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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-K

(Mark One)

|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
|- |  | ------------------------------------------------------------------------------------------------------

For The Fiscal Year Ended December 31, 2003.

| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
|- |  | ----------------------------------------------------------------------------------------------------------

For the transition period fromto.

Commission File No. 0-14691

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SENETEK PLC

(Exact Name of registrant as specified in its charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|England                                                        |  | 77-0039728                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|620 Airpark Road Napa, California, U.S.A.                      |  | 94558                               
|(Address of principal executive offices)                       |  | (Zip code)                          

Registrants telephone number, including area code: (707) 226-3900

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Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant
to Section 12(g) of the Act:

AMERICAN DEPOSITARY SHARES

(each American Depositary share represents

1 Ordinary share, pound sterling
0.05 par value)

(Title of Class)

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrants knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K    x.

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).  Yes ̈No  x

The aggregate market value of the registrants common stock held by non-affiliates of the registrant, computed by reference to the price at which the common stock was last sold, or the average bid and asked price
of such common stock, as of June 30, 2003, the last business day of the registrants most recently completed second quarter, is $32,478,684.

As of March 26, 2004, the Registrant had 59,052,153 Ordinary shares outstanding, including 58,682,402 represented by American Depositary shares.



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INDEX



|         |  |                                                                                       |  |     
|-------- |  | ------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                       |  | Page
|         |  | PART I                                                                                |  |     
|         |  |                                                                                      
|Item 1.  |  | Business                                                                              |  | 1   
|         |  |                                                                                      
|Item 2.  |  | Properties                                                                            |  | 18  
|         |  |                                                                                      
|Item 3.  |  | Legal Proceedings                                                                     |  | 18  
|         |  |                                                                                      
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 19  
|         |  |                                                                                      
|         |  | PART II                                                                               |  |     
|         |  |                                                                                      
|Item 5.  |  | Market for Registrants Common Equity and Related Stockholder Matters                 |  | 21  
|         |  |                                                                                      
|Item 6.  |  | Selected Financial Data                                                               |  | 28  
|         |  |                                                                                      
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 29  
|         |  |                                                                                      
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 39  
|         |  |                                                                                      
|Item 8.  |  | Financial Statements and Supplementary Data                                           |  | 39  
|         |  |                                                                                      
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  | 39  
|         |  |                                                                                      
|Item 9A. |  | Controls and Procedures                                                               |  | 39  
|         |  |                                                                                      
|         |  | PART III                                                                              |  |     
|         |  |                                                                                      
|Item 10. |  | Directors and Executive Officers of Registrant                                        |  | 40  
|         |  |                                                                                      
|Item 11. |  | Executive Compensation                                                                |  | 43  
|         |  |                                                                                      
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 45  
|         |  |                                                                                      
|Item 13. |  | Certain Relationships and Related Transactions                                        |  | 45  
|         |  |                                                                                      
|Item 14. |  | Principal Accountant Fees and Services                                                |  | 46  
|         |  |                                                                                      
|         |  | PART IV                                                                               |  |     
|         |  |                                                                                      
|Item 15. |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                       |  | 47  
|         |  |                                                                                      
|         |  | Signatures and Power of Attorney                                                      |  | 54  



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FORWARD-LOOKING STATEMENTS



This Annual Report on Form 10-K contains certain forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Any statements herein which are not of historical fact may constitute such forward-looking statements. In particular, words such as may, could, would, should,
can, might, expect, estimate, project, anticipate and the like identify the statement to which they refer as forward-looking. Forward-looking statements by their nature involve
substantial uncertainty, and actual results may differ materially from those expressed in such statements. Important factors identified by the Company that it believes could result in such material differences are described in this Annual Report in
the sections titled Competition, Government Regulation and Intellectual Property on pages 10 through 14 of this Annual Report, Risk Factors, on page 15 through 18 of this Annual Report, and
Managements Discussion and Analysis of Results of Operations and Financial Condition, on pages 29 through 39. However, the Company can give no assurance that it has identified all of the important factors that may result in
material differences between actual results and its forward-looking statements, and the Company assumes no obligation to correct or update any forward-looking statements which may prove to be inaccurate, whether as a result of new information,
future events or otherwise, except as may be required in connection with future reports of the Company pursuant to the Securities Exchange Act of 1934, as amended.



PART I



ITEM 1BUSINESS



Overview



Senetek PLC, together with its subsidiaries (the Company
which may be referred to as Senetek, we, us, or our), is a public limited company organized under the laws of England in 1983 (registration number 1759068). Senetek has three wholly-owned subsidiaries,
Senetek Drug Delivery Technologies Inc. (SSDT) and Senetek Asia (HK) Limited, corporations formed by Senetek under the laws of Delaware and Hong Kong, respectively, and Carme Cosmeceutical Sciences Inc. (CCSI), a Delaware
corporation acquired by Senetek in 1995.



