(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

4390 US Route One

Princeton, NJ

Current assets:

Cash and cash equivalents

Short-term investments

Restricted cash

Accounts receivable, net

Inventory

Prepaids and other current assets

Total current assets

Fixed assets, net

Goodwill

Other intangibles, net

Restricted cash

Other assets

Total assets

Current liabilities:

Accounts payable

Accrued expenses

Income tax payable

Current portion of long-term debt

Deferred revenue

Total current liabilities

Accrued restructuring, less current portion

Other liabilities

Total liabilities

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $.001 par value. Authorized 5,000,000 shares; 0 shares issued outstanding as of March 31, 2005 and December 31, 2004, respectively

Series A junior participating preferred stock, $.001 par value. Designated 1,000,000 shares; no shares issued or outstanding

Common stock, $0.001 par value. Authorized 150,000,000 shares; issued and outstanding 24,044,000 and 24,033,000 at March 31, 2005 and December 31, 2004, respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

Revenues:

Service revenues

Other revenues

Total revenues

Operating expenses:

Cost of service revenues

Research and development

Marketing and sales

General and administrative

Restructuring

Amortization of intangible assets

Total operating expenses

Operating loss

Other income (expense):

Interest income

Interest expense

Other income (expense)

Total other income (expense), net

Loss from continuing operations before income taxes

Income tax expense

Loss from continuing operations

Discontinued operations:

Loss from operations of a business sold

Net loss

Dividends to Series A preferred shareholders

Accretion of Series A preferred stock discount

Net loss allocable to common stockholders

Basic and diluted loss from continuing operations per share allocable to common stockholders

Basic and diluted loss from discontinued operations per share

Basic and diluted net loss per share allocable to common stockholders

Shares used in computing basic and diluted net loss per share allocable to common stockholders

Cash flows from operating activities:

Loss from continuing operations

Loss from discontinued operations

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Gain on sale of asset

Noncash compensation expense

Depreciation and amortization

Bad debt expense

Loss of sale of investment

Changes in assets and liabilities:

Accounts receivable

Inventory

Prepaids and other current assets

Other assets

Accounts payable

Accrued expenses, including restructuring

Income tax payable

Deferred revenue

Other liabilities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Capital expenditures

Proceeds from the sale of assets

Maturities of short-term investments

Proceeds from the sale of investments

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Net proceeds from issuance of common stock

Repayment of debt from line of credit

Payments of patent obligations

Net cash provided by (used in) financing activities

Effect of foreign currency translation on cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental disclosure of noncash financing and investing activities:

Dividends to Series A preferred shareholders issued or issuable in common stock

Accretion of Series A preferred stock discount resulting from conversions and probable redemption

Supplemental disclosure of cash flow information:

Cash paid during the period for interest

Balance at January 1, 2005: