8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

Amendment No. 1

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

__________________

Date of Report (Date of earliest event reported) February 12, 2007

NeuStar, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-32548	52-2141938
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

46000 Center Oak Plaza
Sterling, Virginia	20166
(Address of principal executive offices)	(Zip Code)

(571) 434-5400

(Registrant’s telephone number, including area code.)

N/A

(Former name and former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Introductory Note

     On November 27, 2006, NeuStar, Inc. (“Parent”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with B&T Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), Followap Inc., a Delaware corporation (the “Company”), and Carmel V.C. Ltd. and Sequoia Seed Capital II L.P. (Israel) as the Holder Representatives (the “Holder Representatives”).

     On November 27, 2006, the Parent completed the merger (the “Merger”) with Merger Sub and the Company pursuant to the Merger Agreement. On November 27, 2006, the Registrant filed a Current Report on Form 8-K (the “Current Report”) to report the Merger. This Current Report on Form 8-K/A is being filed to amend Item 9.01 of the Current Report. This Current Report on Form 8-K/A provides financial statements of the business acquired as required by Item 9.01(a) and the pro forma financial information required by Item 9.01(b), which financial statements and information were not included in the Current Report filed on November 27, 2006.

Item 9.01. Financial Statements and Exhibits

(a) Audited Financial Statements of Businesses Acquired

The following audited financial statements are attached hereto as Exhibit 99.2:

Report of Independent Auditors
Consolidated Balance Sheets as of December 31, 2005 and 2004
Consolidated Statements of Operations for the years ended December 31, 2005 and 2004
Consolidated Statements of Changes in Shareholders’ Equity for years ended December 31, 2005 and 2004
Consolidated Statements of Cash Flows for the years ended December 31, 2005 and 2004
Notes to Consolidated Financial Statements

(b) Unaudited Interim Financial Statements of Businesses Acquired

The following unaudited interim financial statements are attached hereto as Exhibit 99.3:

Consolidated Balance Sheets as of September 30, 2006 (unaudited) and December 31, 2005 (audited)
Unaudited Consolidated Statements of Operations for the nine months ended September 30, 2006 and 2005
Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2006 and 2005
Notes to Unaudited Consolidated Financial Statements

(c) Pro Forma Unaudited Financial Information

The following unaudited pro forma consolidated financial information is attached hereto as Exhibit 99.4 and is incorporated herein by reference:

Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2006
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2005
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine months ended September 30, 2006
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

1

(d) Exhibits

The following materials are attached as exhibits to this Current Report on Form 8-K/A:

Exhibit
Number	Description
2.1*	Agreement and Plan of Merger, dated as of November 27, 2006, by and among NeuStar, Inc., Followap Inc., B&T Merger Sub, Inc. and Carmel V.C. Ltd. and Sequoia Seed Capital II L.P. (Israel), as Holder Representatives.
23.1	Consent of Independent Auditors
99.1*	Press Release of NeuStar, Inc., dated November 27, 2006.
99.2	Audited consolidated balance sheets as of December 31, 2005 and 2004 and consolidated statements of operations, shareholders’ equity, and cash flows for the years ended December 31, 2005 and 2004 and the notes thereto of Followap Inc., and the report of independent auditors
99.3	Consolidated balance sheets as of September 30, 2006 (unaudited) and December 31, 2005 (audited) and consolidated statements of operations and cash flows for the nine months ended September 30, 2006 and 2005, and the notes thereto of Followap Inc.
99.4	Unaudited pro forma condensed consolidated balance sheet as of September 30, 2006, and unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2005, and unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2006, and the notes thereto of NeuStar, Inc. and Followap Inc.
*	Previously filed as an exhibit to NeuStar, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 27, 2006 (file no. 001-32548).

2

Exhibit Index

Exhibit
Number	Description
23.1	Consent of Independent Auditors
99.2	Audited consolidated balance sheets as of December 31, 2005 and 2004 and consolidated statements of operations, shareholders’ equity, and cash flows for the years ended December 31, 2005 and 2004 and the notes thereto of Followap Inc., and the report of independent auditors
99.3	Consolidated balance sheets as of September 30, 2006 (unaudited) and December 31, 2005 (audited) and consolidated statements of operations and cash flows for the nine months ended September 30, 2006 and 2005, and the notes thereto of Followap Inc.
99.4	Unaudited pro forma condensed consolidated balance sheet as of September 30, 2006, and unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2005, and unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2006, and the notes thereto of NeuStar, Inc. and Followap Inc.

SIGNATURES

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

Date: February 12, 2007	NEUSTAR, INC.
	By:	/s/ Jeffrey E. Ganek
		Name:	Jeffrey E. Ganek
		Title:	Chairman of the Board of Directors and Chief Executive Officer

EX-23.1

EXHIBIT 23.1

Consent of Independent Auditors

     We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-128418) pertaining to the 1999 Equity Incentive Plan and the 2005 Stock Incentive Plan of NeuStar, Inc. of our report dated February 7, 2007 with respect to the consolidated financial statements of Followap Inc., included in Amendment No. 1 to the Current Report on Form 8-K/A of NeuStar, Inc. filed with the Securities and Exchange Commission.

/s/ Kost Forer Gabbay & Kasierer  

A member of Ernst & Young Global 

Haifa, Israel
February 7, 2007

EX-99.2

EXHIBIT 99.2

Followap Inc.

Consolidated Financial Statements
December 31, 2005 and 2004

Followap Inc. and its Consolidated Subsidiaries

Consolidated Financial Statements as of December 31, 2005

Contents

	Page
Report of Independent Auditors	2
Consolidated Balance Sheets	3-4
Consolidated Statements of Operations	5
Consolidated Statements of Changes in Shareholders’ Equity	6
Consolidated Statements of Cash Flows	7
Notes to the Consolidated Financial Statements	8-24

1

Report of Independent Auditors

To the Shareholders of

Followap Inc. and its Consolidated Subsidiaries

We have audited the accompanying consolidated balance sheets of Followap Inc. (the “Company”) and its subsidiaries as of December 31, 2005 and 2004 and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2005. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2005 and 2004, and the consolidated results of its operations and cash flows for each of the two years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.

/s/ Kost Forer Gabbay & Kasierer    
A Member of Ernst & Young Global

February 7, 2007
Haifa, Israel

2

Followap Inc. and its Consolidated Subsidiaries

Consolidated Balance Sheets

In U. S. Dollars (in thousands)

		December 31,
	Note	2005		2004
Assets
Current assets
Cash and cash equivalents	3	$	7,453	$	7,070
Trade receivables			3,832		1,532
Accounts receivable	4		548		441
			11,833		9,043
Long-term assets
Severance pay fund			492		498
Long-term deposits	5		174		174
			666		672
Property and equipment, net	6		536		376
		$	13,035	$	10,091

3

Followap Inc. and its Consolidated Subsidiaries

Consolidated Balance Sheets

In U. S. Dollars (in thousands, except share data)

		December 31,
	Note	2005			2004
Liabilities and shareholders’ equity
Current liabilities
Trade payables	7	$	725		$	325
Accounts payable	8		2,049			1,110
Deferred revenue			3,447			6,860
			6,221			8,295
Long-term liabilities
Accrued severance pay			738			698
Deferred tax liability, net	12		746			453
			1,484			1,151
Liens, Commitments and Contingencies	9
Shareholders’ equity	10
Share capital —
Preferred A shares of $0.001 par value:
2,000,000 shares authorized, issued and outstanding as of December 31, 2005 and December 31, 2004, liquidation preference of approximately $2,875 as of December 31, 2005			2			2
Preferred B shares of $0.001 par value:
4,649,000 shares authorized, issued and outstanding as of December 31, 2005 and December 31, 2004, liquidation preference of approximately $13,382 as of December 31, 2005			5			5
Preferred B1 shares of $0.001 par value:
929,800 shares authorized, issued and outstanding at December 31, 2005 and December 31, 2004, liquidation preference of approximately $2,638 as of December 31, 2005			1			1
Preferred C shares of $0.001 par value:
5,377,391 shares authorized as of December 31, 2005; 4,963,746 shares issued and outstanding as of December 31, 2005, liquidation of preference of approximately $12,550 as of December 31, 2005			5			—
Ordinary shares of $0.001 par value:
22,000,000 shares and 15,804,379 shares authorized as of December 31, 2005 and December 31, 2004, respectively; 5,665,076 shares issued as of December 31, 2005 and December 31, 2004; 3,826,652 shares and 5,665,076 shares outstanding as of December 31, 2005 and December 31,2004, respectively.			4			6
Additional paid-in capital			27,227			15,241
Less treasury share at cost (1,838,424 shares as of December 31, 2005)			(3,998	)		—
Accumulated deficit			(17,916	)		(14,610	)
			5,330			645
Total liabilities and shareholders’ equity		$	13,035		$	10,091

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

4

Followap Inc. and its Consolidated Subsidiaries

Consolidated Statements of Operations

In U. S. Dollars (in thousands)