You should read the
Risk Factors section beginning on page 15 of this document to ensure you understand the risks associated with the Company. For detailed financial information, please consult the Companys financial statements included in this annual
report.



Our corporate website is located at
www.senetekplc.com. Our annual reports on Form 10-K for the 2002, 2001 and 2000 fiscal years, in addition to our interim financial reports on Form 10-Q for fiscal 2003, are available on our website as soon as practicable after they are filed with
the SEC. Our other SEC filings may be obtained from us in electronic or paper format free of charge by writing us at ir@senetek.net or at Investor Relations, 620 Airpark Road, Napa, California, 94558.



Senetek is a life sciences-driven enterprise engaged in developing and
marketing proprietary products that fulfill important unmet consumer needs related to aging. Our business is comprised of two business segments: dermatological/skincare compounds principally addressing photoaging and other skincare needs (the
Skincare Segment); and biopharmaceuticals, currently principally those addressing sexual dysfunction and drug delivery of liquid injectable products (automatic injectors) (Pharmaceutical Segment).



The Company recently completed an in-depth review of Seneteks business
model and strategic direction aimed at broadening the Companys base of proprietary skincare and dermatological technology, more systematically pursuing new high potential Kinetin licensing opportunities, maximizing the return on the
Companys pharmaceutical assets, and reducing non-revenue-generating operating expenses. As part of this program the Company announced it will:



| |  |  | Complete by mid 2004 the building out and equipping of Seneteks dedicated laboratory space at the Science Park adjacent to Aarhus University in Denmark as a
foundation for the identification and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | evaluation of new cytokinins and other anti-aging compounds. Capitalize on Seneteks R&D collaborations with the Institute of Experimental Botany in
Prague and with Beiersdorf AG in Hamburg with the goal of bringing new products to market quickly;
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Aggressively pursue negotiations for the licensing of the Companys patented Reliaject® autoinjector technology for self-administration of epinephrine and other parenteral drugs and the sale of the
Companys proprietary manufacturing equipment;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Redouble efforts to select partners with the ability to assume responsibility for regulatory approvals for the Companys patented Invicorp® erectile dysfunction drug and for establishing a strong distribution network to carry
it to its market potential.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Dermatological and Skincare



Skincare Technology



We have developed and patented multiple cytokinins, including Kinetin and
Zeatin, plant growth factors that are naturally occurring.



Kinetin (N6-furfuryladenine) has been found to retard aging of plants and, in research done on human skin fibroblasts, Kinetin delayed the signs of cell aging, multi-nucleation and loss of organizational structure, as well as other
biochemical and morphologic changes associated with aging. Kinetin also has been shown to be a powerful antioxidant, acting as a free radical scavenger. In clinical studies over the past two years at the University of California, Irvine, Kinetin
showed good-to-excellent response rates in partially reversing the clinical signs of photodamage, including the appearance of fine lines and wrinkles, and in contrast to other anti-aging products such as retinoids and alpha-hydroxy acids, Kinetin
did not produce any clinical signs or symptoms of skin irritation, did not result in skin sensitivity to the sun, and did not break down the skins natural barrier function causing moisture loss; in fact, it improved the moisture barrier,
helping retain moisture.



Zeatin, currently under development,
is an analogue of Kinetin. A study recently completed at the University of Aarhus, Denmark, evaluated the effects of two concentrations of Zeatin on cultured human skin fibroplasts over their approximately 300 day lifespan in lab culture. Uniformly
positive results were obtained. The new results were consistent with earlier studies of Zeatin and Seneteks lead anti-aging compound Kinetin which suggested that at higher concentrations Zeatin was more effective than Kinetin in certain
measures of bioactivity. Based on these results, Senetek will be undertaking a full program of pre-clinical testing which we expect to begin later in fiscal 2004.



We are continually evaluating other applications for Kinetin and its analogues in collaboration with our research partners.



On January 23, 2003, we acquired additional patent rights for
systemic applications of cytokinins including injection therapy along with expanded claims for inflammatory diseases.



Our strategy is to build a global distribution system across all channels of distribution for our core skincare technology.



In June 1998, we granted Osmotics Corporation (Osmotics) an
exclusive license to market Kinetin-based products to the worldwide prestige market, comprised of department stores and perfumeries, in exchange for specified royalties. The license required Osmotics to source licensed products exclusively from
Senetek or its designated contract manufacturer. In February 1999 Osmotics launched a line of Kinetin-based products, but on January 20, 2000, we notified Osmotics that the license was terminated due to material breach of its terms by Osmotics,
including sales outside of the prestige channel of distribution and non-payment of royalties. In May 2001, the parties entered into a settlement of all disputes providing, among other things, for payment by Osmotics of back royalties and the grant
by Senetek of a non-exclusive license for the remaining terms of the underlying patents to manufacture and market specified Kinetin-based products to the prestige class of trade worldwide in exchange for specified royalties.



