##### 



SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For The Quarterly Period Ended June 30, 2002

OR

box   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 xbox  No box

The registrant had 25,833,502 shares of common stock outstanding as of August
1, 2002.





---



##### 



INFORMAX, INC.

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

INDEX

|                              |                                                                                                                                                     |  |      |    |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- |  |  |  |  | 
|                              |                                                                                                                                                     |  | PAGE |    |  |  | 
|PART I -FINANCIAL INFORMATION |                                                                                                                                                     |  |      |    |  |  |  | 
|                             
|                             
|                             
|                             
|                              | Item 1. Financial Statements                                                                                                                        |  |      | 1  |  |  |  |  | 
|                             
|                             
|                             
|                             
|                              | Condensed Consolidated Balance Sheets as of December 31, 2001 and
June 30, 2002 (unaudited)                                                         |  |      | 1  |  |  |  |  | 
|                             
|                             
|                             
|                             
|                              | Condensed Consolidated Statements of Operations for the
Three-Month and Six-Month Periods Ended June 30, 2001 and 2002
(unaudited)                  |  |      | 2  |  |  |  |  | 
|                             
|                             
|                             
|                             
|                              | Condensed Consolidated Statements of Comprehensive Income (Loss) for the
Three-Month and Six-Month Periods Ended June 30, 2001 and 2002
(unaudited) |  |      | 3  |  |  |  |  | 
|                             
|                             
|                             
|                             
|                              | Condensed Consolidated Statements of Cash Flows for the
Six-Month Periods Ended June 30, 2001 and 2002 (unaudited)                                  |  |      | 4  |  |  |  |  | 
|                             
|                             
|                             
|                             
|                              | Notes to Condensed Consolidated Financial Statements                                                                                                |  |      | 5  |  |  |  |  | 
|                             
|                             
|                             
|                             
|                              | Risk Factors                                                                                                                                        |  |      | 8  |  |  |  |  | 
|                             
|                             
|                             
|                             
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations                                                       |  |      | 15 |  |  |  |  | 
|                             
|                             
|                             
|                             
|                              | Item 3. Qualitative and Quantitative Discussion of Market Risk                                                                                      |  |      | 24 |  |  |  |  | 
|                             
|                             
|                             
|                             
|PART II  OTHER INFORMATION   |                                                                                                                                                     |  |      |    |  |  |  | 
|                             
|                             
|                             
|                             
|                              | Item 1. Legal Proceedings                                                                                                                           |  |      | 24 |  |  |  |  | 
|                             
|                             
|                             
|                             
|                              | Item 2. Changes in Securities and Use of Proceeds                                                                                                   |  |      | 25 |  |  |  |  | 
|                             
|                             
|                             
|                             
|                              | Item 4. Submission of Matters to a Vote of Security Holders                                                                                         |  |      | 25 |  |  |  |  | 
|                             
|                             
|                             
|                             
|                              | Item 6. Exhibits and Reports on Form 8-K                                                                                                            |  |      | 26 |  |  |  |  | 
|                             
|                             
|                             
|                             
|SIGNATURES                    |                                                                                                                                                     |  | 27   |    |  |  |  | 





---



##### 



PART I  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INFORMAX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

|                                                                |                                                                                                                                                                                      |                      |                            |         |                        |        |          |         |        |        | 
|--------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------- | -------------------------- | ------- | ---------------------- | ------ | -------- | ------- | ------ | ------ | 
|                                                                |                                                                                                                                                                                      |                      |                            |         | December 31,           |        | June 30,
|                                                                |                                                                                                                                                                                      |                      |                            |         | 2001                   |        | 2002    
|                                                                |                                                                                                                                                                                      |                      |                            |         |                        |        |         
|                                                                |                                                                                                                                                                                      |                      |                            |         | (dollars in thousands)
|ASSETS                                                          |                                                                                                                                                                                      |                      |                            |         |                        |        |          |        
|                                                               
|                                                               
|                                                               
|                                                               
|Current assets:                                                 |                                                                                                                                                                                      |                      |                            |         |                        |        |          |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Cash and cash equivalents                                                                                                                                                            |                      | $                          | 61,348  |                        |        | $        | 25,896  |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Investments available for sale (consists of commercial paper and United States government agencies debt securities)                                                                  |                      |                            |        |                        |        |          | 25,790  |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Accounts receivable (net of allowance for doubtful accounts of $557 and $822 for December 31, 2001 and
June 30, 2002, respectively)                                                  |                      |                            | 9,672   |                        |        |          | 4,229   |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Prepaid expenses and other current assets                                                                                                                                            |                      |                            | 1,253   |                        |        |          | 1,018   |       
|                                                                |                                                                                                                                                                                      |                      |                            |         |                        |        |          |         |       
|                                                                |                                                                                                                                                                                      | Total current assets |                            |         | 72,273                 |        |          |         | 56,933 |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Property and equipment  net                                                                                                                                                         |                      |                            | 9,205   |                        |        |          | 8,314   |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Deposits and other assets                                                                                                                                                            |                      |                            | 1,333   |                        |        |          | 1,225   |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Restricted cash                                                                                                                                                                      |                      |                            | 1,667   |                        |        |          | 1,667   |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Investment in strategic alliance                                                                                                                                                     |                      |                            |        |                        |        |          | 1,500   |       
|                                                                |                                                                                                                                                                                      |                      |                            |         |                        |        |          |         |       
|                                                                | Total assets                                                                                                                                                                         |                      | $                          | 84,478  |                        |        | $        | 69,639  |       
|                                                                |                                                                                                                                                                                      |                      |                            |         |                        |        |          |         |       
|LIABILITIES AND STOCKHOLDERS EQUITY                            |                                                                                                                                                                                      |                      |                            |         |                        |        |          |        
|                                                               
|                                                               
|                                                               
|                                                               
|Current liabilities:                                            |                                                                                                                                                                                      |                      |                            |         |                        |        |          |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Accounts payable                                                                                                                                                                     |                      | $                          | 408     |                        |        | $        | 508     |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Accounts payable to related parties                                                                                                                                                  |                      |                            | 3       |                        |        |          |        |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Accrued liabilities                                                                                                                                                                  |                      |                            | 4,408   |                        |        |          | 4,381   |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Borrowings and capital lease obligations  current portion                                                                                                                           |                      |                            | 852     |                        |        |          | 517     |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Deferred revenue  current portion                                                                                                                                                   |                      |                            | 4,189   |                        |        |          | 3,742   |       
|                                                                |                                                                                                                                                                                      |                      |                            |         |                        |        |          |         |       
|                                                                |                                                                                                                                                                                      |                      | Total current liabilities  |         |                        | 9,860  |          |         |        | 9,148  | 
|                                                               
|                                                               
|                                                               
|                                                               
|Borrowings and capital lease obligations  less current portion |                                                                                                                                                                                      |                      | 405                        |         |                        |        | 215      |        
|                                                               
|                                                               
|                                                               
|                                                               
|Deferred revenue  less current portion                         |                                                                                                                                                                                      |                      | 1,739                      |         |                        |        | 1,517    |        
|                                                               
|                                                               
|                                                               
|                                                               
|Other liabilities                                               |                                                                                                                                                                                      |                      | 29                         |         |                        |        |         |        
|                                                                |                                                                                                                                                                                      |                      |                            |         |                        |        |          |         |       
|                                                                |                                                                                                                                                                                      |                      | Total liabilities          |         |                        | 12,033 |          |         |        | 10,880 | 
|                                                               
|                                                               
|                                                               
|                                                               
|Stockholders equity:                                           |                                                                                                                                                                                      |                      |                            |         |                        |        |          |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Common stock, voting: ($.001 par value authorized 100,000,000 shares; issued and outstanding 24,505,566 and 25,766,376 shares for December
31, 2001 and June 30, 2002, respectively) |                      |                            | 24      |                        |        |          | 26      |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Additional paid-in capital                                                                                                                                                           |                      |                            | 107,207 |                        |        |          | 107,118 |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Deferred compensation                                                                                                                                                                |                      |                            | (515    | )                      |        |          | (57     | )     
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Accumulated other comprehensive income                                                                                                                                               |                      |                            |        |                        |        |          | 48      |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Accumulated deficit                                                                                                                                                                  |                      |                            | (34,271 | )                      |        |          | (48,376 | )     
|                                                                |                                                                                                                                                                                      |                      |                            |         |                        |        |          |         |       
|                                                                |                                                                                                                                                                                      |                      | Total stockholders equity |         |                        | 72,445 |          |         |        | 58,759 | 
|                                                                |                                                                                                                                                                                      |                      |                            |         |                        |        |          |         |       
|Total liabilities and stockholders equity                      |                                                                                                                                                                                      | $                    | 84,478                     |         |                        | $      | 69,639   |        
|                                                                |                                                                                                                                                                                      |                      |                            |         |                        |        |          |         |       

See accompanying notes to
unaudited condensed consolidated financial statements.

1



---



##### 



INFORMAX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

|                                                               |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |       |        |       | 
|-------------------------------------------------------------- | ------------------------------------- | ---------------------------- | -------------- | ----- | ------------------------------------------------ | ----- | ---------------- | ----- | ----- | ----- | ---------- | ------ | ------ | ------ | ---------- | ----- | ------ | ----- | 
|                                                               |                                       |                              |                |       | Three Months Ended                               |       | Six Months Ended
|                                                               |                                       |                              |                |       | June 30,                                         |       | June 30,        
|                                                               |                                       |                              |                |       |                                                  |       |                 
|                                                               |                                       |                              |                |       | 2001                                             |       | 2002             |       | 2001  |       | 2002      
|                                                               |                                       |                              |                |       |                                                  |       |                  |       |       |       |           
|                                                               |                                       |                              |                |       | (dollars in thousands, except per share amounts)
|Revenues:                                                      |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |      
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Software license and customer support |                              | $              | 6,581 |                                                  |       | $                | 2,847 |       |       | $          | 12,187 |        |        | $          | 5,622 |       
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Professional services                 |                              |                | 987   |                                                  |       |                  | 930   |       |       |            | 1,971  |        |        |            | 1,880 |       
|                                                               |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |       |       
|                                                               |                                       |                              | Total revenues |       |                                                  | 7,568 |                  |       |       | 3,777 |            |        |        | 14,158 |            |       |        | 7,502 | 
|                                                              
|                                                              
|                                                              
|                                                              
|Cost of revenues:                                              |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |      
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Software license and customer support |                              |                | 450   |                                                  |       |                  | 149   |       |       |            | 969    |        |        |            | 295   |       
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Professional services                 |                              |                | 498   |                                                  |       |                  | 407   |       |       |            | 966    |        |        |            | 859   |       
|                                                               |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |       |       
|                                                               |                                       | Total cost of revenues       |                |       | 948                                              |       |                  |       | 556   |       |            |        | 1,935  |        |            |       | 1,154  |      
|                                                               |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |       |       
|Gross profit                                                   |                                       |                              | 6,620          |       |                                                  |       | 3,221            |       |       |       | 12,223     |        |        |        | 6,348      |      
|Operating expenses:                                            |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |      
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Selling (1)                           |                              |                | 2,898 |                                                  |       |                  | 1,864 |       |       |            | 5,674  |        |        |            | 4,418 |       
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | General and administrative (2)        |                              |                | 4,852 |                                                  |       |                  | 4,475 |       |       |            | 10,284 |        |        |            | 8,518 |       
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Research and development              |                              |                | 2,622 |                                                  |       |                  | 2,316 |       |       |            | 4,601  |        |        |            | 5,171 |       
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Stock based compensation              |                              |                | 396   |                                                  |       |                  | 18    |       |       |            | 663    |        |        |            | 35    |       
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Depreciation and amortization         |                              |                | 565   |                                                  |       |                  | 749   |       |       |            | 1,007  |        |        |            | 1,489 |       
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Restructuring                         |                              |                |      |                                                  |       |                  | 550   |       |       |            |       |        |        |            | 1,325 |       
|                                                               |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |       |       
|                                                               |                                       | Total operating expenses     |                |       | 11,333                                           |       |                  |       | 9,972 |       |            |        | 22,229 |        |            |       | 20,956 |      
|                                                               |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |       |       
|Loss from operations                                           |                                       |                              | (4,713         | )     |                                                  |       | (6,751           | )     |       |       | (10,006    | )      |        |        | (14,608    | )    
|                                                               |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |       |       
|Other income (expense):                                        |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |      
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Investment earnings                   |                              |                | 856   |                                                  |       |                  | 256   |       |       |            | 2,019  |        |        |            | 576   |       
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Interest and other expense            |                              |                | (39   | )                                                |       |                  | (45   | )     |       |            | (83    | )      |        |            | (73   | )     
|                                                               |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |       |       
|                                                               |                                       | Total other income (expense) |                |       | 817                                              |       |                  |       | 211   |       |            |        | 1,936  |        |            |       | 503    |      
|                                                               |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |       |       
|Loss before income taxes                                       |                                       |                              | (3,896         | )     |                                                  |       | (6,540           | )     |       |       | (8,070     | )      |        |        | (14,105    | )    
|                                                              
|                                                              
|                                                              
|                                                              
|Income tax benefit                                             |                                       |                              |               |       |                                                  |       |                 |       |       |       |           |        |        |        |           |      
|                                                               |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |       |       
|Net loss                                                       |                                       | $                            | (3,896         | )     |                                                  | $     | (6,540           | )     |       | $     | (8,070     | )      |        | $      | (14,105    | )    
|                                                               |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |       |       
|Basic and diluted net loss per common share                    |                                       | $                            | (.17           | )     |                                                  | $     | (.26             | )     |       | $     | (.38       | )      |        | $      | (.56       | )    
|                                                               |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |       |       
|Weighted average common shares outstanding  basic and diluted |                                       |                              | 22,474,514     |       |                                                  |       | 25,502,454       |       |       |       | 21,441,228 |        |        |        | 25,323,234 |      
|                                                               |                                       |                              |                |       |                                                  |       |                  |       |       |       |            |        |        |        |            |       |       



---

|(1) |  | Selling expense excludes stock-based compensation of $0.2, $0, $0.2
and $0 for the three months ended June 30, 2001 and 2002 and the six
months ended June 30, 2001 and 2002, respectively.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | General and administrative expense excludes stock-based compensation of
$0.2, $0, $0.5 and $0 for the three months ended June 30, 2001 and 2002
and the six months ended June 30, 2001 and 2002, respectively.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See accompanying notes to
unaudited condensed consolidated financial statements.

