such shares into the same number of fully paid
      and nonassessable shares of Common Stock. Each Series A Share was
      convertible into the number of shares of the Common Stock that would
      result from dividing the original issue price of the Series A Shares by
      the conversion price for the Series A Shares in effect at the time of the
      conversion.

      The holders of the Series A Shares are entitled to receive, out of funds
      legally available when and if declared by the Board of Directors,
      cumulative dividends at the annual dividend rate $.148 per share. Upon any
      liquidation, dissolution, or winding up of the Company, whether voluntary
      or involuntary, or upon redemption, the holders of the Series A Shares
      would be entitled first, before any distribution or payment was made on
      the Common Stock or any other series of capital stock, to be paid out of
      available funds and assets an amount equal to the "Original Issue Price"
      for each Series A Share as adjusted for common stock events plus, in the
      case of each share, an amount equal to all accrued dividends unpaid



                                       74
<PAGE>   77

      thereon (whether or not declared) and any other dividends declared but
      unpaid thereon. The undeclared dividends were being accreted to the
      redemption value. The 2000 and 1999 accrued dividend of approximately
      $245,000 and $168,000, respectively, is presented on the consolidated
      statements of operations as a component of increase in carrying value of
      redeemable convertible preferred stock as an additional charge to net loss
      applicable to common shareholders.

      The difference between the carrying amounts of the Series A Shares and the
      redemption amount, based upon the liquidation amount, represents the cost
      of issuance, which is being accreted pro rata over the period beginning on
      June 22, 1999 issuance date and ending on the prescribed redemption date,
      June 22, 2004. The 2000 and 1999 accretion of approximately $12,000 and
      $8,000, respectively, is presented on the consolidated statements of
      operations as a component of increase in carrying value of redeemable
      convertible preferred stock as an additional charge to net loss applicable
      to common shareholders.

      On August 16, 2000, the Company entered into a Series B Redeemable
      Convertible Preferred Stock Purchase Agreement with a purchaser. The
      Company authorized, issued, and sold 950,747 shares of Series B redeemable
      Convertible Preferred Stock (Series B Shares), $.01 par value, for
      approximately $9,919,000, net of expenses. The Series B Shares contained
      similar rights and privileges as the Company's Series A Shares and were
      convertible into 1,587,747 shares of common stock of the Company at any
      time at a conversion price of $6.30. At the time of issuance of the Series
      B Shares, the deemed fair market value of the underlying common stock was
      $15.00 per share. Approximately $9,982,000 was allocated to additional
      paid-in capital as a presumed beneficial conversion feature. As the Series
      B Shares were convertible at any time, the entire beneficial conversion
      feature was immediately accreted to the Series B Shares on August 16,
      2000. In connection with the issuance of the Series B Shares, the Company
      entered into joint development and marketing agreements. The accreted
      costs of issuance and the accrued dividend for 2000 of approximately
      $3,000 and $127,000, respectively, are presented on the Consolidated
      Statements of Operations as a component of increase in carrying value of
      redeemable convertible preferred stock as an additional charge to net loss
      applicable to common shareholders.

      Immediately prior to the closing of the IPO, all of the Company's
      outstanding shares of preferred stock were converted into shares of the
      Company's common stock.

5.    LEASE COMMITMENTS

      Total rental expense under all office leases for fiscal years 2000, 1999,
      and 1998, was approximately $833,000, $321,000, and $118,000,
      respectively. At December 31, 2000, future minimum lease payments required
      under noncancelable leases were as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,

<S>                                                        <C>
         2001                                               $   2,426,851
         2002                                                   2,495,854
         2003                                                   2,551,208
         2004                                                   2,644,337
         2005                                                   2,559,701
         Thereafter                                            12,270,869
                                                            -------------
Total minimum lease payments                                $  24,948,820
                                                            =============
</TABLE>



                                       75
<PAGE>   78

      The rental agreement requires that the Company maintain certain letters of
      credit totaling $1,380,600. The irrevocable standby letters of credit are
      secured by the Company's restricted cash (see Note 1) and expire September
      8, 2001.

