<SUBMISSION>
<ACCESSION-NUMBER>0001104659-02-006374
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>2
<PERIOD>20020930
<FILING-DATE>20021115
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CERUS CORP
<CIK>0001020214
<ASSIGNED-SIC>2836
<IRS-NUMBER>680262011
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-21937
<FILM-NUMBER>02827829
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>2411 STANWELL DR
<CITY>CONCORD
<STATE>CA
<ZIP>94520
<PHONE>9252886000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>2525 STANWELL DRIVE
<STREET2>STE 300
<CITY>CONCORD
<STATE>CA
<ZIP>94520
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>CERUS TECHNOLOGIES INC
<DATE-CHANGED>19960731
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>j5455_10q.htm
<DESCRIPTION>10-Q
<TEXT>
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<p align="center" style="border:none;margin:0in 0in .0001pt;padding:0in;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;"><b><font size="5" face="Times New Roman" style="font-size:18.0pt;font-weight:bold;">UNITED STATES</font><br>

</b><b><font size="5" style="font-size:18.0pt;font-weight:bold;">SECURITIES AND EXCHANGE

COMMISSION</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">WASHINGTON, D.C.&#160;

20549</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="5" face="Times New Roman" style="font-size:18.0pt;font-weight:bold;">FORM 10 - Q</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">(Mark

  One)</font></b></p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.98%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="3" face="Wingdings" style="font-family:Wingdings;font-size:12.0pt;font-weight:bold;">&#253;</font></b></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.66%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="92%" valign="top" style="padding:0in 0in 0in 0in;width:92.36%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="3" face="Times New Roman" style="font-size:12.0pt;font-weight:bold;">QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

  SECURITIES EXCHANGE ACT OF 1934</font></b></p>

  </td>

 </tr>

 <tr>

  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.98%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.66%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="92%" valign="top" style="padding:0in 0in 0in 0in;width:92.36%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">For the quarterly period ended

  September 30, 2002</font></b></p>

  </td>

 </tr>

 <tr>

  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.98%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.66%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="92%" valign="top" style="padding:0in 0in 0in 0in;width:92.36%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">or</font></b></p>

  </td>

 </tr>

 <tr>

  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.98%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.66%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="92%" valign="top" style="padding:0in 0in 0in 0in;width:92.36%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.98%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="3" face="Wingdings" style="font-family:Wingdings;font-size:12.0pt;font-weight:bold;">o</font></b></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.66%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="92%" valign="top" style="padding:0in 0in 0in 0in;width:92.36%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="3" face="Times New Roman" style="font-size:12.0pt;font-weight:bold;">TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

  SECURITIES EXCHANGE ACT OF 1934</font></b></p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Commission File Number 0-21937</font></b></p>

  </td>

 </tr>

</table>



<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="5" face="Times New Roman" style="font-size:18.0pt;font-weight:bold;">CERUS

CORPORATION</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Exact name of

registrant as specified in its charter)</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<div align="center">



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="49%" valign="top" style="padding:0in 0in 0in 0in;width:49.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Delaware</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="49%" valign="top" style="padding:0in 0in 0in 0in;width:49.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">68-0262011</font></b></p>

  </td>

 </tr>

 <tr>

  <td width="49%" valign="top" style="padding:0in 0in 0in 0in;width:49.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(State or other

  jurisdiction of<br>

  incorporation or organization)</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="49%" valign="top" style="padding:0in 0in 0in 0in;width:49.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(I.R.S. Employer<br>

  Identification Number)</font></p>

  </td>

 </tr>

 <tr>

  <td width="49%" valign="top" style="padding:0in 0in 0in 0in;width:49.0%;">

  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="49%" valign="top" style="padding:0in 0in 0in 0in;width:49.0%;">

  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">2411

  Stanwell Dr.<br>

  Concord, California&#160; 94520</font></b></p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Address of principal

  executive offices, including zip code)</font></p>

  </td>

 </tr>

 <tr>

  <td width="49%" valign="top" style="padding:0in 0in 0in 0in;width:49.0%;">

  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="49%" valign="top" style="padding:0in 0in 0in 0in;width:49.0%;">

  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">(925) 288-6000</font></b></p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Registrant&#146;s telephone

  number, including area code)</font></p>

  </td>

 </tr>

</table>



</div>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Indicate by check mark whether the registrant (1) has

filed all reports required to be filed by Section 13 or 15 (d) of the

Securities Exchange Act of 1934 during the preceding 12 months (or for such

shorter period that the registrant was required to file such reports), and (2)

has been subject to such filing requirements for the past 90 days.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; YES </font><font face="Wingdings" style="font-family:Wingdings;">&#253;</font>

NO<font face="Wingdings" style="font-family:Wingdings;">o</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">As of October 31, 2002, there were 15,904,520 shares

of the registrant&#146;s common stock outstanding.</font></p>



<div style="border:none;border-bottom:double windowtext 9.0pt;padding:0in 0in 0in 0in;">



<p align="center" style="border:none;margin:0in 0in .0001pt;padding:0in;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



</div>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CERUS CORPORATION</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">QUARTERLY REPORT ON FORM 10-Q<br>

THREE MONTHS ENDED SEPTEMBER 30, 2002</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">TABLE OF CONTENTS</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <h3 style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#PartI" title="Click to goto PART I:">PART I</a></font></b></h3>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <h3 style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</h3>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <h3 style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#PartI" title="Click to goto PART I:">FINANCIAL

  INFORMATION</a></font></b></h3>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <h3 style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</h3>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <h3 style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</h3>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <h3 style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</h3>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item1_" title="Click to goto ITEM 1.">Item

  1.</a></font></p>

  </td>

  <td width="91%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:91.86%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item1_" title="Click to goto ITEM 1.">Financial

  Statements (Unaudited)</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="91%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:91.86%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#CondensedBalanceSheets" title="Click to goto CONDENSED BALANCE SHEETS">Condensed

  Balance Sheets -<br>

  September 30, 2002 and December 31, 2001</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#CondensedStatementsOfOperations" title="Click to goto CONDENSED STATEMENTS OF OPERATIONS">Condensed

  Statements of Operations - <br>

  Three and nine months ended September 30, 2002 and 2001</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#CondensedStatementsOfCashFlows" title="Click to goto CONDENSED STATEMENTS OF CASH FLOWS">Condensed

  Statements of Cash Flows -<br>

  Nine months ended September 30, 2002 and 2001</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Notes" title="Click to goto NOTES">Notes to Condensed Financial Statements</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item2" title="Click to goto ITEM 2">Item

  2.</a></font></p>

  </td>

  <td width="91%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:91.86%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item2" title="Click to goto ITEM 2">Management&#146;s

  Discussion and Analysis of Financial Condition and Results of Operations</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item3_" title="Click to goto ITEM 3.">Item

  3.</a></font></p>

  </td>

  <td width="91%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:91.86%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item3_" title="Click to goto ITEM 3.">Quantitative

  and Qualitative Disclosures About Market Risk</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item4_" title="Click to goto ITEM 4.">Item

  4.</a></font></p>

  </td>

  <td width="91%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:91.86%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item4_" title="Click to goto ITEM 4.">Controls

  and Procedures</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <h3 style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#PartIi" title="Click to goto PART II:">PART II</a></font></b></h3>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <h3 style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</h3>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <h3 style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#PartIi" title="Click to goto PART II:">OTHER INFORMATION</a></font></b></h3>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <h3 style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</h3>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <h3 style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</h3>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <h3 style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</h3>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item1_LegalProceedings" title="Click to goto ITEM 1. LEGAL PROCEEDINGS">Item 1.</a></font></p>

  </td>

  <td width="91%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:91.86%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item1_LegalProceedings" title="Click to goto ITEM 1. LEGAL PROCEEDINGS">Legal Proceedings</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item2_Changes" title="Click to goto ITEM 2. CHANGES">Item 2.</a></font></p>

  </td>

  <td width="91%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:91.86%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item2_Changes" title="Click to goto ITEM 2. CHANGES">Changes in

  Securities and Use of Proceeds</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item3_Defaults" title="Click to goto ITEM 3. DEFAULTS">Item 3.</a></font></p>

  </td>

  <td width="91%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:91.86%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item3_Defaults" title="Click to goto ITEM 3. DEFAULTS">Defaults upon

  Senior Securities</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item4_Submission" title="Click to goto ITEM 4. SUBMISSION">Item 4.</a></font></p>

  </td>

  <td width="91%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:91.86%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item4_Submission" title="Click to goto ITEM 4. SUBMISSION">Submission of

  Matters to a Vote of Security Holders</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item5_OtherInformation" title="Click to goto ITEM 5. OTHER INFORMATION">Item 5.</a></font></p>

  </td>

  <td width="91%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:91.86%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item5_OtherInformation" title="Click to goto ITEM 5. OTHER INFORMATION">Other Information</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item6_Exhibits" title="Click to goto ITEM 6. EXHIBITS">Item 6.</a></font></p>

  </td>

  <td width="91%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:91.86%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item6_Exhibits" title="Click to goto ITEM 6. EXHIBITS">Exhibits and

  Reports on Form 8-K</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;"><a href="#Signatures" title="Click to goto SIGNATURES">SIGNATURES</a></font></b></p>

  </td>

 </tr>

 <tr>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.14%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.02%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="88%" valign="top" style="padding:0in 0in 0in 0in;width:88.84%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;"><a href="#Certifications" title="Click to goto CERTIFICATIONS">CERTIFICATIONS</a></font></b></p>

  </td>

 </tr>

</table>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><a name="PartI"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">PART I:</font></b></a><b><font style="font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; FINANCIAL INFORMATION</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><a name="Item1_"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">ITEM 1.</font></b></a><b><font style="font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; FINANCIAL STATEMENTS</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CERUS CORPORATION</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><a name="CondensedBalanceSheets"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CONDENSED

BALANCE SHEETS</font></b></a></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">UNAUDITED</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(in thousands)</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="65%" valign="bottom" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt 10.0pt;text-align:center;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">September

  30,<br>

  2002</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">December

  31,<br>

  2001</font></b></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Assets</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Current assets:</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash and cash

  equivalents</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:13.72%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">42,128</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:13.72%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">64,503</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Short-term

  investments</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">39,667</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">58,958</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accounts

  receivable from a related party</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">55</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">26</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other current

  assets</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,129</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,573</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total current

  assets</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">83,979</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">125,060</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Furniture and

  equipment, net of depreciation</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6,164</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,012</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other assets</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">153</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">188</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total assets</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:13.72%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">90,296</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:13.72%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">128,260</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Liabilities and

  stockholders&#146; equity</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Current

  liabilities:</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accounts payable

  to a related party</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:13.72%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,897</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:13.72%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,029</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accounts payable</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,687</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,220</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accrued expenses</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,979</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7,247</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Deferred revenue</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">754</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">927</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Current portion

  of capital lease obligations</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">34</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">31</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total current

  liabilities</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">18,351</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">16,454</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Capital lease

  obligations, less current portion</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">25</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">51</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Redeemable

  convertible preferred stock</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,000</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total

  stockholders&#146; equity</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">71,920</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">106,755</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total

  liabilities and stockholders&#146; equity</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="13%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:13.72%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">90,296</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="13%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:13.72%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">128,260</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