2



---



##### 



INFORMAX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

|                                                         |  |   |                        |   |                  |   |        |   |      |   |        |   |  |   |         |   | 
|-------------------------------------------------------- |  | - | ---------------------- | - | ---------------- | - | ------ | - | ---- | - | ------ | - |  | - | ------- | - | 
|                                                         |  |   | Three months ended     |   | Six months ended
|                                                         |  |   | June 30,               |   | June 30,        
|                                                         |  |   |                        |   |                 
|                                                         |  |   | 2001                   |   | 2002             |   | 2001   |   | 2002
|                                                         |  |   |                        |   |                  |   |        |   |     
|                                                         |  |   | (dollars in thousands)
|Net loss                                                 |  | $ | (3,896                 | ) |                  | $ | (6,540 | ) |      | $ | (8,070 | ) |  | $ | (14,105 | )
|                                                        
|                                                        
|                                                        
|                                                        
|Other
comprehensive loss                                
|                                                        
|                                                        
|                                                        
|                                                        
|Unrealized gain (loss) on
investments available for sale |  |   |                       |   |                  |   | 60     |   |      |   |       |   |  |   | 50      |  
|                                                        
|                                                        
|                                                        
|                                                        
|Currency translation adjustments                         |  |   |                       |   |                  |   | (2     | ) |      |   |       |   |  |   | (2      | )
|                                                         |  |   |                        |   |                  |   |        |   |      |   |        |   |  |   |         |  
|Comprehensive loss                                       |  |   | (3,896                 | ) |                  |   | (6,482 | ) |      |   | (8,070 | ) |  |   | (14,057 | )
|                                                         |  |   |                        |   |                  |   |        |   |      |   |        |   |  |   |         |  

See accompanying notes to
unaudited condensed consolidated financial statements.

3



---



##### 



INFORMAX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

|                                                                           |                                                                             |                                                                 |                                           |                                                            |       |                        |         |         |       |       |         |  
|-------------------------------------------------------------------------- | --------------------------------------------------------------------------- | --------------------------------------------------------------- | ----------------------------------------- | ---------------------------------------------------------- | ----- | ---------------------- | ------- | ------- | ----- | ----- | ------- | -
|                                                                           |                                                                             |                                                                 |                                           |                                                            |       | Six months ended      
|                                                                           |                                                                             |                                                                 |                                           |                                                            |       | June 30,              
|                                                                           |                                                                             |                                                                 |                                           |                                                            |       |                       
|                                                                           |                                                                             |                                                                 |                                           |                                                            |       | 2001                   |         | 2002   
|                                                                           |                                                                             |                                                                 |                                           |                                                            |       |                        |         |        
|                                                                           |                                                                             |                                                                 |                                           |                                                            |       | (dollars in thousands)
|Cash flows from operating activities:                                      |                                                                             |                                                                 |                                           |                                                            |       |                        |         |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Net loss                                                                    |                                                                 | $                                         | (8,070                                                     | )     |                        | $       | (14,105 | )    
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Adjustments to reconcile net loss to net cash used in operating activities: |                                                                 |                                           |                                                            |       |                        |         |         |      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             | Depreciation expense                                            |                                           |                                                            | 1,007 |                        |         |         | 1,489 |      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             | Loss on disposal of property and equipment                      |                                           |                                                            | 137   |                        |         |         | 30    |      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             | Expense related to stock options, restricted stock and warrants |                                           |                                                            | 508   |                        |         |         | 27    |      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             | Changes in assets and liabilities:                              |                                           |                                                            |       |                        |         |         |       |      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             |                                                                 | Accounts receivable                       |                                                            |       | (3,684                 | )       |         |       | 5,503 |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             |                                                                 | Prepaid expenses and other current assets |                                                            |       | 22                     |         |         |       | 237   |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             |                                                                 | Deposits                                  |                                                            |       | 483                    |         |         |       | 47    |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             |                                                                 | Accounts payable                          |                                                            |       | 224                    |         |         |       | 97    |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             |                                                                 | Accrued liabilities                       |                                                            |       | 412                    |         |         |       | (56   | )      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             |                                                                 | Deferred revenue                          |                                                            |       | 1,352                  |         |         |       | (669  | )      
|                                                                           |                                                                             |                                                                 |                                           |                                                            |       |                        |         |         |      
|Cash flows from operating activities                                       |                                                                             |                                                                 | (7,609                                    | )                                                          |       |                        | (7,400  | )      
|                                                                           |                                                                             |                                                                 |                                           |                                                            |       |                        |         |         |      
|Cash flows from investing activities:                                      |                                                                             |                                                                 |                                           |                                                            |       |                        |         |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             |                                                                 |                                           | Purchase of available for sale investments                 |       |                        |        |         |       |       | (25,742 | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             |                                                                 |                                           | Investment in strategic alliance                           |       |                        |        |         |       |       | (1,500  | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             |                                                                 |                                           | Purchase of property and equipment                         |       |                        | (5,112  | )       |       |       | (628    | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             |                                                                 |                                           | Proceeds from disposal of property and equipment           |       |                        | 5       |         |       |       |        |  
|                                                                           |                                                                             |                                                                 |                                           |                                                            |       |                        |         |         |      
|Cash flows from investing activities                                       |                                                                             |                                                                 | (5,107                                    | )                                                          |       |                        | (27,870 | )      
|                                                                           |                                                                             |                                                                 |                                           |                                                            |       |                        |         |         |      
|Cash flows from financing activities:                                      |                                                                             |                                                                 |                                           |                                                            |       |                        |         |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             |                                                                 |                                           | Repayments of capital lease obligations                    |       |                        | (123    | )       |       |       | (138    | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             |                                                                 |                                           | Repayments on borrowings                                   |       |                        | (427    | )       |       |       | (387    | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             |                                                                 |                                           | Increase in restricted cash                                |       |                        | (93     | )       |       |       |        |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             |                                                                 |                                           | Proceeds from share options exercised and warrants issued  |       |                        | 1,176   |         |       |       | 342     |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                             |                                                                 |                                           | Proceeds from common stock issuance, net of offering costs |       |                        | (119    | )       |       |       | 1       |  
|                                                                           |                                                                             |                                                                 |                                           |                                                            |       |                        |         |         |      
|Cash flows from financing activities                                       |                                                                             |                                                                 | 414                                       |                                                            |       |                        | (182    | )      
|                                                                           |                                                                             |                                                                 |                                           |                                                            |       |                        |         |         |      
|Net decrease in cash and cash equivalents                                  |                                                                             |                                                                 | (12,302                                   | )                                                          |       |                        | (35,452 | )      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Beginning cash and cash equivalents                                        |                                                                             |                                                                 | 82,656                                    |                                                            |       |                        | 61,348  |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Ending cash and cash equivalents                                           |                                                                             |                                                                 | 70,354                                    |                                                            |       |                        | 25,896  |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|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                                     |       | $                      | 69      |         |       | $     | 14      |  
|                                                                           |                                                                             |                                                                 |                                           |                                                            |       |                        |         |         |      

See accompanying notes to unaudited condensed consolidated financial statements.

