##### 



SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

|                                                  |  |                                                                                         
|------------------------------------------------- |  | ----------------------------------------------------------------------------------------
|[X]                                               |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|                                                  |  |                                                                                         
|For The Quarterly Period Ended September 30, 2002
|                                                  |  |                                                                                         
|OR                                               
|                                                  |  |                                                                                         
|[   ]                                             |  | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



|                                                      
|------------------------------------------------------
|Commission file number 000-31577                      
|                                                      
|INFORMAX, INC                                         
|                                                      
|(Exact Name of Registrant as Specified in its Charter)

|                                                               |  |                         
|-------------------------------------------------------------- |  | ------------------------
|Delaware                                                       |  | 52-1687783              
|                                                               |  |                         
|(State or Other Jurisdiction of Incorporation or
Organization) |  | (IRS Employer
ID Number)
|                                                               |  |                         
|7600 Wisconsin Avenue, 11th Floor, Bethesda, MD                |  | 20814                   
|                                                               |  |                         
|(Address of Principal Executive Offices)                       |  | (Zip Code)              

(240) 747-4000
(Registrants Telephone Number, 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 the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]       No [   ]

Indicate by check mark whether registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act. Yes
[   ]       No [X]

The registrant had 26,204,863 shares of common stock outstanding as of November
1, 2002.





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##### 



INFORMAX, INC.

FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2002

INDEX

|                              |    |                                                                                                                                                |     
|----------------------------- | -- | ---------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                              |    |                                                                                                                                                | PAGE
|                              |    |                                                                                                                                                |     
|PART I -FINANCIAL INFORMATION | 1 
|                              |    |                                                                                                                                                |     
|                              |    | Item 1. Financial Statements                                                                                                                   | 1   
|
|                              |    | Condensed Consolidated Balance Sheets as of December 31, 2001 and September 30, 2002 (unaudited)                                               | 2   
|                              |    | Unaudited Condensed Consolidated Statements of Operations for the Three-Month and Nine-Month Periods Ended September 30, 2001 and 2002         | 3   
|                              |    | Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three-Month and Nine-Month Periods Ended September 30, 2001 and 2002 | 4   
|                              |    | Unaudited Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2001 and 2002                         | 5   
|                              |    | Notes
to Unaudited Condensed Consolidated Financial Statements                                                                                 | 10  
|                              |    | Risk Factors                                                                                                                                   | 17  
|                              |    | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations                                                  | 25  
|                              |    | Item 3. Qualitative and Quantitative Discussion of Market Risk                                                                                 | 25  
|                              |    | Item 4. Controls and Procedures                                                                                                                | 26  
|PART II OTHER INFORMATION    | 26
|                              |    | Item 1. Legal Proceedings                                                                                                                      | 27  
|                              |    | Item 2. Changes in Securities and Use of Proceeds                                                                                              | 27  
|                              |    | Item 5. Other Information                                                                                                                      | 28  
|                              |    | Item 6. Exhibits and Reports on Form 8-K                                                                                                       | 29  
|SIGNATURES                    | 30
|CERTIFICATIONS                |   





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##### 



PART I  FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

INFORMAX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

|                                                                |                                                                                                                                                                                           |                                                    |        |                            |   |                        |        |               |   |  |        | 
|--------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------- | ------ | -------------------------- | - | ---------------------- | ------ | ------------- | - |  | ------ | 
|                                                                |                                                                                                                                                                                           |                                                    |        |                            |   | December 31,           |        | September 30,
|                                                                |                                                                                                                                                                                           |                                                    |        |                            |   | 2001                   |        | 2002         
|                                                                |                                                                                                                                                                                           |                                                    |        |                            |   |                        |        |              
|                                                                |                                                                                                                                                                                           |                                                    |        |                            |   | (dollars in thousands)
|ASSETS                                                          |                                                                                                                                                                                           |                                                    |        |                            |   |                        |        |              
|Current assets:                                                 |                                                                                                                                                                                           |                                                    |        |                            |   |                        |        |              
|                                                                | Cash and cash equivalents                                                                                                                                                                 |                                                    | $      | 61,348                     |   |                        | $      | 6,257         |  
|                                                                | Investments available for sale (consists of commercial paper and                                                                                                                          |                                                    |        |                           |   |                        |        | 40,641        |  
|                                                                |                                                                                                                                                                                           | United States government agencies debt securities) |        |                            |   |                        |        |               |   | 
|                                                                | Accounts receivable (net of allowance for doubtful
accounts of $557 and $681 for December 31, 2001 and
September 30, 2002, respectively)                                                  |                                                    |        | 9,672                      |   |                        |        | 2,832         |  
|                                                                | Prepaid expenses and other current assets                                                                                                                                                 |                                                    |        | 1,253                      |   |                        |        | 917           |  
|                                                                |                                                                                                                                                                                           |                                                    |        |                            |   |                        |        |              
|                                                                |                                                                                                                                                                                           |                                                    |        | Total current assets       |   |                        | 72,273 |               |   |  | 50,647 | 
|Property and equipment  net                                    |                                                                                                                                                                                           |                                                    | 9,205  |                            |   |                        | 7,517  |              
|Deposits and other assets                                       |                                                                                                                                                                                           |                                                    | 1,333  |                            |   |                        | 442    |              
|Restricted cash                                                 |                                                                                                                                                                                           |                                                    | 1,667  |                            |   |                        | 1,667  |              
|Investment in strategic alliance  available for sale           |                                                                                                                                                                                           |                                                    |       |                            |   |                        | 1,500  |              
|                                                                |                                                                                                                                                                                           |                                                    |        |                            |   |                        |        |              
|                                                                |                                                                                                                                                                                           |                                                    |        | Total assets               |   | $                      | 84,478 |               |   |  | 61,773 | 
|                                                                |                                                                                                                                                                                           |                                                    |        |                            |   |                        |        |              
|LIABILITIES AND STOCKHOLDERS EQUITY                            |                                                                                                                                                                                           |                                                    |        |                            |   |                        |        |              
|Current liabilities:                                            |                                                                                                                                                                                           |                                                    |        |                            |   |                        |        |              
|                                                                | Accounts payable                                                                                                                                                                          |                                                    | $      | 408                        |   |                        | $      | 295           |  
|                                                                | Accounts payable to related parties                                                                                                                                                       |                                                    |        | 3                          |   |                        |        | 116           |  
|                                                                | Accrued liabilities                                                                                                                                                                       |                                                    |        | 4,408                      |   |                        |        | 3,394         |  
|                                                                | Borrowings and capital lease obligations  current portion                                                                                                                                |                                                    |        | 852                        |   |                        |        | 363           |  
|                                                                | Deferred revenue  current portion                                                                                                                                                        |                                                    |        | 4,189                      |   |                        |        | 2,459         |  
|                                                                |                                                                                                                                                                                           |                                                    |        |                            |   |                        |        |              
|                                                                |                                                                                                                                                                                           |                                                    |        | Total current liabilities  |   |                        | 9,860  |               |   |  | 6,627  | 
|Borrowings and capital lease obligations  less current portion |                                                                                                                                                                                           |                                                    | 405    |                            |   |                        | 161    |              
|Deferred revenue  less current portion                         |                                                                                                                                                                                           |                                                    | 1,739  |                            |   |                        | 744    |              
|Other liabilities                                               |                                                                                                                                                                                           |                                                    | 29     |                            |   |                        | 569    |              
|                                                                |                                                                                                                                                                                           |                                                    |        |                            |   |                        |        |              
|                                                                |                                                                                                                                                                                           |                                                    |        | Total liabilities          |   |                        | 12,033 |               |   |  | 8,101  | 
|Stockholders equity:                                           |                                                                                                                                                                                           |                                                    |        |                            |   |                        |        |              
|                                                                | Common stock, voting: ($.001 par value authorized 100,000,000
shares; issued and outstanding 24,505,566 and 26,200,815
shares for December 31, 2001 and September 30, 2002,
respectively) |                                                    |        | 24                         |   |                        |        | 26            |  
|                                                                | Additional paid-in capital                                                                                                                                                                |                                                    |        | 107,207                    |   |                        |        | 107,248       |  
|                                                                | Deferred compensation                                                                                                                                                                     |                                                    |        | (515                       | ) |                        |        | (42           | )
|                                                                | Accumulated other comprehensive income                                                                                                                                                    |                                                    |        |                           |   |                        |        | 49            |  
|                                                                | Accumulated deficit                                                                                                                                                                       |                                                    |        | (34,271                    | ) |                        |        | (53,609       | )
|                                                                |                                                                                                                                                                                           |                                                    |        |                            |   |                        |        |              
|                                                                |                                                                                                                                                                                           |                                                    |        | Total stockholders equity |   |                        | 72,445 |               |   |  | 53,672 | 
|                                                                |                                                                                                                                                                                           |                                                    |        |                            |   |                        |        |              
|Total liabilities and stockholders equity                      |                                                                                                                                                                                           | $                                                  | 84,478 |                            |   | $                      | 61,773 |              
|                                                                |                                                                                                                                                                                           |                                                    |        |                            |   |                        |        |              

See accompanying notes to unaudited condensed consolidated financial statements

1



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##### 



INFORMAX, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                               |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |   |        |   |        | 
|-------------------------------------------------------------- |  | ------------------------------------- | ---------- | ---------------------------- | ----- | ------------------------------------------------ | ---------- | ----------------- | ----- | ---- | ---------- | ---- | ------ | - | ---------- | - | ------ | - | ------ | 
|                                                               |  |                                       |            |                              |       | Three Months Ended                               |            | Nine Months Ended
|                                                               |  |                                       |            |                              |       | September 30,                                    |            | September 30,    
|                                                               |  |                                       |            |                              |       |                                                  |            |                  
|                                                               |  |                                       |            |                              |       | 2001                                             |            | 2002              |       | 2001 |            | 2002
|                                                               |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |     
|                                                               |  |                                       |            |                              |       | (dollars in thousands, except per share amounts)
|Revenues:                                                      |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |  
|                                                               |  | Software license and customer support |            | $                            | 3,762 |                                                  |            |                   | 2,126 |      |            |      | 15,949 |   |            |   | 7,749  |  
|                                                               |  | Professional services                 |            |                              | 918   |                                                  |            |                   | 933   |      |            |      | 2,889  |   |            |   | 2,812  |  
|                                                               |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |  
|                                                               |  |                                       |            | Total revenues               |       |                                                  | 4,680      |                   |       |      | 3,059      |      |        |   | 18,838     |   |        |   | 10,561 | 
|Cost of revenues:                                              |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |  
|                                                               |  | Software license and customer support |            |                              | 359   |                                                  |            |                   | 267   |      |            |      | 1,327  |   |            |   | 562    |  
|                                                               |  | Professional services                 |            |                              | 478   |                                                  |            |                   | 538   |      |            |      | 1,445  |   |            |   | 1,397  |  
|                                                               |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |  
|                                                               |  |                                       |            | Total cost of revenues       |       |                                                  | 837        |                   |       |      | 805        |      |        |   | 2,772      |   |        |   | 1,959  | 
|                                                               |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |  
|Gross profit                                                   |  |                                       | 3,843      |                              |       |                                                  | 2,254      |                   |       |      | 16,066     |      |        |   | 8,602      |  
|Operating expenses:                                            |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |  
|                                                               |  | Selling (1)                           |            |                              | 2,370 |                                                  |            |                   | 1,211 |      |            |      | 8,044  |   |            |   | 5,630  |  
|                                                               |  | General and administrative (2)        |            |                              | 3,979 |                                                  |            |                   | 3,729 |      |            |      | 14,415 |   |            |   | 12,247 |  
|                                                               |  | Research and development              |            |                              | 2,544 |                                                  |            |                   | 2,003 |      |            |      | 7,145  |   |            |   | 7,174  |  
|                                                               |  | Stock based compensation              |            |                              | 277   |                                                  |            |                   | 15    |      |            |      | 787    |   |            |   | 50     |  
|                                                               |  | Depreciation and amortization         |            |                              | 657   |                                                  |            |                   | 766   |      |            |      | 1,665  |   |            |   | 2,255  |  
|                                                               |  | Restructuring                         |            |                              |      |                                                  |            |                   |      |      |            |      |       |   |            |   | 1,325  |  
|                                                               |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |  
|                                                               |  |                                       |            | Total operating expenses     |       |                                                  | 9,827      |                   |       |      | 7,724      |      |        |   | 32,056     |   |        |   | 28,681 | 
|                                                               |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |  
|Loss from operations                                           |  |                                       | (5,984     | )                            |       |                                                  | (5,470     | )                 |       |      | (15,990    | )    |        |   | (20,079    | )
|                                                               |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |  
|Other income (expense):                                        |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |  
|                                                               |  | Investment earnings                   |            |                              | 645   |                                                  |            |                   | 258   |      |            |      | 2,664  |   |            |   | 834    |  
|                                                               |  | Interest and other expense            |            |                              | (58   | )                                                |            |                   | (21   | )    |            |      | (140   | ) |            |   | (93    | )
|                                                               |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |  
|                                                               |  |                                       |            | Total other income (expense) |       |                                                  | 587        |                   |       |      | 237        |      |        |   | 2,524      |   |        |   | 741    | 
|                                                               |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |  
|Net loss                                                       |  | $                                     | (5,397     | )                            |       | $                                                | (5,233     | )                 |       | $    | (13,466    | )    |        | $ | (19,338    | )
|                                                               |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |  
|Basic and diluted net loss per common share                    |  | $                                     | (.22       | )                            |       | $                                                | (.20       | )                 |       | $    | (.60       | )    |        | $ | (.76       | )
|                                                               |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |  
|Weighted average common shares outstanding  basic and diluted |  |                                       | 24,300,689 |                              |       |                                                  | 25,993,127 |                   |       |      | 22,404,676 |      |        |   | 25,548,985 |  
|                                                               |  |                                       |            |                              |       |                                                  |            |                   |       |      |            |      |        |   |            |  



