DOUBLETWIST INC, S-1, 2000-09-01

DOUBLETWIST INC
S-1, 2000-09-01

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 1, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

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DOUBLETWIST, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 7372 94-3175560
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

DOUBLETWIST, INC.
1999 HARRISON STREET, SUITE 1100
OAKLAND, CA 94612
(510) 628-0100
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)

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JOHN D. COUCH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
DOUBLETWIST, INC.
1999 HARRISON STREET, SUITE 1100
OAKLAND, CA 94612
(510) 628-0100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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COPIES TO:

<TABLE>
<S> <C>
STEPHEN C. FERRUOLO, ESQ. BRUCE CZACHOR, ESQ.
HELLER EHRMAN WHITE & MCAULIFFE LLP SHEARMAN & STERLING
4250 EXECUTIVE SQUARE, 7TH FLOOR 1550 EL CAMINO REAL, SUITE 100
LA JOLLA, CA 92037 MENLO PARK, CA 94025
(858) 450-8400 (650) 330-2200
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
--------------------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C>
Common stock, $0.01 par value............................ $86,250,000 $22,770
</TABLE>

(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(o) under the Securities Act of 1933.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
SUBJECT TO COMPLETION, DATED , 2000

PROSPECTUS

[COMPANY LOGO]

COMMON STOCK

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

This is our initial public offering of shares of common stock. We are offering
shares. No public market currently exists for our shares. We anticipate
that the initial public offering price will be between $ and $ per
share. We have applied to have our common stock quoted on the Nasdaq National
Market under the symbol "DBLT."

INVESTING IN OUR SHARES INVOLVES RISKS. "RISK FACTORS" BEGIN ON PAGE 7.

<TABLE>
<CAPTION>
Per
Share Total
--------- ---------
<S> <C> <C>
Public offering price....................................... $ $
Underwriting discounts and commissions...................... $ $
Proceeds, before expenses, to DoubleTwist................... $ $
</TABLE>

We have granted the underwriters a 30-day option to purchase up to an aggregate
of additional shares of common stock to cover over-allotments, if any.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Lehman Brothers, on behalf of the underwriters, expects to deliver the shares on
or about , 2000.

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LEHMAN BROTHERS

DAIN RAUSCHER WESSELS

THOMAS WEISEL PARTNERS LLC

FIDELITY CAPITAL MARKETS
a division of National Financial
Services Corporation
<PAGE>
TABLE OF CONTENTS

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<CAPTION>
PAGE
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<S> <C>
Prospectus Summary...................... 3
Risk Factors............................ 7
Special Note Regarding Forward-Looking
Statements............................ 18
Use of Proceeds......................... 19
Dividend Policy......................... 19
Capitalization.......................... 20
Dilution................................ 21
Selected Consolidated Financial Data.... 23
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 24
</TABLE>

<TABLE>
Business................................ 31
Management.............................. 46
<CAPTION>
PAGE
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<S> <C>
Related Party Transactions.............. 56
Principal Stockholders.................. 58
Description of Capital Stock............ 61
Shares Eligible for Future Sale......... 64
Underwriting............................ 66
Legal Matters........................... 69
Experts................................. 69
Where You Can Find Additional
Information........................... 69
Index to Consolidated Financial
Statements............................ F-1
</TABLE>

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

ABOUT THIS PROSPECTUS

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. This prospectus is not an offer to sell or a
solicitation of an offer to buy our common stock in any jurisdiction where it is
unlawful. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of common stock. This preliminary prospectus is
subject to completion prior to this offering.

Until , 2000 (25 days after the commencement of this offering),
all dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This
requirement is in addition to the dealers' obligation to deliver a prospectus
when acting as underwriters and with respect to their unsold allotments or
subscriptions.
<PAGE>
PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
THIS SUMMARY DOES NOT CONTAIN ALL THE INFORMATION YOU SHOULD CONSIDER BEFORE
BUYING SHARES IN THE OFFERING. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY.

DOUBLETWIST, INC.

We are a leading provider of genomic information and bioinformatics analysis
technologies. Our mission is to empower life scientists by simplifying and
accelerating genomic research. Our customers include more than 30 leading
pharmaceutical and biotechnology companies and academic institutions, including
Affymetrix, Inc., Bristol-Myers Squibb Company, Chiron Corporation, E.I. du Pont
de Nemours and Company, Elan Pharmaceuticals, Hitachi Ltd., Merck & Co., Inc.,
Millennium Pharmaceuticals, Inc. and Monsanto Company.

INDUSTRY BACKGROUND

Advances in understanding the role of genes in human health and new enabling
technologies for interpreting genomic data are expected to improve medical
treatment by targeting the genetic roots of disease. As a first step in
determining the role of genes in human health and disease, several public and
private organizations are engaged in decoding the sequence of nucleotides in the
genomes of a number of organisms, including the human genome. The sequencing
process and associated research have generated an enormous amount of raw data.
Identifying and predicting the function of genes within this raw sequence data
is critical to discovering biological targets for drugs and diagnostics.

Bioinformatics, the application of information technology to the life
sciences industry, has become a crucial enabling technology in the drug
discovery process. The estimated size of the global drug discovery market,
including identification and validation of biological targets, is expected to be
$20.6 billion by 2002, according to the PAREXEL Pharmaceutical R&D Statistical
Sourcebook.

INDUSTRY CHALLENGES

The life sciences industry faces significant challenges before it can
capitalize on the enormous amounts of data generated by the Human Genome Project
and similar efforts. These challenges include:

- a rapidly growing amount of genomic data, which is often unorganized,
incomplete and poorly annotated and has no single point of access;

- scarce bioinformatics specialists and the lack of easy-to-use analysis
tools for life scientists; and

- difficulty integrating the growing public data with proprietary or
licensed data in a secure environment.

We believe there is a significant market need for an advanced,
cost-effective bioinformatics solution that integrates multiple sources of data
and that life scientists can securely access and easily use.

OUR SOLUTION

We provide a powerful, secure and comprehensive research environment that
enables the life scientist to perform sophisticated genomic analysis without
requiring bioinformatics expertise. Our solution is available by subscription
through our secure Web site, and we also license components of the underlying
technology platform for use behind a company's firewall.

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OUR PRODUCTS

We currently offer the following products:

- DOUBLETWIST.COM. Launched in January 2000, DoubleTwist.com is our secure
and comprehensive online research environment that integrates more than 25
disparate genomic databases. Doubletwist.com is sold on an annual per user
subscription basis. Subscribers to DoubleTwist.com receive access to
intelligent and automated analysis tools and advanced, interactive
software for the visualization of their research results. In addition,
DoubleTwist.com provides a number of resources that support life science
research, as well as e-commerce functionality and value-added content of
relevance to life scientists.

- PROPHECY. Launched in June 2000, Prophecy is our proprietary Annotated
Human Genome Database and associated data mining and visualization tools
for the analysis of data behind a company's firewall. Prophecy provides
customers with an extensively annotated database of human genomic DNA
sequences which facilitates the discovery of biological targets. Prophecy
is sold on an annual per site subscription basis with regular data
updates.

- GENEFOREST. Launched in August 2000, GeneForest is our proprietary
Annotated Human Gene Index and associated data mining and visualization
tools for the analysis of data behind a company's firewall. GeneForest is
a concise, annotated database of novel expressed gene transcripts which
can be used to identify potential full-length genes and their variants.
GeneForest is sold on an annual per site subscription basis with regular
data updates.

- CLUSTERING AND ALIGNMENT TOOLS (CAT). Launched in October 1998, CAT is our
proprietary software product for processing and analyzing large genetic
sequence databases. CAT is designed to enable customers to more rapidly
assemble gene fragments into full-length sequences and to identify gene
variants. CAT is sold as a software license.

Each of our products is designed to cost-effectively improve life science
research productivity and capability within pharmaceutical and biotechnology
companies and academic institutions.

OUR STRATEGY

Our goal is to provide the leading research environment for genomic
information and bioinformatics analysis. Key elements of our strategy include:

- creating a comprehensive research environment that empowers life
scientists;

- enhancing the functionality of our products;

- continuing to enable aggregation and integration of third-party and
customer data;

- remaining a neutral source for genomic information and analysis;

- continuing to computationally generate proprietary content; and

- rapidly building our customer base and expanding our product line into new
markets.

We were incorporated in California in January 1993 as Pangea Systems, Inc.
In December 1999, we changed our name to DoubleTwist, Inc. In June 2000, we
reincorporated in Delaware. Our principal executive offices are located at 1999
Harrison Street, Suite 1100, Oakland, California 94612, and our telephone number
at that location is (510) 628-0100. Our Web site is located at
WWW.DOUBLETWIST.COM. The information contained on our Web site is not part of
this prospectus.

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THE OFFERING

Unless otherwise indicated, the information in this prospectus assumes the
sale of Series E convertible preferred stock which occurred in July 2000, a
four-to-one reverse stock split of our capital stock to be effected prior to the
closing of this offering, the conversion of each outstanding share of our
preferred stock into one share of our common stock upon the closing of this
offering and no exercise of the underwriters' over-allotment option.

<TABLE>
<S> <C>
Common stock offered by us................... shares

Common stock to be outstanding after the
offering................................... shares

Proposed Nasdaq National Market symbol....... DBLT

Use of proceeds.............................. To enhance our existing products and develop
new products, expand our sales and marketing
activities and for general corporate
purposes, including working capital,
technology enhancements and possible
acquisitions of, or investments in,
companies, technologies or assets that
complement our business.
</TABLE>

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

The outstanding share information is based on 19,026,785 shares outstanding
as of August 15, 2000 and excludes the following:

- 3,338,688 shares of common stock issuable upon exercise of stock options
at a weighted average exercise price of $2.08 per share;

- 569,577 shares of common stock issuable upon exercise of warrants at a
weighted average exercise price of $1.95 per share;

- 233,221 additional shares of common stock available for issuance under our
1996 Equity Incentive Plan;

- 1,000,000 shares of common stock available for issuance under our 2000
Stock Plan, subject to stockholder approval and the effectiveness of the
registration statement of which this prospectus is a part; and

- 400,000 shares of common stock available for issuance under our 2000
Employee Stock Purchase Plan, subject to stockholder approval and the
effectiveness of the registration statement of which this prospectus is a
part.

DoubleTwist and DoubleTwist.com are our trademarks, and we have filed for
trademark registration for Prophecy and GeneForest. Other trademarks,
servicemarks, and trade names appearing in this prospectus are the property of
their respective holders.

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SUMMARY FINANCIAL INFORMATION

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------ ---------------------
1997 1998 1999 1999 2000
-------- -------- -------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues............................. $ 1,276 $ 4,252 $ 3,584 $ 1,870 $ 2,806

Total expenses............................. 9,515 12,505 15,156 6,020 17,177
Loss from operations....................... (8,239) (8,253) (11,572) (4,150) (14,371)
Net loss available to common
stockholders............................. (8,115) (8,702) (11,481) (4,057) (37,570)

Net loss per share available to common
stockholders, basic and diluted.......... $(37.40) $(13.49) $ (16.59) $ (5.93) $ (22.73)
Shares used in computing net loss per share
available to common stockholders, basic
and diluted.............................. 217 645 692 684 1,653
Pro forma net loss per share available to
common stockholders, basic and diluted
(unaudited).............................. $ (1.11) $ (2.35)
Shares used in computing pro forma net loss
per share available to common
stockholders, basic and diluted
(unaudited).............................. 10,332 15,967
</TABLE>

The pro forma balance sheet reflects the sale of 856,441 shares of our
Series E convertible preferred stock in July 2000 raising net proceeds of
$7,677,148 and the conversion of all of our preferred stock, including our
Series E convertible preferred stock upon the closing of this offering. The pro
forma as adjusted balance sheet reflects the sale of shares of common
stock offered by us at an assumed initial public offering price of $ per
share, after deducting estimated underwriting discounts and commissions and
estimated offering expenses.

<TABLE>
<CAPTION>
JUNE 30, 2000
------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents and marketable securities........ $21,813 $29,490
Working capital (deficit).................................. 18,293 25,970
Total assets............................................... 38,402 46,079
Long-term obligations, net of current portion.............. 4,346 4,346
Redeemable convertible preferred stock..................... 66,030 --
Stockholders' equity (deficit)............................. (38,774) 34,933
</TABLE>

See Note 2 of Notes to Consolidated Financial Statements for a description
of the method that we used to compute our basic and diluted net loss per share
available to common stockholders and for a description of the method we used to
complete pro forma basic and diluted net loss per share available to common
stockholders.

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<PAGE>
RISK FACTORS

AN INVESTMENT IN OUR COMMON STOCK IS RISKY. YOU SHOULD CAREFULLY CONSIDER
THE FOLLOWING RISKS, AS WELL AS THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCURS, OUR BUSINESS COULD BE
HARMED. IN THAT CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND
YOU MIGHT LOSE ALL OR PART OF YOUR INVESTMENT.

RISKS RELATED TO OUR BUSINESS

WE HAVE INCURRED SUBSTANTIAL OPERATING LOSSES TO DATE AND EXPECT TO INCUR LOSSES
IN THE FORESEEABLE FUTURE.

We have incurred substantial operating losses and used substantial cash to
support our operations in each year since our inception. We expect to incur
substantial additional operating losses for at least the next several years. Our
business has not generated sufficient cash flow to fund our operations without
resorting to external sources of capital. Our net losses were $8.1 million in
1997, $8.7 million in 1998 and $11.5 million in 1999. As of June 30, 2000, we
had an accumulated deficit of $45.6 million. We expect to increase our operating
expenses as we increase our sales and marketing efforts, further develop our
products and services, build infrastructure and hire additional staff to support
the continued expansion of our business and commercialization of our products.
As a result, we will continue to operate at a loss unless we significantly
increase our revenues. We cannot predict when, if ever, we will operate
profitably.

WE ONLY RECENTLY INTRODUCED DOUBLETWIST.COM, PROPHECY AND GENEFOREST, WHICH
MAKES IT DIFFICULT TO EVALUATE OUR BUSINESS.

Although we started selling our bioinformatics software applications in
1997, we have only recently started to commercialize DoubleTwist.com, Prophecy
and GeneForest. We have generated minimal revenues from sales of these products
to date. Accordingly, our historical financial information is of limited value
in projecting our future results. Therefore, it is difficult to evaluate our
business and prospects. Before investing, you should evaluate the risks,
expenses and problems frequently encountered by companies such as ours that are
in the early stages of product commercialization and are entering new and
rapidly changing markets.

OUR PRODUCTS MAY NOT ACHIEVE MARKET ACCEPTANCE OR GENERATE MEANINGFUL REVENUES.

Market acceptance of our products will depend upon many factors, many of
which are not in our control. These factors include the following:

- continued growth in the bioinformatics industry;

- continued access to new data and databases;

- availability and price of competing products and technologies; and

- success of our sales efforts.

If we are not able to successfully commercialize our products, we will not
achieve meaningful revenues.

THE SALE OF OUR PRODUCTS AND SERVICES INVOLVES A LENGTHY SALES CYCLE, WHICH
COULD CAUSE DELAYS IN RECOGNIZING REVENUE.

In order to successfully sell our products and services we must first
convince customers that our products can improve their drug discovery and
development efforts. This sales cycle is typically lengthy due to the complexity
of our products and services and the effort that is required to educate a
prospective customer. The need to gain approval from a variety of constituencies
within a prospective

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customer, including research and development and key management personnel, also
lengthens the sales cycle. The sales cycle can be lengthened when the
prospective customer has already invested resources in implementing a
bioinformatics solution in-house. The timing of our revenues is difficult to
forecast because of this lengthy sales cycle. We may expend substantial funds
and effort to negotiate these sales agreements with prospective customers, but
may be unable to conclude sales of our products and services.

Our sales cycle has typically ranged from three to 12 months. The delay or
failure to complete sales in a particular quarter would reduce our revenues in
that quarter, as well as subsequent quarters over which revenues for the sale
would likely be recognized. If our sales cycle unexpectedly lengthens in general
or for one or more large orders, it would adversely affect the timing of our
revenues and our revenue growth. If we were to experience a delay on a large
order, it could harm our ability to meet our forecasts for a given quarter.

IF WE ARE UNABLE TO SAFEGUARD THE INTEGRITY, SECURITY AND PRIVACY OF OUR DATA OR
OUR CUSTOMERS' DATA, OUR REVENUE COULD DECLINE, OUR BUSINESS COULD BE DISRUPTED,
AND WE MAY BE SUED.

We need to preserve and protect our data as well as our customers' data that
reside in our databases against loss, corruption and misappropriation caused by
system failures or unauthorized access. A party who is able to circumvent our
security measures could misappropriate or destroy proprietary information or
cause interruptions in our operations. We could be subject to liability claims
by customers for misuse of their data. These claims could result in costly
litigation. We may be required to make significant expenditures to protect
against systems failures or security breaches or to alleviate problems caused by
any failures or breaches. Any failure that causes the loss or corruption of, or
unauthorized access to, this data could reduce customer satisfaction, expose us
to liability and, if significant, could cause our revenue to decline.

OUR QUARTERLY FINANCIAL RESULTS ARE SUBJECT TO FLUCTUATIONS THAT MAY MAKE IT
DIFFICULT TO FORECAST OUR FUTURE PERFORMANCE.

Our revenues and operating results may vary significantly from quarter to
quarter, making it difficult to formulate meaningful comparisons of our results
between quarters. The limited history of DoubleTwist.com and the new and
emerging nature of the genomics Internet market may further contribute to the
difficulty of making meaningful quarterly comparisons. Factors that may affect
our quarterly results include the risks discussed under the following captions:

- "We have incurred substantial operating losses to date and expect to incur
losses in the foreseeable future;"

- "We only recently introduced DoubleTwist.com, Prophecy and GeneForest,
which makes it difficult to evaluate our business;"

- "The sale of our products and services involves a lengthy sales cycle,
which could cause delays in recognizing revenue;"

- "Seasonal trends may cause our quarterly operating results to fluctuate,
which may adversely affect the market price of our common stock;"

- "We may engage in future acquisitions or investments, which may harm our
operating results and disrupt our business;" and

- "Our revenues are derived primarily from, and are subject to, risks faced
by the pharmaceutical and biotechnology industries."

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<PAGE>
SEASONAL TRENDS MAY CAUSE OUR QUARTERLY OPERATING RESULTS TO FLUCTUATE, WHICH
MAY ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK.

Our experience indicates that pharmaceutical and biotechnology companies
traditionally make large software purchases in the second and fourth quarters of
the year. We believe our quarterly operating results may be affected by this
purchasing pattern, particularly with respect to revenue recognition from the
licensing of our enterprise software products. If we do experience these trends,
analysts and investors may not be able to accurately predict our quarterly or
annual operating results. If we fail to meet expectations of analysts and
investors, our stock price could decline.

UNLESS INTERNET-BASED RESEARCH TOOLS ACHIEVE WIDESPREAD ACCEPTANCE, WE WILL HAVE
DIFFICULTY ACHIEVING REVENUE GROWTH.

In order for us to be successful, the Internet must continue to be adopted
as an important medium for conducting life science research. Because Internet
usage is continuing to evolve, it is difficult to estimate with any assurance
the rate of Internet acceptance by our customers, or the size and growth rate,
if any, of an Internet market for our products and services. If the use of
Internet-based research tools fails to expand, our Web site traffic and
resulting revenues could be materially reduced. Factors that could deter
existing or potential customers from using our Internet-based services may
include:

- implementation of competing products or services, particularly if offered
for free or at a lower price than our products and services;

- lack of availability to customers of cost-effective, high-speed
Internet-access;

- inconsistent quality of service;

- inability of life sciences organizations to adequately develop the
infrastructure necessary for Internet-based communications of genomic data
and research;

- lack of access and ease of use; and

- actual or perceived lack of security or confidentiality of information.

OUR INTERNET BUSINESS MODEL IS NOT PROVEN AND MAY NOT BE SUCCESSFUL.

Our Internet business model is based on the development of our
DoubleTwist.com service for the online purchase and sale of genomic and other
research analysis, information and products. Our model is new and unproven, and
we cannot be sure that it will be successful or that we can achieve or sustain
revenue growth or generate any profits. The success of this business model will
depend upon many factors, many of which are beyond our control, such as the
emergence of the Internet as a tool to facilitate research and commerce in our
industry. We cannot be sure that availability of our analysis and information
services over the Internet or our Web-enhanced products will achieve broad
acceptance within our target markets. Consequently, if our Internet business
model is not successful our business will be harmed.

COMPETITION IN OUR INDUSTRY IS INTENSE AND THEREFORE WE MAY LOSE SALES TO
COMPETITORS.

We anticipate competition from genomic data providers as well as from both
traditional and online bioinformatics software companies. A number of companies
focus on generating biological intellectual property, including Incyte
Genomics, Inc. and Celera Genomics Group, either to license such intellectual
property or for internal development efforts. Both of these companies also have
recently begun to provide online solutions for genomic research. The traditional
bioinformatics companies, which produce bioinformatics software either as an
enterprise solution or on a client/server basis, include LION Bioscience AG and
InforMax, Inc. Other bioinformatics companies, such as

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<PAGE>
Compugen Ltd. and eBioinformatics, offer online solutions. We also face
competition from development groups within companies that may offer customized
bioinformatics solutions.

Our success in competing with these companies will depend on our ability to:

- aggregate an increasingly large amount of genomic data and other
resources;

- continue to provide a comprehensive solution for genomic research;

- maintain our technological advantage in organizing and integrating genomic
data;

- develop superior software research applications and tools; and

- maintain competitive pricing.

Many of our competitors have longer operating histories, substantially
greater financial, technical, marketing or other resources, or greater name
recognition than we do. As a result, any of the following could occur:

- our competitors may be able to respond more quickly than we can to new or
emerging technologies and changes in customer requirements;

- our competitors could seriously impede our ability to sell additional
products and services on terms favorable to us;

- our competitors may be able to provide Internet-based services at a lower
cost than we can;

- our competitors may develop and market new technologies that render our
existing or future products and services obsolete, unmarketable or less
competitive; and

- our competitors may obtain patent protection or other intellectual
property rights that would limit our rights or our customers' ability to
use our products and services to commercialize their discoveries.

We may not be able to compete successfully against our current and future
competitors, and competitive pressures that we encounter may harm our business.

OUR COMPETITORS MAY ACQUIRE OR FORM EXCLUSIVE RELATIONSHIPS WITH OTHER GENOMICS
OR BIOINFORMATICS COMPANIES, WHICH COULD INCREASE THEIR PRODUCT OFFERINGS AND
DECREASE THE NUMBER OF OUR POTENTIAL COLLABORATORS.

Our current and potential competitors may make strategic acquisitions or
establish cooperative relationships among themselves or with other genomics or
bioinformatics companies. By acquiring complementary technologies or companies,
our competitors may increase the ability of their products and services to
address the needs of our current and prospective customers. In addition, if
competitors form exclusive relationships with our potential collaborators, we
may not be able to establish alliances or licensing arrangements necessary to
commercialize our products.

WE OBTAIN BIOINFORMATICS SOFTWARE AND CONTENT FOR DOUBLETWIST.COM FROM THIRD
PARTIES, THE LOSS OF WHICH COULD SERIOUSLY IMPAIR OUR BUSINESS.

We depend on third parties to provide us with genomic sequence databases and
bioinformatics software, both of which are important components of
DoubleTwist.com. We depend on public sources and third parties for genomic data,
and if these third parties discontinue providing access to their data, or if
their data contains errors or defects that corrupt our databases, the quality of
our products could deteriorate. In addition, our products incorporate software
programs developed by academic institutions, government-sponsored research
organizations and commercial entities. If these third parties cease providing
support for their software programs or if we are unable to acquire replacement

10
<PAGE>
technologies from these third parties or develop replacement technologies,
either alone or with others, our business could be harmed.

Many of our current license agreements may be terminated under certain
circumstances by the other party, and we may not be able to maintain the
exclusivity of our exclusive licenses. In the event we are unable to obtain or
maintain licenses to technology necessary and advantageous to our business, we
may be required to expend significant time and resources to develop or
in-license alternative technology. If we cannot acquire or develop necessary
technology on commercially reasonable terms, or at all, we may be prevented from
commercializing some of our products or may need to limit our operations.

WE MAY ENGAGE IN FUTURE ACQUISITIONS OR INVESTMENTS, WHICH MAY HARM OUR
OPERATING RESULTS AND DISRUPT OUR BUSINESS.

We may in the future make acquisitions or investments to broaden our product
offerings and expand our technology platform. We have not made any significant
acquisitions or investments in the past, and therefore our ability to complete
acquisitions and investments is unproven. If we fail to evaluate and to execute
successfully acquisitions or investments, they may seriously harm our business.

To complete an acquisition, we must:

- properly evaluate the technology;

- accurately forecast the financial impact of the transaction, including
accounting charges and transaction expenses;

- integrate and retain personnel;

- combine potentially different corporate cultures; and

- effectively integrate services and products and technology, sales,
marketing and support operations.

If we fail to do any of these, we may be unable to complete a desirable
acquisition, our management may be distracted from our day-to-day operations,
our expenses may increase and we may suffer losses. Any of these outcomes could
significantly disrupt our business. In addition, if we conduct acquisitions
using convertible debt or equity securities, existing stockholders may be
diluted, which could adversely affect the market price of our stock.

WE ARE GROWING RAPIDLY, AND IF WE FAIL TO MANAGE OUR GROWTH EFFECTIVELY, WE
COULD LIMIT OUR ABILITY TO INCREASE REVENUE AND ACHIEVE PROFITABILITY.

Our rapid growth over the past two years has placed, and will continue to
place, a considerable strain on our financial and managerial resources. We have
grown from 70 employees on January 1, 1999 to 149 employees on June 30, 2000. We
plan to continue to expand our sales and marketing, administration and
technology organizations. In order to manage this growth effectively we will
need to improve our financial and managerial controls, as well as our reporting
systems and procedures. In addition, we will need to train and manage our
expanding work force. If we fail to manage our growth effectively, our ability
to increase revenue and achieve profitability could be harmed. We will also need
to allocate resources to support our expanding customer base. If we are unable
to support adequately our customers, our reputation and competitiveness will be
seriously damaged.

11
<PAGE>
ANY FAILURE OF OUR NETWORK COULD ADVERSELY IMPACT OUR ABILITY TO DELIVER
PRODUCTS AND SERVICES AND COULD LEAD TO SIGNIFICANT LOSSES, REDUCED CUSTOMER
SATISFACTION AND DAMAGE TO OUR REPUTATION.

The continuing and uninterrupted performance of our computer network and Web
servers is critical to our success. Any system failure that causes interruptions
or delays in our ability to provide our products and services to our customers
could reduce customer satisfaction and could reduce the attractiveness of our
products and services and damage our reputation. We are particularly vulnerable
to network failures during periods of rapid growth, when the growing number of
users of our services can outpace our network capacity. In the past, we have
experienced minor system errors and interruptions, including Internet
disruptions, which we believe may occur periodically in the future. The
continued viability of our business requires us to support multiple users
concurrently and deliver fast response times with minimal network delays. We are
continuing to add system capacity, but we may not be able to adequately address
network capacity, especially if our customers have expanded rapidly. Any failure
to meet these capacity requirements could require additional capital
expenditures, result in lost business opportunities and damage our reputation
and competitiveness.

ANY FAILURES OF, OR CAPACITY CONSTRAINTS IN, OUR INTERNET APPLICATIONS OR
RELATED SYSTEMS OR THE SYSTEMS OF THIRD PARTIES ON WHICH WE RELY COULD ADVERSELY
AFFECT OUR BUSINESS.

Because our DoubleTwist.com customers access our services on the Internet,
we depend upon the continuous, reliable and secure operation of Internet servers
and related hardware and software. To the extent that our customers' access to
our products on the Internet is interrupted, by system failures or otherwise,
our business could suffer. Our communications hardware and other computer
hardware operations are located at the facilities of a hosting company in the
San Francisco Bay Area. Unexpected events such as earthquakes or other natural
disasters, power losses and vandalism could disrupt or damage these systems. In
addition, telecommunications failures, computer viruses, electronic break-ins or
other similar disruptive problems could adversely affect the operation of these
systems. Our insurance policies may not adequately compensate us for any losses
that may occur due to any damages or interruptions in these systems. We could be
required to make significant capital expenditures in the event of damage. We
also depend upon third parties to provide our customers with Web browsers and
Internet services necessary for access to our Web site. Any sustained disruption
in Internet access provided by third parties could adversely impact our
business.

IF ANY OF THE THIRD PARTY TECHNOLOGIES WE LICENSE BECOME UNAVAILABLE TO US, WE
MAY NOT BE ABLE TO OPERATE OUR BUSINESS UNTIL EQUIVALENT TECHNOLOGY CAN BE
OBTAINED.

We are highly dependent on technologies we license from third parties, such
as Oracle Corp., BEA Systems, Inc., Art Technology Group and Sun
Microsystems, Inc. which comprise the infrastructure of DoubleTwist.com. Our
market is evolving, and we may need to license additional technologies to remain
competitive. However, we may not be able to license these technologies on
commercially reasonable terms or at all. Our inability to obtain any of these
licenses could delay the development of our services until equivalent technology
can be identified, licensed or developed and integrated into our products.

IF WE ARE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY, THIRD PARTIES
COULD USE OUR INTELLECTUAL PROPERTY WITHOUT OUR CONSENT, WHICH COULD HARM OUR
COMPETITIVE POSITION.

Our competitive position is in part dependent on our ability to develop and
maintain the proprietary aspects of our software technology. We seek to protect
the source code for our software, documentation and other written materials
under patent, trademark, trade secret and copyright laws.

Our policy is to file patent applications when we discover new software
inventions. For example, we have filed patent applications on core technology
for some of our early software applications. We

12
<PAGE>
have also filed patent applications on important aspects of the technology and
structure underlying DoubleTwist.com. We are also preparing to file patent
applications on various other aspects of our business, including tools that can
be used to view research data, processing systems, and other important
attributes of DoubleTwist.com. We cannot assure you that any patents will result
from our patent applications, that any patents that may issue will protect our
intellectual property or that any issued patents will not be challenged by third
parties.

We enter into confidentiality agreements with our employees and consultants
to avoid disclosure of our confidential information and restrict access to our
source code. In addition, we enter into contractual arrangements with third
parties, such as non-disclosure and non-compete agreements, and invention
assignment agreements with our employees to further protect our proprietary
information. Despite these precautions, third parties could copy or otherwise
obtain and use our technology without authorization, or develop similar
technology independently. Furthermore, we cannot assure you that the protection
of our proprietary rights will be adequate or that our competitors will not
independently develop similar technology, duplicate our products and services or
design around any patents or other intellectual property we hold.