		Year ended
		December 31,
	Notes	2005			2004
Revenues
License		$	8,285		$	1,163
Services			4,635			7,329
Total Revenues			12,920			8,492
Cost of revenues			1,751			1,445
Gross profit			11,169			7,047
Operating expenses
Research and development expenses			4,553			3,465
Sales and marketing expenses			7,123			3,750
General and administrative expenses			1,761			1,561
Total operating expenses			13,437			8,776
Operating loss			(2,268	)		(1,729	)
Financing expenses, net	11		628			31
Loss before taxes on income			(2,896	)		(1,760	)
Taxes on income	12		410			339
Net loss		$	(3,306	)	$	(2,099	)

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

5

Followap Inc. and its Consolidated Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

In U.S. Dollars (in thousands)

												Additional								Total
	Preferred Shares								Ordinary			Paid-in		Treasury			Accumulated			Shareholder’s
	Series A		Series B		Series B1		Series C		Shares			Capital		Shares			Deficit			equity
Balance as of January 1, 2004	$	2	$	5	$	1	$	—	$	6		$	15,136	$	—		$	(12,511	)	$	2,639
Amortization of deferred stock compensation		—		—		—		—		—			89		—			—			89
Exercise of stock options		—		—		—		—					16		—			—			16
Net loss		—		—		—		—		—			—		—			(2,099	)		(2,099	)
Balance as of December 31, 2004		2		5		1		—		6			15,241		—			(14,610	)		645
Issuance of preferred C Shares, net **		—		—		—		5		—			11,886					—			11,891
Purchase of treasury shares		—		—		—		—		(2	)		—		(3,998	)		—			(4,000	)
Amortization of deferred stock compensation		—		—		—		—		—			100		—			—			100
Net loss		—		—		—		—		—			—		—			(3,306	)		(3,306	)
Balance as of December 31, 2005	$	2	$	5	$	1	$	5	$	4		$	27,227	$	(3,998	)	$	(17,916	)	$	5,330

** Net of issuance costs of $109.

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

6

Followap Inc. and its Consolidated Subsidiaries

Consolidated Statements of Cash Flows

In U. S. Dollars (in thousands)

	Year ended
	December 31,
	2005			2004
Cash flows from operating activities:
Net loss	$	(3,306	)	$	(2,099	)
Adjustments required to reconcile net loss to net cash flows used in operating activities:
Depreciation		180			195
Capital loss (gain) in sale of property and equipment		1			(2	)
Non-employees’ stock option compensation		100			89
Increase in liability for employee severance benefits, net		46			68
Increase in deferred tax liability, net		293			321
Increase in trade receivables		(2,300	)		(501	)
Increase in accounts receivable		(107	)		(95	)
Increase in trade payables		400			57
Increase in accounts payable		939			108
Increase (decrease) in deferred revenues		(3,413	)		1,256
Net cash used in operating activities		(7,167	)		(603	)
Cash flows from investing activities:
Purchases of property and equipment		(343	)		(180	)
Proceeds from sales of property and equipment		2			5
Increase in long-term deposits		—			(7	)
Net cash used in investing activities		(341	)		(182	)
Cash flows from financing activities:
Proceeds from issuance of preferred stock, net of issuance costs		11,891			—
Purchase of treasury stock		(4,000	)		—
Exercise of stock options		—			16
Net cash provided by financing activities		7,891			16
Increase (decrease) in cash and cash equivalents		383			(769	)
Cash and cash equivalents at the beginning of the year		7,070			7,839
Cash and cash equivalents at the end of the year	$	7,453		$	7,070
Supplemental disclosure of cash flow information:
Cash paid during the year for income taxes	$	6		$	17
Cash paid during the year for interest	$	10		$	14

7

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 1 — General

A.	Followap Inc. (the “Company”) was incorporated and registered in Delaware, USA in December 1999 and commenced operations in January 2000. The Company and its subsidiaries’ (the “Group”) activities consist of the development, marketing and sale of Mobile Instant Messaging Presence and Location (IMPL) platforms for mobile operators. The Company’s wholly owned subsidiaries include Followap R&D (2000) Ltd. in Israel, Followap GmbH in Germany and Followap Limited incorporated in September 2004, in the U.K.
B.	Over 90% of the Company’s revenues for the year ended December 31, 2005 and 2004 were derived from sales to one major customer and its affiliates.
C.	The high technology industry in which the Group is involved is highly competitive and is characterized by the risks of rapidly changing technologies. Penetration into the world market requires the investment of considerable resources and continuous development efforts. The Group’s future success is dependent upon several factors including the technological quality and price/performance of its products relative to those of its competitors. There can be no assurance that the Group will be able to maintain the high technological quality of its product or to continue to develop or market its new products effectively.

Note 2 — Significant Accounting Policies

	The financial statements have been prepared in conformity with generally accepted accounting principles (GAAP) in the United States.
A.	Basis of presentation
	The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The accounts of the subsidiaries are consolidated from the date of their inception. All significant intercompany balances and transactions have been eliminated upon consolidation.
B.	Use of estimates
	The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
C.	Financial statements in U.S. Dollars
	The Group’s functional and reporting currency is the U.S Dollar. The Group’s transaction and balances denominated in U.S. Dollars are presented at their original amount. The non- U.S. Dollar transactions and balances have been remeasured to dollars in accordance with Statement of Financial Accounting Standard No. 52. “Foreign Currency Translation”. All transactions gains and losses from the remeasurement of monetary balance sheet items denominated in non U.S. dollar currencies are reflected in the statements of operations as financing income or expenses, as appropriate.

8

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 2 — Significant Accounting Policies (continued)

D.	Cash equivalents
	Cash equivalents include short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less.
E.	Allowance for doubtful debts
	Allowances are provided on the basis of specific accounts whose collection is, in the opinion of management, doubtful.
	As of December 31, 2005 and 2004, there were no accounts for which the collection was uncertain.
F.	Property and equipment
	Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets at the following annual rates:

	%
Computers and peripheral equipment	33
Office furniture and equipment	7-15
Test equipment	15
Leasehold improvements	over the term of the lease

The Company’s long-lived assets are reviewed for impairment in accordance with Statement of Financial Accounting Standard No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”) whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During 2005 and 2004 no impairment losses were recorded.

G.

Accounting for stock-based compensation:

1. The Company has elected to follow Accounting Principles Board Opinion No. 25 “Accounting for Stock Issued to Employees” (“APB 25”) and Interpretation No. 44 “Accounting for Certain Transactions Involving Stock Compensation” (“FIN 44”) in accounting for its employee stock option plans. Under APB 25, when the exercise price of the Company’s stock options is less than the market price of the underlying shares on the date of grant, compensation expense is recognized.

9

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 2 — Significant Accounting Policies (continued)

G.	Accounting for stock-based compensation (cont.):
	The Company adopted the disclosure provisions of Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation — transition and disclosure”, which amended certain provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”) to provide alternative methods of transition for an entity that voluntarily changes to the fair value-based method of accounting for stock-based employee compensation, effective as of the beginning of 2003. The Company continues to apply the provisions of APB No. 25 in accounting for stock-based compensation.
	Pro forma information regarding net loss is required by SFAS No. 123 and has been determined as if the Company has accounted for its employee stock options under the minimum value method of that statement (which assumes an expected volatility of zero). The value of these options was estimated at the date of grant using the Black-Scholes Option Valuation Model, with the following weighted-average assumptions:

	For the year ended	For the year ended
	December 31,	December 31,
	2005	2004
Dividend yield	0%	0%
Expected volatility	0%	0%
Risk-free interest rate	4%	2.5%
Expected life	7.5 years	7.5 years

2. The Company applies SFAS No. 123 and EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services” (“EITF 96-18”) with respect to options and warrants issued to non-employees. SFAS No. 123 and EITF 96-18 require the use of an option valuation model to measure the fair value of the options.

H.	Research and development expenses
	Research and development expenses are charged to the statement of operation as incurred.
I.	Revenue recognition
	The Company derives its revenues from licenses and services, software subscriptions, support and consulting. License revenues consist of fees for perpetual licenses of the Company’s software products. Service revenues include maintenance and consulting revenues.

10

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 2 — Significant Accounting Policies (continued)

I.	Revenue recognition (cont.)
	The Company recognizes revenues in accordance with Statement of Position No. 97-2, “Software Revenue Recognition, as amended (“SOP No. 97-2”). In addition, the Company has adopted Statement of Position No. 98-9, “Modification of SOP No. 97-2, Software Revenue Recognition with Respect to Certain Transactions” (“SOP No. 98-9”). SOP No. 98-9 requires that revenue be recognized under the “residual method” when Vendor Specific Objective Evidence (“VSOE”) of fair value exists for all undelivered elements and VSOE does not exist for all of the delivered elements.
	Revenues from license fees are recognized when persuasive evidence of an arrangement exists, delivery of the product has occurred, the fee is fixed or determinable, and collectability is probable. The Company concluded that since it has only one major customer it does not have VSOE of fair value. As a result, revenues from license fees are recognized ratably over the period of the service agreement existing at date of acceptance.
	Service revenues are recognized ratably on a straight-line basis over the maintenance terms or when services are performed. Maintenance arrangements provide technical customer support and the right to unspecified upgrades on a when-and-if basis. Revenues from other services are recognized as the services are delivered.
	Deferred revenues include amounts received from customers for which revenues have not been recognized.
J.	Severance pay
	The Company’s liability for severance pay is calculated pursuant to the agreements signed with its employees.
	The Israeli subsidiary’s liability for severance pay is calculated pursuant to Israeli severance pay law based on the most recent salary of the employees multiplied by the number of years of employment, as of the balance sheet date. Employees in Israel are entitled to one month’s salary for each year of employment or a portion thereof. The Israeli subsidiary’s liability for all of its Israeli employees is provided by monthly deposits with insurance policies and by an accrual. The value of these policies is recorded as an asset in the Group’s balance sheet.
	The deposited funds may be withdrawn only upon the fulfillment of the obligation pursuant to Israeli severance pay law or labor agreements. The value of the deposited funds is based on the cash surrendered value of these policies, and includes immaterial profits.
	Severance expenses for the years ended December 31, 2005 and 2004 amounted to $40 and $136, respectively.

11

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 2 — Significant Accounting Policies (continued)

K.	Concentrations of credit risk:
	Financial instruments that potentially subject the Company and its subsidiaries to concentrations of credit risk consist principally of cash and cash equivalents.
	The Company’s cash and cash equivalents are invested in major banks in Israel and the United States. Such deposits in the U.S. may be in excess of insured limits and are not insured in other jurisdictions. Management believes that the financial institutions that hold the Company’s investments are financially sound, and accordingly, minimal credit risk exists with respect to these investments.
	The Company and its subsidiaries have no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.
L.	Fair value of financial instruments:
	The carrying amounts of the Company’s cash and cash equivalents, trade receivables, accounts receivables, trade payables and accounts payable, approximate their fair value due to the short-term maturity of such instruments.
M.	Income taxes
	The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS No. 109”). This Statement prescribes the use of the liability method whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company will provide a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value.
N.	Impact of recently issued accounting standards

1. On December 2004, the FASB issued Statement of Financial Accounting Standard No. 153, “Exchanges of Nonmonetary Assets,” an amendment of APB Opinion No. 29 (“SFAS 153”). The guidance in APB Opinion No. 29, Accounting for Nonmonetary Transactions (“APB 29”), is based on the principle that exchanges of nonmonetary assets should be measure based on fair value of the assets exchanged. APB 29 included certain exceptions to that principle. SFAS 153 amends APB 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of SFAS 153 will not have a material effect on the financial position or results of operations of the Company.

12

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 2 — Significant Accounting Policies (continued)

N. Impact of recently issued accounting standards (cont.)

2.	On December 16, 2004, the Financial Accounting Standards Board (FASB) issued Statement No. 123 (revised 2004), “Share-Based Payment” (“Statement 123R”), which is a revision of SFAS No. 123. Generally, the approach in Statement 123R is similar to the approach described in SFAS No. 123. However, SFAS No. 123 permitted, but did not require, share-based payments to employees to be recognized based on their fair values while Statement 123R requires all share-based payments to employees to be recognized based on their fair values. Statement 123R also revises, clarifies and expands guidance in several areas, including measuring fair value, classifying an award as equity or as a liability and attributing compensation cost to reporting periods.
	Statement 123(R) requires nonpublic companies that used the minimum value method of measuring equity share options and similar instruments for either recognition or pro forma disclosure purposes under SFAS No. 123 to adopt its requirements prospectively to new awards and to awards modified, repurchased, or cancelled after the required effective date. Those entities shall continue to account for any portion of awards outstanding at the date of initial application using the accounting principles originally applied to those awards (either the minimum value method under SFAS No. 123 or the provisions of APB 25 and its related interpretive guidance).
	In March 2005, the SEC released Staff Accounting Bulletin No. 107, “Share-Based Payment” (“SAB 107”). SAB 107 provides the SEC staff’s position regarding the application of Statement 123R, which contains interpretive guidance related to the interaction between Statement 123R and certain SEC rules and regulations, and also provides the staff’s views regarding the valuation of share-based payment arrangements for public companies.
	The impact of adoption of Statement 123(R) and SAB 107 will depend on levels of share-based payments granted in the future. Since outstanding awards are to be accounted for based on principles originally applied to them (unless modified, repurchased, or cancelled after the required effective date) no resulting accounting effect is expected for such awards. The Company expects the adoption to result in the recognition of stock-based compensation expense of approximately $4.5 to $5.0 million for options granted during 2006.
	The new Standard will be effective for the Company in the first fiscal year beginning after December 15, 2005.
3.	In May 2005, the FASB issued Statement of Financial Accounting Standard No. 154 (“FAS 154”), “Accounting Changes and Error Corrections” — a replacement of APB No. 20, “Accounting Changes” and FAS No. 3, “Reporting Accounting Changes in Interim Financial Statement”.  FAS 154 provides guidance on accounting for and reporting of accounting changes and error corrections.

13

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 2 — Significant Accounting Policies (continued)

N.	Impact of recently issued accounting standards (cont.)
	APB No. 20 previously required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. FAS 154 requires retrospective application to prior periods’ financial statements of a voluntary change in accounting principle unless it is impracticable.
	As of December 31, 2005, adoption of SFAS 154 will not have a material impact on the Company’s financial position or results of operations.

Note 3 — Cash and Cash Equivalents

	December 31
	2005		2004
New Israeli Shekels	$	192	$	154
U.S. Dollars		3,676		6,631
Other currency		3,585		285
	$	7,453	$	7,070

Note 4 — Accounts Receivable

	December 31
	2005		2004
Government institutions	$	156	$	141
Prepaid expenses		319		251
Short-term deposit		73		49
	$	548	$	441

Note 5 — Long-Term Deposits

The long-term deposits consist of prepaid car lease payments representing the last three months of the lease period, and mortgaged cash which is pledged to the bank in order to ensure payment by the Israeli subsidiary to the lessors for the rented offices which are guaranteed by the bank.

14

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 6 — Property and Equipment, Net

	December 31
	2005			2004
Cost:
Leasehold improvements	$	68		$	68
Computer equipment and software		1,200			871
Electronic equipment		123			121
Furniture and office equipment		87			78
		1,478			1,138
Accumulated depreciation		(942	)		(762	)
Net balance	$	536		$	376

Depreciation expense for the years ended December 31, 2005 and 2004 amounted to $180 and $195, respectively.

Note 7 — Trade Payables

	December 31
	2005		2004
Open accounts	$	459	$	197
Post-dated checks		266		128
	$	725	$	325

Note 8 — Accounts Payable

	December 31
	2005		2004
Accounts payable and accrued expenses	$	216	$	46
Accrued salaries and benefits		1,763		1,061
Tax authorities		70		3
	$	2,049	$	1,110

15

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 9 — Liens, Commitments and Contingencies

1. Liens

a.	The Israeli subsidiary has registered charges on its bank account, as security for liabilities to the bank.
b.	The Israeli subsidiary has deposits in the amount of $100 used as collateral for bank letters to ensure lease agreement.

2.	Operating leases
	The Company and its subsidiaries rent their facilities on a operating lease agreement.
	Future minimum lease payments under operating leases as of December 31, 2005 are:

2006	$	278
2007		59
2008		59
2009		59
2010		44
	$	499

	Office rental expenses under the lease agreements for the years ended December 31, 2005, and 2004 amounted to $ 471 and $ 255, respectively.
	The subsidiary in Israel furnished unconditional bank guarantees in the total amount of $49 to guarantee its performance under the terms of the lease agreements.
3.	Contingencies
	The Company received certain benefits under the Law for Encouragement of Capital Investments, 1959. The entitlement to the above benefits is conditional upon the Company’s fulfilling the conditions stipulated by the above law, regulations published there under and the instruments of approval for the specific investments in “Approved Enterprise”. In the event of failure to comply with these conditions, the benefits may be cancelled and the Company may be required to refund the amount of the benefits, in whole or in part, including interest. In the opinion of the Company’s management, the Company is fulfilling the condition stipulated for receiving the benefits (see Note 12D(2)).

16

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands, except number of shares)

Note 10 — Share Capital

A. Composition and capital issuance

	December 31, 2005				December 31, 2004
			Issued and				Issued and
	Authorized		outstanding		Authorized		outstanding
	Number of shares
Ordinary Shares of $0.001 each		22,000,000		*3,826,652		15,804,379		5,665,076
Series A Preferred Shares of $0.001 each		2,000,000		2,000,000		2,000,000		2,000,000
Series B Preferred Shares of $0.001 each		4,649,000		4,649,000		4,649,000		4,649,000
Series B1 Preferred Shares of $0.001 each		929,800		929,800		929,800		929,800
Series C Preferred Shares of $0.001 each		5,377,391		4,963,746		—		—

     * Issued — 5,665,076 shares; outstanding — 3,826,652 shares, see also (3) below

1. Rights attached to shares:

A.	Dividends
	The holders of shares of Series A Preferred, Series B Preferred, Series B1 Preferred and Series C Preferred shall be entitled to receive dividends, when and if declared by the Board of Directors, out of funds legally available therefore, with respect to Common Stock of the Corporation on an as-converted per share basis.
B.	Voting Rights
	The holder of each Ordinary Share shall have one vote and the holder of each of the Preferred Shares shall be entitled to the number of votes equal to the number of Ordinary Shares into which such Preferred Shares could be converted.
C.	Conversion
	The holders of each of the Preferred Shares have the right at any time to convert their shares into Ordinary Shares of $ 0.001 par value each, in the ratio of one Preferred Share to one Ordinary Share.

17

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 10 — Share Capital

A. Composition and capital issuance (continued)

1.	Rights attached to shares (continued):
D.	Liquidation Preference
	In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, distributions to the stockholders shall be made in the following manner: first, each holder of Series C Preferred Shares, second each holder of Series B and B1 Preferred Shares, and third each holder of Series A Preferred Shares , shall be entitled to receive an amount equal to one time the original purchase price, adjusted for any recapitalization, stock combinations, stock dividends, stock splits and the like, plus interest of annual LIBOR plus two percent per annum from the date of issuance of such shares until the date of such distribution with respect to such shares, and, in addition, an amount equal to all declared but unpaid dividends on the preferred shares.
	After payment of the preferred shares preference in full, all shareholders of the Company will participate, on a pro-rata and as-if-converted basis, in the distribution of any remaining assets of the Company.
E.	Other Rights
	As long as the holders of all the preferred shares and are entitled to receive their preferred preference, the amounts to be distributed to the holders of each Preferred Series shall not exceed an aggregate amount equal to $34,900, $26,800, $4,850 and $4,850 for the Series C, B, B1 and A Preferred, respectively (“Cap Amounts”). In addition, in the event that upon a pro rata distribution of the assets of the Company, the holders of Preferred Series would be entitled to receive an amount equal to or greater than the Cap Amounts, then they shall not be entitled to the preferred preference, and they shall be entitled only to their pro rata share of all assets of the Company, provided however, that in such case the amount actually distributed to the holders of Preferred Series shall not be less than the Cap Amounts but may exceed the Cap Amounts.

2.	On May 3, 2005, the Company completed a private placement of 4,963,746 Preferred C shares, at a price of $2.41753 per share, and for an aggregate consideration of $ 6,000 to certain of the Company’s existing shareholders and an additional $ 6,000 to a new investor.
3.	In addition to the private placement mentioned above the Company purchased from one of its shareholders (a related party) 1,838,424 Ordinary shares in consideration for $4,000 which were presented as treasury shares.

18

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 10 — Share Capital

B. Stock Options and warrants to customers and service providers

1.	In January 2000, the Company issued to a service provider options to purchase 70,000 Ordinary shares of $ 0.001 par value of the Company at an exercise price of $ 0.0714 per share. In January 2004 the service provider exercised his right to purchase ordinary shares of the Company in consideration to $5.
2.	In February 2004, the Company granted to a customer a warrant to purchase 60,000 Ordinary shares at an exercise price of $0.917 per share. This warrant is fully vested.
3.	During 2004 the Company granted options to purchase 230,150 Ordinary shares to consultants at an exercise price of $0.0015 per share. The options granted, vest on grant date up to a period of four years. The fair value of these options was estimated using Black-Scholes option-pricing model with the following weighted-average assumptions for 2004: risk-free interest rate of 2.5%, dividend yields of 0%, expected volatility of 60% and a weighted-average contractual life of the options of approximately 10 years. Compensation expenses of approximately $100 and $54 were recognized in the years ended December 31, 2005 and 2004, respectively. In 2005 no options were granted to consultants.

C.	Stock options to directors and employees
	The Board of Directors of the Company adopted a plan to grant options to purchase Ordinary shares of the Company to officers, employees and directors of the Company. The options shall terminate within 10 years after the date of the grant.
	A summary of the status of the stock options to employees and directors as of December 31, 2005 and 2004, and changes during the years ended on those dates, is presented below:

	December 31, 2005					December 31, 2004
				Weighted					Weighted
				average					average
	Number of			exercise		Number of			exercise
	Shares			price		Shares			price
Options unexercised at beginning of the year		2,535,812		$	0.96		2,103,312		$	0.85
Granted during the year		200,000		$	1.69		508,000		$	1.5
Exercised during the year		—			—		(15,000	)	$	0.8
Cancelled during the year		(246,500	)	$	1.5		(60,500	)	$	1.5
Options unexercised at end of the year		2,489,312		$	0.97		2,535,812		$	0.96
Exercisable by year end		1,763,812		$	0.78		1,023,309		$	0.69

19

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 10 — Share Capital

C.	Stock options to directors and employees (cont.)
	The options were granted at an exercise price per share of $0.001- $1.72. The weighted average fair value per share of options granted during the years 2005 and 2004 was $1.69 and $1.505 respectively.
D.	Compensation expenses with respect to options granted to employees
	The Company applies APB 25 and related interpretations in accounting for stock options granted to employees and directors of the Group. The number of shares is fixed at the date of grants. Accordingly, the difference between the fair value of the shares on the date of grant and the exercise price of such options is charged to statement of operations over the vesting period.
	Had compensation expenses for stock options granted been determined based on the fair value at the grant dates, consistent with the method of SFAS No. 123, the effect on the results of operation for the years ended December 31, 2005 and 2004 would have amounted as follows:

	Year ended December 31,
	2005			2004
Net loss as reported	$	(3,306	)	$	(2,099	)
Deduct — stock-based compensation expense as reported (intrinsic value method)		—			—
Add — stock fair value based method of SFAS 123		(118	)		(183	)
Proforma net loss	$	(3,424	)	$	(2,282	)

Note 11 — Financing expenses, net

	Year ended December 31,
	2005			2004
Foreign currency translation differences	$	722		$	74
Interest income on deposits		(104	)		(57	)
Bank expenses		10			14
	$	628		$	31

20

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 12 — Taxes on Income

A.	Taxation
	The Company is taxed under United States federal and state tax rules.
B.	Loss for tax purposes
	The Company’s carryforward tax losses amounted to approximately $9.7 million as of December 31, 2005. Such losses are available to offset any future U.S. taxable income of the Company and will expire in the years 2021-2025.
C.	Income tax assessments
	The Company and its subsidiaries have not been assessed for tax purposes since incorporation.
D.	Subsidiaries

1.	The subsidiaries of the Company are subject to tax laws in their countries of residence.
2.	Israeli income tax is computed on the basis of the Israeli subsidiary’s results in nominal New Israeli Shekels (“NIS”) determined for statutory purposes. The Israeli subsidiary is assessed for tax purposes under the Income Tax Law (Inflationary Adjustments 1985), the purpose of which is to prevent taxation of inflationary profits.
	On May 2001, the Israeli subsidiary submitted a request to the Investment Center of the Ministry of Industry and Commerce (hereinafter “Investment Center”) for the approval of its investment program as an “Approved Enterprise” status under the alternative benefits method pursuant to the Israeli Tax Law. The benefit period deriving from the plan is due to end in 2007.
3.	The main benefits of which the Israeli subsidiary will be entitled, if the Israeli subsidiary implements all the terms of the approved program and the Israeli Tax Law, are the reduced tax rates on income deriving from an approved enterprise and reduced tax rates on dividends originating from this income. The income derived from an approved enterprise will be exempt from tax for a two year period, commencing on the date that taxable income is first generated by the approved enterprise (limited to the earlier of a maximum period of 12 years from the year of commencement of operations or 14 years from the year in which the approval letter was received), and will be subject to a reduced tax rate of 25% during the remaining tax benefits period (five years). The reduced tax rate and the remaining period are subject to the percentage of foreign shareholders.
	Dividend distributions originating from the income of the Approved Enterprise will be subject to withholding tax at the rate of 25%, provided that the dividend is distributed during the period stipulated in the Law. If the Israeli subsidiary derives income from sources other than the approved enterprise during the relevant period of benefits, such income will be taxable at regular corporate tax rate. (See G below).

21

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 12 — Taxes on Income (continued)

E. Composition

	Year ended December 31,
	2005		2004
Current tax	$	103	$	18
Previous years’ taxes		14		—
Increase in deferred tax liability, net		293		321
Taxes on income	$	410	$	339

F.	Deferred taxes
	Deferred taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and such amounts for tax purposes.
	Significant components of deferred tax assets and liabilities are as follows:

	December 31
	2005			2004
Carry forward losses and other		2,432			1,704
Less: valuation allowance		(2,432	)		(1,704	)
	—			—
Less:
Tax liability on exempt income from approved enterprise		(746	)		(453	)
Deferred tax liability, net	$	(746	)	$	(453	)

G.

Tax rates applicable to the income of the Israeli subsidiary

Until December 31, 2003, the regular tax rate applicable to income of companies (which are not entitled to benefits due to “approved enterprise”, as described above) was 36%. In June 2004, an amendment to the Income Tax Ordinance (No. 140 and Temporary Provision), 2004 was passed by the “Knesset” (Israeli parliament) and on July 25, 2005, another law was passed, the amendment to the Income Tax Ordinance (No. 147) 2005, according to which the corporate tax rate is to be progressively reduced to the following tax rates: 2004 — 35%, 2005 — 34%, 2006 - 31%, 2007 — 29%, 2008 — 27%, 2009 — 26%, 2010 and thereafter — 25%.

22

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 13 — Transactions with Related Parties

	Year ended December 31,
	2005		2004
Wages and related benefits	$	1,140	$	474

Note 14 — Subsequent events

A.	On August 16, 2006, the Company entered into an agreement with a lender for the extension of a line of credit to the Company for a year in an amount of up to $ 4,500. The loan bears annual interest at the rate of LIBOR + 4% that is to be paid on a quarterly basis. The loan will be repaid in one installment not later than the end of a year from the date the agreement is signed.
	If during the six-month period from the date of the agreement, one of the events below shall occur, the Company will pay the lender an additional amount of $ 495:

1.	The agreement is cancelled by the Company, or
2.	The original shareholders as of the date the agreement will hold at least 50% of the Company’s share capital as a result of the sale of control in the Company, or a merger with another company.

	Should none of the above events occur during the six-month period from the date of the agreement the Company will allocate Preferred C shares to the lender at no consideration, which shares shall provide the lender 1% of the Company’s issued and outstanding share capital.
	In the framework of the agreement, the Company undertook to comply with financial covenants and additional stipulations and, in addition, to record a floating charge on all of its tangible and intangible rights and assets.
B.	On August 16, 2006, the Company’s board of directors approved the receipt of an additional credit of up to $1,000 from existing shareholders.
	The credit shall be granted at the same terms as stated in Note 14a, including the issuance of Preferred shares relative to the credit amount to be received from the shareholders.

23

Followap Inc. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In U. S. Dollars (in thousands)

Note 14 — Subsequent events (continued)

C.	On November 27 2006, the Company was acquired by NeuStar, Inc. (NYSE: NSR), a provider of essential communications services to the global communications and Internet industry, for approximately $139 million in cash.
	On November 27 2006, the Company cancelled its $5,500 credit agreements. NeuStar Inc repaid the loans together with all associated accrued interest and termination fees.

24

EX-99.3

EXHIBIT 99.3

Followap Inc.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2006
(Unaudited)

Followap Inc.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2006
IN U.S. DOLLARS
UNAUDITED

INDEX

	Page
Consolidated Balance Sheets		2-3
Consolidated Statements of Operations		4
Consolidated Statements of Cash Flows		5
Notes to the Consolidated Financial Statements		6-12

1

	Followap Inc.
CONSOLIDATED BALANCE SHEETS
U.S. Dollars in thousands

	September 30,		December 31,
	2006		2005
	Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,280	$	7,453
Trade receivables		971		3,832
Accounts receivable		321		548
		3,572		11,833
LONG-TERM ASSETS
Long-term deposits		219		174
Severance pay fund		601		492
		820		666
PROPERTY AND EQUIPMENT, NET		1,014		536
Total assets	$	5,406	$	13,035

The accompanying notes are an integral part of the financial statements.

2

	Followap Inc.
CONSOLIDATED BALANCE SHEETS
U.S. Dollars in thousands (except share data)

	September			December
	30,			31,
	2006			2005
	Unaudited
Liabilities and shareholders’ equity
Current liabilities
Loans from others	$	2,500		$	—
Loans from related parties		556			—
Trade payables		812			725
Accounts payable		3,737			2,049
Deferred revenues		1,083			3,447
		8,688			6,221
Long-term liabilities
Accrued severance pay		898			738
Deferred tax liability, net		415			746
		1,313			1,484
Shareholders’ equity
Share capital -
Preferred A shares of $0.001 par value:
2,000,000 shares authorized, issued and outstanding as of September 30, 2006, and December 31, 2005; liquidation preference of approximately $2,944 as of September 30, 2006		2			2
Preferred B shares of $0.001 par value:
4,649,000 shares authorized, issued and outstanding as of September 30, 2006, and December 31, 2005; liquidation preference of approximately $13,726 as of September 30, 2006		5			5
Preferred B1 shares of $0.001 par value:
929,800 shares authorized, issued and outstanding as of September 30, 2006, and December 31, 2005; liquidation preference of approximately $2,707 as of September 30, 2006		1			1
Preferred C shares of $0.001 par value:
5,377,391 shares authorized as of June 30, 2006 and December 31, 2005; 4,963,746 shares issued and outstanding as of September 30, 2006 and December 31, 2005, liquidation of preference of approximately $12,963 as of September 30, 2006		5			5
Ordinary shares of $0.001 par value:
22,000,000 shares authorized as of September 30, 2006, and December 31, 2005; 5,665,076 shares issued as of September 30, 2006, and December 31, 2005; 3,826,625 shares outstanding as of September 30, 2006 and December 31, 2005		4			4
Additional paid-in capital		31,661			27,227
Less treasury share at cost (1,838,424 ordinary shares as of September 30, 2006 and December 31, 2005)		(3,998	)		(3,998	)
Accumulated deficit		(32,275	)		(17,916	)
		(4,595	)		5,330
Total liabilities and shareholders’ equity	$	5,406		$	13,035

The accompanying notes are an integral part of the financial statements.

3

	Followap Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. Dollars in thousands

	Nine months
	ended
	September 30,
	2006			2005
	Unaudited
Revenues	$	5,742		$	5,738
Cost of revenues		2,785			1,222
Gross profit		2,957			4,516
Operating expenses:
Research and development expenses		6,203			3,322
Sales and marketing expenses		8,650			4,884
General and administrative expenses		2,496			780
Total operating expenses		17,349			8,986
Operating loss		(14,392	)		(4,470	)
Financing expenses, net		284			600
Loss before taxes on income		(14,676	)		(5,070	)
Tax benefit (taxes on income)		317			(250	)
Loss for the period	$	(14,359	)	$	(5,320	)

The accompanying notes are an integral part of the financial statements.

4

	Followap Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. Dollars in thousands

	For the nine months ended
	September 30,
	2006			2005
	Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss for the period	$	(14,359	)	$	(5,320	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		229			129
Amortization of stock based compensation		4,434			21
Accrued severance pay, net		51			37
Decrease (increase) in long-term deposits		(45	)		6
Capital loss on sale of property and equipment		—			—
Increase (decrease) in deferred tax liabilities		(331	)		220
Decrease (increase) in trade receivables		2,861			358
Decrease (increase) in accounts receivable		227			55
Increase (decrease) in trade payables		87			(25	)
Increase (decrease) in accounts payable		1,688			(168	)
Decrease in deferred revenues		(2,364	)		(106	)
Net cash used in operating activities		(7,522	)		(4,793	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(707	)		(177	)
Proceeds from sale of property and equipment		—			3
Net cash used in investment activities		(707	)		(174	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Receipt of loans from related parties		556			—
Receipt of loans from others		2,500			—
Proceeds from issuance of preferred stock, net of issuance costs		—			11,891
Purchase of treasury stocks		—			(4,000	)
Net cash provided by financing activities		3,056			7,891
Increase (decrease) in cash and cash equivalents		(5,173	)		2,924
Cash and cash equivalents at the beginning of the period		7,453			7,070
Cash and cash equivalent at the end of the period	$	2,280		$	9,994
Supplemental disclosure of cash flow information:
Cash paid during the year for income taxes	$	49		$	41
Cash paid during the year for interest	$	1		$	2

The accompanying notes are an integral part of the financial statements.

5

	Followap Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands

NOTE 1:- GENERAL

A.

Followap Inc. (the “Company”), registered in Delaware, was incorporated in December 1999 and commenced operations on January 19, 2000. The Company and its wholly owned subsidiaries, Followap R&D 2000 Ltd. in Israel, Followap GmbH in Germany and Followap Ltd. in the UK are engaged in development, marketing and sales of Mobile Instant Messaging Presence and Location (IMPL) platforms for mobile operators.

Most of the Company’s revenues for the nine-month period ended September 30, 2006 and for the year ended December 31, 2005 were derived from sales to a major customer and his affiliates.

B. The high technology industry in which the Company is involved is highly competitive and is characterized by the risks of rapidly changing technologies. Penetration into the world market requires the investment of considerable resources and continuous development efforts. The Company’s future success is dependent upon several factors including the technological quality and price/performance of its products relative to those of its competitors. There can be no assurance that the Company will be able to maintain the high technological quality of its product or to continue to develop or market its new products effectively.

C. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States for interim financial information. Accordingly, they do not include all 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 accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended September 30, 2006 are not necessarily indicative of the results that may be expected for the year ended December 2006.

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES

A. The significant accounting policies applied in the annual consolidated financial statements of the Company as of December 31, 2005 are applied consistently in these consolidated financial statements, except as detailed in b below.

B. Stock based compensation

On January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”) which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based payment awards made to employees and directors. SFAS 123(R) supersedes Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), for periods beginning in fiscal 2006. In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 (“SAB 107”) relating to SFAS 123(R). The Company has applied the provisions of SAB 107 in its adoption of SFAS 123(R).

6

	Followap Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (continued.)

C. Stock based compensation (continued)

SFAS 123(R) requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated income statement.

Prior to January 1, 2006, the Company accounted for equity-based awards to employees and directors using the intrinsic value method in accordance with APB 25 as allowed under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). Compensation expense is equal to the excess, if any, of the market price of the stock over the exercise price on the grant date of the award. Pro forma information regarding net loss is required by SFAS 123 and has been determined as if the Company has accounted for its employee stock options under the Minimum value method (which assumes an expected volatility of zero).

Statement 123(R) requires nonpublic companies that used the minimum value method of measuring equity share options for pro forma disclosure purposes under SFAS 123 to adopt its requirements prospectively to new awards and to awards modified, repurchased, or cancelled after the required effective date. The Company continues to account for any portion of awards outstanding at the date of initial application using the accounting principles originally applied to those awards, the provisions of Opinion 25 and its related interpretive guidance.

The Company recognizes compensation expenses for the value of its awards, which have graded vesting over a period of 4 years, based on the straight line method over the requisite service period of each of the awards. The contractual life of the options is 10 years from date of grant.

As a result of adopting SFAS 123(R) on January 1, 2006, the Company’s loss before taxes on income and net loss for the nine months ended September 30, 2006, is $2,379 higher than if it had continued to account for stock-based compensation under APB 25. During the nine months period ended September 30, 2006, the Company recognized stock-based compensation expense related to employee stock options in the amount of $4,434.

The Company estimates the value of its stock options using the “calculated value” on grant date that incorporates each of the inputs required by Statement 123(R),with the exception of the expected volatility of its stock. The calculated value method requires that the volatility assumption used in an option pricing model be based on the historical volatility of similar public companies. The Company measures compensation cost of employee stock options based on the calculated value instead of fair value because it is not practical to estimate the volatility of its share price.

The Company uses the Black-Scholes-Merton formula to estimate the value of its share-based payments.

7

	Followap Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (continued.)

C.	Stock based compensation (continued)
	The expected option term represents the period that the Company’s stock options are expected to be outstanding and was determined according to simplified method as suggested by SAB107, the average of vesting and the contractual terms of the stock options. The Company has historically not paid dividends and has no foreseeable plans to issue dividends. The risk-free interest rate is based on the yield from U.S. Treasury bonds with an equivalent term.
	The fair value of the Company’s stock options granted to employees and directors for the nine months ended September 30, 2006 was estimated using the following weighted average assumptions:

	Nine months
	ended
	September 30,
	2006
Dividend yield		0	%
Expected volatility		60	%
Risk-free interest rate		4.5-5	%
Expected life	6 years

A summary of option activity under the Company’s Stock Option Plan as of September 30, 2006 and changes during the nine months ended September 30, 2006 are as follows:

						Weighted-
						average
				Weighted-		remaining
				average		contractual		Aggregate
	Number of			exercise		term		intrinsic
	options			price		(in years)		value
	Unaudited
Options outstanding at December 31, 2005		2,489,312		$	0.77
Granted		1,882,250		$	1.68
Exercised		—			—
Forfeited		(569,000	)	$	1.43
Options outstanding at September 30, 2006		3,802,562		$	1.33		7.16	$	11,102
Options exercisable at September 30, 2006		1,620,187		$	0.89		4.27	$	1,454
Options vested and expected to vest at September 30, 2006		1,620,187		$	0.89		4.27	$	1,454

8

	Followap Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (continued.)

C.	Stock based compensation (continued)
	The weighted-average grant-date value of options granted during the nine months ended September 30, 2006 was $ 6.05. The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company’s stock price on September 30, 2006 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2006. This amount changes based on the value of the Company’s stock. As of September 30, 2006, there was $ 6,910 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Company’s stock option plans. That cost is expected to be recognized over a weighted-average period of 2.9 years.
	The options outstanding as of September 30, 2006 have been separated into ranges of exercise prices, as follows:

			Weighted
	Options		Average
	outstanding		remaining
	as of		contractual
Exercise	September 30,		life		Options
price	2006		(in years)		exercisable
$0.001		677,812		4.68		677,812
$0.80		18,000		4.28		18,000
$1.50		1,139,500		7.28		712,625
$1.69		1,967,250		9.47		211,750
		3,802,562		7.16		1,620,187

During the nine months ended September 30, 2006, the Company recognized stock-based compensation expense related to employee stock options in the amount of $4,434, as follows:

	Nine months
	ended
	September 30,
	2006
	Unaudited
Cost of revenues	$	158
Research and development		1,338
Sales and marketing		1,710
General and administrative		1,228
Total Stock-based compensation expense	$	4,434

9

	Followap Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (continued.)

C.	Stock based compensation (continued)
	Options granted to non-employees:
	The Company applies SFAS 123 and Emerging Issues Task Force No. 96-18 “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”, with respect to options issued to non-employees. SFAS 123 requires the use of option valuation models to measure the fair value of the options and warrants.
	The fair value for these options was estimated at the measurement date using the Black-Scholes option-pricing model with the following weighted-average assumptions for 2006: risk-free interest rates of 2.5%, dividend yields of 0%, volatility factors of the historical volatility of similar public companies of 60% and a contractual life of 7.5 years.
	Compensation expenses related to the granting of stock options to consultants amounted to $39 for the nine month periods ending September 30, 2006.

D. Recently issued accounting pronouncements:

1.	FASB Interpretation No. 48:
	In July 2006, the FASB issued FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 utilizes a two-step approach for evaluating tax positions. Recognition (step one) occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) is only addressed if step one has been satisfied (i.e., the position is more-likely-than-not to be sustained). Under step two, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis that is more-likely-than-not to be realized upon ultimate settlement.
	FIN 48 applies to all tax positions related to income taxes subject to the Financial Accounting Standard Board Statement No. 109, “Accounting for income taxes” (“FAS 109”). This includes tax positions considered to be “routine” as well as those with a high degree of uncertainty.
	FIN 48 has expanded disclosure requirements, which include a tabular roll forward of the beginning and ending aggregate unrecognized tax benefits as well as specific detail related to tax uncertainties for which it is reasonably possible the amount of unrecognized tax benefit will significantly increase or decrease within twelve months. These disclosures are required at each annual reporting period unless a significant change occurs in an interim period.

10

	Followap Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (continued.)

D.	Recently issued accounting pronouncements (cont.)
	FIN 48 is effective for fiscal years beginning after December 15, 2006. The cumulative effect of applying FIN 48 will be reported as an adjustment to the opening balance of retained earnings. The Company is currently evaluating the impact of adopting FIN 48.

2.

SFAS No. 157:

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”). This statement provides a single definition of fair value, a framework for measuring fair value, and expanded disclosures concerning fair value. Previously, different definitions of fair value were contained in various accounting pronouncements creating inconsistencies in measurement and disclosures. SFAS No. 157 applies under those previously issued pronouncements that prescribe fair value as the relevant measure of value, except SFAS No. 123(R) and related interpretations. The statement does not apply to accounting standard that require or permit measurement similar to fair value but are not intended to represent fair value. This pronouncement is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of adopting SFAS 157.

3.

Staff Accounting Bulletin No. 108:

In September 2006, the SEC issued Staff Accounting Bulletin No. 108 (“SAB 108”) Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, that provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. The SEC staff believes that registrants should quantify errors using both a balance sheet and an income statement approach and evaluate whether either approach results in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. This pronouncement is effective for fiscal years ending after November 15, 2006. The Company is currently evaluating the provisions of SAB 108.

NOTE 3:- SIGNIFICANT EVENTS DURING THE PERIOD ENDED SEPTEMBER 30, 2006

A.	On August 16, 2006, the Company entered into an agreement with a lender for the extension of a line of credit to the Company for a year in an amount of up to $ 4,500. The loan bears annual interest at the rate of LIBOR + 4% that is to be paid on a quarterly basis. The loan will be repaid in one installment not later than the end of a year from the date the agreement is signed.
	If during the six-month period from the date of the agreement, one of the events below shall occur, the Company will pay the lender an additional amount of $ 495 (“termination fee”):

11

	Followap Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands

NOTE 3:- SIGNIFICANT EVENTS DURING THE PERIOD ENDED SEPTEMBER 30, 2006 (continued.)

A. (continued.)

1.	The agreement is cancelled by the Company, or
2.	The original shareholders as of the date the agreement will hold at least 50% of the Company’s share capital as a result of the sale of control in the Company, or a merger with another company.

Should none of the above events occur during the six-month period from the date of the agreement the Company will allocate Preferred C shares to the lender at no consideration, which shares shall provide the lender 1% of the Company’s issued and outstanding share capital.

In the framework of the agreement, the Company undertook to comply with financial covenants and additional stipulations and, in addition, to record a floating charge on all of its tangible and intangible rights and assets.

As of September 30, 2006, the Company borrowed an amount of $2,500 from the credit line mentioned above and accrued $495 for the termination fee.

B.	On August 16, 2006, the Company’s board of directors approved the receipt of an additional credit of up to $1,000 from existing shareholders.
	The credit shall be granted at the same terms as stated in Note 4a, including the issuance of Preferred shares relative to the credit amount to be received from the shareholders.
	As of September 30, 2006, the Company borrowed an amount of $556 from the credit line mentioned above and accrued $110 for the termination fee.

NOTE 4:- SUBSEQUENT EVENTS

On November 27 2006, the Company was acquired by NeuStar, Inc. (NYSE: NSR), a provider of essential communications services to the global communications and Internet industry, for approximately $139 million in cash.

On November 27 2006, the Company cancelled its $5,500 credit agreements. NeuStar Inc repaid the loans together with all associated accrued interest and termination fees.

12

EX-99.4

EXHIBIT 99.4

Pro Forma Condensed Consolidated Financial Statements

     On November 27, 2006, NeuStar, Inc. (“NeuStar” or the “Company”) completed its acquisition of all the issued and outstanding shares of Followap Inc. (“Followap”). On April 21, 2006, NeuStar completed its acquisition of all the issued and outstanding shares of UltraDNS Corporation (“UltraDNS”). The following unaudited pro forma condensed consolidated financial statements are based on the historical financial statements of NeuStar, UltraDNS and Followap and have been prepared to give effect to these completed acquisitions, which were accounted for as a purchase business combination in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations (“SFAS 141”).

     The unaudited pro forma condensed consolidated balance sheet gives effect to the acquisition of Followap as if it had occurred on September 30, 2006. The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2005 and for the nine months ended September 30, 2006 gives effect to the acquisition of Followap, as well as the acquisition of UltraDNS, as if they had occurred on January 1, 2005. The assumptions, estimates and adjustments herein have been made solely for purposes of developing these pro forma condensed consolidated financial statements.

     NeuStar’s acquisition of Followap will be accounted for under the purchase method of accounting in accordance with SFAS 141. Under the purchase method of accounting, the total estimated purchase price, calculated as described in Notes 1 and 2 to these unaudited pro forma condensed consolidated financial statements, is allocated to the net tangible liabilities assumed and the intangible assets acquired in connection with the acquisition, based on their estimated fair values as of the effective date of the acquisition. Management’s estimates of the fair value of tangible and intangible assets acquired and liabilities assumed are based, in part, on third-party valuations. The preliminary allocation of the purchase price was based upon a preliminary valuation and our estimates and assumptions are subject to change.

     The unaudited pro forma condensed consolidated financial statements do not include any adjustments regarding liabilities incurred or cost savings achieved resulting from the integration of these companies, as management is in the process of assessing what, if any, future actions are necessary. However, additional liabilities ultimately may be recorded for severance and/or other costs associated with removing redundant operations that could affect amounts in these pro forma condensed consolidated financial statements, and their effects may be material.

     The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical audited consolidated financial statements and related notes of NeuStar, “Management’s Discussions and Analysis of Financial Condition and Results of Operations” contained in NeuStar’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and NeuStar’s Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2006, as well as the historical consolidated financial statements and related notes of Followap which are attached as Exhibit 99.2 and Exhibit 99.3, to this Current Report on Form 8-K/A. The unaudited pro forma condensed consolidated financial statements are not intended to represent or be indicative of the consolidated results of operations or financial condition of NeuStar that would have been reported had the acquisition been completed as of the dates presented, and should not be construed as representative of the future consolidated results of operations or financial condition of the combined entity.

1

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

NEUSTAR, INC.
AS OF SEPTEMBER 30, 2006

						Pro Forma			Consolidated
	NeuStar		Followap			Adjustments			Total
Current assets:
Cash and cash equivalents	$	27,055	$	2,280		$	(29,335)	(a)	$	—
Restricted cash		388		—			—			388
Short-term investments		111,451		—			(111,451)	(a)		—
Accounts receivable, net		46,379		971			—			47,350
Unbilled receivables		501		—			—			501
Notes receivable		1,954		—			—			1,954
Prepaid expenses and other current assets		7,621		321			—			7,942
Deferred costs		5,871		—			—			5,871
Income taxes receivable		23,141		—			—			23,141
Deferred tax asset, net		4,480		—			—			4,480
Total current assets		228,841		3,572			(140,786	)		91,627
Property and equipment, net		38,316		1,014			—			39,330
Goodwill		86,189		—			120,141	(b)		206,330
Intangibles assets, net		23,173		—			30,600	(c)		53,773
Notes receivable, long-term		3,431		—			—			3,431
Deferred costs, long-term		4,781		—			—			4,781
Deferred tax asset, net		10,624		—			(4,805)	(f)		5,819
Other assets		222		820			—			1,042
Total assets	$	395,577	$	5,406		$	5,150		$	406,133
Current liabilities:
Accounts payable	$	3,651	$	812		$	—		$	4,463
Accrued expenses		35,601		3,737			(639)	(d)		38,699
Deferred revenue		22,472		1,083			(913)	(e)		22,642
Notes payable		929		—			5,578	(a)		6,507
Capital lease obligations		3,910		—			—			3,910
Accrued restructuring reserve		392		—			—			392
Loans from others		—		2,500			(2,500)	(d)		—
Loans from related parties		—		556			(556)	(d)		—
Total current liabilities		66,955		8,688			970			76,613
Deferred revenue, long-term		17,954		—			—			17,954
Notes payable, long-term		330		—			—			330
Capital lease obligations, long-term		931		—			—			931
Accrued restructuring reserve, long-term		2,300		—			—			2,300
Deferred tax liability, net		—		415			(415)	(f)		—
Other liabilities		500		898			—			1,398
Total liabilities		88,970		10,001			555			99,526
Total stockholders’ equity (deficit)		306,607		(4,595	)		4,595	(g)		306,607
Total liabilities and stockholders’ equity (deficit)	$	395,577	$	5,406		$	5,150		$	406,133

See unaudited notes to the pro forma condensed consolidated financial statements

2

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

NEUSTAR, INC.
FOR THE YEAR ENDED DECEMBER 31, 2005

										Pro Forma			Consolidated
	NeuStar			UltraDNS			Followap			Adjustments			Total
Revenue	$	242,469		$	11,998		$	12,920		$	¾		$	267,387
Operating expense:
Cost of revenue (excluding depreciation and amortization shown separately below)		64,891			1,586			1,751			¾			68,228
Sales and marketing		29,543			5,069			7,123			¾			41,735
Research and development		11,883			1,281			4,553			(144)	(h)		17,573
General and administrative		28,048			3,891			1,761			(252)	(h)		33,448
Depreciation and amortization		16,025			396			¾			13,264	(h)(i)		29,685
Restructuring recoveries		(389	)		—			¾			¾			(389	)
		150,001			12,223			15,188			12,868			190,280
Income (loss) from operations		92,468			(225	)		(2,268	)		(12,868	)		77,107
Other (expense) income		285			(396	)		(628	)		(3,164)	(j)		(3,903	)
Income (loss) before minority interest and income taxes		92,753			(621	)		(2,896	)		(16,032	)		73,204
Minority interest		(104	)		—			¾			¾			(104	)
Income (loss) before income taxes		92,649			(621	)		(2,896	)		(16,032	)		73,100
Provision (benefit) for income taxes		37,251			¾			410			(8,264)	(k)		29,397
Net income (loss)	$	55,398		$	(621	)	$	(3,306	)	$	(7,768	)	$	43,703
Dividends on and accretion of preferred stock		(4,313	)		¾			¾			¾			(4,313	)
Net income (loss) attributable to common stockholders	$	51,085		$	(621	)	$	(3,306	)	$	(7,768	)	$	39,390
Net income attributable to common stockholders per common share:
Basic	$	1.48											$	1.14
Diluted	$	0.72											$	0.57
Weighted average common shares outstanding:
Basic		34,437												34,437
Diluted		77,046												77,046

See unaudited notes to the pro forma condensed consolidated financial statements

3

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

NEUSTAR, INC.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006

				Jan. 1, 2006
				to
				Apr. 20, 2006						Pro Forma			Consolidated
	NeuStar			UltraDNS			Followap			Adjustments			Total
Revenue	$	240,935		$	5,227		$	5,742		$	¾		$	251,904
Operating expense:
Cost of revenue (excluding depreciation and amortization shown separately below)		62,422			583			2,785			¾			65,790
Sales and marketing		32,754			1,848			8,650			¾			43,252
Research and development		12,782			559			6,203			(183)	(h)		19,361
General and administrative		25,551			1,072			2,496			(46)	(h)		29,073
Depreciation and amortization		16,493			151			¾			7,322	(h)(i)		23,966
		150,002			4,213			20,134			7,093			181,442
Income (loss) from operations		90,933			1,014			(14,392	)		(7,093	)		70,462
Other (expense) income		1,802			(2,649	)		(284	)		509	(j)		(622	)
Income (loss) before minority interest and income taxes		92,735			(1,635	)		(14,676	)		(6,584	)		69,840
Minority interest		(95	)		¾			¾			¾			(95	)
Income (loss) before income taxes		92,640			(1,635	)		(14,676	)		(6,584	)		69,745
Provision (benefit) for income taxes		37,299			¾			(317	)		(8,901	)  (k)		28,081
Net income (loss)	$	55,341		$	(1,635	)	$	(14,359	)	$	2,317		$	41,664
Net income attributable to common stockholders per common share:
Basic	$	0.77											$	0.58
Diluted	$	0.71											$	0.53
Weighted average common shares outstanding:
Basic		71,849												71,849
Diluted		78,096												78,096

See unaudited notes to the pro forma condensed consolidated financial statements

4

NOTES TO THE UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
NEUSTAR, INC.