4



---



##### 



INFORMAX, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTER ENDED JUNE 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 six month periods ended June 30, 2002 and 2001, the Companys financial
position at June 30, 2002, and the cash flows for the six month periods ended
June 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 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 11. SFAS No. 146 is to be applied prospectively to exit
or disposal activities initiated after December 31, 2002. The Company is
currently evaluating the impact of implementing SFAS No. 146.

Note 2  Investments

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

|                         |                                                      |   |                |        |            |   |            |    |            |   |     |     |   |   |        |        | 
|------------------------ | ---------------------------------------------------- | - | -------------- | ------ | ---------- | - | ---------- | -- | ---------- | - | --- | --- | - | - | ------ | ------ | 
|                         |                                                      |   |                |        |            |   | Gross      |    | Gross      |   |     |     |  
|                         |                                                      |   | Adjusted       |        | Unrealized |   | Unrealized |    | Estimated 
|                         |                                                      |   | Cost           |        | Gains      |   | Losses     |    | Fair Value
|                         |                                                      |   |                |        |            |   |            |    |           
|                         |                                                      |   | (in thousands)
|Commercial Paper         |                                                      | $ | 5,976          |        |            | $ |           |    |            | $ | (15 | )   |   | $ | 5,961  |       
|                        
|                        
|                        
|                        
|United States
government
|                        
|                        
|                        
|                        
|agencies
debt securities |                                                      |   | 19,764         |        |            |   | 65         |    |            |   |    |     |   |   | 19,829 |       
|                         |                                                      |   |                |        |            |   |            |    |            |   |     |     |   |   |        |       
|                         | Total
investments
available for sale current
portion |   |                | 25,740 |            |   |            | 65 |            |   |     | (15 | ) |   |        | 25,790 | 
|                         |                                                      |   |                |        |            |   |            |    |            |   |     |     |   |   |        |       
|Preferred Stock          |                                                      |   | 1,500          |        |            |   |           |    |            |   |    |     |   |   | 1,500  |       
|                         |                                                      |   |                |        |            |   |            |    |            |   |     |     |   |   |        |       
|                         | Total
investments
available for sale                 |   | $              | 27,240 |            |   | $          | 65 |            |   | $   | (15 | ) |   | $      | 27,290 | 
|                         |                                                      |   |                |        |            |   |            |    |            |   |     |     |   |   |        |       

5



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##### 



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

Employment Agreements  Certain employees have employment agreements that
entitle them to two weeks of severance in case of termination. In addition,
three senior executive officers and two officers of the Company have employment
agreements that entitle these individuals to specified amounts of severance if
such individuals are terminated by the Company or terminate their employment
for reasons specified in such agreements.

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 June 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, 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 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.

6



---



##### 



The Company believes that meritorious defenses to these claims are available
and 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 condition,
results of operations or cash flows.

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, $0.1 million of
the first quarter charge remains unpaid and is included in accrued expenses as
of June 30, 2002 and approximately $0.3 million of the second quarter charge
remains unpaid and is included in accrued expenses as of June 30, 2002.

Note 5  Segment Information

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

The principal products in the software segment are our Vector NTI Suite and our
GenoMax enterprise platform. Software segment revenues are generated from
software license fees and maintenance fees. Our professional services segment
consists of services rendered under our government subcontracts with NCBI and
those services provided to our software customers including installation,
training and customization of our 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 six months ended June 30, 2001 and 2002.

|                              |  |              |        |          |  |       |        |   |  |  |        |  
|----------------------------- |  | ------------ | ------ | -------- |  | ----- | ------ | - |  |  | ------ | -
|                              |  | Professional |        |          |  |       |        |   |  | 
|                              |  | Services     |        | Software |  | Total
|                              |  |              |        |          |  |      
|Quarter ended
June 30, 2001:  |  |              |        |          |  |       |        |   |  |  |        |  
|                             
|                             
|                             
|                             
|Revenue                       |  |              | 987    |          |  |       | 6,581  |   |  |  | 7,568  |  
|                             
|                             
|                             
|                             
|Income (Loss) from
Operations |  |              | (2,933 | )        |  |       | (1,780 | ) |  |  | (4,713 | )
|                             
|                             
|                             
|                             
|Quarter ended
June 30, 2002:  |  |              |        |          |  |       |        |   |  |  |        |  
|                             
|                             
|                             
|                             
|Revenue                       |  |              | 930    |          |  |       | 2,847  |   |  |  | 3,777  |  
|                             
|                             
|                             
|                             
|Income (Loss) from
Operations |  |              | (3,118 | )        |  |       | (3,633 | ) |  |  | (6,751 | )

7



---



##### 



|                                |  |              |        |          |  |       |        |   |  |  |         |  
|------------------------------- |  | ------------ | ------ | -------- |  | ----- | ------ | - |  |  | ------- | -
|                                |  | Professional |        |          |  |       |        |   |  | 
|                                |  | Services     |        | Software |  | Total
|                                |  |              |        |          |  |      
|Six months ended
June 30, 2001: |  |              |        |          |  |       |        |   |  |  |         |  
|                               
|                               
|                               
|                               
|Revenue                         |  |              | 1,971  |          |  |       | 12,187 |   |  |  | 14,158  |  
|                               
|                               
|                               
|                               
|Income (Loss) from
Operations   |  |              | (5,711 | )        |  |       | (4,295 | ) |  |  | (10,006 | )
|                               
|                               
|                               
|                               
|Six months ended
June 30, 2002: |  |              |        |          |  |       |        |   |  |  |         |  
|                               
|                               
|                               
|                               
|Revenue                         |  |              | 1,880  |          |  |       | 5,662  |   |  |  | 7,502   |  
|                               
|                               
|                               
|                               
|Income (Loss) from
Operations   |  |              | (6,080 | )        |  |       | (8,528 | ) |  |  | (14,608 | )

The difference between loss from operations and net loss is attributable to
investment earnings, interest expense and other expense totaling, $0.8, $0.2,
$1.9 and $0.5 for the three months ended June 30, 2001 and 2002, and the six
months ended June 30, 2001 and 2002 respectively.

The table below presents asset allocation of reported segment amounts in
thousands at December 31, 2001 and June 30, 2002.

|                     |                       |  |                   |        |               |  |        |       | 
|-------------------- | --------------------- |  | ----------------- | ------ | ------------- |  | ------ | ----- | 
|                     |                       |  | December 31, 2001 |        | June 30, 2002
|                     |                       |  |                   |        |              
|Allocable Assets:    |                       |  |                   |        |               |  |        |      
|                    
|                    
|                    
|                    
|                     | Professional Services |  |                   | 656    |               |  |        | 792   | 
|                    
|                    
|                    
|                    
|                     | Software              |  |                   | 10,224 |               |  |        | 3,438 | 
|                    
|                    
|                    
|                    
|Non-Allocable Assets |                       |  | 73,598            |        |               |  | 65,409 |      

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 software suite, which is scheduled for release in the third
quarter of 2002. The cost of development is expected to be approximately $0.4
million over the next six months. At June 30, 2002, the Company had
capitalized $0.1 million in software product technology costs associated with
the arrangement.

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

8



---



##### 



risks detailed below. These factors and others are more fully described
in our Annual Report on Form 10-K, as filed with the Securities and Exchange
Commission on April 2, 2002.

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. Advances in life science research include the
expanded use and application of proteomic data and its increasing availability
to researchers. 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;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 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.

We have recently announced a new product development strategy that will
include a stronger emphasis on leveraging and building upon our Vector NTI
Suite franchise and developing enhanced applications. We anticipate increased
research and development expenses related to the implementation of our new
strategy. 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.

9



---



##### 



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. In addition, 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 June
30, 2002, we had 43 customers of our GenoMax product, having added two new
customers in the second quarter of 2002 and no new customers in the first
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.

The trading price of our common stock may fluctuate widely.

The trading price of our common stock has experienced significant
fluctuations, from a high sales price of $14.69 in 2001 to a low sales price of
$0.59 through August 1, 2002. The trading price of our common stock may
continue to fluctuate widely as a result of a large number of 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, which have often been unrelated to the operating
performance of these companies. As a result of these fluctuations, you may not
be able to sell your common stock at a price above your purchase price.

Our common stock may be delisted from the Nasdaq National Market. Delisting
would result in a limited public market for our common stock and would make
obtaining future equity financing more difficult for us.

Our common stock is currently listed on the Nasdaq National Market. In
connection with such listing, we are subject to financial and market related
tests and other qualitative standards established by Nasdaq to maintain our
listing.

We currently are not in compliance with the $1.00 minimum bid price
listing requirement for continued listing on the Nasdaq National Market and
have been notified by Nasdaq that we have until October 29, 2002 to demonstrate
a closing bid price of at least $1.00 per share or more for a minimum of ten
consecutive trading days. If we fail to meet Nasdaqs continued listing
requirements by October 29, 2002, we may be delisted from the Nasdaq National
Market. We are considering

10



---



##### 



several options to regain compliance with the Nasdaq National Market listing
requirements, as well as an application for a voluntary transfer of trading of
our common stock to Nasdaqs SmallCap Market. If our common stock is delisted
from Nasdaq, trading of our common stock would thereafter have to be conducted
in the over-the-counter market in the so-called pink sheets or on the
electronic bulletin board of the National Association of Securities Dealers,
Inc. In such an event, an investor could find it more difficult to dispose of,
or to obtain accurate quotations as to the market value of our common stock.
We may also lose support from institutional investors, brokerage firms and
market makers that currently buy and sell our stock or provide information
about us. Delisting would also make obtaining future equity financing more
difficult for us.

If we cannot effectively manage changes to our business and the level of our 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 headcount and significant
turnover in our senior management personnel. 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 our headcount and operations in prior periods, we
entered into office space leases to accommodate these needs. Subsequently as a
result of our restructuring efforts, 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 costs associated with such leases. 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 $0.6 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.

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 $6.5 million for the quarter ended June
30, 2002 and approximately $4.0 million for the quarter ended June 30, 2001.
As of June 30, 2002, we had an accumulated deficit of approximately $48.0
million. Our recent increase in net loss is primarily attributable to
significantly reduced software sales and changing market dynamics affecting the
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 in the near term. 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;
| | - |  | --------------------------------------------------------------------------------------------------------------------------

11



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| |  |  | Consider appropriate acquisitions and strategic
relationships.
| | - |  | --------------------------------------------------------------

We cannot assure 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.

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;                                                           
|
| |  |  | 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. 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. 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.

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 June 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
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 and financial performance 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 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.

If we are unable to collect receivables from our development stage biotech and
life science customers, our operating results may be materially harmed.

We frequently license our informatics software to smaller, development
stage biotech and life sciences customers. Often these customers have a
limited, or no, operating history and require considerable funding to launch
their business. As a result, transactions with these customers carry a higher
degree of financial risk. Our customers, particularly our development stage
customers, are also vulnerable to, and may be impacted by, the current
tightening of available credit and the

12



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general economic slowdown that has occurred in the United States. As a
result of these conditions, our customers may be unable to pay, or may delay
payment, for software products purchased from us. If we are not able to
collect such amounts, we may be required to write-off significant accounts
receivable and recognize bad debt expense. We recorded a provision for
doubtful accounts of $0.8 million for the quarter ended June 30, 2002 compared
to $0.3 million for the quarter ended June 30, 2001. Write-offs and
difficulties associated with collection of receivables from these customers
could materially harm our operating results.

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 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 June 30, 2002, $3.0 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. 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

13



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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 NCBI, 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.

We may consider acquisitions or strategic investments. We have limited
experience with these activities and the costs associated with and distractions
that may arise pursuing these activities could harm our future growth, results
of operations and financial condition.

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

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.

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 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

14



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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 also received observation rights on the board of directors of
TissueInformatics and will serve on their scientific advisory board. 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,

15



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intends, may, should, continue, seek, could and other similar
reasonable 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 unanticipated 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 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 June 30, 2002, we had more than 32,000 estimated users of
our market leading Vector NTI Suite of desktop software applications and had
sold 43 GenoMax enterprise licenses. As of June 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 17% and 55% of our total software license
revenues for the quarters ended June 30, 2002 and 2001, respectively.

Since InforMax began commercial operations in 1993, we have dedicated
substantial financial and personnel resources toward the expansion and
enhancement of our software product portfolio in an effort to provide customers
with the components necessary to achieve a comprehensive High Throughput
Research environment. We have recently reviewed our product development
strategy and have begun an aggressive product development effort that will
include a stronger emphasis on building upon and leveraging our Vector NTI
Suite software to develop and market enhanced desktop applications.

In March 2002, we commercially released Vector NTI Suite 7.1, featuring
improved integration with Vector Enterprise and supporting greater connectivity
with our Xpression NTI module. We anticipate commercially releasing Vector NTI
Suite 8.0 in the third quarter of 2002. Vector NTI Suite 8.0 will support
protein annotation and incorporate certain functions useful in the GenoMax
environment expanding our desktop suite of sequence and protein analysis, we intend to roll
out new and enhanced desktop applications beginning in the fourth quarter of
2002. In February 2002, we commercially released GenoMax 3.3, incorporating
enhanced features such as increased GenBank data storage, accelerated initial
data loading and indexing, improved administrative capabilities and our Gene
Expression Analysis II module. GenoMax 3.4, a significant upgrade of our
existing product, is currently in the final development stage and is expected
to be released late in the third quarter of 2002.
Also, in the third
quarter of 2002, we anticipate commercially releasing Vector Enterprise 2.0,
our desktop product that incorporates a relational database allowing
information to be shared among various user groups.
In connection with this
upgrade Vector Enterprise will be renamed Lab Share.
We intend to develop Linux and Oracle versions of our
enterprise products in an effort to enhance the flexibility and affordability
of these products to customers.