OUR OPERATING RESULTS COULD SUFFER IF WE ARE FORCED TO DEFEND AGAINST A
PROTRACTED INFRINGEMENT CLAIM OR PAY AN AWARD OF SIGNIFICANT DAMAGES TO A THIRD
PARTY.

There is a substantial risk of litigation regarding intellectual property
rights in our industry. We expect that our technologies may experience an
increase in third party infringement claims as the number of our competitors
grows. We cannot be certain that third parties will not make a claim of
infringement against us relating to our technology. Any claims, whether with or
without merit, could:

- be time consuming and costly to defend;

- divert management's attention and resources;

- cause delays in delivering services;

- require the payment of monetary damages, which may be tripled if the
infringement is found to be willful;

- result in an injunction, which would prohibit us from offering a
particular service; or

- require us to enter into royalty or licensing agreements, which may not be
available on commercially reasonable terms, or at all.

A successful claim of technology infringement against us and our failure or
inability to license the infringed or similar technology could harm our
business.

WE MAY NOT BE ABLE TO SECURE NECESSARY FUNDING IN THE FUTURE.

We have had significant operating losses and negative cash flow from
operations since inception and expect this to continue for the foreseeable
future. We currently anticipate that our available cash resources combined with
the net proceeds from this offering will be sufficient to meet our anticipated
working capital and capital expenditure requirements for at least the next
12 months. However, we may need to raise additional funds in order to expand
rapidly, develop new products and services, enhance existing services, respond
to competitive pressures or acquire complementary products, businesses or
technologies. In addition, we may choose to raise additional capital due to
market conditions or strategic considerations even if we have sufficient funds
for our operating plan. If we raise additional funds through the issuance of
equity or convertible debt securities, the percentage of ownership of our
current stockholders will be reduced, and such securities may have rights,
preferences or privileges senior to those of our current stockholders.
Additional financing may not be available on terms favorable to us, or at all.
If adequate funds are not available or are not available on acceptable terms,

13
<PAGE>
our ability to fund our expansion, take advantage of unanticipated
opportunities, develop or enhance our products and services or otherwise respond
to competitive pressures could be significantly limited.

WE DEPEND ON OUR KEY PERSONNEL, THE LOSS OF WHOM COULD IMPAIR OUR ABILITY TO
COMPETE.

We are highly dependent on John D. Couch, our President and Chief Executive
Officer, as well as the other principal members of our management and scientific
staff. The loss of services of any of these persons could seriously harm our
product development and commercialization efforts. In addition, research,
product development and commercialization will require additional skilled
personnel in areas such as chemistry, biology, bioinformatics and software
engineering. Our business is located in the San Francisco Bay Area, where demand
for personnel with these skills is extremely high and is likely to remain high.
As a result, competition for and retention of personnel, particularly for
employees with technical expertise, is intense and the turnover rate for these
people is high. If we are unable to attract, hire, train and retain a sufficient
number of qualified employees, our ability to conduct and expand our business
could be seriously reduced. The inability to retain and hire qualified personnel
could also hinder the planned expansion of our business.

WE DEPEND UPON HOLDERS OF NON-IMMIGRANT VISAS TO STAFF OUR PRODUCT DEVELOPMENT
TEAM, AND OUR ABILITY TO HIRE AND RETAIN THESE EMPLOYEES MAY BE IMPAIRED AS A
RESULT OF CHANGES IN U.S. IMMIGRATION LAW.

We recruit professionals for our product development group on an
international basis and, therefore, must comply with the immigration laws in the
relevant countries, particularly the United States. If we are unable to obtain
visas for our employees in sufficient quantities or in a timely manner, our
product development efforts could be hampered and our business could suffer. Any
changes in such laws making it more difficult to hire foreign nationals or
limiting our ability to retain existing foreign employees, could require us to
incur additional unexpected labor costs and expenses and could hamper product
enhancement and expansion efforts.

RISKS RELATED TO OUR INDUSTRY

OUR PRODUCTS AND SERVICES MAY BECOME SUBJECT TO GOVERNMENTAL REGULATION.

We are subject to regulations applicable to businesses generally. In
addition, we may be subject to regulation indirectly via regulation of our Web
site content providers, by governmental agencies that promulgate and enforce
laws and regulations generally applicable to chemicals, pharmaceuticals,
controlled substances, human and biological reagents, environmental impacts, as
well as U.S. and foreign export and import controls. Regulatory agencies
potentially involved include the Food and Drug Administration, the Environmental
Protection Agency, the Drug Enforcement Agency, the Department of Agriculture,
the Occupational Safety and Health Administration, the Department of Commerce,
the Department of the Interior, and various other federal, state and local
agencies and regulatory bodies.

We rely on our strategic partners to meet the various regulatory and other
legal requirements applicable to their role in our business. However, we are
unable to verify whether they do so, or whether they are in violation of
governmental requirements. We are not aware of any violations, investigations,
inquiries or allegations with regard to any such regulations. If our customers
are found to violate any of the applicable regulations, we could be fined or
exposed to civil or criminal liability, and we could receive negative publicity.
Any of these results could have a negative impact on our business.

14
<PAGE>
our customers over the next few years will come primarily from the
pharmaceutical and biotechnology industries. A significant factor in the
production and marketing of pharmaceutical products by those customers will be
the impact of regulation by the FDA and other agencies and institutions which
regulate medicinal and food products.

Due to the increasing popularity and use of the Internet, it is possible
that laws and regulations may be adopted or interpreted in the United States and
abroad with particular applicability to the Internet. It is possible that
governments will enact legislation that may be applicable to us in areas such as
content, publishing, product distribution, network security, encryption and the
use of key escrow, data and privacy protection, electronic authentication or
"digital" signatures, illegal and harmful content, access charges and
retransmission activities. Moreover, the applicability to the Internet of
existing laws governing issues such as property ownership, content, publishing,
taxation, defamation, personal privacy, product liability and environmental
protection, as well as the necessity for governmental permits, labeling,
certifications and the need to supply information to relevant parties, is
uncertain. Most of these laws were adopted before the widespread use and
commercialization of the Internet and, as a result, do not contemplate or
address the unique issues of the Internet and related technologies. Any export
or import restrictions, new legislation or regulation or governmental
enforcement of existing regulations may limit the growth of the Internet,
increase our cost of doing business or increase our legal exposure. Any of these
factors could have a negative affect on our business.

IF WE OR OUR CUSTOMERS ARE UNABLE TO DEVELOP OR COMMERCIALIZE NEW DRUGS,
THERAPIES OR OTHER PRODUCTS BASED ON OUR TECHNOLOGIES, OUR BUSINESS COULD SUFFER
EVEN IF OUR TECHNOLOGIES ARE EFFECTIVE AS RESEARCH TOOLS.

Even if our technologies perform their intended functions as research tools,
we or our customers may be unable to use the discoveries resulting from them to
produce new drugs, therapies, diagnostics or other life science products. There
is still a limited understanding of the roles of genes and proteins and their
involvement in diseases and other life processes. Few therapeutic products based
on genomic or proteomic discoveries have been developed and commercialized. To
date, no one has developed or commercialized any drug, therapeutic, diagnostic,
or other life science products based on our technologies. To the extent we or
our customers are unable to capitalize on the products and services we provide,
our business could suffer or fail to develop.

OUR REVENUES ARE DERIVED PRIMARILY FROM, AND ARE SUBJECT TO, RISKS FACED BY THE
PHARMACEUTICAL AND BIOTECHNOLOGY INDUSTRIES.

We expect that our revenues in the foreseeable future will be derived
primarily from products and services provided to the pharmaceutical and
biotechnology industries. Accordingly, our success will depend directly upon
their demand for our products and services and the success of drugs derived from
genomics research. Our operating results may fluctuate substantially due to
reductions and delays in research and development expenditures by companies in
these industries. These reductions and delays may result from factors not within
our control, such as:

- changes in the regulatory environment affecting health care and health
care providers;

- pricing pressures and reimbursement policies;

- market-driven pressures on companies to consolidate and reduce costs;

- other factors affecting research and development spending; and

- changes in general economic conditions.

15
<PAGE>
Consolidation within the pharmaceutical and biotechnology industries has
heightened the competition for the type of services we provide. If this
consolidation trend continues, it may result in fewer customers for our
services, price erosion and greater competition among us and our competitors.
Our potential partners may consolidate, which could decrease the value of our
technologies and shrink the research market we target for our products.

RISKS RELATED TO OUR OFFERING

OUR STOCK PRICE MAY FLUCTUATE SUBSTANTIALLY.

Prior to this offering, there has been no public market for shares of our
common stock. An active public trading market may not develop following
completion of this offering or, if developed, may not be sustained. The initial
public offering price of the shares of our common stock will be determined by
negotiation between us and representatives of the underwriters. The initial
public offering price will not necessarily reflect the market price of our
common stock following this offering. See "Underwriting" for a discussion of the
factors to be considered in determining the initial public offering price.

The market price for our common stock following this offering will be
affected by a number of factors, including:

- announcements of new products and services or product and service
enhancements by us or our competitors;

- announcements by governments with respect to policies regarding biomedical
research;

- actual or anticipated variations in our quarterly results of operations or
those of our competitors;

- changes in earnings estimates or recommendations by securities analysts
that may follow our stock;

- developments in our industry; and

- general market conditions and other factors, including factors unrelated
to our operating performance or the operating performance of our
competitors.

Stock prices for many companies in the biotechnology and emerging growth
sectors have experienced wide fluctuations that have often been unrelated to the
operating performance of such companies. Such factors and fluctuations, as well
as general economic, political and market conditions, may materially adversely
affect the market price of our common stock.

CONCENTRATION OF OWNERSHIP AMONG OUR EXISTING EXECUTIVE OFFICERS, DIRECTORS AND
PRINCIPAL STOCKHOLDERS MAY PREVENT NEW INVESTORS FROM INFLUENCING SIGNIFICANT
CORPORATE DECISIONS.

Following this offering our directors, entities affiliated with our
directors, and our executive officers will beneficially own, in the aggregate
approximately % of our outstanding common stock. These stockholders as a
group will be able to substantially influence our management and affairs and, if
acting together, will be able to influence most matters requiring the approval
of our stockholders, including the election of directors, any merger,
consolidation or sale of all or substantially all of our assets and any other
significant corporate transaction. The concentration of ownership may also delay
or prevent a change of control of our company at a premium price if these
stockholders oppose it. See "Principal Stockholders" for details on our stock
ownership.

16
<PAGE>
MANAGEMENT MAY INVEST OR SPEND THE PROCEEDS OF THIS OFFERING IN WAYS WITH WHICH
YOU MAY NOT AGREE AND IN WAYS THAT MAY NOT YIELD A RETURN.

Management will retain broad discretion over the use of proceeds from this
offering. Stockholders may not deem these uses desirable, and our use of the
proceeds may not yield a significant return or any return at all. Management
intends to use a majority of the proceeds from this offering for research and
development, working capital, expansion of our sales and marketing efforts and
other general corporate purposes. Because of the number and variability of
factors that determine our use of the net proceeds from this offering, these
uses may vary substantially from our currently planned uses. We may not be able
to invest these funds effectively, which would adversely affect our financial
returns.

THERE IS A LARGE NUMBER OF SHARES THAT MAY BE SOLD IN THE MARKET FOLLOWING THIS
OFFERING, WHICH COULD CAUSE OUR STOCK PRICE TO DECLINE.

Sales of a substantial number of shares of our common stock in the public
market following this offering could cause the market price of our common stock
to decline. The number of shares of common stock available for sale in the
public market is limited by restrictions under federal securities law and under
lock-up agreements that our stockholders have entered into with the underwriters
and with us. Those lock-up agreements restrict our stockholders from selling,
pledging our otherwise disposing of their shares for a period of 180 days after
the date of this prospectus without the prior written consent of Lehman
Brothers Inc. The following table indicates approximately when the 19,026,785
shares of our common stock that are not being sold in the offering but which
were outstanding as of August 15, 2000 will be eligible for sale into the public
market:

<TABLE>
<CAPTION>
SHARES ELIGIBLE
DAYS AFTER THE EFFECTIVE DATE FOR SALE
----------------------------- ---------------
<S> <C>
18,170,344
180 days....................

856,441
Various dates thereafter....
</TABLE>

Additionally, of the 3,338,668 shares that may be issued upon the exercise
of options outstanding as of August 15, 2000, approximately 2,064,044 shares
will be vested and eligible for sale 180 days after the date of this prospectus.

YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION IN THE BOOK VALUE OF YOUR
SHARES.

The initial public offering price is substantially higher than the book
value per share of our common stock. You will, therefore, incur immediate
dilution of $ , based on the initial public offering price of $ per
share, in the book value per share of our common stock from the price you pay
for our common stock. In addition, the number of shares available for issuance
under our stock option and employee stock purchase plans will automatically
increase without stockholder approval. You will incur additional dilution upon
the exercise of outstanding stock options and warrants. See "Dilution" for a
more detailed discussion of the dilution you will incur in this offering.

PROVISIONS OF OUR CHARTER AND BYLAWS AND DELAWARE LAW COULD DETER TAKEOVER
ATTEMPTS THAT MIGHT BE BENEFICIAL TO OUR STOCKHOLDERS.

Provisions of our amended and restated certificate of incorporation and
bylaws, as well as Delaware law, could make it more difficult for a third party
to acquire us, even if doing so would be beneficial to our stockholders. We are
subject to the provisions of Delaware law which restrict certain business
combinations with interested stockholders, which may have the effect of
inhibiting a non-negotiated merger or other business combinations. See
"Description of Capital Stock."

17
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and in other sections of this prospectus are
forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. These
risks, uncertainties and other factors are described in "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other sections of this prospectus.

In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "expects," "plans," "anticipates," "believes,"
"estimates," "forecasts," "predicts," "intends," "potential" or "continues" or
the negative of such terms or other comparable terminology.

18
<PAGE>
USE OF PROCEEDS

We estimate that the net proceeds from the sale of shares of our common
stock in this offering will be approximately $_____ million, assuming an initial
public offering price of $___ per share and after deducting underwriting
discounts and commissions and estimated offering expenses. If the underwriters
exercise their over-allotment option, we estimate our net proceeds will be
$_____ million.

The principal purposes of this offering are to generate funds to enable us
to conduct our business, to create a public market for our common stock and to
facilitate our future access to the public capital markets. We plan to use the
net proceeds for the following purposes:

- enhancing our existing products and developing new products;

- expanding our sales and marketing activities; and

- general corporate purposes, including working capital, technology
enhancements and possible acquisitions of, or investments in, companies,
technologies or assets that complement our business.

We have no current agreements to make any acquisitions or investments.

We have not yet determined the amount of net proceeds to be used
specifically for any of the purposes described above. Accordingly, our
management will have broad discretion in allocating the net proceeds of this
offering. We intend to invest the net proceeds in short-term investment-grade,
interest-bearing instruments until the proceeds are used for the purposes
described above.

DIVIDEND POLICY

We have never declared or paid any dividends on our capital stock. We
currently expect to retain future earnings, if any, to support the development
of our business and do not anticipate paying any cash dividends in the
foreseeable future. In addition, certain of our equipment loan agreements
generally prohibit us from paying dividends. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources."

19
<PAGE>
CAPITALIZATION

The following table sets forth our capitalization at June 30, 2000:

- on an actual basis;

- on a pro forma basis to reflect the sale of 856,441 shares of our
Series E preferred stock in July 2000 raising net proceeds of $7,677,148
and the conversion of each outstanding share of our preferred stock,
including the Series E convertible preferred stock, into one share of our
common stock upon the closing of this offering; and

- on a pro forma as adjusted basis to reflect the sale of shares of
common stock offered by us at an assumed initial public offering price of
$ per share, after deducting estimated underwriting discounts and
commissions and estimated offering expenses.

This table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the more detailed
financial statements and related notes appearing elsewhere in this prospectus.

<TABLE>
<CAPTION>
AS OF JUNE 30, 2000
-------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
--------- ---------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Long-term obligations, net of current portion............... $ 4,346 $ 4,346 $
-------- -------- -------
Convertible preferred stock, $0.01 par value; 66,197,329
shares authorized, actual; none authorized, pro forma and
pro forma as adjusted; 15,969,651 shares issued and
outstanding, actual; none issued and outstanding, pro
forma and pro forma as adjusted........................... 66,030 -- --
-------- -------- -------
Stockholders' equity (deficit):
Preferred stock, $0.01 par value, none authorized, issued
or outstanding, actual and pro forma; 5,000,000 shares
authorized and none issued or outstanding, pro forma as
adjusted................................................ -- --
Common stock, $0.01 par value; 100,000,000 shares
authorized; 2,096,267 shares issued and outstanding,
actual; 18,922,359 shares issued and outstanding, pro
forma; shares issued and oustanding, pro
forma as adjusted 21 189
Additional paid-in capital................................ 28,682 102,221
Deferred stock-based compensation......................... (19,366) (19,366)
Notes receivable from stockholders........................ (2,515) (2,515)
Accumulated deficit....................................... (45,596) (45,596)
-------- -------- -------
Total stockholders' equity (deficit)...................... (38,774) 34,933
-------- -------- -------
Total capitalization...................................... $ 31,602 $ 39,279
======== ======== =======
</TABLE>

The above information excludes:

- 3,154,505 shares of common stock issuable upon exercise of options
outstanding at a weighted exercise price of $0.60 per share;

- 569,577 shares of common stock issuable upon exercise of warrants
outstanding at a weighted average exercise price of $1.95 per share;

- 521,869 additional shares of common stock available for issuance under our
1996 Equity Incentive Plan;

20
<PAGE>
DILUTION

Our net tangible book value as of June 30, 2000, was million of $ per
share common stock after giving effect to the conversion of all outstanding
shares of preferred stock into shares of common stock in connection with this
offering. Our net tangible book value per share represents the amount of total
tangible assets less total liabilities, divided by the shares of common stock
outstanding as of June 30, 2000, assuming the conversion of all outstanding
shares of preferred stock.

After giving effect to the sale of shares of common stock we are
offering hereby at an assumed initial public offering price of $ per share
and after deducting estimated underwriting discounts and commissions and
offering expenses, our net tangible book value as of June 30, 2000, would have
been approximately $ or $ per share. This represents an immediate increase
in net tangible book value of $ per share to existing stockholders and an
immediate dilution of $ per share to the investors purchasing shares of
common stock in this offering. The following table illustrates this per share
dilution.

Pro forma net tangible book value dilution per share represents the
incremental dilutive effect of the July 2000 issuance of 856,441 share of
Series E convertible preferred stock at a price of $8.96 per share.

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
Net tangible book value per share as of June 30, 2000.....
Increase attributable to new investors....................
------
Net tangible book value per share after the offering........
------
Dilution per share to new investors.........................
Incremental dilution occurring upon issuance of Series E
convertible preferred stock...............................
------
Pro forma dilution per share to new investors...............
======
</TABLE>

The following table shows on a pro forma as adjusted basis at June 30, 2000,
after giving effect to the issuance of 856,441 shares of Series E convertible
preferred stock in July 2000, the sale of shares of common stock in
this offering at an assumed initial public offering price of $
per share, less estimated underwriting discounts and commissions and estimated
offering expenses and conversion of all preferred stock into common stock for
the number of shares of common stock purchased from us, the total consideration
paid to us and the average price paid per share by existing stockholders and by
new investors purchasing common stock in this offering:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
---------------------- ------------------------ PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
--------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Existing
stockholders........ % $ % $
New investors.........
--------- ---- ----------- ----
Total................. 100% $ 100%
========= ==== =========== ====
</TABLE>

The tables and calculations above exclude the following shares:

- 3,338,688 shares of common stock issuable upon exercise of options
outstanding as of August 15, 2000 at a weighted exercise price of $2.08
per share;

- 569,577 shares of common stock issuable upon exercise of warrants
outstanding as of August 15, 2000 at a weighted average exercise price of
$1.95 per share;

21
<PAGE>
- 233,221 additional shares of common stock available for issuance under our
1996 Equity Incentive Plan;

22
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

You should read the following selected consolidated financial data in
conjunction with our consolidated financial statements and the related notes,
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus. The consolidated statements
of operations data for the years ended December 31, 1997, 1998 and 1999, and the
consolidated balance sheet data as of December 31, 1998 and 1999 are derived
from the audited consolidated financial statements which are included elsewhere
in this prospectus. The consolidated statements of operations data for the years
ended December 31, 1995 and 1996, and the balance sheet data as of December 31,
1995, 1996 and 1997 are derived from our audited consolidated financial
statements not included in this prospectus. The statements of operations data
for the six months ended June 30, 1999 and 2000 and the balance sheet data as of
June 30, 2000 are derived from our unaudited consolidated financial statements
included elsewhere in this prospectus. In the opinion of management, the
unaudited consolidated financial statements include all adjustments, consisting
principally of normal recurring adjustments necessary for a fair presentation of
our results of operations and financial position for these periods. Historical
results are not necessarily indicative of the results of operations to be
expected for future periods and the results of interim periods are not
necessarily indicative of the results for a full year.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------- ----------------------
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- -------- ----------- -------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues:
License fees................................ $ -- $ -- $ 506 $ 2,779 $ 2,289 $ 1,103 $ 2,315
Subscriptions............................... -- -- -- -- -- -- 151
Services and other.......................... 755 1,474 770 1,473 1,295 767 340
------ ------- ------- ------- ----------- ------- -----------
Total revenues............................ 755 1,474 1,276 4,252 3,584 1,870 2,806
------ ------- ------- ------- ----------- ------- -----------
Cost of revenues:
License fees................................ -- -- 2 209 110 28 37
Subscriptions............................... -- -- -- -- -- -- 1,024
Services and others......................... 208 687 368 1,254 943 584 239
------ ------- ------- ------- ----------- ------- -----------
Total cost of revenues.................... 208 687 370 1,463 1,053 612 1,300
------ ------- ------- ------- ----------- ------- -----------
Gross profit.................................. 547 787 906 2,789 2,531 1,258 1,506
------ ------- ------- ------- ----------- ------- -----------
Operating expenses:
Product development......................... 282 555 4,999 5,282 6,932 2,597 7,061
Sales and marketing......................... 68 314 2,153 4,037 4,862 1,775 6,699
General and administrative.................. 184 514 1,993 1,723 2,309 1,036 2,117
------ ------- ------- ------- ----------- ------- -----------
Total operating expenses.................. 534 1,383 9,145 11,042 14,103 5,408 15,877
------ ------- ------- ------- ----------- ------- -----------
Income (loss) from operations................. 13 (596) (8,239) (8,253) (11,572) (4,150) (14,371)
Interest income............................... -- -- 157 39 458 303 709
Interest expense.............................. (6) (44) (33) (488) (367) (210) (2,759)
------ ------- ------- ------- ----------- ------- -----------
Net income (loss)............................. 7 (640) (8,115) (8,702) (11,481) (4,057) (16,421)
Deemed dividend on preferred stock............ -- -- -- -- -- -- (21,149)
------ ------- ------- ------- ----------- ------- -----------
Net income (loss) available to common
stockholders................................ $ 7 $ (640) $(8,115) $(8,702) $ (11,481) $(4,057) $ (37,570)
====== ======= ======= ======= =========== ======= ===========
Net (loss) per share available to common
stockholders, basic and diluted............. $ 0.01 $ (0.53) $(37.40) $(13.49) $ (16.59) $ (5.93) $ (22.73)
Shares used in computing net (loss) per share
available to common stockholders, basic and
diluted..................................... 1,188 1,201 217 645 692 684 1,653
Pro forma net loss per share available to
common stockholders, basic and diluted
(unaudited)................................. $ (1.11) $ (2.35)
Shares used in computing pro forma net loss
per share available to common stockholders,
basic and diluted (unaudited)............... 10,332 15,967
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------------------------------- JUNE 30,
1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents and marketable securities... $ 54 $ 206 $ 1,986 $ 10,087 $ 1,089 $ 21,813
Working capital (deficit)............................. 54 (539) 1,288 7,449 (2,620) 18,293
Total assets.......................................... 261 453 4,203 13,786 7,261 38,402
Long-term obligations, net of current portion......... 264 1 1,102 1,255 1,324 4,346
Redeemable convertible preferred stock................ -- 355 10,471 24,942 28,917 66,030
Stockholders' deficit................................. (112) (732) (8,483) (16,758) (27,906) (38,774)
</TABLE>

23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND THE NOTES TO THE FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS
PROSPECTUS. THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS, WHICH INVOLVE
RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF MANY FACTORS,
INCLUDING THOSE DISCUSSED IN "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

Our primary product is DoubleTwist.com, a secure and comprehensive online
research environment that enables the life scientist to perform sophisticated
genomic analysis without requiring bioinformatics expertise. Subscribers to
DoubleTwist.com receive access to intelligent and automated analysis tools and
advanced, interactive software for the visualization of their research results.
Our products also include Prophecy and GeneForest, each of which includes one of
our proprietary databases and associated data mining and visualization tools,
and our Clustering and Alignment Tools (CAT) software for analyzing large
sequence databases.

From our incorporation in January 1993 through December 1996, we developed
custom database applications for biotechnology and pharmaceutical companies. In
January 1997, we released the first versions of our bioinformatics enterprise
applications. In 1997 and 1998, we released enhanced versions of these products,
as well as the first versions of additional products, including CAT. Since our
inception we have incurred substantial losses, and as of June 30, 2000 we had an
accumulated deficit of $45.6 million.

In the second quarter of 1999, we changed our business strategy and directed
substantially all of our development and marketing resources to the
implementation of DoubleTwist.com, which became publicly available in
January 2000. In the summer of 2000, we launched Prophecy and GeneForest. While
we are continuing to market and sell CAT, we discontinued marketing and sales
efforts for some of our other bioinformatics enterprise applications in the
third quarter of 1999 as we integrated these products into the DoubleTwist.com
technology platform. To date, we have generated minimal revenues from
DoubleTwist.com, Prophecy and GeneForest. We expect sales of subscriptions for
DoubleTwist.com, Prophecy and GeneForest to contribute an increasing portion of
our revenues in the future.

Our revenues are classified into three categories: license fees,
subscriptions and services and other revenues. Revenues from product licenses
such as CAT are generally recognized as license fees upon shipment to the
customer site. Revenues from DoubleTwist.com, Prophecy and GeneForest are
recognized monthly on a subscription basis, and are classified as subscriptions.
Services and other revenues include maintenance fees from support contracts for
our products, which are recognized ratably over the service period (generally
one year), professional services for installation and training of our products,
grant revenue, and revenues from the resale of third-party hardware and
software.

Cost of subscriptions is comprised of hosting fees, depreciation of
equipment, and costs related to technical and support personnel necessary to run
the DoubleTwist.com Web site. Cost of license fees includes costs associated
with product packaging, documentation and bundled third-party software

24
<PAGE>
necessary to run our products. Cost of services and other revenues consists
primarily of the personnel costs related to providing maintenance and other
services, as well as costs from the resale of third-party hardware and software.

Operating expenses consist of all expenses related to the development,
marketing, and sale of our products, including salaries and other
payroll-related expenses, equipment depreciation and administrative overhead.
Interest income (expense), net reflects income received on cash and cash
equivalents and interest expense on leases to secure equipment and software.

We account for stock-based employee compensation arrangements in accordance
with provisions of Accounting Principles Board Opinion No. 25 (APB No. 25),
"Accounting for Stock Issued to Employees" and Financial Accounting Standards
Board Interpretation No. 28 (FASB No. 28), "Accounting for Stock Appreciation
Rights and Other Variable Stock Option or Award Plans" and comply with the
disclosure provisions of Statement of Financial Accounting Standards No. 123
(SFAS No. 123), "Accounting for Stock-Based Compensation."

Under APB No. 25, compensation expense is based on the difference, if any,
on the date of the grant, between the fair value of our stock and the exercise
price. SFAS No. 123 defines a "fair value" based method of accounting for an
employee stock option or similar equity investment. The pro forma disclosures of
the difference between compensation expense included in net loss and the related
cost measured by the fair value method are presented in Note 5 of the notes to
our financial statements.

We account for equity instruments issued to non-employees in accordance with
the provisions of SFAS No. 123 and Emerging Issues Task Force Issue No. 96-18,
"Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services." During 1999, we
recorded deferred stock-based compensation of approximately $5.5 million. For
the six months ended June 30, 1999 and 2000, we recorded deferred stock-based
compensation of approximately $0.9 million and $16.3 million. These amounts are
being amortized as charges to operations over the respective vesting periods of
the individual stock options, generally four years. We recorded amortization of
deferred stock-based compensation of approximately $0.3 million during the
fiscal year ended December 31, 1999. For the six months ended June 30, 1999 and
2000, we recorded amortization of deferred stock-based compensation of
approximately $10,000 and $2.1 million.

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2000 AND 1999

REVENUES. Total revenues increased $0.9 million, or 50%, to $2.8 million
for the six months ended June 30, 2000 from $1.9 million for the same period in
1999. License fees increased $1.2 million, or 110%, to $2.3 million for the six
months ended June 30, 2000 from $1.1 million for the same period in 1999. The
increase in license fees was due to an increase in sales of Clustering and
Alignment Tools and included a large sale to a Japanese distributor.
Subscription revenues increased to $0.2 million for the six months ended
June 30, 2000 from zero for the same period in 1999, due to the launch of the
DoubleTwist.com Web site. Services and other revenues decreased $0.5 million, or
56%, to $0.3 million for the six months ended June 30, 2000 from $0.8 million
for the same period in 1999. The decrease was due primarily to the completion in
1999 of a grant funded by the National Institutes of Health. We expect
subscription revenues to increase as a percentage of our total revenue as we
continue to commercialize DoubleTwist.com, Prophecy and GeneForest.

COST OF REVENUES. Cost of license fees increased 32%, to $37,000 for the
six months ended June 30, 2000 from $28,000 for the same period in 1999. Cost of
subscriptions increased to $1.0 million for the six months ended June 30, 2000
from zero for the same period in 1999, due to the launch of the DoubleTwist.com
Web site. Cost of services and other revenues decreased $0.4 million, or 59%, to
$0.2 million for the six months ended June 30, 2000 from $0.6 million for the
same period in 1999, due

25
<PAGE>
to the completion in 1999 of a grant funded by the National Institutes of
Health. Amortization of deferred stock-based compensation allocated to cost of
revenues was $51,000 for the six months ended June 30, 2000 as compared to zero
in the corresponding period in 1999. Gross profit increased $0.2 million, or
20%, to $1.5 million for the six months ended June 30, 2000 from $1.3 million
for the same period in 1999, due to the increase in license fees. Gross margin
decreased to 54% for the six months ended June 30, 2000 from 67% in the six
months ended June 30, 1999 due to the cost of launching and maintaining
DoubleTwist.com.

PRODUCT DEVELOPMENT EXPENSES. Product development expenses increased
$4.5 million, or 172%, to $7.1 million for the six months ended June 30, 2000
from $2.6 million for the same period in 1999. The increase was due primarily to
an increase in headcount, equipment depreciation and third-party consulting
expenses related to the development of the DoubleTwist.com Web site. In
addition, amortization of deferred stock-based compensation allocated to product
development expenses increased to $433,000 for the six months ended June 30,
2000 from $9,000 for the six months ended June 30, 1999.

SALES AND MARKETING EXPENSES. Sales and marketing expenses increased
$4.9 million, or 277%, to $6.7 million for the six months ended June 30, 2000
from $1.8 million for the same period in 1999, due primarily to additional
headcount in sales, marketing and customer support, as well as an increase in
marketing expenses related to the launch of the Web site. For the six months
ended June 30, 2000, we recorded amortization of deferred stock-based
compensation allocated to sales and marketing expenses of $1,046,000 as compared
to $1,500 in the six months ended June 30, 1999.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $1.1 million, or 104%, to $2.1 million for the six months ended
June 30, 2000 from $1.0 million for the same period in 1999. The increase was
due primarily to an increase in headcount, as well as amortization of deferred
stock-based compensation allocated to general and administrative expenses of
$618,000 for the six months ended June 30, 2000.

INTEREST INCOME (EXPENSE), NET. Interest income (expense), net decreased
$2.1 million to net interest expense of $2.1 million for the six months ended
June 30, 2000 from net interest income of $93,000 for the same period in 1999.
The increase was due primarily to noncash interest expense of $2.6 million
related to the beneficial conversion feature and the fair value of warrants
issued in connection with our bridge loan financing.

YEARS ENDED DECEMBER 31, 1999 AND 1998

REVENUES. Total revenues in 1999 decreased $0.7 million, or 16%, to
$3.6 million from $4.3 million in 1998. License fees in 1999 decreased
$0.5 million, or 18%, to $2.3 million from $2.8 million in 1998. The decrease in
license fees was due to the discontinuation of sales efforts for some of our
bioinformatics software applications. Services and other revenues decreased
$0.2 million in 1999, or 12%, to $1.3 million from $1.5 million in 1998. The
decrease in services and other revenues was due to a decrease in revenues from
the resale of third-party hardware and software.

COST OF REVENUES. Cost of license fees decreased $0.1 million in 1999, or
47%, to $0.1 million from $0.2 million in 1998. Cost of services and other
revenues decreased $0.3 million in 1999, or 25%, to $0.9 million from
$1.3 million in 1998. The decrease in cost of services and other revenues was
due to the decrease in revenues from the resale of third-party hardware and
software. Amortization of deferred stock-based compensation allocated to cost of
revenues was $7,000 in 1999. Gross profit decreased $0.3 million in 1999, or 9%,
to $2.5 million from $2.8 million in 1998. The decrease was due to the decrease
in license fees. Gross margin increased to 71% in 1999 from 66% in 1998 due to
the decrease in revenues from the resale of third-party hardware and software,
which have a lower gross margin than revenues from license fees or services.

26
<PAGE>
PRODUCT DEVELOPMENT EXPENSES. Product development expenses increased
$1.6 million in 1999, or 31%, to $6.9 million from $5.3 million in 1998. The
increase was due to third-party consulting expenses related to the development
of DoubleTwist.com, as well as increased equipment depreciation expenses. In
addition, amortization of deferred stock-based compensation allocated to product
development expenses was $106,000 in 1999.

SALES AND MARKETING EXPENSES. Sales and marketing expenses increased
$0.9 million in 1999, or 20%, to $4.9 million from $4.0 million in 1998. The
increase was due to additional marketing expenses related to the launch of
DoubleTwist.com as well as amortization of deferred stock-based compensation
allocated to sales and marketing expenses of $153,000 in 1999.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $0.6 million in 1999, or 34%, to $2.3 million from $1.7 million in
1998. The increase was due primarily to strategic and other consulting expenses,
and expenses related to the Scientific Advisory Board. Amortization of deferred
stock-based compensation allocated to general and administrative expenses was
$23,000 in 1999.

INTEREST INCOME (EXPENSE), NET. Interest income (expense), net increased
$0.5 million in 1999, or 120%, to net interest income of $91,000 from net
interest expense of $0.4 million in 1998. The increase was primarily due to
interest income on increased cash balances from equity financings in
February 1999.

YEARS ENDED DECEMBER 31, 1998 AND 1997

REVENUES. Total revenues in 1998 increased $3.0 million, or 233%, to
$4.3 million from $1.3 million in 1997. License fees in 1998 increased
$2.3 million, or 449%, to $2.8 million from $0.5 million in 1997. The increase
in license fees was due to an increase in sales of our bioinformatics software
applications. Services and other revenues increased $0.7 million in 1998, or
91%, to $1.5 million from $0.8 million in 1997. The increase was due to an
increase in maintenance and service revenues from the installation and support
of our products, to an increase in the resale of third-party hardware and
software, and to a grant from the National Institutes of Health.

COST OF REVENUES. Cost of license fees increased $0.2 million in 1998, to
$0.2 million from $2,000 in 1997. The increase was due to the increase in
license fees, and to an increase in third-party software bundled with our
products. Cost of services and other revenues increased $0.9 million in 1998, or
241%, to $1.3 million from $0.4 million in 1997, due to the increase in services
and other revenues. Gross profit increased $1.9 million in 1998, or 208%, to
$2.8 million from $0.9 million in 1997. Gross margin decreased to 66% in 1998
from 71% in 1997 due to the increase in revenues from the resale of third-party
hardware and software, which have a lower gross margin than revenues from
license fees or services.

PRODUCT DEVELOPMENT EXPENSES. Product development expenses increased
$0.3 million in 1998, or 6%, to $5.3 million from $5.0 million in 1997 due
primarily to increased compensation expenses.

SALES AND MARKETING EXPENSES. Sales and marketing expenses increased
$1.8 million in 1998, or 88%, to $4.0 million from $2.2 million in 1997, due
primarily to additional headcount in sales, marketing, professional services and
customer support, as well as an increase in commission expenses.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
decreased $0.3 million in 1998, or 14%, to $1.7 million from $2.0 million in
1997 due primarily to a reallocation of personnel.

INTEREST INCOME (EXPENSE), NET. Interest income (expense), net decreased
$0.5 million in 1998, or 462%, to net interest expense of $0.4 million from net
interest income of $0.1 million in 1997. The decrease was primarily due to a
lower average in cash balances during 1998 due to losses from

27
<PAGE>
operations and to interest expense related to the issuance of warrants to
investors and to a financial institution.

INCOME TAXES

We incurred net losses during the past three years and consequently are not
subject to corporate income taxes. At December 31, 1999, we had federal net
operating loss carryforwards of approximately $27.9 million, state net operating
loss carryforwards of approximately $6.8 million, federal research and
development credits of approximately $0.6 million and state research and
development carryforwards of approximately $0.4 million. The net operating loss
and credit carryforwards will expire at various dates beginning in the year
2002. The utilization of net operating loss carryforwards to reduce future
income taxes will depend on our ability to generate sufficient taxable income
prior to the expiration of the net operating loss carryforwards. In addition,
the maximum annual use of the net operating loss carryforwards is limited in
certain situations where changes occur in our stock ownership.

LIQUIDITY AND CAPITAL RESOURCES

Since inception we have primarily funded our operations through private
placements of our preferred stock and convertible notes, through which we raised
aggregate net proceeds of $65.7 million through June 30, 2000. We have also
financed our operations through equipment loans and lease financings. As of
June 30, 2000, we had outstanding bank and other borrowings of $6.0 million and
additional availability under our bank facilities of $0.8 million. As of
June 30, 2000, we had cash and cash equivalents and short term investments of
$21.8 million. In July 2000, we received net proceeds of $7.7 million from the
private placement of our Series E preferred stock.

In April 1997, we obtained $2.0 million in equipment lease financing from
Comdisco Ventures. Amounts borrowed to purchase computer hardware and software
bear interest at 6.5% per year and are payable in 48 monthly installments. In
connection with this facility, we issued Comdisco a warrant to purchase 10,090
shares of our Series B convertible preferred stock at $6.442 per share. In
May 1998, we obtained $1.0 million in equipment lease financing from Comdisco
Ventures. This financing bears interest at 8.25% per year and is payable in
48 monthly installments. In connection with this facility, we issued Comdisco a
warrant to purchase 12,500 shares of our Series C convertible preferred stock at
$2.80 per share. These facilities are secured by the computer equipment
purchased with the loans and have no remaining available balance.

In August 1998, we entered into a $1.0 million equipment loan agreement with
Silicon Valley Bank, which became available to us in December 1998. This
financing bears interest at the bank's prime rate plus 0.5% per year and is
payable in 36 monthly installments. In connection with this facility, we issued
Silicon Valley Bank a warrant to purchase 12,500 shares of our common stock at
$6.442 per share. In November 1998, we issued Silicon Valley Bank a warrant to
purchase 3,703 shares of Series C preferred stock at a price of $2.80 per share
in connection with a bridge loan which was made by Silicon Valley Bank. In
February 2000, we obtained an additional $1.5 million equipment loan from
Silicon Valley Bank. Borrowings bear interest at the bank's prime rate plus 0.5%
per year and are payable in 36 monthly installments. In June 2000, we obtained
an additional $3.0 million equipment loan from Silicon Valley Bank. Borrowings
bear interest at the bank's prime rate plus 1.0% per year and are payable in
36 monthly installments. There is no remaining available balance under any of
these agreements. The agreements governing the terms of these loans contain
restrictions on the payment of dividends and financial covenants, including, but
not limited to, tangible net worth requirements and current and debt service
ratios. We were not in compliance with the financial covenants at December 31,
1999. We received the necessary waivers from the financial institutions and are
currently in compliance with the covenants.

28
<PAGE>
Net cash used in operating activities was $7.8 million, $7.8 million,
$7.9 million and $10.6 million in 1997, 1998, 1999 and for the six months ended
June 30, 2000. The decreases in cash were primarily attributable to operating
losses.

Net cash used in investing activities was $0.5 million, $0.2 million,
$3.4 million and $16.9 million in 1997, 1998, 1999 and for the six months ended
June 30, 2000. The increase in cash used in investing activities for the year
ended December 31, 1999, over the prior period was due to the acquisition of
equipment for DoubleTwist.com, the purchase of marketable securities and an
investment in restricted cash and notes receivable for the lease of a building.
We acquired an additional $1.5 million, $0.9 million and $0.3 million of
equipment in 1997, 1998 and 1999 under an equipment lease and presented these
funds as a noncash transaction in our financial statements. In April 2000, we
made a loan in the principal amount of $4.5 million for the purchase of a
building which we will be leasing from the purchaser commencing in October 2000.
The loan bears interest at 10.5% per year, payable monthly, and the principal is
payable in full in April 2010.

Net cash provided by financing activities was $10.1 million, $16.1 million,
$2.2 million and $41.1 million in 1997, 1998, 1999 and for the six months ended
June 30, 2000 and resulted primarily from $9.9 million in net proceeds from the
issuance of Series B convertible preferred stock in 1997, from $18.4 million in
net proceeds from the issuance of Series C convertible preferred stock and
convertible notes in 1998 and 1999, and from $37.0 million in net proceeds from
the issuance of Series D convertible preferred stock and convertible notes in
2000.

We believe that our available cash resources will be sufficient to meet our
liquidity needs for at least the next 12 months. Our future long-term capital
needs will depend significantly on the rate of growth of our business, the
timing of expanded service offerings and the success of these services once they
are launched. Any projections of future long-term cash needs and cash flows are
subject to substantial uncertainty. If the net proceeds of this offering,
together with our available funds and cash generated from operations, are
insufficient to satisfy our long-term liquidity requirements, we may seek to
sell additional equity or debt securities, obtain a line of credit or curtail
expansion of our services. If we issue additional securities to raise funds,
those securities may have rights, preferences or privileges senior to those of
the rights of our common stock and our stockholders may experience dilution. We
cannot be certain that additional financing will be available to us on favorable
terms when required, or at all.

RECENT ACCOUNTING PRONOUNCEMENTS

In June of 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," (SFAS 133) which is effective for all
fiscal quarters of fiscal years beginning after June 15, 1999. It requires that
an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. In
July of 1999, the FASB issued Statement of Financial Standards No. 137, or
SFAS 137, "Accounting for Derivative Instruments and Hedging
Activities--Deferral of the Effective Date of FASB Statement No. 133," which
defers the effective date to all fiscal quarters of fiscal years beginning after
June 15, 2000. We have not yet evaluated the effects of this change in our
operations. We do not currently hold derivative instruments or engage in hedging
activities.

In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition," which outlines the
basic criteria that must be met to recognize revenue and provides guidance for
presentation of revenue and for disclosure related to revenue recognition
policies in financial statements filed with the SEC. In June 2000, the SEC
issued SAB 101B which delays the implementation of SAB 101 until no later than
the fourth fiscal quarter of

29
<PAGE>
fiscal years beginning after December 15, 1999. We believe that our current
revenue recognition policy is in compliance with SAB 101.

In March 2000, the FASB issued Interpretation No. 44, Accounting for Certain
Transactions Involving Stock Compensation--an interpretation of APB Opinion
No. 25 (FIN 44). This Interpretation clarified the definition of an employee for
purposes of applying Accounting Practice Board Opinion 25, Accounting for Stock
Issued to Employees, the criteria for determining whether a plan qualifies as a
noncompensatory plan, the accounting consequence of various modifications to the
terms of a previously fixed stock option or award and the accounting for an
exchange of stock compensation awards in a business combination. This
Interpretation is effective July 1, 2000, but certain conclusions in this
Interpretation cover specific events that occurred after either December 15,
1998, or January 12, 2000. Management does not expect that FIN 44 will have a
material effect on the consolidated financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk for changes in interest rates relates primarily
to our investment portfolio and notes payable. We do not use derivative
financial instruments in our investment portfolio, and our investment portfolio
consists of short-term investment-grade corporate securities. These securities
are highly liquid and generally mature within 12 months from our purchase date.
We primarily enter into notes payable agreements to support general corporate
purposes, including working capital requirements and capital expenditures.

We are subject to fluctuating interest rates that may impact, adversely or
otherwise, our results of operations or cash flows for our variable rate cash
equivalents, marketable securities and notes payable. The estimated fair value
of our cash equivalents and marketable securities approximates costs due to
their short maturities. The estimated fair value of our notes payable
approximates carrying value based on rates currently available for debt with
similar terms and remaining maturities.

This table below presents principal amounts and related weighted average
interest rates by year for our cash and cash equivalents and notes payable:

<TABLE>
<CAPTION>
2000 2001 2002 TOTAL
---------- -------- -------- ----------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents........................ $1,089,315 $ -- $ -- $1,089,315
Weighted average interest rate................... 5.82% 5.82%
LIABILITIES
Variable rate debt (prime plus 0.5%)
Notes payable to bank.......................... $ 333,333 $333,333 $250,001 $ 916,667
</TABLE>

30
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BUSINESS

OVERVIEW

DOUBLETWIST.COM. Our primary product is DoubleTwist.com, a secure and
comprehensive online research environment that enables the life scientist to
perform sophisticated genomic analysis without requiring bioinformatics
expertise. Subscribers to DoubleTwist.com receive access to intelligent and
automated analysis tools and advanced, interactive software for the
visualization of their research results. The technology platform underlying
DoubleTwist.com integrates more than 25 disparate genomic databases. These
databases include public databases, databases licensed from third parties and
our strategic partners and our proprietary databases, such as our Annotated
Human Genome Database and our Annotated Human Gene Index, which are created by
processing and annotating the public genomic data.

We also license some of our proprietary databases and software underlying
DoubleTwist.com to pharmaceutical and biotechnology companies and academic
institutions.

PROPHECY. Our proprietary Annotated Human Genome Database, a regularly
updated source of extensively annotated human genomic DNA sequences, is
available for use behind a company's firewall through a product called Prophecy.
Prophecy also includes data mining and visualization tools for the analysis of
these data.

GENEFOREST. Our proprietary Annotated Human Gene Index, a concise and
regularly updated database containing novel expressed genes and their variants,
is available for use behind a company's firewall through a product called
GeneForest. GeneForest also includes data mining and visualization tools for the
analysis of these data.

CLUSTERING AND ALIGNMENT TOOLS (CAT). Our proprietary software product,
CAT, is used to more rapidly assemble gene fragments into full-length sequences
and to identify gene variants. This product is also licensed separately to
companies seeking to mine the public and their own genomic data.

Each of our products is designed to cost-effectively improve life science
research productivity and capability within pharmaceutical and biotechnology
companies and academic institutions.

INDUSTRY BACKGROUND

THE ROLE OF GENES IN HUMAN HEALTH

All of the basic information required to build a living organism is encoded
in deoxyribonucleic acid, or DNA. DNA is structured as two parallel strands of
nucleotides, specifically adenine, cytosine, guanine and thymine, in the shape
of a double helix. The specific sequence of these nucleotides determines genetic
identity, and the sum of the information is referred to as the genome.

The human genome is made up of approximately 3.2 billion pairs of
nucleotides, which define approximately 100,000 genes. Genes are segments of
genomic DNA, each capable of specifying the synthesis of one or more specific
proteins. These proteins work together to define and regulate critical cellular
functions.

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Proteins are created from DNA through processes called transcription and
translation. First, the parallel strands of the DNA molecule unwind forming a
template for the synthesis of ribonucleic acid, or RNA, in a process called
transcription. The non-protein coding portions of this RNA transcript are then
removed, creating a messenger RNA molecule, or mRNA, which includes only the
information required to build a protein. The mRNA molecule then becomes a
template for protein synthesis in a process called translation. Protein-coding
DNA sequences only account for approximately five percent of the total genomic
DNA. The other 95 percent of non-coding genomic DNA is sometimes referred to as
junk DNA.

Variation in genes dictates differences in one's development, physiology and
disease susceptibility and progression. In fact, nearly every disease has a
genetic component. Individual genetic profiles also determine individual
responses to certain medications. Some diseases, such as cystic fibrosis, are
caused by a single gene mutation. Others, such as cancer, can be the result of
multiple mutated and interacting genes. The consequences of genetic variation
also can be external to the human genome. For example, different strains of the
HIV virus elicit different responses in different individuals.

Using the understanding of the role of genes to create drugs is a relatively
new phenomenon within the drug discovery industry. Historically, drugs were
derived either from natural products or by serendipity to treat symptoms,
generally without an understanding of the underlying genetic components of the
disease. Only in the last 20 years has genetic engineering been used to create
drugs. Examples of the first genetically engineered drugs include Erythropoietin
and human insulin. Advances in understanding the role of genes in human health
and disease and new enabling technologies for interpreting genomic data are
expected to improve medical treatment by targeting the genetic roots of disease.

SEQUENCING THE GENOME AND IDENTIFYING NEW DRUG TARGETS

Several public and private organizations are engaged in decoding the
sequence of nucleotides in the genomes of a number of organisms, including the
human genome. In a recent milestone, the Human Genome Project announced the
completion of a "rough draft" of the human genome sequence.

The sequencing process and associated research have generated an enormous
amount of raw data, which contains errors and is often unorganized, incomplete
and poorly annotated. Further, much of these data are located in disparate
databases with no single point of access. It is expected that the amount of data
will continue to grow exponentially as technology improves and scientists build
upon their existing knowledge of the human genome.

The sequencing process is only a first step in applying genomic data to the
biomedical research process. A necessary next step is annotation, which involves
performing a range of analyses designed to locate genes and to predict the
function of their protein products in cellular processes and disease.
Identifying and predicting the function of genes within this raw sequence data
and performing experiments to confirm these hypotheses allows researchers to
identify biological targets for drugs or diagnostics.

Identifying biological targets for drugs or diagnostics involves the
following types of data analysis:

- DNA SEQUENCE ANALYSIS involves identifying gene location, searching for
similarities across organisms, predicting the protein products of genes
and their structure and identifying gene families.

- GENE EXPRESSION ANALYSIS involves analyzing whether a gene is active or
repressed in a particular disease state or tissue type. Common
technologies include the study of Expressed Sequence Tags, or ESTs--
fragments of expressed genes.

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- GENETIC VARIATION STUDIES involve the study of gene variants such as
single nucleotide polymorphisms (SNPs)--single nucleotide variations in a
particular gene that can affect a person's susceptibility to disease or
response to various treatments.

- PATHWAY STUDIES involve mapping how proteins and small molecules interact
in order to identify specific biological processes which may be associated
with disease.

- PROTEOMICS involves the study of proteins, including their structure,
function, expression and interactions with other proteins in order to
determine disease-related proteins or identify potential therapies.

Pharmaceutical and biotechnology companies are aggressively mining the
available genomic and proteomic data for new biological targets in order to
build their drug pipelines. According to the Pharmaceutical Research and
Manufacturers of America, the human genome contains approximately 3,000 to
10,000 biological molecules of potential value as therapeutic targets, whereas
only about 500 biological targets have been identified so far. The estimated
size of the global drug discovery market, including identification and
validation of biological targets is expected to be $20.6 billion by 2002,
according to the PAREXEL Pharmaceutical R&D Statistical Sourcebook.

THE ROLE OF BIOINFORMATICS IN THE LIFE SCIENCES INDUSTRY

Bioinformatics is the application of information technology to the life
sciences industry, specifically the storage, management and analysis of genomic
and other biological data. Over the past few years, bioinformatics has become
increasingly crucial to the management and analysis of the sequence data
generated by the Human Genome Project and similar efforts. Advances in
computational processing and computer-aided visualization have increased the
ability of bioinformatics tools to facilitate rapid interpretation and analysis
of genomic data.

Access to comprehensive data and the tools to manipulate and analyze these
data is critical to the process of converting genomic information into promising
biological targets and successful therapeutic candidates. However, the life
science industry faces significant analytical and data management challenges
before it can capitalize on the promise of genomics.

BIOINFORMATICS CHALLENGES FACING THE LIFE SCIENCES INDUSTRY

There is currently no comprehensive bioinformatics solution that addresses
the full spectrum of an organization's needs for drug discovery research. As a
result, some pharmaceutical and large biotechnology companies have attempted to
implement bioinformatics solutions in-house, requiring significant internal
investments in computer hardware, software, personnel and maintenance. These
companies often establish dedicated, centralized departments, staffed by
bioinformaticists. However, these individuals, trained in computer science and
biology, are scarce and often do not have the resources both to update and
maintain the databases and to adequately serve the analysis needs of the life
scientist. As a result, we believe that, as seen in other industries, there will
be a greater trend towards outsourcing bioinformatics solutions.

Smaller biotechnology companies and academic institutions typically do not
have the resources to implement an adequate in-house bioinformatics solution. As
a result, they rely on less comprehensive publicly available tools, such as
those provided by the National Center for Biotechnology Information, for their
analyses.

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In summary, the following are examples of current bioinformatics challenges
facing the life sciences industry:

- The amount of available genomic data is increasing exponentially, and
there is no single point of access to multiple sources of disparate public
and private data. Further, data provided through public sources often are
unorganized, incomplete and poorly annotated.

- Individual life scientists typically do not have direct access to
sophisticated bioinformatics tools or the training to use many of the
currently available tools. In addition, even within large organizations,
bioinformaticists are scarce and often are unavailable to serve the needs
of all of the organization's life scientists.

- As the amount of publicly available data grows, organizations are faced
with the challenge of integrating public data with their proprietary or
licensed data in a secure environment.

The explosion in available genomic data has brought about the need for an
advanced cost-effective, bioinformatics solution that integrates multiple
sources of data and that can be securely accessed and easily used by the life
scientist.

THE DOUBLETWIST SOLUTION

We are a leading provider of genomic information and bioinformatics analysis
technologies. We provide a powerful, secure and comprehensive research
environment that enables the life scientist to perform sophisticated genomic
analysis without requiring bioinformatics expertise. Our solution is available
by subscription through our secure Web site, and we also license components of
the underlying technology platform for use behind a company's firewall.

Our mission is to empower life scientists by simplifying and accelerating
genomic research. To support this mission, we:

- AGGREGATE AND INTEGRATE PROPRIETARY, PUBLIC AND THIRD-PARTY DATA. Using
our internal bioinformatics expertise and computational capabilities, we
process and error-correct the public data in order to provide value-added,
target-enriched databases, which are offered as part of DoubleTwist.com,
Prophecy and GeneForest. By integrating our proprietary data with the
numerous public databases, as well as with other licensed third-party
databases, DoubleTwist.com provides life scientists with a single point of
access to more than 25 sources of genomic information. As a result,
DoubleTwist.com provides scientists with a familiar interface from which
to search multiple databases at once, a single environment in which to
store and analyze results and a common graphical view for the
interpretation of multiple scientific analyses.

- SIMPLIFY AND ACCELERATE GENOMIC ANALYSIS. By automating processes that
typically require bioinformatics expertise, our products simplify genomic
analysis and accelerate the drug discovery process. Through
DoubleTwist.com, we provide intelligent, automated programs, called
Research Agents, which conduct genomic analysis and continual database
monitoring on behalf of the user. These Research Agents have been designed
to save time and reduce the complexity of genomic analysis by automating
the activities that would otherwise be conducted by trained
bioinformaticists. In addition, our advanced data mining and visualization
tools facilitate the rapid interpretation of analysis results by
aggregating a large amount of data into one intuitive and interactive
graphical view.

- PROVIDE A SECURE, ROBUST TECHNOLOGY PLATFORM. Underlying DoubleTwist.com
is a highly secure, reliable and scalable technology platform. Our
technology platform has been developed in such a way that the component
parts--Prophecy, GeneForest and Clustering and Alignment Tools (CAT)--can
be licensed separately for use behind a company's firewall. Each of these
component products can be used with the others and with DoubleTwist.com.
In addition, we provide our data

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in a format that can be integrated with our customers' own data and
software solutions. The DoubleTwist.com software architecture ensures that
our product is reliable and scalable, and that our customers' data as well
as their online interactions are confidential.

OUR STRATEGY

Our goal is to provide the leading research environment for genomic
information and bioinformatics analysis. Our mission is to empower life
scientists by simplifying and accelerating genomic research. Our strategy is to:

CREATE A COMPREHENSIVE WORK ENVIRONMENT THAT EMPOWERS LIFE
SCIENTISTS. Through our product offerings, we intend to create a comprehensive
work environment for genomic research. As part of this strategy, we will
continue to:

- simplify access to multiple sources of genomic data through a common
interface;

- facilitate and automate genomic database searches;

- aid the rapid interpretation of results with interactive, graphical
viewers;

- centralize project management with online data storage;

- provide continual updates using our automated data monitoring tools;

- link research results to scientific journal articles and other literature;
and

- streamline laboratory product ordering with a seamless link from research
to relevant goods and data.

ENHANCE THE FUNCTIONALITY OF OUR PRODUCTS. We intend to continue to enhance
our products by adding tools, data and resources. We intend to continue to
improve our computational methods, software tools and user interface to further
enhance our technological leadership. We also plan to continue to aggregate and
annotate public and proprietary genomic data as such data becomes available
using our bioinformatics expertise and computational processing capabilities. In
addition, we plan to integrate new resources into our DoubleTwist.com research
environment by expanding our strategic partnerships.

CONTINUE TO ENABLE AGGREGATION AND INTEGRATION OF THIRD PARTY AND CUSTOMER
DATA. Our technology platform has been designed to allow for the integration of
databases from third parties. This provides a cost-effective way for us to
regularly enhance the value of our products. In addition, we intend to enable
the integration and aggregation of our customers' internally generated data. We
expect that this will significantly enhance the value of our products by
providing our customers with a common view in which to analyze DoubleTwist
provided annotated data with their internally generated data.

REMAIN A NEUTRAL SOURCE FOR GENOMIC INFORMATION AND ANALYSIS. We believe
our neutrality provides us with a strategic advantage in attracting both
partners and pharmaceutical and biotechnology customers since we do not compete
with them in either the laboratory generation of intellectual property or in the
development of drugs. We do not intend to develop drugs or to secure rights to
drug targets identified using our products. We are, and intend to continue to
be, a neutral showcase and channel for our partners' data.

CONTINUE TO COMPUTATIONALLY GENERATE PROPRIETARY CONTENT. We intend to use
our bioinformatics expertise and computational processing capabilities to
continue to generate proprietary genomic information from publicly available
data. For example, we may use these capabilities to annotate data for additional
species important for biomedical research, such as the mouse, in order to
provide additional value-added annotated databases. Furthermore, since we are
not patenting this data, we intend to continue to provide a royalty-free source
of high-quality genomic information.

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RAPIDLY BUILD OUR CUSTOMER BASE AND EXPAND OUR PRODUCT LINE INTO NEW
MARKETS. We intend to rapidly build our customer base by aggressively marketing
to pharmaceutical and biotechnology companies, as well as major academic and
research institutions, through our direct sales force and traditional marketing
channels, and by leveraging our existing customer relationships. In addition, we
will use our free trial subscriptions to DoubleTwist.com to introduce scientists
to our products. In the future, we also intend to leverage our technology
platform to address the needs of other large markets that require genomic
information, such as physicians and genetic counselors. We may pursue these
opportunities either on our own or through acquisitions or strategic
partnerships that complement or extend our current product line.

OUR PRODUCTS

Our products include DoubleTwist.com and a selection of separately licensed
components of the DoubleTwist.com technology platform, including Prophecy,
GeneForest and our Clustering and Alignment Tools (CAT).

<TABLE>
<CAPTION>
PRODUCT KEY FEATURES
<S> <C>
DOUBLETWIST.COM Research environment that provides access
LAUNCHED JANUARY 2000 to multiple sources of genomic data,
automated analysis and advanced
visualization tools.

PROPHECY Extensively annotated database of human
LAUNCHED JUNE 2000 genomic DNA sequences and software for
data mining and visualization.

GENEFOREST Concise, annotated database of novel
LAUNCHED AUGUST 2000 expressed gene transcripts and their
variants, and software for data mining
and visualization.

CLUSTERING AND ALIGNMENT TOOLS (CAT) Software for processing and analyzing
LAUNCHED OCTOBER 1998 large genetic sequence databases.
</TABLE>

DOUBLETWIST.COM

Our primary product is DoubleTwist.com, a secure and comprehensive online
research environment that enables the life scientist to perform sophisticated
genomic analysis. By providing a powerful, automated and easy-to-use
computational discovery platform, DoubleTwist.com simplifies and accelerates the
drug discovery process. The key benefits of DoubleTwist.com include:

- IMPROVED RESEARCHER PRODUCTIVITY. By creating a single source for genomic
data through the integration of disparate public and proprietary
databases, DoubleTwist.com allows life scientists to quickly and
efficiently access many databases simultaneously. In addition, our
Research Agents monitor changes or additions to databases, avoiding the
need for scientists to conduct repetitive searches across multiple
databases and cross-reference data and literature in order to stay
up-to-date.

