###### FORM 10-Q/A

(Amendment No.2)

** **

**UNITED STATES**

###### SECURITIES AND EXCHANGE COMMISSION

**Washington, DC  20549**

** **

(Mark One)

[X]**  QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**

**SECURITIES EXCHANGE ACTOF 1934**

or

[  ]  **TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**

**SECURITIES EXCHANGE ACTOF 1934**

###### For the quarterly period ended March 31,2005

** **

###### Commission File Number 0-23666

**TRIPOS, INC.**

(Exact Name ofRegistrant as Specified in its Charter)

** **

| **Utah**                         | ** ** | **43-1454986**      |
|----------------------------------|------------|---------------------|
| (State or Other  Jurisdiction of | ** ** | (I.R.S. Employer    |
| Incorporation or  Organization)  | ** ** | Identification No.) |
| ** **                       | ** ** | ** **          |

** **

**1699 South Hanley Road**

**St. Louis, Missouri63144**

(Address of PrincipalExecutive Offices and Zip Code)

** **

**(314) 647-1099**

(Registrant's TelephoneNumber, Including Area Code)

** **

** **

** **

Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirement for the past 90 days.

Yes    X            No       

Indicate by check mark whether the registrant isan accelerated filer (as defined in Rule 12b-2 of the Exchange Act)

Yes    X            No       

Number of shares outstanding of the issuer'sCommon Stock, par value $.01 per share, as of May 09, 2005:****10,089,981shares.

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Tripos, Inc.

Explanatory Note

For Quarter Ended

March 31, 2005

This amendment to theCompany's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 isbeing filed to revise the consolidated financial statements, as set forth inNote 14 of the Notes to Unaudited Consolidated Financial Statements, from thosepreviously filed with the Securities and Exchange Commission (the "SEC") on May10, 2005.  The Company has filed this amendment in order to correct an errorfound in a consolidating spreadsheet application used solely for 2005 interimreporting relating to accounting for foreign exchange transaction gains/losseson certain intercompany balances as described in Note 14.  Previously reportedamounts for 2004 were not affected by this error. Except for changes in amountsreported in Items 1 and 2 of this Quarterly Report on Form 10-Q to correct thiserror, the addition of a new Note 14 of the Notes to the Company's ConsolidatedFinancial Statements, revised disclosures regarding internal controls in Item4, and new certifications filed as exhibits to this Quarterly Report onForm10-Q, this amendment does not affect any amounts or disclosures previouslyreported or disclosed in the Quarterly Report on Form 10-Q for the quarterended March 31, 2005, nor does it reflect events occurring after the date offiling of the Quarterly Report on Form 10-Q. 

In accordance withapplicable SEC rules, the Quarterly Report on Form 10-Q/A includes updatedcertifications from the Company's Chief Executive Officer and Chief FinancialOfficer as Exhibits 31.1, 31.2 and 32.

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**TRIPOS,INC.**

###### TABLE OF CONTENTS

|                                                                                                                                                                                    | **Page** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
| **PART  I  FINANCIAL INFORMATION**                                                                                                                                            |          |
| **Item  1.  Financial Statements**                                                                                                                                            |          |
|   Consolidated  Balance Sheets at March 31, 2005 (Unaudited) and December 31, 2004                                                                                       | 4        |
|   Consolidated  Statements of Operations for the Three-Months Ended 

      March  31, 2005(Unaudited) and March 31, 2004 (Unaudited) | 5        |
|   Consolidated  Statements of Cash Flows for the Three-Months Ended 

      March  31, 2005 (Unaudited) and March 31, 2004 (Unaudited)     | 6-7      |
|   Notes  to Consolidated Financial Statements (Unaudited)                                                                                                                | 7-22     |
|                                                                                                                                                                                    |          |
| **Item  2. Management's Discussion and Analysis of Financial Condition**

**      and  Results of Operations**                                       | 23-29    |
| **Item  3. Quantitative and Qualitative Disclosures about Market Risk**                                                                                                            | 30       |
| **Item  4. Controls and Procedures (as amended)**                                                                                                                                  | 30-31    |
|                                                                                                                                                                                    |          |
| **PART  II  OTHER INFORMATION**                                                                                                                                               | 31       |
| **SIGNATURES**                                                                                                                                                                     | 32       |

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**PART I**

##### FINANCIALINFORMATION

** **

**Item1.  Financial Statements.**

**TRIPOS, INC.**

**CONSOLIDATED BALANCESHEETS**

(In thousands)  

|                                                                                                                                                                                                | Restated

**03-31-2005**              |  

 12-31-2004 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|--------------------------|
| ASSETS                                                                                                                                                                                                                                 | **(Unaudited) **                 |                          |
| Current  assets:                                                                                                                                                                                                                       |                                       |                          |
|      Cash  and cash equivalents                                                                                                                                                                               | **$ 5,616 **                | $ 4,171        |
|      Marketable  securities                                                                                                                                                                                   | **71 **                          | 341                 |
|      Accounts  receivable, less allowances for doubtful accounts of

     $242  and $246, respectively                                                                               | ** **

**9,809 **           | 15,666              |
|      Inventory                                                                                                                                                                                                | **10,370 **                      | 12,007              |
|      Deferred  income taxes                                                                                                                                                                                   | **-- **                          | 29                  |
|      Prepaid  expenses                                                                                                                                                                                        | **6,826 **                       | 5,603               |
| Total current assets                                                                                                                                                                                                                   | **32,692 **                      | 37,817              |
|                                                                                                                                                                                                                                        | ** **                            |                          |
|    Property  and equipment, less accumulated depreciation                                                                                                                                                               | **29,778 **                      | 30,672              |
|    Capitalized  development costs, less accumulated amortization                                                                                                                                                        | **2,758 **                       | 2,159               |
|    Goodwill                                                                                                                                                                                                             | **5,142 **                       | 965                 |
|    Intangible  assets, less accumulated amortization                                                                                                                                                                    | **4,023 **                       | 90                  |
|    Investments  recorded at cost                                                                                                                                                                                        | **1,433 **                       | 1,397               |
|    Other  assets, net                                                                                                                                                                                                   | **-- **                          | 22                  |
| Total assets                                                                                                                                                                                                                           | **$ 75,826 **               | $ 73,122       |
|                                                                                                                                                                                                                                        | ** **                            |                          |
| LIABILITIES  AND SHAREHOLDERS' EQUITY                                                                                                                                                                                                  |
| Current  liabilities:                                                                                                                                                                                                                  | ** **                            |                          |
|      Current  portion of long-term debt                                                                                                                                                                       | **$ 2,718 **                | $ 4,514        |
|      Current  portion of capital leases                                                                                                                                                                       | **3,706 **                       | 3,689               |
|      Accounts  payable                                                                                                                                                                                        | **1,638 **                       | 1,796               |
|      Accrued  expenses                                                                                                                                                                                        | **5,974 **                       | 8,950               |
|      Deferred  revenue                                                                                                                                                                                        | **19,603 **                      | 21,945              |
| Total current liabilities                                                                                                                                                                                                              | **33,639 **                      | 40,894              |
|                                                                                                                                                                                                                                        | ** **                            |                          |
|    Long-term  portion of capital leases                                                                                                                                                                                 | **1,634 **                       | 2,653               |
|    Long-term  debt                                                                                                                                                                                                      | **6,935 **                       | --                  |
|    Deferred  income taxes                                                                                                                                                                                               | **1,419 **                       | 1,709               |
| Shareholders'  equity :                                                                                                                                                                                                                | ** **                            |                          |
|      Common  stock, $0.01 par value; authorized 20,000 shares,

     issued  10,088 shares as of Mar. 31, 2005 and 9,359 shares as of

     Dec.  31, 2004. | ** **

** **

**101 ** | 94                  |
|      Additional  paid-in capital                                                                                                                                                                              | **41,301 **                      | 37,394              |
|      Retained  earnings (deficit)                                                                                                                                                                             | **(8,108)**                           | (8,089)                  |
|      Other  comprehensive loss                                                                                                                                                                                | **(1,095)**                           | (1,533)                  |
| Total shareholders' equity                                                                                                                                                                                                             | **32,199 **                      | 27,866              |
|                                                                                                                                                                                                                                        | ** **                            |                          |
| Total liabilities and shareholders' equity                                                                                                                                                                                             | **$ 75,826 **               | $ 73,122       |
|                                                                                                                                                                                                                                        |                                       |                          |

*Seeaccompanying notes.*

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**Item1.  Financial Statements (continued)**

**TRIPOS, INC.**

**CONSOLIDATED STATEMENTSOF OPERATIONS**

**(In thousands, exceptper share data)**

**(Unaudited)**

|                                                                 |       |       | **Three Months Ended** |
|-----------------------------------------------------------------|------------|------------|------------------------|
|                                                                 |       |       |                   | Restated

**03-31-2005** |  

03-31-2004 |
| Net  sales:                                                     | ** ** | ** ** | ** **             | ** ** |  |
|    Discovery  informatics products & support | ** ** | ** ** | ** **             | **$ 6,263 ** | $ 5,974  |
|    Discovery  informatics services               | ** ** | ** ** | ** **             | **668 ** | 715  |
|    Discovery  research products & services   | ** ** | ** ** | ** **             | **8,102 ** | 8,727  |
|    Hardware                                      | ** ** | ** ** | ** **             | **10 ** | 44  |
| Total net sales                                                 | ** ** | ** ** | ** **             | **15,043 ** | 15,460  |
|                                                                 | ** ** | ** ** | ** **             | ** ** |  |
| Cost  of sales                                                  | ** ** | ** ** | ** **             | **7,907 ** | 7,693  |
| Gross profit                                                    | ** ** | ** ** | ** **             | **7,136 ** | 7,767  |
|                                                                 | ** ** | ** ** | ** **             | ** ** |  |
| Operating  expenses:                                            | ** ** | ** ** | ** **             | ** ** |  |
|    Sales  and marketing                          | ** ** | ** ** | ** **             | **2,945 ** | 3,142  |
|    Research  and development                     | ** ** | ** ** | ** **             | **1,921 ** | 2,828  |
|    General  and administrative                   | ** ** | ** ** | ** **             | **1,965 ** | 1,879  |
| Total operating expenses                                        | ** ** | ** ** | ** **             | **6,831 ** | 7,849  |
|                                                                 | ** ** | ** ** | ** **             | ** ** |  |
| Income (loss) from operations                                   | ** ** | ** ** | ** **             | **305 ** | (82) |
|                                                                 | ** ** | ** ** | ** **             | ** ** |  |
| Interest  expense                                               | ** ** | ** ** | ** **             | **(388)** | (231) |
| Other  (loss) income , net                                      | ** ** | ** ** | ** **             | **(7)** | 273  |
| Loss before income tax benefit                                  | ** ** | ** ** | ** **             | **(90)** | (40) |
|                                                                 | ** ** | ** ** | ** **             | ** ** |  |
| Income  tax benefit                                             | ** ** | ** ** | ** **             | **(71)** | (15) |
| Net loss                                                        | ** ** | ** ** | ** **             | **$ (19)** | $ (25) |
|                                                                 | ** ** | ** ** | ** **             | ** ** |  |
| Basic  and diluted loss per share                               | ** ** | ** ** | ** **             | **$ (0.00)** | $ (0.00) |
| Basic  and diluted  weighted average number of shares      | ** ** | ** ** | ** **             | **10,060 ** | 9,047  |

*See accompanying notes.*

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**Item 1.  Financial Statements (continued)**

**TRIPOS, INC.**

**CONSOLIDATED STATEMENTSOF CASH FLOWS**

**(In Thousands)**

**(Unaudited)**

|                                                                                     | **Three Months Ended**   |
|-------------------------------------------------------------------------------------|--------------------------|
|                                                                                     | Restated