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In October 1998, we granted Valeant Pharmaceuticals International (Valeant,), formerly called
ICN Pharmaceuticals, Inc., a worldwide license to market Kinetin in the ethical skincare market. The Valeant license agreement provided for royalties on Valeants net sales of licensed products within its class of trade and a supply agreement
requiring Valeant to source its products from Senetek with prescribed minimums. In March 1999, Valeant launched Kinerase in the United States and Canada, followed by launches in various Latin American and Far East markets. In August 2003, Valeant
signed an amendment to its license agreement to expand its exclusivity in the ethical channel from North America to Europe and Australia. The expanded license transfers manufacturing to Valeant, adds five new products to the Kinerase® line, including new serum and cream formulations with
highly stabilized Vitamin C, a Kinerase® sunscreen
formulation and new cream and lotion formulations, and adds non-exclusive rights in the prestige, spa/salon and travel retail channels of trade as well as direct-to-consumer media including television, print and Internet.



In November 1999, we entered into a license and supply agreement with Obagi
Medical Products, Inc. (Obagi) for the exclusive marketing and distribution of specified Kinetin-based products in the mass market channel of distribution in China, Hong Kong, Japan, Malaysia, Singapore, South Korea, the Philippines and
other designated Asian countries and in the multi-level marketing channel of distribution in Taiwan, in exchange for a licensing fee, paid in installments in 1999 and 2000, and specified royalties on Obagis net sales of licensed products. In
March 2000, Obagi entered into a joint venture with Rohto Pharmaceuticals Co., Ltd. (Rohto), apublicly traded company based in Osaka, Japan, providing for the latter to market Kinetin-based products in Japan, and Obagi subsequently
launched Kinetin-based products in Taiwan and South Korea. On April 12, 2001, OMP Inc. (OMP), the successor to Obagi, filed suit against Senetek alleging breach of the license, and on July 23, 2001 Senetek filed suit against OMP alleging
breach and patent infringement. The litigation was settled in January 2002 for a $375,000 lump sum settlement payment to Senetek for past royalties. The parties agreed to terminate the original license and to use best efforts to negotiate a new
license agreement, to which Rohto would also be a party, and OMP agreed to pay Senetek a specified royalty for sales of products during the negotiating period (which totaled $248,000). The parties failed to reach agreement on this and Senetek ceased
all contractual relationships with OMP and Rohto on May 31, 2002. All countries, except Japan, included in the territory granted to Obagi by the original license agreement were surrendered in the January 2002 settlement and, pursuant to the terms of
the Companys previously signed license agreement with Revlon Consumer Products Corporation (Revlon) described below, became part of the territory granted to Revlon. In April 2003, Senetek commenced a lawsuit against OMP alleging
breach of the January 2002 settlement agreement. This lawsuit and related litigation were settled in March 2004 under terms granting OMP and Rohto a non-exclusive right to continue selling certain Kinetin products in their existing class of trade in
Japan. See Item 3, Legal Proceedings.



In May 2000, we entered
into a license and supply agreement with Buth-Na-Bodhaige, Inc., doing business as The Body Shop. Under the terms of the license agreement, as amended in November 2000, The Body Shop was granted the right to sell Kinetin-based products supplied by
Senetek in The Body Shop retail stores in North America, in The Body Shops catalogue and on The Body Shops Internet website, in exchange for a specified royalty based on the suggested retail prices of products sold by The Body Shop to
consumers, and Senetek agreed not to enter into Kinetin licenses with specified other retailers. The Body Shop launched its initial line of licensed products in April 2001. On November 4, 2002, we signed an expansion of the license agreement with
The Body Shop under which The Body Shop is launching its Kinetin line of exclusively formulated skin care products in its retail stores, kiosks, catalogs and websites throughout Europe and Asia.