- EXPANDED ANALYSIS CAPABILITIES FOR LIFE SCIENTISTS. Our Research Agents
automate processes traditionally performed by a bioinformaticist using
complex computer programs. DoubleTwist.com enables individual life
scientists to perform advanced genomic analyses without specialized
training in bioinformatics.

- REDUCED COST OF GENOMIC RESEARCH. We host advanced genomics research
applications supported by powerful bioinformatics hardware and software,
eliminating the need for our customers to make large investments in
internal bioinformatics systems and specialized personnel. Our Web-based
business model allows smaller biotechnology companies and academic

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institutions, which traditionally have not had access to advanced
bioinformatics solutions, to more rapidly and cost-effectively gain access
to sophisticated genomic analysis capabilities.

DoubleTwist.com is sold as an annual per user subscription at one of three
pricing levels: Bronze, Silver or Gold. Subscriptions are based on the number of
sequence queries and the degree of access to agents, features and data.
Additional sequence queries and features can be purchased on an a-la-carte
basis. The Bronze subscription provides complimentary access to a limited number
of DNA and protein sequence analysis Research Agents, and allows users to
analyze and store up to 10 sequences on our secure server. The Silver
subscription allows additional sequence analysis and storage, and offers users
access to additional functionality and data, including Expressed Sequence Tag,
or EST analysis for constructing full-length gene sequences from expressed gene
fragments. The Gold subscription provides users with our highest level of
sequence analysis and storage, and offers users access to our Annotated Human
Genome Database and other databases and analysis tools. All subscriptions allow
users to access resources including protocols and pathway databases, our desktop
sequence analysis applications and educational courses.

DOUBLETWIST.COM DATABASES. The databases underlying DoubleTwist.com include
continually updated public and licensed databases, literature databases,
DoubleTwist-generated proprietary databases (computationally processed from
public data) and partner databases. These databases contain data on protein
interactions, novel genes, patents and other relevant information.

<TABLE>
<CAPTION>
SELECTED DATABASES UNDERLYING DOUBLETWIST.COM
<S> <C>
PUBLIC AND LICENSED DATABASES DOUBLETWIST'S PROPRIETARY DATABASES
Blocks+ Annotated Human Gene Index
DbEST Annotated Human Genome Database
GenBank Arabidopsis Gene Index
GenPept Drosophila Gene Index
Medline Mouse Gene Index
PDB
PFAM PARTNER DATABASES
PRINTS AlphaGene proprietary gene inventory
PRODOM HighWire Press literature database
Swiss-Prot ProNet-TM- Online (Myriad Genetics, Inc.)
TrEMBL
Unigene
</TABLE>

DOUBLETWIST.COM RESEARCH TOOLS. Research tools are at the core of the
DoubleTwist.com product. These tools include our automated Research Agents
(Profile and Monitor Agents), as well as software applications for sequence
analysis, data mining and visualization. Profile Agents perform a comprehensive,
one-time search based on a query or request from the user, and Monitor Agents
continually search the databases underlying DoubleTwist.com and notify the user
of any additions or changes.

To conduct an analysis, the user submits a sequence or set of sequences and
selects one or more Research Agents. When a Research Agent has completed its
analysis, it sends an email notifying the user that a new report has been placed
in the user's online password-protected project folder.

These DoubleTwist.com research tools enable life scientists to:

- discover new genes and gene function;

- identify new members of a gene family;

- analyze the gene structure of human genomic DNA;

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- compare DNA and protein sequences; and

- identify protein function.

<TABLE>
<CAPTION>
RESEARCH TOOL DESCRIPTION
<S> <C>
Profile Agents Automated programs for comprehensive DNA and protein
sequence analysis

Monitor Agents Automated programs for on-going database monitoring and
notification of relevant updates

Genomic Viewer Interactive data mining and visualization tool that
integrates the results of multiple scientific analyses

Cluster Viewer Interactive data mining and visualization tool that enables
analysis of EST-derived consensus sequences

TwistTools Desktop sequence analysis tools
</TABLE>

DOUBLETWIST.COM RESOURCES. In addition to research tools, we provide a
number of resources on DoubleTwist.com that help support life science research.
These include educational services, and searchable sources of additional
information on biological protocols, protein interactions and pathways.

<TABLE>
<CAPTION>
RESOURCE DESCRIPTION
<S> <C>
TwistEd Bioinformatics educational tutorials

ProNet Online Database and visualization tools exclusively licensed from
Myriad Genetics, Inc. for analyzing protein-protein
interactions

Protocol Online Searchable site for molecular and cell biology protocols and
discussion groups

EcoCyc Online encyclopedia of E. coli metabolic pathways
</TABLE>

DOUBLETWIST.COM E-COMMERCE. Our e-commerce functionality provides
scientists a way to identify relevant laboratory supplies and genomic data that
are associated with the research they are conducting on DoubleTwist.com. Through
our strategic partnerships with life science suppliers and e-commerce platform
providers, including Chemdex, an operating company of Ventro Corporation,
scientists will be able to click-through to purchase from these suppliers,
making the purchasing process both easier and more efficient. Currently,
scientists can purchase products from AlphaGene, Inc., CLONTECH
Laboratories, Inc. and Invitrogen Corporation. We are in the process of
integrating product databases from additional e-commerce partners.

DOUBLETWIST.COM CONTENT. Our Web-based product model also allows us to
provide an up-to-date source of news and other information that is of interest
to life scientists. As part of this ancillary service, we have established an
in-house editorial team who provide original features, research methods reviews
and commentary. In addition, we license content from such organizations as
ScreamingMedia.com, Inc., an aggregator of news sources, Oncology.com, a source
of news and information on cancer research, and Stockpoint, Inc., a provider of
online investment analysis tools and financial information.

PROPHECY

Prophecy consists of our regularly updated Annotated Human Genome Database
and its associated data mining and visualization tools. Prophecy provides
customers with an extensively annotated source of human genomic DNA sequences
that facilitates target discovery by enabling users to identify novel

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genes, examine gene structure (including gene variants), and predict gene
function. This product is designed for customers who wish to analyze gene
structure and function within the context of the whole genome, and who wish to
access this data and functionality behind a company's firewall.

The key benefits of Prophecy include:

- INCREASED UNDERSTANDING OF THE HUMAN GENOME. The proprietary analytical
methodology used to process the public genomic data produces annotation
that allows life scientists to more quickly understand gene structure and
function. Obtaining a comprehensive view of the human genome. allows users
to identify other genes that may be functionally related to the gene of
interest, and to study the regions that regulate the expression of these
genes.

- RAPID INTERPRETATION OF RESEARCH RESULTS. Prophecy includes our Genomic
Viewer, which integrates the result of various annotation methodologies
into a single, interactive application. Thus, the tool facilitates rapid,
interactive discovery and pattern recognition through graphical
representation of genomic sequences and related information.

- ABILITY TO PERFORM CONCEPT-BASED QUERIES. Prophecy provides a text-based
search tool that allows for concept-based queries, enabling scientists to
mine the database for genes associated with specific disease states, gene
or protein families, sequence or chromosome positions or other types of
annotation.

Prophecy is currently sold as an annual per site subscription with regular
data updates. If desired by the customer, subscriptions to Prophecy can be
bundled with subscriptions to DoubleTwist.com, allowing users to access the most
up-to-date information, automated analysis and database monitoring through the
Web site's Research Agents.

GENEFOREST

GeneForest consists of our regularly updated Annotated Human Gene Index
database and its associated data mining and visualization tools. GeneForest
provides customers with a compendium of gene transcripts computationally derived
and annotated from public domain EST and mRNA sequences. This product is
designed for customers wishing to analyze only expressed sequences that code for
protein products. These data can be used to identify potential full-length genes
and their variants, to predict protein function and family associations, and to
investigate gene expression patterns. The product is designed for customers
wishing to access this data and functionality behind a company's firewall.

A key benefit of GeneForest is that its underlying Annotated Human Gene
Index compresses the public domain EST and mRNA sequences into a more concise,
accurate and annotated database. Further, we provide data mining and
visualization tools to facilitate the graphical interpretation and validation of
consensus sequences.

GeneForest is currently sold as an annual per site subscription with regular
data updates. If desired by the customer, subscriptions to GeneForest can be
bundled with subscriptions to DoubleTwist.com, allowing users to access the most
up-to-date information, automated analysis and database monitoring through the
Web site's Research Agents.

CLUSTERING AND ALIGNMENT TOOLS (CAT)

Our proprietary Clustering and Alignment Tools (CAT) have been used by more
than 25 organizations to more rapidly assemble gene fragments into full-length
sequences and to identify gene variants, enabling users to more effectively mine
public and in-house genomic data.

A key benefit of these tools is their ability to integrate multiple data
sources and data types into a single project framework, meeting a significant
infrastructure challenge for companies generating their

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own data as well as subscribing to third-party sequence databases. Our Cluster
Viewer allows users to zoom in and out on sequence detail from clusters of
similar sequences to the nucleotide level. As a result, users can visualize
genetic sequence variations.

The CAT product is sold as a software license. In addition, we use these
tools to assist in creating our gene index databases, which are integrated into
DoubleTwist.com.

SALES AND MARKETING

We are marketing our products to the global life sciences industry. We
expect to expand our sales and marketing organization and activities and to
drive market awareness and sales in the following ways:

- ESTABLISH BROAD-BASED USAGE OF DOUBLETWIST.COM. To raise awareness among
life scientists of DoubleTwist.com and its benefits, we have launched a
marketing campaign using traditional and online media, such as journal
advertising, trade show exhibits, seminars, direct mail and email. As part
of our marketing strategy we have made certain features of the site
available to potential subscribers free of charge. In this way, we expect
to generate demand for DoubleTwist.com among life scientists who may
encourage their employers to purchase upgraded subscriptions to the
product.

- LICENSE COMPONENTS OF DOUBLETWIST.COM. We directly sell our full
product-line into pharmaceutical and biotechnology companies and academia.
This includes the DoubleTwist.com research environment and components of
its underlying technology platform--including Prophecy, GeneForest and
Clustering and Alignment Tools (CAT). All component products include links
to DoubleTwist.com, reinforcing the technology platform, and introducing
benefits of additional components to new users.

- LEVERAGE RELATIONSHIPS WITH EXISTING CUSTOMERS. We intend to leverage our
relationships with pharmaceutical and large biotechnology companies that
have previously purchased our enterprise software products, such as CAT,
to further drive subscriptions for DoubleTwist.com and its component
products.

In March 2000, we entered into an exclusive agreement with Hitachi, Ltd. for
marketing and distribution of CAT to the Asia-Pacific region. The agreement
expires on December 31, 2000 but is automatically renewed for successive one
year terms unless terminated by either party upon 30 days prior notice. In
July 2000, we entered into a non-exclusive agreement with Hitachi, Ltd. for
distribution and marketing of our DoubleTwist.com, Prophecy and GeneForest
products to the Asia-Pacific market. The agreement expires on September 30,
2000.

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Our sales team is divided into academic and commercial sales units,
including direct and telephone sales associates across North America and Europe.
These sales teams rely on our marketing communications efforts as well as our
internal usage tracking systems to identify, develop and close leads. As of
June 30, 2000, our worldwide sales and marketing group had 44 employees located
in the United States and Europe. We expect to expand our sales and marketing
group as we continue to commercialize our products.

STRATEGIC RELATIONSHIPS

We have established strategic relationships as a means of integrating
additional features and content into DoubleTwist.com. Our technology platform
and neutrality gives us an advantage in attracting content partners, since we do
not compete with them in either the laboratory generation of intellectual
property or in the development of drugs. Rather, we act as a showcase and a
channel for our partners by integrating their products into our technology
platform. Our strategic relationships include the following scientific database
and content, research tools and e-commerce partners:

OUR SCIENTIFIC DATABASE AND CONTENT PARTNERS:

- AlphaGene, Inc., for its proprietary gene inventory;

- Derwent Information Ltd., for its GENSEQ patent database;

- EraGen Biosciences, Inc., for its Master Catalog database of gene family
trees;

- Highwire Press, for its full-text journal articles;

- Myriad Genetics, Inc., for its ProNet Online database of protein-protein
interactions;

- Oncology.com, for news and information on cancer research;

- Popular Proteins, LLP, for its protein network data; and

- Proteome, Inc., for its model organism databases.

OUR RESEARCH TOOLS PARTNERS:

- BioTools Incorporated, for its GeneTool and PepTool desktop sequence
analysis software;

- Molecular Simulations Inc., for its tools for analyzing protein structure;
and

- University of Pennsylvania, for its BioWidgets toolkit.

OUR E-COMMERCE PARTNERS:

- Chemdex, an operating company of Ventro Corporation, for its e-commerce
infrastructure and fulfillment system;

- CLONTECH Laboratories, Inc., for its clones and arrays;

- Incyte Genomics, Inc., for its cDNA clones, DNA arrays, and purification
and screening kits; and

- Invitrogen Corporation, for its GeneStorm clones and DNA sequences.

We have several models for generating revenue from our strategic partners,
which include:

- INTELLECTUAL PROPERTY MARKET MAKER. We identify potential sales of partner
intellectual property for a customer.

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- DATA "PAY PER VIEW". Customer pays for one-time view of a segment of
partner content, as related to a specific research report arising from a
DoubleTwist.com Research Agent.

- PHYSICAL PRODUCT PURCHASE. Customer buys products, which have been
identified by DoubleTwist.com Research Agents as relevant to the
customer's research.

In each of these relationships we receive a percentage of the resulting
revenue from our strategic partners. The agreements with our strategic partners
generally have a term of one year and generally are non-exclusive.

CUSTOMERS

Our customers include the following pharmaceutical and biotechnology
companies:

- Affymetrix, Inc.
- ARIAD Pharmaceuticals, Inc.
- Berlex Laboratories, Inc.,
a subsidiary of Schering AG, Germany
- Bristol-Myers Squibb Company
- Chiron Corporation
- E. I. du Pont de Nemours and Company
- Elan Pharmaceuticals,
a division of Elan Corporation, plc
- Eli Lilly and Company
- EOS Biotechnology, Inc.
- Genaissance Pharmaceuticals, Inc.
- Genetics Institute, a subsidiary of
American Home Products Corporation
- Genome Therapeutics Corp.
- Hitachi, Ltd.
- Hoecsht Marion Roussel, Inc.,
an affiliate of Aventis S.A.
- Merck & Co., Inc.
- Metabolex, Inc.
- Millenium Pharmaceuticals, Inc.
- Monsanto Company, a subsidiary of
Pharmacia Corporation
- RW Johnson Pharmaceutical Research
Institute, a division of Johnson & Johnson
- SUGEN, Inc., a subsidiary of
Pharmacia Corporation

Our customers also include individual life scientists from several leading
academic and research institutions, including Harvard Medical School, University
of California at San Francisco and Cedars Sinai Medical Center.

In addition, researchers at many of the leading research and academic
institutions have Bronze subscriptions to DoubleTwist.com. We introduce
scientists to our solution by offering a complimentary Bronze account with
limited access to features of DoubleTwist.com. Our goal is to upgrade Bronze
accounts to paid Silver or Gold subscriptions that offer higher levels of
functionality.

CUSTOMER SERVICE AND SUPPORT

We believe a high level of customer support is a distinguishing element in
selling both subscription services and software products to the life sciences
industry. Our key customer support functions include:

- CUSTOMER EDUCATION AND TRAINING. Developing and delivering both internal
and external education, training programs and materials. Training is
provided either onsite or online.

- TECHNICAL SUPPORT. Providing technical knowledge and solutions for
customers via phone, e-mail and online services. Online support is
provided 24 hours a day, seven days a week using sophisticated online
support tools. E-mail and phone support is provided 12 hours a day, five
days a week.

As of June 30, 2000, our customer support team consisted of 10 persons,
seven of whom hold Ph.D.s or Masters degrees.

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<PAGE>
TECHNOLOGY AND SECURITY

Underlying DoubleTwist.com is a highly secure, reliable, and scalable
technology platform. Our technology platform has been designed to leverage our
substantial investment in hardware and software. We have built a scalable
genomic processing center based on our bioinformatics expertise and
computational capabilities. This includes a distributed processing center that
allows for high-speed, parallel processing of large amounts of genomic data.

DoubleTwist.com provides a secure Web site to ensure that our customers'
data as well as their online interactions are confidential. We provide our users
and strategic partners with multiple safeguards, such as a multi-tiered
architecture that isolates and protects information behind public facing
servers, while multiple firewalls protect servers hosting our customers' and
strategic partners' data. All user research data transmissions are secured by a
128-bit Secure Socket Layer. Access to our site is monitored using intrusion and
audit tracking software, and we have in place internal company restrictions on
the ability to access customer and strategic partner data. The site is hosted
and monitored at a facility that provides physical security, electronic security
services and back-up power generation.

We seek to provide a reliable system with minimal downtime. To provide this
level of service, we have designed DoubleTwist.com with redundant storage and
processing systems to ensure the availability of all key components. We have
designed DoubleTwist.com's infrastructure to be scalable as the number of our
subscribers grows. We use distributed processing technology that can load
balance demand across multiple processors. Our component-based architecture will
support future enhancements and the addition of new features such as new
research areas, third-party services or integration of new data.

COMPETITION

We face competition from genomic data providers as well as from both
traditional and online bioinformatics software companies. A number of companies
focus on generating biological intellectual property, including Incyte
Genomics, Inc. and Celera Genomics Group, either to license or for internal
development efforts. Both of these companies also have recently begun to provide
online solutions for genomic research. The traditional bioinformatics companies,
which produce bioinformatics software either as an enterprise solution or on a
client/server basis, include LION Bioscience AG and InforMax, Inc. Other
bioinformatics companies, such as Compugen Ltd. and eBioinformatics, Inc., offer
online solutions. We also face competition from development groups within
companies that may offer customized bioinformatic solutions.

Our success in competing with these companies will depend on our ability to:

- aggregate an increasingly large amount of genomic data and other
resources;

- continue to provide a comprehensive solution for genomic research;

- maintain our technological advantage in organizing and integrating genomic
data;

- develop superior software research applications and tools; and

- maintain competitive pricing.

- our competitors may be able to respond more quickly than we can to new or
emerging technologies and changes in customer requirements;

43
<PAGE>
- competition could seriously impede our ability to sell additional products
and services on terms favorable to us;

- our competitors may be able to provide Internet-based services at a lower
cost than we can;

- our current and potential competitors may develop and market new
technologies that render our existing or future products and services
obsolete, unmarketable or less competitive; and

- our competitors may obtain patent protection or other intellectual
property rights that would limit our rights or our customer's ability to
use our products and services to commercialize their discoveries.

We may not be able to compete successfully against our current and future
competitors, and competitive pressures that we encounter may harm our business.

INTELLECTUAL PROPERTY

Our policy is to file patent applications when we discover new software
inventions. For example, we have filed patent applications on core technology
for some of our early software applications. We have also filed patent
applications on important aspects of the technology and structure underlying
DoubleTwist.com. We are also preparing to file patent applications on various
other aspects of our business, including tools that can be used to view research
data, processing systems, and other important attributes of DoubleTwist.com.

We do not file patents on the sequence information in our proprietary
databases, including potential novel genes. Our strategy is to remain a neutral
service provider, which includes providing customers with a royalty-free source
of genomic data. We believe this neutrality significantly enhances our ability
to attract both customers and database partners because we do not compete with
them on either the generation of intellectual property or in drug discovery.

We have registered the trademark, DoubleTwist, and we own the domain name
DoubleTwist.com. We also have registered the trademark, Prophecy, and we have
filed a trademark application for GeneForest.

GOVERNMENTAL REGULATION

We rely on our strategic partners to meet the various regulatory and other
legal requirements applicable to their role in our business. However, we are
unable to verify whether they do so, or

44
<PAGE>
whether they are in violation of governmental requirements. We are not aware of
any violations, investigations, inquiries or allegations with regard to any such
regulations. If our customers are found to violate any of the applicable
regulations, we could be fined or exposed to civil or criminal liability, and we
could receive negative publicity. Any of these results could have a negative
impact on our business.

In addition, regulation of the activities of our customers by agencies in
the United States and in foreign countries may have a significant impact on our
ability to sell our products and services because this regulation may prevent or
limit our customers' ability to produce and market their products. We presently
do not have any plans to develop pharmaceutical products ourselves. However, we
expect that our customers over the next few years will come primarily from the
pharmaceutical and biotechnology industries. A significant factor in the
production and marketing of pharmaceutical products by those customers will be
the impact of regulation by the FDA and other agencies and institutions which
regulate medicinal and food products.

EMPLOYEES

As of June 30, 2000, we employed 149 persons, of whom 36 hold Ph.D. or M.D.
degrees and 57 hold other advanced degrees. Seventy-one employees were engaged
in research and development, eight in business development, 44 in sales and
marketing, 10 in customer support, and 16 in finance, legal and other
administrative functions. Our success will depend in large part upon our ability
to attract and retain skilled employees. We face competition in this regard from
other companies, research and academic institutions, government entities and
other organizations. None of our employees is represented by a labor union, and
we believe our employee relations are good.

FACILITIES

We currently lease approximately 20,000 square feet of office space for our
corporate offices and development facilities in a building located in Oakland,
California. The lease expires on September 30, 2000. In April 2000 we entered
into an agreement to lease a 63,000 square foot building for our corporate
offices and development facilities in Oakland, California. The lease commences
in October 2000 and has a term of ten years with two five-year options to renew.
We currently lease approximately 5,000 square feet of office space in
Philadelphia, Pennsylvania, which is used for development and sales.

We also lease a sales office in Munich, Germany, and we expect to lease
other sales offices in Europe as required.

LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.

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<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth, as of August 31, 2000, certain information
concerning our executive officers and directors:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- -------- --------
<S> <C> <C>
John D. Couch............................. 52 President, Chief Executive Officer and
Chairman of the Board
Robert F. Williamson...................... 34 Chief Operating Officer
H. Ward Wolff............................. 52 Chief Financial Officer
Stephen H. Sanders........................ 36 Vice President of Worldwide Sales
Gregory C. Thayer......................... 49 General Counsel, Vice President of
Corporate Development and Secretary
Fred E. Cohen(1).......................... 43 Director
Samuel D. Colella(2)...................... 60 Director
Ansbert Gadicke(1)(2)..................... 42 Director
A. Grant Heidrich, III.................... 47 Director
Thomas A. Penn(1)(2)...................... 54 Director
Dexster L. Smith.......................... 33 Director
</TABLE>

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

(1) Member of the audit committee.

(2) Member of the compensation committee.

JOHN D. COUCH has served as chairman of our board of directors since
February 2000, as our president since May 1998, as a member of our board of
directors since October 1997 and as our chief executive officer since
September 1997. From May to September 1997, Mr. Couch was a consultant to
DoubleTwist. Prior to consulting for DoubleTwist, Mr. Couch served from January
1997 to May 1997 as an executive-in-residence for the Mayfield Fund. From
January 1995 to January 1997, Mr. Couch was an independent management
consultant, providing strategic planning, management and technology advice to
various companies. Prior to that, Mr. Couch held several positions at Apple
Computer, Inc., including vice president and general manager of personal office
systems and vice president of software. Prior to Apple, Mr. Couch served as
section manager in the General Systems Division of Hewlett-Packard Company.
Mr. Couch received both his B.A. in Computer Science and his M.S. in Electrical
Engineering and Computer Science from the University of California at Berkeley.

ROBERT F. WILLIAMSON has served as our chief operating officer since
December 1999, having joined us as senior vice president of marketing, business
development and e-commerce in July 1999. From 1991 to July 1999, Mr. Williamson
worked with Boston Consulting Group, Inc., a leading global management
consulting firm, where he was elected partner in May 1998. During his tenure
with Boston Consulting Group, Mr. Williamson led the firm's west coast health
care practice, co-led the west coast e-commerce practice, and was a senior
member of the firm's global high tech practice. Prior to that, Mr. Williamson
founded and ran several small businesses and worked as a research assistant for
the Federal Reserve Board of Governors. He received a B.A. in Economics from
Pomona College and an M.B.A. from Stanford Graduate School of Business.

H. WARD WOLFF has served as our chief financial officer since April 1998.
Prior to joining DoubleTwist, he served from July 1996 to March 1998 as senior
vice president of finance and administration and chief financial officer of
Premenos Technology Corp., a provider of electronic commerce software and
services, and from 1992 to June 1996 as vice president of finance and
administration and chief financial officer of Premenos. Prior to that, he served
as an executive director of Russell Reynolds Associates, Inc., an international
management recruiting firm, and held a number

46
<PAGE>
of positions with Price Waterhouse as a certified public accountant, including
senior audit manager. Mr. Wolff received a B.A. in Economics from the University
of California at Berkeley and an M.B.A. from Harvard University.

STEPHEN H. SANDERS has served as our vice president of worldwide sales since
February 2000, having joined us as vice president of sales in August 1999. Prior
to joining DoubleTwist, he served as executive vice president with the Mega
Systems division of Safeguard Scientifics, Inc. from August 1998 to June 1999.
From May 1996 to July 1998, Mr. Sanders served as vice president of sales with
Azron, Inc., a provider of health care information solutions. From 1993 to May
1996, Mr. Sanders was a regional sales manager for Biosym Technologies, Inc. and
Molecular Simulations, Inc., two providers of molecular modeling and simulations
software which merged in August 1995. He has also held senior sales and
marketing positions with Enviro Track, Inc. and Chevron Chemical Company LLC.
Mr. Sanders holds a B.A. in Political Economics from the University of
Washington.

GREGORY C. THAYER has served as our secretary since March 2000 and as our
general counsel and vice president of corporate development since
December 1998. Prior to serving as general counsel, Mr. Thayer served as our
director of science and technology from August 1998 and joined us as chief
patent counsel in March 1997. From December 1993 to March 1997, Mr. Thayer was
the director of intellectual property and licensing at Somatix Therapy
Corporation, a biotechnology company. Mr. Thayer received a B.A. in Biology from
Reed College, an M.Phil. from Columbia University and a J.D. from University of
California Hastings College of Law.

FRED E. COHEN, M.D., D. PHIL. has served as a director of DoubleTwist since
February 1997. Dr. Cohen has been a professor of pharmacology and medicine at
the University of California, San Francisco since 1988. Dr. Cohen is an advisory
editor of the Journal of Molecular Biology, and he serves on the editorial
boards of several other scientific journals, including Molecular Medicine and
the Journal of Computational Biology. Dr. Cohen serves as a consultant to Chiron
Corporation and Iconix Pharmaceuticals, Inc. Dr. Cohen received a B.S. in
Molecular Biophysics and Biochemistry from Yale University, a Ph.D. in Molecular
Biophysics from Oxford University as a Rhodes Scholar and an M.D. from Stanford
University. Dr. Cohen is also a member of our scientific advisory board.

SAMUEL D. COLELLA has served as a director of DoubleTwist since
February 1997. From 1984 to the present, Mr. Colella has been a general partner
of Institutional Venture Partners, a venture capital firm. Prior to joining
Institutional Venture Partners, Mr. Colella served as president of Spectra-
Physics, Inc. Mr. Colella serves as a director of Onyx Pharmaceuticals, Inc.,
Symyx Technologies, Inc. and various private companies. Mr. Colella received a
B.S. in Business and Engineering from the University of Pittsburgh and an M.B.A.
from Stanford University.

ANSBERT S. GADICKE, M.D. has served as a director of DoubleTwist since
February 2000. In 1992, Dr. Gadicke founded MPM Capital, a venture capital firm,
where he is currently a managing partner. He serves as a director of BioMarin
Pharmaceutical Inc., and various private companies. He is also a member of the
Harvard Medical School Advisory Council. He received a B.A. and an M.D. from the
J.W. Goethe University in Frankfurt, Germany.

A. GRANT HEIDRICH, III has served as a director of DoubleTwist since
February 1997. From 1982 to the present, Mr. Heidrich has been a general partner
or managing member of several venture capital funds associated with the Mayfield
Fund. He serves as a director of Millennium Pharmaceuticals, Inc. and is
chairman of the board of directors of Tularik Inc. Mr. Heidrich received a B.A.
in Human Biology from Stanford University and an M.B.A. from Columbia
University.

THOMAS A. PENN has served as a director of DoubleTwist since December 1998.
Mr. Penn is a partner at Boston Millennia Partners, a Boston based venture
capital firm that he joined in June 1998. From March 1994 to March 1998, Mr.
Penn served as the president and chief executive officer of

47
<PAGE>
Tektagen, Inc., a contract services organization that provides product
development services and support to the biotechnology and pharmaceutical
industries. Mr. Penn is a member of the board of directors of Deltagen, Inc. and
various private companies. Mr. Penn holds B.S. degrees from the Massachusetts
Institute of Technology in Metallurgy and Materials Science and in Industrial
Management, an M.B.A. from Stanford University and a J.D. from the University of
Pennsylvania.

DEXSTER L. SMITH co-founded DoubleTwist and has served as one of our
directors since January 1993. From January 1993 to February 2000, Mr. Smith
served in various management positions with DoubleTwist. Mr. Smith currently
provides consulting services to us. In February 1999, Mr. Smith co-founded
DigiScents, Inc., a developer of digital scent technology, where he currently
serves as president. Mr. Smith is also a member of the board of directors or the
advisory board of several private companies. Mr. Smith received a B.S. in
Industrial Engineering from Stanford University. Mr. Smith is also a member of
our scientific advisory board.

SCIENTIFIC ADVISORY BOARD

We have established a select group of scientists and physicians to advise us
on scientific matters in the areas of research and development relevant to our
business. Our scientific advisors are:

BARRY H. HONIG, PH.D. serves as chairman of our scientific advisory board.
Dr. Honig is a professor of biochemistry and molecular biophysics at Columbia
University. Dr. Honig is an associate editor of the Journal of Molecular Biology
and serves on the editorial board of several other scientific journals. In June
2000, Dr. Honig was appointed by the Howard Hughes Medical Institute as a Howard
Hughes Medical Institute Investigator. He received a B.S. in Chemistry from the
Polytechnic Institute of Brooklyn and a Ph.D. from the Weizmann Institute of
Science.

FRED E. COHEN, M.D., D. PHIL. See "Board of Directors."

DOUGLAS L. BRUTLAG, PH.D. has served as our acting chief scientific officer
since May 1999. Dr. Brutlag is presently director of the Bioinformatics Resource
at Stanford University and has been a professor of biochemistry at Stanford
since 1974. He received a B.S. in Biology from the California Institute of
Technology and a Ph.D. in Biochemistry from Stanford University.

THERESA GAASTERLAND, PH.D. is an assistant professor and head of laboratory
at the Laboratory of Computational Genomics at Rockefeller University.
Dr. Gaasterland received a B.S. in Computer Science from Duke University, and a
Ph.D. in Computer Science from the University of Maryland.

JOEL L. BELLENSON is a co-founder of DoubleTwist and DigiScents, Inc.
Mr. Bellenson received a B.S. in Biology from Stanford University.

DEXSTER L. SMITH See "Board of Directors."

BOARD COMPOSITION

Our bylaws currently authorize a board consisting of eight directors. Our
amended and restated bylaws that become effective upon the completion of this
offering provide that our board will be divided into three classes, Class I,
Class II and Class III, with each class serving staggered three-year terms. The
Class I directors, Messrs. Penn and Smith, will stand for reelection at the 2001
annual meeting of stockholders. The Class II directors, Messrs. Gadicke and
Heidrich will stand for reelection at the 2002 annual meeting of stockholders.
The Class III directors, Messrs. Couch, Cohen and Colella will stand for
reelection at the 2003 annual meeting of stockholders. Any additional directors
will be distributed among the three classes so that, as nearly as possible, each
class will consist of one-third of the directors. This staggered classification
of the board of directors may have the effect of delaying or

48
<PAGE>
preventing changes in control or management. There are no family relationships
among any of our directors, officers or key employees.

COMMITTEES OF THE BOARD OF DIRECTORS

Our compensation committee consists of Messrs. Colella, Gadicke and Penn.
Mr. Colella serves as the chairman of the compensation committee. The
compensation committee makes recommendations regarding our various incentive
compensation and benefit plans and determines salaries for our executive
officers and incentive compensation for our employees and consultants.

Our audit committee consists of Messrs. Cohen, Gadicke and Penn. Mr. Penn
serves as the chairman of the audit committee. The audit committee makes
recommendations to the board of directors regarding the selection of our
independent auditors, reviews the results and scope of the audit and other
services provided by our independent auditors and reviews and evaluates our
control functions.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the members of our compensation committee is or was, at any time
since our formation, one of our officers or employees. None of our executive
officers serves as a member of the board of directors or compensation committee
of any entity that has one or more executive officers serving as a member of our
board of directors or compensation committee.

DIRECTOR COMPENSATION

With the exception of Dr. Cohen, who receives $10,000 per year for his
service as a director, we do not currently provide cash compensation to our
directors, although we do reimburse our directors for out-of-pocket expenses
incurred in connection with their activities as directors, including attendance
at meetings of our board of directors or its committees. Our directors are
generally eligible to participate in our 2000 Stock Plan and, if a director is
an employee of DoubleTwist, to participate in our 2000 Employee Stock Purchase
Plan. Directors who are not employees will also receive periodic stock option
grants under our 2000 Stock Plan. See "Director Option Program."

In February 1999, we granted Dr. Cohen a stock option to purchase 15,000
shares of common stock under our 1996 Equity Incentive Plan. This option has an
exercise price of $0.80 per share and vests in equal monthly installments over
four years.

EXECUTIVE COMPENSATION

The following table sets forth the compensation paid by us during the year
ended December 31, 1999 to our chief executive officer and to our other
executive officers who earned more than $100,000 during our last fiscal year.
Mr. Williamson joined us in July 1999, and salary information for him is for a
partial year. This prospectus refers to these executives as the "Named Executive
Officers."

49
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS
--------------------------- -------- -------- ------------
<S> <C> <C> <C>
John D. Couch............................................... $200,000 $ -- 225,000
President and Chief Executive Officer

Robert F. Williamson........................................ $ 88,636 $36,250 250,000
Chief Operating Officer

H. Ward Wolff............................................... $167,500 $ -- 125,000
Chief Financial Officer

Gregory C. Thayer........................................... $140,000 $ 7,500 42,500
General Counsel, Vice President of Corporate Development
</TABLE>

OPTION GRANTS IN LAST FISCAL YEAR

The following table provides information relating to stock options awarded
to each of the Named Executive Officers during the year ended December 31, 1999.
All of these options were awarded under our 1996 Equity Incentive Plan. Options
generally vest over four years from the date of grant. Percent of total options
granted in 1999 is based on an aggregate of 1,865,403 options granted in the
year ended December 31, 1999 to our employees, directors and consultants,
including the Named Executive Officers. Options were granted at an exercise
price equal to the fair market value per share of common stock on the grant date
as determined by our board, based upon the purchase price paid by investors for
shares of our preferred stock, taking into account the liquidation preferences
and other rights, privileges and preferences associated with such stock.

The potential realizable value amounts in the last two columns of the
following table are calculated based on an assumed initial public offering price
of $ per share and represent hypothetical gains that could be achieved for
the respective options if exercised and sold at the end of the option term. The
assumed 5% and 10% annual rates of stock price appreciation from the date of
grant to the end of the option term are provided in accordance with the rules of
the Securities and Exchange Commission and do not represent our estimate or
projection of the future common stock price. Actual gains, if any, on stock
option exercises are dependent on the future performance of the common stock,
overall market conditions and the option holder's continued employment through
the vesting period. This table does not take into account any actual
appreciation in the price of the common stock from the date of grant to the
present.

50
<PAGE>

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL RATES OF
SECURITIES PERCENT OF STOCK PRICE APPRECIATION
UNDERLYING TOTAL OPTIONS EXERCISE FOR OPTION TERM
OPTIONS GRANTED IN PRICE EXPIRATION ------------------------------
NAME GRANTED 1999 ($/SHARE) DATE 5%($) 10%($)
---- ------------ ------------- --------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
John D. Couch............. 75,000(1) 4.0% $0.80 12/15/2009
150,000(1) 8.0 0.80 2/11/2009

Robert F. Williamson...... 62,500(1) 3.4 0.80 12/15/2009
187,500(2) 10.1 0.80 6/23/2009

H. Ward Wolff............. 25,000(1) 1.3 0.80 12/15/2009
100,000(1) 5.4 0.80 2/11/2009

Gregory C. Thayer......... 25,000(1) 1.3 0.80 6/23/2009
17,500(1) 0.9 0.80 2/11/2009
</TABLE>

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

(1) Options vest as to 1/48 of the shares monthly for 48 months.

(2) Options vest as to 1/8 of the shares six months after the effective date of
the grant and 1/48 of the shares monthly thereafter for the next 42 months.

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

None of the Named Executive Officers exercised options during the year ended
December 31, 1999. The following table sets forth the number and value of
securities underlying unexercised options held at December 31, 1999. There was
no public trading market for our common stock as of December 31, 1999.
Accordingly, these values have been calculated on the basis of an assumed
initial public offering price of $ per share, less the per share exercise
price, multiplied by the number of shares issued upon exercise of the option.
All options were granted under our 1996 Equity Incentive Plan.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31,1999
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John D. Couch.................................. 177,082 297,918
Robert F. Williamson........................... -- 250,000
H. Ward Wolff.................................. 52,083 147,917
Gregory C. Thayer.............................. 13,227 46,566
</TABLE>

1996 EQUITY INCENTIVE PLAN

Our 1996 Equity Incentive Plan was adopted by our board of directors and
initially approved by our stockholders on August 19, 1996. Our 1996 Equity
Incentive Plan provides for the grant of incentive stock options at fair market
value, which may provide for preferential tax treatment, to our employees, and
for the grant of nonstatutory stock options, stock purchase rights, stock
appreciation rights and stock bonuses to our employees, directors and
consultants.

We have reserved an aggregate of 5,197,500 shares of our common stock for
issuance under this plan. As of August 15, 2000, 1,625,591 shares had been
issued pursuant to the exercise of options and stock purchase rights and options
to purchase 3,338,688 shares of common stock were outstanding. In addition,
233,221 shares were available for future grant. We will not grant any additional
stock options under our 1996 Equity Incentive Plan after the effective date of
our registration statement. Any shares remaining for issuance under our 1996
Equity Incentive Plan as of the effective date of our registration

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<PAGE>
statement and any shares returned to our 1996 Equity Incentive Plan shall be
reserved for issuance under our 2000 Stock Plan.

The 1996 Equity Incentive Plan provides that in the event that we merge or
consolidate, dissolve or liquidate, or sell substantially all our assets, each
outstanding option will be assumed or an equivalent option or award will be
granted in its place by the successor corporation. If the successor corporation
refuses to assume or substitute for the option or the awards, the options or
awards will terminate at such time and such manner as determined by our board of
directors.

2000 STOCK PLAN

Our 2000 Stock Plan was adopted by our board of directors on April 20, 2000,
subject to stockholder approval and the effectiveness of the registration
statement of which this prospectus is a part. This plan provides for the grant
of incentive stock options at fair market value to our employees and
nonstatutory stock options and stock purchase rights to our employees, directors
and consultants. A total of 1,000,000 shares of our common stock are reserved
for issuance pursuant to our 2000 Stock Plan, plus any shares remaining under
the 1996 Equity Incentive Plan as of the effective date of the registration
statement and any shares returned to the 1996 Equity Incentive Plan.

No options have yet been issued pursuant to the 2000 Stock Plan. The number
of shares reserved for issuance under our 2000 Stock Plan will increase annually
on the first day of our fiscal year beginning in 2001 by an amount equal to the
lesser of 5% of the outstanding shares of our common stock on the first day of
the year, 1,500,000 shares or such lesser amount as our board of directors may
determine.

Our board of directors or a committee of our board administers the 2000
Stock Plan. The committee may consist of two or more "outside directors" to
satisfy certain tax and securities requirements. The administrator has the power
to determine the terms of the options or stock purchase rights granted,
including the exercise price, the number of shares subject to each option or
stock purchase right, the exercisability of the options and the form of
consideration payable upon exercise. The administrator determines the exercise
price of options granted under our 2000 Stock Plan, but with respect to
incentive stock options, the exercise price must at least be equal to the fair
market value of our common stock on the date of grant. Additionally, the term of
an incentive stock option may not exceed ten years. No optionee may be granted
an option to purchase more than 1,500,000 shares in any fiscal year, except that
in connection with his or her initial service, an optionee may be granted an
additional option to purchase up to 3,000,000 shares of our common stock. After
termination of one of our employees, directors or consultants, he or she may
exercise his or her option for the period of time stated in the option
agreement. If termination is due to death or disability, the option will
generally remain exercisable for 12 months following such termination. In all
other cases, the option will generally remain exercisable for three months.
However, an option may never be exercised later than the expiration of its term.

The administrator determines the exercise price of stock purchase rights
granted under our 2000 Stock Plan. Unless the administrator determines
otherwise, the restricted stock purchase agreement will grant us a repurchase
option that we may exercise upon the voluntary or involuntary termination of the
purchaser's service with us for any reason, including death or disability. The
purchase price for shares we repurchase will generally be the original price
paid by the purchaser. The administrator determines the rate at which our
repurchase option will lapse. Our 2000 Stock Plan generally does not allow for
the transfer of options or stock purchase rights and only the optionee may
exercise an option and stock purchase right during his or her lifetime.

Our 2000 Stock Plan provides that in the event of our merger with or into
another corporation or a sale of substantially all of our assets, the successor
corporation will assume or substitute for each option or stock purchase right.
If the outstanding options or stock purchase rights are not assumed or

52
<PAGE>
substituted for, all outstanding options and stock purchase rights become fully
vested and exercisable. Our 2000 Stock Plan will automatically terminate in
2010, unless we terminate it sooner. In addition, our board of directors has the
authority to amend, suspend or terminate the 2000 Stock Plan provided it does
not adversely affect any option previously granted under our 2000 Stock Plan.

DIRECTOR OPTION PROGRAM

The director option program is part of our 2000 Stock Plan and provides for
the periodic grant of nonstatutory stock options to our non-employee directors.

All grants of options to our non-employee directors under the director
option program are automatic. We will grant to each individual who is a
non-employee director on the effective date of the registration statment of
which this prospectus is a part or who becomes a non-employee director
thereafter, an option to purchase 15,000 shares on the later of the effective
date of the registration statement or the date which such person becomes a
non-employee director. These options will be fully exercisable on the date of
grant.

Each non-employee director shall automatically be granted an option to
purchase 5,000 shares on each annual meeting of our stockholders occurring after
the end of our fiscal year 2000, if immediately after such meeting, he or she
shall continue to serve on the board and has been a director for at least six
months prior to the annual stockholders meeting. The shares subject to the
annual options become fully vested on the first anniversary of the date of
grant, provided the individual remains an outside director on such dates.

All options granted under our director option program have a term of ten
years and an exercise price equal to fair market value on the date of grant.
After termination as a non-employee director with us, an optionee must exercise
an option at the time set forth in his or her option agreement. If termination
is due to death or disability, the option will remain exercisable for
12 months. In all other cases, the option will remain exercisable for a period
of three months. However, an option may never be exercised later than the
expiration of its term. A non-employee director may not transfer options granted
under our director option program other than by will or the laws of descent and
distribution. Only the non-employee director may exercise the option during his
or her lifetime.

In the event of a change of control, all of the outstanding options granted
pursuant to the director option program become fully vested and exercisable.

2000 EMPLOYEE STOCK PURCHASE PLAN

Our 2000 Employee Stock Purchase Plan was adopted by our board of directors
on April 20, 2000, subject to stockholder approval and the effectiveness of the
registration statment of which this prospectus is a part. A total of 400,000
shares of our common stock will be made available for sale under our 2000
Employee Stock Purchase Plan. In addition, our 2000 Employee Stock Purchase Plan
provides for annual increases in the number of shares available for issuance
under the 2000 Employee Stock Purchase Plan on the first day of our fiscal year
beginning in 2001 in an amount equal to the lesser of 3% of the outstanding
shares of our common stock on the first day of the calendar year, 300,000
shares, or such other lesser amount as may be determined by our board of
directors. Our board of directors or a committee of our board administers the
2000 Employee Stock Purchase Plan. Our board of directors or its committee has
full and exclusive authority to interpret the terms of the 2000 Employee Stock
Purchase Plan and determine eligibility. All of our employees are eligible to
participate if they are customarily employed by us or any participating
subsidiary for at least 20 hours

53
<PAGE>
per week and more than five months in any calendar year. However, an employee
may not be granted an option to purchase stock under the plan if:

- immediately after the grant the employee would own stock possessing 5% or
more of the total combined voting power or value of all classes of our
capital stock; or

- the employee's right to purchase stock under all of our employee stock
purchase plans accrues at a rate that exceeds $25,000 worth of stock for
each calendar year.

Our 2000 Employee Stock Purchase Plan is intended to qualify for
preferential tax treatment and contains consecutive, overlapping 24-month
offering periods. Each offering period includes four six-month purchase periods.
The offering periods generally start on the first trading day on or after
January 1 and July 1 of each year, except for the first such offering period
which will commence on the first trading day on or after the effective date of
the registration statement of which this prospectus is a part and will end on
the last trading day on or before June 30, 2002.

The 2000 Employee Stock Purchase Plan permits participants to purchase
common stock through payroll deductions of up to 15% of their eligible
compensation which includes a participant's base straight time gross earnings
and commissions but excluding all other compensation paid to our employees. A
participant may purchase no more than 10,000 shares during any six-month
purchase period.

Amounts deducted and accumulated by the participant are used to purchase
shares of our common stock at the end of each six-month purchase period. The
price is 85% of the lower of the fair market value of our common stock at the
beginning of an offering period or after a purchase period ends. If the fair
market value at the end of a purchase period is less than the fair market value
at the beginning of the offering period, participants will be withdrawn from the
current offering period following their purchase of shares on the purchase date
and will be automatically re-enrolled in a new offering period. Participants may
end their participation at any time during an offering period and will be paid
their payroll deductions to date. Participation ends automatically upon
termination of employment with us.

A participant may not transfer rights granted under our 2000 Employee Stock
Purchase Plan other than by will, the laws of descent and distribution or as
otherwise provided under this plan.

In the event of our merger with or into another corporation or a sale of all
or substantially all of our assets, a successor corporation may assume or
substitute each outstanding option. If the successor corporation refuses to
assume or substitute for the outstanding options, the offering period then in
progress will be shortened and a new exercise date will be set.

Our 2000 Employee Stock Purchase Plan will terminate in 2010. However, our
board of directors has the authority to amend or terminate our 2000 Employee
Stock Purchase Plan, except that, subject to certain exceptions described in the
plan, no such action may adversely affect any outstanding rights to purchase
stock under our 2000 Employee Stock Purchase Plan.

CHANGE OF CONTROL AND RETENTION PLAN AND EMPLOYMENT ARRANGEMENTS

Our 2000 Stock Plan provides that, upon a change of control, each
outstanding option and award will generally become fully vested unless the
surviving corporation assumes the option or replaces it with a comparable
option.

Our 1997 Change of Control and Retention Plan provides that, upon a change
of control, each outstanding option and award granted under the 1996 Equity
Incentive Plan will generally become fully vested unless the surviving
corporation assumes the option or replaces it with a comparable option. In
addition, our 1997 Change of Control and Retention Plan provides that, upon a
change of control, the vesting and exercisability of each option granted under
our 1996 Equity Incentive Plan to an officer at the vice-president level or
higher or any non-employee director will be automatically accelerated as to

54
<PAGE>
50% of the unvested shares subject to these options. Our 1997 Change of Control
and Retention Plan also provides that upon any involuntary or constructive
termination of such officer or non-employee director within 12 months after a
change of control, the vesting and exercisability of each option granted under
our 1996 Equity Incentive Plan to such person will be automatically accelerated
as to 50% of the unvested shares subject to these options as of the termination
date.

We have also entered into letter agreements with Messrs. Couch, Williamson
and Wolff that contain provisions substantially similar to those in our 1997
Change and Control and Retention Plan. In addition, our agreement with Mr.
Williamson provides for a severance payment equal to six months' annual base
salary and our agreement with Mr. Wolff provides for a severance payment equal
to four months' base salary in the event of their involuntary or constructive
termination without cause within 12 months after a change in control.

INDEMNIFICATION

Our amended and restated certificate of incorporation limits the liability
of directors to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except
liability for: (1) breach of their duty of loyalty to the corporation or its
stockholders, (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) unlawful payments of
dividends or unlawful stock repurchases or redemptions or (4) any transaction
from which the director derived an improper personal benefit. This limitation of
liability does not apply to liabilities arising under the federal or state
securities laws and does not affect the availability of equitable remedies such
as injunctive relief or rescission.

Our amended and restated certificate of incorporation and bylaws provide
that we will indemnify our directors and officers, and may indemnify our other
employees and agents, to the fullest extent permitted by law. We believe that
indemnification under our certificate of incorporation and bylaws covers at
least negligence and gross negligence on the part of indemnified parties. Our
amended and restated bylaws also permit us to secure insurance on behalf of any
officer, director, employee or other agent for any liability arising out of his
or her actions in such capacity, regardless of whether the bylaws permit such
indemnification.

We intend to enter into agreements to indemnify our directors and officers,
in addition to the indemnification provided for in our amended and restated
bylaws. These agreements, among other things, will indemnify our directors and
officers for certain expenses (including attorneys' fees), judgments, fines and
settlement amounts incurred by any such person in any action or proceeding,
including any action by or in the right of DoubleTwist arising out of services
as one of our directors or officers or such person's services to any of our
subsidiaries or any other company or enterprise to which the person provides
services at our request. We believe that these provisions and agreements are
necessary to attract and retain qualified directors and officers.

There is no pending litigation or proceeding involving any of our directors
or officers in which indemnification is required or permitted, and we are not
aware of any threatened litigation or proceeding that may result in a claim for
such indemnification.

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<PAGE>
RELATED PARTY TRANSACTIONS

PURCHASES OF STOCK

Since January 1, 1999, we have issued shares of our preferred stock and
warrants to purchase our preferred stock to investors in private placements. We
sold 6,994,897 shares of our Series C preferred stock, at a per share price of
$2.80, over the period from December 1998 through February 1999. We sold
6,146,600 shares of our Series D preferred stock at a per share price of $6.02,
and warrants to purchase 41,526 shares of our Series D preferred stock, at a per
share exercise price of $6.02 in February 2000. We sold 856,441 shares of our
Series E preferred stock at a per share price of $8.964 in July 2000. The
following entities affiliated with directors or which are holders of more than
five percent of our voting securities purchased preferred stock and warrants to
purchase preferred stock in these financings in the amounts set forth below. We
believe that we sold these shares and warrants at their fair market value and
that the terms of these transactions were no less favorable than we could have
obtained from unaffiliated parties.

<TABLE>
<CAPTION>
PREFERRED STOCK
---------------------------------
PREFERRED STOCKHOLDER SERIES C SERIES D SERIES E
--------------------- --------- --------- ---------
<S> <C> <C> <C>
ENTITIES AFFILIATED WITH DIRECTORS
Institutional Venture Partners(1)(8)...................... 678,214 521,986 --
Mayfield Fund(2)(8)....................................... 678,213 499,085 --
Boston Millennia Partners(3)(8)........................... 1,464,285 421,649 --
MPM Capital LP(4)......................................... -- 1,661,129 --
A. Grant Heidrich, III, Trustee of Property Trust UDT 5 31
84(5)................................................... -- 22,899 --

OTHER 5% STOCKHOLDERS
Kleiner Perkins Caufield & Byers(6)(8).................... 452,141 212,831 --
MDS Capital Corp.(7)(8)................................... 1,785,713 340,423 --
T. Rowe Price Associates, Inc.(9)......................... -- 996,677 --
</TABLE>

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

(1) Includes shares held by Institutional Venture Partners VII, L.P.,
Institutional Venture Management VII, L.P., and IVP Founders Fund I. Samuel
D. Colella, a member of our board of directors, is a general partner of
Institutional Venture Partners.

(2) Includes shares held by Mayfield VIII, A California Limited Partnership,
Mayfield Associates Fund III, A California Limited Partnership and The Gene
Trust. A. Grant Heidrich, III, a member of our board of directors, is a
general partner or managing member of several venture funds associated with
the Mayfield Fund.

(3) Includes shares held by Boston Millennia Partners Limited Partnership and
Boston Millennia Associates I Partnership. Thomas A. Penn, a member of our
board of directors, is a partner at Boston Millennia Partners.

(4) Includes shares held by BB BioVentures, L.P., MPM BioVentures Parallel Fund,
L.P. and MPM Asset Management Investors 2000A, LLC. Ansbert S. Gadicke,
M.D., a member of our board of directors, is the founder and managing
partner of MPM Capital LP.

(5) A. Grant Heidrich, III, a member of our board of directors, is the trustee
of this trust.

(6) Includes shares held by Kleiner Perkins Caufield & Byers VIII, L.P., KPCB
VIII Founders Fund, L.P., KPCB Life Sciences Zaibatsu Fund II and KPCB Java
Fund, L.P.

(7) Includes shares held by MDS Life Sciences Technology Fund, L.P., MDS Life
Sciences Technology Fund USA, L.P., MDS Life Sciences Technology Barbados
Investment Trust, The Healthcare and Biotechnology Venture Fund.

56
<PAGE>
(8) Includes warrants issued in conjunction with a bridge loan to the Series D
preferred stock financing.

(9) Includes shares held by T. Rowe Price New Horizons Fund, Inc., T. Rowe Price
Health Sciences Fund, Inc. and Green Line Health Sciences Fund, Inc.

INVESTORS' RIGHTS AGREEMENT

The preferred stockholders described above have entered into an agreement
with us, pursuant to which these and other preferred stockholders will have
registration rights with respect to their shares of common stock following this
offering. See "Description of Capital Stock--Registration Rights." This
agreement also provides that some of our Series C preferred stockholders may
have the right to purchase shares in this offering. See "Description of Capital
Stock--Right of First Offer." Upon the completion of this offering, all shares
of our outstanding preferred stock will be automatically converted into an equal
number of shares of common stock.

INDEMNIFICATION AGREEMENTS

We intend to enter into indemnification agreements with our directors and
executive officers. See "Management--Indemnification."

ACCELERATION OF VESTING

In March 2000, we granted acceleration of vesting to a former officer in
connection with his separation. In addition, certain of our officers will be
entitled to accelerated vesting in connection with a change of control. See
"Management--Change of Control and Retention Plan."

INDEBTEDNESS OF MANAGEMENT

In April 2000, we received promissory notes due and payable on April 11,
2005 from our executive officers in connection with their exercise of stock
options in the aggregate amount of $2,381,250 with an interest rate of 6.71%.
These promissory notes represent $900,000 in principal amount from Mr. Couch,
$750,000 in principal amount from Mr. Williamson, $375,000 in principal amount
from Mr. Wolff, and $356,250 in principal amount from Mr. Sanders. In
February 2000, we received a promissory note in the principal amount of $112,500
with an interest rate of 6.497% from Fred E. Cohen, our director, in connection
with his purchase of common stock. No other executive officer or director or
immediate family members of any executive officer or director has been indebted
to us in an amount greater than $60,000 since the beginning of our last fiscal
year.

CONSULTING AGREEMENT

In February 2000, we entered into a consulting agreement with Dexster Smith,
our director, under which we agreed to pay Mr. Smith $10,000 per month for
consulting services for a term of one year.

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<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding the beneficial
ownership of our common stock as of August 15, 2000 by the following individuals
or groups:

- each person, or group of affiliated persons, whom we know beneficially
owns more than 5% of our outstanding stock;

- each of our Named Executive Officers;

- each of our directors; and

- all of our directors and executive officers as a group.

Unless otherwise indicated, the address for each stockholder on this table
is c/o DoubleTwist, Inc., 1999 Harrison Street, Suite 1100, Oakland, California
94612. Except as otherwise noted, and subject to applicable community property
laws, the persons named in this table have sole voting or investing power with
respect to all of the shares of common stock held by them.

This table lists applicable percentage ownership based on 19,026,785 shares
of common stock outstanding as of August 15, 2000, as adjusted to reflect the
conversion of all outstanding shares of preferred stock which will be effected
upon the closing of this offering and also lists applicable percentage ownership
based on shares of common stock outstanding after completion of this
offering. Options and warrants to purchase shares of our common stock that are
exercisable presently or within 60 days of August 15, 2000 are deemed to be
beneficially owned by the persons holding these options or warrants for the
purpose of computing percentage ownership of that person, but are not treated as
outstanding for the purpose of computing any other person's ownership
percentage.

<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
NUMBER OF OWNED SUBJECT TO
SHARES REPURCHASE AS OF PERCENT BENEFICIALLY OWNED
BENEFICIALLY AUGUST 15, --------------------------------
BENEFICIAL OWNER OWNED 2000(1) BEFORE OFFERING AFTER OFFERING
---------------- ------------ ---------------- --------------- --------------
<S> <C> <C> <C> <C>
Institutional Venture Partners(2)............. 2,154,703 -- 11.3%
3000 Sand Hill Road
Building 2, Suite 290
Menlo Park, CA 94025
Mayfield Fund(3).............................. 2,117,053 -- 11.1%
2800 Sand Hill Road
Menlo Park, CA 94025

MDS Capital Corp.(4).......................... 2,126,136 -- 11.2%
100 International Blvd.
Toronto, Ontario
Canada, M9W 6J6

Boston Millennia Partners(5).................. 1,885,934 -- 9.9%
30 Rowes Wharf, Suite 330
Boston, MA 02110
</TABLE>

58
<PAGE>

<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
NUMBER OF OWNED SUBJECT TO
SHARES REPURCHASE AS OF PERCENT BENEFICIALLY OWNED
BENEFICIALLY AUGUST 15, --------------------------------
BENEFICIAL OWNER OWNED 2000(1) BEFORE OFFERING AFTER OFFERING
---------------- ------------ ---------------- --------------- --------------
<S> <C> <C> <C> <C>
MPM Capital LP(6)............................. 1,661,129 -- 8.7%
One Cambridge Center, 9th Floor
Cambridge, MA 02142

Kleiner Perkins Caufield & Byers(7)........... 1,307,885 -- 6.9%
2750 Sand Hill Road
Menlo Park, CA 94025

T. Rowe Price Associates, Inc.(8)............. 996,677 -- 5.2%
100 East Pratt Street
Baltimore, MD 21202

John D. Couch(9).............................. 574,477 300,000 3.0%

Robert F. Williamson(10)...................... 320,311 250,000 1.7%

H. Ward Wolff(11)............................. 218,228 125,000 1.1%

Gregory C. Thayer(12)......................... 66,456 37,500 *

Fred E. Cohen(13)............................. 66,250 40,312 *

Samuel D. Colella(2).......................... 2,154,703 -- 11.3%

A. Grant Heidrich(14)......................... 2,139,952 -- 11.2%

Thomas A. Penn(5)............................. 1,885,934 -- 9.9%

Dexster L. Smith(15).......................... 461,134 7,500 2.4%

Ansbert Gadicke, M.D.(6)...................... 1,661,129 -- 8.7%

Directors and Executive Officers as a group
(11 persons)(16)............................ 9,691,021 879,062 50.9%
</TABLE>

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

* Indicates beneficial ownership of less than one percent.

(1) Represents shares received upon exercise of stock options which were
exercisable as of the grant date but which are subject to our right of
repurchase. Our right of repurchase expires as to 1/4 of the shares one
year after the effective date of the grant and 1/48 of the shares monthly
thereafter for the next 36 months.

(2) Includes shares held of record by Institutional Venture Partners VII, L.P.,
Institutional Venture Management VII, L.P. and Institutional Venture
Partners Founders Fund I. Also includes warrants to purchase an aggregate
of 94,089 shares of common stock. Mr. Colella, a member of our board of
directors, is a general partner of Institutional Venture Partners and
disclaims beneficial ownership of these shares, except to the extent of his
proportionate pecuniary interest.

(3) Includes shares held of record by Mayfield VIII, A California Limited
Partnership, Mayfield Associates Fund III, A California Limited Partnership
and The Gene Trust. Also includes warrants to purchase an aggregate of
94,089 shares of common stock.

(4) Includes shares held of record by MDS Life Sciences Technology Fund Limited
Partnership, MDS Life Sciences Technology Fund USA, L.P., MDS Life Sciences
Technology Barbados Investment Trust and The Health Care and Biotechnology
Venture Fund. Also includes a warrant to purchase 7,765 shares of common
stock.

(5) Includes shares held of record by Boston Millennia Partners Limited
Partnership and Boston Millennia Associates I Partnership. Also includes a
warrant to purchase 6,367 shares of common stock. Mr. Penn,

59
<PAGE>
a member of our board of directors, is a partner of Boston Millennia
Partners and disclaims beneficial ownership of these shares, except to the
extent of his proportionate pecuniary interest.

(6) Includes shares held of record by BB BioVentures, L.P., MPM BioVentures
Parallel Fund, L.P. and MPM Asset Management Investors 2000A, LLC.
Dr. Gadicke, a member of our board of directors, is the founder and
managing partner of MPM Capital and disclaims beneficial ownership of these
shares, except to the extent of his proportionate pecuniary interest.