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Over the last year, we have experienced significant turnover in our
executive management ranks. On March 13, 2002, we announced the hiring of
Andrew Whiteley, a member of our Board of Directors and the Vice President of
Bioinformatics of Amersham Biosciences Corp., to become our new Chief Executive
Officer, President and Chairman of the Board of Directors. Dr. Titomirov, our
founder, resigned as our Chief Executive Officer and Chairman upon Mr.
Whiteleys hiring. During the past year, we have also streamlined our
organization, implemented tighter cost controls and improved the productivity
of our organization. In January 2002, we reduced our work force by over 30
employees, or approximately 14% of our employees. As a result, we incurred a
charge of approximately $0.78 million, consisting of cash severance and related
payroll costs of $0.54 million, and legal and outplacement fees of $0.24, in
the first quarter of 2002. In an effort to further streamline our
organization and better align our resources and cost structure with what we
believe to be our near-term market opportunities, we conducted a second work
force reduction in May 2002 of over 30 additional employees, or approximately
15% of our employees. We incurred a charge of approximately $0.6 million,
consisting of cash severance and related payroll costs of approximately $0.3
million and legal and outplacement fees of approximately $0.3 million, in the
second quarter of 2002. We believe that these actions will better enable us to
conserve our cash position and to focus our organizational efforts on the
implementation of our product development strategy and delivery of new products. At June 30,
2002 our headcount was 181 employees, down from 262 employees at December 31,
2001.

We have 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 penetration of
our software solutions. In the second quarter of 2002, we entered into new
software distributorship relationships that we hope will facilitate sales of
our products in Germany, Austria and Canada.

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

Our revenues for the year ended December 31, 2001 represented a 47%
increase over the same period in 2000. Our revenues for the year ended
December 31, 2000 represented a 71% increase over the same period in 1999. Our
revenues for the quarter and six months ended June 30, 2002 represented a 50%
and 47% 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 anticipate experiencing a decline in revenues, particularly software
license revenues, in 2002 compared to 2001. GenoMax and Vector NTI Suite sales
during the quarter ended June 30, 2002 were considerably lower in comparison to
the same quarter last year. We believe that our declining sales are
primarily attributable to reduced spending by biotechnology and pharmaceutical
companies and increased competition, including price competition
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. 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 continued growth and availability of capital to
biotechnology companies and increased spending by such other market
participants. We believe that our revenue growth in prior periods, was buoyed,
at least partly, by higher than typical spending of 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.

Our headcount reductions in June and May and attrition have resulted in an
overall sales headcount of 35 at June 30, 2002 compared to 59 at June 30, 2001.
In August 2002, J Rollins, our vice president of sales resigned.

While we believe that our cost containment efforts and headcount reductions have resulted in a more
productive and cost effective.

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organization, there can be no assurance that such personnel changes will not be
disruptive to our sales efforts or the retention of qualified personnel.

While we entered into two new GenoMax relationships in the second quarter
of 2002, and we intend to release GenoMax 3.4 containing significant
enhancements to our existing product in the third quarter of 2002, there can be
no assurance that our refocused product development strategy will not adversely
affect our ability to 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 $2.9 million in software license revenue for the quarter ended June 30,
2002, $0.5 million resulted from deferred revenue from GenoMax sales in prior
periods. We anticipate recognizing over the next 12 months deferred revenue of
$1.6 million related to GenoMax sales closed during prior periods.

We are aware of these evolving dynamics in the marketplace for our
products and services, including increased competition and reduced spending,
and as a result we are focusing on our long term strategic position and
actively considering various alternatives to generate additional revenues,
expand our product and service offering, increase our market share and
geographic scope, improve our path to profitability and benefit our
stockholders. These alternatives could include further redirection of our
resources and efforts or strategic alliances or other strategic relationships
with other parties. We cannot predict whether or when any of these
alternatives may be effected, or whether they will be successful in improving
shareholder value.

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.

18



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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.

19



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Results of Operations

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

|                         |                                       |                              |     |                    |     |                  |      |      |     |      |     |    |     |  |      |     |     | 
|------------------------ | ------------------------------------- | ---------------------------- | --- | ------------------ | --- | ---------------- | ---- | ---- | --- | ---- | --- | -- | --- |  | ---- | --- | --- | 
|                         |                                       |                              |     | Three Months Ended |     | Six Months Ended
|                         |                                       |                              |     | June 30            |     | June 30         
|                         |                                       |                              |     |                    |     |                 
|                         |                                       |                              |     | 2001               |     | 2002             |      | 2001 |     | 2002
|                         |                                       |                              |     |                    |     |                  |      |      |     |     
|Revenues:                |                                       |                              |     |                    |     |                  |      |      |     |      |     |    |     |  |      |    
|                        
|                        
|                        
|                        
|                         | Software license and customer support |                              |     | 87                 | %   |                  |      | 75   | %   |      |     | 86 | %   |  |      | 75  | %  
|                        
|                        
|                        
|                        
|                         | Professional services                 |                              |     | 13                 |     |                  |      | 25   |     |      |     | 14 |     |  |      | 25  |    
|                         |                                       |                              |     |                    |     |                  |      |      |     |      |     |    |     |  |      |     |    
|                         |                                       | Total revenues               |     |                    | 100 |                  |      |      | 100 |      |     |    | 100 |  |      |     | 100 | 
|                        
|                        
|                        
|                        
|Cost of revenues:        |                                       |                              |     |                    |     |                  |      |      |     |      |     |    |     |  |      |    
|                        
|                        
|                        
|                        
|                         | Software license and customer support |                              |     | 6                  |     |                  |      | 4    |     |      |     | 7  |     |  |      | 4   |    
|                        
|                        
|                        
|                        
|                         | Professional services                 |                              |     | 7                  |     |                  |      | 11   |     |      |     | 7  |     |  |      | 11  |    
|                         |                                       |                              |     |                    |     |                  |      |      |     |      |     |    |     |  |      |     |    
|                         |                                       | Total cost of revenues       |     |                    | 13  |                  |      |      | 15  |      |     |    | 14  |  |      |     | 15  | 
|                         |                                       |                              |     |                    |     |                  |      |      |     |      |     |    |     |  |      |     |    
|Gross profit             |                                       |                              | 87  |                    |     |                  | 85   |      |     |      | 86  |    |     |  | 85   |    
|                        
|                        
|                        
|                        
|Operating expenses:      |                                       |                              |     |                    |     |                  |      |      |     |      |     |    |     |  |      |    
|                        
|                        
|                        
|                        
|                         | Selling                               |                              |     | 38                 |     |                  |      | 49   |     |      |     | 40 |     |  |      | 59  |    
|                        
|                        
|                        
|                        
|                         | General and administrative            |                              |     | 64                 |     |                  |      | 119  |     |      |     | 73 |     |  |      | 114 |    
|                        
|                        
|                        
|                        
|                         | Research and development              |                              |     | 35                 |     |                  |      | 61   |     |      |     | 32 |     |  |      | 69  |    
|                        
|                        
|                        
|                        
|                         | Stock based compensation              |                              |     | 5                  |     |                  |      |     |     |      |     | 5  |     |  |      |    |    
|                        
|                        
|                        
|                        
|                         | Depreciation and amortization         |                              |     | 7                  |     |                  |      | 20   |     |      |     | 7  |     |  |      | 20  |    
|                        
|                        
|                        
|                        
|                         | Restructuring                         |                              |     |                   |     |                  |      | 15   |     |      |     |   |     |  |      | 18  |    
|                         |                                       |                              |     |                    |     |                  |      |      |     |      |     |    |     |  |      |     |    
|                         |                                       | Total operating expenses     |     |                    | 149 |                  |      |      | 264 |      |     |    | 157 |  |      |     | 280 | 
|                         |                                       |                              |     |                    |     |                  |      |      |     |      |     |    |     |  |      |     |    
|Loss from operations     |                                       |                              | (62 | )                  |     |                  | (179 | )    |     |      | (71 | )  |     |  | (195 | )  
|                         |                                       |                              |     |                    |     |                  |      |      |     |      |     |    |     |  |      |     |    
|Other income (expense):  |                                       |                              |     |                    |     |                  |      |      |     |      |     |    |     |  |      |    
|                        
|                        
|                        
|                        
|                         | Investment earnings                   |                              |     | 11                 |     |                  |      | 7    |     |      |     | 14 |     |  |      | 8   |    
|                        
|                        
|                        
|                        
|                         | Interest expense and other            |                              |     |                   |     |                  |      | (1   | )   |      |     |   |     |  |      | (1  | )  
|                         |                                       |                              |     |                    |     |                  |      |      |     |      |     |    |     |  |      |     |    
|                         |                                       | Total other income (expense) |     |                    | 11  |                  |      |      | 6   |      |     |    | 14  |  |      |     | 7   | 
|                         |                                       |                              |     |                    |     |                  |      |      |     |      |     |    |     |  |      |     |    
|Loss before income taxes |                                       |                              | (51 | )                  |     |                  | (173 | )    |     |      | (57 | )  |     |  | (188 | )  
|                        
|                        
|                        
|                        
|Income tax benefit       |                                       |                              |    |                    |     |                  |     |      |     |      |    |    |     |  |     |    
|                         |                                       |                              |     |                    |     |                  |      |      |     |      |     |    |     |  |      |     |    
|Net loss                 |                                       |                              | (51 | )%                 |     |                  | (173 | )%   |     |      | (57 | )% |     |  | (188 | )% 
|                         |                                       |                              |     |                    |     |                  |      |      |     |      |     |    |     |  |      |     |    