On June 8, 2000, we entered into a license agreement with Revlon for the
remaining term of the principal covered patents, in consideration of a license fee, paid at signing, of $3 million and royalties based on Revlons net sales of licensed products. In connection with this agreement we granted Revlon warrants to
purchase one million Ordinary shares in Senetek at a price of $6 per share. Under the agreement as amended in February 2001, and giving effect to Revlons assumption of territories surrendered by OMP under its license as described above, Revlon
was granted exclusive rights throughout the world, excluding Japan, to sell specified Kinetin-based products in the mass market class of trade, subject to Revlons royalty payments and advertising expenditures meeting certain minimums. The
agreement also grants Revlon non-exclusive rights to sell such products in



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perfumeries and department stores in Europe, South and Central America, Mexico, Puerto Rico, South Africa, Australia, New Zealand, Israel, China, Hong Kong,
Taiwan and certain additional Asian markets other than Japan, subject to Revlons royalty payments meeting certain additional minimums. Revlon launched the Almay Kinetin Skincare Advanced Anti-Aging Series of products in the United States in
mid-2001, followed by launches in other territories including the United Kingdom, Canada, New Zealand, and South Africa.



In December 2000, we entered into a license and supply agreement with Med-Beauty AG (Med-Beauty), a Swiss company based in Zurich, in
consideration of a product license fee. Under the agreement as amended in September 2001, Med-Beauty is granted an exclusive right to sell specified Kinetin-based products to estheticians and beauty salons in Switzerland and a non-exclusive right to
sell such products in those classes of trade in Germany and Russia, all subject to achieving certain minimum purchase levels of bulk product. Med-Beautys initial launch of covered products was made in May 2001. Currently Med Beauty is in the
process of expanding the number of kinetin based products offered.



In November 2001, we entered into an arrangement to collaborate with Allure Cosmetics (Allure), a California-based skincare manufacturing and marketing company, under which the parties undertook to develop new Kinetin-based
products to be manufactured by Allure and marketed by the Company directly or through licensees. The parties agreed to jointly market Kinetin-based products to Allures existing customer base, and the Company granted Allure a non-exclusive
license to manufacture and market specified Kinetin-based products to health food stores, estheticians, beauty salons, spas and by direct mail, in exchange for specified royalties.



On April 16, 2002 we executed a license agreement with C. J. Enprani Co., Ltd. (Enprani) of Seoul, Republic of
Korea, to market and distribute Kinetin based products in South Korea in the Cosmetics Specialty Stores channel of distribution under the Enprani brand. Enprani is also developing and clinically testing a new and unique combination skincare line
containing our patented Kinetin ingredient. Enprani has gained functional care approval for Kinetin from the Korean Food and Drug Administration (KFDA). The licensing arrangement includes an upfront royalty payment and agreed annual
minimum sales of licensed product. Enprani is a well-established and highly regarded cosmetic company in Korea. It is an affiliate of Samsung, one of the largest business conglomerates in Korea with total assets exceeding (US) $2 billion and
consolidated sales of (US) $4.5 billion.



On October 22, 2002
we signed an agreement with Vivier Pharma Inc. (Vivier), of Montreal, Canada, granting Vivier the right to manufacture and sell to dermatologists, pharmacies and other ethical channels in Canada and the United States dermatological
products containing our patented Kinetin skin care ingredient in combination with Viviers proprietary formulation of highly stable Vitamin C serum (L-Ascorbic Acid). Vivier launched in the fourth quarter of 2003. In addition to this, Vivier
has granted us the right to sell, and license third parties to sell, the KinetinVitamin C combination products as well as Viviers line of Vitamin C serums in certain global markets. The Agreement calls for the parties to collaborate on
future developmental projects and clinical evaluations.



On
November 12, 2002 we signed a worldwide non-exclusive Kinetin licensing agreement with Shaklee Corporation, a wholly-owned subsidiary of Yamanouchi Pharmaceutical Co., Ltd, Japans third largest pharmaceutical company. The agreement was
terminated in 2003 but on April 15, 2003 we entered into a license agreement with Shaklee for the sales by Senetek and our licensees of products combining Kinetin and Shaklees proprietary formulation of highly stable Vitamin C cream.



On March 12, 2003 we signed a non-exclusive license agreement
with Panion & BF Biotech Inc., a major manufacturer and marketer of pharmaceuticals and cosmeceuticals based in the Republic of China on Taiwan. Under the agreement, Panion will launch a line of Kinetin-based skin care products in the ethical
(physician) channel of distribution in Taiwan, Hong Kong and subject to agreement on royalty levels, The Peoples Republic of China. The launch of its initial product collection occurred in the fourth quarter of 2003. In February 2004 we expanded the
license agreement to include the ethical channel in Republic of Korea and the ASEAN member



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countries, including the key markets of Indonesia, Malaysia, The Philippines, Singapore and Thailand, and to broaden its authorized trading channels to
include prestige department and specialty stores and salons and spas except in Korea. Further products featuring Kinetin in combination with effective synergistic ingredients are scheduled to be submitted to the Taiwan Department of Health for
registration as functional skin care products during 2004.