(7) Includes shares held of record by Kleiner Perkins Caufield & Byers VIII,
L.P., KPCB VIII Founders Fund, L.P., KPCB Life Sciences Zaibatsu Fund II
and KPCB Java Fund, L.P. Also includes warrants to purchase an aggregate of
63,226 shares of common stock.

(8) Includes shares held of record by T. Rowe Price New Horizons Fund, Inc., T.
Rowe Price Health Sciences Fund, Inc. and Green Line Health Sciences
Fund, Inc.

(9) Includes 97,915 shares of common stock issuable upon exercise of stock
options.

(10) Includes 38,666 shares of common stock issuable upon exercise of stock
options.

(11) Includes 30,208 shares of common stock issuable upon exercise of stock
options.

(12) Includes 46,615 shares of common stock issuable upon exercise of stock
options.

(13) Includes 2,188 shares of common stock issuable upon exercise of stock
options.

(14) Includes shares held of record by Mayfield VIII, A California Limited
Partnership, Mayfield Associates Fund III, A California Limited
Partnership, The Gene Trust and A. Grant Heidrich, III, Trustee of
Property Trust UDT 5 31 84. Also includes warrants to purchase an
aggregate of 94,089 shares of common stock. Mr. Heidrich, a member of our
board of directors, is a general partner or managing member of several
venture funds associated with the Mayfield Fund and disclaims beneficial
ownership of the shares held by Mayfield VIII, A California Limited
Partnership, Mayfield Associates Fund III, A California Limited
Partnership and The Gene Trust, except to the extent of his proportionate
pecuniary interest.

(15) Includes 7,500 shares of common stock issuable upon exercise of stock
options.

(16) Includes an aggregate of 512,326 shares of common stock issuable upon the
exercise of stock options and warrants.

60
<PAGE>
DESCRIPTION OF CAPITAL STOCK

GENERAL

Upon the completion of this offering, we will amend our certificate of
incorporation to change our authorized capital stock to 100,000,000 shares of
common stock, $0.01 par value per share, and 5,000,000 shares of preferred
stock, par value $0.01 per share. The following description of our capital stock
is not complete. We encourage you to refer to our amended and restated
certificate of incorporation and bylaws, which are included as exhibits to the
registration statement of which this prospectus forms a part, and applicable
provisions of Delaware law for a more complete description.

COMMON STOCK

As of August 15, 2000, there were 19,026,785 shares of common stock
outstanding held of record by approximately 170 stockholders. There will be
shares of common stock outstanding, assuming no exercise of the
underwriters' over-allotment option and no exercise of outstanding options,
after giving effect to the sale of common stock in the offering and the
conversion of our outstanding preferred stock.

Each holder of our common stock is entitled to one vote for each share held
of record on all matters to be voted upon by the stockholders.

Subject to preferences to which holders of preferred stock issued after the
sale of the common stock offered hereby may be entitled, holders of common stock
are entitled to receive ratably such dividends, if any, as may be declared from
time to time by our board of directors out of funds legally available therefor.
In the event of our liquidation, dissolution or winding up, holders of common
stock will be entitled to share in our assets remaining after the payment of
liabilities and the satisfaction of any liquidation preference granted to the
holders of any outstanding shares of preferred stock.

Holders of common stock have no preemptive or conversion rights or other
subscription rights, and there are no redemption or sinking fund provisions
applicable to the common stock. All outstanding shares of common stock are, and
the shares of common stock offered by us in this offering, when issued and paid
for will be, fully paid and nonassessable. The rights, preferences and
privileges of the holders of common stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of preferred
stock, which our board of directors may designate in the future.

PREFERRED STOCK

Until the completion of this offering, our certificate of incorporation
provides for five series of preferred stock. Upon the closing of this offering,
each share of our outstanding preferred stock will automatically convert into
one quarter of a share of common stock. After the closing, our board of
directors will be authorized, subject to any limitations prescribed by law,
without stockholder approval, from time to time to issue up to an aggregate of
5,000,000 shares of preferred stock, in one or more series, each of such series
to have such rights and preferences, including voting rights, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be determined by the board of directors. The rights of the holders of common
stock will be subject to, and may be adversely affected by, the rights of
holders of any preferred stock that may be issued in the future. Issuance of
preferred stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from attempting to acquire, a majority of our outstanding voting
stock. Our board of directors has no present plans to issue any shares of
preferred stock.

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<PAGE>
WARRANTS

As of August 15, 2000, warrants were outstanding to purchase an aggregate of
501,758 shares of common stock: (i) 232,141 warrants to purchase common stock
have an exercise price of $2.00 per share and expire in December 2002;
(ii) 32,117 and 225,000 warrants to purchase common stock have an exercise price
of $0.80 per share and expire in October 2007 and December 2003; and
(iii) 12,500 warrants to purchase common stock have an exercise price of $6.442
per share and expire in August 2003. In addition, as of August 15, 2000,
warrants were outstanding to purchase an aggregate of 67,819 shares of
convertible preferred stock. Warrants to purchase an aggregate of 10,090 shares
of Series B preferred stock were issued in April 1997 to an equipment lessor.
These warrants have an exercise price of $6.442 per share and expire in
April 2004 or 3 years after the effective date of our initial public offering,
whichever is later. Warrants to purchase an aggregate of 16,203 shares of
Series C preferred stock were issued in November 1998 and December 1998 to an
equipment lessor and commercial lender. These warrants have an exercise price of
$2.80 per share and expire in November 2003 and December 2005, or 3 years after
the effective date of our initial public offering, whichever is later. Warrants
to purchase an aggregate of 41,526 shares of Series D preferred stock were
issued to various investors in a February 2000 private placement. These warrants
have an exercise price of $6.02 per share and expire in January 2003. The
exercise prices of all of the warrants listed are subject to adjustment for
stock splits, combinations and dividends. This description of the warrants
reflects our four-to-one reverse stock split to be effected prior to the
completion of this offering.

REGISTRATION RIGHTS

After this offering, holders of 15,695,206 shares of common stock and 10,090
shares of common stock issuable upon exercise of outstanding warrants or their
transferees are entitled to certain rights with respect to the registration of
such shares under the Securities Act. These rights are provided under the terms
of an agreement between us and the holders of these securities. Beginning
180 days following the date of this prospectus, holders of at least 20% of these
securities may require, on no more than two occasions, that we use our best
efforts to register these securities for public resale. Additionally, upon the
request of any holders of a lesser number of shares, we are obligated to
register these holders' shares if the outstanding registrable securities they
hold have an anticipated public offering price of at least $15,000,000. Also,
holders of these securities may require, no more than twice during any
twelve-month period, that we register their shares for public resale on
Form S-3 or similar short-form registration if the value of the securities to be
registered is at least $1,000,000. Furthermore, in the event we elect to
register any of our shares of common stock for purposes of effecting any public
offering, the holders of registrable securities are entitled to include their
shares of common stock in that registration, but we may reduce the number of
shares proposed to be registered in view of market conditions. These piggy-back
registration rights are not applicable to this offering. We will bear all
expenses in connection with any registration, other than underwriting discounts
and commissions. All registration rights will terminate five years following the
consummation of this offering.

RIGHT OF FIRST OFFER

We are party to an agreement with our preferred stockholders which provides
that the holders of our Series C preferred stock may have a right to purchase up
to an aggregate of $10.0 million of our shares in this offering.

EFFECT OF CERTAIN PROVISIONS OF OUR AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION AND BYLAWS AND THE DELAWARE ANTI-TAKEOVER STATUTE

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS. Certain
provisions of our amended and restated certificate of incorporation and bylaws
that become effective upon completion of this offering may have the effect of
making it more difficult for a third party to acquire, or of discouraging

62
<PAGE>
a third party from attempting to acquire, control of us. Such provisions could
limit the price that certain investors might be willing to pay in the future for
shares of our common stock. Certain of these provisions allow us to issue
preferred stock without any vote or further action by the stockholders, require
advance notification of stockholder proposals and nominations of candidates for
election as directors, eliminate the ability of our stockholders to act by
written consent and do not provide for cumulative voting in the election of
directors. Our bylaws provide for the division of the board of directors into
three classes, with each class serving three-year terms. In addition, our bylaws
provide that special meetings of the stockholders may be called only by the
board of directors and that the authorized number of directors may be changed
only by resolution of the board of directors. These provisions may make it more
difficult for stockholders to take certain corporate actions and could have the
effect of delaying or preventing a change in control of us.

DELAWARE ANTI-TAKEOVER STATUTE. We are subject to Section 203 of the
Delaware General Corporation Law. This law prohibits a Delaware corporation from
engaging in any "business combination" with any "interested stockholder," unless
any of the following conditions are met. The law will not apply if:

- prior to the date of the transaction, our board of directors approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder;

- upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of our voting stock outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned by our directors and officers and by
employee stock plans in which employee participants do not have the right
to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer; or

- on or subsequent to the date of the transaction, the business combination
is approved by the board of directors and authorized at an annual or
special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which
is not owned by the interested stockholder.

Section 203 defines "business combination" to include:

- any merger or consolidation involving us and the interested stockholder;

- any sale, transfer, pledge or other disposition of 10% or more of our
assets involving the interested stockholder;

- subject to certain exceptions, any transaction that results in the
issuance or transfer by us of any of our stock to the interested
stockholder; and

- the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.

In general, Section 203 defines an "interested stockholder" as an entity or
person beneficially owning 15% or more of our outstanding voting stock and any
entity or person affiliated with or controlling or controlled by such entity or
person.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is Harris Trust
Company of California.

LISTING

We intend to apply to have our common stock approved for quotation on the
Nasdaq National Market under the symbol "DBLT."

63
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, we will have shares of common
stock outstanding assuming no exercise of the over-allotment option and no
exercise of outstanding options and warrants. Of these shares, the
shares sold in this offering will be freely tradable without restriction under
the Securities Act, unless purchased by our "affiliates," as that term is
defined in Rule 144 under the Securities Act. The remaining 19,026,785 shares of
common stock held by existing stockholders were issued and sold by us in
reliance on exemptions from the registration requirements of the Securities Act
and are restricted securities. All of these remaining shares will be subject to
180-day lock-up agreements and may not be sold in the public market prior to the
expiration of the lock-up agreements without the prior written consent of Lehman
Brothers Inc. Upon expiration of the lock-up agreements, 3,725,857 shares will
become eligible for sale pursuant to Rule 144(k), 12,912,062 shares will become
eligible for sale under Rule 144 and 1,532,425 shares will become eligible for
sale under Rule 701.

Taking into account the lock-up agreements, the number of shares that will
be available for sale in the public market under the provisions of Rules 144,
144(k) and 701 will be as follows:

<TABLE>
<CAPTION>
SHARES
DAYS AFTER DATE OF THIS PROSPECTUS ELIGIBLE FOR SALE
---------------------------------- -----------------
<S> <C> <C>
180 days........................ 18,170,344

Various dates thereafter........ 856,441
</TABLE>

We intend to file a registration statement on Form S-8 under the Securities
Act after the effective date of this offering to register the shares of our
common stock that are subject to outstanding options or reserved for issuance
under our 1996 Equity Incentive Plan, 2000 Stock Plan and 2000 Employee Stock
Purchase Plan. Shares registered under the registration statement on Form S-8
will generally be available for sale in the open market immediately after the
180-day lock-up agreements expire.

RULE 144

In general, under Rule 144, as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned shares for at least one
year is entitled to sell within any three-month period a number of shares that
does not exceed the greater of:

- one percent (1%) of the then outstanding shares of our common stock
(approximately shares immediately after this offering); or

- the average weekly trading volume during the four calendar weeks preceding
the filing of a Form 144 with respect to the sale.

Affiliates of DoubleTwist must always sell pursuant to Rule 144, even after
the applicable holding periods have been satisfied. Sales under Rule 144 are
also subject to requirements with respect to manner of sale, notice and
availability of current public information about us.

RULE 144(K)

Under Rule 144(k), a person (or persons whose shares are aggregated) who is
not deemed to have been our affiliate at any time during the 90 days immediately
preceding the sale and who has beneficially owned his or her shares for at least
two years is entitled to sell such shares without regard to the volume
limitation, manner of sale, notice and public information requirements of
Rule 144.

64
<PAGE>
RULE 701

Rule 701, as currently in effect, permits our employees, officers, directors
or consultants who purchased shares pursuant to a written compensatory plan or
contract to resell such shares in reliance upon Rule 144, but without compliance
with certain restrictions. Rule 701 provides that affiliates may sell their
Rule 701 shares 90 days after the effective date of this offering without
complying with the holding period and notice requirements of Rule 144 and that
non-affiliates may sell their Rule 701 shares 90 days after the effective date
of this offering without complying with the holding period, public information,
volume limitation or notice provisions of Rule 144. However, holders of shares
that are otherwise saleable under Rule 701 are subject to the 180-day lock-up
agreements described above.

65
<PAGE>
UNDERWRITING

Under the underwriting agreement, which is filed as an exhibit to the
registration statement relating to this prospectus, each of the underwriters for
whom Lehman Brothers Inc., Dain Rauscher Incorporated, Thomas Weisel Partners
LLC and Fidelity Capital Markets, a division of National Financial Services
Corporation, are acting as representatives, has agreed to purchase from us the
respective number of shares of common stock set forth opposite its name below:

<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
------------ ----------------
<S> <C>
Lehman Brothers Inc.........................................
Dain Rauscher Incorporated..................................
Thomas Weisel Partners LLC..................................
Fidelity Capital Markets, a division of National Financial
Services
Corporation...............................................
------
Total.....................................................
======
</TABLE>

This is a firm commitment underwriting. This means that the underwriters
have agreed to purchase all of the shares offered by this prospectus, other than
those covered by the over-allotment option described below, if any are
purchased. Under the underwriting agreement, if an underwriter defaults in its
commitment to purchase shares, the commitments of non-defaulting underwriters
may be increased or the underwriting agreement may be terminated, depending on
the circumstances.

The underwriting agreement provides that the underwriters' obligations to
purchase shares of common stock depend on the satisfaction of the conditions
contained in the underwriting agreement. The conditions contained in the
underwriting agreement include the requirement that:

- the representations and warranties made by us to the underwriters are
true;

- that there is no material change in the financial markets; and

- we deliver to the underwriters customary closing documents.

The representatives have advised us that the underwriters propose to offer
the shares directly to the public at the public offering price that appears on
the cover page of this prospectus. In addition, the representatives may offer
some of the shares to certain securities dealers at such price less a selling
concession of $ per share. The underwriters may also allow to dealers, and
such dealers may reallow, a selling concession not in excess of $ per share
to certain other dealers. After completion of this offering, the representatives
may change the offering price and other selling terms at various times.

We have granted the underwriters an over-allotment option. This option,
which is exercisable for up to thirty days after the date of this prospectus,
permits the underwriters to purchase a maximum of additional shares of
our common stock to cover over-allotments. If the underwriters exercise all or
part of this option, they will purchase shares covered by the option at the
public offering price that appears on the cover page of this prospectus, less
the underwriting discount. If this option is exercised in full, the underwriters
will purchase shares from us, the total price to the public will be $ , and
the total proceeds to us will be $ . The underwriters have severally
agreed that, to the extent the over-allotment option is exercised, each of the
underwriters will purchase a number of additional shares proportionate to its
initial amount reflected in the above table.

66
<PAGE>
The following table provides information regarding the amount of the
discount to be paid to the underwriters by us:

<TABLE>
<CAPTION>
PAID BY US
----------------------------------
NO EXERCISE OF FULL EXERCISE OF
OVER-ALLOTMENT OVER-ALLOTMENT
OPTION OPTION
-------------- -----------------
<S> <C> <C>
Per Share........................................ $ $
Total............................................ $ $
</TABLE>

We estimate that the total expenses of this offering, excluding the
underwriters discount, will be approximately $ .

We and each of our directors and executive officers, and substantially all
of the other holders of our common stock and securities convertible into or
exercisable or exchangeable for common stock issued prior to this offering, have
agreed, pursuant to certain "lock-up" agreements with the underwriters, that we
and they will not offer, sell, contract to sell, pledge, grant any option to
sell, or otherwise dispose of, directly or indirectly, any shares of common
stock or securities convertible into or exercisable or exchangeable for common
stock for a period of 180 days after the date of this prospectus without the
prior written consent of Lehman Brothers Inc. Lehman Brothers Inc., in its sole
discretion, may release the shares subject to the lock-up agreements in whole or
in part at any time with or without notice. However, Lehman Brothers Inc. has no
current plan to do so.

At our request, the underwriters have reserved for sale at the initial
public offering price up to shares of our common stock for our
officers, directors, employees, customers, collaborative partners, friends and
related persons. The number of shares of our common stock available for sale to
the general public will be reduced to the extent these persons purchase these
reserved shares. The underwriters will offer any shares not so purchased by
these persons to the general public on the same basis as the other shares in
this initial public offering.

Prior to this offering, there has been no public market for our common
stock. Consequently, the offering price for our common stock will be determined
by negotiations between us and the underwriters and will not necessarily be
related to our asset value, net worth or other established criteria of value.
The factors to be considered in these negotiations, in addition to prevailing
market conditions, will include the history of and prospects for the industry in
which we compete, an assessment of our management, our prospects, our capital
structure and certain other factors as are deemed relevant.

The underwriters may purchase and sell shares of common stock in the open
market. These transactions may include short sales, stabilizing transactions and
purchases to cover short positions created by short sales. Short sales involve
the sale by the underwriters of a greater number of shares than they are
required to purchase in the offering. "Covered" short sales are sales made in an
amount not greater than the underwriters' option to purchase additional shares
from the issuer in the offering. The underwriters may close out any covered
short position by either exercising their option to purchase shares or
purchasing shares in the open market. In determining the source of shares to
close out the covered short position, the underwriters will consider, among
other things, the price of shares available for purchase to the open market as
compared to the price at which they may purchase shares through the
over-allotment option. "Naked" short sales are any sales in excess of such
option. The underwriters must close out any naked short position by purchasing
shares in the open market. A naked short position is more likely to be created
if the underwriters are concerned that there may be downward pressure on the
price of the common stock in the open market after pricing that could adversely
affect investors who purchase in the offering. Stabilizing transactions consist
of various bids for or purchases of common stock made by the underwriters in the
open market prior to the completion of the offering.

67
<PAGE>
The underwriters may also impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such underwriter in stabilizing or short covering
transactions.

Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the common stock. In addition, neither
we nor any of the underwriters makes any representation that the representatives
will engage in these transactions or that these transactions, once commenced,
will not be discontinued without notice.

Similar to other purchase transactions, the underwriters' purchases to cover
the syndicate short sales may have the effect of raising or maintaining the
market price of the common stock or preventing or retarding a decline in the
market price of the common stock. As a result, the price of the common stock may
be higher than the price that might otherwise exist in the open market.

We have agreed to indemnify the underwriters against liabilities, including
liabilities under the Securities Act, and to contribute to payments that the
underwriters may be required to make for these liabilities.

The underwriters do not expect sales to discretionary accounts to exceed
five percent of the total number of shares offered.

We intend to apply to have our stock approved for quotation on the Nasdaq
National Market under the symbol "DBLT."

Any offers in Canada will be made only under an exemption from the
requirements to file a prospectus in the relevant province of Canada in which
the sale is made.

Purchasers of the shares of common stock offered in this prospectus may be
required to pay stamp taxes and other charges under the laws and practices of
the country of purchase, in addition to the offering price listed on the cover
page of this prospectus.

Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker/dealer in December 1998. Since
December 1998, Thomas Weisel Partners has acted as a lead or co-manager on
numerous public offerings of equity securities. Thomas Weisel Partners does not
have any material relationship with us or any of our officers, directors or
other controlling persons, except with respect to its contractual relationship
with us under the underwriting agreement entered into in connection with this
offering.

Fidelity Capital Markets, a division of National Financial Services
Corporation, is acting as an underwriter of this offering and will be
facilitating electronic distribution through the Internet.

68
<PAGE>
LEGAL MATTERS

The validity of the common stock being offered by DoubleTwist will be passed
upon for DoubleTwist by Heller Ehrman White & McAuliffe LLP, La Jolla,
California, which has acted as our counsel in connection with this offering.
Patricia M. Thayer, a partner in the law firm of Heller Ehrman White & McAuliffe
LLP, is the wife of Gregory C. Thayer, the general counsel, vice president of
corporate development and secretary of DoubleTwist. Certain legal matters in
connection with this offering will be passed upon for the underwriters by
Shearman & Sterling, Menlo Park, California.

EXPERTS

The financial statements as of December 31, 1998 and 1999 and for each of
the three years in the period ended December 31, 1999, included in this
prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the common stock
offered hereby. This prospectus does not contain all of the information set
forth in the registration statement and the exhibits and schedules thereto. For
more information about us and the common stock we are offering, you should
review the registration statement and the exhibits and schedules filed with the
registration statement. Statements contained in this prospectus as to the
contents of any contract or any other document referred to are not necessarily
complete. In each instance, reference is made to the copy of such contract or
document filed as an exhibit to the registration statement, and each such
statement is qualified in all respects by such reference. Copies of the
registration statement, including exhibits and schedules thereto, may be
inspected without charge at the Securities and Exchange Commission's principal
office in Washington, D.C., or obtained at prescribed rates from the Public
Reference Section of the Securities and Exchange Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Securities and Exchange Commission maintains a
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Securities
and Exchange Commission. The address of the site is http://www.sec.gov.

Upon completion of this offering, we will be subject to the information
reporting requirements of the Securities Exchange Act of 1934, as amended, and
we will file reports, proxy statements and other information with the Securities
and Exchange Commission.

We intend to furnish our stockholders with annual reports containing
financial statements audited by our independent public accountants and quarterly
reports for the first three fiscal quarters of each fiscal year containing
unaudited financial information. Our telephone number is (510) 628-0100.

69
<PAGE>
DOUBLETWIST, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Report of Independent Accountants........................... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statements of Changes in Stockholders'
Deficit................................................... F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
DoubleTwist, Inc.

The stock split described in Note 9 to the consolidated financial statements
has not been consummated at the date of our opinion. When it has been
consummated, we will be in a position to furnish the following report:

"In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of stockholders' deficit and
of cash flows present fairly, in all material respects, the financial
position of DoubleTwist, Inc. and its subsidiary at December 31, 1998 and
1999 and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with auditing standards generally accepted in the United States, which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for the opinion expressed above."

San Jose, California
March 24, 2000, except as to Note 9,
which is as of September , 2000

F-2
<PAGE>
DOUBLETWIST, INC.
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
DECEMBER 31, EQUITY AT
----------------------------- JUNE 30, JUNE 30,
1998 1999 2000 2000
------------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................. $ 10,087,007 $ 1,089,315 $ 14,689,612
Marketable securities................................. -- -- 7,123,840
Accounts receivable................................... 1,596,499 776,756 2,200,337
Prepaid expenses and other current assets............. 111,262 440,226 1,080,739
------------- ------------- -------------
Total current assets.............................. 11,794,768 2,306,297 25,094,528

Restricted cash......................................... -- -- 900,000
Property and equipment, net............................. 1,898,799 4,198,356 7,266,391
Other assets............................................ 91,994 756,298 641,200
Long-term notes receivable.............................. -- -- 4,500,000
------------- ------------- -------------
Total assets...................................... $ 13,785,561 $ 7,260,951 $ 38,402,119
============= ============= =============

LIABILITIES, REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable, current portion........................ $ 1,922,453 $ 333,333 $ 859,469
Capital lease obligations, current portion............ 590,913 671,128 755,768
Accounts payable...................................... 300,034 2,070,332 1,534,716
Accrued and other current liabilities................. 1,065,182 1,433,220 1,580,316
Deferred revenue...................................... 467,603 418,216 2,070,842
------------- ------------- -------------
Total current liabilities......................... 4,346,185 4,926,229 6,801,111

Notes payable, net of current portion................... -- 583,334 3,985,194
Capital lease obligations, net of current portion....... 1,254,699 741,032 360,398
------------- ------------- -------------
Total liabilities................................. 5,600,884 6,250,595 11,146,703
------------- ------------- -------------

Commitments and contingency (Note 6)

Redeemable convertible preferred stock: $0.01 par value;
37,352,886, 39,552,886 and 66,197,329 shares
authorized at December 31, 1998 and 1999 and June 30,
2000 (unaudited), respectively; 8,273,000, 9,823,000
and 15,970,000 shares issued and outstanding at
December 31, 1998 and 1999 and June 30, 2000
(unaudited), respectively; none issued and outstanding
pro forma (unaudited) (aggregate liquidation
preference $57,361,921 at December 31, 1999 and
$94,364,530 at June 30, 2000 (unaudited))............. 24,942,369 28,916,836 66,029,812 $ --
------------- ------------- ------------- -------------

Stockholders' deficit:
Common stock: $0.01 par value; Authorized: 100,000,000
shares; Issued and outstanding: 695,000, 754,000 and
2,096,000 shares issued and outstanding at December
31, 1998 and 1999 and June 30, 2000 (unaudited),
respectively; 18,066,000 shares outstanding pro
forma (unaudited)................................... 6,952 7,535 20,963 180,660
Additional paid-in capital............................ 964,357 6,547,991 28,682,279 94,552,394
Deferred stock-based compensation..................... -- (5,247,466) (19,366,286) (19,366,286)
Notes receivable from stockholders.................... (34,500) (39,500) (2,515,250) (2,515,250)
Accumulated deficit................................... (17,694,501) (29,175,040) (45,596,102) (45,596,102)
------------- ------------- ------------- -------------

Total stockholders' deficit....................... (16,757,692) (27,906,480) (38,774,396) $ 27,255,416
------------- ------------- ------------- =============

Total liabilities, redeemable convertible
preferred stock and stockholders' deficit..... $ 13,785,561 $ 7,260,951 $ 38,402,119
============= ============= =============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE>
DOUBLETWIST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------------- ----------------------------
1997 1998 1999 1999 2000
----------- ----------- ------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
License fees................................ $ 506,240 $ 2,779,195 $ 2,289,372 $ 1,103,456 $ 2,315,459
Subscriptions............................... -- -- -- -- 151,210
Services and other.......................... 769,498 1,472,826 1,294,532 766,657 339,795
----------- ----------- ------------ ------------ -------------
Total revenues.......................... 1,275,738 4,252,021 3,583,904 1,870,113 2,806,464
----------- ----------- ------------ ------------ -------------

Cost of revenues:
License fees................................ 1,886 208,585 109,653 28,060 37,428
Subscriptions............................... -- -- -- -- 1,023,728
Services and other.......................... 367,732 1,253,995 943,312 583,875 238,569
----------- ----------- ------------ ------------ -------------
Total cost of revenues.................. 369,618 1,462,580 1,052,965 611,935 1,299,725
----------- ----------- ------------ ------------ -------------
Gross profit.................................. 906,120 2,789,441 2,530,939 1,258,178 1,506,739
----------- ----------- ------------ ------------ -------------

Operating expenses:
Product development......................... 4,998,944 5,282,566 6,932,020 2,596,723 7,060,713
Sales and marketing......................... 2,153,375 4,036,945 4,861,531 1,774,844 6,699,495
General and administrative.................. 1,993,381 1,723,221 2,309,085 1,036,006 2,117,358
----------- ----------- ------------ ------------ -------------
Total operating expenses................ 9,145,700 11,042,732 14,102,636 5,407,573 15,877,566
----------- ----------- ------------ ------------ -------------

Operating loss................................ (8,239,580) (8,253,291) (11,571,697) (4,149,395) (14,370,827)

Interest income............................... 157,484 39,572 457,919 302,837 709,440

Interest expense.............................. (33,364) (488,033) (366,761) (210,177) (2,759,675)
----------- ----------- ------------ ------------ -------------

Net loss...................................... (8,115,460) (8,701,752) (11,480,539) (4,056,735) (16,421,062)
----------- ----------- ------------ ------------ -------------

Deemed dividend on preferred stock............ -- -- -- -- (21,148,633)
----------- ----------- ------------ ------------ -------------

Net loss available to common stockholders..... $(8,115,460) $(8,701,752) $(11,480,539) $ (4,056,735) $ (37,569,695)
=========== =========== ============ ============ =============

Net loss per share available to common
stockholders, basic and diluted............. $ (37.40) $ (13.49) $ (16.59) $ (5.93) $ (22.73)
=========== =========== ============ ============ =============

Shares used in computing net loss per
share available to common stockholders,
basic and diluted........................... 217,000 645,000 692,000 684,000 1,653,000

Pro forma net loss per share available to
common stockholders, basic and diluted
(unaudited)................................. $ (1.11) $ (2.35)
============ =============