---

|(1) |  | Selling expense excludes stock-based compensation of $0.2, $0, $0.4
and $0 for the three months ended September 30, 2001 and 2002 and the
nine months ended September 30, 2001 and 2002, respectively.                   
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | General and administrative expense excludes stock-based compensation of
$0.1, $0, $0.6 and
$0 for the three months ended September 30, 2001 and 2002 and the nine
months ended September 30, 2001 and 2002, respectively.

See accompanying notes to unaudited condensed consolidated financial statement

2



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##### 



INFORMAX, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

|                         |                                                          |   |                        |   |                   |   |        |    |      |   |         |   |  |   |         |    |  
|------------------------ | -------------------------------------------------------- | - | ---------------------- | - | ----------------- | - | ------ | -- | ---- | - | ------- | - |  | - | ------- | -- | -
|                         |                                                          |   | Three months ended     |   | Nine months ended
|                         |                                                          |   | September 30,          |   | September 30,    
|                         |                                                          |   |                        |   |                  
|                         |                                                          |   | 2001                   |   | 2002              |   | 2001   |    | 2002
|                         |                                                          |   |                        |   |                   |   |        |    |     
|                         |                                                          |   | (dollars in thousands)
|Net loss                 |                                                          | $ | (5,397                 | ) |                   | $ | (5,233 | )  |      | $ | (13,466 | ) |  | $ | (19,338 | ) 
|Other comprehensive loss |                                                          |   |                        |   |                   |   |        |    |      |   |         |   |  |   |         |   
|                         | Unrealized gain (loss) on
investments available for sale |   |                        |  |                   |   |        | 8  |      |   |         |  |  |   |         | 58 |  
|                         | Currency translation adjustments                         |   |                        |  |                   |   |        | (6 | )    |   |         |  |  |   |         | (8 | )
|                         |                                                          |   |                        |   |                   |   |        |    |      |   |         |   |  |   |         |   
|Comprehensive loss       |                                                          |   | (5,397                 | ) |                   |   | (5,231 | )  |      |   | (13,466 | ) |  |   | (19,288 | ) 
|                         |                                                          |   |                        |   |                   |   |        |    |      |   |         |   |  |   |         |   

See accompanying notes to unaudited condensed consolidated financial statements

3



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##### 



INFORMAX, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                           |                                                                             |                                                                 |                                   |         |                        |      |         |         |         |        |  
|-------------------------------------------------------------------------- | --------------------------------------------------------------------------- | --------------------------------------------------------------- | --------------------------------- | ------- | ---------------------- | ---- | ------- | ------- | ------- | ------ | -
|                                                                           |                                                                             |                                                                 |                                   |         | Nine months ended     
|                                                                           |                                                                             |                                                                 |                                   |         | September 30,         
|                                                                           |                                                                             |                                                                 |                                   |         |                       
|                                                                           |                                                                             |                                                                 |                                   |         | 2001                   |      | 2002   
|                                                                           |                                                                             |                                                                 |                                   |         |                        |      |        
|                                                                           |                                                                             |                                                                 |                                   |         | (dollars in thousands)
|Cash flows from operating activities:                                      |                                                                             |                                                                 |                                   |         |                        |      |         |        
|                                                                           | Net loss                                                                    |                                                                 | $                                 | (13,466 | )                      |      | $       | (19,338 | )      
|                                                                           | Adjustments to reconcile net loss to net cash used in operating activities: |                                                                 |                                   |         |                        |      |         |         |        
|                                                                           |                                                                             | Depreciation expense                                            |                                   |         | 1,665                  |      |         |         | 2,255   |       
|                                                                           |                                                                             | Loss on disposal of property and equipment                      |                                   |         | 177                    |      |         |         | 30      |       
|                                                                           |                                                                             | Expense related to stock options, restricted stock and warrants |                                   |         | 785                    |      |         |         | 42      |       
|                                                                           |                                                                             | Changes in assets and liabilities:                              |                                   |         |                        |      |         |         |         |       
|                                                                           |                                                                             |                                                                 | Accounts receivable               |         |                        | (673 | )       |         |         | 7,820  |  
|                                                                           |                                                                             |                                                                 | Prepaid expenses and other assets |         |                        | (66  | )       |         |         | 195    |  
|                                                                           |                                                                             |                                                                 | Deposits                          |         |                        | 500  |         |         |         | 52     |  
|                                                                           |                                                                             |                                                                 | Accounts payable                  |         |                        | (321 | )       |         |         |       |  
|                                                                           |                                                                             |                                                                 | Accrued liabilities               |         |                        | 504  |         |         |         | (474   | )
|                                                                           |                                                                             |                                                                 | Deferred revenue                  |         |                        | (198 | )       |         |         | (2,725 | )
|                                                                           |                                                                             |                                                                 |                                   |         |                        |      |         |         |         |        |  
|Cash flows from operating activities                                       |                                                                             |                                                                 | (11,093                           | )       |                        |      | (12,143 | )      
|                                                                           |                                                                             |                                                                 |                                   |         |                        |      |         |         |         |        |  
|Cash flows from investing activities:                                      |                                                                             |                                                                 |                                   |         |                        |      |         |        
|                                                                           |                                                                             | Purchase of available for sale investments                      |                                   |         |                       |      |         |         | (40,584 | )     
|                                                                           |                                                                             | Investment in strategic alliance                                |                                   |         |                       |      |         |         | (1,500  | )     
|                                                                           |                                                                             | Purchase of property and equipment                              |                                   |         | (5,872                 | )    |         |         | (596    | )     
|                                                                           |                                                                             | Proceeds from disposal of property and equipment                |                                   |         | 20                     |      |         |         |        |       
|                                                                           |                                                                             |                                                                 |                                   |         |                        |      |         |         |         |        |  
|Cash flows from investing activities                                       |                                                                             |                                                                 | (5,852                            | )       |                        |      | (42,680 | )      
|                                                                           |                                                                             |                                                                 |                                   |         |                        |      |         |         |         |        |  
|Cash flows from financing activities:                                      |                                                                             |                                                                 |                                   |         |                        |      |         |        
|                                                                           |                                                                             | Repayments of capital lease obligations                         |                                   |         | (192                   | )    |         |         | (192    | )     
|                                                                           |                                                                             | Repayments on borrowings                                        |                                   |         | (640                   | )    |         |         | (542    | )     
|                                                                           |                                                                             | Increase in restricted cash                                     |                                   |         | (93                    | )    |         |         |        |       
|                                                                           |                                                                             | Proceeds from share options exercised and warrants issued       |                                   |         | 1,207                  |      |         |         | 472     |       
|                                                                           |                                                                             | Proceeds from common stock issuance, net of offering costs      |                                   |         | 31                     |      |         |         | 2       |       
|                                                                           |                                                                             |                                                                 |                                   |         |                        |      |         |         |         |        |  
|Cash flows from financing activities                                       |                                                                             |                                                                 | 313                               |         |                        |      | (260    | )      
|                                                                           |                                                                             |                                                                 |                                   |         |                        |      |         |         |         |        |  
|Effect of exchange rate changes on cash                                    |                                                                             |                                                                 |                                  |         |                        |      | (8      | )      
|                                                                           |                                                                             |                                                                 |                                   |         |                        |      |         |         |         |        |  
|Net decrease in cash and cash equivalents                                  |                                                                             |                                                                 | (16,632                           | )       |                        |      | (55,091 | )      
|Beginning cash and cash equivalents                                        |                                                                             |                                                                 | 82,656                            |         |                        |      | 61,348  |        
|Ending cash and cash equivalents                                           |                                                                             |                                                                 | 66,024                            |         |                        |      | 6,257   |        
|Supplemental information on non cash investing and financing transactions: |                                                                             |                                                                 |                                   |         |                        |      |         |        
|                                                                           |                                                                             | Purchase of equipment through capital lease obligations         |                                   | $       | 738                    |      |         | $       |        |       
|Supplemental cash flow information:                                        |                                                                             |                                                                 |                                   |         |                        |      |         |        
|                                                                           |                                                                             | Cash paid for interest                                          |                                   | $       | 68                     |      |         | $       | 17      |       

See accompanying notes to unaudited condensed consolidated financial statements.

4



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##### 



INFORMAX, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED SEPTEMBER 30, 2002

Note 1  Interim Financial Statements

The accompanying condensed consolidated financial statements of InforMax, Inc.
(the Company) have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial
information. These financial statements should be read together with the
audited financial statements and notes for the year ended December 31, 2001
contained in the Companys Annual Report on Form 10-K filed with the Securities
and Exchange Commission (SEC). Certain information and footnote disclosures
normally included in financial statements have been condensed or omitted. In
the opinion of the Companys management, the financial statements reflect all
adjustments necessary to present fairly the results of operations for the three
and nine-month periods ended September 30, 2002 and 2001, the Companys
financial position at September 30, 2002, and the cash flows for the nine-month
period ended September 30, 2002 and 2001. The results of operations for the
interim periods are not necessarily indicative of the results of the entire
year.

In June 2001, the FASB issued SFAS No. 143 (SFAS 143), Accounting for Asset
Retirement Obligations. SFAS 143 addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets
and the associated asset retirement costs. SFAS 143 is effective for fiscal
years beginning after June 15, 2002. The adoption of SFAS No. 143 is not
expected to have any impact on the Companys financial position or results of
operations.

In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
of Long-Lived Assets, which supersedes SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
and the accounting and reporting provisions of APB No. 30, Reporting the
Results of Operations  Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions for the disposal of a segment of a business. SFAS No. 144
retained many of the provisions of SFAS No. 121, but addresses certain
implementation issues associated with that Statement. The adoption of SFAS No.
144, effective January 1, 2002, had no impact on the Companys financial
position or results of operations.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
SFAS 145 is effective for fiscal years beginning after May 15, 2002.
The adoption of SFAS No. 145 is not expected to have any impact on the Companys financial position or results of operations.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities which replaces EITF Issue No. 94-3,
Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity. SFAS No. 146 is to be applied prospectively to
exit or disposal activities initiated after December 31, 2002.
The adoption of SFAS No. 146 is not expected to have any impact on the Companys financial position or results of operations.

For the nine months ended September 30, 2002, deferred compensation
decreased as a result of termination of employees in our workforce reductions who had been
granted discounted stock options in prior years.