</table>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">See notes to

condensed financial statements.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='3',FILE='C:\C2\nyang\5455_4\t_950649\j5455_10q.htm',USER='nyang',CD='Nov 14 14:32 2002' -->
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</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CERUS CORPORATION</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><a name="CondensedStatementsOfOperations"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CONDENSED

STATEMENTS OF OPERATIONS</font></b></a></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">UNAUDITED</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(in thousands, except per

share data)</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="47%" valign="bottom" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt 10.0pt;text-align:center;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="24%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:24.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Three

  Months Ended<br>

  September 30,</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="24%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:24.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Nine

  Months Ended<br>

  September 30,</font></b></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="bottom" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt 10.0pt;text-align:center;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2002</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2001</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2002</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2001</font></b></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Revenue:</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Milestone and

  development funding, related parties</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="9%" valign="bottom" style="padding:0in 0in 0in 0in;width:9.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="9%" valign="bottom" style="padding:0in 0in 0in 0in;width:9.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">69</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="9%" valign="bottom" style="padding:0in 0in 0in 0in;width:9.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,002</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="9%" valign="bottom" style="padding:0in 0in 0in 0in;width:9.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,935</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Development

  funding, other</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">167</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">231</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">306</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">681</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Government

  grants and cooperative agreements</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">563</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">217</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,574</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">904</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:47.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total revenue</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">730</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">517</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6,882</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,520</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:47.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Operating

  expenses:</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Research and

  development</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14,881</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">12,194</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">41,286</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">35,598</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">General and

  administrative</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,925</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,347</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,751</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7,384</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:47.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total operating

  expenses</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">17,806</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14,541</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">50,037</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">42,982</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:47.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Loss from

  operations</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(17,076</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(14,024</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(43,155</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(39,462</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:47.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Interest income,

  net</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">485</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,298</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,733</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,696</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:47.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Loss before

  provision for income taxes</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(16,591</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(12,726</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(41,422</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(35,766</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:47.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Provision for

  income taxes</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(100</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:47.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net loss</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="9%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:9.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(16,591</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="9%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:9.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(12,726</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="9%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:9.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(41,422</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="9%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:9.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(35,866</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:47.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net loss per

  share - basic and diluted</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="9%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:9.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1.05</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="9%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:9.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.81</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="9%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:9.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2.62</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="9%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:9.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2.41</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:47.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Shares used in

  computing net loss per share - basic and diluted</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">15,874</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">15,711</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">15,802</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:11.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14,898</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

</table>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">See notes to

condensed financial statements.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CERUS CORPORATION</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><a name="CondensedStatementsOfCashFlows"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CONDENSED

STATEMENTS OF CASH FLOWS</font></b></a></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">UNAUDITED</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(in thousands)</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="65%" valign="bottom" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt 10.0pt;text-align:center;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="32%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:32.04%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Nine

  Months Ended<br>

  September 30,</font></b></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="bottom" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt 10.0pt;text-align:center;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2002</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2001</font></b></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Operating

  activities:</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net loss</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="13%" valign="bottom" style="padding:0in 0in 0in 0in;width:13.72%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(41,422</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="13%" valign="bottom" style="padding:0in 0in 0in 0in;width:13.72%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(35,866</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Adjustments to

  reconcile net loss to net cash used in operating activities:</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Depreciation and

  amortization</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,685</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">869</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Issuance of

  common stock for services</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">33</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">420</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gain on sale of

  equipment</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(22</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Changes in

  operating assets and liabilities:</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 40.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accounts

  receivable from a related party</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(29</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">204</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 40.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other current

  assets</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(556</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(442</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 40.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other assets</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">35</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(34</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 40.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accounts payable

  to a related party</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,868</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6,082</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 40.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accounts payable

  and accrued expenses</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1,801</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2,270</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 40.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Deferred revenue</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(173</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,166</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net cash used in

  operating activities</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(38,360</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(29,893</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Investing

  activities:</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Purchases of

  furniture, equipment and leasehold improvements</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(4,837</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(614</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Proceeds from

  sale of equipment</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">44</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Purchases of

  short-term investments</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(77,034</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(39,275</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Sales of

  short-term investments</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">47,033</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Maturities of

  short-term investments</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">49,292</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">19,062</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net cash

  provided by (used in) investing activities</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14,454</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(20,783</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Financing

  activities:</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net proceeds

  from issuance of common stock</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,554</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">78,132</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Payments on

  capital lease obligations</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(23</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(26</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net cash

  provided by financing activities</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,531</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">78,106</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net increase

  (decrease) in cash and cash equivalents</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(22,375</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">27,430</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash and cash

  equivalents, beginning of period</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">64,503</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">71,871</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" style="padding:0in 0in 0in 0in;width:65.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:15.02%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="65%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:65.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash and cash

  equivalents, end of period</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:13.72%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">42,128</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:13.72%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">99,301</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

</table>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">See notes to condensed

financial statements.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CERUS CORPORATION</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;"><a name="Notes"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">NOTES</font></b></a><b><font style="font-weight:bold;"> TO CONDENSED

FINANCIAL STATEMENTS</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">UNAUDITED</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note 1 -

Basis of Presentation</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The accompanying unaudited condensed financial statements of Cerus

Corporation have been prepared in accordance with generally accepted accounting

principles for interim financial information and pursuant to the instructions

to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include

all of the information and footnotes required by generally accepted accounting

principles for complete financial statements. In the opinion of management, all

adjustments, consisting of normal recurring accrual adjustments, considered

necessary for a fair presentation have been included. Operating results for the

three- and nine-month periods ended September 30, 2002 are not necessarily indicative

of the results that may be expected for the year ending December 31, 2002 or

for any future period.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">These condensed financial statements and notes should be read in

conjunction with Cerus&#146; audited financial statements and notes thereto for the

year ended December 31, 2001 included in the company&#146;s 2001 Annual Report on

Form 10-K.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note 2 -

Comprehensive Income (Loss)</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Statement of Financial Accounting Standards No. 130, &#147;Reporting

Comprehensive Income,&#148; requires that all items recognized under accounting

standards as comprehensive income (revenue, expenses, gains and losses) be

reported in a financial statement that is displayed with the same prominence as

other financial statements. Cerus does not have material components of other

comprehensive income. Therefore, comprehensive loss is equal to net loss for

all periods presented.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note 3 -

Net Loss per Share</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cerus&#146; net loss per share has been calculated in accordance with

Statement of Financial Accounting Standards No. 128, &#147;Earnings per Share.&#148; Basic

and diluted net loss per share has been computed using the weighted average

number of common shares outstanding during the period. The effects of

outstanding stock options and other convertible securities are excluded from

the calculation of diluted net loss per share, as inclusion would be

antidilutive.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note 4 - Revenue and Research and

Development Expenses</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Development funding revenue includes amounts recognized under

development agreements with Baxter Healthcare Corporation, Kirin Brewery

Company, Ltd. and the Consortium for Plasma Science. Baxter and the Consortium

are related parties to Cerus. Revenue from related parties for the nine months

ended September 30, 2002 was $5,002,000. No revenue from related parties</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">was recognized in the three-month period in 2002. Revenue from related

parties for the three and nine months ended September 30, 2001 was $69,000 and

$1,935,000, respectively. Development funding revenue is recognized as the

related project costs are incurred. Research and development expenses are

recognized as incurred. Revenue related to at-risk milestones specified under

development contracts is recognized as the milestones are achieved. Payments

for achieved milestones are non-refundable and are not subject to future

performance. In the second quarter of 2002, Cerus recognized $5,000,000 of

milestone revenue from Baxter upon CE Mark approval of the disposable set for

the platelet system. There was no milestone revenue recognized in 2001.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cerus receives certain United States government grants in support of

its research efforts in defined research projects. These grants generally

provide for reimbursement of approved costs incurred as defined in the various

grants. Revenue associated with these grants is recognized as costs under each

grant are incurred. Grants recorded as revenue are non-refundable.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note 5 &#150; Preferred Stock</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Upon regulatory approval of the platelet system in Europe, all 5,000

outstanding shares of Series A preferred stock were converted to common shares

in July 2002. Cerus issued a total of 129,968 common shares to Baxter, the

holder of the Series A preferred stock, in connection with this conversion. The

conversion price was based on the average of 120% of the average closing price

of the common stock 30 trading days prior to CE Mark approval of the disposable

set for the platelet system and 120% of the average closing price of the common

stock 30 trading days prior to CE Mark of the illumination device for the

platelet system.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Baxter holds 3,327 shares of Cerus&#146; Series B preferred stock, which

represents 100% of the total outstanding shares of Series B preferred stock.

The holder of Series B preferred stock has no voting rights, except with

respect to the authorization of any class or series of stock having preference

or priority over the Series B preferred stock as to voting, liquidation or

conversion or with respect to the determination of fair market value of

non-publicly traded shares received by the holder of Series B stock in the

event of a liquidation, or except as required by Delaware law. At any time, the

holder may convert each share of Series B preferred stock into 100 common

shares. If all shares of Series B preferred stock were converted to common

stock, 332,700 shares would be issued, which represents 2.1% of the outstanding

common shares of Cerus at September 30, 2002. Cerus has the right to redeem the

Series B preferred stock prior to conversion for a payment of $9.5 million.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note 6 &#150; Loan Commitment from Baxter</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In October 2002, Cerus received a commitment from Baxter for a $50

million loan, subject to the completion of final loan documentation. The terms

of the five-year loan include the availability of the funds beginning January

2003. The interest rate of the loan will be 12%, with no interest or principal

payments due until 2008. The loan will be secured with collateral based on

future revenue from sales of the INTERCEPT Blood System for platelets.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7</font></p>





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<p style="font-size:10.0pt;margin:0in 0in .0001pt 81.35pt;text-indent:-81.35pt;"><a name="Item2"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">ITEM 2</font></b></a><b><font style="font-weight:bold;">.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>MANAGEMENT&#146;S

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">This discussion and analysis should be read in conjunction with Cerus&#146;

financial statements and accompanying notes included in this report and the

company&#146;s 2001 audited financial statements and accompanying notes included in

its 2001 Annual Report on Form 10-K. Operating results for the periods

presented are not necessarily indicative of results for the year ending

December 31, 2002 or any future period.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The following discussion includes forward-looking statements that

involve risks and uncertainties. When used herein, the words &#147;believe,&#148;

&#147;anticipate,&#148; &#147;expect,&#148; &#147;estimate&#148; and similar expressions are intended to

identify such forward-looking statements. There can be no assurance that these

statements will prove to be correct. Certain important factors could cause

actual results to differ materially from those discussed in such statements,

including uncertainties associated with pre-clinical and clinical testing, regulatory

approvals, manufacturing, reimbursement, market acceptance and other factors

discussed below and under the caption &#147;Risk Factors,&#148; and in the company&#146;s

other documents filed with the Securities and Exchange Commission. Cerus

undertakes no obligation to update any of the forward-looking statements

contained herein to reflect any future events or developments.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The condensed balance sheet at December 31, 2001 has been derived from

the audited financial statements at that date, but does not include all of the

information and footnotes required by generally accepted accounting principles

for complete financial statements.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Cerus </font></i>and<i><font style="font-style:italic;"> Helinx</font></i> are United States

registered trademarks of Cerus Corporation.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">INTERCEPT

</font></i>is a trademark of Baxter International, Inc.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<h3 style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">Overview</font></b></h3>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cerus Corporation is developing medical systems and therapeutics based

on its proprietary Helinx</font><font face="Symbol" style="font-family:Symbol;">&#210;</font>

technology for controlling biological replication. Cerus&#146; most advanced

programs are focused on systems to enhance the safety of blood products used

for transfusion. The INTERCEPT Blood System, based on the company&#146;s Helinx

technology, is designed to inactivate viruses, bacteria, other pathogens and

white blood cells. Cerus also is pursuing therapeutic applications of Helinx

technology to treat and prevent serious diseases.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cerus is developing the INTERCEPT Blood System for platelets, plasma

and red blood cells with its development and marketing partner, Baxter

Healthcare Corporation. The INTERCEPT Blood System is intended to target and

inactivate blood-borne pathogens, such as HIV and hepatitis B and C, as well as

harmful white blood cells, while leaving intact the therapeutic properties of

the blood components. The INTERCEPT Blood System inactivates a broad array of

pathogens and has the potential to reduce the risk of transmission of pathogens

for which testing is not completely effective or is not currently performed.

Cerus believes that the INTERCEPT Blood System also has the potential to

inactivate new pathogens before they are identified and before tests are

developed to detect their presence in donated blood.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8</font></p>





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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cerus and Baxter have received a CE Mark for the INTERCEPT Blood System

for platelets. The companies have begun the regulatory submission process to

obtain approval in the United States. Cerus and Baxter are also in late stage

development of the INTERCEPT Blood System for plasma. In addition, the

companies are conducting Phase III clinical trials for INTERCEPT Red Blood

Cells. Cerus&#146; allogeneic cellular immune therapy (ACIT) program, designed to

improve the outcome of bone marrow transplantation procedures through use of

T-cells treated with the Helinx technology, is in Phase I clinical trials.

Cerus&#146; Epstein-Barr Virus (EBV) cellular vaccine program is in pre-clinical

development.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Since its inception in 1991, Cerus has devoted substantially all of its

efforts and resources<i><font style="font-style:italic;">  </font></i>to the research, development and clinical

testing of medical systems based on its Helinx technology.&#160; Cerus has been unprofitable since inception

and, as of September 30, 2002, had an accumulated deficit of approximately

$214.5 million. Except for the INTERCEPT Blood System for platelets, which is

approved for sale in Europe, all of Cerus&#146; product candidates are in the research

and development stage, and Cerus has not yet received any revenue from product

sales. Cerus and Baxter must conduct significant research, development,

pre-clinical and clinical evaluation, commercialization and regulatory

compliance activities on these product candidates that, together with

anticipated general and administrative expenses, are expected to result in

substantial losses at least until after commercialization of one or more

products. Cerus&#146; ability to achieve a profitable level of operations in the

future will depend on its and Baxter&#146;s ability to successfully complete

development and obtain regulatory approvals and on Baxter&#146;s ability to

commercialize and achieve market acceptance of the INTERCEPT Blood System.

Cerus may never achieve a profitable level of operations. Further, under the

agreements discussed below, Baxter provides significant funding for development

of the INTERCEPT Blood System, based on an annual budgeting process, and is

responsible for manufacturing and marketing the products following regulatory

approvals. These agreements may be modified or terminated.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Agreement

with Baxter for the Development of the INTERCEPT Blood System for Platelets.</font></i>

Cerus has a development and commercialization agreement with Baxter for the

joint development of the INTERCEPT Blood System to inactivate viruses, bacteria

and other infectious pathogens in platelets used for transfusion. This

agreement provides for Baxter and Cerus generally to share system development

costs equally, subject to mutually determined budgets established from time to

time, and for Cerus to receive approximately 33.5% of revenue from sales of

inactivation system disposables after each party is reimbursed for its cost of

goods to the extent the cost exceeds specified amounts. Baxter has an

exclusive, worldwide distribution license and will be responsible for

manufacturing and marketing the INTERCEPT Blood System for platelets following

regulatory approval. The agreement also provided for Baxter to make a $5

million cash milestone payment to Cerus upon approval to market products

developed under the platelet program. The $5 million milestone was earned and

recognized as revenue by Cerus in the second quarter of 2002. Cerus received

payment of the $5 million milestone from Baxter in July 2002.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Agreement

with Baxter for the Development of the INTERCEPT Blood System for Red Blood

Cells and Plasma.</font></i> Cerus also has a development and

commercialization agreement with Baxter for the joint development of the

INTERCEPT Blood System to inactivate viruses, bacteria and other infectious

pathogens in red blood cells and fresh frozen plasma for transfusion. This

agreement provides for Baxter and Cerus generally to share red blood cell

system development</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9</font></p>





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<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">costs equally, subject to mutually determined budgets established from

time to time. Cerus is solely responsible for funding the development costs of

the plasma system. Baxter has an exclusive, worldwide distribution license and

will be responsible for manufacturing and marketing the red blood cell and

plasma systems following regulatory approvals. The agreement also provides for

an equal sharing of revenue from sales of red blood cell system disposables,

and for Cerus to receive 75% and Baxter to receive 25% of revenue from sales of

plasma system disposables, in each case after each party is reimbursed for its

cost of goods and a specified percentage, not to exceed 14% of revenue, is

retained by Baxter for marketing and administrative expenses.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">This agreement also provides that Baxter and its affiliates will not

acquire capital stock of Cerus if the acquisition would result in Baxter and

its affiliates owning 5.4% or more of the outstanding voting power of Cerus.

The provision excludes the conversion of preferred stock and will not apply in

the event a third party makes a tender offer for a majority of the outstanding

voting shares of Cerus, the Board of Directors decides to liquidate or sell to

a third party substantially all of Cerus&#146; assets or a majority of Cerus&#146; voting

securities approve a merger in which Cerus&#146; stockholders do not own a majority

of the voting securities of the post-merger company. As of September 30, 2002,

Baxter owned less than 5% of Cerus&#146; outstanding common stock.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">From inception through September 30, 2002, Cerus has received $46.7

million in equity investments from Baxter and $25.9 million in an equity

investment from Baxter International Inc. and Subsidiaries Pension Trust, and

has recognized $30.0 million in revenue from Baxter. Baxter has advised Cerus

that Baxter International Inc. and Subsidiaries Pension Trust is not an

affiliate of Baxter. Development funding is in the form of balancing payments

made by Baxter to Cerus, if necessary, to reimburse Cerus for development

spending in excess of the levels determined by Baxter and Cerus. Development

funding revenue is recognized as the related project costs are incurred.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In October 2002, Cerus received a commitment from Baxter for a $50

million loan, subject to the completion of final loan documentation. The terms

of the five-year loan include the availability of the funds beginning January

2003. The interest rate of the loan will be 12%, with no interest or principal

payments due until 2008. The loan will be secured with collateral based on

future revenue from sales of the INTERCEPT Blood System for platelets.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Agreement with

Kirin.</font></i>  In January

2001, Cerus entered into a collaborative agreement with the Pharmaceutical

Division of Kirin to develop and market products for stem cell transplantation

based on Cerus&#146; Helinx technology. Under the terms of the agreement, Cerus and

Kirin will jointly develop the products. Cerus has received an initial license

fee of $1 million. The license fee is being deferred and recognized as development

funding ratably over the development period. Cerus may not receive additional

funding from Kirin. In addition, the agreement calls for Kirin to fund all

development expenses for the Asia-Pacific region and a portion of Cerus&#146;

development activities aimed at obtaining product approval in the United

States. No such development activities by Cerus are currently ongoing. Upon

product approval, Kirin has exclusive rights to market the products in the

Asia-Pacific region, including Japan, China, Korea and Australia, and Cerus

will receive a specified share of product revenue, including a royalty and

reimbursement of its cost of goods. Cerus retains all marketing rights for the

rest of the world, including the United States and Europe.</p>



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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">10</font></p>





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<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Cooperative

Agreement with the Armed Forces of the United States.</font></i>  In February 2001, Cerus was awarded a

$3.5 million cooperative agreement by the Army Medical Research Acquisition

Activity division of the Department of Defense. Cerus received the award to

develop its pathogen inactivation technologies to improve the safety and

availability of blood that may be used by the United States Armed Forces for

medical transfusions. Under the conditions of the agreement, Cerus will conduct

research on the inactivation of infectious pathogens, including unusual

viruses, bacterial and parasites, which are of particular concern to the Armed

Forces. Cerus, in collaboration with investigators at Walter Reed Army

Institute of Research, also will investigate ways to improve the storage and

shelf life of blood and blood components, which may be used for medical

transfusion support in combat zones. Also under the terms of the agreement,

Cerus would receive commercial rights to the discoveries and inventions arising

from the research performed under the collaboration. In September 2002, Cerus

was awarded an additional $6.5 million cooperative agreement to continue

funding of these projects.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Agreement

with the Consortium for Plasma Science. </font></i>In December 1998,

Cerus and the Consortium for Plasma Science entered into an agreement for the

development of a pathogen inactivation system for source plasma used for

fractionation. The Consortium is co-funded by four plasma fractionation

companies: Alpha Therapeutics Corporation, Aventis Behring, Bayer Corporation

and Baxter. The Consortium, which is a separate entity from its members,

provides research and development funding worldwide for technologies to improve

the safety of source plasma. Under the agreement, the Consortium has funded

development of Cerus&#146; proprietary technology for use with source plasma. Cerus

does not expect to receive additional funding from the Consortium. Cerus will

pay the Consortium a royalty based on a percentage of product sales, if any.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Results

of Operations</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Three- and Nine-Month Periods Ended

September 30, 2002 and 2001</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Revenue.</font></i>

Milestone and development funding from Baxter and the Consortium increased to

$5.0 million for the nine months ended September 30, 2002 from $1.9 million for

the comparable period in 2001. The increase was due to a $5 million milestone

payment from Baxter earned in the second quarter of 2002 upon regulatory

approval of the disposable set for the INTERCEPT Blood System for platelets in

Europe. No revenue from Baxter or the Consortium was recognized in the

three-month period ended September 30, 2002. No development funding revenue

from Baxter was recognized in 2002. Development funding revenue earned under

the agreements with Baxter is dependent on the relative spending by Cerus and

Baxter on the programs for which development costs are shared.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Development funding from non-related parties decreased 28% to $167,000

for the three months ended September 30, 2002 from $231,000 for the comparable

period in 2001, and decreased 55% to $306,000 for the nine months ended

September 30, 2002 from $681,000 for the comparable period in 2001. The changes

for both periods were due to decreased development funding from Kirin,

principally resulting from reduced ACIT program expenses incurred by Cerus in

2002.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Milestone revenue from Baxter was 73% of total revenue for the nine

months ended September 30, 2002. There was no revenue from Baxter recognized in

the three months ended September 30, 2002.&#160;

Development funding from Kirin was 5% of total revenue for the three

months</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



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<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">ended September 30, 2002, and was 2% of total revenue for the nine

months ended September 30, 2002. Development funding from the Consortium was

less than 1% of total revenue for the nine months ended September 30, 2002.

There was no revenue from the Consortium recognized in the three months ended

September 30, 2002.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Revenue from government grants and cooperative agreements increased

159% to $0.6 million for the three months ended September 30, 2002 from $0.2

million for the comparable period in 2001, and increased 74% to $1.6 million

for the nine months ended September 30, 2002 from $0.9 million for the

comparable period in 2001. The changes in both periods were primarily due to

the timing of various external contract research activities. Cerus has two

three-year cooperative agreements with the Armed Forces of the United States

that were entered into in February 2001 and September 2002. Cerus&#146; grant from the

National Institutes of Health expired in July 2002.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cerus anticipates that its sources of revenue until product sales occur

will be limited to payments under collaboration agreements, including Cerus&#146;

development agreements with Baxter, and payments from the United States

government under cooperative agreement and research grant programs. There can

be no assurance that Cerus will receive additional payments under collaboration

agreements or additional government grants in the future or that Cerus&#146; development

agreements will not be modified or terminated. Cerus does not expect revenue

from product sales to be significant until after 2002.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Research

and Development Expenses. </font></i>Research and development expenses include salaries and related expenses

for scientific personnel, payments to consultants, supplies and chemicals used

in in-house laboratories, costs of research and development facilities,

depreciation of equipment and external contract research expenses, including

clinical trials, pre-clinical safety studies, compound manufacturing and other

laboratory studies. Research and development expenses increased 22% to

$14.9 million for the three months ended September 30, 2002 from $12.2 million

for the comparable period in 2001, and increased 16% to $41.3 million for the

nine months ended September 30, 2002 from $35.6 million for the comparable

period in 2001. The increase was due principally to the addition of scientific

personnel and increased development spending at Baxter for development of the

INTERCEPT Blood System.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cerus&#146; total research and development costs included $12.6 million for

the INTERCEPT Blood System and $2.3 million for all other programs for the

three months ended September 30, 2002, and $10.3 million for the INTERCEPT

Blood System and $1.9 million for all other programs for the comparable period

in 2001. Cerus&#146; total research and development costs included $35.4 million for

the INTERCEPT Blood System and $5.9 million for all other programs for the nine

months ended September 30, 2002, and $29.9 million for the INTERCEPT Blood

System and $5.7 million for all other programs for the comparable period in

2001.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cerus anticipates that its research and development expenses will

continue to increase as additional regulatory approval filings are prepared and

additional product configurations and testing are completed for the platelet

and plasma systems, Phase III clinical trials of INTERCEPT Red Blood Cells

continue and research and development activity relating to other pre-clinical

programs increases. Due to the inherent uncertainties and risks associated with

developing biomedical products, including but not limited to intense and

changing government</font></p>



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<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">regulation, uncertainty of future pre-clinical and clinical study

results and uncertainty associated with manufacturing, it is not possible to

reasonably estimate the costs to complete these research and development

projects. Cerus faces numerous risks and uncertainties associated with the

successful completion of its research and development projects; see &#147;Risk

Factors&#148; below.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">General

and Administrative Expenses.</font></i> General and administrative

expenses increased 25% to $2.9 million for the three months ended September 30,

2002 from $2.3 million for the comparable period in 2001, and increased 19% to

$8.8 million for the nine-month period ended September 30, 2002 from $7.4

million for the comparable period in 2001. The increase was primarily

attributable to the addition of administrative personnel and increased

facilities expenses associated with expansion of Cerus&#146; operations. Cerus

expects its general and administrative expenses to continue to increase as

development and commercialization activities progress.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Net

Interest Income.</font></i> Net interest income decreased 63% to $0.5

million for the three months ended September 30, 2002 from $1.3 million for the

comparable period in 2001, and decreased 53% to $1.7 million for the nine

months ended September 30, 2002 from $3.7 million for the comparable period in 2001.

The decrease was principally due to reduced investment balances carried by

Cerus in 2002 and less favorable yields on investments as a result of declining

interest rates. Cerus expects to earn interest at market rates in proportion to

the balances it maintains.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Liquidity

and Capital Resources</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cerus&#146; sources of capital to date have consisted of public offerings

and private placements of equity securities, payments received under its

agreements with Baxter, Kirin and the Consortium, United States government

grants and cooperative agreements and interest income. In October 2002, Cerus

received a commitment from Baxter for a $50 million loan, subject to completion

of final loan documentation. The terms of the five-year loan include the

availability of the funds beginning January 2003. To date, Cerus has not

received any revenue from product sales, and it will not derive revenue from

product sales unless and until one or more products under development receives

regulatory approval and achieves market acceptance. Cerus does not expect

Baxter to receive regulatory approval for or commercialize the INTERCEPT Blood

System for platelets in the United States until the second half of 2003 or

later. Cerus does not expect regulatory approval to be received for the INTERCEPT

Blood System for plasma in Europe or in the United States until 2004 or later.

Cerus does not expect regulatory approval to be received for the INTERCEPT Red

Blood Cell System until 2005 or later.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">At September 30, 2002, Cerus had cash, cash equivalents and short-term

investments of $81.8 million. Net cash used in operating activities was $38.4

million for the nine months ended September 30, 2002, compared to $29.9 million

for the same period in 2001, resulting primarily from the net loss of $41.4 million

during the period and changes in other operating balances. Net cash provided by

investing activities during the nine months ended September 30, 2002 of $14.5

million resulted principally from the sales and maturities of $96.3 million of

short-term investments, offset by the purchases of $77.0 million of short-term

investments and $4.8 million of furniture, equipment and leasehold

improvements. Working capital decreased to $65.6 million at September 30, 2002

from $108.6 million at December 31, 2001, primarily due to decreased cash, cash

equivalent and short-term investment balances used in operating activities.</font></p>



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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">13</font></p>





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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cerus believes that its available cash balances, together with

anticipated cash flows from existing development and grant arrangements and its

loan commitment from Baxter, will be sufficient to meet its capital

requirements for at least the next 12 months. These near-term capital

requirements are dependent on various factors, including: satisfactory

completion of final loan documentation with Baxter; the development progress

and costs of the INTERCEPT Blood System and other programs; payments from

Baxter and the United States government; and costs related to creating,

maintaining and defending Cerus&#146; intellectual property position. Cerus&#146;

long-term capital requirements will be dependent on these factors and on Cerus&#146;

ability to raise capital through public or private equity or debt financings or

through additional collaborative arrangements or government grants, regulatory

approval and successful commercialization of the INTERCEPT Blood System and

other product candidates, competitive developments and regulatory factors. If

Baxter were to terminate its agreements with Cerus, Cerus might not be able to

meet its long-term capital requirements. Future capital funding transactions

may result in dilution to investors in Cerus, and may not be available on

favorable terms or at all. In August 2001, Cerus filed a shelf registration

statement on Form S-3 to offer and sell up to $300 million of common stock

and/or debt securities. Cerus has no current commitments to offer or sell

securities pursuant to this registration statement.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Financial

Instruments</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cerus maintains an investment portfolio of various issuers, types and

maturities. These securities are generally classified as available-for-sale

and, consequently, are recorded on the balance sheet at fair value with

unrealized gains or losses reported as a separate component of stockholders&#146;

equity, if material. Unrealized gains and losses at September 30, 2002 and

December 31, 2001 were not material. Cerus&#146; investments primarily consist of

short-term money market mutual funds, United States government obligations and

commercial paper. Of Cerus&#146; investments balance of $81.7 million at September

30, 2002, approximately 51% have original maturity dates of less than 90 days,

and approximately 33% have original maturities of 90 days to one year. Cerus

does not believe its exposure to interest rate risk to be material given the

short-term nature of its investment portfolio.</font></p>



<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>



<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Risk Factors</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cerus&#146; business faces

significant risks. If any of the events or circumstances described in the

following risks actually occur, Cerus&#146; business may suffer, the trading price

of Cerus&#146; common stock could decline and Cerus&#146; financial condition or results

of operations could be harmed. These risks should be read in conjunction with

the other information set forth in this report.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Our products are in development; if our pre-clinical and

clinical trials are not successful or the data are not considered sufficient by

regulatory authorities to grant marketing approval, Baxter and we will be

unable to commercialize our products and generate revenue.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Except for the INTERCEPT Blood System for platelets, which is approved

for sale in Europe, we have no products that have received regulatory approval

for commercial sale. Our product candidates are in various stages of

development, and we face the risks of failure inherent in developing medical devices

and biotechnology products based on new technologies. Our products must satisfy

rigorous standards of safety and efficacy before the United States Food and

Drug Administration, the FDA, and international regulatory authorities can

approve them for commercial use. Our INTERCEPT Blood System and stem cell

transplantation programs are undergoing</font></p>



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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14</font></p>





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<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">clinical testing. We must provide the FDA and foreign regulatory

authorities with pre-clinical, clinical and manufacturing data that demonstrate

our products are safe, effective and in compliance with federal regulations

before the products can be approved for commercial sale.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In October 2002, we received CE Mark approval of the INTERCEPT Blood

System for platelets in Europe. Our development and marketing partner, Baxter

Healthcare Corporation, will need to complete validation studies and, in some

countries, obtain reimbursement approvals in individual European countries to

market our products. The level of additional product testing varies by country,

but could take up to six months or more to complete after CE Mark approval. We

have also submitted a CE Mark application to extend qualification of the system

to platelets collected by Baxter&#146;s apheresis collection system, which is a

system to separate and collect a full unit of platelets from a donor using an

automated collection machine, and we have submitted a CE Mark application for

approval of conversion kits that would allow our system to be used with other manufacturers&#146;

apheresis collection systems. We completed our Phase III clinical trial of the

INTERCEPT Blood System for platelets in the United States in March 2001, but we

have not yet submitted all of the modules of our pre-market approval

application with the FDA. We have completed Phase IIIa and Phase IIIb clinical

trials of the INTERCEPT Blood System for plasma in the United States and are

conducting a Phase IIIc clinical trial. We are conducting Phase III clinical

trials of INTERCEPT Red Blood Cells in the United States. Our allogeneic

cellular immune therapy (referred to as ACIT) program, designed to improve the

outcome of bone marrow transplantation procedures through use of T-cells

treated with the Helinx technology, is in Phase I clinical trials in the United

States. Last, our Epstein-Barr Virus (referred to as EBV) cellular vaccine

program is in pre-clinical development. We will have to conduct significant

additional research and pre-clinical (animal) and clinical (human) testing

before we can file additional applications for product approval with the FDA

and foreign regulatory authorities. Clinical trials in particular are expensive

and have a high risk of failure. In addition, to compete effectively, our

products must be easy to use, cost-effective and economical to manufacture on a

commercial scale. Any of our product candidates may fail in the testing phase

or may not attain market acceptance, which could prevent us from achieving

profitability.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">It may take us several years to complete our clinical testing, and

failure can occur at any stage of testing. We cannot rely on interim results of

trials to predict their final results, and acceptable results in early trials

might not be repeated in later trials. Any trial may fail to produce results satisfactory

to the FDA or foreign regulatory authorities. Pre-clinical and clinical data

can be interpreted in different ways, which could delay, limit or prevent

regulatory approval. Negative or inconclusive results from a pre-clinical study

or clinical trial or adverse medical events during a clinical trial could cause

a pre-clinical study or clinical trial to be repeated, require other studies to

be performed or cause a program to be terminated, even if other studies or

trials relating to a program are successful.&#160;

We are currently in discussions with the FDA to determine what

additional information, which could include further clinical studies, may be

required to approve our platelet system.</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">&nbsp;</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">We may fail to complete our clinical trials on time or be

unable to complete the trials at all.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Significant clinical trial delays would impair our ability to

commercialize our products and could allow competitors to bring products to

market before we do. Some of our clinical trials involve patient groups with

rare medical conditions, which has in the past made, and may continue to make,

it difficult to identify and enroll a sufficient number of patients to complete

the trials on time. Other factors, including the unavailability of blood

products, could also delay our clinical trials. We are planning clinical trials

of our ACIT and EBV vaccine programs to be sponsored by other organizations,

which will further reduce our ability to control the progress of these trials.</font></p>



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<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our product development costs will increase if we have additional

delays in testing or approvals.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">We are using

prototype components in our pre-clinical studies and clinical trials and have

not completed the components&#146; commercial design.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">If we fail to develop commercial versions of the systems on schedule,

our potential revenue would be delayed or diminished and our competitors may be

able to bring products to market before we do. The system disposables and

instruments we use in our pre-clinical studies and clinical trials are

prototypes of those to be used in the final products. As a result, we plan to

perform studies, both pre-clinical and clinical, to demonstrate the

acceptability of the commercial configuration and the equivalence of the

prototype and the commercial design. However, regulatory authorities may

require us to perform additional studies, both pre-clinical and clinical, using

the commercial versions of the systems, which may increase our expenses and

delay the commercialization of our products.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Because our product

candidates have not been manufactured on a commercial scale, we face

manufacturing uncertainties that could limit their commercialization.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our product candidates, including many of the components, have never

been manufactured on a commercial scale. We intend to use third-party

manufacturers to produce commercial quantities of the chemical compounds and

other components to be used in our products to inactivate viruses, bacteria and

other pathogens. These inactivation compounds and other components have never

been produced in commercial quantities. We have an agreement with a

manufacturer to produce commercial quantities of amotosalen, which is the

compound used in our platelet and plasma systems. We currently do not have any

other third-party manufacturing agreements in place for commercial production

of other compounds or components. Any additional commercial manufacturer will

need to develop new methods and processes to manufacture these compounds on a

commercial scale and demonstrate to us, the FDA and foreign regulatory

authorities that its commercial scale manufacturing processes comply with

government regulations. It may be difficult or impossible to economically

manufacture our products on a commercial scale.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Baxter is responsible for manufacturing and assembling our pathogen

inactivation systems. Baxter intends to rely on third parties to manufacture

and assemble some of the system components, many of which are customized and

have not been manufactured on a commercial scale. Baxter has not produced the

pathogen inactivation systems in commercial quantities and may not be able to

manufacture and assemble them, or do so economically. In the United States,

studies related to the illumination device, disposable and compound manufacturing

need to be completed and included in FDA submissions before the FDA would

consider the application for approval. </font>Product stability studies to establish the shelf life of the

disposables have yet not demonstrated a sufficient shelf life. Accordingly,

certain disposables and packaging are being redesigned, and product stability

will need to be validated through additional studies. If sufficient shelf life

cannot be demonstrated, the products may not achieve customer acceptance and

may not receive regulatory approval in the United States. It may be

difficult or impossible to complete all studies in a timeframe consistent with

intended commercialization.</p>



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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">If our third-party

manufacturers fail to produce our compounds and other product components

satisfactorily and in sufficient quantities, we may incur delays, shortfalls

and additional expenses.</font></i></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">A limited number of suppliers manufacture our inactivation compounds

for our use in product development, including clinical trials. We have an

agreement with a manufacturer to produce commercial quantities of amotosalen.

We have contracted with one manufacturer to produce an intermediate compound,

S-301, which is used by another manufacturer as a raw material of S-303, the

inactivation compound we use in our red blood cell system. If any of these

manufacturers cannot produce our compounds in the required quantities or to the

required standards, we may face delays and shortfalls before we are able to

identify alternate or additional manufacturers to meet these requirements.

Contracts have not yet been signed for the long-term supply in commercial

quantities of the compounds used in our red blood cell system. While

alternative suppliers for the inactivation compounds exist, any new

manufacturer will have to prove both to us and to the FDA and foreign

regulatory authorities that its manufacturing process complies with government

regulations. Identifying and qualifying such new suppliers could be expensive

and time-consuming.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Baxter has advised us that it intends to purchase certain key

components of the pathogen inactivation systems from a limited number of

suppliers. Contracts for the long-term supply of certain components have not

yet been signed. While we believe there are alternative suppliers for these

components, it would be expensive and time-consuming to establish additional or

replacement suppliers for these components. If Baxter were unable to find

adequate suppliers for these components, we may be required to redesign the

systems, which could lead to additional testing and clinical trials. If we were

required to redesign the products, our development costs would increase, and

our programs could be delayed significantly.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Our products may

not achieve acceptance in, or be rapidly adopted by, the health care community.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Even if our product candidates receive regulatory approval for

commercial sale, physicians, patients and healthcare payors may not believe

that the benefits of using our systems justify their additional cost, because

the blood supply has become safer or for other reasons. Baxter&#146;s ability to

successfully commercialize our products will depend in part on the availability

of adequate reimbursement for product costs and related treatment of blood components

from governmental authorities and private health care insurers (including

health maintenance organizations), which are increasingly attempting to contain

health care costs by limiting both the extent of coverage and the reimbursement

rate for new tests and treatments. In addition, our products do not inactivate

all known pathogens, and the inability of our systems to inactivate certain

pathogens may inhibit their acceptance. For logistical and financial reasons,

the transfusion industry has not always integrated new technologies into their

processes, even those with the potential to improve the safety of the blood

supply. Our products will affect our potential customers&#146; space and staffing

requirements. If our products fail to achieve market acceptance, we may never

become profitable.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">We will need to

develop and test additional configurations of our pathogen inactivation systems

to address the entire market.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In the United States, our efforts to develop our systems to inactivate

viruses, bacteria and other pathogens in platelets have focused almost entirely

on apheresis platelets collected on Baxter&#146;s automated collection platform.

Apheresis platelets are platelets that are collected from a single donor using

an automated collection machine. Currently, we estimate that the majority of</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">17</font></p>





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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">platelets used in the United States are collected by apheresis, with

the remainder prepared from pooled random donor platelets. Blood centers in the

United States preparing random donor platelets may be reluctant to switch to

apheresis collection, and the FDA may require us to make our systems to

inactivate viruses, bacteria and other pathogens in platelets compatible with

random donor platelets. In order to develop a platelet pathogen inactivation

system compatible with random donor platelets, we plan to perform additional

product development and testing, including clinical trials. These development

activities would increase our costs significantly, and may not be successful.

In addition, FDA regulations limit the time from pooling to transfusion to four

hours to minimize the proliferation of bacterial contamination in the pooled

product. As a result, most pooling occurs in hospitals. Our platelet system is

designed for use in blood centers, not at hospitals, and is intended to permit

storage and transfusion of treated platelets for up to five days after pooling.

The FDA&#146;s time limit between pooling and transfusion currently precludes the

use of our system with pooled random donor platelets. Although our system is

designed to reduce the risk of bacterial contamination, we cannot predict

whether the FDA would remove this process time constraint to allow our system

to be used with pooled random donor platelets, and we have not yet made a

formal request for the FDA to do so.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Baxter is one of three primary manufacturers of equipment for the

collection of apheresis platelets in the United States. The equipment, design

and materials used to collect the platelets vary from manufacturer to

manufacturer. We have conducted our pre-clinical and clinical studies in the

United States for apheresis platelets collected using only Baxter&#146;s equipment

and materials. Under an agreement with Haemonetics Corporation, Baxter has

agreed to provide Haemonetics with a platelet storage solution proprietary to

Cerus and Baxter, with the objective that platelets collected on certain future

Haemonetics apheresis collection equipment may be directly treated using our

platelet system. Baxter and we also are adapting our platelet system to allow

compatibility with other manufacturers&#146; equipment. Such adaptations will

require additional product development and testing, including clinical trials.