Shares used in computing pro forma net loss
per share available to common stockholders,
basic and diluted (unaudited)............... 10,332,000 15,967,000
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE>
DOUBLETWIST, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
NOTES
COMMON STOCK ADDITIONAL DEFERRED RECEIVABLE TOTAL
---------------------- PAID-IN STOCK-BASED FROM ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL COMPENSATION STOCKHOLDERS DEFICIT DEFICIT
----------- -------- ----------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31,
1996....................... 1,213,000 $ 12,125 $ 132,875 $ -- $ -- $ (877,289) $ (732,289)
Issuance of common stock..... 6,000 63 19,937 -- -- -- 20,000
Conversion of common stock to
Series A1 redeemable
convertible
preferred stock............ (1,219,000) (12,188) (152,812) -- -- -- (165,000)
Issuance of warrants for
licenses................... -- -- 22,870 -- -- -- 22,870
Issuance of common stock
pursuant
to exercise of stock
options.................... 30,000 299 23,601 -- -- -- 23,900
Issuance of common stock..... 578,000 5,783 456,831 -- -- -- 462,614
Issuance of restricted common
stock
pursuant to exercise of
stock
options for notes
receivable................. 43,000 431 34,069 -- (34,500) -- --
Net loss..................... -- -- -- -- -- (8,115,460) (8,115,460)
----------- -------- ----------- ------------ ----------- ------------ ------------
Balances at December 31,
1997....................... 651,000 6,513 537,371 -- (34,500) (8,992,749) (8,483,365)
Issuance of common stock
pursuant
to exercise of stock
options.................... 44,000 439 34,727 -- -- -- 35,166
Issuance of warrants in
conjunction
with issuance of Series C
redeemable convertible
preferred
stock and various
financings................. -- -- 392,259 -- -- -- 392,259
Net loss..................... -- -- -- -- -- (8,701,752) (8,701,752)
----------- -------- ----------- ------------ ----------- ------------ ------------
Balances at December 31,
1998....................... 695,000 6,952 964,357 -- (34,500) (17,694,501) (16,757,692)
Issuance of common stock
pursuant
to exercise of stock
options.................... 52,000 520 41,593 -- -- -- 42,113
Issuance of restricted common
stock
pursuant to exercise of
stock
options for note
receivable................. 7,000 63 4,937 -- (5,000) -- --
Deferred stock-based
compensation............... -- -- 5,537,104 (5,537,104) -- -- --
Amortization of deferred
stock-based compensation... -- -- -- 289,638 -- -- 289,638
Net loss..................... -- -- -- -- -- (11,480,539) (11,480,539)
----------- -------- ----------- ------------ ----------- ------------ ------------
Balances at December 31,
1999....................... 754,000 7,535 6,547,991 (5,247,466) (39,500) (29,175,040) (27,906,480)
Issuance of common stock
pursuant
to exercise of stock
options.................... 511,000 5,115 517,509 -- -- -- 522,624
Issuance of common stock
pursuant
to exercise of stock
options for
notes receivable........... 831,000 8,313 2,485,437 -- (2,493,750) -- --
Repayment of notes receivable
from
stockholders............... -- -- -- -- 18,000 -- 18,000
Deferred stock-based
compensation............... -- -- 16,266,843 (16,266,843) -- -- --
Amortization of deferred
stock-based compensation... -- -- -- 2,148,023 -- -- 2,148,023
Charge for accelerated
vesting of
employee stock options..... -- -- 382,500 -- -- -- 382,500
Issuance of convertible
subordinated promissory
notes with beneficial
conversion feature......... -- -- 2,481,999 -- -- -- 2,481,999
Issuance of preferred stock
with
beneficial conversion
feature.................... -- -- 21,148,633 -- -- -- 21,148,633
Deemed dividend on preferred
stock...................... -- -- (21,148,633) -- -- -- (21,148,633)
Net loss..................... -- -- -- -- -- (16,421,062) (16,421,062)
----------- -------- ----------- ------------ ----------- ------------ ------------
Balances at June 30, 2000
(unaudited)................ 2,096,000 $ 20,963 $28,682,279 $(19,366,286) $(2,515,250) $(45,596,102) $(38,774,396)
=========== ======== =========== ============ =========== ============ ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE>
DOUBLETWIST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------------- -----------------------------
1997 1998 1999 1999 2000
----------- ----------- ------------ ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................. $(8,115,460) $(8,701,752) $(11,480,539) $ (4,056,735) $ (16,421,062)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization.................... 414,521 871,782 1,322,096 542,210 1,285,956
Charges related to the issuance of warrants and
redeemable convertible preferred
stock.......................................... 32,870 51,734 -- -- --
Amortization of debt discount.................... -- 256,508 77,547 38,773 145,824
Conversion of accrued interest to
redeemable convertible preferred stock......... -- 64,000 -- -- 13,973
Amortization of deferred stock-based compensation
and accelerated vesting of stock options....... -- -- 289,638 10,397 2,530,523
Noncash interest expense on convertible notes.... -- -- -- -- 2,481,999
Changes in current assets and liabilities:
Accounts receivable............................ (262,285) (1,251,998) 819,743 1,210,973 (1,423,581)
Prepaid expenses and other current assets...... (69,206) (40,556) (328,964) (173,773) (640,513)
Other assets................................... (65,176) 11,443 (664,304) 50,000 115,098
Accounts payable............................... 229,929 (117,528) 1,770,298 143,567 (535,616)
Accrued and other current liabilities.......... (24,193) 771,232 368,038 (333,842) 147,096
Deferred revenue............................... 66,022 321,399 (49,387) (66,997) 1,652,626
Other long-term liabilities.................... 3,000 (3,000) -- -- --
----------- ----------- ------------ ------------- -------------
Net cash used in operating activities........ (7,789,978) (7,766,736) (7,875,834) (2,635,427) (10,647,677)
----------- ----------- ------------ ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment................... (530,122) (206,334) (3,355,835) (524,320) (4,353,991)
Purchase of marketable securities.................... -- -- -- -- (7,123,840)
Issuance of notes receivable......................... -- -- -- -- (4,500,000)
Increase in restricted cash.......................... -- -- -- -- (900,000)
----------- ----------- ------------ ------------- -------------
Net cash used in investing activities........ (530,122) (206,334) (3,355,835) (524,320) (16,877,831)
----------- ----------- ------------ ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of redeemable convertible
preferred
stock and warrants, net............................ 9,940,721 10,413,868 3,974,467 3,974,467 31,953,179
Proceeds from issuance of common stock, net.......... 506,514 35,166 42,113 11,669 522,624
Proceeds from issuance of notes payable.............. -- 6,000,000 1,000,000 567,910 9,107,233
Proceeds from repayment of notes receivable from
stockholders....................................... -- -- -- -- 18,000
Principal payments on notes payable.................. (229,935) -- (2,083,333) (1,000,000) (179,237)
Principal payments on capital leases................. (116,940) (375,030) (699,270) (294,402) (295,994)
----------- ----------- ------------ ------------- -------------
Net cash provided by financing activities.... 10,100,360 16,074,004 2,233,977 3,259,644 41,125,805
----------- ----------- ------------ ------------- -------------
Net increase (decrease) in cash and cash equivalents... 1,780,260 8,100,934 (8,997,692) 99,897 13,600,297
Cash and cash equivalents, beginning of period......... 205,813 1,986,073 10,087,007 10,087,007 1,089,315
----------- ----------- ------------ ------------- -------------
Cash and cash equivalents, end of period............... $ 1,986,073 $10,087,007 $ 1,089,315 $ 10,186,904 $ 14,689,612
=========== =========== ============ ============= =============
SUPPLEMENTAL CASH FLOWS INFORMATION
Cash paid for interest............................... $ 33,363 $ 231,525 $ 252,065 $ 131,957 $ 117,878
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Acquisition of property and equipment under capital
leases............................................. $ 1,457,130 $ 866,464 $ 265,818 $ 265,818 $ --
Conversion of common stock to Series A1 redeemable
convertible preferred stock........................ 165,000 -- -- -- --
Issuance of restricted common stock for notes
receivable
from stockholders.................................. 34,500 -- 5,000 5,000 2,493,750
Conversion of notes payable to Series C redeemable
convertible preferred stock........................ -- 4,000,000 -- -- --
Conversion of notes payable to Series D redeemable
convertible preferred stock........................ -- -- -- -- 5,000,000
Issuance of warrants in conjunction with issuance of
Series C
redeemable convertible preferred stock and various
financing.......................................... -- 430,160 -- -- --
Issuance of Series C redeemable convertible preferred
stock
to placement agent for services rendered........... -- -- 340,000 340,000 --
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE>
DOUBLETWIST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. FORMATION AND BUSINESS OF THE COMPANY:

DoubleTwist, Inc. (the "Company"), formerly Pangea Systems, Inc., was formed
in 1991 and incorporated in the State of California in 1993. The Company is a
leading provider of genomic information and bioinformatics analysis
technologies.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

UNAUDITED INTERIM RESULTS

The accompanying interim consolidated financial statements and the related
notes as of June 30, 2000 and for the six months ended June 30, 1999 and 2000
are unaudited. The unaudited interim consolidated financial statements have been
prepared on the same basis as the audited consolidated financial statements and,
in the opinion of management, reflect all adjustments, consisting principally of
normal recurring adjustments, necessary to present fairly the Company's
consolidated financial position as of June 30, 2000 and their results of
operations and cash flows for the six months ended June 30, 1999 and 2000. The
financial data and other information disclosed in these notes to consolidated
financial statements related to these periods are unaudited. The results for the
six months ended June 30, 2000 are not necessarily indicative of the results to
be expected for the year ending December 31, 2000.

UNAUDITED PRO FORMA STOCKHOLDERS' EQUITY

If the offering contemplated by this prospectus is consummated, all of the
convertible preferred stock outstanding will automatically convert into
15,970,000 shares of common stock. Unaudited pro forma stockholders' equity, as
adjusted for the assumed conversion of the preferred stock, is set forth on the
balance sheet.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Amounts reported for cash and cash equivalents, accounts receivable and
accounts payable approximate fair value primarily due to their short-term
maturities. Based on borrowing rates currently available to the Company for
loans with similar terms, the carrying value of its debt obligations approximate
fair value.

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

The Company considers all highly liquid investments with an original
maturity of three months or less at the date of purchase to be cash equivalents.

Restricted cash consists of a certificate of deposit held with a financial
institution as a security deposit for a building lease (Note 9).

F-7
<PAGE>
DOUBLETWIST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
MARKETABLE SECURITIES

Marketable securities are classified as available-for-sale in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting
for Certain Investments in Debt and Securities" and are carried at cost which
approximates fair value. Realized gains and losses on sales of all such
securities are reported in earnings and computed using the specific
identification cost method. There were no unrealized gains or losses for all
periods presented.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and are depreciated on a
straight-line basis over their estimated useful lives of three to five years.
Property and equipment under capital leases are amortized on a straight line
basis over the shorter of their estimated useful lives or the terms of the
leases. Upon retirement or sale, the cost and related accumulated depreciation
are removed from the balance sheet and the resulting gain or loss is reflected
in operations. Maintenance and repairs are charged to operations as incurred.

SOFTWARE DEVELOPMENT COSTS

Costs related to the conceptual formulation and design of software products
are expensed as product development while costs incurred subsequent to
establishing technological feasibility of software products are capitalized, if
material, until the general release of the product. Generally, technological
feasibility is established when the software module performs its primary
functions as described in its original specifications, contains convenience
features required for it to be useable in a production environment and is
completely documented. During the years ended December 31, 1997, 1998 and 1999,
the amounts of costs incurred subsequent to establishing technological
feasibility were not material.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company evaluates its long-lived assets for indicators of possible
impairment by comparison of the carrying amounts to future net undiscounted cash
flows expected to be generated by such assets when events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable.
Should an impairment exist, the impairment loss would be measured based on the
excess carrying value of the asset over the asset's fair value or discounted
estimates of future cash flows. The Company has not identified any such
impairment losses to date.

INCOME TAXES

Income taxes are recorded under the liability method, under which deferred
tax assets and liabilities are determined based on the difference between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.

F-8
<PAGE>
DOUBLETWIST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
REVENUE RECOGNITION

The Company recognizes revenues from the license of software products under
software license agreements and from the delivery of professional services and
maintenance services in accordance with Statement of Position ("SOP") 97-2,
SOFTWARE REVENUE RECOGNITION, and SOP 98-9, MODIFICATION OF SOP 97-2, SOFTWARE
REVENUE RECOGNITION TO CERTAIN TRANSACTIONS. When contracts contain multiple
elements, and vendor-specific objective evidence exists for all undelivered
elements, the Company accounts for the delivered elements in accordance with the
"Residual Method" prescribed by SOP 98-9. License revenues are recognized when
persuasive evidence of an arrangement exists, the fee is fixed or determinable,
collectibility is probable and delivery and customer acceptance, if required
under the terms of the contract, have occurred. The Company generally does not
grant rights of return. In instances where vendor obligations remain, revenues
are deferred until the obligation has been satisfied. Service revenues consist
of implementation and training services and maintenance. Implementation and
training revenues are recognized as the services are performed. Maintenance
contracts include the right to unspecified upgrades on a when-and-if available
basis, and ongoing support. Maintenance revenues are recognized ratably over the
term of the maintenance contract, which is generally twelve months.

Subscription revenue consists of revenue recognized from the license of
proprietary databases and from contracts for access to the Company's online
tools and data sets. In accordance with SOP 97-2, the Company defers revenue
from the licensing of databases, as the Company has a contractual obligation to
deliver specified upgrades on a when-and-if available basis during the license
term. Subscription revenue is generally billed annually and recognized ratably
over the term of the contract, generally twelve months.

Research and development grant agreements provide for periodic payments in
support of the Company's research activities. Grant revenue is recognized as
earned based on actual cost incurred. Reimbursements from grants are recorded as
service and other revenues. For the years ended December 31, 1997, 1998 and
1999, the Company was reimbursed for product development costs of $0, $463,073
and $458,801 from the Department of Health and Human Services.

Other revenue also includes sales of workstations, servers and third-party
software for use with the Company's products. The Company has reseller
arrangements with vendors and bears the risk of loss on the products. Revenues
are recognized upon shipment of the third-party product from the Company.

PRODUCT DEVELOPMENT COSTS

Product development costs are expensed as incurred. Costs incurred in the
design, creation and maintenance of content, graphics and user interface of the
Company's web site are expensed as incurred in accordance with SOP 98-1. Costs
incurred in the development of application and infrastructure of the web site
are capitalized and amortized over the useful life of the web site. Costs
required to be capitalized under SOP 98-1 have been insignificant to date and
were expensed.

ADVERTISING

The Company expenses advertising costs as they are incurred. Advertising
expense for the years ended December 31, 1997, 1998 and 1999 was $97,526,
$602,632 and $1,222,901, respectively.

F-9
<PAGE>
DOUBLETWIST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
CERTAIN RISKS AND UNCERTAINTIES

The Company's operating results are significantly dependent on the Company's
ability to market and develop its products. The life cycles of the Company's
products are difficult to estimate due in part to the effect of future product
enhancements and competition. The inability of the Company to successfully
develop and market its products as a result of competition or other factors
would have a material adverse affect on the Company's business, financial
condition and results of operations.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash and cash equivalents and accounts
receivable. Cash and cash equivalents are deposited in demand and money market
accounts at three financial institutions. At times, such deposits may be in
excess of insured limits. The Company has not experienced any losses on its
deposits of cash and cash equivalents. The Company's accounts receivable are
derived from revenue earned from customers primarily located in the United
States. The Company performs ongoing credit evaluations of its customers'
financial condition and requires no collateral from its customers.

At December 31, 1998, amounts due from three customers represented 43%, 25%,
and 11% of gross accounts receivable. At December 31, 1999, amounts due from
four customers represented 31%, 23%, 16% and 14% of gross accounts receivable.
For the year ended December 31, 1997, five customers accounted for 30%, 30%,
13%, 12% and 11% of the Company's net revenues. For the year ended December 31,
1998, three customers accounted for 13%, 12%, and 11% of the Company's net
revenues. No customer accounted for more than 10% of revenues in 1999.

SEGMENTS

The Company operates in one segment, using one measurement of profitability
to manage its business. All long-lived assets are maintained in the United
States. Export sales to England represented approximately 30% of net revenues
for fiscal 1997. In subsequent fiscal years, export sales were less than 5% of
net revenues.

COMPUTATION OF EARNINGS PER SHARE

Basic earnings per share ("EPS") is computed by dividing net loss available
to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur from common shares issuable through stock options, warrants and
other convertible securities. Potentially dilutive securities have been excluded
from the diluted EPS calculations as they have an antidilutive effect due to the
Company's net losses.

Pro forma net loss per share available to common stockholders for the year
ended December 31, 1999 and the six months ended June 30, 2000 was computed
using the weighted average number of shares of common stock outstanding,
including the pro forma effects of the automatic conversion of all of the
Company's preferred stock into shares of the Company's common stock as if such
conversion occurred on January 1, 1999, or at the date of original issuance, if
later.

F-10
<PAGE>
DOUBLETWIST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
A reconciliation of shares used in the calculations is as follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------- --------------------------
1997 1998 1999 1999 2000
----------- ----------- ------------ ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Numerator:
Net loss available to
common
stockholders............. $(8,115,460) $(8,701,752) $(11,480,539) $(4,056,735) $(37,569,695)
=========== =========== ============ =========== ============
Denominator:
Weighted average common
shares outstanding....... 236,000 674,000 713,000 705,000 1,993,000
Weighted average unvested
common shares subject to
repurchase............... (19,000) (29,000) (21,000) (21,000) (340,000)
----------- ----------- ------------ ----------- ------------
Denominator for basic and
diluted calculations..... 217,000 645,000 692,000 684,000 1,653,000
=========== =========== ============ =========== ============
Net loss per share
available
to common stockholders,
basic and diluted........ $ (37.40) $ (13.49) $ (16.59) $ (5.93) $ (22.73)
=========== =========== ============ =========== ============
Shares used to compute net
loss per share available to
common stockholders........ 692,000 1,653,000
Adjustment to reflect
weighted-average effect
of assumed conversion of
preferred stock
(unaudited)................ 9,640,000 14,314,000
------------ ------------
Shares used to compute pro
forma net loss per share
available to common
stockholders, basic and
diluted (unaudited)........ 10,332,000 15,967,000
============ ============
Pro forma net loss per share
available to common
stockholders, basic and
diluted (unaudited)........ $ (1.11) $ (2.35)
============ ============
</TABLE>

F-11
<PAGE>
DOUBLETWIST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
The following table sets forth potential shares of common stock that are not
included in the diluted net loss per share available to common stockholders as
their effect is antidilutive:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------ -----------------------
1997 1998 1999 1999 2000
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Antidilutive securities:
Convertible preferred stock...... 2,828,000 8,273,000 9,823,000 9,823,000 15,970,000
Options to purchase common
stock.......................... 773,000 925,000 2,319,000 1,811,000 3,155,000
Common stock subject to
repurchase..................... 34,000 23,000 18,000 24,000 840,000
Warrants......................... 42,000 528,000 528,000 528,000 570,000
---------- ---------- ---------- ---------- ----------
3,677,000 9,749,000 12,688,000 12,186,000 20,535,000
========== ========== ========== ========== ==========
</TABLE>

ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB No. 25") and complies with the
disclosure provisions of Statements of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123").

Under APB No. 25, compensation expense is based on the difference, if any,
on the date of the grant, between the fair value of the Company's stock and the
exercise price. SFAS No. 123 defines a "fair value" based method of accounting
for an employee stock option or similar equity instruments. The pro forma
disclosures of the difference between compensation expense included in net loss
and the related cost measured by the fair value method are presented in Note 5.

The Company accounts for equity instruments issued to non-employees in
accordance with the provisions of SFAS 123 and Emerging Task Force Issue
No. 96-18, "Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services."

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES ("SFAS
133") which is effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. In July 1999, the FASB issued Statement of Financial
Standards No. 137, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES--DEFERRAL OF THE EFFECTIVE DATE OF FASB STATEMENT NO. 133 ("SFAS
137") which defers the effective date to all fiscal quarters of fiscal years
beginning after June 15, 2000. The Company has not yet evaluated the effects of
this change on its operations. The Company does not currently hold derivative
instruments or engage in hedging activities.

F-12
<PAGE>
DOUBLETWIST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), REVENUE RECOGNITION, which
outlines the basic criteria that must be met to recognize revenue and provides
guidance for presentation of revenue and for disclosure related to revenue
recognition policies in financial statements filed with the SEC. In June 2000,
the SEC issued SAB 101B which delays the implementation of SAB 101 until no
later than the fourth fiscal quarter of fiscal years beginning after
December 15, 1999. The Company believes that its current revenue recognition
policy is in compliance with SAB 101.

In March 2000, the FASB issued Interpretation No. 44, ACCOUNTING FOR CERTAIN
TRANSACTIONS INVOLVING STOCK COMPENSATION--AN INTERPRETATION OF APB OPINION NO.
25 ("FIN 44"). This Interpretation clarifies the definition of an employee for
the purposes of applying Accounting Practice Board Opinion No. 25, ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES, the criteria for determining whether a plan
qualifies as a noncompensatory plan, the accounting consequences of various
modifications to the terms of a previously fixed stock option or award, and the
accounting for an exchange of stock compensation awards in a business
combination. This Interpretation is effective July 1, 2000, but certain
conclusions in this Interpretation cover specific events that occur after either
December 15, 1998, or January 12, 2000. The Company believes that FIN 44 will
not have a material effect on the financial position or results of operation of
the Company.

3. BALANCE SHEET COMPONENTS:

Accounts receivable consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1999
----------- -----------
<S> <C> <C>
Accounts receivable................................ $ 1,547,537 $ 759,831
Unbilled receivables............................... 48,962 16,925
----------- -----------
$ 1,596,499 $ 776,756
=========== ===========
</TABLE>

Property and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1999
----------- -----------
<S> <C> <C>
Computer hardware.................................. $ 2,362,840 $ 5,401,032
Computer software.................................. 396,292 909,132
Furniture and fixtures............................. 517,704 588,325
----------- -----------
3,276,836 6,898,489
----------- -----------
Less: Accumulated depreciation and amortization.... (1,378,037) (2,700,133)
----------- -----------
$ 1,898,799 $ 4,198,356
=========== ===========
</TABLE>

At December 31, 1998 and 1999, property and equipment included assets
acquired under capital leases of $2,433,486 and $2,699,305, respectively.
Related accumulated amortization totaled $1,001,832 and $1,976,633 respectively.
Depreciation and amortization expense for the years ended December 31, 1997,
1998 and 1999 was $414,521, $871,782 and $1,322,096, respectively.

F-13
<PAGE>
DOUBLETWIST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. BALANCE SHEET COMPONENTS: (CONTINUED)
Accrued and other current liabilities consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1999
---------- ----------
<S> <C> <C>
Accrued payroll and benefits......................... $ 644,404 $ 500,866
Accrued professional fees............................ 175,976 643,668
Other................................................ 244,802 288,686
---------- ----------
$1,065,182 $1,433,220
========== ==========
</TABLE>

4. DEBT:

Throughout 1998, the Company issued $4,000,000 in convertible subordinated
notes payable to certain preferred and common shareholders. The principal amount
of the notes payable, together with interest at 6% per annum, was due and
payable upon demand or automatically converted into a new series of preferred
stock upon the closing of a minimum of $2,000,000 of a new series of preferred
stock. In December 1998, the principal amount of the notes payable plus accrued
interest of $64,000 converted into 1,452,000 shares of Series C redeemable
convertible preferred stock.

In August 1998, the Company entered into a loan and security agreement with
a commercial bank, which provided for a $1,000,000 equipment line of credit.
Borrowings under the equipment line of credit ($0 in 1998 and $1,000,000 in
1999) plus accrued interest are due in monthly installments commencing October
1999 through September 2002. As of December 31, 1999, the Company does not have
the ability to borrow additional amounts under this equipment line of credit. In
connection with the loan and security agreement, the Company entered into a
$2,000,000 bridge loan bearing interest at the bank's prime rate plus 0.5% per
annum (9% at December 31, 1999). In November 1998, the bridge loan was converted
into a term loan with interest accruing at 8.25% per annum and principal
payments due in twelve equal monthly installments. The outstanding balance under
the term loan was paid in full during 1999.

The loan and security agreement contains restrictions on the payment of
dividends and financial covenants, including but not limited to, tangible net
worth requirements and current and debt service ratios. At December 31, 1999,
the Company was not in compliance with the financial covenants; however,
management received the necessary waivers through February 29, 2000 at which
date the Company was in compliance with the financial covenants.

Maturities of debt outstanding for the years ended December 31, are as
follows:

F-14
<PAGE>
DOUBLETWIST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY:

RECAPITALIZATION

In January 1997, the Company's Articles of Incorporation were amended and
the 1,219,000 shares of common stock outstanding were converted into Series A1
redeemable convertible preferred stock on a one-for-one basis.

REDEEMABLE CONVERTIBLE PREFERRED STOCK

In January 1997, the Company issued 5,000 shares of Series A redeemable
convertible preferred stock at $6.00 per share for gross proceeds of $30,000.

In February 1997, the Company issued 1,157,000 shares of Series B redeemable
convertible preferred stock at $6.442 per share for gross proceeds of
$7,450,405.

In connection with the issuance of Series B redeemable convertible preferred
stock in February 1997, the Company issued warrants to investors for cash at
$0.01 per warrant the right to purchase 385,000 shares of Series B redeemable
convertible preferred stock at $6.442 per share. During 1997, all of the
warrants were exercised.

In December 1998, the Company issued 3,975,000 shares of Series C redeemable
convertible preferred stock at $2.80 per share for gross proceeds of $11,130,006
and 18,000 shares of Series C redeemable convertible preferred stock for
services rendered. In February 1999, the Company issued 1,429,000 shares of
Series C redeemable convertible preferred stock at $2.80 per share for gross
proceeds of $4,000,000 and 121,000 shares of Series C redeemable convertible
preferred stock to the placement agent for services rendered.

During 1998, the Company issued $4,000,000 in convertible subordinated notes
payable to certain preferred and common shareholders (Note 4). In December 1998,
the principal amounts of the notes payable plus accrued interest of $64,000
converted into 1,452,000 shares of Series C redeemable convertible preferred
stock at $2.80 per share.

Redeemable convertible preferred stock consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1999
----------- -----------
<S> <C> <C>
Series A: 256,834 shares authorized, 64,000 shares
issued and outstanding at December 31, 1998 and
1999, (liquidation preference $385,250).......... $ 385,250 $ 385,250
Series A1: 4,887,500 shares authorized, 1,222,000
shares issued and outstanding at December 31,
1998 and 1999, (liquidation preference
$7,871,319)...................................... 175,000 175,000
Series B: 6,208,552 shares authorized; 1,542,000
shares issued and outstanding at December 31,
1998 and 1999 (liquidation preference
$9,933,873)...................................... 9,910,721 9,910,721
Series C: 26,000,000 and 28,200,000 shares
authorized at December 31, 1998 and 1999,
respectively; 5,445,000 and 6,995,000 shares
issued and outstanding at December 31, 1998 and
1999, respectively (liquidation preference
$39,171,479)..................................... 14,471,398 18,445,865
----------- -----------
$24,942,369 $28,916,836
=========== ===========
</TABLE>

F-15
<PAGE>
DOUBLETWIST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY: (CONTINUED)
Under the Company's Articles of Incorporation, the Company's redeemable
convertible preferred shares are issuable in series.

DIVIDENDS

The holders of shares of Series C are entitled to receive, when and if
declared by the Board of Directors, cumulative dividends out of any assets
legally available therefore, prior and in preference to any declaration or
payment of any dividend on the Series A, A1, B and common shares at the rate of
$0.224 per share, per annum. After dividends to Series C stockholders have been
paid, the Series B and Series A stockholders are entitled to receive
non-cumulative dividends over Series A1 and common stockholders at the rate of
$0.64 and $0.60, respectively. No dividends have been declared to date.

LIQUIDATION

In the event of any liquidation, change in control, dissolution or winding
up of the Company, the order of liquidation preference will be as follows: each
of the Series C, Series B, Series A and Series A1 stockholders, respectively,
will receive its full liquidation preference amount including any declared but
unpaid dividends thereon prior to any payment to a junior class. The liquidation
value of the Series C, Series B, Series A and Series A1 is $2.80, $6.442, $6.00
and $6.442 per share, respectively, plus any declared but unpaid dividends
thereon. Should there be any assets after providing for the full liquidation
preference of the Series C, Series B, Series A and Series A1 stockholders, the
remaining assets of the corporation are to be distributed pro rata among the
holders of the Company's common stock. However, if such liquidation, change in
control, dissolution or winding up occurs within four years from the date on
which the first share of Series C redeemable convertible preferred stock was
issued by the Company, then the holders of the Series C are entitled to receive
prior and in preference liquidation to any distribution of any of the assets or
surplus fund to the holders of Series B, Series A, Series A1 or common stock at
an amount equal to $5.60 per share.

CONVERSION

Each share of redeemable convertible preferred stock can be converted at the
option of the holder to a share of common subject to adjustment for certain
equity related events, or automatically converts upon the earlier of (i) the
Company's initial registered public offering in which the aggregate offering
price equals or exceeds $20 million and the public offering price per share
equals or exceeds $9.80 per share or (ii) the date on which the holders of a
majority of the then outstanding shares of redeemable convertible preferred
stock have voted or consented in writing to such conversion. The conversion
price is equal to the original issue price of $2.80, $6.442, $6.00 and $6.442
for Series C, Series B, Series A and Series A1, respectively, as of December 31,
1999.

VOTING

The holders of Series C, Series B, Series A, and Series A1 are entitled to
the number of votes equal to the number of full shares of common stock into
which each share of redeemable convertible preferred stock can be converted and
shall have the same voting rights and powers equal to the voting rights and
powers of the Company's common shares.

F-16
<PAGE>
DOUBLETWIST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY: (CONTINUED)
REDEMPTION

In the event that the holders of at least eighty percent of the then
outstanding shares of Series C give written notice at any time after the fifth
anniversary from the first issuance of Series C, the Company is required to
redeem Series C at the redemption price of the greater of $2.80 per share plus
any accrued but unpaid dividends up to the redemption date or the fair market
value of Series C determined by the Company's Board of Directors. Series A, A1
and B are not redeemable.

ELECTION OF DIRECTORS

The holders of Series C, Series B and Series A1, voting as a separate class,
are entitled to elect two members of the Company's Board of Directors. The
remaining directors are elected by all common and redeemable convertible
preferred stockholders voting as a single class.

STOCK OPTIONS

In August 1996, the Company adopted the 1996 Equity Incentive Plan (the
"Plan"). The Company had reserved 437,500 common shares for issuance under the
Plan. At December 31, 1999, the total number of common shares reserved under the
Plan was 3,197,500. Under the plan, restricted stock, stock bonuses and options
to purchase common stock may be granted to employees, officers, directors,
consultants and advisors of the Company. Under the Plan, incentive options may
be granted at prices not less than fair market value at the date of grant or
110% of the fair market value if the optionee, immediately prior to the grant,
owns shares representing 10% or more of the voting power or value of all
securities. Nonstatutory options may be granted at prices not less than 85% of
fair market value at the date of grant as determined by the Board of Directors.
Options granted under the Plan generally become exercisable ratably over a four
year period and generally expire from five to ten years from the date of grant.

F-17
<PAGE>
DOUBLETWIST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY: (CONTINUED)
Stock option activity under the Plan is as follows:

<TABLE>
<CAPTION>
WEIGHTED
SHARES AVERAGE
AVAILABLE SHARES EXERCISE
FOR GRANT OUTSTANDING PRICE
---------- ----------- --------
<S> <C> <C> <C>
Balances, December 31, 1996................. 193,000 241,000 $3.20

Additional shares reserved................ 590,000 -- --
Options granted........................... (869,000) 869,000 $0.80
Options canceled.......................... 264,000 (264,000) $3.00
Options exercised......................... (73,000) $0.80
---------- ----------

Balances, December 31, 1997................. 178,000 773,000 $0.80

Additional shares reserved................ 1,170,000 -- --
Options granted........................... (490,000) 490,000 $1.12
Options canceled.......................... 294,000 (294,000) $0.96
Options exercised......................... -- (44,000) $0.80
---------- ----------

Balances, December 31, 1998................. 1,152,000 925,000 $0.88

Additional shares reserved................ 1,000,000 -- --
Options granted........................... (1,866,000) 1,866,000 $0.80
Options canceled.......................... 413,000 (413,000) $0.84
Options exercised......................... -- (59,000) $0.80
---------- ----------

Balances, December 31, 1999................. 699,000 2,319,000 $0.84
---------- ----------

Additional shares reserved................ 2,000,000 -- --
Options granted........................... (2,307,000) 2,307,000 $3.00
Options canceled.......................... 129,000 (129,000) $1.32
Options exercised......................... -- (1,342,000) $2.24
---------- ----------

Balances, June 30, 2000 (unaudited)......... 521,000 3,155,000 $0.60
========== ==========
</TABLE>

During 1997, 1999 and the six months ended June 30, 2000, options to
purchase 43,000, 6,000 and 831,000 shares, respectively, of common stock subject
to repurchase by the Company had been exercised in exchange for full recourse
promissory notes of $34,500, $5,000 and $2,493,750, respectively. These notes
bear interest at rates of 6.00% to 6.71% and become due in 2001, 2009 and 2005,
respectively. The Company's right of repurchase expires on a ratable basis over
periods of up to four years and as of June 30, 2000, 840,000 shares were subject
to repurchase. The related shares are pledged as collateral for the notes.

F-18
<PAGE>
DOUBLETWIST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY: (CONTINUED)
The Company has adopted the disclosure only provisions of SFAS 123. Had
compensation expense for options granted been determined based on the fair value
at the grant date, as prescribed by SFAS 123, the Company's net loss per share
available to common stockholders would be as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1997 1998 1999
----------- ----------- ------------
<S> <C> <C> <C>
Net loss available to common stockholders:
As reported......................... $(8,115,460) $(8,701,752) $(11,480,539)
=========== =========== ============
Pro forma........................... $(8,150,860) $(8,756,398) $(11,597,243)
=========== =========== ============
Basic and diluted net loss per share:
As reported......................... $ (37.40) $ (13.49) $ (16.59)
=========== =========== ============
Pro forma........................... $ (37.56) $ (13.58) $ (16.76)
=========== =========== ============
</TABLE>

Such pro forma disclosures may not be representative of future compensation
cost because options vest over several years and additional grants are made each
year. The fair value of each option grant is estimated on the date of grant
using the minimum value method with the following assumptions used for grants:

<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Risk-free interest rate........................... 6.22% 5.15% 5.55%
Expected life..................................... 5 years 5 years 5 years
Expected dividends................................ -- -- --
</TABLE>

Based on the above assumptions, the weighted average minimum values per
share of options granted were approximately $0.06, $0.08 and $0.07 for the years
ended December 31, 1997, 1998 and 1999, respectively.

Options outstanding and currently exercisable by exercise price at
December 31, 1999 are as follows:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS CURRENTLY
-------------------------------------- EXERCISABLE
WEIGHTED AVERAGE ----------------------------
EXERCISE NUMBER REMAINING NUMBER
PRICE OUTSTANDING CONTRACTUAL LIFE (YEARS) EXERCISABLE EXERCISE PRICE
-------- ----------- ------------------------ ----------- --------------
<S> <C> <C> <C> <C>
$0.80 2,257,000 9.10 481,000 $0.80
$2.00 62,000 8.57 21,000 $2.00
--------- ---------
2,319,000 9.09 502,000 $0.84
--------- =========
</TABLE>

WARRANTS

In April 1997, in connection with a financing arrangement, the Company
issued 10,000 warrants to purchase shares of Series B redeemable convertible
preferred stock at $6.442 per share. The fair value of these warrants were
determined to be immaterial. In October 1997, for licenses, the Company issued
32,000 warrants to purchase shares of common stock at $0.80 per share. The fair
value of these warrants of $22,870 was expensed during the year ended
December 31, 1997.

F-19
<PAGE>
DOUBLETWIST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY: (CONTINUED)
During 1998, in connection with various financing arrangements (Notes 4 and
6), the Company issued 232,000 warrants to purchase common stock at $2.00 per
share, 13,000 warrants to purchase common stock at $6.442 per share and 16,000
warrants to purchase share of Series C redeemable convertible preferred stock at
$2.80 per share. The fair value of these warrants to purchase common stock and
Series C redeemable convertible preferred stock of $296,154 and $37,901,
respectively, have been recorded as a discount on the debt and accreted as
interest expense over the life of the debt. During the years ended December 31,
1998 and 1999, a total of $265,508 and $77,547, respectively, was charged to
interest expense.

During 1998, in connection with the issuance of Series C redeemable
convertible preferred stock, the Company issued warrants to the placement agent
for the purchase of 225,000 shares of Series C common stock at $0.80 per share.
The fair value of these warrants of $96,105 was netted against the proceeds.

The Company calculated the fair value of each warrant issued on the date of
issuance using the Black-Scholes pricing method with the following assumptions:
dividend yield at 0%, expected term of the warrants between four to ten years;
risk free interest rate between 4.31% to 5.37% and volatility of 67%.

The Company has reserved redeemable convertible preferred stock and common
stock as of December 31, 1999 for the following exercisable warrants:

<TABLE>
<CAPTION>
PROCEEDS
EXERCISE UPON
SHARES NUMBER OF SHARES PRICE PER SHARE EXERCISE EXERCISE PERIOD
------ ---------------- --------------- -------- ----------------------
<S> <C> <C> <C> <C>
Series B............. 10,000 $ 6.442 $ 65,000 through April 2004
Series C............. 16,000 $ 2.80 45,371 through December 2005
Common stock......... 257,000 $ 0.80 205,694 through October 2007
Common stock......... 232,000 $ 2.00 464,286 through December 2002
Common stock......... 13,000 $ 6.442 80,525 through August 2003
--------- --------
528,000 $860,876
========= ========
</TABLE>

Unless exercised, warrants to purchase 32,000 shares of common stock at
$0.80 per share expire upon the effectiveness of an initial public offering.

DEFERRED STOCK-BASED COMPENSATION

During the period from January 1999 through June 30, 2000, the Company
recorded $21,803,947 of deferred stock-based compensation in accordance with
APB 25, SFAS 123 and Emerging Issues Task Force 96-18, related to stock options
granted to consultants and employees. For options granted to consultants, the
Company determined the fair value of the options using the Black-Scholes option
pricing model with the following assumptions: expected lives of five years;
weighted average risk-free rate between 4.8% and 6.6%; expected dividend yield
of zero percent; volatility of 67% and fair values of common stock between $0.80
and $11.70 per share. Stock-based compensation expense is being recognized on a
straight-line basis for employees and in accordance with FIN 28, an accelerated
amortization method, for consultants, over the vesting periods of the related
options, generally four years. The Company recognized stock-based compensation
expense of $0, $0, $289,638 and $2,148,023

F-20
<PAGE>
DOUBLETWIST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY: (CONTINUED)
for the years ended December 31, 1997, 1998 and 1999 and the six months ended
June 30, 2000, respectively.

The allocation of stock-based compensation expense by functional area is as
follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
YEARS ENDED -------------------------
DECEMBER 31, 1999 1999 2000
----------------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Cost of revenue...................... $ 7,224 $ -- $ 50,997
Product development.................. 106,472 8,897 433,257
Sales and marketing.................. 153,223 1,500 1,046,200
General and administrative........... 22,719 -- 617,569
-------- ---------- ----------
Total stock-based
compensation................. $289,638 $ 10,397 $2,148,023
======== ========== ==========
</TABLE>

6. COMMITMENTS AND CONTINGENCY:

COMMITMENTS

The Company leases office space and equipment under noncancelable operating
and capital leases with various expiration dates through June 2003. Rent expense
for the years ended December 31, 1997, 1998 and 1999 was $367,980, $453,337 and
$449,457, respectively. The Company recognizes rent expense on a straight-line
basis over the lease period, and has accrued for rent expense incurred but not
paid.

Future minimum lease payments under noncancelable operating and capital
leases are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
YEARS ENDED DECEMBER 31, LEASES LEASES
------------------------ ---------- ----------
<S> <C> <C>
2000................................................. $ 750,221 $ 883,800
2001................................................. 609,542 528,988
2002................................................. 145,240 29,714
2003................................................. 24,018 --
---------- ----------
Total minimum lease payments......................... 1,529,021 $1,442,502
==========
Less: Amount representing interest................... 116,861
----------
Present value of capital lease obligations........... 1,412,160
Less: Current portion................................ 671,128
----------
Long-term portion of capital lease
obligations.................................. $ 741,032
==========
</TABLE>

CONTINGENCY

The Company is involved in routine legal and administrative proceedings that
arise from the normal conduct of business. Management believes that the ultimate
disposition of these matters will not have a material adverse effect on the
consolidated financial results or condition of the Company.

F-21
<PAGE>
7. INCOME TAXES:

No provision for federal or state income taxes has been recorded for the
years ended December 31, 1998 and December 31, 1999 as the Company incurred net
operating losses.

Temporary differences which gave rise to significant portions of deferred
tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
1998 1999
----------- ------------
<S> <C> <C>
Net operating losses.............................. $ 5,936,000 $ 9,882,000
Research and development credits.................. 577,000 838,000
Accruals, reserves and allowances................. 259,000 4,000
Capitalized research and development costs........ 543,000 828,000
----------- ------------
7,315,000 11,552,000
Valuation allowance............................... (7,315,000) (11,552,000)
----------- ------------
$ -- $ --
=========== ============
</TABLE>

Due to uncertainty of realizing the benefits of the deferred tax assets, the
Company has provided a full valuation allowance against its net deferred tax
assets. The valuation allowance has increased by $3,663,000 and $4,237,000
during 1998 and 1999, respectively.

At December 31, 1999, the Company had net operating loss carryforwards of
approximately $27,894,000 and $6,814,000 for Federal and California purposes,
respectively, available to reduce future taxable income, if any. These
carryforwards expire beginning in the years 2012 and 2002 for Federal and
California purposes, respectively, if not utilized beforehand.

At December 31, 1999, the Company had research and development credit
carryforwards of approximately $599,000 and $363,000 for Federal and California
income tax purposes, respectively. The research and development carryforwards
expire beginning in the year 2012.

The Tax Reform Act of 1986 limits the use of net operating loss and tax
credit carryforwards in certain situations where changes occur in the stock
ownership of a company. An ownership change did occur in 1997. In the event the
Company has future changes in ownership, utilization of the carryforwards could
be further restricted.

8. EMPLOYEE BENEFIT PLAN:

In May 1996, the Company adopted an employee benefit plan (the "Plan") which
is qualified under Section 401(k) of the Internal Revenue Code of 1986. Eligible
employees may make voluntary contributions to the Plan of up to 20% of their
annual compensation, not to exceed the statutory amount, and the Company may
make matching contributions. The Company made no contributions in 1997, 1998 or
1999.

9. SUBSEQUENT EVENTS:

CONVERTIBLE SUBORDINATED PROMISSORY NOTES

In January 2000, the Company issued $5,000,000 in convertible subordinated
promissory notes to certain preferred and common stockholders. The principal
amount of the notes, together with interest at 6% per annum, is due and payable
upon demand after August 31, 2000 or automatically converts into the securities
issued in the next private equity financing consisting of gross proceeds of at
least $4,000,000 at the purchase price paid for the securities. The difference
between the conversion price and the fair market value per share of the common
stock on the transaction date resulted in a

F-22
<PAGE>
9. SUBSEQUENT EVENTS: (CONTINUED)
beneficial conversion feature of $2,481,999 which has been recorded as a charge
to interest expense in the June 30, 2000 interim financial statements. In
connection with the notes, the Company issued 42,000 warrants to purchase
Series D redeemable convertible preferred stock at $6.02 per share. The relative
fair value of the warrants, totaling $145,824 was recorded as a discount on the
notes to be accreted as interest expense over the life of the notes. Upon
exercise of such warrants, the Company may incur an additional beneficial
conversion feature based on the difference between the exercise price and the
fair market value of common stock on the date of exercise. In February 2000, the
principal amount of the notes plus accrued interest of $13,973 converted into
833,000 shares of Series D redeemable convertible preferred stock.

SERIES D CONVERTIBLE PREFERRED STOCK

In February 2000, the Company issued 5,314,000 shares of Series D preferred
stock ("Series D") at $6.02 per share resulting in gross proceeds of
$31,988,636. The difference between the conversion price and the fair market
value per share of the common stock on the transaction date resulted in a
beneficial conversion feature of $21,148,633 which has been reflected as a
preferred stock dividend in the June 30, 2000 consolidated interim financial
statements. Each share of Series D has voting rights equal to the number of
shares of common stock into which such share is convertible. Holders of
Series D are entitled to receive annual dividends of $0.602 per share, when and
if declared by the Board of Directors, on a pari passu basis with the holders of
Series B and Series C preferred stock, and prior to the Series A and Series A1
preferred stock and to the common stock. The Series D is convertible at any time
into common stock at a one-for-one exchange ratio. Such conversion is automatic
upon the effective date of an initial public offering of at least $15.0 million
provided the public offering price is at least $12.00 per share. In the event of
any liquidation, change in control, dissolution or winding up of the Company,
the holders of Series D are entitled to receive an amount equal to $6.02 per
share, plus any declared but unpaid dividends. In conjunction with the Series D
convertible preferred stock financing, the redemption rights related to the
Series C convertible preferred stock were rescinded.

SERIES E CONVERTIBLE PREFERRED STOCK

In July 2000, the Company issued 856,000 shares of Series E preferred stock
("Series E") at $8.964 per share resulting in net cash proceeds of $7,677,148.
The difference between the conversion price and the fair market value per share
of the common stock on the transaction date resulted in a beneficial conversion
feature of approximately $2,343,000 which will be reflected as a preferred stock
dividend in the September 30, 2000 consolidated interim financial statements.
Each share of Series E has voting rights equal to the number of shares of common
stock into which such share is convertible. Holders of Series E are entitled to
receive annual dividends of $0.8964 per share, when and if declared by the Board
of Directors, on a pari passu basis with the holders of Series B, Series C and
Series D preferred stock, and prior to the Series A and Series A1 preferred
stock and to the common stock. The Series E is convertible at any time into
common stock at a one-for-one exchange ratio. Such conversion is automatic upon
the effective date of an initial public offering of at least $15.0 million
provided the public offering price is at least $12.00 per share. In the event of
any liquidation, change in control, dissolution or winding up of the Company,
the holders of Series E are entitled to receive an amount equal to $2.241 per
share, plus any declared but unpaid dividends.

F-23
<PAGE>
9. SUBSEQUENT EVENTS: (CONTINUED)
REINCORPORATION

In June 2000, the Company reincorporated in the State of Delaware. Following
the reincorporation, the Company will be authorized to issue 100,000,000 shares
of $0.01 par value common stock and 66,197,329 shares of $0.01 par value
preferred stock.

NOTES PAYABLE

In February 2000, the Company amended its loan and security agreement to
provide for an additional $1,500,000 equipment line of credit. Borrowings under
the equipment line of credit bear interest at the bank's prime rate plus 0.5%
per annum. In June 2000, the Company modified its loan and security agreement to
provide for an additional $3,000,000 equipment line of credit. Borrowings under
the additional equipment line of credit bear interest at the bank's prime rate
plus 1.0% per annum. Borrowings under the equipment lines of credit plus accrued
interest are payable in monthly installments commencing June 2000 through
December 2003. As of July 31, 2000, the Company does not have the ability to
borrow additional amounts under the equipment lines of credit.

Maturities of debt outstanding under the equipment lines of credit for the
six months ended December 31, 2000 and for the years ended December 31, 2001,
2002 and 2003 are $250,000, $1,500,000, $1,500,000 and $1,208,333, respectively.

BUILDING LEASE

In April 2000, the Company entered into an agreement with a Limited
Liability Corporation ("LLC") to loan the LLC $4,500,000 for the purchase of a
building. The note bears interest at 10.5% per annum with interest only payments
due monthly and principal due in 2010. The note can be prepaid at any time
without penalty. The Company will lease the building from the LLC for a term of
ten years with two five-year options to extend the term of the lease. In
connection with the lease, the Company is required to maintain a certificate of
deposit for $900,000 as a security deposit. Future minimum lease payments under
the building lease are $439,170, $1,773,450, $1,832,400, $1,893,420, $1,956,600
and $12,584,580 for the years ending December 31, 2000, 2001, 2002, 2003, 2004
and thereafter.

COLLABORATION AGREEMENT

In May 2000, the Company entered into a collaboration agreement with Ventro
Corporation to offer certain products through the Company's web site. The
Company will receive a commission on all products sold. Furthermore, Ventro will
receive a commission if it sells any of the Company's products through its
technology platform. In addition, Ventro invested $5,000,000 in the Company's
Series E convertible preferred stock financing at terms no less favorable than
those extended to other investors.

STOCK SPLIT

In August 2000, the Board of Directors approved a reverse 4 for 1 stock
split. All preferred stock data, common stock data and common stock option plan
information in this report has been restated retroactively to reflect the split.
Stockholders approval of the reverse stock split was obtained in September ,
2000.

INITIAL PUBLIC OFFERING

In August 2000, the Board of Directors authorized management of the Company
to file a registration statement with the Securities and Exchange Commission
permitting the Company to sell

F-24
<PAGE>
9. SUBSEQUENT EVENTS: (CONTINUED)
shares of its common stock to the public. If the initial public offering is
closed under the terms presently anticipated, all the redeemable convertible
preferred stock outstanding will automatically convert into shares of common
stock. Unaudited pro forma stockholders' equity, as adjusted for the assumed
conversion of the preferred stock, is set forth on the balance sheet.

GERMAN SUBSIDIARY

In March 2000, the Company incorporated DoubleTwist GmbH, a wholly-owned
subsidiary in Germany. DoubleTwist GmbH's principal activity is sales and sales
support in the German market. All intercompany transactions have been eliminated
in the interim consolidated financial statements.

RELATED PARTY TRANSACTION

In February 2000, the Company entered into a one-year agreement with a
member of the Board of Directors to provide certain consulting services for a
monthly fee of $10,000.

2000 STOCK PLAN

The 2000 Stock Plan was adopted by the Board of Directors on April 20, 2000
subject to stockholder approval and the effectiveness of a registration
statement. This plan provides for the grant of incentive stock options to
employees and nonstatutory stock options and stock purchase rights to employees,
directors and consultants. A total of 1,000,000 shares of common stock are
reserved for issuance pursuant to the 2000 Stock Plan, plus any shares remaining
under the 1996 Equity Incentive Plan as of the effective date of a registration
statement and any shares returned to the 1996 Equity Incentive Plan.

DIRECTOR OPTION PROGRAM

The Director Option Program is part of the 2000 Stock Plan and provides for
the periodic grant of nonstatutory stock options to non-employee directors. All
grants of options to non-employee directors under the Director Program are
automatic. The Company will grant to each individual who is a non-employee
director on the effective date of a registration statement or who becomes a
non-employee director thereafter, an option to purchase 15,000 shares on the
later of the effective date of a registration statement or the date which such
person becomes a non-employee director. These options will be fully exercisable
on the date of grant. In addition, non-employee directors receive annual grants
of options to purchase 5,000 shares beginning in fiscal 2001. These options vest
on the first anniversary of the date of grant.

2000 EMPLOYEE STOCK PURCHASE PLAN

The 2000 Employee Stock Purchase Plan was adopted by the Board of Directors
on April 20, 2000 subject to stockholder approval and the effectiveness of a
registration statement. A total of 400,000 shares of common stock will be made
available for sale under the 2000 Employee Stock Purchase Plan. In addition, the
2000 Employee Stock Purchase Plan provides for annual increases in the number of
shares available for issuance under the 2000 Employee Stock Purchase Plan on the
first day of the fiscal year beginning in 2001 in an amount equal to the lesser
of 3% of the outstanding shares of common stock on the first day of the calendar
year, 300,000 shares, or such other lesser amount as may be determined by our
board of directors.

The 2000 Employee Stock Purchase Plan is intended to qualify for
preferential tax treatment and contains consecutive, overlapping 24-month
offering periods. Each offering period includes four

F-25
<PAGE>
9. SUBSEQUENT EVENTS: (CONTINUED)
six-month purchase periods. The offering periods generally start on the first
trading day on or after January 1 and July 1 of each year, except for the first
such offering period which will commence on the first trading day on or after
the effective date of a registration statement and will end on the last trading
day on or before June 30, 2002.

F-26
<PAGE>
SHARES

[LOGO]

COMMON STOCK

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

PROSPECTUS
, 2000

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

LEHMAN BROTHERS

DAIN RAUSCHER WESSELS

THOMAS WEISEL PARTNERS LLC

FIDELITY CAPITAL MARKETS

A DIVISION OF NATIONAL FINANCIAL SERVICES CORPORATION
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all fees and expenses payable by DoubleTwist
in connection with the registration of the common stock hereunder. All of the
amounts shown are estimates except for the SEC registration fee, NASD filing fee
and the Nasdaq National Market listing fees.

<TABLE>
<CAPTION>
AMOUNT TO BE
PAID
------------
<S> <C>
SEC Registration Fee........................................ $ 22,770
NASD Filing Fee............................................. 9,125
Nasdaq National Market Listing Fee.......................... 95,000
Printing and Engraving Expenses............................. *
Legal Fees and Expenses..................................... *
Accounting Fees and Expenses................................ *
Transfer Agent and Registrar Fees and Expenses.............. *
Miscellaneous Expenses...................................... *
--------
Total................................................... $ *
========
</TABLE>

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

* To be supplied by amendment

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law allows for the
indemnification of officers, directors and any corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising, among other
things, under the Securities Act. Our amended and restated certificate of
incorporation and our amended and restated bylaws provide for indemnification of
our directors, officers, employees and other agents to the extent and under the
circumstances permitted by the Delaware General Corporation Law. We have also
entered into agreements with our directors and executive officers that require
DoubleTwist among other things to indemnify them against certain liabilities
that may arise by reason of their status or service as directors and executive
officers to the fullest extent permitted by Delaware law. We intend to purchase
directors and officers liability insurance in connection with this offering,
which will provide coverage against certain liabilities including liabilities
under the Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

(a) Through August 15, 2000, we have issued and sold the following unregistered
securities. The share numbers below assume a four-to-one reverse stock split
to be effected prior to the closing of this offering:

(1) Since July 1997, we have issued and sold an aggregate of
2,200,730 shares of common stock to officers, directors and scientific
advisory board members at a price of $0.80 to $3.00 per share and to
individuals exercising options under our 1996 Equity Incentive Plan.

(2) In October 1997, we sold 578,264 shares of common stock at a price of
$0.80 per share to three investors.

(3) Since our inception, we have granted options to purchase
5,872,225 shares of common stock to employees, directors and consultants
under our 1996 Equity Incentive Plan at exercise prices

II-1
<PAGE>
ranging from $0.80 to $5.00 per share. Of the 5,872,225 shares granted,
3,338,688 remain outstanding, 1,625,591 shares of common stock have been
purchased pursuant to exercises of stock options and 907,946 have been
canceled and returned to our 1996 Equity Incentive Plan.

(4) In February 1999, we exchanged options to purchase an aggregate of
27,125 shares of common stock at an exercise price of $0.80 per share for
options to purchase the same number of shares at an exercise price of
$2.00 per share.

(5) From October 1997 to February 1999, we issued warrants to purchase an
aggregate of 501,758 shares of common stock at exercise prices of $0.80
to $6.442 to three investors, two research institutions, one investment
bank and one financial institution.

(6) In October 1997, we sold 385,508 shares of Series B preferred stock
upon the exercise of warrants at a price of $6.442 per share to three
investors.

(7) In December 1998 and February 1999, we sold an aggregate of
6,994,897 shares of Series C preferred stock at a price of $2.80 per
share to 12 investors.

(8) From November 1998 to December 1998, we issued warrants to purchase an
aggregate of 16,203 shares of Series C preferred stock at an exercise
price of $2.80 to one equipment lessor and one financial institution.

(9) In January 2000, we issued convertible subordinated promissory notes to
eight investors in the aggregate principal amount of $5,000,000. The
principal amount, together with accrued interest, was converted into
832,885 shares of Series D preferred stock in February 2000.

(10) In February 2000, we sold an aggregate of 5,313,727 shares of Series D
preferred stock at a price of $6.02 per share to 14 investors.

(11) In February 2000, we issued warrants to purchase an aggregate of
41,526 shares of Series D preferred stock at an exercise price of
$6.02 per share to eight investors.

(12) In July 2000, we sold an aggregate of 856,441 shares of Series E
preferred stock at a price of $8.464 per share to three investors.

The sales and issuances of securities in the transactions described above
were made without general solicitation or general advertising and were deemed to
be exempt from registration under the Securities Act in reliance upon
Section 4(2) of the Securities Act, Regulation D promulgated thereunder or
Rule 701 promulgated under Section 3(b) of the Securities Act, as transactions
by an issuer not involving any public offering or transactions pursuant to
compensatory benefit plans and contracts relating to compensation as provided
under Rule 701. The recipients of securities in each transaction represented
their intentions to acquire the securities for investment only and not with a
view to or for sale in connection with any distribution thereof and appropriate
legends were affixed to the securities issued in such transactions. All
recipients had adequate access, through their relationship with DoubleTwist, to
information about us.

(b) There were no underwritten offerings employed in connection with any of the
transactions set forth in Item 15(a).

II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
--------------------- ------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1 Amended and Restated Certificate of Incorporation, as in
effect upon filing of the registration statement
3.2* Certificate of Amendment to Amended and Restated Certificate
of Incorporation to be filed prior to completion of this
offering.
3.3* Certificate of Incorporation to be filed upon completion of
the offering
3.4 Bylaws of the registrant as currently in effect
3.5* Bylaws of the registrant to be in effect upon completion of
the offering
4.1* Specimen certificate for common stock
5.1* Opinion of Heller Ehrman White & McAuliffe LLP
10.1 Amended and Restated Investors' Rights Agreement dated
July 6, 2000
10.2 1996 Equity Incentive Plan
10.3 2000 Stock Plan
10.4 2000 Employee Stock Purchase Plan
10.5 Change of Control and Retention Plan
10.6 Form of Director and Executive Officer Indemnification
Agreement
10.7 Letter Agreement dated September 25, 1997 with John D. Couch
10.8 Letter Agreement dated July 16, 1999 with Robert F.
Williamson
10.9 Letter Agreement dated March 27, 1998 with H. Ward Wolff
10.10 Consultant's Agreement by and between DoubleTwist, Inc. and
Dexster Smith, dated as of February 18, 2000.
10.11 Office Lease by and between Lake Merritt Plaza, a California
General Partnership, and Pangea Systems, Inc., dated as of
March 21, 1997
10.12 Office Lease by and between 3201 Associates, LP and Pangea
Systems, Inc., dated as of June 2, 1997
10.13 Office Lease by and between First Broadway 20th, LLC and
DoubleTwist, Inc., dated as of April 12, 2000
10.14 Distribution and Value-Added Reseller Agreement dated as of
March 24, 2000 by and between DoubleTwist, Inc. and
Hitachi, Ltd.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants
23.2* Consent of Heller Ehrman White & McAuliffe LLP (included in
Exhibit 5.1)
24.1 Power of Attorney (see page II-5)
27.1 Financial Data Schedule
</TABLE>

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

* To be filed by amendment.

(b) Financial Statement Schedules:

All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.

II-3
<PAGE>
ITEM 17. UNDERTAKINGS

Insofar as indemnification by DoubleTwist for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of DoubleTwist, we have been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
DoubleTwist of expenses incurred or paid by a director, officer or controlling
person of DoubleTwist in the successful defense of any action, suit or
proceeding) is asserted by a director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
DoubleTwist is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.

We hereby undertake:

(a) to provide to the underwriters at the closing specified in the
underwriting agreement, certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery
to each purchaser.

(b) that, for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by DoubleTwist pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.

(c) that, for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
DoubleTwist has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Oakland, State of California, on the 1st day of September, 2000.

<TABLE>
<S> <C>
DOUBLETWIST, INC.

By: /s/ JOHN D. COUCH
--------------------------------------------
John D. Couch
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints John D. Couch, H. Ward Wolff and
Gregory C. Thayer, and each of them acting individually, his true and lawful
attorneys-in-fact and agents, each with full power of substitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to sign any registration statement for the same offering covered by this
Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) promulgated under the Securities Act of 1933, as amended, and all
post-effective amendments thereto, and to file the same, with all exhibits
thereto and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement on Form S-1 has been signed by the following persons in
the capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President, Chief Executive Officer
/s/ JOHN D. COUCH and Chairman of the Board of
--------------------------------- Directors (principal executive September 1, 2000
John D. Couch officer)

/s/ H. WARD WOLFF
--------------------------------- Chief Financial Officer (principal September 1, 2000
H. Ward Wolff financial and accounting officer)

/s/ FRED E. COHEN
--------------------------------- Director September 1, 2000
Fred E. Cohen
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ SAMUEL D. COLELLA
--------------------------------- Director September 1, 2000
Samuel D. Colella

/s/ ANSBERT GADICKE
--------------------------------- Director September 1, 2000
Ansbert Gadicke

/s/ A. GRANT HEIDRICH, III
--------------------------------- Director September 1, 2000
A. Grant Heidrich, III

/s/ THOMAS A. PENN
--------------------------------- Director September 1, 2000
Thomas A. Penn

/s/ DEXSTER L. SMITH
--------------------------------- Director September 1, 2000
Dexster L. Smith
</TABLE>

II-6
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
--------------------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1 Amended and Restated Certificate of Incorporation, as in
effect upon filing of the registration statement
3.2* Certificate of Amendment to Amended and Restated Certificate
of Incorporation to be filed prior to completion of this
offering.
3.3* Certificate of Incorporation to be filed upon completion of
the offering
3.4 Bylaws of the registrant as currently in effect
3.5* Bylaws of the registrant to be in effect upon completion of
the offering
4.1* Specimen certificate for common stock
5.1* Opinion of Heller Ehrman White & McAuliffe LLP
10.1 Amended and Restated Investors' Rights Agreement dated
July 6, 2000
10.2 1996 Equity Incentive Plan
10.3 2000 Stock Plan
10.4 2000 Employee Stock Purchase Plan
10.5 Change of Control and Retention Plan
10.6 Form of Director and Executive Officer Indemnification
Agreement
10.7 Letter Agreement dated September 25, 1997 with John D. Couch
10.8 Letter Agreement dated July 16, 1999 with Robert F.
Williamson
10.9 Letter Agreement dated March 27, 1998 with H. Ward Wolff
10.10 Consultant's Agreement by and between DoubleTwist, Inc. and
Dexster Smith, dated as of February 18, 2000.
10.11 Office Lease by and between Lake Merritt Plaza, a California
General Partnership, and Pangea Systems, Inc., dated as of
March 21, 1997
10.12 Office Lease by and between 3201 Associates, LP and Pangea
Systems, Inc., dated as of June 2, 1997
10.13 Office Lease by and between First Broadway 20th, LLC and
DoubleTwist, Inc., dated as of April 12, 2000
10.14 Distribution and Value-Added Reseller Agreement dated as of
March 24, 2000 by and between DoubleTwist, Inc. and
Hitachi, Ltd.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants
23.2* Consent of Heller Ehrman White & McAuliffe LLP (included in
Exhibit 5.1)
24.1 Power of Attorney (see page II-5)
27.1 Financial Data Schedule
</TABLE>

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

* To be filed by amendment.