Note 2  Investments

Available for sale investments at September 30, 2002 were as follows:

|                                                  |  |   |                        |  |            |   |            |  |            |   |   |  |  |   |        |  | 
|------------------------------------------------- |  | - | ---------------------- |  | ---------- | - | ---------- |  | ---------- | - | - |  |  | - | ------ |  | 
|                                                  |  |   |                        |  |            |   | Gross      |  | Gross      |   |   |  | 
|                                                  |  |   | Amortized              |  | Unrealized |   | Unrealized |  | Estimated 
|                                                  |  |   | Cost                   |  | Gains      |   | Losses     |  | Fair Value
|                                                  |  |   |                        |  |            |   |            |  |           
|                                                  |  |   | (dollars in thousands)
|Commercial Paper                                  |  | $ | 13,228                 |  |            | $ | 3          |  |            | $ |  |  |  | $ | 13,231 | 
|United States Government                          |  |   |                        |  |            |   |            |  |            |   |   |  |  |   |        | 
|United States Government
Agencies debt securities |  |   | 27,355                 |  |            |   | 55         |  |            |   |  |  |  |   | 27,410 | 
|                                                  |  |   |                        |  |            |   |            |  |            |   |   |  |  |   |        | 

5



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##### 



|                |                                                         |  |       |        |  |  |   |    |  |  |   |   |  |  |       |        | 
|--------------- | ------------------------------------------------------- |  | ----- | ------ |  |  | - | -- |  |  | - | - |  |  | ----- | ------ | 
|                | Total investments available-for-
sale  current portion |  |       | 40,583 |  |  |   | 58 |  |  |   |  |  |  |       | 40,641 | 
|                |                                                         |  |       |        |  |  |   |    |  |  |   |   |  |  |       |       
|Preferred Stock |                                                         |  | 1,500 |        |  |  |   |    |  |  |   |   |  |  | 1,500 |       
|                | Total investments available-for-
sale                   |  | $     | 42,083 |  |  | $ | 58 |  |  | $ |  |  |  | $     | 42,141 | 
|                |                                                         |  |       |        |  |  |   |    |  |  |   |   |  |  |       |       

The Companys investments consist primarily of investment-grade marketable debt
securities and redeemable convertible preferred stock acquired in connection
with a strategic alliance, all of which are classified as available-for-sale
and recorded at fair value. Current investments in available-for-sale
marketable securities are carried at their estimated fair value based on
current market quotes. The fair value of redeemable convertible preferred
stock in TissueInformatics, Inc., acquired in connection with our strategic
alliance, is estimated based on current rates for instruments with similar
terms, degree of risk and remaining maturities. Unrealized holding gains and
losses are recorded, as a separate component of accumulated other comprehensive
income.

Note 3  Commitments and Contingencies

Incentive Bonus Plan  On September 25, 2002, the Compensation Committee of the
Companys Board of Directors adopted the InforMax Incentive Bonus Plan in order
to give certain officers of the Company an incentive to stay with the Company
through the closing date of a change of control transaction. Under the plan, a
change of control transaction shall be deemed to have occurred upon a persons
acquisition of 50% or more of the combined voting power of the Companys
securities, a merger where the Companys stockholders at the time of the
signing of the merger documents own less than 50% of the equity of the combined
company after the closing of the merger, or a sale of all or substantially all
of the Companys assets. Accordingly, the consummation of the cash tender offer
by a wholly owned subsidiary of Invitrogen, discussed under Note 8 below, would
constitute a change of control transaction under the plan. The aggregate
bonuses to be paid under the plan are based upon the valuation of the Company
in the change of control transaction. Based upon the offer price in the cash
tender offer and subsequent merger transaction with Invitrogen Corporation
discussed in Note 8 below, four officers of the Company will each receive a
portion of an aggregate bonus pool of approximately $1.57 million. The
Compensation Committee has the authority to determine which officers are
eligible to participate in the plan and to modify any bonus allocation prior to
the closing of a change of control transaction. Additional information
relating to the plan can be found in the Schedule 14D-9 filed by the Company
with the SEC on October 28, 2002. See Item 5 of Part II of this report for
information on the availability of such filing. No accrual for any
liability which may result from the incentive bonus plan has been recorded in the September 30, 2002 financial statements.

Obligations to Former Executives  In October 2001, we entered into a
separation and consulting agreement with Dr. Titomirov, our founder and former
chief executive officer and chairman. The agreement provides that Dr.
Titomirov will provide consultant services to us as directed by our Chief
Executive Officer for up to forty hours a month for a period of three years,
unless earlier terminated by him. Dr. Titomirov will be paid approximately
$30,600 per month for his services, will receive $7,000 per month for expenses
related to his office and support services and is eligible to be reimbursed for
certain health insurance costs. In October 2001, we entered into a separation
agreement with Dr. Bernstein, our former president. The agreement provides that
Dr. Bernstein will receive payment of $275,000, one years salary at the time
of separation, as severance compensation to be paid periodically through
December 31, 2002.

Employment and Severance Agreements  Certain employees have employment
agreements that entitle them to a severance payment of two weeks salary upon
termination of employment. In September 2002, the Compensation Committee of
the Companys Board of Directors authorized the Company to enter into revised
severance terms with ten employees, as an incentive to retain such employees
through the closing date of a change of control transaction. These revised
severance terms provide such employees payment of three to four months salary
upon their termination by the Company or by the employee for reasons specified
in such agreements. The aggregate amount

6



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##### 



payable under these agreements is approximately $280,000. Three senior
executive officers and two officers of the Company have employment agreements
that entitle these individuals to severance payments ranging from six months to
one years salary, plus bonus in certain circumstances if such individuals are
terminated by the Company or such individuals terminate their employment for
reasons specified in such agreements. Agreements with executive officers are
fully described in the Companys proxy statement for the 2002 annual meeting of
stockholders filed with the SEC. No accrual for any liability which may result from the employee agreements has been recorded in the September 30, 2002 financial statements.

Transaction Break Up Fee  In connection with the pending cash tender offer
and merger transaction with Invitrogen discussed in Note 8 below, the Company
has agreed to pay to Invitrogen a customary break up fee in the event that
the merger agreement between the parties is terminated by either the Company or
Invitrogen, for certain reasons specified under such agreement. In the event
that such fees are payable under the merger agreement, the Company shall pay
Invitrogen its reasonable costs and expenses, not to exceed $500,000, incurred
in connection with the negotiation and performance of the merger agreement, and
an additional termination fee of $1.5 million. Additional information relating
to this termination fee can be found in the tender offer materials filed by the
Company and Invitrogen with the SEC. See Item 5 of Part II of this report for
information as to the availability of information regarding the tender offer.

Government Audits  Payments to the Company on subcontracts with prime U.S.
Government contracts are subject to adjustment upon audit by various agencies
of the U.S. Government. No audits of costs and the related payments have been
performed by the various agencies. At September 30, 2002, there were no
liabilities accrued related to the billing in excess of cost. In the opinion
of management, the final determination of these costs and related payments will
not have a material effect on the Companys financial position, results of
operations or liquidity.

Litigation  In the ordinary course of conducting its business, the Company is
involved in litigation and administrative proceedings.

In November 2001, the Company and two of its former officers, as well as the
underwriters of the Companys initial public offering, were named as defendants
in a securities class action lawsuit in the U.S. District Court for the
Southern District of New York. Similar complaints have been filed against
approximately 310 other issuers that have had initial public offerings since
1998 and all such actions have been included in a single coordinated proceeding
for pre-trial purposes. A consolidated amended complaint was filed on April
19, 2002. The amended complaint alleges, among other things, that certain of
the underwriters of the Companys initial public offering violated the
securities laws by failing to disclose certain alleged compensation
arrangements (such as commissions paid to them by the underwriters customers)
in the offerings registration statement and by engaging in manipulative
practices to artificially inflate the price of the Companys stock in the
after-market subsequent to the initial public offering. The Company is named
in the amended complaint pursuant to Section 11 of the Securities Act of 1933,
and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 on the
basis of an alleged failure to disclose the underwriters alleged compensation
arrangements and allegedly manipulative practices. The complaint seeks
unspecified damages.

The Company and its former chairman are also parties to lawsuits claiming that
the Company failed to honor alleged agreements to pay a commission and other
consideration including shares of pre-initial public offering common stock for
an introduction to a venture capital firm and services rendered.

The Company believes that meritorious defenses to these claims are available
and it intends to vigorously contest and defend against them. However, due to
the inherent uncertainties of litigation, the Company cannot accurately predict
the ultimate outcome of the litigation. Any unfavorable outcome of this
litigation could have a negative impact on the Companys business, financial

7



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##### 



condition, results of operations or cash flows. See Item 1 of Part II of this
report for additional information related to the Companys pending litigation.

Note 4  Restructuring

The Company announced two restructurings of its operations effective January
2002 and May 2002. In connection with these restructurings, a $0.78 million
charge was recorded in the quarter ended March 31, 2002 and a $0.55 million
charge was recorded in the quarter ended June 30, 2002. The first quarter
charge consisted of cash severance and related payroll costs of $0.54 million,
and legal and outplacement fees of $0.24 million in connection with our
termination of approximately 30 employees. The second quarter charge consists
of cash severance and related payroll costs of approximately $0.29 million, and
legal and outplacement fees of approximately $0.26 million in connection with
our termination of approximately 30 employees. Approximately $0.2 million of
the combined charge remains unpaid and is included in accrued expenses as of
September 30, 2002.

Note 5  Segment Information

The Company has two reportable segments: software and professional services.

The principal products in the software segment are the Companys Vector NTI
Suite and its GenoMax enterprise platform. Software segment revenues are
generated from software license fees and maintenance fees. Professional
services segment consists of services rendered under government subcontracts
with National Center for Biotechnology Information (NCBI) and those services
provided to software customers including installation, training and
customization of the Companys software products.

Segment data includes an allocation of all general and administrative expenses
to each of the operating segments based on each segments proportionate share
of salary expense.

The table below presents reported segment amounts in thousands for the three
and nine months ended September 30, 2001 and 2002.

|                                  |  |              |        |          |  |       |        |   |  |  |        |  
|--------------------------------- |  | ------------ | ------ | -------- |  | ----- | ------ | - |  |  | ------ | -
|                                  |  | Professional |        |          |  |       |        |   |  | 
|                                  |  | Services     |        | Software |  | Total
|                                  |  |              |        |          |  |      
|Quarter ended
September 30, 2001: |  |              |        |          |  |       |        |   |  |  |        |  
|Revenue                           |  |              | 918    |          |  |       | 3,762  |   |  |  | 4,680  |  
|Income (Loss) from Operations     |  |              | (1,464 | )        |  |       | (4,520 | ) |  |  | (5,984 | )
|Quarter ended
September 30, 2002: |  |              |        |          |  |       |        |   |  |  |        |  
|Revenue                           |  |              | 933    |          |  |       | 2,126  |   |  |  | 3,059  |  
|Income (Loss) from Operations     |  |              | (2,347 | )        |  |       | (3,123 | ) |  |  | (5,470 | )

|                                      |  |              |        |          |  |       |         |   |  |  |         |  
|------------------------------------- |  | ------------ | ------ | -------- |  | ----- | ------- | - |  |  | ------- | -
|                                      |  | Professional |        |          |  |       |         |   |  | 
|                                      |  | Services     |        | Software |  | Total
|                                      |  |              |        |          |  |      
|Nine months ended
September 30, 2001: |  |              |        |          |  |       |         |   |  |  |         |  
|Revenue                               |  |              | 2,889  |          |  |       | 15,949  |   |  |  | 18,838  |  
|Income (Loss) from Operations         |  |              | (3,661 | )        |  |       | (12,329 | ) |  |  | (15,990 | )
|Nine months ended September 30, 2002: |  |              |        |          |  |       |         |   |  |  |         |  
|Revenue                               |  |              | 2,812  |          |  |       | 7,749   |   |  |  | 10,561  |  
|Income (Loss) from Operations         |  |              | (8,229 | )        |  |       | (11,850 | ) |  |  | (20,079 | )

8



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The difference between loss from operations and net loss is attributable to
investment earnings, interest expense and other expense totaling $0.6, $0.2,
$2.5 and $0.7 for the three months ended September 30, 2001 and 2002, and the
nine months ended September 30, 2001 and 2002 respectively.

The table below presents the allocation of assets between reported segments, in
thousands, at December 31, 2001 and September 30, 2002.

|                     |                       |  |                   |        |                    |  |        |       | 
|-------------------- | --------------------- |  | ----------------- | ------ | ------------------ |  | ------ | ----- | 
|                     |                       |  | December 31, 2001 |        | September 30, 2002
|                     |                       |  |                   |        |                   
|Allocable Assets:    |                       |  |                   |        |                    |  |        |      
|                     | Professional Services |  |                   | 656    |                    |  |        | 492   | 
|                     | Software              |  |                   | 10,224 |                    |  |        | 2,340 | 
|Non-Allocable Assets |                       |  | 73,598            |        |                    |  | 58,941 |      

Note 6  Related Party Transaction

In the quarter ended March 31, 2002 the Company wrote off a related party
receivable of $0.2 million.