**03-31-2005** |  

03-31-2004 |
| **Operating  activities:**                                                          | ** **               |  |
| Net  loss                                                                           | **$ (19)**          | $ (25) |
| Adjustments  to reconcile net loss to 

net  cash provided by operating activities: | ** **               |  |
|    Depreciation  of property and equipment                           | **1,328 **          | 609  |
|    Amortization  of capitalized development costs & intangibles  | **180 **            | 68  |
|    Amortization  of debt discount                                    | **14 **             | --  |
|    Appreciation  in foreign currency hedge instruments               | **2 **              | 757  |
|    Deferred  tax benefit                                             | **(237)**                | (243) |
|    Gain  from sale of marketable securities                          | **(182)**                | (144) |
|    Impairment  loss on long-term investment                          | **88 **             | --  |
|                                                                                     | ** **               |  |
| Change  in operating assets and liabilities (excluding acquired business):          | ** **               |  |
|    Accounts  receivable                                              | **5,565 **          | 4,677  |
|    Inventories                                                       | **1,348 **          | 1  |
|    Prepaid  expenses and other current assets                        | **(1,618)**              | 1,221  |
|    Accounts  payable and accrued expenses                            | **(3,049)**              | (2,251) |
|    Deferred  revenue                                                 | **(1,675)**              | 4,472  |
| Net cash provided by operating activities                                           | **1,745 **          | 9,142  |
|                                                                                     | ** **               |  |
| **Investing  activities:**                                                          | ** **               |  |
| Purchases  of property and equipment                                                | **(1,076)**              | (1,101) |
| Capitalized  development costs                                                      | **(599)**                | --  |
| Acquisition  of business, net of cash received                                      | **(4,779)**              | --  |
| Proceeds  from the sale of marketable securities                                    | **338 **            | 196  |
| Investment  in unconsolidated affiliates                                            | **(125)**                | (188) |
| Net cash used in investing activities                                               | **(6,241)**              | (1,093) |
|                                                                                     | ** **               |  |
| **Financing  activities:**                                                          | ** **               |  |
| Proceeds  from stock issuance pursuant to stock purchase and option plans           | **8 **              | 17  |
| Proceeds  from issuance of common stock                                             | **500 **            | --  |
| Net  borrowings (repayments) under revolving line of credit                         | **1,900 **          | (1,500) |
| Proceeds  from issuance of long-term debt and capital leases                        | **3,500 **          | 341  |
| Payments  on long-term debt and capital lease obligations                           | **(851)**                | (2,945) |
| Net cash provided by (used in) financing activities                                 | **5,057 **          | (4,087) |
|                                                                                     | ** **               |  |
| Effect  of foreign exchange rate changes on cash and cash equivalents               | **884 **            | (381) |
|                                                                                     | ** **               |  |
| Net increase in cash and cash equivalents                                           | **1,445 **          | 3,581  |
|                                                                                     | ** **               |  |
| Cash  and cash equivalents at beginning of period                                   | **4,171 **          | 2,945  |
| Cash and cash equivalents at end of period                                          | **$ 5,616 **   | $ 6,526  |
|                                                            | ** **               |  |

*See accompanying notes.*

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**Item 1.  Financial Statements (continued)**

** **

**Supplemental Disclosure of Cash Flow Information**

Information about noncash investing activitiesnot reflected in the Consolidated Statement of Cash Flows follows:

| (Amounts in thousands)                                                                                   | Three Months Ended |
|----------------------------------------------------------------------------------------------------------|--------------------|
| ** **                                                                                               | 03/31/2005         | 03/31/2004 |
| **Noncash investing activities**                                                                         |                    |  |
|   Increase (decrease) in fair value  of marketable securities, 

  net of tax effect | $ 42          | $ 7 |
|                                                                                                          |                    |  |

In January 2005, the Company acquired OptiveResearch, Inc. for $4,750 in cash, 600 shares of the Company's common stockvalued at $3,183 and direct costs of the acquisition.  The related assets andliabilities at the acquisition date were as follows (amounts in thousands):

|   Cash                              | $ 647    |
|-----------------------------------------------|--------------------|
|   Accounts receivable               | 809           |
|   Prepaids & other              | 30            |
|   Equipment, net                    | 40            |
|   Intangible assets                 | 4,080         |
|   Goodwill                          | 4,177         |
|     Total assets acquired | 9,783         |
|                                               |                    |
|   Accounts payable                  | (422)              |
|   Accrued expenses                  | (97)               |
| **  **Deferred revenue              | (655)              |
|   Common stock issued to sellers    | (3,183)            |
|                                               |                    |
|   Cash paid                         | $ 5,426  |

**TRIPOS, INC.**

**NOTES TO UNAUDITED CONSOLIDATEDFINANCIAL STATEMENTS**

 **(In thousands,except per share data)**

**(1)     Summary ofSignificant Accounting Policies**

#### Organization

Our discoveryinformatics and discovery research products and services enable life sciencecompanies to enhance their drug discovery capabilities.  We combine ourresources in computer-aided molecular design, cheminformatics, chemistryresearch and production, with scientists on our staff to address the challengesfacing pharmaceutical research organizations. These pharmaceutical firmsdeliver products and services that are internationally recognized for theirinnovation and quality.  By formulating new chemical compounds and aiding ourpartners' design of new chemical compounds in ways that we believe are morelikely to result in drug discoveries, we offer our customers advantages interms of research cycle time, cost, and efficiency of research activities.

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**Item1.  Financial Statements (continued)**

We have formedcommercial relationships with most major pharmaceutical companies and with manyemerging biotechnology companies based on their use of some or all of ourproducts and services.  In addition, we have established strategiccollaborations with several of the companies based on our specific uniquecapabilities.  Representative pharmaceutical clients include: Sanofi-Aventis,Bayer, Bristol-Myers Squibb, Pfizer, and Schering AG.  Representativebiotechnology clients include: CeNeS, BioTie and Chronogen.  

Tripos was formed in1979 to commercialize software for molecular visualization, analysis anddesign.  In building our discovery informatics services, we have focused ondeveloping an integrated suite of offerings to stay at the leading edge ofscientific research.  In addition to creating discovery informatics product andservice offerings, our chemistry research activities have created anopportunity for us to participate in therapeutic collaborations with certain ofour customers, giving us the potential for milestones and/or royalty interestsin early-stage new drug candidates.

Our business model isbased primarily on deriving recurring revenues from our discovery informaticsand discovery research businesses and secondarily on achieving contributionsfrom therapeutic collaborations if and when new therapeutics are developed. The following is a description of each area of our business:

•        *DiscoveryInformatics Products and Services.* The SYBYL® and UNITY®software suites are the foundation of our discovery informatics product(software) offerings.  These suites provide integrated tools for computer-aidedmolecular modeling and visualization, virtual screening (docking),combinatorial library design, data storage and analysis, and structure-activityrelationships to customers in pharmaceutical, biotechnology and related lifescience fields of research.  We offer over fifty (50) software products forthese research areas.  We recently introduced Windows®-basedprograms such as Lithium®,BenchwareTM and SARNavigatorTM, along with other desktop systems toreach beyond the traditional computational chemistry user base within lifescience research organizations:  LITHIUM facilitates visualization andcommunication of computational models to other parts of the organization;Benchware enables combinatorial library enumeration and design to be performedby bench scientists; and SARNavigator provides an intuitive means ofhigh-throughput screening (HTS) data analysis.

           Additionalnew Tripos products and technologies will enable management of modern researchlaboratory operations as well as data analysis: the Tripos Electronic NotebookTMprovides researchers with a common interface to enter all experimental data andstore such knowledge and experience for future query and retrieval; ChemCoreRIOTMis a chemical registration, inventory and ordering system; ModelBaseTMis an Oracle® based system for storage and retrieval ofcomputational and therapeutic product knowledge; and the Auspyx® data cartridge is asupporting technology for storing and searching chemical data within Oraclerelational databases.  These products and technologies are provided to clientsthrough a license arrangement and typically involve some services to facilitatea smooth implementation.  Customized software development projects can also bean avenue to assist customers to resolve specific research issues that requirenew scientific methods, techniques and analytical tools.

•        *DiscoveryResearch Products and Services.*Tripos Discovery Research Centre's laboratories,based in the United Kingdom, offer compound analysis, design and synthesis anda complete suite of lead discovery, optimization, and recovery projects on afee per service basis. Certain projects are focused on specific therapeutictargets that may result in our obtaining an ownership or economic interest in theproducts resulting from our research.  Typically such ownership positionsresult only when we invest through contribution of discounted services or ofin-kind products or 

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**Item 1.  FinancialStatements (continued)**

      servicesto a project or through specific and unique scientific expertise.  We entersuch collaborations on an opportunistic basis if and when scientific andfunding resources are available.  Our intent is to pursue improved returns fromthese projects.  We do not seek to become a therapeutics company.

We have a geographicallydiverse customer base, with over half of our revenues derived from customersoutside of North America.  Our worldwide sales force operates from offices inthe United States, Canada, England, France, and Germany, and throughrepresentatives around the Pacific Rim.  Our headquarters is in St. Louis,Missouri and our chemistry laboratory is in Cornwall, England.

** **

**Basis of Presentation**

The accompanyingunaudited consolidated financial statements have been prepared in accordancewith generally accepted accounting principles for interim financial informationand with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes requiredby accounting principles generally accepted in the United States for completefinancial statements.  In the opinion of management, all normal recurringadjustments necessary for a fair presentation of such financial statements havebeen included.  For a further description of accounting policies, please referto the "Critical Accounting Policies" section in the Company's annualreport on Form 10-K for the year ended December 31, 2004.  Operating resultsfor the three-month periods ended March 31, 2005 are not necessarily indicativeof the results that may be expected for the year ending December 31, 2005.

** **

**Revenue Recognition **

** **

**Discovery InformaticsProducts**

** **

We recognize revenues inaccordance with the American Institute of Certified Public Accountants (AICPA)Statement of Position (SOP) 97-2, "Software Revenue Recognition," asamended.  Revenues from informatics software license agreements are recognizedwhen each of the following criteria are met as set forth in paragraph 8 of SOP97-2: (1) persuasive evidence of an arrangement exists, (2) delivery hasoccurred, (3) the fee is fixed or determinable, and (4) collectibility isprobable.

We allocate revenues onperpetual software arrangements involving multiple elements to each elementbased on the relative fair values of each element.  Our determination of fairvalue of each element in multiple element arrangements is based onvendor-specific objective evidence (VSOE).  We limit our assessment of VSOE foreach element to the price charged when the same element is sold separately.  Wehave analyzed all of the elements included in our multiple-element arrangementsand determined that we have sufficient VSOE to allocate revenues to maintenanceand support services, and training.  We sell training separately and haveestablished VSOE on this basis.  VSOE for maintenance and support is determinedbased upon the renewal rates in contracts themselves, which is based on a fixedpercentage of the current perpetual license list price.  Accordingly, assumingall other revenue recognition criteria are met, revenues from perpetuallicenses are recognized upon delivery of the software using the residual methodin accordance with SOP 98-9, "Modification of SOP 97-2, Software RevenueRecognition, with Respect to Certain Transactions."

 

Softwaremaintenance agreements provide technical support and the right to unspecifiedenhancements and upgrades on a "when-and-if-available" basis. Post-contract customer support revenues on perpetual agreements are recognizedratably over the term of the support period (generally one-year), and training

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**Item 1.  FinancialStatements (continued)**

** **

and other servicerevenues are recognized as the related services are provided.  Any unrecognizedportion of amounts paid or billed in advance for licenses and services isrecorded as deferred revenue.

Term and Bundledlicenses represent time-based license arrangements for one or multiple softwareproducts that are sold with maintenance and support for the term of the licensearrangement.  We do not have VSOE to determine fair value of the maintenanceand support in term arrangements and therefore recognize revenues from thesebundled time-based licenses ratably over the license term, which is typically 1to 3 years. 

**Discovery InformaticsServices**

Discovery InformaticsServices (DIS) represents contracts for the development and delivery ofenterprise-wide customized software (such as laboratory information systems ordatabase integration projects).  Technological feasibility exists on thesesoftware arrangements and they typically include installation at the customer'ssite.  We account for these arrangements in accordance with SOP 81-1, asrequired by SOP 97-2 since the contract to deliver software and installationrequires significant production, modification or customization of software.

In applying theprovisions of SOP 81-1 the percentage of completion method is utilized.  Forcontracts where customer approval of contractually required tasks must occur ateach distinct milestone, and where amounts billable are indicative ofprogress-to-completion, we record revenues when a milestone has been met andaccepted by the customer.  For contracts without distinct milestones, wemeasure progress using the cost-to-cost method, which approximates progresstowards completion.  When current estimates of total contract revenue andcontract cost indicate a loss, a provision for the entire loss on the contractis made in the period that the loss becomes evident.

** **

DIS also includessoftware development ("SD") projects that are contractualarrangements with customers for use of our software developers in an effort todevelop a scientific software tool for use in drug discovery.  Billings may beon a time and materials basis; accordingly, we record the related revenue whenthe time and costs are incurred at the stated contractual rates.  Othercontracts may be accounted for under milestone or completed contract basisdepending on the negotiated terms.  For these arrangements, cost and revenuesare deferred until achievement of the milestone or completion of the contract. 

**Discovery ResearchProducts and Services**

Discovery research sales include: (1) sales of chemicalcompounds from inventory, (2) long-term contracts to design and producechemical compounds to customer specifications, or (3) contracts to performdiscovery research activities. 

We recognize revenue from the sale of chemical compoundsupon shipment of the products, FOB shipping point, to the customer.  Thispractice is consistent with the four criteria required for revenue recognitionlisted in paragraph 1 of Staff Accounting Bulletin ("SAB") 101 issued by theU.S. Securities and Exchange Commission ("SEC").  For chemical compoundtransactions, persuasive evidence of an agreement exists upon the receipt of acontract outlining the purchase and usage terms of the compounds.  A purchaseorder may also be received as confirmation.  As stated above, revenue is notrecognized until the compounds have been shipped to the customer.  The sellingprice for compounds is fixed according to the terms of the contract orcustomer's purchase order.  Payment terms for chemical compound 

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**Item 1.  Financial Statements (continued)**

transactions are Net 30 days.  We have experienced veryfew bad debts arising from these product transactions; as a result,collectibility is reasonably assured.

In accordance with SOP 81-1, sales derived from long-termcontracts to design and produce chemical compounds to customer specificationsare recorded using the percentage of completion method as the compounds aredelivered (under the units of delivery method).  The contract costs related todelivered compounds are recorded to cost of sales as the compounds aredelivered and revenue is recognized.

            

Discovery research activities may involve lead compoundoptimization projects, custom synthesis, and compound design.  These contractsgenerally call for non-refundable contractual fees tied to time and materials. Accordingly, revenues under contracts of this type are recorded on a time andmaterial basis.  When contracts to perform discovery research activitiesrequire a specific deliverable, the direct and incremental contract costs aredeferred.  Revenue and the contract costs are then recorded upon delivery andacceptance.

** **

**Hardware Sales**

Hardware sales are recorded upon delivery unlessdelivered in connection with a contractual arrangement involving term orbundled software licenses.  When hardware is sold in conjunction with a term orbundled license, the entire contractual revenue amount is recognized ratablyover the term or bundled software license period and the related hardware costsare deferred and recorded in cost of sales ratably over the same period.

** **

**Stock-based Compensation**

We account for stockoption plans under the intrinsic value method as permitted under AccountingPrinciples Board Opinion No. 25 ("APB 25"), "*Accounting forStock Issued to Employees*", and related Interpretations.  Under APB25, generally no compensation expense is recognized because the exercise priceof the options equals the fair value of the stock at the grant date.

The following tableillustrates the effect on net income and earnings per share for thethree-months ended March 31, 2005 and 2004 as if the Company had applied thefair value recognition provisions of SFAS 148, "*Accounting forStock-Based Compensation--Transition and Disclosure*", to stock-basedemployee compensation. 

|                                                                                                                                                                                                                |       |       | **Three-month Period** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------------------|
|                                                                                                                                                                                                                |       |       |                   | Restated

**03-31-2005** |  

03-31-2004 |
| Net  loss as reported                                                                                                                                                                                          | ** ** | ** ** | ** **             | **$ (19)** | $ (25) |
| Deduct:  Total stock-based employee

   compensation  expense determined 

   under  fair value based method for all

   awards,  net of related tax effects | ** ** | ** ** | ** **             | ** **

** **

** **

**115 ** | 239  |
| Pro  forma net loss                                                                                                                                                                                            | ** ** | ** ** | ** **             | **$(134)** | $ (264) |
|                                                                                                                                                                                                                | ** ** | ** ** | ** **             | ** ** |  |
| Pro  forma loss per share:                                                                                                                                                                                     | ** ** | ** ** | ** **             | ** ** |  |
|       Basic  and diluted- as reported                                                                                                                                            | ** ** | ** ** | ** **             | **$(0.00)** | $ (0.00) |
|       Basic  and diluted- pro forma                                                                                                                                              | ** ** | ** ** | ** **             | **$(0.01)** | $ (0.03) |
|                                                                                                                                                                                                                | ** ** | ** ** | ** **             | ** ** |  |

| 11 |
|----|

                                                                                                                                                

----

**Item 1.  Financial Statements (continued)**

**Income Taxes**

 We account for incometaxes in accordance with Statement of Financial Accounting Standards No. 109("FAS 109"), *Accounting for Income Taxes,* which prescribes the use ofthe asset and liability method whereby deferred tax assets or liabilities arecalculated at the balance sheet date using current tax laws and rates ineffect.  Valuation allowances are established when necessary to reduce deferredtax assets when it is more likely than not that a portion or all of thedeferred tax assets will not be realized.  In accordance with FAS 109, incometax expense includes 1) deferred tax expense, which generally represents thenet change in the deferred tax asset or liability balance during the periodplus any change in valuation allowances, and 2) current tax expense, whichrepresents the amount of tax currently payable to or receivable from a taxingauthority.  The primary difference between financial statement income andtaxable income results from the use of different methods of computingdepreciation, capitalized development cost, certain revenue recognitionactivities, other timing differences and the valuation of net operating losscarryforwards.  Deferred taxes do not reflect temporary differences relating toour investment in foreign subsidiaries as these amounts have been deemed to bepermanently invested.  Estimating the deferred tax position on these amounts isnot practical.

The effective tax ratefor 2005 reflects management's current estimate of the distribution of earningsamong the statutory jurisdictions in which we operate and the valuation ofcertain tax credits and net operating losses in the U.S. and U.K. from priortax years (each ending December 31).  Valuation allowances established fordeferred tax assets related to net operating losses does not impair our abilityto use those deferred tax assets upon achieving profitability in the relatedjurisdictions.  Upon the recognition of income in future periods in thejurisdictions where the deferred tax assets were created, release of thecorresponding valuation allowances may result in a lower effective tax rate.

** **

**(2)     ContingentLiabilities**

On or about July 24,2003, the Company and two of its executive officers, Dr. John P. McAlister andMr. B. James Rubin, were sued in federal district court in St. Louis, Missourion behalf of purchasers of the Company's common stock during the first half of2002.  The consolidated class action complaint alleged that statements made bythe Company in press releases and other public disclosures contained materiallyfalse and misleading information in violation of the federal securities laws. On or about May 5, 2004, plaintiffs filed a second amended complaint on behalfof a purported class of purchasers of the Company's common stock betweenFebruary 9, 2000 and July 1, 2002 (the "Class Period").  The second amendedcomplaint generally alleges that, during the Class Period, defendants made falseor misleading statements of material fact about the Company's prospects andfailed to follow generally accepted accounting principles in violation of thefederal securities laws.  The second amended complaint also names Ernst &Young LLP, the Company's former independent registered public accounting firm,as a co-defendant.  In August 2004, the Company and the individual defendantsand Ernst & Young filed motions to dismiss the second amended complaint. The amount of damages being sought is unspecified at this time. Although theCompany believes that it has meritorious defenses to the claims alleged againstit in this action, it is too early in the litigation to provide an accurateassessment of the likelihood or the extent of any liability arising from thismatter.

| 12 |
|----|

                                                                                                                                                

----

**Item 1.  FinancialStatements (continued)**

** **

**(3)     ComprehensiveIncome (Loss)**

The components ofcomprehensive income, net of related tax, for the three-month periods endedMarch 31, 2005 and 2004 were as follows:

|                                                                             |       |   | **Three-month Period** |
|-----------------------------------------------------------------------------|------------|--------|------------------------|
|                                                                             | ** ** |        |                   | Restated

**03-31-2005** |  

03-31-2004 |
| Net loss                                                                    | ** ** |        |                        | **$ (19)** | $ (25) |
| Unrealized gain (loss)on marketable securities                              | ** ** |        |                        | **42 ** | 7  |
| Less: reclassification for gains included in  net

   Income | ** ** |        |                        | ** **

**(113)** | (90) |
| Foreign currency translation adjustments                                    | ** ** |        |                        | **509 ** | 321  |
| Comprehensive income                                                        | ** ** |        |                        | **$ 419 ** | $ 213  |

The components ofaccumulated other comprehensive income, net of related tax, at March 31, 2005and December 31, 2004 were as follows:

|                                          | Restated 

**03-31-2005** |  

12-31-2004 |
|------------------------------------------|--------------------------------|--------------------|
| Foreign currency translation adjustments | **$ (1,120)**             | $ (1,629)     |
| Unrealized gain on marketable securities | **25 **                   | 96            |
| Accumulated other comprehensive  loss    | **$ (1,095)**             | $ (1,533)     |

** **

** **

** **

**(4)     SignificantCustomers **

** **

During the first quarterof 2005, revenues from Pfizer, Inc. represented 46% of total net sales.  Forthe same period in 2004, Pfizer represented 57% of total net sales.  No othercustomers represented over 10% of total net sales in either period.  We haveprovided products and services to Pfizer under three separate contracts:multi-year worldwide licenses to our discovery software products, multi-yearcollaborative software development project and a $90 million four-yeardiscovery research project to design and synthesize exclusive compoundlibraries. 

| 13 |
|----|

                                                                                                                                                

----

**Item 1.  FinancialStatements (continued)**

** **

**(5)     Earnings PerShare**  

The following table setsforth the computation of basic and diluted earnings per share for thethree-month periods ended March 31, 2005 and 2004.

|                                                                                                    |       |       | **Three-months Ended** |
|----------------------------------------------------------------------------------------------------|------------|------------|------------------------|
|                                                                                                    | ** ** |            |                   | Restated

**03-31-2005** |  

03-31-2004 |
| **Numerator:**                                                                                     | ** ** |            |                        | ** ** |  |
| Numerator for basic earnings per  share--net loss                                             | ** ** |            |                        | **$ (19)** | $ (25) |
| **Denominator:**                                                                                   | ** ** |            |                        | ** ** |  |
| Denominator for basic earnings per share--

   Weighted average shares              | ** ** |            |                        | ** **

**10,060 ** | 9,047  |
| Effect of dilutive securities:                                                                     | ** ** | ** ** | ** **             | ** ** | ** ** |
|    Employee stock options    --Note A                                     | ** ** |            |                        | **-- ** | --  |
| Denominator for diluted earnings  per share--

   Adjusted weighted  average shares | ** ** |            |                        | ** **

**10,060 ** | 9,047  |
| **Basic** and diluted loss per share                                                               | ** ** |            |                        | **$ (0.00)** | $ (0.00) |

For additionaldisclosures regarding earnings per share, see the notes to the Company's 2004consolidated financial statements in its Form 10-K.

--Note A: For thethree-months ended in 2005 and 2004, weighted average shares outstanding didnot include 78 shares and 299 shares, respectively, related to the effect ofemployee stock options as their inclusion would have been anti-dilutive.

** **

**(6)     Inventory**

We maintain a physicalinventory of chemical compound libraries in various states of completion. Costs associated with the manufacture of compounds are calculated using thestandard cost method and are carried at the lower of cost (standard cost methodapproximating FIFO) or market.  Compounds that are acquired from third partiesare also carried at the lower of cost or market.  In calculating the reservefor obsolescence, collections of compounds are reviewed for their age andcumulative sales trends, and if necessary, a reserve provision is made so thatthe carrying value is at or below the respective net realizable values.  Ifthere is, in our opinion, a significant adverse deviation in sales trends for aspecific compound collection or library, an additional reserve provision istaken.  A portion of the inventory is used in discovery research projects. Depreciation of this inventory is recorded in the reserve for obsolescence overits 10-year expected useful life.  Work in process and finished goods inventoryincludes the accumulated cost of compounds in production or awaiting shipmentto customers under discovery research or custom synthesis contracts.  Inventorybalances at March 31, 2005 and December 31, 2004 were:

|                                                                                                                            | **03-31-2005**                     | 12-31-2004                 |
|----------------------------------------------------------------------------------------------------------------------------|------------------------------------|----------------------------|
|      Raw materials                                                                                | **$ 2,170 **             | $ 2,124          |
|      Work in process                                                                              | **5,379 **                    | 6,594                 |
|      Finished goods                                                                               | **6,398 **                    | 6,815                 |
|      Reserve for  obsolescence                                                                    | **(3,577)**                        | (3,526)                    |
|          Total  inventory                                                     | **$ 10,370 **            | $ 12,007         |
| Costs of discovery research projects included  in 

    Work in Process and  Finished Goods above | ** **

**$ 5,557 ** |  

$ 7,468  |

| 14 |
|----|

                                                                                                                                                

----

** **

**Item 1.  FinancialStatements (continued)**

**(7)     Time-basedSoftware License Arrangements**

Certain time-basedsoftware license arrangements are covered by non-cancelable agreements whoseterms generally range from one to three years.  Revenue from these time-basedsoftware license arrangements is recognized ratably over the agreed term.  Thefollowing table shows the amount of revenues to be recognized from thesenon-cancelable arrangements after March 31, 2005:

|  | Revenues to be  recognized in:    | Amount        |
|--|-----------------------------------|---------------|
|  |    2005            | $ 15,321 |
|  |    2006            | 10,067        |
|  |    2007            | 5,361         |
|  |    2008  and later | 335           |
|  | Total                             | $ 31,084 |

Tripos is typically paidannually under these contracts.  Shown below are the amounts to be billed underthese contracts subsequent to March 31, 2005 (amounts not included in theaccompanying balance sheets at March 31, 2005).

|  | Amounts to be billed  in: | Amount        |
|--|---------------------------|---------------|
|  |    2005    | $ 7,582  |
|  |    2006    | 7,367         |
|  |    2007    | 1,093         |
|  |    2008    | 60            |
|  | Total                     | $ 16,102 |

** **

**(8)     Goodwilland Other Intangible Assets**

** **

At March 31, 2005 and December31, 2004, the Company had the following intangible asset balances: 

|                        |  | March 31, 2005 |  | December 31, 2004 |
|------------------------|--|----------------|--|-------------------|
|                        |  | Gross          |  |                   |  | Gross |  |  |
|                        |  | Carrying       |  | Accumulated       |  | Carrying |  | Accumulated |
|                        |  | Amount         |  | Amortization      |  | Amount |  | Amortization |
| Acquired software      |  | $ 3,760   |  | $ 123        |  | $ -- |  | $ -- |
| Noncompete agreements  |  | 320            |  | 21                |  | -- |  | -- |
| Patents and trademarks |  | 183            |  | 96                |  | 183 |  | 93 |
| Total                  |  | $ 4,263   |  | $ 240        |  | $ 183 |  | $ 93 |

Amortization expense wasapproximately $47 and $3 for the three-month periods ended March 31, 2005 and2004, respectively.  Estimated annual amortization expense for the next 5 yearsis: 2005 - $588; 2006 - $588; 2007 - $578; 2008 - $576 and 2009 - $120.

The changes in the carryingamount of goodwill for the three months ended March 31, 2005 are as follows:

|                                       |  | Discovery    |  | Discovery  |  |              |
|---------------------------------------|--|--------------|--|------------|--|--------------|
|                                       |  | Informatics  |  | Research   |  | Total        |
| Balance at December  31, 2004         |  | $ --    |  | $ 965 |  | $ 965   |
| Acquisition of Optive  Research, Inc. |  | 4,177        |  | --         |  | 4,177        |
| Balance at March 31,  2005            |  | $ 4,177 |  | $ 965 |  | $ 5,142 |

The goodwill related tothe acquistion of Optive is not tax deductible.

| 15 |
|----|

                                                                                                                                                

----

**Item 1.  Financial Statements (continued)**

** **

**(9)     DebtFacilities**

We have existing creditfacilities provided by LaSalle Bank in the form of a revolving line of creditand a mortgage loan for our corporate headquarters building.  The creditfacilities are collateralized by substantially all of our U.S. assets and stockpledges for each of the U.S. and U.K. subsidiaries.

The mortgage note callsfor even quarterly principal payments based on a twenty-year amortizationschedule.  Borrowings under the mortgage are subject to a variable interestrate at LIBOR plus 2.25%.  Interest rates paid by the Company on the mortgageaveraged 4.8% during the first quarter of 2005.  As of March 31, 2005, $3,861was remaining on the mortgage.

The revolving facility wasa one-year commitment for a $6,000 line of credit. Covenants under therevolving facility include minimum interest coverage, minimum shareholders'equity, maximum capital expenditure and an annual clean down period of 30consecutive days in which no borrowings are outstanding.  We were in compliancewith all covenants as of March 31, 2005 and March 31, 2004 and achieved the30-day clean down provision in July 2004.  The line of credit carries acommitment fee of 3/8% of the unused portion of the line.  At March 31, 2005,we had $2,500 of borrowings outstanding. Due to the one-year commitment of theamended credit facility, draws on the line of credit are classified asshort-term debt.

Subsequently, in April2005, the Company and LaSalle Bank entered into an amendment to the existingcredit facility and mortgage loan.  The revolving line of credit continues as aone-year commitment, however, borrowing capacity increased to $6,500.  Allother terms of the revolving line of credit remain the same, including allcovenants.  At December 31, 2004, the balance owed on the mortgage note of$3,914 was presented as a current liability on the balance sheet since it wasdue within a one-year period.  The April 2005 amendment extends the maturity ofthe mortgage from December 2, 2005 to April 18, 2008, therefore amounts due inexcess of one year, $3,643, have been classified as long-term liabilities while$218 remains classified as short-term.

In connection with theOptive acquisition, the Company issued a subordinated promissory note toHorizon Technology Finance with a face value of $3,500 and a stated interestrate of 11.42%.  The repayment terms of the promissory note require monthlyinterest only payments of $33 for the first 18 months, followed by 30 monthlypayments of $135 beginning on August 1, 2006.  Each payment of principal willbe accompanied by payment of accrued but unpaid interest to the date of thepayment.  In addition, as part of the financing transaction, 112 shares ofcommon stock were issued to Horizon and Sand Hill Capital at a discounted priceof $4.48 per share.  156 warrants to purchase common stock were issued toHorizon at a negotiated price of $4.48.  When taken as a whole, thesetransactions resulted in an original issuance debt discount of $222 that isbeing amortized to interest expense over the life of the loan.  

**(10)     Long-termInvestments**

Since 2001, we haveinvested in the Life Science Ventures II fund administered by A.M. Pappas. This fund invests in new and developing companies in the life science sector. Our investment commitment of $2,500 represents approximately 2.2% of the totalcapital of the fund.  As of March 31, 2005 we had invested $1,875 or 75% of ourtotal commitment.  The fund records investment impairments when identified, forwhich we recognize our pro-rata share of such impairments.  The fund's managersdetermined that certain investments were impaired.  We recorded our pro-ratashare of the fund's investment impairments, totaling $88 in the first quarterof 2005. 

| 16 |
|----|

                                                                                                                                                

----

**Item 1.  FinancialStatements (continued)**

** **

**(11)     Segments**

The Company operates intwo industry segments, Discovery Informatics and Discovery Research.   TheCompany's Discovery Informatics segment designs, or in-licenses, and sellslicenses to software suites that provide computer-aided molecular modeling andvisualization, visual screening, combinatorial library design, data storage andanalysis, and structure-activity relationships to customers in pharmaceutical,biotechnology and related life science fields of research.  The Company'sDiscovery Research segment provides drug discovery services to pharmaceuticaland biotechnology companies.  High-end services offered are based onapplication by Tripos of its proprietary high-throughput combinatorialchemistry, and Tripos' ChemspaceTM database searching and selectiontechnologies, including the Lead HoppingTM method for quickidentification of alternative chemistries for the customer's problem.

Summarized financialinformation concerning the industry segments follows:

DI=Discovery  Informatics

DR=Discovery Research

|                                                                | ** ** | ** **                     |
|----------------------------------------------------------------|------------|--------------------------------|
|                                                                | ** ** | **Three Months-End March 31,** |
|                                                                | ** ** |                                | **2005** |  | 2004 |
|                                                                | ** ** |                                |  |  | **DI** | **DR** | **Total** |  | DI | DR | Total |
| Revenues:                                                      |            |                                |  |  |  |  |  |  |  |  |  |
| DI products                                                    | ** ** | ** **                     | ** ** |  | $ 6,273 | $ -- | $ 6,273  |  | $ 6,018 | $ -- | $ 6,018  |
| DI services                                                    | ** ** | ** **                     | ** ** |  | 668 | -- | 668  |  | 715 | -- | 715  |
| DR products &  services                                    | ** ** | ** **                     | ** ** |  | -- | 8,102 | 8,102  |  | -- | 8,727 | 8,727  |
| Total revenues                                                 | ** ** | ** **                     | ** ** |  | $6,941 | $ 8,102 | $ 15,043  |  | $ 6,733 | $ 8,727 | $ 15,460  |
|                                                                |            |                                |  |  |  |  |  |  |  |  |  |
| Depreciation &  amortization                               | ** ** | ** **                     | ** ** |  | $ 408 | $ 950 | $ 1,358  |  | $ 130 | $ 426 | $ 556  |
| Non-allocated corporate                                        | ** ** | ** **                     | ** ** |  |  |  | 150  |  |  |  | 121  |
| Depreciation &  amortization on on statement of operations | ** ** | ** **                     | ** ** |  |  |  | $ 1,508  |  |  |  | $ 677  |
|                                                                | ** ** | ** **                     | ** ** |  |  |  |  |  |  |  |  |
| Operating income                                               | ** ** | ** **                     | ** ** |  | $ 1,093 | $ 683 | $ 1,776  |  | $ 918 | $ 711 | $ 1,629  |
| Non-allocated corporate departments                            | ** ** | ** **                     | ** ** |  |  |  | (1,471) |  |  |  | (1,711) |
| Operating income (loss)  on  per statement of operations  | ** ** | ** **                     | ** ** |  |  |  | $ 305  |  |  |  | $ (82) |
|                                                                | ** ** | ** **                     | ** ** |  |  |  |  |  |  |  |  |
| Long-lived assets                                              | ** ** | ** **                     | ** ** |  | $ 17,471 | $ 24,230 | $ 41,701  |  | $ 9,468 | $ 23,543 | $ 33,011  |
|                                                                | ** ** | ** **                     | ** ** |  |  |  |  |  |  |  |  |
| Total assets (1)                                               | ** ** | ** **                     | ** ** |  | $ 28,829 | $ 41,381 | $ 70,210  |  | $ 22,341 | $ 41,261 | $ 63,602  |
| Consolidated cash                                              | ** ** | ** **                     | ** ** |  |  |  | 5,616  |  |  |  | 6,526  |
| Total assets on balance  sheet                                 | ** ** | ** **                     | ** ** |  |  |  | $ 75,826  |  |  |  | $ 70,128  |

* *

(1)           Excludes cash and cash equivalents of $5,616 and $6,526 in 2005 and2004, respectively as cash and cash equivalents are monitored on a consolidatedbasis.

| 17 |
|----|

                                                                                                                                                

----

 

**Item 1.  FinancialStatements (continued)**

** **

**(12)     BusinessCombination**

On December 22, 2004 weannounced an agreement to acquire Optive Research, Inc. ("Optive"), a U.S.software company offering discovery informatics products complementary with ourown to the pharmaceutical and biotechnology industry.  We acquired Optive tomaintain access to products presently being distributed by us and to gainaccess to new technologies being developed.  The transaction was completed onJanuary 5, 2005, for consideration including cash and stock. The acquisitionwas accomplished through a merger of a newly−formed, wholly−ownedsubsidiary of Tripos with and into Optive, with Optive surviving as oursubsidiary. Under the terms of the agreement, we issued 600 shares of ourcommon stock with a value of $3,183 (a portion of which is restricted and willvest evenly on a semi-annual basis over 2 years) and $4,750 in cash to Optive'sformer shareholders. The cash portion was funded by a group of new investorsthrough the issuance of $3,500 of subordinated debt bearing an interest rate of11.42%, 112 shares of common stock with a negotiated value of $500 and warrantsto purchase 156 shares of common stock at $4.48 per share.  Optive's operatingrevenues prior to the acquisition were approximately $2,400, including nearly$900 of royalty payments made by us.  The purchase price, including estimateddirect acquisition costs, has been allocated as follows:

| Cash                                              | $ 647  |
|---------------------------------------------------|------------------|
| Accounts receivable                               | 809         |
| Prepaid expenses                                  | 30          |
| Property &  equipment, net                    | 40          |
| Intangible software  & non-compete agreements | 4,080       |
| Goodwill                                          | 4,177       |
| Accounts payable                                  | (422)            |
| Accrued expenses                                  | (97)             |
| Deferred revenue                                  | (655)            |

The allocation of purchaseprice is subject to change pending the completion of the Company's valuation oftangible and intangible assets acquired.  The Company does not expect any suchchanges to be material.

Optive's results ofoperations are included in our consolidated statements of operations from thedate of acquisition.

**(13)     NewAccounting Pronouncements**

In November 2004, theFinancial Accounting Standards Board ("FASB") issued Statement ofFinancial Accounting Standards ("SFAS") No. 151 "InventoryCosts-an amendment of ARB No. 43, Chapter 4" ("FAS 151").  FAS151 clarifies the accounting for abnormal amounts of idle facility expense,freight, handling costs, and wasted material (spoilage) to require that theseitems be included as current-period charges and not included in overhead.  Inaddition, FAS 151 requires that allocation of fixed production overheads to thecosts of conversion be based on the normal capacity of the productionfacilities.  The provisions in FAS 151 are effective for inventory costsincurred during fiscal years beginning after June 15, 2005.  We are in theprocess of evaluating the requirements of FAS 151 but do not expect theadoption of FAS 151 to have a significant effect on our financial statements.

In December 2004, the FASBissued SFAS No. 123 (revised 2004), "Share-Based Payment" (FAS 123R"), whichrevises and replaces SFAS No. 123, "Accounting for Stock-Based Payment" andsupercedes APB Opinion No. 25, "Accounting for Stock Issued to Employees."  FAS123R requires the measurement of all share-based payments to employees,including grants of employee stock options, using a fair-value based 

| 18 |
|----|

                                                                                                                                                

----

**Item 1.  FinancialStatements (continued)**

** **

**(13)     NewAccounting Pronouncements (continued)**

method and the recordingof such expense in our consolidated statements of operations.  The pro-formadisclosures previously permitted under SFAS No. 123 will no longer be analternative to financial statement recognition.  The provisions of FAS 123Rwere to have been effective for reporting periods beginning after June 15,2005.  At the end of March, the SEC staff released Staff Accounting BulletinNo. 107 (SAB 107), providing guidance for implementing FASB Statement No. 123(revised 2004), *Share-Based Payment* (Statement 123R).  Subsequently, theCommission delayed the implementation dates for Statement 123R to the start ofa Company's fiscal year.  As a result, we will be required to comply with theprovisions of FAS 123R beginning January 1, 2006.  We are currently evaluatingthe requirements of FAS 123R, but because we are presently accounting foremployee stock option grants in a footnote disclosure as permitted by SFAS No.123, the adoption of FAS 123R will have an impact on our results of operationseffective upon adoption.

** **

** **

**(14)     Restatement**

** **

On February 28, 2006, managementconcluded and the Audit  Committee of the Board of Directors agreed that theCompany's condensed consolidated financial statements included in its QuarterlyReports on Form 10−Q for the fiscal quarters ended March 31, 2005, June30, 2005 and September 30, 2005 should be restated to correct an error relatingto accounting for foreign exchange transaction gains and losses from certainintercompany transactions and that such previously filed financial statementsshould no longer be relied upon.  This conclusion was reported in a CurrentReport on Form 8-K filed March 6, 2006.  The error found by management in a consolidatingfinancial statement spreadsheet application used solely for 2005 interimreporting related to foreign currency translation gains and losses fromintercompany transactions that should have been recorded in "Other income andexpense" on the statement of operations instead of "Other comprehensive income"within the shareholders' equity section of the balance sheet.  All other assetand liability accounts in the balance sheet and operating activity on thestatement of operations were properly reported.  This error affected foreigntranslation effects for the periods ending March 31, June, 30 and September 30,2005.  Previously reported amounts for 2004 were not affected by this error.  

The following tablespresent the effects of the restatement in the Consolidated Statement ofOperations and Consolidated Balance Sheets as of the period ended March 31,2005.

| 19 |
|----|

                                                                                                                                                

----

**TRIPOS, INC.**

**CONSOLIDATED STATEMENTSOF OPERATIONS**

|  (In  thousands, except per share data**)**                |       |       | Three-months Ended |
|-----------------------------------------------------------------|------------|------------|--------------------|
|                                                                 |       |       |               | As Reported

03-31-2005 | As Restated

03-31-2005 |
| Net  sales:                                                     | ** ** | ** ** | ** **         | ** ** |  |
|    Discovery  informatics products & support | ** ** | ** ** | ** **         | $ 6,263  | $ 6,263  |
|    Discovery  informatics services               | ** ** | ** ** | ** **         | 668  | 668  |
|    Discovery  research products & services   | ** ** | ** ** | ** **         | 8,102  | 8,102  |
|    Hardware                                      | ** ** | ** ** | ** **         | 10  | 10  |
| Total net sales                                                 | ** ** | ** ** | ** **         | 15,043  | 15,043  |
|                                                                 | ** ** | ** ** | ** **         |  |  |
| Cost  of sales                                                  | ** ** | ** ** | ** **         | 7,907  | 7,907  |
| Gross profit                                                    | ** ** | ** ** | ** **         | 7,136  | 7,136  |
|                                                                 | ** ** | ** ** | ** **         |  |  |
| Operating  expenses:                                            | ** ** | ** ** | ** **         |  |  |
|    Sales  and marketing                          | ** ** | ** ** | ** **         | 2,945  | 2,945  |
|    Research  and development                     | ** ** | ** ** | ** **         | 1,921  | 1,921  |
|    General  and administrative                   | ** ** | ** ** | ** **         | 1,965  | 1,965  |
| Total operating expenses                                        | ** ** | ** ** | ** **         | 6,831  | 6,831  |
|                                                                 | ** ** | ** ** | ** **         |  |  |
| Income from operations                                          | ** ** | ** ** | ** **         | 305  | 305  |
|                                                                 | ** ** | ** ** | ** **         |  |  |
| Interest  expense                                               | ** ** | ** ** | ** **         | (388) | (388) |
| Other  (loss), net                                              | ** ** | ** ** | ** **         | (199) | (7) |
| Loss before income taxes                                        | ** ** | ** ** | ** **         | (282) | (90) |
|                                                                 | ** ** | ** ** | ** **         |  |  |
| Income  tax benefit                                             | ** ** | ** ** | ** **         | (71) | (71) |
| Net loss                                                        | ** ** | ** ** | ** **         | $ (211) | $ (19) |
|                                                                 | ** ** | ** ** | ** **         |  |  |
| Basic  and diluted loss per share                               | ** ** | ** ** | ** **         | $ (0.02) | $ (0.00) |
| Basic  and diluted  weighted average number of shares      | ** ** | ** ** | ** **         | 10,060  | 10,060  |
|                                                                 | ** ** | ** ** | ** **         |  |  |
|                                                                 | ** ** | ** ** | ** **         |  |  |

| 20 |
|----|

                                                                                                                                                

----

**(14)     Restatement(continued)**

**TRIPOS, INC.**

**CONSOLIDATED BALANCESHEETS**

** **

| (In  thousands)                                                                                                                                                  | As Reported

03-31-2005 | As Restated

03-31-2005 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|-------------------------|
| ASSETS                                                                                                                                                           |                         |                         |
| Current  Assets:                                                                                                                                                 |                         |                         |
|      Cash  and cash equivalents                                                                                                         | $ 5,616       | $ 5,616       |
|      Marketable  Securities                                                                                                             | 71                 | 71                 |
|      Accounts  receivable, less allowances for doubtful accounts of $242                                                                | 9,809              | 9,809              |
|      Inventory                                                                                                                          | 10,370             | 10,370             |
|      Deferred  income taxes                                                                                                             | --                 | --                 |
|      Prepaid  expenses                                                                                                                  | 6,826              | 6,826              |
| Total current assets                                                                                                                                             | 32,692             | 32,692             |
|                                                                                                                                                                  |                         |                         |
|    Property  and equipment, less accumulated depreciation                                                                                         | 29,778             | 29,778             |
|    Capitalized  development costs, less accumulated amortization                                                                                  | 2,758              | 2,758              |
|    Goodwill                                                                                                                                       | 5,142              | 5,142              |
|    Intangible  assets, less accumulated amortization                                                                                              | 4,023              | 4,023              |
|    Investments  recorded at cost                                                                                                                  | 1,433              | 1,433              |
|    Other  assets, net                                                                                                                             | **-- **            | **-- **            |
| Total assets                                                                                                                                                     | $ 75,826      | $ 75,826      |
|                                                                                                                                                                  |                         |                         |
| LIABILITIES  AND SHAREHOLDERS' EQUITY                                                                                                                            |
| Current  Liabilities:                                                                                                                                            |                         |                         |
|      Current  portion of long-term debt                                                                                                 | $ 2,718       | $ 2,718       |
|      Current  portion of capital leases                                                                                                 | 3,706              | 3,706              |
|      Accounts  payable                                                                                                                  | 1,638              | 1,638              |
|      Accrued  expenses                                                                                                                  | 5,974              | 5,974              |
|      Deferred  revenue                                                                                                                  | 19,603             | 19,603             |
| Total current liabilities                                                                                                                                        | 33,639             | 33,639             |
|                                                                                                                                                                  |                         |                         |
|    Long-term  portion of capital leases                                                                                                           | 1,634              | 1,634              |
|    Long-term  debt                                                                                                                                | 6,935              | 6,935              |
|    Deferred  income taxes                                                                                                                         | 1,419              | 1,419              |
| Shareholders'  equity :                                                                                                                                          |                         |                         |
|      Common  stock, $0.01 par value; authorized 20,000 shares,

     issued  10,088 shares as of Mar. 31, 2005 | 101                | 101                |
|      Additional  paid-in capital                                                                                                        | 41,301             | 41,301             |
|      Retained  earnings (deficit)                                                                                                       | (8,300)                 | (8,108)                 |
|      Other  comprehensive (loss)                                                                                                        | (903)                   | (1,095)                 |
| Total shareholders' equity                                                                                                                                       | 32,199             | 32,199             |
|                                                                                                                                                                  |                         |                         |
| Total liabilities and shareholders' equity                                                                                                                       | $ 75,826      | $ 75,826      |
|                                                                                                                                                                  |                         |                         |

** **

** **

** **

** **

** **

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**TRIPOS, INC.**

**CONSOLIDATED STATEMENTSOF CASH FLOWS**

** **

| (In  Thousands)                                                                                 | Three-months Ended      |
|-------------------------------------------------------------------------------------------------|-------------------------|
|                                                                                                 | As Reported

03-31-2005 | As Restated

03-31-2005 |
| **Operating  activities:**                                                                      |                         |  |
| Net  loss                                                                                       | $ (211)            | $ (19) |
| Adjustments  to reconcile net income to 

net  cash provided by (used in) operating activities: |                         |  |
|    Depreciation  of property and equipment                                       | 1,328              | 1,328  |
|    Amortization  of capitalized development costs & intangibles              | 180                | 180  |
|    Amortization  of debt discount                                                | 14                 | 14  |
|    Appreciation  in foreign currency hedge instruments                           | 2                  | 2  |
|    Deferred  tax benefit                                                         | (237)                   | (237) |
|    Gain  from sale of marketable securities                                      | (182)                   | (182) |
|    Impairment  loss on long-term investment                                      | 88                 | 88  |
|                                                                                                 |                         |  |
| Change  in operating assets and liabilities:                                                    |                         |  |
|    Accounts  receivable                                                          | 5,565              | 5,565  |
|    Inventories                                                                   | 1,348              | 1,348  |
|    Prepaid  expenses and other current assets                                    | (1,618)                 | (1,618) |
|    Accounts  payable and accrued expenses                                        | (3,049)                 | (3,049) |
|    Deferred  revenue                                                             | (1,675)                 | (1,675) |
| Net cash provided by operating activities                                                       | 1,553              | 1,745  |
|                                                                                                 |                         |  |
| **Investing  activities:**                                                                      |                         |  |
| Purchases  of property and equipment                                                            | (1,076)                 | (1,076) |
| Capitalized  development costs                                                                  | (599)                   | (599) |
| Acquisition  of business, net of cash received                                                  | (4,779)                 | (4,779) |
| Proceeds  from the sale of marketable securities                                                | 338                | 338  |
| Investment  in unconsolidated affiliates                                                        | (125)                   | (125) |
| Net cash used in investing activities                                                           | (6,241)                 | (6,241) |
|                                                                                                 |                         |  |
| **Financing  activities:**                                                                      |                         |  |
| Proceeds  from stock issuance pursuant to stock purchase and option and option plans            | 8                  | 8  |
| Proceeds  from issuance of common stock                                                         | 500                | 500  |
| Net  borrowings under revolving line of credit                                                  | 1,900              | 1,900  |
| Proceeds  from issuance of long-term debt and capital leases                                    | 3,500              | 3,500  |
| Payments  on long-term debt and capital lease obligations                                       | (851)                   | (851) |
| Net cash provided by financing activities                                                       | 5,057              | 5,057  |
|                                                                                                 |                         |  |
| Effect  of foreign exchange rate changes on cash and cash equivalents                           | 1,076              | 884  |
|                                                                                                 |                         |  |
| Net increase in cash and cash equivalents                                                       | 1,445              | 1,445  |
|                                                                                                 |                         |  |
| Cash  and cash equivalents at beginning of period                                               | 4,171              | 4,171  |
| Cash and cash equivalents at end of period                                                      | $ 5,616       | $ 5,616  |
|                                                                        |                         |  |

** **

** **

** **

| 22 |
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**Item 2.  Management'sDiscussion and Analysis of Financial Condition and Results of Operations**

**Forward-lookingStatements**

The remainder of thisreport may contain certain statements that are forward-looking and involverisks and uncertainties.  Words such as "expects","anticipates", "projects", "estimates","intends", "plans", "believes", variations ofsuch words and similar expressions are intended to identify such forwardlooking statements.  These statements are based on current expectations andprojections made by management and are not guarantees of future performance. Therefore, actual events, outcomes and results may differ materially from whatis expressed or forecast in such forward-looking statements.  Among the factorsthat could cause actual results to differ materially from the forward-lookingstatements are set forth under the caption "Cautionary Statements -- AdditionalImportant Factors to be Considered" in Item 7, Management's Discussion andAnalysis of Financial Condition and Results of Operations("MD&A") in Tripos' Form 10*-*K for 2004.  Tripos undertakesno obligation to update any forward-looking statements in this Form 10-Q.