Three and Six Months ended June 30, 2002 compared to Three and Six Months ended
June 30, 2001

Revenues. For the quarter ended June 30, 2002, revenue decreased 50% to
$3.8 million from $7.6 million in the corresponding period of 2001. For the
six months ended June 30, 2002, revenue decreased 47% to $7.5 million from
$14.2 million in the corresponding period of 2001.

Software segment revenue decreased 57% to $2.8 million for the quarter
ended June 30, 2002 from $6.6 million in the corresponding period of 2001. For
the six months ended June 30, 2002, software segment revenue decreased 54% to
$5.6 million from $12.2 million in the corresponding period of 2001. Vector
NTI Suite bookings decreased 44% to $1.6 million for the quarter ended June 30,
2002 from $2.8 million in the corresponding period of 2001. Vector NTI Suite
revenue decreased

20



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##### 



30% to $2.2 million for the quarter ended June 30, 2002 from $3.1 million
in the corresponding period of 2001. GenoMax bookings decreased 91% to $0.4
million for the quarter ended June 30, 2002 compared to $4.6 million for the
corresponding period of 2001. GenoMax revenue decreased 81% to $0.7 million
for the quarter ended June 30, 2002 from $3.5 million in the corresponding
period of 2001. Bookings represent contracted sales of software products.

Professional services segment revenue decreased 6% to $0.93 million for
the quarter ended June 30, 2002 from $0.99 million in the corresponding period
of 2001. For the six months ended June 30, 2002, professional service segment
revenues decreased 5% to $1.9 million from $2.0 million in the corresponding
period of 2001. In the second quarter of 2002, services provided to the NCBI
under subcontracts accounted for 79% of professional services revenue and 19%
of consolidated revenues.

Cost of Revenues. For the quarter ended June 30, 2002, cost of revenues
decreased 41% to $0.6 million from $0.9 million in the corresponding period of
2001. For the six months ended June 30, 2002, cost of revenues decreased 40% to
$1.2 million from $1.9 million in the corresponding period of 2001.

Costs of software license and customer support segment revenue decreased
67% to $0.1 million for the quarter ended June 30, 2002 from $0.5 million in
the corresponding period of 2001. For the six months ended June 30, 2002, cost
of software license and customer support segment revenues decreased 70% to $0.3
million from $1.0 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 June
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 decreased 18% to $0.4
million for the quarter ended June 30, 2002 from $0.5 million in the
corresponding period of 2001. For the six months ended June 30, 2002, costs
of professional services segment revenues decreased 11% to $0.9 million from
$1.0 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 decreased primarily due to a decline in software
implementation services.

Selling Expenses. For the three months ended June 30, 2002, selling
expenses decreased 36% to $2.0 million from $3.0 million in the corresponding
period of 2001. For the six months ended June 30, 2002, selling expenses
decreased 22% to $4.4 million from $5.7 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 June 30, 2002 was 35 compared to 59 at June 30, 2001.

General and Administrative Expenses. For the three months ended June 30,
2002, general and administrative expenses decreased 8% to $4.5 million from
$4.9 million in the corresponding period of 2001. For the six months ended
June 30, 2002, general and administrative expenses decreased 17% to $8.5
million from $10.3 million in the corresponding 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

21



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##### 



functions, at June 30, 2002 was 35 compared to 54 at June 30, 2001. These
headcount numbers include our professional services headcount of 17 at June 30,
2002 compared to 12 at June 30, 2001.

Research
and Development Expenses. For the three months ended June 30,
2002, research and development expenses decreased 12% to $2.3 million from $2.6
million in the corresponding period of 2001. For the six months ended June 30,
2002, research and development expenses increased 12% to $5.2 million from $4.6
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 June 30,
2002 was 94 compared to 108 at June 30, 2001. These headcount numbers include
NIH contractors totaling 22 at June 30, 2002 and 2001.

Stock Based Compensation. For the three months ended June 30, 2002, stock
based compensation expense decreased 96% to $0.02 million from $0.4 million in
the corresponding period of 2001. For the six months ended June 30, 2002,
stock based compensation expenses decreased 95% to $0.04 million from $0.7
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 June 30, 2002,
depreciation and amortization expenses increased 32% to $0.7 million from $0.6
million in the corresponding period of 2001. For the six months ended June 30,
2002, depreciation and amortization expenses increased 48% to $1.5 million from
$1.0 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 June 30, 2002, other
income decreased 74% to $0.2 million from $0.8 million in the corresponding
period of 2001. For the six months ended June 30, 2002, other income
decreased 74% to $0.5 million from $1.9 million in the corresponding period of
2001. The decrease is primarily due to lower interest rates and a decrease in
our cash balance.

Net Loss. We incurred a net loss of $6.5 million for the three months
ended June 30, 2002, compared with a net loss of $3.9 million for the three
months ended June 30, 2001. For the six months ended June 30, 2001, we
incurred a net loss of $14.1 million compared with a net loss of $8.1 million
for the six months ended June 30, 2001. Our net loss is primarily attributable
to the significant decrease in our software sales revenue driven by the market
conditions discussed above in Trends that Have Affected or May Affect Results
of Operations and Financial Condition.