Note 7  Software Development Costs

In April 2002, the Company and a software firm entered into an agreement to
develop software and associated materials related to the Macintosh version of
our Vector NTI Suite software. This software is scheduled for release in the
fourth quarter of 2002 and the cost of development is expected to be
approximately $0.4 million during that quarter. At September 30, 2002,
the Company had capitalized $0.1 million in software product technology costs
associated with the development arrangement.

Note 8  Subsequent Events; Tender Offer and Merger

On October 15, 2002, the Company entered into a merger agreement with
Invitrogen Corporation and Babcock, Inc., a wholly owned subsidiary thereof
(Purchaser). Under the merger agreement, on October 25, 2002, Purchaser
commenced a tender offer for all of the Companys outstanding shares at $1.36
per share in cash, or approximately $42.0 million for the Companys fully
diluted equity. The tender offer was made by an offer to purchase and other
offering and solicitation documents, copies of which were filed by Purchaser
and Invitrogen with the SEC and mailed to the Companys stockholders. The
tender offer will expire at midnight on Friday, November 22, 2002, unless
extended by the parties as provided in the merger agreement. The consummation
of the tender offer is subject to certain customary conditions, including the
tender, without withdrawal prior to expiration of the tender offer, of at least
a majority of the Companys outstanding shares of common stock on a fully
diluted basis. Following the consummation of the tender offer, Purchaser will be
merged with and into the Company and the Company shall survive the merger as a
wholly owned subsidiary of Invitrogen. Subject to any effective exercise of
appraisal rights, all remaining outstanding shares of the Companys common
stock will be converted in the merger into the right to receive $1.36 per share in the
merger. See Item 5 of Part II of this report for information as to the
availability of information regarding the tender offer.

9



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Also, in October 2002, the Company announced a strategic alliance with
SciTegic, Inc. to develop new data pipelining and automation products for the
bioinformatics market. Pursuant to this agreement, we paid SciTegic $300,000
in October 2002. This amount includes a $150,000 signing fee that was
capitalized upon payment and will be amortized for a one-year period beginning
with the first commercial release of the product. The remaining
$150,000 shall
be treated as a pre-payment by the Company of royalties payable to SciTegic
upon sales of the product. Under the agreement, we are obligated to make two
additional pre-payments of royalties totaling $250,000 in future periods. The
first version of this planned series of software is in development and is
expected to be released in the second quarter of 2003.

Risk Factors

Statements in this report that are not strictly historical are
forward-looking statements, which involve a high degree of risk and
uncertainty. Such statements are only predictions, and the actual events or
results may differ materially from those projected in such forward-looking
statements. Factors that could cause or contribute to differences include, but
are not limited to, the risks detailed below. These factors and others are
more fully described in our Annual Report on Form 10-K, as filed with the SEC
on April 2, 2002.

The consummation of the tender offer by Invitrogens wholly owned subsidiary is
subject to numerous conditions and is therefore not certain. If the conditions
to the tender offer are not satisfied, or if the merger agreement is terminated
without consummation of the tender offer, we may be subject to a number of
material risks that would adversely affect our business operations and the
trading price of our common stock.

On October 15, 2002, we entered into a merger agreement with Invitrogen
Corporation and its wholly owned subsidiary. Under the terms of the merger
agreement, on October 25, 2002, Invitrogens subsidiary commenced a tender
offer to acquire all of our outstanding shares of common stock at $1.36 per
share in cash. The consummation of this tender offer is subject to numerous
conditions in the tender offer materials filed by Invitrogen and us with the
SEC. See Item 5 of Part II of this report for information as to the
availability of information regarding the tender offer. These conditions
include, but are not limited to, receipt of all necessary government approvals
and the tender, without withdrawal prior to the expiration of the tender offer,
of at least a majority of our outstanding shares of common stock on a fully
diluted basis. If the conditions to the tender offer are not satisfied or the
merger agreement is terminated without consummation of the tender offer, we may
be subject to a number of material risks, including the following:



| |  |  | The price of our common stock may decline to the extent that the
current market price reflects a market assumption that the tender offer
and the merger will be completed;                                                                                       
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | We may be required to pay Invitrogen a termination fee of $1.5 million
and an additional payment of up to $500,000 to cover its costs and
expenses incurred in connection with the transaction if the merger
agreement is terminated under certain circumstances;
|
| |  |  | The perception of InforMax as a viable independent company and its
future prospects may be damaged;                                                                                                                                                              
|
| |  |  | The diversion of managements attention and the unavoidable disruption to our relationship with customers may detract from our ability to grow revenues and minimize costs;                                                                                      
|
| |  |  | Our costs related to the tender offer, such as legal, accounting
and certain financial advisor fees, must be paid even if neither the tender offer nor the merger is completed; and                                                                              

10



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| |  |  | We would face risks of operating as a stand-alone company or
finding another merger partner or acquirer, with no assurance that we
would be successful as a stand-alone company, find another merger
partner or acquirer or be able to complete an alternative merger or
sale of InforMax on terms as favorable to InforMax and its stockholders
as the tender offer and merger.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Events occurring in the period between execution of the merger agreement and
the closing of the merger could harm our business.

The merger agreement contains customary interim covenants that restrict
our ability to take specified actions during the pre-closing period without
Invitrogens prior written consent. Economic and market conditions, changes in
our industry or other unforeseen events may require us at some time during the
pre-closing period to take actions outside the ordinary course of our business
to preserve or promote our business not anticipated at the date of signing of
the merger agreement. Such actions on our part could require the prior written
consent of Invitrogen. We cannot be assured that Invitrogen would give its
consent to any such proposed actions. In the event that the tender offer or
merger is ultimately not consummated, these delays or inaction on our part
could harm our financial condition, prospects and our efforts to retain key
employees.

We have incurred operating losses in the past resulting in an accumulated
deficit and may not achieve or maintain profitability in the future.

We have incurred operating losses in most periods since our inception. We
incurred net losses of approximately $5.2 million for the quarter ended
September 30, 2002 and approximately $5.4 million for the quarter ended
September 30, 2001. As of September 30, 2002, we had an accumulated deficit of
approximately $54.0 million. Our recent increase in net loss is primarily
attributable to significant declines in software revenues and changing market
dynamics affecting purchasers and potential purchasers of our products. We do
not anticipate that our revenues for 2002 will return to the level achieved in
2001 and net losses are likely to continue. Moreover, a considerable portion
of our expenses are fixed and consist of contractual obligations related to
operating leases, primarily associated with our office space leases. For
expense analysis and a discussion of our contractual obligations related to
leases see Managements Discussion and Analysis of Financial Condition and
Results of Operations below. In addition, we expect to invest substantial
financial and other resources to:



| |  |  | Execute our product development strategy, including the
development and introduction of new products and product versions;
and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Consider appropriate acquisitions and strategic
relationships.                                                                

We cannot be certain that we will be able to generate sufficient additional
revenues from these investments in new products to match the expenses
associated with such endeavors. There is no assurance that our product
development efforts will enable us to achieve or maintain profitability. Even
if we are able to achieve profitability, we may not be able to sustain
profitability on a quarterly or annual basis. Failure to achieve consistent
profitability may limit the growth potential of our business and the trading
price of our common stock.

If products we develop under our new product development strategy do not
achieve market acceptance and generate additional revenues to support our
research and development expenses, our competitive position and revenue from
software sales would be seriously harmed.

11



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##### 



We have recently announced a new product development strategy that
includes a stronger emphasis on leveraging and building upon our Vector NTI
Suite franchise and developing enhanced applications. We anticipate
experiencing increased research and development expenses in order to execute
our new strategy. In the third quarter of 2002, we introduced new products and
product enhancements including Vector NTI Advance, Vector Xpression, GenomBench
and LabShare for Vector NTI (formerly Vector Enterprise). In October 2002, we
introduced Vector Path Blazer, a desktop application for the integration of
diverse biological pathway and protein-protein interaction data. There can be
no assurance that these new products or product versions will be more
attractive to customers than the products of our competitors or that revenues,
if any, received in connection with these new products will support the
expenditures incurred. Even if our products gain market acceptance, they may
become obsolete due to our competitors introduction of products containing
advanced technology, applications and functionality. If we do not keep pace
with technological change and we fail to produce cost effective software
products in growth markets, our competitive position and revenue from software
sales would be seriously harmed.

We must add new customers and retain and expand upon existing customer
relationships in order to generate revenues to support our research and
development expenditures and future growth of our business.

In recent periods we have experienced a considerable decline in our
software revenues. Our software revenues for the third quarter of 2002
decreased 43% compared to the same quarter in 2001. In order to generate
revenues sufficient to support research and development expenditures for the
implementation of our new product development strategy and the introduction of
new products, we must add new customers and retain, and expand upon, our
existing customer relationships. Growth of our business depends significantly
upon our successful development of new products, product upgrades and
complementary professional services, and their support by effective sales and
marketing efforts. Our ability to avoid a considerable decline in our revenues
in 2002 in comparison to 2001 is heavily dependent upon the level of sales of
our GenoMax enterprise product. At September 30, 2002, we had 43 customers of
our GenoMax product, having added two new customers in the first six months of
2002 and no new customers in the third quarter of 2002. GenoMax sales are
significantly dependent upon the enhancement and improvement of our enterprise
product and the ability of our sales force to leverage our existing Vector NTI
franchise to cross-sell GenoMax. If we are unable to add revenues from new or
expanded customer relationships, particularly as such revenues relate to
GenoMax sales, we will experience a considerable decline in 2002 revenues in
comparison to 2001. We may also not generate revenues sufficient to support our
planned research and development effort and the growth of our business could
suffer.

We must develop software products that keep pace with rapid technological
advances, that are cost effective to produce and for which there is a market
growth opportunity. Our inability to produce such products will cause our
competitive position and software revenues to be seriously harmed.

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



| |  |  | Develop and introduce new software products and complementary
services that meet evolving customer needs and preferences and
incorporate new life science and information technology advances;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12



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| |  |  | Expand the functionality of our existing software products to
ensure that they enable researchers to work with new biomolecular
data, including proteomic data, in various formats;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Incorporate on a continuous basis, feedback from our
customers relating to their life science informatics and discovery
needs and preferences; and                                 
|
| |  |  | Enhance on a continuous basis the analytical functions,
versatility and ease of use of our existing software products.                                                             

Difficulty in our ability to address these factors could result in our
informatics software products being unable to keep pace with technological
change and the needs and preferences of the evolving market for life science
informatics.

We also may not be able to identify in a timely manner important emerging
industry standards and we may invest considerable financial resources and
research and development time in technologies that rapidly become obsolete or
for which there is a waning, or no, commercial market. Our failure to timely
address these factors would seriously harm our competitive position and our
software revenues.

The trading price of our common stock may fluctuate widely.

The trading price of our common stock has experienced significant
fluctuations, ranging from a high sales price of $14.69 in 2001 to a low sales price of
$0.53 on October 10, 2002. We cannot be assured that our acquisition by
Invitrogen Corporation, including any uncertainties or perceived uncertainties
associated with the consummation of the pending tender offer, will not
materially adversely affect the price or trading volume of our common stock.
The trading price of our common stock may continue to fluctuate widely as a
result of a large number of other factors, many of which are beyond our control
including:



| |  |  | Announcements of technological innovations, new customers or
strategic relationships by our competitors or us;
| | - |  | --------------------------------------------------------------------------------------------------------------
|
| |  |  | Changes in research and development and government spending on
genomic research;                              
|
| |  |  | Failure to meet previously announced guidance or analysts
expectations of our quarterly results;             
|
| |  |  | Period to period fluctuations in our financial results; and                                                   
|
| |  |  | General economic and other external factors.                                                                  

The stock market has experienced extreme price and volume fluctuations that
have affected the market prices of many companies involved in the software and
biotechnology industries, and that have often been unrelated to the operating
performance of these companies. As a result of these fluctuations,
stockholders may not
be able to sell their common stock at a price above their purchase price.

If we cannot effectively manage changes to our business and level of growth,
our future prospects and results of operations would be harmed.