      The Company obtained additional three years office space leases in 2001
      with future minimum lease payments of approximately $1,460,000 for the
      years ended December 31, 2001, 2002, and 2003, respectively.

      Capital Leases - The Company is obligated under capital leases for
      computers and other equipment. The following is a summary of assets under
      capital leases:

<TABLE>
<CAPTION>
                                                                             DECEMBER 31,
                                                                     ----------------------------
                                                                        2000               1999

<S>                                                                  <C>                <C>
Computer equipment                                                   $ 343,475          $ 368,723
Office equipment                                                        15,524             31,151
                                                                     ---------          ---------

           Total                                                       358,999            399,874

Less: Accumulated depreciation and amortization                       (294,972)          (222,321)
                                                                     ---------          ---------

Assets under capital lease - net                                     $  64,027          $ 177,553
                                                                     =========          =========
</TABLE>


      Assets under capital lease are depreciated or amortized over three- to
      five-year lives, with expense totaling approximately $107,000, $129,000,
      and $85,000 for the years ended 2000, 1999, and 1998, respectively.

      The future minimum lease payments under capital leases are computed as
      follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,

<S>                                                                   <C>
       2001                                                             $ 85,157
       2002                                                               14,502
                                                                        --------

                                                                          99,659

Less: Interest                                                            (7,942)
                                                                        --------

Present value of future minimum
    capital lease payments                                                91,717

Less:  Current portion                                                   (77,729)
                                                                        --------

Capital lease obligation, net of current portion                        $ 13,988
                                                                        ========
</TABLE>

6.    LINE OF CREDIT AND EQUIPMENT LOAN FACILITY

      In May 1999, the Company paid off the outstanding amount on their original
      line of credit and outstanding note payable and obtained a new line of
      credit consisting of a secured revolving credit line and equipment line of
      credit. The Company has pledged property and equipment, trademarks and
      accounts receivable as collateral for these agreements.


                                       76
<PAGE>   79

      In 1999, the Company borrowed approximately $961,000 against the equipment
      loan facility of $1,000,000. Any outstanding amounts within the first six
      months of the loan plus accrued interest were converted to a term loan.
      Borrowings under this note are secured by equipment of the Company, bear
      interest at prime plus 1.25% (9.75% at December 31, 1999) and are subject
      to certain financial covenants. In November 1999, all equipment line
      advances then outstanding, plus any accrued interest, were converted to a
      term loan. The Term Loan provides for repayments of principal and interest
      in thirty equal monthly installments. The Company must also maintain
      various financial covenants, including minimum cash balance and certain
      financial ratios. In addition, the Company cannot declare or pay dividends
      on, or make any distribution with respect to, any class of its equity
      during the term of this facility.

      At December 31, 1999, the amount outstanding under the revolving credit
      line was $550,000 payable by May 2000 with accrued interest due and
      payable monthly. Borrowings under this note bear interest at prime plus 1%
      (9.5% at December 31, 1999) and are subject to certain financial
      covenants.

      In June 2000, the Company amended the 1999 line of credit agreement in
      connection with a $3 million bridge loan. This amendment provides a $3
      million bridge loan to fund the Company's operating expenses. The Company
      did not borrow on the bridge loan during 2000 and the bridge loan expired
      in December of 2000. In connection with the bridge loan the Company issued
      to the bank warrants to purchase up to 15,030 shares of common stock for
      $0.006 per warrant. The warrants are initially exercisable at $5.99 per
      share, subject to adjustment for certain dilutive issuances. The fair
      value of the warrants granted was estimated at $9,826 on the date of the
      grant using the Black-Scholes pricing model with the following weighted
      average assumptions: risk-free interest rate of 5.74%, expected dividend
      yield of 0%, expected life of one year and expected volatility of 93%. The
      fair value of the warrants were amortized to additional paid-in capital
      over the period of the bridge loan. The bank was also issued certain
      registration rights enabling them to request the Company to include the
      common stock underlying their warrants in a registration statement filed
      by the Company.

      The following represents the maturities of the equipment loan facility:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                      PRINCIPAL DUE

<S>                                          <C>
       2001                                   $  854,000
       2002                                      624,974
       2003                                       63,333
                                              ----------

           Total                              $1,542,307
                                              ==========
</TABLE>


7.    RELATED PARTY TRANSACTIONS

      The Company had an arrangement with another company, the president of
      which was a former member of the Company's Board of Directors, whereby the
      other company provides advisory and fiduciary oversight services to the
      Company at an average monthly fee of $2,500. This arrangement ended and
      was paid in full during July 1999. Total fees paid to the other company
      under this arrangement totaled $50,000 for the year ended 1999.

      The Company engaged a law firm during 2000, 1999 and 1998. An attorney at
      the firm is also a shareholder of the Company. The Company incurred
      approximately $397,000, $227,000 and $19,000 in expense to the firm and
      the Company's accrued liability to the firm was approximately $139,000,
      $21,000 at 2000 and 1999, respectively.


                                       77
<PAGE>   80

      The Company had an arrangement with a shareholder of the Company whereby
      the shareholder provides consulting services to the Company. Total fees
      paid to the shareholder under this arrangement totaled approximately
      $38,000, $50,000 and $8,000 for the years ended 2000, 1999 and 1998,
      respectively, and the Company's accrued liability to the shareholder was
      approximately $4,000 at December 31, 1998. This arrangement ended and was
      paid in full during September 2000.

      Beginning in 1999, the Company had an arrangement with a nonqualified
      stock option holder of the Company whereby the option-holder provides
      consulting services to the Company at an average monthly fee of
      approximately $4,000. Total fees paid to the option-holder under this
      arrangement totaled approximately $38,000 and $21,000 for the years ended
      2000 and 1999, respectively. This arrangement ended and was paid in full
      during September 2000.

      In April 1999, the Company loaned the president of the Company $65,000,
      which is to be paid in full with all unpaid, accrued interest by April
      2004. The interest rate of this note is prime plus 1% (9.5% at December
      31, 1999). Interest income earned during 1999 and receivable at December
      31, 1999 was approximately $4,000. In April 2000, the president of the
      Company paid $65,000 toward the interest and principal outstanding under
      the loan. In July 2000, the remaining principal and interest of
      approximately $6,000 was repaid.

8.    BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION

      The Company operates in one industry segment, the development and sale of
      computer software programs and related services.

      Two customers accounted for approximately 14% and 10% of total accounts
      receivable at 2000 and another customer accounted for approximately 14% of
      total accounts receivable at 1999, and two other customers accounted for
      26% and 23% of total accounts receivable at 1998.

      One customer accounted for approximately 10% and 19% of total revenue for
      the year ended 2000 and 1999, respectively. This customer and another
      customer accounted for 20% and 14% of total revenue respectively, for the
      year ended 1998. There were no sales to any individual country except for
      the United States where such sales accounted for 10% or more of total
      revenue.

      Substantially all assets are held in the United States at 2000, 1999 and
      1998.


                                     78
<PAGE>   81

      Revenues by geographic destination and as a percentage of total revenues
      are as follows:

<TABLE>
<CAPTION>
                                                                              YEAR ENDED
                                                        --------------------------------------------------------
                                                               2000               1999              1998
<S>                                                           <C>                <C>                <C>

Geographic Area by Destination

    United States                                             $12,799,112        $ 8,513,617        $2,882,439
    International                                               4,348,477          1,500,808         1,243,806
                                                              -----------        -----------        ----------

                                                              $17,147,589        $10,014,425        $4,126,245
                                                              ===========        ===========        ==========

<CAPTION>
                                                                               YEAR ENDED
                                                        --------------------------------------------------------
                                                               2000               1999              1998
<S>                                                          <C>                <C>                <C>

Geographic Area by Destination

    United States                                               76 %               85 %              70 %
    International                                               24 %               15 %              30 %
                                                               ---                ---               ---

                                                               100 %              100 %             100 %
                                                               ===                ===               ===
</TABLE>

9.    COMMITMENTS AND CONTINGENCIES

      Employment Agreements - Certain employees have employment agreements that
      entitle them to two weeks of severance in case of termination. In
      addition, three employees of the Company have employment agreements that
      entitle these individuals to specified amounts of severance if such
      individuals are terminated.