These development activities will increase our costs significantly, and may not

be successful. Market acceptance of the platelet system in the United States

may be delayed until the system receives regulatory approval for use on such

other equipment.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In Europe, platelets also are typically prepared from several units of

whole blood using a semi-automated process known as the buffy coat process. We

have conducted our pre-clinical and clinical studies for platelets prepared by

the buffy coat process using only Baxter&#146;s platelet collection and pooling

materials. As a result, market acceptance in Europe of our platelet system for

platelets prepared by the buffy coat process will depend on market acceptance

of Baxter&#146;s platelet collection and pooling sets or on our ability to develop

products compatible with other manufacturers&#146; platelet collection and pooling

sets.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">For apheresis platelets in Europe, we have conducted a clinical trial

of our pathogen inactivation system using largely Baxter&#146;s equipment and

materials. Baxter has submitted a CE Mark application for approval of

conversion kits that would allow our system to be used with other

manufacturers&#146; apheresis collection systems. Market acceptance of the platelet

system in Europe may be delayed until the system receives regulatory approval

for use on such other equipment.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Fresh frozen plasma and red blood cells are also collected by different

methods and equipment and in different volumes. Our systems for plasma and red

blood cells being developed and tested will not be suitable for all methods,

equipment and volumes used to collect these blood</font></p>



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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">18</font></p>





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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">components. We will need to develop and test additional configurations

of these systems in order to address the entire market.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">A small number of

customers will determine market acceptance of our pathogen inactivation

systems.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Even if our products receive regulatory approval to be commercialized

and marketed, due to the intense market concentration, failure to properly

market, price or sell our products to any of these large customers could

significantly diminish potential product revenue. The market for our pathogen

inactivation systems is dominated by a small number of blood collection

organizations. In the United States, the American Red Cross collects and

distributes approximately 50% of the nation&#146;s supply of blood and blood

components. Other major United States blood collection organizations include

the New York Blood Center and United Blood Services, each of which distributes

approximately 6% of the nation&#146;s supply of blood and blood components. In many

countries of Western Europe and in Japan, various national blood transfusion

services or Red Cross organizations collect, store and distribute virtually all

of their respective nations&#146; blood and blood components supply.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">We rely heavily on

Baxter for development funding, manufacturing, marketing and sales.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We have two development and commercialization agreements with Baxter

for our systems to inactivate viruses, bacteria and other pathogens in each of

the three commonly transfused blood components: platelets, fresh frozen plasma

and red blood cells, and we rely on Baxter for significant financial and

technical contributions to these programs. Since the beginning of our

relationship with Baxter in 1993 through September 30, 2002, we have received

$46.7 million in equity investments from Baxter and $25.9 million from Baxter

International Inc. and Subsidiaries Pension Trust, and we have recognized $30.0

million in revenue from Baxter. Our ability to develop, manufacture and market

these products successfully depends significantly on Baxter&#146;s performance under

these agreements.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>We rely on

Baxter for manufacturing and supplying components of our pathogen inactivation

systems. Under the terms of our agreements, Baxter is responsible for

manufacturing or supplying the disposable units, such as blood storage

containers and related tubing, as well as any device associated with the

inactivation processes. If these agreements were terminated or if Baxter

otherwise failed to deliver an adequate supply of components, we would be

required to identify other third-party component manufacturers. We cannot

assure you that we would be able to identify such manufacturers on a timely

basis or enter into contracts with such manufacturers on reasonable terms, if

at all. Any delay in the availability of devices or disposables from Baxter

could delay the submission of INTERCEPT Blood Systems for regulatory approval

or the market introduction and subsequent sales of such <font size="3" style="font-size:12.0pt;">systems</font>.

Moreover, the inclusion of components manufactured by others could require us

to seek new approvals from government regulatory authorities, which could

result in delays in product delivery. We may not receive any such required

regulatory approvals.</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>We rely on

Baxter for the marketing, sales and distribution of our pathogen inactivation

systems. We currently have a small marketing group that helps support Baxter&#146;s

marketing organization; however, we do not intend to develop our own

independent marketing and sales organization and expect to continue to rely on

Baxter to market and</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">19</font></p>





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</font></div>



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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">sell

the INTERCEPT Blood Systems</font>. If our joint development agreements with

Baxter are terminated or if Baxter is unable to market the products successfully,

we will be required to find another marketing, sales and distribution partner

or develop these capabilities ourselves. We may not be able to find a suitable

partner on favorable terms or on a timely basis, if at all. Developing

marketing, sales and distribution capabilities ourselves would delay

commercialization of our pathogen inactivation systems and increase our costs.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><i><font style="font-style:italic;">We share

control over management decisions</font></i>. Baxter and we share

responsibility for managing the development programs for the pathogen

inactivation systems. Management decisions are made by a management board that

has equal representation from both Baxter and us. Our interests and Baxter&#146;s

may not always be aligned. Disagreements with Baxter may be time-consuming to

resolve and cause significant delays in the development of our products. If we

disagree with Baxter on program direction, a neutral party will make the

decision. The neutral party may not decide in our best interest. Under the

agreements, Baxter may independently develop a pathogen inactivation system for

fresh frozen plasma using a pre-existing technology. Such an effort by Baxter

could create conflicts in our joint program for the development of a pathogen

inactivation system for fresh frozen plasma.</p>



<p style="margin:0in 0in .0001pt;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><i><font style="font-style:italic;">Baxter can

terminate our agreements or fail to perform</font></i>. Baxter can terminate

the agreements without cause under certain circumstances. A development program

under the agreements may be terminated by either party on 90 days&#146; notice in

the case of the platelet program, or 270 days&#146; written notice in the case of

the plasma or red blood cell programs. If Baxter terminates the agreements or

fails to provide adequate funding to support the product development efforts,

we will need to obtain additional funding from other sources and will be

required to devote additional resources to the development of our products. We

cannot assure you that we would be able to find a suitable substitute partner

in a timely manner, on reasonable terms or at all. If we fail to find a

suitable partner, our research, development or commercialization of certain

planned products would be delayed significantly, which would cause us to incur

additional expenditures.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Our products are

subject to extensive regulation by domestic and foreign governments.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our products under development, and anticipated future products, are

subject to extensive and rigorous regulation by United States local, state and

federal regulatory authorities and by foreign regulatory bodies. These

regulations are wide-ranging and govern, among other things:</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>product

development;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>product

testing;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>product

manufacturing;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>product

labeling;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>product

storage;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>product

premarket clearance or approval;</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">20</font></p>





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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>product

sales and distribution;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>product

use standards and documentation; and</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>product

advertising and promotion.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The FDA and other agencies in the United States and in foreign

countries impose substantial requirements upon the manufacturing and marketing

of products such as those we are developing. The process of obtaining FDA and

other required regulatory approvals is long, expensive and uncertain. The time

required for regulatory approvals is uncertain, and the process typically takes

a number of years, depending on the type, complexity and novelty of the

product. We may encounter significant delays or excessive costs in our efforts

to secure necessary approvals or licenses, or we may not be successful at all.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Even if our product candidates receive approval for commercial sale,

their marketing and manufacturing will be subject to continuing FDA and other

regulatory requirements, such as requirements to comply with good manufacturing

practices. The failure to comply with these requirements could result in

enforcement action, which could harm our business. Later discovery of problems

with a product, manufacturer or facility may result in additional restrictions

on the product or manufacturer, including withdrawal of the product from the

market. Regulatory authorities may also require post-marketing testing, which

can involve significant expense. The government may impose new regulations that

could further delay or preclude regulatory approval of our potential products.

We cannot predict the impact of adverse governmental regulation that might

arise from future legislative or administrative action.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Distribution of our products outside the United States also is subject

to extensive government regulation. These regulations, including the

requirements for approvals or clearance to market, the time required for

regulatory review and the sanctions imposed for violations, vary by country. In

addition to CE Mark approval in Europe, we will need to obtain regulatory

approvals in individual European countries to market our products. The level of

additional product testing varies by country, but could take up to six months

or more to complete after CE Mark approval. Failure to obtain necessary

regulatory approvals or any other failure to comply with regulatory

requirements could result in reduced revenue and earnings.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">To support our requests for regulatory approval to market our product

candidates, we have conducted and intend to conduct various types of studies

including:</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>toxicology

studies to evaluate product safety;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>laboratory

and animal studies to evaluate product effectiveness;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>human

clinical trials to evaluate the safety, tolerability and effectiveness of

treated blood components; and</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>manufacturing

and stability studies.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We have conducted many toxicology studies to demonstrate our product

candidates&#146; safety, and we plan to conduct additional toxicology studies

throughout the product development process. At any time, the FDA and other

regulatory authorities may require further toxicology or other studies to

further demonstrate our products&#146; safety, which could delay commercialization.

We</font></p>



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</font></div>



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<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">believe the FDA and other regulatory authorities are likely to weigh

the potential risks of using our pathogen inactivation products against the

incremental benefits, which may be less compelling in light of improved safety

in the blood supply. In addition, our clinical development plan assumes that we

will not be required to perform human clinical studies to demonstrate our

systems&#146; ability to inactivate pathogens. Although we have discussed this plan

with the FDA and other regulatory authorities, they may find it unacceptable at

any time and may require human clinical trials to demonstrate efficacy in

inactivating pathogens. Trials of this type may be too large and expensive to

be practical.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Regulatory agencies may limit the uses, or indications, for which any

of our products is approved. For example, we believe that we will be able to

claim the inactivation of particular pathogens only to the extent we have

laboratory or animal data to support such claims. After regulatory approval for

the initial indications, further clinical trials may be necessary to gain

approval for the use of the product for additional indications.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In addition to the regulatory requirements applicable to us and to our

products, there are regulatory requirements applicable to our prospective

customers, the blood centers that process and distribute blood and blood

products. Blood centers and others will likely be required to obtain approved

license supplements from the FDA before using products processed with our

pathogen inactivation systems. This requirement or FDA delays in approving

these supplements may deter some blood centers from using our products. Blood

centers that do submit supplements may face disapproval or delays in approval

that could provide further delay or deter them from using our products. The

regulatory impact on potential customers could slow or limit the potential

sales of our products.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">We have only a

limited operating history, and we expect to continue to generate losses.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We may never achieve a profitable level of operations. To date, we have

engaged primarily in research and development. Our development and general and

administrative expenses have resulted in substantial losses each year since our

inception, including net losses of $22.6 million in 1999, $36.0 million in 2000

and $49.4 million in 2001. As of September 30, 2002, we had an accumulated

deficit of approximately $214.5

million. All of our products are in the research and development stage, and we

have not received any revenue from product sales. We have received all of our

revenue from our agreements with Baxter and other development partners and from

federal research grants and cooperative agreements. We will be required to

conduct significant research, development, clinical testing and regulatory

compliance activities for each of these products. We expect our losses to

continue at least until our product candidates are commercialized and achieve

significant market acceptance.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">If we fail to

obtain the capital necessary to fund our future operations, we will not be able

to develop product candidates in our pipeline.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our product development programs are capital-intensive. We expect to

continue to spend substantial funds for our operations for the foreseeable

future. We believe that our existing capital resources, together with

anticipated product revenue, funding from Baxter and the United States

government, our loan commitment from Baxter and projected interest income, will

support our current and planned operations for at least the next 12<b><font style="font-weight:bold;">  </font></b>months. Our cash, liquidity and capital

requirements will depend on many factors, including satisfactory completion of

final loan documentation with Baxter, the development progress and costs of our

programs, payments by Baxter and the United States government, costs related to

creating, maintaining and defending our</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">22</font></p>





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</font></div>



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<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">intellectual property position, regulatory approval and successful

commercialization of our product candidates, competitive developments and

regulatory factors.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We expect to require substantial additional funds for our long-term

product development, marketing programs and operating expenses. We do not know

if we will be able to raise additional funds on acceptable terms. If we raise

additional funds by issuing equity securities, our existing stockholders may

experience substantial dilution.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">If our competitors

develop and market products that are more effective than our product

candidates, our commercial opportunity will be reduced or eliminated.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We expect our products to encounter significant competition. Our

products may compete with other approaches to blood safety and improving the

outcome of stem cell transplantation currently in use, as well as with future

products developed by biotechnology and pharmaceutical companies, hospital

supply companies, national and regional blood centers and governmental

organizations and agencies. Our success will depend in part on our ability to

respond quickly to medical and technological changes through the development

and introduction of new products. Product development is risky and uncertain,

and we cannot assure you that we will develop our products successfully.