Liquidity and Capital Resources

At June 30, 2002, we had $25.9 million in cash and cash equivalents, and
$25.8 million in available for sale investments. Our available for sale
investments include commercial paper and United States government
agency securities.
At June 30, 2001, we had $70.4 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 six months ended June 30, 2002 compared to net cash provided by
financing activities of $0.4 million for the comparable period in 2001.

We believe that the net proceeds from our initial public offering, our
cash flows from operations and our existing capital resources will be adequate
to fund our operations for the next 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

22



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##### 



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 six months ended June 30, 2002 and 2001, we generated $13.2
million and $13.9 million of cash receipts from operating activity,
respectively. Gross cash used by operations for the six months ended June 30,
2002 was $20.6 million compared to $21.5 million for the six months ended June
30, 2001.

Net cash used in investing activities was $27.9 million for the six months
ended June 30, 2002 compared to net cash used in investing activities of $5.1
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 June 30, 2002, approximately $475,000 remained outstanding and payable
under our equipment line of credit with PNC Bank, NA. Amounts outstanding
under the equipment line of credit accrue interest at the prime rate as
reported in the Wall Street Journal plus one and one-quarter percent. With
respect to advances made prior to November 6, 1999, principal and interest
accrued thereon are payable in monthly principal amounts of $19,727 through and
including April 15, 2002. For advances made after November 6, 1999, principal
and interest accrued thereon shall be made in monthly principal payments of
$35,607 through October 15, 2002 and $15,833 through March 15, 2003. We have
pledged our personal property, including our equipment, trademarks and accounts
receivable, to PNC Bank as security for any amounts owed by us under these
facilities. 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 are our contractual obligations associated with lease
commitments and debt obligations:

|                               |  |      |       |      |  |      |       |      |  |                        |       |            |  |   |       |  |  |   |       |  |  |   |        | 
|------------------------------ |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ---------------------- | ----- | ---------- |  | - | ----- |  |  | - | ----- |  |  | - | ------ | 
|                               |  | 2002 |       | 2003 |  | 2004 |       | 2005 |  | 2006                   |       | Thereafter
|                               |  |      |       |      |  |      |       |      |  |                        |       |           
|                               |  |      |       |      |  |      |       |      |  | (amounts in thousands) |       |            |  |   |       |  |  |  
|Contractual Obligations:       |  |      |       |      |  |      |       |      |  |                        |       |            |  |   |       |  |  |   |       |  |  |   |        | 
|                              
|                              
|                              
|                              
|Capital Lease Obligations (1)  |  | $    | 227   |      |  | $    | 216   |      |  | $                      | 126   |            |  | $ |      |  |  | $ |      |  |  | $ |       | 
|                              
|                              
|                              
|                              
|Operating Leases (2)           |  |      | 4,055 |      |  |      | 4,190 |      |  |                        | 3,584 |            |  |   | 2,568 |  |  |   | 2,121 |  |  |   | 10,256 | 
|                              
|                              
|                              
|                              
|Equipment Line of Credit       |  |      | 625   |      |  |      | 66    |      |  |                        |      |            |  |   |      |  |  |   |      |  |  |   |       | 
|                               |  |      |       |      |  |      |       |      |  |                        |       |            |  |   |       |  |  |   |       |  |  |   |        | 
|Total Contractual Obligations: |  | $    | 4,907 |      |  | $    | 4,472 |      |  | $                      | 3,710 |            |  | $ | 2,568 |  |  | $ | 2,121 |  |  | $ | 10,256 | 
|                               |  |      |       |      |  |      |       |      |  |                        |       |            |  |   |       |  |  |   |       |  |  |   |        | 



| | (1) |  | Capital lease obligations relate primarily to office
furniture leased in conjunction with our headquarters office space
in Bethesda, Maryland.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------

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##### 





| | (2) |  | Operating leases include our headquarters office space in
Bethesda, Maryland and sales offices located in San Francisco,
Denver, Boston and Oxford, England.
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------

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 June 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. All
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.

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.

24



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##### 



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. 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 us and Dr.
Titomirov by Robert W. Ludwig, Jr., a member of the firm of Ludwig & Robinson.
That complaint, filed in D.C. Superior Court in August 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 litigation matters,
and we have moved for summary judgment on all claims. 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 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 June 30, 2002, we have used approximately $29 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 money market
funds 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The annual meeting of stockholders was held on May 16, 2002. At the
annual meeting, the stockholders voted on the following matters:

|                                                                                                                                                                   |  |           |            |               |  |           |           |       |  |       |         |            |  |  |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------- | ---------- | ------------- |  | --------- | --------- | ----- |  | ----- | ------- | ---------- |  |  | --------- | 
|                                                                                                                                                                   |  |           |            |               |  |           |           |       |  | Votes |         | Non-Broker
|                                                                                                                                                                   |  | Votes For |            | Votes Against |  | Abstained |           | Votes
|Election
of Hooks Johnston as a director to our Board of Directors                                                                                                 |  |           | 13,062.355 |               |  |           | 1,058,858 |       |  |       |        |            |  |  | 2,772,644 | 
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|                                                                                                                                                                  
|Amendment and restatement of our amended equity
incentive compensation plan, among other things,
increasing the authorized amount thereunder by 2.2
million shares |  |           | 4,334,318  |               |  |           | 2,661,498 |       |  |       | 330,399 |            |  |  | 2,722,644 | 

25



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##### 



|                                                                                                                                            |  |           |            |               |  |           |         |       |  |       |       |            |  |  |           | 
|------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | ---------- | ------------- |  | --------- | ------- | ----- |  | ----- | ----- | ---------- |  |  | --------- | 
|                                                                                                                                            |  |           |            |               |  |           |         |       |  | Votes |       | Non Broker
|                                                                                                                                            |  | Votes For |            | Votes Against |  | Abstained |         | Votes
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|Ratification of the Board of Directors appointment of
Deloitte & Touche LLP as our independent public
accountants for the 2002 fiscal year |  |           | 13,872,730 |               |  |           | 242,109 |       |  |       | 6,374 |            |  |  | 2,772,644 | 

Following the annual meeting and the election of Mr. Johnston to our Board
of Directors, the terms of office of Messrs. DAndrea, Whiteley and Dr. He
continued.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

|    |  |  |                                                                                                                          
|--- |  |  | -------------------------------------------------------------------------------------------------------------------------
|(a) |  |  | 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) |  |  | None                                                                                                                     

26



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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 9th day of August 2002.

| |  |                |                                                             
| |  | -------------- | ------------------------------------------------------------
| |  | INFORMAX, INC.
|
|
|
|
| |  |               
| |  | By:           
| |  |                | /s/ Andrew P. Whiteley                                      
| |  |                | Andrew P. Whiteley                                          
|
|
|
|
| |  |                | Chairman of the Board, Chief Executive Officer and President
| |  |               
|
|
|
|
| |  | By:           
| |  |                | /s/ John M. Green                                           
| |  |                | John M. Green                                               
|
|
|
|
| |  |                | Chief Operating Officer and Chief Financial Officer         

27



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##### 



EXHIBIT TABLE



|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)
|------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

28