The following discussionshould be read in conjunction with the audited consolidated financialstatements and notes thereto.

** **

**Overview**

** **

We provide products andservices to the pharmaceutical, biotechnology, and life science industries tosupport early stage research activities.  Our offerings are applied principallyto assist research chemists to make decisions about the most productive newcompounds to make and test as potential therapeutics.  Through our ownchemistry laboratories, we can also make those compounds for our clients. Through strategic partnerships, we can also test compounds for our clients.

The industries that weserve are highly research driven.  Industry trade publications state thatmature pharmaceutical companies typically spend between 12% and 20% of theirannual revenues on research in the search for new blockbuster drugs.  Thisresearch process consists of several phases from early discovery of compoundsof interest, through testing of the promising ones for activity and safety inanimals, to final testing of these compounds in humans.  Our offerings are mostrelevant to the initial phase of this activity.  Our products and services aredesigned and intended to provide our pharmaceutical and biotechnology customerswith improved ways to identify and select the most promising drug candidates totake forward into the more expensive and time consuming stages of the drugdevelopment process.   Depending on the number of compounds that a particularcompany has in different stages of their new therapeutic pipeline, it mayreduce or increase investment in the other phases of research.  Further,decisions by the pharmaceutical industry concerning their research investmentsare strongly influenced by decisions by the various governments of the worldregarding drug pricing and regulation.

Our software productsare sold on a renewable license basis, typically with a term of one or threeyears.  This business is generally predictable, as we have experienced highrenewal rates in the past for licenses.  Our management closely monitorslicense expirations and deploys sales staff to ensure the highest probabilityof renewals.  Our service businesses, both informatics and chemistry, are muchless predictable.  The sales cycles for these offerings are typically long --from six months to eighteen months -- and are highly influenced by factors inthe macro-economic environment, including the general state of thepharmaceutical industry and the political situations in various parts of theworld.  To forecast potential business in these areas, our management strivesto closely interact with the management of our customers and is closelyinvolved in business development activities for service projects.

| 23 |
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**Item 2.            Management'sDiscussion and Analysis of Financial Condition and Results of Operations(continued)**

Large service contractsfor pharmaceutical research, both informatics and chemistry, are complex and,because they are deployed in research applications where outcomes areuncertain, have a large risk component.  Risk management in these projectsbegins with the definition of project requirements and continues throughperformance metrics and customer acceptance milestones.  Due to the complexityof the projects and changing priorities within client organizations, it istypical that many decision points will arise that require management attentionboth at Tripos and at the client.  To mitigate the project difficulties, wehave developed a process focus and management monitors milestones in the projectplan according to the process workflow.  Despite these efforts, however, someprojects are of sufficient complexity that they present challenges that requirerevisions to the project plan and scope. 

Having been a publiccompany spin-off in 1994 with limited capital, we have focused on profitabilityand cashflow.  That said, the company has not always been profitable, but wehave achieved profitability in certain years.  Major investments, such as therecent expansion of our chemistry research laboratories in England, have beenfunded by the proceeds from the sale of certain investments, cash fromoperations, temporary use of debt capacity, and grant funding from the Britishgovernment.

We license our discoverysoftware products and post-contract support ("PCS") as eitherperpetual licenses or time-based licenses, typically one to three-yearrenewable contracts.  The magnitude of these license fees is dependent on eachcustomer's required usage levels, that is, the number of locations and individualusers.  Variations in licensing levels range from the low hundred-thousands upto several million dollars.  The following are descriptions of our currentsales models for discovery software:

**Perpetuallicenses:**

Software pricing istaken from our price list based on the quantity of individual modules andnumber of users.  Customers are billed upon delivery.  Revenue for software isrecognized upon delivery of product and issuance of perpetual keys.  Supportpricing is a fixed percentage of the total current list price of the softwarepurchased and is billed annually.

We have analyzed theother elements included in our multiple-element arrangements involvingperpetual licenses, and determined that we have sufficient Vendor SpecificObjective Evidence ("VSOE") to allocate revenues to PCS and/ortraining.  VSOE for PCS and training is established based upon the pricecharged when those elements are sold separately.  For PCS this is establishedbased on the renewal rate specified in the arrangement, which is consistentlypriced at a percentage of the list price of the purchased licenses.  Trainingis charged consistently from our price list. 

**Bundledlicenses:**

In 1998, we began offering time-based bundled licenses as an alternativeto perpetual licenses.  This allows our customers to obtain multiplesoftware products bundled with PCS that is co-terminus with the period of thearrangement.  A bundled license includes specific software modules,specified numbers of users of each module with all product and access keysdelivered on or before the effective date of the contract.  Our software issold to professional users on an "off the shelf" basis in which the customer isresponsible for installation.  These non-cancelable, non-refundablecontracts are normally three years in duration, although certain customersrequest shorter or longer contract periods.  At the end of the contractterm, the customer must renew the license or the software will cease to operate. PCS, which includes unspecified updates, upgrades and "help desk" services, isincluded in the total price of the contract.  The PCS provided underbundled arrangements is the same as that provided to customers under perpetualagreements.  Bundled contract pricing is taken from our established pricelist for products (includes package pricing and a-la-cart pricing), number ofusers and length of term.  All contracted 

| 24 |
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**Item 2.      Management'sDiscussion and Analysis of Financial Condition and Results of Operations(continued)**

products are deliveredat inception.  If the customer should want additional modules, users or newsoftware products upon their release, the customer must enter into a newcontract (or addendum) and pay the incremental fees to purchase these items. Software revenue and PCS revenues under bundled license agreements arerecognized ratably over the contract term.

**Termlicenses:**

Term licenses representone-year arrangements for a software product with an additional charge forone-year of PCS.  The price is taken from our price list by product.  The supportrenewal fee is a fixed percentage of the software price (similar to perpetualmodel).  The PCS provided under term arrangements is the same as that providedto customers under perpetual agreements.  Software and support pricing areseparately stated and billed upon delivery of product.  To continue to operatethe software, the customer must pay their annual renewal fee.  Software revenueand PCS revenues under these license agreements are recognized ratably over thecontract term.

Our integration ofchemistry and biological data in the life sciences industries creates a revenuestream for discovery informatics services (software consulting).  To serve thismarket, we maintain a staff of specialists who use our proprietary technology,such as MetaLayer, Lithium, FormsBuilder, Tripos Electronic Notebook,ChemCoreRIO and AUSPYXTM technologies to configure customizedsolutions for data management.  Revenue may be generated on a billable rate perday, or upon achievement of milestones or deliverables and is recognized asproduction activities are performed.  These contracts may also generatesubstantial license fee revenue for our proprietary software technologies.  

We develop andmanufacture general screening compound libraries for sale to the life sciencesindustry for a fee per compound delivered.  This has created the opportunity tooffer follow-up discovery research methods to customers for design andsynthesis of focused libraries for lead optimization.  We also market acomprehensive research process to our life sciences customers for rapid andcost effective discovery.  This process combines advanced informatics,chemistry and access to biology products and services, and proprietarydiscovery technologies for efficient lead development, refinement, andoptimization resulting in a tightly integrated process to facilitate synergiesin drug discovery. 

We also act as areseller of computer hardware.  Hardware sales are generally made to facilitateour software customers' access to hardware components and are not a primaryfocus of our sales activities.  We act as an authorized reseller and only orderproducts on an "as needed" basis, and thus do not maintain anyinventory.  Margins on these sales are relatively modest.

We license discoveryinformatics tools to customers, provide ongoing support (including upgradesselected by customers) and provide informatics services to customers thatenable integration of our existing and newly developed discovery tools tocustomers' discovery operations.  We generally expense research and developmentcosts associated with software enhancements and new functionality.  Thus, asignificant portion of the costs associated with development and enhancement ofsoftware is accounted for as research and development and not as a cost ofsoftware sales.  Certain software development projects require substantialcommitments of time and resources.  Costs of these projects are capitalizedupon achievement of technological feasibility and/or a working model accordingto Financial Accounting Standards Board ("FASB") Statement of FinancialAccounting Standards ("SFAS") No. 86.  

Quarterlyexpenses include the costs of research and development for software developmentand new chemistry research.  We believe that core selling andadministrative costs will remain generally consistent as a percentage of saleson an annual basis.  Variability in quarterly expenses primarily occurs inrelation to the

 

|  25 |
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**Item 2.  Management'sDiscussion and Analysis of Financial Condition and Results of Operations (Continued)**

level of revenues.  Thisis due to sales compensation, bonuses, staffing for selling, general andadministrative functions and for periodic marketing activities such asappearances at trade exhibitions.

Ourrevenues and expenses vary from quarter to quarter depending upon, among otherthings, the timing of customers' budget processes, the success of our salesefforts, the lengthy sales cycle and our ability to influence customers andprospective customers to make decisions to outsource portions of theirdiscovery process, the size of the customers' capital expenditure budgets, theability to produce compound libraries in a timely manner, market acceptance ofnew products and enhanced versions of existing products, the timing of newproduct introductions by us and other vendors, changes in pricing policies(ours, partners and other vendors), consolidation in customer base, clientinvolvement in decision points in contracts related to project plans, ourability to accurately match contract costs to milestone or contract performancerequirements on our larger collaborative arrangements, and changes in generaleconomic and competitive conditions.  Because much of our informatics productlicenses and PCS revenue along with our contracted discovery research revenueis recognized ratably over multiple periods, fluctuations in our quarterlyrevenues and earnings are caused principally by sales of compounds or byachievement of milestones on specific projects.  Our management team monitorsquarterly business activity with the aid of sales pipeline reports and monthlyfinancial reports.

** **

**Results of Operations**(Amounts in thousands,except per share amounts)

**Net sales** for the first quarterof 2005 were $15,043 compared to $15,460 in 2004, a decrease of 3%.  Discovery informaticsproducts and support sales increased 5% to $6,263 in 2005 from $5,974 for sameperiod in 2004.  This increase is primarily attributable to a larger base ofcontract values from existing time-based license customers along with revenuesfrom our recently acquired Optive Research subsidiary.  Discovery informaticsservices revenues for the first quarter of 2005 decreased 7% to $668.  Thereduction in this area's revenues was attributable to an overall reduction inthe number and size of ongoing projects in the current year.  The timing ofrevenue recognition from discovery informatics services is typically subject toachievement of contractual milestones.  Discovery research sales accounted for$8,102 in the first quarter of 2005 and $8,727 in the same period in 2004, adecrease of 7%.  This decrease in discovery research business was attributed tolower levels of production on the four-year, $90 million strategic compoundfile enrichment and hit follow-up contract with Pfizer (the "PfizerContract") that was partially offset by incremental work for othercustomers.  As previously disclosed, revenues from the Pfizer Contract wereexpected to be lower in 2005 than 2004 as the project moves toward completion. Hardware sales decreased by 77% to $10 for the first quarter 2005 from $44 in2004.  We do not actively market hardware products, but rather facilitatecustomer demand when required.