In
April 2003 we signed a license agreement with Lavipharm S.A. of Athens, Greece, a major manufacturer and marketer of pharmaceutical, cosmetic and consumer health products with an extensive R&D activity, for Lavipharm to launch a line of
Kinetin-based skin care products in the ethical and pharmacy market under its well-known brand name Castalia in Greece, Cyprus and, subject to agreement on royalty levels, a number of Near East, Asian and Latin American markets. The
launch in Greece and Cyprus occurred in the fourth quarter of 2003. In addition, the two companies will work together to develop additional proprietary Kinetin-based products using Lavipharms proprietary technologies.



In September 2003, the Company launched its proprietary product line, Kinetin
Plus Age Defiant®. The Kinetin Plus product line consists of eight products: Chest & Neck
Treatment Lotion, Eye Area Eraser Plus Vitamin C & E Booster, Gentle Foaming Cleanser, Intense Serum Plus 10% Vitamin C Booster, Night Renewal Cream, Refresh Finishing Toner, Smoothing Lip Balm SPF 20, and Sun Protection Lotion SPF 15 (the
latter two bearing the Skin Cancer Foundation Seal). As part of this product launch, the Company established its own website (www.kinetinplus.com and www.kinetin.com.) where the products can be purchased. Also related to the product
launch, the Company created a program length infomercial for Kinetin Plus and undertook some limited media placements of its infomercial. As a result of lower than anticipated response rates to the infomercial, the Company terminated the media tests in the fourth quarter of 2003. After
evaluating the infomercial and analyzing media costs, the Company has concluded that it is unlikely it will undertake any significant expenditure related to the infomercial in 2004. The Company is currently evaluating alternative approaches for
marketing its proprietary Kinetin Plus product line and formulations.



In October 2003 we entered into a non-exclusive license agreement for Age Advantage to formulate its unique Age Eraser cream with Kinetin and market it in the United States to spas, beauty salons, department stores, high-end
perfumeries and natural and health product retailers. Headquartered in Atlanta, Georgia, Age Advantage Laboratories offers natural anti-aging and skin repair products.



We plan to continue focusing on building a high-margin, royalty-based revenue stream by actively developing additional
licensing opportunities for those territories and categories of trade for which we have not granted exclusive licenses under the agreements described above. These include the prestige market, the ethical market (dermatologists and cosmetic
surgeons patients outside of North America, Europe and Australia), the multi-level market, direct response market, salon-esthetician market, infomercials and the natural products market throughout the world.



A key element of the Companys strategic Business Plan is to add to our
portfolio of cytokinin compounds and other ingredients with strong antisenescent properties by working through our research facility in Aarhus, Denmark with institutions conducting basic research on naturally-occurring compounds, such as the
Institute of Experimental Botany of the Czech Academy of Sciences, and with commercial partners such as Beiersdorf, AG and current and future licensees, under the direction of our Chief Scientist, Dr. Brian Clark, in association with Dr. Suresh
Rattan, the co-discoverers of Kinetins antisenescent and other dermatological bioactivity, both of the University of Aarhus in Denmark. See Research and Development.



Other Products



The Company previously developed or acquired a number of skincare products designed to meet specific niche segments of the market, including Mill Creek,
Sleepy Hollow Botanicals and Biotene H-24, as well as two specialty mass market lines, Silver Fox, a product for gray hair, and Allercreme, a hypoallergenic range of skincare and cosmetic products for women with sensitive skin, developed in
conjunction with dermatologists. In 1999 the Company determined that these product lines were non-core and entered into a license agreement with



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United States International Trading Corporation (USITC) under which USITC purchased the Companys inventories of Mill Creek and Silver Fox
finished goods and componentry and paid a licensing fee for the exclusive right to manufacture and market these lines in exchange for royalties subject to specified annual minimums. USITC was granted an option to purchase the rights to these lines
for $2.8 million. Subsequently, an existing distribution agreement with Quimlam, Inc. covering the Allercreme product line was terminated and these distribution rights were granted to USITC on a non-exclusive basis up to December 31, 2001.
Currently, we are planning to divest and sell off the Allercreme line and have discontinued the manufacture of these products.



On September 27, 2002 we signed an agreement with USITC conveying to it the rights to the Mill Creek personal care line, the Silver Fox hair care line and
other brands. made under a purchase option in the license agreement described above. The purchase price was $2.8 million, $100,000 having been previously paid, of which $400,000 was paid in cash at closing, and the balance of $2.3 million was
represented by a secured promissory note providing for twenty-three consecutive quarterly payments of $100,000 each beginning in September 2003. Interest is payable on the outstanding principal balance at an annual rate of 10%. During fiscal 2003,
USITC paid the Company $113,000 which was allocated to interest due under the note. As of December 31, 2003, USITC was delinquent on scheduled principal and interest payments totaling approximately $398,000. The Company is currently working with
USITC to bring the note current and assure timely performance in the future.