Competitors&#146; products or technologies may make our products obsolete or

non-competitive before we are able to generate any significant revenue.

Competitors or potential competitors may have substantially greater financial

and other resources than we have. They may also have greater experience in

pre-clinical testing, human clinical trials and other regulatory approval

procedures. Our ability to compete successfully will depend, in part, on our

ability to:</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>attract

and retain skilled scientific personnel;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>develop

technologically superior products;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>develop

lower cost products;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>obtain

patent or other proprietary protection for our products and technologies;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>obtain

required regulatory approvals for our products;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>be

early entrants to the market; and</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>manufacture,

market and sell our products, independently or through collaborations.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Several companies are developing technologies that are, or in the

future may be, the basis for products that will directly compete with or reduce

the market for our pathogen inactivation systems. A number of companies are

specifically focusing on alternative strategies for pathogen inactivation in

various blood components. In Europe, several companies, including Grifols,

Octapharma AG and Maco Pharma International GmbH, are developing or have

developed commercial systems to treat fresh frozen plasma.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other groups are developing synthetic blood product substitutes and

products to stimulate the growth of platelets, and new methods of testing blood

for specific pathogens have recently been approved by the FDA, including a test

for bacteria. Several companies are developing tests for West Nile Virus in

blood products, although none have been approved for sale to date. Development

of any of these technologies could impair the potential market for our

products.</font></p>



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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">23</font></p>





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<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">We may not be able

to protect our intellectual property or operate our business without infringing

intellectual property rights of others.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our commercial success will depend, in part, on obtaining and

maintaining patent protection on our products and successfully defending our

products against third-party challenges. Our technology will be protected from

unauthorized use by others only to the extent that it is covered by valid and

enforceable patents or effectively maintained as trade secrets. As a result,

our success depends in part on our ability to:</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>obtain

patents;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>protect

trade secrets;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>operate

without infringing upon the proprietary rights of others; and</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>prevent

others from infringing on our proprietary rights.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">As of September 30, 2002, we owned 60 issued or allowed United States

patents and 61 issued or allowed foreign patents. Our patents expire at various

dates between 2003 and 2021. In addition, we have 23 pending United States

patent applications and have filed 16 corresponding patent applications under

the Patent Cooperation Treaty, which are currently pending in Europe, Japan,

Australia and Canada, and of which seven are also pending in China and Hong

Kong. In addition, we are a licensee under a license agreement with respect to

two United States patents covering inventions pertaining to psoralen-based

photochemical decontamination treatment of whole blood or blood components and

four United States patents relating to vaccines, as well as related foreign

patents. We cannot be certain that our patents or patents that we license from

others will be enforceable and afford protection against competitors. Our

patents or patent applications, if issued, may be challenged, invalidated or

circumvented. Our patent rights may not provide us with proprietary protection

or competitive advantages against competitors with similar technologies. Others

may independently develop technologies similar to ours or independently

duplicate our technologies. For example, a patent has recently issued to a

third-party covering methods to remove psoralen compounds from blood products.

We have reviewed the patent and believe our work predates the invention

disclosed in that patent. We are continuing to review that patent and will make

a determination as to whether any action is necessary. Due to the extensive

time required for development, testing and regulatory review of our potential

products, our patents may expire or remain in existence for only a short period

following commercialization. This would reduce or eliminate any advantage of

the patents.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We cannot be certain that we were the first to make the inventions

covered by each of our issued patents or pending patent applications or that we

were the first to file patent applications for such inventions. We may need to

license the right to use third-party patents and intellectual property to

continue development and commercialization of our products. We may not be able

to acquire such required licenses on acceptable terms, if at all. If we do not

obtain such licenses, we may need to design around other parties&#146; patents, or

we may not be able to proceed with the development, manufacture or sale of our

products.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">24</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



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</font></div>



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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We may face litigation to defend against claims of infringement, assert

claims of infringement, enforce our patents, protect our trade secrets or

know-how or determine the scope and validity of others&#146; proprietary rights.

Patent litigation is costly. In addition, we may require interference

proceedings declared by the United States Patent and Trademark Office to

determine the priority of inventions relating to our patent applications.

Litigation or interference proceedings could be expensive and time consuming,

and we could be unsuccessful in our efforts to enforce our intellectual

property rights.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We may rely, in certain circumstances, on trade

secrets to protect our technology. However, trade secrets are difficult to

protect. We protect our proprietary technology and processes, in part, by

confidentiality agreements with employees and certain contractors. However,

these agreements may be breached, we may not have adequate remedies for any

breach or our trade secrets may otherwise become known or be independently

discovered by competitors. To the extent that our employees, consultants or

contractors use intellectual property owned by others, disputes may also arise

as to the rights in related or resulting know-how and inventions.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">We may be liable if

our products harm people.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We are exposed to potential liability risks inherent in the testing and

marketing of medical devices and products. We may be liable if any of our

products causes injury, illness or death. We intend to obtain product liability

insurance before the commercial introduction of any product, but do not know

whether we will be able to obtain and maintain such insurance on acceptable

terms. Any insurance we obtain may not provide adequate coverage against

potential liabilities. If we cannot successfully defend ourselves against

product liability claims, we may incur substantial liabilities or be required

to limit commercialization of our products.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">We may be liable if

hazardous materials used in the development of our products harm the

environment, our employees or other people.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our research and development activities involve the controlled use of

hazardous materials, including certain hazardous chemicals, radioactive

materials and infectious pathogens, such as HIV and hepatitis viruses. Although

we believe that our safety procedures for handling and disposing of hazardous

materials comply with regulatory requirements, we cannot eliminate the risk of

accidental contamination or injury. If an accident occurs, we could be held

liable for any damages that result.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">The market price of

our stock may be highly volatile.</font></i></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The market prices for our securities and those of other emerging

medical device and biotechnology companies have been, and may continue to be,

volatile. For example, during the period from January 1, 1999 to September 30,

2002, the closing sale price of our common stock as quoted on the Nasdaq

National Market fluctuated from a low of $15.44 to a high of $80.50.

Announcements may have a significant impact on the market price of our common

stock. Such announcements may include:</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>biological

or medical discoveries;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>technological

innovations or new commercial services by us or our competitors;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>developments

concerning proprietary rights, including patents and litigation matters;</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">25</font></p>





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</font></div>



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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>regulatory

developments in both the United States and foreign countries;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>public

concern as to the safety of new technologies;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>general

market conditions;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>comments

made by analysts, including changes in analysts&#146; estimates of our financial

performance; and</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>quarterly

fluctuations in our revenue and financial results.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The stock market has from time to time experienced extreme price and

volume fluctuations, which have particularly affected the market prices for

emerging biotechnology and medical device companies, and which have often been

unrelated to the operating performance of such companies. These broad market

fluctuations may adversely affect the market price of our common stock. In the

past, following periods of volatility in the market price of a company&#146;s stock,

securities class action litigation has occurred against the issuing company.

Such litigation could result in substantial costs and a diversion of

management&#146;s attention and resources, which could have a material adverse

effect on our revenue and earnings. Any adverse determination in such

litigation could also subject us to significant liabilities.</font></p>



<p style="margin:0in 0in .0001pt 81.0pt;text-indent:-81.0pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 81.0pt;text-indent:-81.0pt;"><a name="Item3_"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">ITEM 3.</font></b></a><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>QUANTITATIVE

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The information called for by this item is provided under the caption

&#147;Financial Instruments&#148; under Item 2 - Management&#146;s Discussion and Analysis of

Financial Condition and Results of Operations.</font></p>



<p style="margin:0in 0in .0001pt 81.0pt;text-indent:-81.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 81.0pt;text-indent:-81.0pt;"><a name="Item4_"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">ITEM 4.</font></b></a><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>CONTROLS

AND PROCEDURES</b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Evaluation of Disclosure Controls

and Procedures.</font></i> Our chief executive officer and chief

financial officer have concluded that Cerus&#146; disclosure controls and procedures

(as defined in Rules 13a-14(c) and 15d-14(c) promulgated under the Securities

Exchange Act of 1934, as amended) are sufficiently effective to ensure that the

information required to be disclosed by Cerus in the reports we file under the

Exchange Act is gathered, analyzed and disclosed with adequate timeliness,

accuracy and completeness, based on an evaluation of such controls and

procedures conducted within 90 days prior to the date hereof.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Changes in

Internal Controls.</font></i>

There have been no significant changes in our internal controls or in other

factors that could significantly affect these controls subsequent to the date

of the evaluation referred to above, nor were there any significant

deficiencies or material weaknesses in Cerus&#146; internal controls. Accordingly,

no corrective actions were required or undertaken.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Limitations

on the Effectiveness of Controls.</font></i> A controls system, no matter how well conceived and operated, can

provide only reasonable, not absolute, assurance that the objectives of the

control system are met. Because of the inherent limitations in all control

systems, no evaluation of controls can provide absolute assurance that all

control issues, if any, within a company have been detected.</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">26</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 81.35pt;text-indent:-81.35pt;"><a name="PartIi"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">PART II:</font></b></a><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>OTHER

INFORMATION</b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 81.35pt;text-indent:-81.35pt;"><a name="Item1_LegalProceedings"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">ITEM

1.</font></b></a><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>LEGAL

PROCEEDINGS</b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">None.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 81.35pt;text-indent:-81.35pt;"><a name="Item2_Changes"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">ITEM 2.</font></b></a><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>CHANGES</b><b><font style="font-weight:bold;"> IN

SECURITIES AND USE OF PROCEEDS</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On July 1, 2002, Cerus issued 1,000 shares of unregistered common stock

as a contribution to Johns Hopkins University. Such issuance of common stock

was exempt from registration under the Securities Act of 1933 pursuant to

section 4(2) thereof, as a transaction not involving any public offering.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 81.35pt;text-indent:-81.35pt;"><a name="Item3_Defaults"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">ITEM

3.</font></b></a><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><b><font style="font-weight:bold;">DEFAULTS</font></b><b><font style="font-weight:bold;"> UPON SENIOR

SECURITIES</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">None.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 81.35pt;text-indent:-81.35pt;"><a name="Item4_Submission"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">ITEM

4.</font></b></a><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>SUBMISSION</b><b><font style="font-weight:bold;"> OF MATTERS

TO A VOTE OF SECURITY HOLDERS</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">None.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 81.35pt;text-indent:-81.35pt;"><a name="Item5_OtherInformation"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">ITEM

5.</font></b></a><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>OTHER

INFORMATION</b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">None.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 81.35pt;text-indent:-81.35pt;"><a name="Item6_Exhibits"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">ITEM

6.</font></b></a><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>EXHIBITS</b><b><font style="font-weight:bold;"> AND REPORTS

ON FORM 8-K</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Exhibits</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 84.95pt;text-indent:-45.35pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">99.1*</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Certification

by the Chief Executive Officer and Chief Financial Officer of Cerus as required

by Section 906 of the Sarbanes-Oxley Act of 2002, dated November 13, 2002.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Reports on Form 8-K</font></p>