In prior years, we experienced significant growth in the size of our
customer base and the scope of our products and services. During this same
period, we also experienced an increase in our

13



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headcount and significant turnover in our senior management personnel.
Recently, as a result of market conditions impacting our industry, we have seen
a considerable reduction in spending among our commercial customers that has
resulted in a significant decline in our software revenues compared to prior
periods. These factors have placed, and will continue to place a significant
strain on our management and our administrative, financial and operational
systems. By way of example, in connection with the significant growth of
headcount and operations in prior periods, we entered into office space leases
to accommodate these needs. Subsequently, as a result of our restructuring and
cost containment efforts discussed below, certain portions of our office space
are under-utilized and we are seeking to sublease some of this office space to
offset a portion of our fixed cost. Efforts to more efficiently manage the
growth of our business or reduce expenses, including restructuring our
organization, reducing our headcount, closing offices or reducing or
eliminating certain administrative functions, often result in increased
near-term expenses. In January 2002, in an effort to streamline our
organization and reduce costs, we reduced our headcount by over 30 employees,
or approximately 14% of our work force. As a result of this reduction, we
incurred an accounting charge of approximately $0.78 million in the first
quarter of 2002. In May 2002, in an effort to further streamline our
organization and more closely align our resources with our new product
development strategy, we further reduced our headcount by over 30 employees, or
approximately 15% of our work force. As a result, we incurred an accounting
charge of $0.55 million in the second quarter of 2002. Our ability to manage
changes to our business and the level of our growth, as well as related
expenses, will depend upon the ability of our officers to continue to implement
and improve our development, operational, administrative and financial control
systems and to train and manage our workforce. Our inability to manage these
changes effectively would negatively impact our future prospects and results of
operations.

The market for informatics products and services is intensely competitive and
evolving and we may not achieve or maintain market leadership for a variety of
reasons.

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



| |  |  | Third party commercial software and information technology vendors;               
| | - |  | ----------------------------------------------------------------------------------
|
| |  |  | Informatics developers; and                                                       
|
| |  |  | Internal informatics departments of some of our customers and potential customers;

We believe that we compete most often with LION biosciences, Accelerys,
Compugen, DNA Star, and Rosetta Inpharmatics (acquired by Merck in 2001).
Others, including large, well-established software vendors, could readily enter
this market. In the event that Invitrogen's acquisition of us is not
consummated, it may become one of our competitors. Many of our
competitors have longer operating histories, stronger name recognition and
significantly greater financial, technical and marketing resources than we do.
As a result of these advantages, our competitors may be better able to adopt
more aggressive pricing policies and better positioned to respond to changes in
customer preference or technology. We continue to experience price competition
among providers of informatic software. To the extent that we are required to
compete aggressively with such organizations as it relates to the pricing of
our software products, we may not be able to achieve or maintain the margins
historically realized on our software sales and our competitive position and
software sales revenue would suffer.

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

14



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The continued enhancement and development of our life science informatics
products and related services depend upon the retention of our research and
product development group and our ability to recruit, motivate and retain
highly skilled research and development personnel.

The number of technical personnel with experience in the field of life
science informatics is limited and competition for qualified employees is
intense. In connection with our January and May 2002 headcount reductions, we
reduced the size of our research and development staff to 73 employees at
September 30, 2002 from 93 employees at December 31, 2001. There can be no
assurance that such reductions will not be disruptive to or negatively impact
our product development strategy and its implementation. We are also unsure of
the effect that such reductions, as well as the pending acquisition
of us by
Invitrogen, may have on our personnel retention efforts or the
continuity of our development efforts. We may not be successful in motivating
or retaining our technical employees or recruiting and training additional
skilled personnel. The loss of a significant number of employees in our
research and product development group, occurring at one instance or over a
period of time, could seriously harm our product development and enhancement
efforts.

Our workforce reductions, financial
performance and execution of the merger
agreement with Invitrogen Corporation may adversely affect the morale and
performance of our personnel and our ability to retain and hire personnel.

In connection with our effort to streamline operations, reduce costs and
better align our resources with perceived market opportunities, we restructured
our organization and reduced our workforce twice in the first half of 2002. We
terminated over 30 employees in each of January 2002 and May 2002. These cost
containment efforts, as well as our recent execution of the merger agreement with
Invitrogen Corporation and a wholly owned subsidiary thereof, may also yield
unanticipated consequences, such as attrition beyond our planned reduction in
workforce and loss of employee morale and decreased performance. Continuity of
personnel is an important factor in the successful implementation of our
business plan and ongoing turnover in our personnel could materially and
adversely impact our sales and marketing efforts, current customer
implementations, and our research and development projects. We believe that
hiring and retaining qualified individuals at all levels is essential to our
success, and there can be no assurance that we will be successful in attracting
and retaining the necessary personnel.

Revenue recognition rules applicable to software may require that we defer
recognizing revenues under certain licenses until quarters after licenses are
executed or fees are received. This can cause our quarterly results to
fluctuate substantially.

We may not be able to recognize revenue associated with a particular
software license in the same quarter in which we enter into the agreement or in
which we collect licensing fees. Under some of our licenses, we must deliver
to a customer an enhanced product version or additional module, and, therefore,
we must defer recognizing any payments previously received until delivery of
all contract elements are made. If we are unable to release future modules as
scheduled, we will be required to defer the recognition of a significant amount
of revenues to quarters after those quarters in which we collect licensing
fees.

Our software sales have historically been made under perpetual and term
license agreements. Under perpetual arrangements, the customer assumes
ownership of the software, and

15



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##### 



upgrades and enhancements are available provided that the customers
maintenance agreement is current. The revenue related to the software element
under a perpetual arrangement is often recognized at the time of delivery of
the software. Under our term arrangements, which typically run one to three
years, our customers do not assume ownership of the software at delivery.
Instead, customers use the software over the term period and are required to
return it upon the non-renewal of the term arrangement. The revenue related to
the software element under the term arrangement may be recognized over the term
period. As discussed more fully in the revenue section of Item 7,
Managements Discussion and Analysis of Financial Condition and Results of
Operations, contained in our Annual Report on Form 10-K filed with the SEC on
April 2, 2002, our ability to recognize software license revenue in a given
fiscal quarter will be affected by the mix of perpetual and term contracts
entered into during that period.

Some of our software license arrangements have payment terms that extend
past twelve months. As a result, a portion of the revenue from such sales is
deferred due to our being unable to determine if the fees are fixed and
determinable. We do not have sufficient history to overcome the presumption
that the fees are fixed and determinable. Based on our deferred revenue
balance at September 30, 2002, $1.4 million has been deferred on this basis.

Expenses associated with software licenses, unlike revenues, are not
typically deferred. The manner in which we recognize revenue, in accordance
with the revenue recognition rules applicable to software under generally
accepted accounting principles, may therefore cause us to incur a
disproportionate amount of expense related to the software revenue that may be
recognized, and, as a result, our quarterly operating results can fluctuate
substantially. As a result, in connection with our new product development
strategy, we may incur higher near term development expenses while revenue, if
any, recognized from sales of new products and product versions may be deferred
until later periods.

Our sale of life science informatics software products and services would
further suffer if there are additional or prolonged reductions in research and
development expenditures among our commercial customers and potential customers
and if public funding related to life sciences research decline.

Sales of our products and services have suffered as a result of recent
reductions in research and development expenditures among our commercial
customers and potential customers. State and federal government budgets,
including academic and research institutes supported thereby, however, have
experienced an increase in allocations and spending related to genomic research
in recent years. As a result of the tightening of the capital markets and
slowdown in technology spending among commercial life sciences companies, we
have experienced an increase in the number of public institutions that make up
our customer base. These institutions that often rely heavily on public
funding represent an increasing portion of our software sales revenue.
Shifting government budget priorities, specifically related to recent national
defense and homeland security efforts, could result in the reduction or
elimination of certain publicly funded research efforts. Our continued
services to the National Center for Biotechnology Information at the National
Institutes of Health, for example, could be negatively affected by reductions
in such public funding. Our sale of life science informatics software products
and services would further suffer if there are additional or prolonged
reductions in research and development expenditures among our commercial
customers and potential customers and if public funding related to life
sciences research were to decline.

Part of our business strategy is to develop strategic relationships with larger
life sciences or technology companies, as well as providers of complementary
products and services. If we are not successful in doing so, our results of
operations could suffer.

16



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##### 



A component of our business strategy is to develop strategic relationships
with larger life sciences or technology companies as well as providers of
complementary products and services. We believe that through such
relationships we can add revenues, expand our distribution channels, maximize
our research and development resources, improve our competitive position and
increase market awareness and acceptance of our life science informatics
software products. We have limited experience in engaging in and managing such
relationships and have entered into only a few of these strategic
relationships. To date, we have not recognized significant revenues as a
result of any such relationship. In October 2002, we entered into a strategic
alliance with SciTegic, Inc. to develop new data pipelining and automation
products for the bioinformatics market. Pursuant to this agreement, we paid
SciTegic $300,000 in October 2002. This amount includes a $150,000 signing fee
and a $150,000 pre-payment of royalties payable to SciTegic upon sales of the
product. Under the agreement we are obligated to make two additional
pre-payments of royalties totaling $250,000 in future periods. In January
2002, we entered into scientific collaboration with TissueInformatics, Inc. in
which we will seek to collaborate on the development and validation of software
tools to integrate and analyze genomic and tissue data from digital tissue
images. In connection with this collaboration, we invested $1.5 million in
TissueInformatics for an approximately 5% ownership interest at the time of our
investment. We have no prior experience in assessing, making or managing
investments in other companies and there can be no assurance that our
investment in TissueInformatics will prove to be successful. Currently our
balance sheet reflects a $1.5 million available for sale investment in
TissueInformatics. There is no assurance that this valuation will be maintained
in future periods and it is possible that we may experience a partial or total
loss in this investment. If we are unable to successfully develop and
effectively manage our strategic relationships, including our current
investment or similar future investments, we could experience increased costs
and distraction of our management team that could harm our results of
operations. There can be no assurance that such relationships or
collaborations will ever yield the desired financial or competitive results
sought by our management.

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

Special Note Regarding Forward Looking Statements

Certain statements contained in the Managements Discussion and Analysis
of Financial Condition and Results of Operations and other sections herein,
including statements regarding our product development strategy, scheduled
product releases and functionality, the markets for our products and services,
our anticipated revenues and expenditures, and other similar statements are
forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995) which can be identified as any statement that
does not relate strictly to historical or current facts. Forward-looking
statements use such words as plans, expects, will, will likely result,
are expected to, will continue, is anticipated, estimate, project,
believes, anticipates, intends, may, should, continue, seek,
could and other similar expressions. Although we believe that our
expectations are based on reasonable assumptions, we can give no assurance that
our expectations will be achieved. The important factors which could cause
actual results to differ materially from those in the forward-looking
statements herein include the risk factors identified in the preceding Risk
Factors section, as well as other risks referenced from time to time in our
filings with the SEC, including our Annual Report on Form 10-K, filed April 2,
2002. We do not undertake any obligation to release publicly any revisions to
such forward-looking statements in order to reflect the occurrence of
future events.

The following discussion and analysis should be read in conjunction with
our condensed consolidated financial statements and notes thereto included
herewith, and with our Managements

17



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Discussion and Analysis of Financial Condition and Results of Operations and
audited consolidated financial statements and notes thereto for the year ended
December 31, 2001, included in our Annual Report on Form 10-K filed with the
SEC on April 2, 2002.

Overview

We are a leading global provider of informatics software solutions to the
life sciences industry. Our software solutions enable more efficient and
accelerated analysis and interpretation of genomic, proteomic and other
biomolecular data for application in pharmaceutical, therapeutic and diagnostic
development. As of September 30, 2002, we had more than 32,000 estimated users
of our market leading Vector NTI Suite of desktop software and had sold 43
GenoMax enterprise licenses. As of September 30, 2002, our customer base
included over 2,100 organizations worldwide, including over 800 biotechnology,
pharmaceutical and agricultural biotechnology and life science companies, and
over 1,300 academic and government research institutions. Our 10 largest
customers accounted for approximately 12% and 20% of our total software license
revenues for the quarters ended September 30, 2002 and 2001, respectively. At
September 30, 2002 our headcount was 171 employees, down from 262 employees at
December 31, 2001.

On October 15, 2002, we entered into a merger agreement with Invitrogen
Corporation and Babcock, Inc., a wholly owned subsidiary thereof (Purchaser).
Under the agreement, Purchaser, on October 25, 2002, commenced a tender offer
for all of our outstanding shares at $1.36 per share in cash, or approximately
$42.0 million for our fully diluted equity. The tender offer was made by an
offer to purchase and other offering and solicitation documents, copies of
which were filed by Invitrogen and us with the SEC and mailed to our
stockholders. The tender offer will expire at midnight on Friday, November 22,
2002, unless extended by the parties as provided in the agreement. The
consummation of the tender offer is subject to certain customary conditions,
including the tender, without withdrawal prior to expiration of the tender
offer, of at least a majority of our outstanding shares of common stock on a
fully diluted basis. Following the consummation tender offer, we will be
merged with Purchaser and we will survive the merger as a wholly owned
subsidiary of Invitrogen. Subject to any effective exercise of appraisal
rights, all remaining outstanding shares of the common stock will be converted
into the right to receive $1.36 per share in the merger. See Item 5 of Part II
of this report for information as to the availability of information regarding
the tender offer.

We have begun to implement and execute our new product
development strategy to leverage and extend our strong Vector NTI market position to
develop and market a new Vector Family of Products in connection with this
aggressive product development effort. In September 2002, we launched Vector NTI
Advance, a new comprehensive product combining Vector NTI Suite 8.0 and
GenomBench, a new, fully integrated module for the import, analysis, annotation
and storage of genomic sequence information including enhanced access to public
databases of genomic data. In the third quarter we also launched Vector
Xpression, a new software tool for the analysis of microarray gene expression
data and LabShare for Vector NTI (an upgraded version of Vector Enterprise), a
product for shared, secure data storage among Vector NTI users. GenoMax 3.4, a
significant upgrade of our existing enterprise product, was released in August
2002. In October 2002, we launched Vector PathBlazer, a desktop application
for the integration of diverse biological pathway and protein-protein
interaction data. An upgraded Vector NTI Suite for MacOSX is currently in
development and is expected to be released late in the fourth quarter of 2002.
We intend to develop Linux and Oracle versions of our enterprise products in an
effort to enhance the flexibility and affordability of these products.

We have also continued to execute our corporate strategy of evaluating and
establishing key alliances and marketing relationships with other leading
companies and providers of complementary products and services in an effort to
expand the scope of our product offerings and increase market

18



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penetration of our software solutions. In the third quarter of 2002, we
entered into a strategic alliance with SciTegic, Inc. to develop new data
pipelining and automation products for the bioinformatics market. The new
products, which are currently anticipated for delivery in the second quarter of
2003, will enable users to automate predefined processing protocols or build
their own data pipelines from a set of modular bioinformatics components. The
new products are expected to combine SciTegics Pipeline Pilot  technologies
with components from our Vector family of products to streamline the
integration and analysis of biological data. Pursuant to our agreement, we
paid SciTegic $300,000 in October 2002. This amount includes a $150,000
signing fee and a $150,000 pre-payment of royalties payable to SciTegic upon
sales of the product. Under the agreement, we are obligated to make two
additional pre-payments of royalties totaling $250,000 in future periods.

Trends That Have Affected or May Affect Results of Operations and Financial
Condition

Our
revenues for the quarter and nine months ended September 30, 2002 represented a
35% and 44% decrease, respectively, compared to revenues achieved for the same
periods of 2001. As a result of a number of factors, including those set forth
below, we have been experiencing a considerable decline in revenues,
particularly software license revenues, in 2002 compared to 2001. As a result,
we expect that our revenues in 2002 will represent a significant decline
compared to our results in 2001.

We believe that our declining sales are primarily attributable to reduced
spending by biotechnology and pharmaceutical companies and increased
competition, including price competition. In addition, our software revenue in
the third quarter of 2002 was less than expected as a result of unanticipated
delays in the commercial release of new products and product versions toward
the end of the third quarter and the beginning of the fourth quarter of 2002.
We continue to see tightened capital markets and slowdown in commercial
research and development spending, which, among other things, have contributed
to a considerable slowdown in software and information technology spending by
prospective customers. Our ability to grow our revenues significantly depends
upon, our successful implementation of our product development strategy,
the availability of capital to biotechnology companies and increased spending by
such companies. We believe that our revenue growth in prior
periods, was buoyed, at least partly, by higher than typical spending
by biotechnology companies. Government and academic spending on life sciences,
however, has remained relatively strong. As a result, a higher concentration
of our customers consists of government and academic life science institutions
as compared to prior periods.

As a result of market conditions described above, we continue to see price
competition among informatic software providers. Intensification of or the
continuation of price competition in the market in which we operate would
reduce our margins and negatively affect our revenues and market share.

Our headcount reductions in January and May 2002 and attrition have
resulted in an overall sales headcount of 34 at September 30, 2002 compared to
65 at September 30, 2001. While we believe that our cost containment efforts
and headcount reductions have resulted in a more productive and cost effective
organization, there can be no assurance that such personnel changes will not be
disruptive to our sales efforts or the retention of qualified personnel.

We released GenoMax 3.4 containing significant enhancements to our
existing product in the third quarter of 2002. No new sales of GenoMax were
made in the third quarter and only two new sales of this enterprise product
have been made in 2002. A considerable portion of our revenue growth in prior
periods resulted from sales of GenoMax to biotechnology companies. There can be
no assurance that our refocused product development strategy will not adversely
affect our ability to

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enter into additional GenoMax licenses. Due to the manner in which we
recognize revenues from GenoMax sales, a decline in GenoMax sales would result
in a considerable reduction in near term revenues, compared to 2001, as well as
a reduction in revenues in future quarters as a result of the loss of deferred
revenue associated with such sales. By way of example, of our $2.1 million in
software license revenue for the quarter ended September 30, 2002, $0.4 million
resulted from deferred revenue from GenoMax sales in prior periods. We
anticipate recognizing over the next 12 months deferred revenue of $1.0 million
related to GenoMax sales closed during prior periods.

Quarterly Fluctuations

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



| |  |  | Software licensing agreements, particularly related to GenoMax sales;             
| | - |  | ----------------------------------------------------------------------------------
|
| |  |  | Product delivery schedules;                                                       
|
| |  |  | Strategic relationships; and                                                      
|
| |  |  | Professional service
activities, including installation and software modification.
|

The number and timing of customer orders for our GenoMax enterprise
product will cause our results of operations to fluctuate on a near-term basis,
compared to 2001, as well as in future periods, due to the level of deferred
revenue recognized.

Our quarterly results may fluctuate in response to increased competition
including price competition, and our product pricing in response to such
competition.

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

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

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Results of Operations

The following table summarizes our results of operations for the three and
nine months ended September 30, 2002, compared to the same
periods in 2001, as a
percentage of our total revenue for the respective period.

|                        |                                       |                              |      |                    |     |                   |      |      |     |      |     |    |     |  |      |     |     | 
|----------------------- | ------------------------------------- | ---------------------------- | ---- | ------------------ | --- | ----------------- | ---- | ---- | --- | ---- | --- | -- | --- |  | ---- | --- | --- | 
|                        |                                       |                              |      | Three Months Ended |     | Nine Months Ended
|                        |                                       |                              |      | September 30       |     | September 30     
|                        |                                       |                              |      |                    |     |                  
|                        |                                       |                              |      | 2001               |     | 2002              |      | 2001 |     | 2002
|                        |                                       |                              |      |                    |     |                   |      |      |     |     
|Revenues:               |                                       |                              |      |                    |     |                   |      |      |     |      |     |    |     |  |      |    
|                        | Software license and customer support |                              |      | 80                 | %   |                   |      | 70   | %   |      |     | 85 | %   |  |      | 73  | %  
|                        | Professional services                 |                              |      | 20                 |     |                   |      | 30   |     |      |     | 15 |     |  |      | 27  |    
|                        |                                       |                              |      |                    |     |                   |      |      |     |      |     |    |     |  |      |     |     | 
|                        |                                       | Total revenues               |      |                    | 100 |                   |      |      | 100 |      |     |    | 100 |  |      |     | 100 | 
|Cost of revenues:       |                                       |                              |      |                    |     |                   |      |      |     |      |     |    |     |  |      |    
|                        | Software license and customer support |                              |      | 8                  |     |                   |      | 9    |     |      |     | 7  |     |  |      | 5   |    
|                        | Professional services                 |                              |      | 10                 |     |                   |      | 17   |     |      |     | 8  |     |  |      | 13  |    
|                        |                                       |                              |      |                    |     |                   |      |      |     |      |     |    |     |  |      |     |     | 
|                        |                                       | Total cost of revenues       |      |                    | 18  |                   |      |      | 26  |      |     |    | 15  |  |      |     | 18  | 
|                        |                                       |                              |      |                    |     |                   |      |      |     |      |     |    |     |  |      |     |     | 
|Gross profit            |                                       |                              | 82   |                    |     |                   | 74   |      |     |      | 85  |    |     |  | 82   |    
|Operating expenses:     |                                       |                              |      |                    |     |                   |      |      |     |      |     |    |     |  |      |    
|                        | Selling                               |                              |      | 51                 |     |                   |      | 40   |     |      |     | 43 |     |  |      | 54  |    
|                        | General and administrative            |                              |      | 85                 |     |                   |      | 122  |     |      |     | 76 |     |  |      | 116 |    
|                        | Research and development              |                              |      | 54                 |     |                   |      | 66   |     |      |     | 38 |     |  |      | 68  |    
|                        | Stock based compensation              |                              |      | 6                  |     |                   |      |     |     |      |     | 4  |     |  |      |    |    
|                        | Depreciation and amortization         |                              |      | 14                 |     |                   |      | 25   |     |      |     | 9  |     |  |      | 21  |    
|                        | Restructuring                         |                              |      |                   |     |                   |      |     |     |      |     |   |     |  |      | 13  |    
|                        |                                       |                              |      |                    |     |                   |      |      |     |      |     |    |     |  |      |     |     | 
|                        |                                       | Total operating expenses     |      |                    | 210 |                   |      |      | 253 |      |     |    | 170 |  |      |     | 272 | 
|                        |                                       |                              |      |                    |     |                   |      |      |     |      |     |    |     |  |      |     |     | 
|Loss from operations    |                                       |                              | (128 | )                  |     |                   | (179 | )    |     |      | (85 | )  |     |  | (190 | )  
|                        |                                       |                              |      |                    |     |                   |      |      |     |      |     |    |     |  |      |     |     | 
|Other income (expense): |                                       |                              |      |                    |     |                   |      |      |     |      |     |    |     |  |      |    
|                        | Investment earnings                   |                              |      | 14                 |     |                   |      | 8    |     |      |     | 14 |     |  |      | 8   |    
|                        | Interest expense and other            |                              |      | (1                 | )   |                   |      |     |     |      |     |   |     |  |      | (1  | )  
|                        |                                       |                              |      |                    |     |                   |      |      |     |      |     |    |     |  |      |     |     | 
|                        |                                       | Total other income (expense) |      |                    | 13  |                   |      |      | 8   |      |     |    | 14  |  |      |     | 7   | 
|                        |                                       |                              |      |                    |     |                   |      |      |     |      |     |    |     |  |      |     |     | 
|Net loss                |                                       |                              | (115 | )%                 |     |                   | (171 | )%   |     |      | (71 | )% |     |  | (183 | )% 
|                        |                                       |                              |      |                    |     |                   |      |      |     |      |     |    |     |  |      |     |     | 

Three and Nine Months ended September 30, 2002 compared to Three and Nine
Months ended September 30, 2001

Revenues. For the quarter ended September 30, 2002, revenue decreased 35%
to $3.1 million from $4.7 million in the corresponding period of 2001. For the
nine months ended September 30, 2002, revenue decreased 44% to $10.6 million
from $18.8 million in the corresponding period of 2001.

Software segment revenue decreased 43% to $2.1 million for the quarter
ended September 30, 2002 from $3.8 million in the corresponding period of 2001.
For the nine months ended September 30, 2002, software segment revenue
decreased 51% to $7.7 million from $15.9 million in the corresponding period of
2001. Vector NTI Suite bookings decreased 49% to $1.0 million for the quarter
ended September 30, 2002 from $1.8 million in the corresponding period of 2001.
Vector NTI

21



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##### 



Suite revenue decreased 36% to $1.6 million for the quarter ended
September 30, 2002 from $2.5 million in the corresponding period of 2001.
GenoMax bookings decreased 84% to $0.1 million for the quarter ended September
30, 2002 compared to $.6 million for the corresponding period of 2001. GenoMax
revenue decreased 59% to $0.5 million for the quarter ended September 30, 2002
from $1.3 million in the corresponding period of 2001. Bookings represent
contracted sales of software products. Our decline in software sales revenue
is primarily attributable to the market conditions and competitive factors
discussed above under the heading Trends that Have Affected or May Affect Results of
Operations and Financial Condition.

Professional services segment revenue increased 2% to $0.93 million for
the quarter ended September 30, 2002 from $0.92 million in the corresponding
period of 2001. For the nine months ended September 30, 2002, professional
service segment revenues decreased 3% to $2.8 million from $2.9 million in the
corresponding period of 2001. In the third quarter of 2002, services provided
under subcontracts for services to the National Center for Biotechnology
Information (NCBI) of the National Institutes of Health accounted for 76% of
professional services revenue and 23% of consolidated revenues.

Cost of Revenues. For the quarter ended September 30, 2002, cost of
revenues decreased 4% to $0.80 million from $0.84 million in the corresponding
period of 2001. For the nine months ended September 30, 2002, cost of revenues
decreased 29% to $2.0 million from $2.8 million in the corresponding period of
2001.

Costs of software license and customer support segment revenue decreased
26% to $0.3 million for the quarter ended September 30, 2002 from $0.4 million
in the corresponding period of 2001. For the nine months ended September 30,
2002, cost of software license and customer support segment revenues decreased
58% to $0.6 million from $1.3 million in the corresponding period of 2001.
Costs of software segment revenues include manufacturing costs incurred on an
as needed basis, cost of product resale, cost of shipping products, and
providing customer support. Reduction in the costs of software license and
customer support is primarily attributed to reduced expenses associated with
our January and May 2002 work force reductions and the benefits of our efforts
to implement tighter costs controls initiated in 2001. The costs in the
quarter ended September 30, 2001 were higher than typical due to our payment of
fees associated with our sales of a BioRS system occurring in that period.

Costs of professional services segment revenue increased 12% to $0.54
million for the quarter ended September 30, 2002 from $0.48 million in the
corresponding period of 2001. For the nine months ended September 30, 2002,
costs of professional services segment revenues decreased 3% to $1.40 million
from $1.44 million in the corresponding period of 2001. Costs of professional
services segment revenue consist primarily of salaries, benefits, and related
expenses of our professional services personnel. Costs of professional
services segment revenue increased in the quarter ended September 30, 2002, primarily due to market related increases in
professional services salaries.

Selling Expenses. For the three months ended September 30, 2002, selling
expenses decreased 49% to $1.2 million from $2.4 million in the corresponding
period of 2001. For the nine months ended September 30, 2002, selling expenses
decreased 30% to $5.6 million from $8.0 million in the corresponding period of
2001. This decrease primarily reflects a decrease in our sales force headcount
and a decrease in commissions expensed due to reduced revenue. Overall sales
headcount at September 30, 2002 was 34 compared to 65 at September 30, 2001.

General and Administrative Expenses. For the three months ended September
30, 2002, general and administrative expenses decreased 6% to $3.7 million from
$4.0 million in the corresponding period of 2001. For the nine months ended
September 30, 2002, general and administrative expenses decreased 15% to $12.2
million from $14.4 million in the corresponding

22



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##### 



period of 2001. This decrease primarily reflects a decrease in our
general and administrative headcount and our continued cost reduction measures.
Overall general and administrative headcount, which includes our executive
team and finance, human resources, information technology, and investor
relations functions, at September 30, 2002 was 48 compared to 66 at September
30, 2001. These headcount numbers include our professional services headcount
of 14 at September 30, 2002 compared to 12 at September 30, 2001.

Research and Development Expenses. For the three months ended September
30, 2002, research and development expenses decreased 21% to $2.0 million from
$2.5 million in the corresponding period of 2001. For the nine months ended
September 30, 2002, research and development expenses increased 0.4% to $7.17
million from $7.15 million in the corresponding period of 2001. This decrease
primarily reflects a decrease in our research and development headcount and our
continued cost reduction measures. Overall research and development headcount
at September 30, 2002 was 90 compared to 108 at September 30, 2001. These
headcount numbers include personnel providing professional services under
subcontracts with National Center for Biotechnology Information totaling 18 at
September 30, 2002 and 20 at September 30, 2001. We anticipate that our
research and development expenses may increase in connection with our
implementation of our new product development strategy and aggressive product
development efforts.

Stock Based Compensation. For the three months ended September 30, 2002,
stock based compensation expense decreased 95% to $0.01 million from $0.3
million in the corresponding period of 2001. For the nine months ended
September 30, 2002, stock based compensation expenses decreased 94% to $0.05
million from $0.8 million in the corresponding period of 2001. The decrease is
a result of termination of employees in our workforce reductions who had been
granted discounted stock options in prior years. The related unamortized
deferred compensation was adjusted through additional paid in capital.

Depreciation and Amortization. For the three months ended September 30,
2002, depreciation and amortization expenses increased 17% to $0.8 million from
$0.7 million in the corresponding period of 2001. For the nine months ended
September 30, 2002, depreciation and amortization expenses increased 35% to
$2.3 million from $1.7 million in the corresponding period of 2001. The
increase reflects increased depreciation related to the building out of our
headquarter office space and expansion of our network infrastructure, which
occurred during the first quarter of 2001.

Other Income (Expense). For the three months ended September 30, 2002,
other income decreased 61% to $0.2 million from $0.6 million in the
corresponding period of 2001. For the nine months ended September 30, 2002,
other income decreased 71% to $0.7 million from $2.5 million in the
corresponding period of 2001. The decrease experienced in the current period
is primarily due to a decrease in our cash balance and lower interest rates.

Net Loss. We incurred a net loss of $5.2 million for the three months
ended September 30, 2002, compared with a net loss of $5.4 million for the
three months ended September 30, 2001. For the nine months ended September 30,
2001, we incurred a net loss of $19.3 million compared with a net loss of $13.5
million for the nine months ended September 30, 2001. Our net loss is primarily
attributable to the significant decrease in our software sales revenue driven
by the market conditions discussed above under the heading Trends that Have Affected or May
Affect Results of Operations and Financial Condition.

Liquidity and Capital Resources

At September 30, 2002, we had $6.3 million in cash and cash equivalents,
and $40.6 million in available for sale investments. Our available for sale
investments include commercial paper and

23



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##### 



United States government agency debt securities. At September 30, 2001,
we had $66.0 million in cash and cash equivalents and $0.0 available for sale
investments. Net cash used in financing activities was $0.2 million for the
nine months ended September 30, 2002 compared to net cash provided by financing
activities of $0.3 million for the comparable period in 2001.

We believe that if the tender offer and merger with Invitrogen are not
consummated, the net proceeds from our initial public offering, our cash flows
from sales and our existing capital resources will be adequate to fund our
operations for the next 36 months. We will seek to conserve cash and achieve a
positive cash flow sooner than that timeframe. While we continue our efforts
to reduce costs, a considerable portion of our costs are fixed, including our
lease commitments, depreciation and insurance. We continue to seek to sublease
office space that is under-utilized in an effort to reduce our fixed costs.
Growth of our business and implementation of our new product development
strategy may nonetheless require us to seek additional funding. If that
funding is not available, or not available on terms acceptable to us, we may be
required to curtail certain marketing and product development efforts and also
reduce overhead further.

During the nine months ended September 30, 2002 and 2001, we generated
$15.7 million and $20.8 million of cash receipts from gross sales
respectively. Gross cash used by operations for the nine months ended
September 30, 2002 was $12.1 million compared to $31.6 million for the nine
months ended September 30, 2001.

Net cash used in investing activities was $42.7 million for the nine
months ended September 30, 2002 compared to net cash used in investing
activities of $5.9 million for the comparable period in 2001. This increase is
primarily due to our investment of cash in available for sale investments,
which includes commercial paper and United States government securities. In
January 2002, we also entered into a scientific and business collaboration with
TissueInformatics, Inc., an innovative provider of imaging and image analysis
solutions for pre-clinical and clinical pathology. In connection with our
scientific collaboration, we invested $1.5 million in a redeemable convertible
preferred stock financing completed by TissueInformatics for approximately a 5%
interest in TissueInformatics outstanding stock at the time of the financing.

At September 30, 2002, approximately $0.1 million remained outstanding and
payable under our equipment line of credit with PNC Bank, NA. Amounts
outstanding under this equipment line of credit accrue interest at the prime
rate as reported in the Wall Street Journal plus one and one-quarter percent.
For advances made after November 6, 1999, principal and interest accrued
thereon shall be made in monthly principal payments of $35,607 through October
15, 2002 and $15,833 through March 15, 2003. We have pledged our personal
property, including our equipment, trademarks and accounts receivable, to PNC
Bank as security for any amounts owed by us under these facilities. We are
generally restricted from incurring additional indebtedness without the consent
of PNC Bank. We must also maintain various financial covenants, including
minimum cash balance and certain financial ratios. In addition, we may not
declare or pay dividends or make any distribution with respect to any equity
security during the term of the loan agreement without the consent of PNC Bank.

The following table
sets forth our contractual obligations due by period as of
September 30, 2002:

|                               |  |                        |       |      |  |      |       |      |  |      |       |            |  |       |       |  |  |   |       |  |  |   |        |  |  |   |        | 
|------------------------------ |  | ---------------------- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | ---------- |  | ----- | ----- |  |  | - | ----- |  |  | - | ------ |  |  | - | ------ | 
|                               |  | 2002                   |       | 2003 |  | 2004 |       | 2005 |  | 2006 |       | Thereafter |  | Total
|                               |  |                        |       |      |  |      |       |      |  |      |       |            |  |      
|                               |  | (amounts in thousands) |       |     
|Contractual Obligations:       |  |                        |       |      |  |      |       |      |  |      |       |            |  |       |       |  |  |   |       |  |  |   |        |  |  |   |       
|Capital Lease Obligations (1)  |  | $                      | 227   |      |  | $    | 216   |      |  | $    | 126   |            |  | $     |      |  |  | $ |      |  |  | $ |       |  |  | $ | 569   
|Operating Leases (2)           |  |                        | 4,055 |      |  |      | 4,190 |      |  |      | 3,584 |            |  |       | 2,568 |  |  |   | 2,121 |  |  |   | 10,256 |  |  |   | 26,774
|Equipment Line of Credit       |  |                        | 625   |      |  |      | 66    |      |  |      |      |            |  |       |      |  |  |   |      |  |  |   |       |  |  |   | 691   
|Other Obligations              |  |                        | 772   |      |  |      | 356   |      |  |      |      |            |  |       |      |  |  |   |      |  |  |   |       |  |  |   | 1,128 
|                               |  |                        |       |      |  |      |       |      |  |      |       |            |  |       |       |  |  |   |       | 
|Total Contractual Obligations: |  | $                      | 5,679 |      |  | $    | 4,828 |      |  | $    | 3,710 |            |  | $     | 2,568 |  |  | $ | 2,121 |  |  | $ | 10,256 |  |  | $ | 29,162
|                               |  |                        |       |      |  |      |       |      |  |      |       |            |  |       |       |  |  |   |       | 

24



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---

|(1) |  | Capital lease obligations relate primarily to office
furniture leased in conjunction with our headquarters office space
in Bethesda, Maryland.                                          
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Operating leases include our headquarters office space in
Bethesda, Maryland and sales offices located in San Francisco,
Golden, Colorado, Cambridge, Massachusetts and Oxford, England.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK

Our exposure to market risk for changes in interest rates relates
primarily to the increase or decrease in the amount of interest income we can
earn on our initial public offering proceeds and any available for sale
investments in our portfolio. Our exposure to changes in interest rates also
relates to the increase or decrease in the amount of interest expense we must
pay with respect to our various outstanding debt instruments. Our risk
associated with fluctuating interest expense is limited, however, to credit
facilities that are closely tied to market rates. Under our current policies,
we do not use interest rate derivative instruments to manage exposure to
interest rate changes. We ensure the safety and preservation of our invested
principal funds by limiting default risks, market risk and reinvestment risk.
We reduce default risk by investing in investment grade securities. A
hypothetical 100 basis point drop in interest rates along the entire interest
rate yield curve would not significantly affect the fair value of our interest
sensitive financial instruments at September 30, 2001 and 2002. Declines in
interest rates over time will, however, reduce our interest income and expense
while increases in interest rates over time will increase our interest income
and expense. Sales to foreign-based customers are invoiced and paid in U.S.
dollars. We do not believe that we are exposed to any material foreign
currency exchange rate risk.