Biopharmaceuticals and Drug Delivery Technology



Sexual Dysfunction



We have developed,
patented and, are in the process of securing European marketing approvals for Invicorp, an intracavernous injection therapy for the treatment of erectile dysfunction (ED). Invicorp is a combination therapy comprised of phentolamine
mesylate (PMS) and vasoactive intestinal peptide (VIP), a 28-amino-acid peptide found naturally in the human male and female urogenital tracts and central and peripheral nervous systems that cause erection by binding to
smooth-muscle receptors in the corpus cavernosum, inducing smooth-muscle relaxation and increased blood flow.



The commercial potential of products for the treatment of ED is significant and growing. A study released in 2002 by Decision Resources, Inc. (the
2002 Study) estimates that in 2001 some 70 million men in the seven major pharmaceutical markets covered by the study (the United States, France, Germany, Italy, Spain, the United Kingdom and Japan) suffered from some degree of ED. The
incidence of ED increases with age, and therefore is expected to grow as the median age of the worlds population increases. ED is also associated with a number of common conditions including arteriosclerosis, diabetes, hypertension and the use
of such medications as beta blockers and tricyclic antidepressants. According to the 2002 Study, seven-market sales of drugs and devices to treat ED totaled $1.3 billion in 2001 and are expected to grow at an annual rate of 10%, reaching $3.6
billion in 2011.



According to the 2002 Study, oral medications
(principally Pfizer, Inc.s sildenafil product Viagra) represented in excess of 92% of total 2001 sales of ED products in the studied markets. However, these oral therapies are ineffective, medically contraindicated or otherwise unsuitable for
significant numbers of ED sufferers, who opt for second line injection therapies or penile implants, or who may forego therapy altogether. The 2002 Study indicated that physicians are increasingly likely to prescribe combination
therapies to treat ED due to the fact that emerging localized drugs with improved methods of delivery will drive a trend towards combinations of oral and localized therapy in an effort to boost the overall efficacy of ED treatment.



Specifically, the 2002 Study found that men whose ED is classified as
moderate or severe (those most likely to seek treatment) show a markedly lower response rate to sildenafil and other oral therapies than do those with mild ED; that certain patient groups (including diabetics, who have a high incidence of ED)
experience particularly low response rates to sildenafil; that sildenafil is contraindicated for patients who take any form of nitrates (a group that represents 5-10% of men with ED); and that men who take both sildenafil and drugs such as



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erythromycin or cholesterol-lowering agents, which are metabolized by the same isoenzymes as sildenafil, are at risk for developing higher than desirable
serum levels of sildenafil. In addition, Pfizer, Inc. has advised that sildenafil should not be taken by men who have suffered a recent stroke or myocardial infarction or men with hypotension or certain retinal disorders. Also, the 2002 Study found
that some men for whom sildenafil is effective nevertheless decline to use it because of its relatively slow onset of activity.



Clinical trials of Invicorp suggest that it could become the selected therapy for all of these patient types. Invicorp has been found to have a favorable
side-effect and drug-interaction profile, permitting it to be prescribed for men with the various contraindications referred to above. In clinical trials, Invicorp has been shown to be highly safe and effective in patients of all etiologies, as well
as patients who have failed previous therapy. In trials, participants have also reported lower incidences of penile pain and fibrosis than with other ED injection therapies. The 2002 Study concluded Invicorp has a novel micro-injection system that
significantly reduces the pain associated with local invasive ED therapies.



As the 2002 Study found, we believe that mode of administration is an important factor affecting patient acceptance of injection therapy. We have developed Reliaject, a highly advanced, disposable autoinjector that
renders the administration process uncomplicated and pain-free. We believe Invicorp and Reliaject to be the right drug in the right delivery system that will ideally address the needs of a significant segment of the ED market including ED sufferers
for whom currently available therapies are ineffective or contraindicated. See Government Regulation.



On November 12, 2002 we signed a marketing and distribution agreement for Invicorp in New Zealand with Douglas Pharmaceuticals (Douglas). This
is our first licensing agreement for Invicorp and Douglas is to assume full marketing responsibility for Invicorp in New Zealand in exchange for specified payments. Douglas will also receive rights of first offer for future Senetek products in
development, not limited to sexual dysfunction. In addition, Douglas will provide assistance for regulatory filings in Australia as well as marketing support for launching in other countries. The New Zealand launch of Invicorp is scheduled for early
April of 2004.