<p style="margin:0in 0in .0001pt 81.0pt;text-indent:-45.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .55in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">None.</font></p>



<p style="margin:0in 0in .0001pt 15.95pt;text-indent:-15.95pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>





<div style="margin:0in 0in .0001pt 15.95pt;text-indent:-15.95pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="1" width="25%" noshade color="black" align="left">



</font></div>





<p style="font-size:10.0pt;margin:0in 0in .0001pt .3in;text-indent:-.3in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">*</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The

certification attached as Exhibit 99.1 accompanies this Quarterly Report on

Form 10-Q pursuant to &#167;906 of the Sarbanes-Oxley Act of 2002 and shall not be

deemed &#147;filed&#148; by Cerus for purposes of Section 18 of the Securities Exchange

Act of 1934, as amended.</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">27</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><a name="Signatures"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">SIGNATURES</font></b></a></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Pursuant to the

requirements of the Securities Exchange Act of 1934, the registrant has duly

caused this report to be signed on its behalf by the undersigned, thereunto

duly authorized.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="43%" valign="top" style="padding:0in 0in 0in 0in;width:43.38%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="56%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:56.62%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">CERUS CORPORATION</font></p>

  </td>

 </tr>

 <tr>

  <td width="43%" valign="top" style="padding:0in 0in 0in 0in;width:43.38%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="56%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:56.62%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="43%" valign="top" style="padding:0in 0in 0in 0in;width:43.38%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="56%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:56.62%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="43%" valign="top" style="padding:0in 0in 0in 0in;width:43.38%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Date:&nbsp;&nbsp;&nbsp;November 13, 2002</font></p>

  </td>

  <td width="2%" valign="top" style="padding:0in 0in 0in 0in;width:2.92%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="24%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:24.96%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Gregory W. Schafer</font></p>

  </td>

  <td width="28%" valign="top" style="padding:0in 0in 0in 0in;width:28.74%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="43%" valign="top" style="padding:0in 0in 0in 0in;width:43.38%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="top" style="padding:0in 0in 0in 0in;width:2.92%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="53%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:53.7%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="43%" valign="top" style="padding:0in 0in 0in 0in;width:43.38%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="top" style="padding:0in 0in 0in 0in;width:2.92%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="53%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:53.7%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gregory W. Schafer</font></p>

  </td>

 </tr>

 <tr>

  <td width="43%" valign="top" style="padding:0in 0in 0in 0in;width:43.38%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="top" style="padding:0in 0in 0in 0in;width:2.92%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="53%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:53.7%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Financial Officer</font></p>

  </td>

 </tr>

 <tr>

  <td width="43%" valign="top" style="padding:0in 0in 0in 0in;width:43.38%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="top" style="padding:0in 0in 0in 0in;width:2.92%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="53%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:53.7%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Principal Financial and Accounting Officer)</font></p>

  </td>

 </tr>

</table>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">28</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Book Antiqua" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><a name="Certifications"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CERTIFICATIONS</font></b></a></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I,

Stephen T. Isaacs, Chief Executive Officer of Cerus Corporation, certify that:</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>I have reviewed this quarterly report on Form

10-Q of Cerus Corporation;</p>



<p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Based on my knowledge, this quarterly report

does not contain any untrue statement of a material fact or omit to state a

material fact necessary to make the statements made, in light of the

circumstances under which such statements were made, not misleading with

respect to the period covered by this quarterly report;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Based on my

knowledge, the financial statements, and other financial information included

in this quarterly report, fairly present in all material respects the financial

condition, results of operations and cash flows of the registrant as of, and

for, the periods presented in this quarterly report;</p>



<p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The registrant&#146;s other certifying officers

and I are responsible for establishing and maintaining disclosure controls and

procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the

registrant and we have:</p>



<p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 45.0pt;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>designed such disclosure controls and

procedures to ensure that material information relating to the registrant,

including its consolidated subsidiaries, is made known to us by others within

those entities, particularly during the period in which this quarterly report

is being prepared;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 45.0pt;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>evaluated the effectiveness of the

registrant&#146;s disclosure controls and procedures as of a date within 90 days

prior to the filing date of this quarterly report (the &#147;Evaluation Date&#148;); and</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 45.0pt;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">c)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>presented in this quarterly report our

conclusions about the effectiveness of the disclosure controls and procedures

based on our evaluation as of the Evaluation Date;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The registrant&#146;s

other certifying officers and I have disclosed, based on our most recent

evaluation, to the registrant&#146;s auditors and the audit committee of the

registrant&#146;s board of directors:</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 45.0pt;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>all significant

deficiencies in the design or operation of internal controls which could

adversely affect the registrant&#146;s ability to record, process, summarize and

report financial data and have identified for the registrant&#146;s auditors any

material weaknesses in internal controls; and</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 45.0pt;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>any fraud, whether or

not material, that involves management or other employees who have a

significant role in the registrant&#146;s internal controls; and</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The registrant&#146;s

other certifying officers and I have indicated in this quarterly report whether

or not there were significant changes in internal controls or in other factors

that could significantly affect internal controls subsequent to the date of our

most recent evaluation, including any corrective actions with regard to

significant deficiencies and material weaknesses.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="60%" valign="top" style="padding:0in 0in 0in 0in;width:60.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Date: November 13, 2002</font></p>

  </td>

  <td width="40%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:40.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="60%" valign="top" style="padding:0in 0in 0in 0in;width:60.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="33%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:33.46%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Stephen T. Isaacs</font></p>

  </td>

  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.54%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="60%" valign="top" style="padding:0in 0in 0in 0in;width:60.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="40%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:40.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Stephen T. Isaacs</font></p>

  </td>

 </tr>

 <tr>

  <td width="60%" valign="top" style="padding:0in 0in 0in 0in;width:60.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="40%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:40.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Executive Officer</font></p>

  </td>

 </tr>

</table>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">29</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I,

Gregory W. Schafer, Chief Financial Officer of Cerus Corporation, certify that:</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>I have reviewed this quarterly report on Form

10-Q of Cerus Corporation;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Based on my knowledge, this quarterly report

does not contain any untrue statement of a material fact or omit to state a

material fact necessary to make the statements made, in light of the

circumstances under which such statements were made, not misleading with

respect to the period covered by this quarterly report;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Based on my knowledge,

the financial statements, and other financial information included in this

quarterly report, fairly present in all material respects the financial

condition, results of operations and cash flows of the registrant as of, and

for, the periods presented in this quarterly report;</p>



<p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The registrant&#146;s other certifying officers

and I are responsible for establishing and maintaining disclosure controls and

procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the

registrant and we have:</p>



<p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 45.0pt;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>designed such disclosure controls and

procedures to ensure that material information relating to the registrant,

including its consolidated subsidiaries, is made known to us by others within

those entities, particularly during the period in which this quarterly report

is being prepared;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 45.0pt;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>evaluated the effectiveness of the

registrant&#146;s disclosure controls and procedures as of a date within 90 days

prior to the filing date of this quarterly report (the &#147;Evaluation Date&#148;); and</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 45.0pt;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">c)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>presented in this quarterly report our

conclusions about the effectiveness of the disclosure controls and procedures

based on our evaluation as of the Evaluation Date;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The registrant&#146;s

other certifying officers and I have disclosed, based on our most recent

evaluation, to the registrant&#146;s auditors and the audit committee of the

registrant&#146;s board of directors:</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 45.0pt;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">c)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>all significant

deficiencies in the design or operation of internal controls which could

adversely affect the registrant&#146;s ability to record, process, summarize and report

financial data and have identified for the registrant&#146;s auditors any material

weaknesses in internal controls; and</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 45.0pt;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">d)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>any fraud, whether or

not material, that involves management or other employees who have a

significant role in the registrant&#146;s internal controls; and</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The registrant&#146;s

other certifying officers and I have indicated in this quarterly report whether

or not there were significant changes in internal controls or in other factors

that could significantly affect internal controls subsequent to the date of our

most recent evaluation, including any corrective actions with regard to

significant deficiencies and material weaknesses.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="60%" valign="top" style="padding:0in 0in 0in 0in;width:60.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Date: November 13, 2002</font></p>

  </td>

  <td width="40%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:40.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="60%" valign="top" style="padding:0in 0in 0in 0in;width:60.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="33%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:33.46%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Gregory W. Schafer</font></p>

  </td>

  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.54%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="60%" valign="top" style="padding:0in 0in 0in 0in;width:60.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="40%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:40.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gregory W. Schafer</font></p>

  </td>

 </tr>

 <tr>

  <td width="60%" valign="top" style="padding:0in 0in 0in 0in;width:60.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="40%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:40.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Financial Officer</font></p>

  </td>

 </tr>

</table>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">30</font></p>





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<p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Exhibit 99.1</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CERTIFICATION</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. &#167;&nbsp;1350, as

adopted), Stephen T. Isaacs, the Chief Executive Officer of Cerus Corporation

(the &#147;Company&#148;), and Gregory W. Schafer, the Chief Financial Officer of the

Company, each hereby certifies that, to the best of his knowledge:</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></b>The

Company&#146;s Quarterly Report on Form 10-Q for the period ended September 30,

2002, and to which this Certification is attached as Exhibit 99.1 (the

&#147;Periodic Report&#148;), fully complies with the requirements of Section 13(a) or

Section 15(d) of the Securities Exchange Act of 1934, as amended; and</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></b>The

information contained in the Periodic Report fairly presents, in all material

respects, the financial condition of the Company at the end of the periods

covered by the Periodic Report and results of operations of the Company for the

periods covered by the Periodic Report.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">This

certification accompanies the Periodic Report pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002 and shall not be deemed &#147;filed&#148; by the Company for

purposes of Section 18 of the Securities Exchange Act of 1934, as amended.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="100%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Dated:

  November 13, 2002</font></p>

  </td>

 </tr>

 <tr>

  <td width="50%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:50.64%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="49%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:49.36%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="50%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:50.64%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="49%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:49.36%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="30%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:30.58%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Stephen

  T. Isaacs</font></p>

  </td>

  <td width="34%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:34.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="35%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:35.2%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Gregory

  W. Schafer</font></p>

  </td>

 </tr>

 <tr>

  <td width="64%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:64.8%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Stephen T.

  Isaacs</font></p>

  </td>

  <td width="35%" valign="top" style="padding:0in 0in 0in 0in;width:35.2%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gregory W.

  Schafer</font></p>

  </td>

 </tr>

 <tr>

  <td width="64%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:64.8%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief

  Executive Officer</font></p>

  </td>

  <td width="35%" valign="top" style="padding:0in 0in 0in 0in;width:35.2%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief

  Financial Officer</font></p>

  </td>

 </tr>

 <tr height="0">

  <td width="220" style="border:none;"></td>

  <td width="145" style="border:none;"></td>

  <td width="102" style="border:none;"></td>

  <td width="254" style="border:none;"></td>

 </tr>

</table>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>





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