Netsales for the Company's activities outside of North America representedapproximately 80% for both three-month periods ending March 31, 2005 and 2004. North American net sales, accounting for roughly 20% of 2005 and 2004 totalfirst quarter sales.  Net sales in Europe decreased 5% for the first quarter of2005 compared to 2004, and accounted for 74% and 76%, respectively, of totalsales.  This decrease in Europe is principally related to progress on thePfizer strategic compound design and synthesis project that was contractedthrough our U.K. office.  Net sales in the Pacific Rim increased by 27% for thefirst quarter of 2005 compared to the same period in 2004.  The increase wasdriven primarily by incremental perpetual informatics licenses in 2005 versus2004.  The Pacific Rim accounted for 6% and 4% of net sales for three-monthperiods in 2005 and 2004, respectively.

| 26 |
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**Item 2.  Management'sDiscussion and Analysis of Financial Condition and Results of Operations (Continued)**

** **

**Cost of sales** for the three-monthperiod ending March 31, 2005 increased 3% to $7,907 compared to $7,693 for thesame period in 2004.  Cost of sales as a percent of net sales was 53% and 50%for the three-month periods in 2005 and 2004, respectively.  Driving theincrease in cost of sales for the first quarter of 2005 was amortization of theinformatics product-related intangibles acquired in the Optive Researchtransaction and incremental costs of handling our LeadQuest compound sales. The cost of sales of discovery research activities in 2004 were impacted by theadverse effect of foreign currency (U.S. dollar to Great Britain Pound).  Thecurrency effect in the first quarter of 2005 was less than that of the sameperiod in 2004.

**Gross profit** margin for the firstquarter 2005 declined to 47% of total net sales versus 50% in the first quarterof 2004.  Principal contributors to the decrease in overall gross margin werehigher royalties from certain discovery software sales, the recognition of zeromargin from the milestone delivery under the Schering contract, higher costs toprocess small chemical compound orders and amortization of the product-relatedintangibles acquired with Optive Research, Inc.  We will not recognize grossmargin, if any, on the Schering discovery informatics consulting contract untilthe project is completed due to its historical experience of losses on theassignment.  The majority of the discovery informatics service revenues in thefirst quarter of 2005 were attributable to the Schering contract.  Gross profitfor the company is also dependent on costs of chemical materials and overhead,the mix of internal versus third-party software product sales, foreign exchangerates and the company's ability to successfully deliver on informaticscontracts.

**Sales and marketing** expenses decreased 6%to $2,945 for the first quarter of 2005 from $3,142 in the same period in2004.  Sales and marketing expenses as a percentage of net sales were 20% forboth three-month periods in 2005 and 2004, respectively.  The decrease in salesand marketing spending was attributable to lower employee costs and theexpiration of certain consulting relationships.

** **

**Research and development**expensesdecreased by 32% to $1,921 from $2,828 and represented 13% and 18% of net salesfor the three-month periods in 2005 and 2004, respectively.  The decline inquarterly R&D expense year-over-year was attributable to reductions tostaff in certain areas of our informatics group, capitalization of $600 ofcosts for development related to discovery informatics products that haveachieved technological feasibility and inventoried costs related to our innovativeLead Discovery chemistry projects. 

**General andadministrative**expensesincreased 5% to $1,965 in 2005 from $1,879 for the first quarter of 2004,respectively, and represent 13% and 12% of net sales for the correspondingperiods.  Higher administrative costs at our expanded U.K. chemistry facilitymore than offset expense reducution in other areas. 

** **

**Interest expense andother income (loss), net**decreased to a loss of $395 in the first quarter in 2005from income of $42 in the same period in 2004.  The 2005 losses resulted from acurrency loss of $128, net interest expense of $360 (net of interest income),and recording of an unrealized loss of $88 on our pro-rata share of aninvestment held in the A.M. Pappas Life Science II fund.  Offsetting theselosses was a gain of $182 from the sale of shares of NuVasive, Inc. (a recentIPO distribution from the A.M. Pappas Life Science II fund).  In the sameperiod of 2004, other income was comprised of a gain of $144 on the sale ofshares of Arena Pharmaceuticals, Inc. coupled with a small currency gainpartially offset by net interest expense of $167.  We completed the sale of ourArena holdings in the first quarter of 2004.

** **

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**Item 2.  Management'sDiscussion and Analysis of Financial Condition and Results of Operations (Continued)**

** **

**Income tax** benefit was $71 for thefirst three-months of 2005 compared to $15 for the same period in 2004, whichrepresent effective tax rates of 79% and 38%, respectively.  The 78% effectivetax rate for 2005 reflects management's current estimate of the distribution ofearnings among the statutory jurisdictions in which we operate, realization ofadditional R&D tax credits in the U.K. and the utilization of certain netoperating loss carryforwards in 2005. 

** **

**Liquidity, Capital Resources and CapitalCommitments**

Net cash provided byoperations in 2005 was $1,745.  The primary sources of cash were fromreductions in accounts receivable of $5,565, reductions in inventory of $1,348plus the add-back of non-cash depreciation and amortization, including theamortization of debt discount, of $1,522, combined.  These increases of cashwere partially offset by payments of accounts payable and accrued expenses of$3,049 along with additions to prepaid expenses of $1,618 with a reduction indeferred revenue of $1,675.  Net cash provided by operations in 2004 was$9,142.  Sources of operating funds for 2004 were net collections of accountsreceivable of $4,677, reductions in prepaid expenses of $1,221, increaseddeferred revenue of $4,472 plus the add-back of non-cash depreciation andamortization expenses of a combined $677 and a net reduction in the amount offoreign currency forward contracts outstanding of $757.  Operating funds usedin 2004 were from a net loss of $25, changes in net deferred tax position of$243, reductions of accounts payable & accrued expenses of $2,251, less thepre-tax gain of $144 from the sale of shares of Arena Pharmaceuticals commonstock. The primary differences in cashflow from operations year-over-year arisesfrom higher prepaid royalties in 2005 and receipt of $3,600 advance funding oftechnology access fees (deferred revenue) in the first quarter of 2004.

Cash used in investingactivities during 2005 totaled $6,241 and were for property and equipmentacquisitions of $1,076, capitalized development costs for our discoveryinformatics software products of $599 and the cash used in the acquisition ofOptive Research, Inc. of $4,779.  These were partially offset by  $338 of grossproceeds from the sale of NuVasive shares.  Over the next 12 to 18 months, wewill be required to fund the remainder of our investment commitment ($625) tothe A.M. Pappas Life Science II Fund.  Cash used in investing activities in2004 was $1,093 generated principally from the acquisitions of capitalexpenditures of $1,101, investment in the A.M. Pappas Life Science Ventures IIof $188 partially offset by the proceeds from the sale of Arena shares of$196.  

For 2005, $5,057 of cashwas generated through financing activities from the issuance of common stock of$500 and subordinated debt of $3,500 to fund part of the acquisition of OptiveResearch and the issuance of shares under our employee stock plans of $8.  Wehad a net increase in outstanding borrowings on our line of credit with LaSalleBank of $1,900 that were partially offset by payments on our mortgage andcapital leases of $851.  For the first three-month period in 2004, the net cashused in financing activities was $4,087, consisting of payments on bank loansand capital lease arrangements totaling $4,445, less proceeds from additionalcapital leases of $341 and the issuance of shares under our employee stockplans of $17.  

Subsequent to March 31,2005, the company and LaSalle Bank executed an amendment to the existing creditfacility.  The modified revolving credit facility is now $6,500, which is anincrease of $500 in available credit.  The maturity date on the mortgage loanhas been extended from December 2005 to April 2008.  All other terms andconditions, including covenants, remain unchanged.  At March 31, 2005, we hadborrowings outstanding of $2,500 on the line of credit that were included inshort-term debt.

| 28 |
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**Item 2.  Management'sDiscussion and Analysis of Financial Condition and Results of Operations (Continued)**

Activities over andabove normal operations may require additional sources of funding that are notpresently identified.  However, we believe that with our cash, accountsreceivable balances, projected cash flows from operations, access to availableborrowings from LaSalle Bank, and incremental capital leases, if any, we willbe able to meet our liquidity needs and capital expenditure requirements for atleast the next twelve months.  We expect that our capital expenditurerequirements will be substantially lower than in recent years due to thecompletion of our chemistry laboratory expansion.

** **

Despite current capitalmarkets uncertainties, we may decide to seek additional financing to supportour objectives to enhance product development, expand existing markets andenter new markets, expand our chemistry research laboratories, fundparticipation in new therapeutic collaborations, or enhance our capital basefor other purposes.  In making decisions regarding access to additionalcapital, we will consider the availability and terms of financing alternatives,as well as our objective to maintain financial flexibility to support plannedand opportunistic growth of our business.  Additional capital may be in theform of equity or debt securities, and may be raised in public offering orprivate placement transactions.  See "Management's Discussion and Analysisof Financial Condition and Results of Operations - Liquidity and CapitalResources", "Cautionary Statements - Additional Important Factors to beConsidered" and Note 12 of the Notes to Consolidated Financial Statementsin our Annual Report on Form 10-K for the year ended December 31, 2004 for adiscussion of the credit facilities available to us.

** **

** **

**Critical Accounting Policies**

For further discussionof the Company's critical accounting policies, please see the section entitled"Critical Accounting Policies" in Management's Discussion andAnalysis of Financial Condition and Results of Operations in Form 10-K for theyear ending December 31, 2004.  In addition, with the acquisition of Optive,which closed in the first quarter of 2005, management has determined that theaccounting policies related to goodwill and other intangible assets should beincluded as one of the Company's identified critical accounting policies.  Thecost of acquired companies is allocated first to their identifiable tangibleand intangible assets based on estimated fair values.  Costs allocated toidentifiable intangible assets are generally amortized on a straight-line basisover the remaining estimated useful lives of the assets.  The excess of thepurchase price over the fair value of identifiable assets acquired, net of ofliabilities assumed, is recorded as goodwill and is subject to impairment testsat least annually as required by Statement of Financial Accounting StandardsNo.142, "Goodwill and Other Intangible Assets." If the impairment test indicatesthat the carrying value of goodwill exceeds its fair value, than an impairmentloss would be required to be recognized in the consolidated statements ofoperations in an amount equal to the excess carrying value. 

** **

Periodic reports on Form10-Q, Form 10-K and other filings with the Securities and Exchange Commission("SEC") on Form 8-K and S-8, can be found on the Tripos web site at www.tripos.comunder the heading Investor Relations - SEC Filings.

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**Item 3. Quantitative and Qualitative Disclosuresabout Market Risk**

Our exposure tofinancial markets risk is limited to foreign exchange variances andfluctuations in interest rates.  The Company may be subject to a significantimpact from foreign exchange.  The costs to perform the custom design andsynthesis contract with Pfizer are incurred in British pounds sterling while weare compensated in U.S. dollars for much of the work.  As a result, our grossprofit may be adversely affected by the decline in the U.S. dollar against thepound.  At times, we may mitigate this effect through foreign currency forwardcontracts whose mark-to-market gains or losses are recorded in "OtherIncome".

Our foreign exchangerisk is presently limited to currencies that historically have exhibited onlyminor fluctuations although during 2004 and currently, these currencies haveshown more significant variation.  Assets outside the United States areprimarily located in England.  Our investments in foreign subsidiaries with afunctional currency other than the U.S. dollar are not hedged.  The net assetsin foreign subsidiaries translated into U.S. dollars using the year-endexchange rates were approximately $15.5 million at December 31, 2004.  Thepotential reduction in fair value resulting from a hypothetical 10% adversechange in foreign currency exchange rates would have been approximately $1.6million at December 31, 2004.  Any loss in fair value of permanently invested fundswould be reflected in Other Comprehensive Income and would not impact our netincome. 

Our interest rate riskis attributable to borrowings under the line-of-credit and mortgage loan thatare tied to the bank's prime rate or short-term LIBOR rates.  We monitor ourexposure to floating interest rate risk on line-of-credit borrowings along withthe outstanding balance on the mortgage loan and may endeavor to mitigate thisrisk through the use of appropriate hedging instruments.

**Item 4.  Controls and Procedures (as amended)**

**(a)     *Restatementof Previously Issued Financial Statements. ***As more fully describedin Note 14 of the notes to the Company's consolidated financial statements, wehave restated our consolidated financial statements for the three months endedMarch 31, 2005 and 2004.  As the result of the restatements of our previouslyissued financial statements, management has reassessed the impact of therestatements on its disclosure controls and internal controls over financial reportingfor the interim periods in 2005.  Previously reported amounts for 2004 were notaffected.