Although the Company is optimistic about the
long term potential of Invicorp, the Company has determined it does not have the financial or technical resources to complete the necessary regulatory filing in Europe. Accordingly, the Company is seeking an appropriate partner that has the
requisite financial and technical resources to first progress with the Mutual Recognition Procedure (MRP) in Europe and secondly prepare for discussions with the U.S. FDA, regarding the number and scope of Invicorp pre-clinical and
clinical trials in the U.S.



We have engaged a regulatory
consultant, Quintiles, to assist the Company with filing the necessary variations, including for the change of manufacturing site and supplier of active ingredients with the Danish Medicines Agency, which is the Companys reference country for
its MRP process.While the Company has received pre-market approval for Invicorp in New Zealand and Denmark, and for one formulation in the United Kingdom and is optimistic about the long term potential of Invicorp, the Company has determined it does
not have the financial or technical resources to complete the necessary regulatory process in Europe or to undertake the regulatory process for the United States, which the Company believes represents some 70% of the potential world market for ED
treatments. Accordingly, the Company is seeking an appropriate partner that has the requisite financial and technical resources to first progress with the Mutual Recognition Procedure (MRP) in Europe and secondly prepare for discussions
with the U.S. FDA, regarding the number and scope of Invicorp pre-clinical studies and clinical trials in the U.S.



Drug Delivery Technology



Reliaject is Seneteks modular, disposable, automatic, self-injection system. While originally developed for self-administration of Invicorp, its
modular design accommodates multiple therapeutic applications. Reliaject is equipped with an ultra fine gauge needle, manufactured by a laser process for pain-free use and utilizes a dental cartridge to contain the drug to be injected. The needle is
visibly undetectable by the patient during administration of the drug and appropriate needle depth is automatically reached before drug flow occurs, thereby reducing reliance upon the patients technique for accuracy and safe delivery. In
addition to Invicorp,



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Reliaject has potential use with other therapies including anaphylactic shock, migraine treatment, infertility regimens, human growth hormones and
analgesics. The equipment is highly specialized and involves a significant commitment of funds, manufacturing space and technical and regulatory expertise. The Company is currently seeking a transaction whereby a commercial partner would assume
primary responsibility for regulatory approvals and for marketing Reliaject. As discussed in more detail in Note 5 to the audited financial statements, the Company recorded an impairment charge of $2,451,000 in 2003 related to this asset.



Diagnostic Monoclonal Antibodies



In 1995, we entered into a license agreement with the Research Foundation
for Mental Hygiene (RFMH), an agency operated by the State of New York, under which the Company was granted exclusive rights to certain of the RFMHs cell lines capable of producing monoclonal antibodies for research on various
diseases including Alzheimers Disease. The license expires 10 years from inception as to the cell lines originally covered and, as to cell lines subsequently added to the license (most recently) in 1999, 10 years from their inclusion. The
three cell lines currently licensed expire in 2004, 2005 and 2009. Until mid 2000 the Company marketed these cell lines to major pharmaceutical companies including Glaxo, Pfizer, Wyeth Ayest, Amgen, Pharmacia Upjohn, Eli Lilly and Genentech. In
August 2000, we determined that the marketing of diagnostic monoclonial antibodies was not a core business and entered into an agreement for the remaining term of the RFMH license with Signet Laboratories, Inc., a leading medical diagnostic and
research company, under which Signet now markets these cell lines and develops new antibodies and assays based on the cell lines covered by the RFMH license. We receive royalties on Signets sales, subject to certain minimum royalty guarantees,
and remit a portion to the RFMH in accordance with the terms of its license. During 2004, the Company will be working with RFMH to extend its license agreement on those cell lines that expire in 2004.



Research and Development



We sponsor research in the life sciences and biotechnology fields involving
the treatment of conditions related to aging, particularly our core field of interest in dermatologicals and skin treatment. Our strategy has been to apply our available research and development resources to funding research agreements with
third-party consultants, clinicians and research scientists having particular expertise in our areas of interest with a direct focus on getting our products into the market. Under these agreements, we are granted exclusive rights to patents for the
manufacture and marketing of products arising from this research, with the researchers in certain cases being entitled to royalties or other payments in connection with commercialization of resulting products.



Typically, our research agreements oblige us to fund or co-fund agreed
research in amounts determined between the parties. The researchers are responsible for filing progress reports and working with consultants appointed by us on matters such as product formulation, stability, clinical trials and regulatory
compliance.



In furtherance of this strategy, in October 2001,
we established a research professorship at the University of Aarhus, Denmark, at the Universitys Center for Molecular Gerontology. Previous research programs with the University resulted in us acquiring the patent rights to Kinetin and Zeatin
for certain applications. Under the terms of the grant, which will be administered by the Universitys Natural Science Faculty, we will have a right of first refusal on discoveries resulting from the sponsored research.