Note 1. Basis of Pro Forma Presentation

     The unaudited pro forma condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission for the purposes of inclusion in NeuStar’s amended Form 8-K/A prepared in connection with the acquisition of Followap. These unaudited pro forma condensed consolidated financial statements also give effect to the acquisition of UltraDNS.

     Certain information and certain footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures provided herein are adequate to make the information presented not misleading.

     The information concerning NeuStar has been obtained from the audited consolidated financial statements of NeuStar for the year ended December 31, 2005 and the unaudited consolidated financial statements for the nine months ended September 30, 2006. The information concerning Followap has been obtained from the audited consolidated financial statements of Followap for the year ended December 31, 2005 and the unaudited consolidated financial statements for the nine months ended September 30, 2006. The information concerning UltraDNS has been obtained from the audited financial statements for the year ended December 31, 2005 and the unaudited financial statements for the period from January 1, 2006 to April 20, 2006, the day immediately prior to the completion of the acquisition of UltraDNS by NeuStar.

     The unaudited pro forma condensed consolidated financial statements are provided for informational purposes only and do not purport to be indicative of the Company’s financial position or results of operations which would actually have been obtained had such transactions been completed as of the date or for the periods presented, or of the financial position or results of operations that may be obtained in the future.

Note 2. Purchase Price Allocation

     On November 27, 2006, NeuStar completed its acquisition of all the issued and outstanding shares of Followap. The unaudited pro forma condensed consolidated financial statements have been prepared to give effect to the completed acquisition, which was accounted for as a purchase business combination in accordance with SFAS No. 141. Followap is a leading provider of next-generation communications solutions for network operators, delivering interoperability between operators and Internet portals in five different functional areas, which are instant messaging, presence, multimedia gateways, inter-carrier messaging hubs, and services for handset clients. The total estimated purchase price was approximately $146.4 million, which includes cash consideration of $139.0 million, payment of Followap debt and other liabilities of $5.6 million and estimated direct transaction costs of $1.8 million. The consideration payable to the holders of options to purchase Followap common stock that had not vested as of the closing of the acquisition was deposited into an escrow fund for the benefit of option holders. These funds will be paid to the holders of such options over time as their options would have vested if they had not been canceled in connection with the acquisition. To the extent a holder of such options forfeits this consideration in accordance with the agreement and plan of merger, this consideration shall be distributed among the former shareholders of Followap.

     Of the total cash consideration, approximately $14.1 million was distributed to an escrow account, of which $13.8 million will be used for indemnification claims as set forth in the agreement and plan of merger. The other $0.3 million will be used for the reimbursement of certain costs and expenses of the representative for the former shareholders of Followap. All funds remaining in the account will be distributed to Followap stockholders in accordance with the agreement and plan of merger following 12 months from the completion of the acquisition.

5

NOTES TO THE UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
NEUSTAR, INC. (continued)

Note 2. Purchase Price Allocation (continued)

     Under the purchase method of accounting, the total estimated purchase price is allocated to Followap’s net tangible liabilities assumed and intangible assets acquired based on their estimated fair values as of November 27, 2006, the effective date of the acquisition. Based in part on a third party valuation, and other factors as described in the introduction to these unaudited pro forma condensed consolidated financial statements, the preliminary estimated purchase price is allocated as follows (in thousands):

Cash and cash equivalents	$	2,218
Accounts receivable		1,161
Prepaid expenses and other current assets		283
Property and equipment		1,094
Other assets		870
Accounts payable		(707	)
Accrued expenses		(3,223	)
Deferred revenue		(212	)
Other liabilities		(1,019	)
Deferred tax liability, net		(4,605	)
Net tangible liabilities assumed		(4,140	)
Definite-lived intangible assets acquired		30,600
Goodwill		119,904
Total estimated purchase price	$	146,364

     Of the total estimated purchase price, a preliminary estimate of $4.1 million has been allocated to net tangible liabilities assumed and $30.6 million has been allocated to definite-lived intangible assets acquired. The Company utilized a third party valuation in determining the fair value of the definite-lived intangible asset base. The income approach, which includes an analysis of cash flows and the risks associated with achieving such cash flows, was the primary technique utilized in valuing the identifiable intangible assets. The $30.6 million of definite lived intangible assets acquired consists of the value assigned to Followap’s customer relationships of $20.8 million and acquired technology of $9.8 million. NeuStar expects to amortize the value of the Followap customer relationships using an accelerated basis over five years and the value of the acquired technology will be amortized on a straight-line basis over 3 years.

     Of the total estimated purchase price, approximately $119.9 million has been allocated to goodwill. Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net tangible and intangible assets acquired. Goodwill is not deductible for tax purposes.

     In accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, goodwill will be tested for impairment at least annually (more frequently if certain impairment indicators are present). In the event that the management of the Company determines that the goodwill has become impaired, the Company will incur an accounting charge for the amount of impairment during the fiscal quarter in which the determination is made.

Note 3. Pro Forma Adjustments

     Pro forma adjustments are necessary to reflect the estimated purchase price, to adjust amounts related to Followap’s net tangible liabilities and intangible assets to a preliminary estimate of the fair values of those amounts, to reflect the amortization expense related to the estimated amortizable intangible assets and to reclassify certain of Followap’s amounts to conform to NeuStar’s presentation.

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NOTES TO THE UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
NEUSTAR, INC. (continued)

Note 3. Pro Forma Adjustments (continued)

     The unaudited pro forma condensed consolidated financial statements do not include adjustments for liabilities relating to Emerging Issues Task Force No. 95-3 (“EITF 95-3”), Recognition of Liabilities in Connection with a Purchase Business Combination. Management is in the process of assessing what, if any, future actions are necessary. However, liabilities ultimately may be recorded for severance or relocation costs, or other costs associated with exiting activities of Followap that may affect amounts in the unaudited pro forma condensed consolidated financial statements.

     NeuStar has not identified any material preacquisition contingencies where the related asset, liability or impairment is probable and the amount of the asset, liability or impairment can be reasonably estimated. Prior to the end of the purchase price allocation period, if information becomes available which would indicate it is probable that such events have occurred and the amounts can be reasonably estimated, such items will be included in the purchase price allocation.

The pro forma adjustments included in the unaudited pro forma condensed consolidated financial statements are as follows:

a)	To reflect cash paid and related pro forma borrowings of $5.6 million related to the acquisition of Followap. The pro forma borrowings of $5.6 million represent the difference between the cash paid for the acquisition and the cash, cash equivalents and short-term investments on hand as of September 30, 2006. As of the acquisition date, the Company had sufficient cash on hand to pay the entire purchase price of $146.4 million.
b)	To reflect the fair value of acquired goodwill based on net assets acquired as if the acquisition occurred on September 30, 2006. The difference between the amount recorded on a pro forma basis and the actual balance as of the acquisition date is the result of changes in the net assets of Followap between September 30, 2006 and November 27, 2006.
c)	To reflect the estimate of the fair value of customer relationships estimated to be $20.8 million and acquired technology estimated to be $9.8 million.
d)	To reflect the payment of debt and other liabilities in connection with the acquisition of Followap.
e)	To eliminate Followap’s deferred revenue that does not represent a legal performance obligation to the combined company. No adjustments were made to the pro forma statement of operations related to this pro forma condensed consolidated balance sheet adjustment.
f)	To reflect net deferred tax assets and liabilities related to the acquisition.
g)	To eliminate Followap’s stockholders’ deficit balances.
h)	Reclassification of depreciation expense to conform to presentation of NeuStar’s statement of operations.

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NOTES TO THE UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
NEUSTAR, INC. (continued)

Note 3. Pro Forma Adjustments (continued)

i)	Pro forma amortization expense related to the identified intangibles as a result of the Followap and UltraDNS acquisitions. Pro forma amortization expense for the year ended December 31, 2005 was $8.0 million and $5.1 million for identified intangibles from Followap and UltraDNS acquisitions, respectively. Pro forma amortization expense for the nine months ended September 30, 2006 was $5.5 million and $1.6 million for identified intangibles from Followap and UltraDNS acquisitions, respectively.
j)	To eliminate interest expense recognized for debt paid off in connection with the acquisitions of Followap and UltraDNS which would not have been incurred if the acquisitions had occurred on January 1, 2005 and to reduce interest income due to cash utilized to fund these acquisitions.
k)	To record income taxes at NeuStar’s consolidated effective income tax rate.

Note 4.     Pro Forma Net Income Attributable to Common Stockholders Per Common Share

The pro forma basic and diluted net income per share are based on the weighted average number of shares of NeuStar’s common stock outstanding during the period.

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