      Government Audits - Payments to the Company on subcontracts with prime
      U.S. Government contracts are subject to adjustment upon audit by various
      agencies of the U.S. Government. For the years ended 2000, 1999, and 1998,
      no audits of costs and the related payments have been performed by the
      various agencies. At December 31, 1998, the Company accrued a potential
      liability for billings in excess of costs incurred of approximately
      $80,000 related to a cost-plus-fee contract. In July 1999, this contract
      was converted to a time and material based contract by signing new
      agreements. Any potential liabilities from the prior contract ceased under
      the new agreements. At December 31, 2000, there were no liabilities
      accrued related to the billing in excess of cost. In the opinion of
      management, the final determination of these costs and related payments
      will not have a material effect on the Company's financial position,
      results of operations, or liquidity.

      Litigation - In late 1998, litigation was filed in France by a former
      sales representative. A hearing was held in 1999, and according to the
      decision of the French court, the Company has been directed to pay
      $228,600 to the former representative. The liability of approximately
      $229,000 was accrued at December 31, 1999 and paid in full on June 20,
      2000.

      In the ordinary course of conducting its business, the Company becomes
      involved in litigation and administrative proceedings. It is the opinion
      of the Company's management that the outcome of these proceedings,
      individually, or in the aggregate, will not have a material adverse effect
      on the business or consolidated financial position of the Company.

10.   RETIREMENT PLAN

      Effective January 1, 1999, the Company established a 401(k) retirement
      plan (the Plan) covering all eligible employees, as defined. Under the
      terms of the Plan, participants may defer a portion of their


                                       79
<PAGE>   82

      salaries as employee contributions and are immediately 100% vested. The
      Company may make matching, nonelective or discretionary contributions to
      the Plan. In general, matching and discretionary contributions made by the
      Company vest ratably over a three-year period. The Company did not make a
      contribution under this Plan for 2000 and 1999.

11.   VALUATION AND QUALIFYING ACCOUNTS

      The following table sets forth activity in the Company's allowance for
      doubtful accounts receivable:

<TABLE>
<CAPTION>
                                                 BALANCE AT                                        BALANCE AT
                                                 BEGINNING       CHARGES TO                          END OF
                                                 OF PERIOD         EXPENSE        DEDUCTIONS         PERIOD
                                               ---------------  --------------   --------------  ---------------
<S>                                             <C>              <C>               <C>            <C>

Year ended:
    December 31, 1998                             $   -            $  -              $ -            $    -
    December 31, 1999                              15,000             -                -              15,000
    December 31, 2000                              15,000           5,000              -              20,000
</TABLE>

12.   QUARTERLY INFORMATION (UNAUDITED)

      The following are the unaudited quarterly results of operations for the
      fiscal years ended December 31, 2000 and 1999, respectively:

<TABLE>
<CAPTION>
                                                                     QUARTER ENDED
                                         ------------------------------------------------------------------------
                                           MARCH 31        JUNE 30            SEPTEMBER 30        DECEMBER 31
                                                    (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                          <C>            <C>                <C>                  <C>

2000:
    Revenues                                 $ 3,208             $ 3,301             $  4,873             $ 5,765
    Gross profit                               2,683               2,714                4,248               5,069
    Operating expenses                         5,089               6,264                6,398               8,830
    Net loss                                  (2,450)             (3,619)              (2,220)             (2,384)
    Net loss applicable to
        common shares                         (2,534)             (3,703)             (12,338)             (2,404)
    Basic net loss per
        common share                           (0.61)              (0.59)               (1.55)              (0.13)
    Diluted net loss per common
        share                                  (0.61)              (0.59)               (1.55)              (0.13)

1999:
    Revenues                                   1,590               2,891                1,915               3,619
    Gross profit                               1,177               2,427                1,422               2,973
    Operating expenses                         1,632               2,010                2,612               3,754
    Net income (loss)                           (337)                255                 (740)               (493)
    Net income (loss) applicable
        to common shares                        (337)               0.07                 (829)               (575)
    Basic net income (loss) per
        common share                           (0.09)               0.04                (0.21)              (0.14)
    Diluted net income (loss) per
        common share                         $ (0.09)            $  0.04             $  (0.21)            $ (0.14)
</TABLE>



                                   * * * * * *



                                       80
<PAGE>   83





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

        Not applicable.






                                       81









<PAGE>   84


                                 INFORMAX, INC.

                                    PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        Information responsive to this Item is set forth in Part I of this
Annual Report under the caption "Item 1. Business--Directors and Executive
Officers" and is incorporated by reference herein.

ITEM 11 - EXECUTIVE COMPENSATION

        Information responsive to this Item is incorporated herein by reference
to our definitive proxy statement for the 2001 Annual Meeting of Stockholders to
be filed within 120 days after the end of our fiscal year.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        Information responsive to this Item is incorporated herein by reference
to our definitive proxy statement for the 2001 Annual Meeting of Stockholders to
be filed within 120 days after the end of our fiscal year.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        Information responsive to this Item is incorporated herein by reference
to our definitive proxy statement for the 2001 Annual Meeting of Stockholders to
be filed within 120 days after the end of our fiscal year.




















                                       82
<PAGE>   85





ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

a)      1.FINANCIAL STATEMENTS

               The information required by this item is included in Item 8 of
Part II of this Form 10-K.

        2.FINANCIAL STATEMENT SCHEDULE

               None.

b)      REPORTS ON FORM 8-K:

               None.

c)      EXHIBITS

               See Exhibit Index attached. The exhibits listed in the attached
        Exhibit Index are filed or incorporated by reference as part of this
        report.



















                                       83
<PAGE>   86


                                   SIGNATURES


        Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this annual report to be
signed on its behalf by the undersigned, thereunto duly authorized, in the city
of Rockville, State of Maryland, on March 26, 2001.

                                      INFORMAX, INC.

                                   By: /S/ Alexander V. Titomirov, Ph.D.
                                       -----------------------------------------
                                           Alexander V. Titomirov, Ph.D.
                                        Chairman and Chief Executive Officer

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

<TABLE>
<CAPTION>
SIGNATURE                                          TITLE                                DATE
---------                                          ----                                 -----
<S>                                             <C>                                    <C>
                                                Chairman of the Board of Directors      March 26, 2001
 /S/ Alexander V. Titomirov, Ph.D.              and Chief Executive Officer
------------------------------------------      (Principal Executive Officer)
Alexander V. Titomirov, Ph.D.

 /S/ John M. Green                              Chief Financial Officer
------------------------------------------      (Principal Financial Officer)           March 29, 2001
John M. Green


 /S/ James E. Bernstein, M.D.                   Director and President                  March 29, 2001
------------------------------------------
James E. Bernstein, M.D.


 /S/ Harry D'Andrea                             Director                                March 29, 2001
------------------------------------------
Harry D'Andrea


 /S/ Hooks Johnston                             Director                                March 29, 2001
-------------------------------------------
Hooks Johnston


/s/ Andrew Whiteley                             Director                                March 29, 2001
-------------------------------------------
Andrew Whiteley

 /S/ Wei-Wu He, Ph.D.                           Director                                March 27, 2001
-------------------------------------------
Wei-Wu He, Ph.D.

</TABLE>






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<PAGE>   87



                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                                  DESCRIPTION
--------        -------------------------------------------------------------------------------------------
<S>             <C>
3.1 (1)         Restated Certificate of Incorporation

3.2 (1)         Restated Bylaws

4.1 (1)         Specimen Common Stock Certificate

10.1 (2)        Amended Equity Incentive Compensation Plan

10.2 (1)        Amended and Restated Investor Rights Agreement between InforMax, Inc., FBR Technology
                Venture Partners II, L.P. and Amersham Pharmacia Biotech, Inc. dated August 16, 2000

10.3 (1)        Non-Preferred Holder Rights Agreement between InforMax, Inc. and each of the Weiss, Peck &
                Greer entities noted in the Principal Stockholders table dated March 29, 2000

10.4 (1)        Shareholder's Agreement among InforMax, Inc., Dr. Alex Titomirov, Dr. James Bernstein and
                certain other stockholders, and Amendment No. 1 thereto dated August 17, 1999, and
                Amendment No. 2 thereto dated March 29, 2000