ITEM 4.  CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Within 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and procedures (as
that term is defined in Exchange Act Rules 13a-14 and 15d-14). Based on
that evaluation, our Chief Executive Officer and Chief Financial
Officer have concluded that as of the date of such evaluation, our
disclosure controls and procedures were effective in timely alerting them
to material information required to be included in our periodic SEC
reports filed under the Securities Exchange Act of 1934, as amended.

(b) Changes in Internal Controls



| |                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | There were no significant changes in internal controls or in other
factors that could significantly affect these controls subsequent to the
date we carried out our evaluation.

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PART II  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

In November 2001, we and two of our former officers, as well as the
underwriters of our initial public offering, were named as defendants in a
securities class action lawsuit in the U.S. District Court for the Southern
District of New York.

Similar complaints have been filed against approximately 310 other issuers
who have had initial public offerings since 1998 and all such actions have been
included in a single coordinated proceeding for pre-trial purposes. A
consolidated amended complaint was filed on approximately April 19, 2002. The
amended complaint alleges, among other things, that certain of the underwriters
of our initial public offering violated the securities laws by failing to
disclose certain alleged compensation arrangements (such as commissions paid to
them by the underwriters customers) in the offerings registration statement
and by engaging in manipulative practices to artificially inflate the price of
our stock in the after-market subsequent to the initial public offering. We
are named in the amended complaint pursuant to Section 11 of the Securities Act
of 1933, and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of
1934 on the basis of an alleged failure to disclose the underwriters alleged
compensation arrangements and allegedly manipulative practices. The complaint
seeks unspecified damages.

We believe that meritorious defenses to these claims are available and we
intend to vigorously contest and defend against them. However, due to the
inherent uncertainties of litigation, we cannot accurately predict the ultimate
outcome of the litigation. This defense may be time consuming, expensive, and
distracting from the conduct of our business and we cannot currently predict
the outcome. We are, however, seeking indemnification from our underwriters
pursuant to the underwriting agreement entered into at the time of the
offering. Any unfavorable outcome of this litigation could have a negative
impact on our business, financial condition, results of operations or cash
flows.

We are party to a lawsuit brought against us and our former Chairman and
Chief Executive Officer, Dr. Alexander Titomirov by Ludwig & Robinson, P.L.L.C.
in D.C. Superior Court on or about March 30, 2001. The complaint alleges that in or about March 1996,
Ludwig & Robinson began to provide legal services to us. The complaint further
alleges that in mid-1998 Dr. Titomirov and Ludwig & Robinson reached an oral
agreement that Ludwig & Robinson would receive a flat commission of $150,000
for introducing us to a venture capital firm in the event that such
introduction lead to a financing of between $3 million and $5 million. The
complaint alleges that we and Dr. Titomirov failed to honor the alleged oral
agreement. In addition to the breach of contract claim, the complaint raises a
fraudulent inducement claim and other common law claims. The complaint seeks a
judgment against us and any other appropriate relief and $2 million in punitive
damages. We are also a party to related litigation brought against Dr.
Titomirov and us by Robert W. Ludwig, Jr., a member of the firm of Ludwig &
Robinson. That complaint, filed in D.C. Superior Court on or about
August 25, 2001, alleges
a second oral agreement between Dr. Titomirov and Mr. Ludwig, by which Mr.
Ludwig claims he was promised shares of our common stock. The complaint raises
a breach of contract claim, a fraudulent inducement to contract claim, a
common-law equitable claim, and an abuse of process claim. Mr. Ludwig seeks
$6.1 million, plus the value of 83,500 shares of our common stock calculated at
the initial public offering price. Discovery has now closed in both matters.
With respect to the complaint brought by Ludwig & Robinson, the
Court dismissed Plaintiffs breach of contract claim on summary judgment
but allowed the fraud in the inducement claim and two other equitable claims to
proceed, finding that there were disputed issues of fact that could not be
resolved on summary judgment. With respect to the complaint brought by Mr.
Ludwig, the Court dismissed all of his claims, including the breach of
contract claim, except for his fraud in the inducement claim, finding that
there were disputed issues of fact that could not be resolved on summary
judgment. We will defend against the remaining claim at trial. We believe that
these claims are without merit, that we have meritorious defenses and we intend
to vigorously litigate these suits. However, due to the inherent uncertainties
of litigation, we cannot accurately predict the ultimate

26



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outcome of this litigation. Any unfavorable outcome of this litigation could
have a negative impact on our business, financial condition, results of
operations or cash flows.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

As of September 30, 2002, we have used approximately $33 million of the
net offering proceeds of our initial public offering toward the improvement of
our resources and infrastructure including new office space and additional
satellite offices to support the growth of our operations and personnel, and
the recruitment and hiring of additional personnel, particularly related to our
research and development and sales and marketing teams and consideration of
certain strategic relationships and collaboration opportunities. We have
placed the remaining net proceeds from the offering principally in commercial
paper and United States government agency debt securities as well as in other
interest bearing, investment-grade securities. We expect to use the net
proceeds to support our research and development and sales and marketing
efforts, implement our product development strategy as well as for working
capital and general corporate purposes. We also expect to use the net proceeds
from the offering to consider opportunities to expand our business through the
acquisition of additional businesses, products and technologies and to
establish joint ventures or other collaborative arrangements which we believe
complement our current or future business.

ITEM 5.  OTHER INFORMATION

Recent Developments/Events

On October 15, 2002, we entered into a merger agreement with Invitrogen
Corporation and Babcock, Inc., a wholly owned subsidiary thereof (Purchaser).
Under the agreement, Purchaser, on October 25, 2002, commenced a tender offer
for all of our outstanding shares at $1.36 per share in cash, or approximately
$42.0 million for our fully diluted equity. The tender offer was made by an
offer to purchase and other offering and solicitation documents, copies of
which were filed by Invitrogen and us with the SEC and mailed to our
stockholders. The tender offer will expire at midnight on Friday, November 22,
2002, unless extended by the parties as provided in the agreement. The
consummation of the tender offer is subject to certain customary conditions,
including the tender, without withdrawal prior to expiration of the tender
offer, of at least a majority of our outstanding shares of common stock on a
fully diluted basis. Following the consummation of the tender offer, Purchaser
will be merged with and into us and we will survive the merger as a wholly owned
subsidiary of Invitrogen. Subject to any effective exercise of appraisal
rights, all remaining outstanding shares of the common stock will be converted
into the right to receive $1.36 per share in the merger.

The information contained herein is neither an offer to purchase nor a
solicitation of an offer to sell shares of InforMax. Invitrogen has filed a
tender offer statement and InforMax has filed a solicitation/recommendation
statement with the SEC with respect to the offer. The tender offer statement
(including an offer to purchase, a related letter of transmittal and other
offer documents) and the solicitation/recommendation statement contain
important information that should be read carefully before any decision is made
with respect to the offer. The offer to purchase, the related letter of
transmittal and certain other offer documents, as well as the
solicitation/recommendation statement, have been mailed to all of our
stockholders, at no expense to them. The tender offer statement (including the
offer to purchase, the related letter of transmittal and all other offer
documents filed with the SEC) and the solicitation/ recommendation statement
are also available at no charge at the SECs website at www.sec.gov. The tender
offer statement and related materials may be obtained for free by directing
such requests to the information agent, Mackenzie Partners, Inc., 105 Madison
avenue, New York, NY 10016, (800) 322-2885.The solicitation/recommendation
statement and related documents may be obtained by directing such requests to
our investor relations department, at (240) 747-4000.

27



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##### 



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits.

|             |  |                                                                                                                                                                                    
|------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 10.1 |  | InforMax, Inc. Incentive Bonus Plan                                                                                                                                                
|             |  |                                                                                                                                                                                    
|Exhibit 10.2 |  | Amendment No. 1 to Executive Employment Agreement of Andrew
P. Whiteley dated as of October 1, 2002                                                                                
|             |  |                                                                                                                                                                                    
|Exhibit 10.3 |  | Letter Agreement dated October 1, 2002, between InforMax,
Inc. and John M. Green concerning post-employment
non-competition provisions                                             
|             |  |                                                                                                                                                                                    
|Exhibit 10.4 |  | Amendment No. 1 to Executive Employment Agreement of Stephen
Lincoln dated as of October 3, 2002                                                                                   
|             |  |                                                                                                                                                                                    
|Exhibit 99.1 |  | Written statement of Chief Executive Officer and Chief
Operating Officer/Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section
1350)

(b)  Reports on Form 8-K.

| |  |                                                                                                                                                                                                            
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Current Report on Form 8-K filed on October 15, 2002 (announcing
execution of an Agreement and Plan of Merger between InforMax,
Inc., Invitrogen Corporation and Babcock, Inc., a wholly owned
subsidiary).

28



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SIGNATURES

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

|                                      |  |                                                                                                          
|------------------------------------- |  | ---------------------------------------------------------------------------------------------------------
|Dated this 14th day of November 2002. |  |                                                                                                          
|                                     
|                                      |  | INFORMAX, INC.                                                                                           
|                                     
|                                      |  |                                                                                                          
|                                     
|                                      |  | By: /S/ Andrew P. WhiteleyAndrew P. Whiteley
Chairman of the Board, Chief Executive Officer and President
|                                     
|                                      |  |                                                                                                          
|                                     
|                                      |  | By: /S/ John M. GreenJohn M. Green
Chief Operating Officer and Chief Financial Officer                   

29



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CERTIFICATION

I, Andrew P. Whiteley, certify that:

|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. |  | I have reviewed this quarterly report on Form 10-Q of InforMax, Inc.;                                                                                                                                                                                                                                                                                                                    
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;                                                           
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                                                                              
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                                                                                
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|   |  | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities particularly during the period in which this quarterly report
is being prepared;                                                                                        
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|   |  | b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                                                                                                         
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|   |  | c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                                                                                                               
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):                                                                                                                                           
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|   |  | a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and                                                                                        
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|   |  | b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal
controls; and                                                                                                                                                                                                                                
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.

|                        |  |                                                                                             
|----------------------- |  | --------------------------------------------------------------------------------------------
|Date: November 14, 2002 |  | /S/ Andrew P. Whiteley                                                                      
|                        |  |                                                                                             
|                        |  | Andrew P. Whiteley
Chairman of the Board of Directors,
Chief Executive Officer and
President

30



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##### 



CERTIFICATION

|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  | I, John M. Green, certify that:                                                                                                                                                                                                                                                                                                                                                          
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|1. |  | I have reviewed this quarterly report on Form 10-Q of InforMax, Inc.;                                                                                                                                                                                                                                                                                                                    
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;                                                           
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                                                                              
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                                                                                
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|   |  | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities particularly during the period in which this quarterly report
is being prepared;                                                                                        
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|   |  | b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                                                                                                         
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|   |  | c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                                                                                                               
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):                                                                                                                                           
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|   |  | a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and                                                                                        
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|   |  | b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal
controls; and                                                                                                                                                                                                                                
|   |  |                                                                                                                                                                                                                                                                                                                                                                                          
|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.

|                        |  |                                                                  
|----------------------- |  | -----------------------------------------------------------------
|Date: November 14, 2002 |  | /S/ John M. Green                                                
|                        |  |                                                                  
|                        |  | John M. Green
Chief Financial Officer and
Chief Operating Officer

31



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##### 



EXHIBIT TABLE

|             |  |                                                                                                                                                                                    
|------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 10.1 |  | InforMax, Inc. Incentive Bonus Plan                                                                                                                                                
|             |  |                                                                                                                                                                                    
|Exhibit 10.2 |  | Amendment No. 1 to Executive Employment Agreement of Andrew
P. Whiteley dated as of October 1, 2002                                                                                
|             |  |                                                                                                                                                                                    
|Exhibit 10.3 |  | Letter Agreement dated October 1, 2002, between InforMax,
Inc. and John M. Green concerning post-employment
non-competition provisions                                             
|             |  |                                                                                                                                                                                    
|Exhibit 10.4 |  | Amendment No. 1 to Executive Employment Agreement of Stephen
Lincoln dated as of October 3, 2002                                                                                   
|             |  |                                                                                                                                                                                    
|Exhibit 99.1 |  | Written Statement of Chief Executive Officer and Chief
Operating Officer/Chief Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section
1350)

32