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(b)     ***Controlsand Procedures.*********We maintain disclosure controls andprocedures that are designed to ensure that information required to bedisclosed in the reports we file or submit with the Securities and ExchangeCommission (the "Commission") is recorded, processed, summarized and reportedwithin the time periods specified in the Commission's rules and forms, and thatsuch information is accumulated and communicated to management, including ourprincipal executive officer and principal financial officer, as appropriate, toallow timely decisions regarding required disclosure based on the definition of"disclosure controls and procedures" in Rule 13a-15(e) and 15d-15(e)promulgated under the Exchange Act.  In designing and evaluating the disclosurecontrols and procedures, management recognized that any controls andprocedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving the desired control objectives, andmanagement is required to apply judgment in evaluating our controls andprocedures.  In connection with the original filing of our Quarterly Report onForm 10-Q for the quarter ended March 31, 2005, management, with theparticipation of the principal executive officer and principal financialofficer, conducted an evaluation of the effectiveness of our disclosurecontrols and procedures as of March 31, 2005 at the reasonable assurance leveland concluded that our disclosure controls and procedures were effective as ofMarch 31, 2005.  In light of the restatements referred to in (a) above,management, with the participation of our principal executive officer andprincipal financial officer, reevaluated our disclosure controls and proceduresas of March 31, 2005 at the reasonable assurance level.  Based on thisreevaluation and following the identification of the following materialweakness in our internal control over financial reporting, management concludedthat our disclosure controls and procedures were not effective as of March 31,2005:

As a resultof the error described above in Note 14 of the Notes to Consolidated FinancialStatements, the Company determined, and the Audit Committee concurred, that amaterial weakness existed with respect to its determination of the completenessand accuracy and monitoring of foreign exchange transaction gains/lossesrelated to certain intercompany balances.  This determination was disclosed ina Current Report on Form 8-K filed March 6, 2006.  This control deficiencyresulted in the restatement of the Company's condensed consolidated financialstatements for the fiscal quarters ending March 31, 2005, June 30, 2005 andSeptember 30, 2005 and the Company has filed a Form 10−Q/A for each ofthose fiscal quarters.  Accordingly, the Audit Committee has agreed withmanagement's assessment that its disclosure controls and procedures were noteffective and this control deficiency constituted a material weakness in its internalcontrol over financial reporting as of December 31, 2005.  A material weaknessis a control deficiency or combination of control deficiencies that results inmore than a remote likelihood that a material misstatement of the annual orinterim financial statements will not be prevented or detected.

As a resultof this determination that the controls in place over the process oftranslating certain intercompany balances did not operate effectively as of and during the year ended December 31, 2005, the Company and its independentregistered accountants have performed additional procedures during the fourthquarter of 2005 closing process to address the control failure that occurred,including: a) performing additional recalculations of foreign exchange transactiongains/losses on the intercompany balances and ending other comprehensive incomebalance; b) reconfirmation of intercompany settlements related to thesebalances; and c) rectified the errors within the consolidating spreadsheetapplication.  The Audit Committee believes that these corrective actions, takenas a whole, will successfully mitigate the material weakness described aboveand the Company will continue to perform these enhanced procedures as part oftheir normal closing process.  

As a resultof these remedial actions (restatement of reported results and implementationof additional controls), the Chief Executive Officer and Chief FinancialOfficer are filing new certifications as of the date of this Quarterly Reporton Form 10-Q/A pursuant to Section 302 an Section 906 of the Sarbanes-Oxley Actof 2002 and the requirements of Rule 12b-15 under the Securities Exchange Actof 1934.

During the quarterlyperiod covered by this report and except as disclosed in this Item 4, therewere no changes in the Company's internal control over financial reporting thathave materially affected, or are reasonably likely to materially affect, theCompany's internal control over financial reporting.

** **

**PART II**

**OTHER INFORMATION**

Item 1.     LegalProceedings

          Noupdates.  See "Contingent Liabilities" in the Notes to Unaudited FinancialStatements above for a general description.  Reference is made to the "LegalProceedings" section of our Form 10-K for the year ending December 31, 2004 fora detailed description of legal proceedings.

** **

Item 2.     Changes inSecurities and Use of Proceeds

          None

Item 3.     Defaultsupon Senior Securities

          None

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Item 4.     Submissionof Matters to a Vote of Security Holders

None

Item 5.     Other Information

          None

Item 6.     Exhibits 

          10.20      FourthAmendment to the Amended and Restated Loan Agreement with LaSalle Bank, N.A.dated April 18, 2005.

31.1      Section 302Certification of the Chief Executive Officer*

31.1      Section 302Certification of the Chief Executive Officer**

            31.2      Section302 Certification of the Chief Financial Officer*

            31.2      Section302 Certification of the Chief Financial Officer**

32.1      WrittenStatement of Chief Executive Officer and Chief Financial Officer Pursuant toSection 906 of the Sarbanes-Oxley Act of 2002*

32.1      WrittenStatement of Chief Executive Officer and Chief Financial Officer Pursuant toSection 906 of the Sarbanes-Oxley Act of 2002**

* Previously filed

** Filed herewith

**SIGNATURES**

** **

Pursuant to therequirements of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned hereunto dulyauthorized.

TRIPOS, INC.

| Date: | March 29, 2006 | /s/ John P. McAlister                 |
|-------|----------------|---------------------------------------|
|       |                | President and                         |
|       |                | Chief Executive Officer               |
|       |                |                                       |
| Date: | March 29, 2006 | /s/ B. James Rubin                    |
|       |                | Senior Vice President,                |
|       |                | Chief Financial Officer and Secretary |
|       |                |                                       |
| Date: | March 29, 2006 | /s/ John D. Yingling                  |
|       |                | Vice President,                       |
|       |                | Chief Accounting Officer and          |
|       |                | Assistant Secretary                   |

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

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**Exhibit 10.20**

FOURTH AMENDMENTTOAMENDED AND RESTATED LOAN AGREEMENT

            THISFOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT ("Fourth Amendment") ismade and entered into as of this 14th day of April, 2005 by and among TRIPOS,INC., a Utah corporation ("Tripos"), TRIPOS REALTY, LLC, a Missouri limitedliability company ("Tripos Realty;" Tripos and Tripos Realty are sometimescollectively referred to herein as the "Obligors"), and LASALLE BANK NATIONALASSOCIATION (the "Lender").

WITNESSETH:

            WHEREAS,pursuant to that certain Amended and Restated Loan Agreement, dated as ofDecember 2, 2002, by and among the Obligors and Lender, Lender (i) establishedin favor of Tripos a revolving line of credit in the amount of $6,000,000, and(ii) made a Term Loan  to Tripos in the amount of $4,350,000, as amendedby that certain First Amendment to Amended and Restated Loan Agreement dated asof October 16, 2003, that certain Second Amendment to Amended and Restated LoanAgreement dated as of April 19, 2004 and that certain Third Amendment toAmended and Restated Loan Agreement dated as of December 21, 2004 (as the samemay be further amended, supplemented or otherwise modified from time to time,the "Loan Agreement"); and

            WHEREAS,the Lender has agreed to the modification of certain provisions contained inthe Loan Agreement and certain of the other Loan Documents upon the terms andconditions hereafter set forth.

            NOW,THEREFORE, in consideration of the premises and the mutual covenants andagreements set forth herein and for other good and valuable consideration, themutuality, receipt and sufficiency of which are hereby acknowledged, theparties hereto hereby agree as follows:

            1.         Definitions. All capitalized terms not otherwise defined herein shall have the meaningsgiven to such terms in the Loan Agreement.

 

            2.         Amendmentsto Loan Agreement.  The Loan Agreement is hereby amended as follows:

(a)        Section 3.1.1 (Aggregate Amount,Reductions) of the Loan Agreement is hereby amended by deleting the referenceto "6,000,000" and substituting in lieu thereof the figure "6,500,000".

(b)        Section 15.5 is hereby amended and restatedas follows:

"**Revolving Loan Thirty DayReduction.**During each Loan Year, for a period of thirty (30) consecutive days, shall notpermit the aggregate Revolving Loans, exclusive of LOC Obligations, to exceedZero Dollars in amount.  As used herein, "Loan Year", means the 12 month periodfrom April 18 of any calendar year through and including April 17 of theimmediately next following calendar year."

(c)        The definition of "Revolving Loan MaturityDate" contained on Exhibit 2.1 (Glossary and Index of Defined Terms) is herebyamended by deleting the reference to April 18, 2005" and substituting in lieuthereof the date "April 18, 2006".

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(d)        The definition of "Revolving Note"contained on Exhibit 2.1 (Glossary and Index of Defined Terms) is herebyamended by adding the following phrase to the end thereof:

            ", as from time to time amended, replaced,extended or restated from time to time"

(e)        The definition of "Term Loan Maturity Date"contained on Exhibit 2.1 (Glossary and Index of Defined Terms) is herebyamended by deleting the reference to "December 2, 2005" and substituting inlieu thereof the date "April 18, 2008".

(f)        The definition of "Term Loan Note"contained on Exhibit 2.1 (Glossary and Index of Defined Terms) is herebyamended by adding the following phrase to the end thereof:

            ", as from time to time amended, replaced,extended or restated from time to time"

            3.         Conditionsto Effectiveness.  This Fourth Amendment shall become effective when andonly when the Lender shall have received (i) this Fourth Amendment dulyexecuted by the Obligors, (ii) a replacement Revolving Note in form reasonablysatisfactory to Lender, (iii) evidence reasonably satisfactory to theLender and its counsel that the transactions contemplated by the FourthAmendment have been properly authorized, (iv) a Third Modification ofDeed of Trust, Assignment of Rents and Security Agreement of even date herewithin form reasonably satisfactory to the Lender and (v) a Reaffirmation ofGuaranty in a form reasonably satisfactory to Lender duly executed by TriposRealty and Optive Research.

            4.         Representations andWarranties.  Borrower and Tripos Realty hereby represent and warrant asfollows:

                        (a)        This FourthAmendment and the Loan Agreement, amended hereby, constitute legal, valid andbinding obligations of the Obligors and are enforceable against Obligors inaccordance with their respective terms, except to the extent that theenforceability thereof may be limited by bankruptcy, insolvency,reorganization, moratorium or similar Laws affecting creditors' rightsgenerally or by equitable principles of general application.

                        (b)        Upon theeffectiveness of this Fourth Amendment, Obligors hereby reaffirm all covenants,representations and warranties made in the Loan Agreement (except to the extentany representation or warranty relates to an earlier date in which case suchrepresentations and warranties are not being restated) to the extent the sameare not amended hereby and agrees that all such covenants, representations andwarranties shall be deemed to have been remade as of the effective date of thisFourth Amendment.

                        (c)        No Event of Defaultor Default has occurred and is continuing or would exist after giving effect tothis Fourth Amendment.

                        (d)        The Covered Personshave no defense, counterclaim or offset with respect to the Loan Agreement orany of the other Loan Documents.

            5.         Effecton the Loan Agreement.

                        (a)        Upon theeffectiveness of this Fourth Amendment, each reference in the Loan Agreement to"this Agreement," "hereunder," "hereof," "herein" or words of like import shallmean and be a reference to the Loan agreement as amended hereby.

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                        (b)        Except as specificallyamended herein, the Loan Agreement, the Loan Documents, and all otherdocuments, instruments and agreements executed and/or delivered in connectiontherewith, shall remain in full force and effect, and are hereby ratified andconfirmed.

                        (c)        The execution,delivery and effectiveness of this Fourth Amendment shall not operate as awaiver of any right, power or remedy of Lender, nor constitute a waiver of anyprovision of the Loan Agreement, the Loan Documents, or any other documents,instruments or agreements executed and/or delivered under or in connectiontherewith.

            7.         Governing Law.  ThisFourth Amendment shall be binding upon and inure to the benefit of the partieshereto and their respective successors and assigns and shall be governed by andconstrued in accordance with the laws of the State of Missouri.

            8.         Headings.  Sectionheadings in this Fourth Amendment are included herein for convenience ofreference only and shall not constitute a part of this Fourth Amendment for anyother purpose.

            9.         Counterparts.  ThisFourth Amendment may be executed by the parties hereto in one or morecounterparts, each of which taken together shall be deemed to constitute oneand the same instrument.

                          INWITNESS WHEREOF, this Fourth Amendment has been duly executed as of the day andyear first written above.

                                                                        TRIPOS,INC.

                                                                        By:       _________________________________

                                                                                    Name: B. James Rubin

                                                                                    Title:   Senior Vice President & Chief 

                                                                                                FinancialOfficer

                                                                        TRIPOSREALTY, LLC 

                                                                        (asObligor and acknowledged as Guarantor)

                                                                        By:TRIPOS, INC., its sole member

                                                                        By:       ________________________________

                                                                                    Name: B. James Rubin

                                                                                    Title:   Senior Vice President & Chief 

                                                                                                FinancialOfficer

                                                                        LASALLEBANK NATIONAL ASSOCIATION 

                                                                        By:       ________________________________

                                                                                    Name: Tom Harmon

                                                                                    Title:     SeniorVice President

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