10.5 (1)        Loan Agreement between InforMax, Inc. and PNC Bank, National Association dated May 6, 1999,
                Amendment No. 1 thereto dated August 6, 1999, Amendment No. 2 thereto dated November 30,
                1999, Amendment No. 3 thereto dated February 7, 2000, Amendment No. 4 thereto dated
                February 29, 2000 and Amendment No. 5 thereto dated June 19, 2000

10.6 (1)        Second Amended and Restated Revolving Credit Note dated February 7, 2000

10.7 (1)        Third Amended and Restated Line of Credit Note dated February 7, 2000

10.8 (1)        Security Agreement between InforMax, Inc. and PNC Bank, National Association dated May 6,
                1999

10.9 (1)        Office Lease Agreement between InforMax, Inc. and Jemal Cayre 6010 Executive Blvd. L.L.C.
                dated March 31, 1999, Addendum No. 1 thereto dated July 8, 1999 and Addendum No. 2 thereto
                dated February 1, 2000 and Addendum No. 3 thereto dated May 19, 2000

10.10(1)        Letter Agreement between InforMax, Inc. and Management System Designers, Inc. dated July 9,
                1999, in connection with services to be provided to the National Center for Biotechnology
                Information (NCBI), addendum thereto dated November 22, 1999, addendum thereto dated
                November 22, 1999, addendum dated July 26, 2000, and addendum dated as of September 18, 2000

</TABLE>


                                       85
<PAGE>   88


<TABLE>
<S>             <C>

10.11 (3)       Letter Agreement dated October 10, 2000 and Letter Agreement dated November 7, 2000,
                between InforMax, Inc. and Management System Designers, Inc., amending the Letter Agreement
                between the parties dated July 9, 1999, as amended***

10.12 (1)       Technical Services Agreement between InforMax, Inc. and Unisys Corporation dated April 18,
                2000 in connection with services to be provided to the National Center for Biotechnology
                Information (NCBI)

10.13 (1)       Warrant Purchase Agreement between InforMax, Inc and PNC Bank, National Association dated
                June 19, 2000

10.14 (1)       Joinder Agreement between InforMax, Inc. and Paul Capital Partners VI Holdings dated June
                13, 2000

10.15 (1)       Joinder Agreement between InforMax, Inc. and Cogene Biotech Ventures, L.P. dated June 29,
                2000

10.16 (1)       Joinder Agreement between InforMax, Inc. and Gene Fund, LP, Kenson Venture, LLC and
                VitalBio Holdings, Inc. dated June 23, 2000

10.17 (1)       Data Analysis Products Development and Distribution Agreement dated August 16, 2000 between
                InforMax, Inc. and Amersham Pharmacia Biotech, Inc.

10.18 (3)       Addendum to Data Analysis Product Development and Distribution Agreement dated February 9,
                2001 between InforMax, Inc. and Amersham Pharmacia Biotech, Inc.

10.19 (1)       Sublease between PG&E Generating Company and InforMax, Inc. dated as of September 21, 2000

10.20 (1)       Commitment letter dated August 14, 2000 from Dr. Alex Titomirov to InforMax, Inc.

10.21 (1)       Joinder Agreement between InforMax, Inc. and Gene Fund, LP dated August 16, 2000

10.22 (1)       Joinder Agreement between InforMax, Inc. and Gene Fund, LP dated as of September 8, 2000

10.23 (1)       Employment Agreement between Timothy Sullivan and InforMax, Inc. dated April 1, 1999

10.24 (3)       Employment Agreement between John Green and InforMax, Inc. dated as of March 2, 2001

10.25 (3)       Sublease Agreement between Discovery Communications, Inc. and InforMax, Inc. dated as of
                February 22, 2001

23.1 (3)        Consent of Deloitte & Touche LLP
</TABLE>

----------
(1) Incorporated by reference from InforMax, Inc.'s Registration Statement on
    Form S-1 (333-41194).

(2) Incorporated by reference from InforMax, Inc.'s Registration Statement on
    Form S-8 (333-51658).

(3) Filed herewith.


*** Confidential Treatment requested as to certain portions of this Exhibit.

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