On January 29, 2003, Dr. Brian Clark, one of the founders of Senetek PLC and
co-discoverer and patentee of the therapeutic properties of Kinetin and various of its analogues, agreed to lead our Research and Development program as Chief Scientist. Dr. Clark is based at the University of Aarhus, Denmark at its Center for
Molecular Gerontology. Dr. Clark will be working, in association with Dr. Suresh Rattan, the other co-discoverer of Kinetins therapeutic properties, on our future research and development infrastructure and will assess the scientific
feasibility of new technology acquisition candidates.



In June
2003 the Company entered into a research collaboration agreement with Beiersdorf AG for it to undertake and fund laboratory and in vivo evaluations of selected compounds for potential licensing in the mass market worldwide. Beiersdorfs
Nivea® is the worlds largest selling skin
care brand. Senetek will own and have the right to practice and license all compounds resulting from this collaboration outside of the markets and fields of use that may be licensed to Beiersdorf.



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In June 2003 the Company also signed a cooperative research agreement with the Institute of Experimental
Botany in Prague, Czech Republic. The Institute was created in 1962 from the Department of Plant Physiology and the Department of Phytopathology of the Institute of Biology of the Czechoslovak Academy of Sciences. In 1990, it was divided into two
independent units, one of which became The Institute of Experimental Botany (IEB) in Prague and Olomouc. The principal fields of scientific work in the Institute consist of plant genetics, physiology and biotechnology. In genetic research, the
Institute carries out work on induced mutagenesis and DNA repair, induction of genetic variability in tissue and cell cultures in vitro, and the molecular genetics of pollen. Physiological subjects include adaptation and acclimation mechanisms of
photosynthesis, hormonal and ecological control of plant growth and development, the mechanisms of action of growth regulators, physiology of plant viruses and plant pathophysiology. The agreement gives Senetek exclusive access to all chemical and
botanical based compounds and the related scientific data developed by the Institute for all applications worldwide. Senetek has the option to enter into exclusive licenses for these applications worldwide.



Our research and development expenditures amounted to $1,560,000, $1,332,000
and $344,000 for 2003, 2002 and 2001, respectively. See Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations. Under the terms of our skincare license agreements, various licensees are
responsible for developing new products and applications, and gaining product approvals based upon the technologies and patents covered by the licenses.



We expect research and development spending for our skincare segment to continue to increase as we develop our pipeline of proprietary technology and move
forward with establishing more advanced research capabilities, including the build out of our leased space in Denmark, through our partnership with Aarhus University in Denmark with the intention of identifying and evaluating new cytokinins, and
accelerating development of Zeatin in 2004. The Company expects, however, a portion of these expenses to continue to be absorbed by its existing and future commercial partners.



Research and Development expenditures associated with our sexual dysfunction products are expected to significantly decline
in fiscal 2004 as the Company has determined it does not have the financial or technical resources to complete the necessary regulatory filing in Europe. Accordingly, the Company is seeking an appropriate partner that has the requisite financial and
technical resources to first progress with the Mutual Recognition Procedure (MRP) in Europe and secondly prepare for discussions with the U.S. FDA, regarding the number and scope of Invicorp clinical trials in the U.S. In this
connection, we are working with Quintiles, a leading provider of information, technology and services to the pharmaceuticals industry, to support our efforts to contract with a partner with the goal of bringing Invicorp to market in Europe and in
the US as efficiently as possible. The future success of Invicorp in Europe and the United States will be dependent on finding the appropriate corporate partner.



Marketing and Manufacturing



Marketing



Consistent with our strategy of building a high-margin revenue stream, virtually all of our current Kinetin revenues are derived from license agreements
under which our licensees assume responsibility for marketing and maintaining required government approvals within their respective licensed territories. We expect to maintain this business model in the case of emerging products in our Skincare
Segment, where achieving acceptable distribution is dependent upon a broad-based sales and distribution network within the particular class of trade. In fiscal 2003 we developed our own proprietary product line, Kinetin Plus. Our initial attempt at
selling direct to consumers through a national infomercial did not produce acceptable response rates and we are currently evaluating different ways to market and distribute this proprietary product line and its unique formulations. The Company does
not expect to spend significant funds on marketing Kinetin Plus in 2004.



In the case of Invicorp and Reliaject, we have concluded that we are not going to undertake sales and distribution directly but rather are seeking alliances with companies with appropriate sales and distribution



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infrastructure. Establishing an alliance with a company having an established retailing and distribution network in a particular market will subsidize
ongoing marketing approval expense and realize revenues through licensing fees and royalties or other participation in the third partys sales or through shared equity or other joint venture arrangements.



Manufacturing



Certain of our existing licenses for core products in the Skincare Segment
grant our licensees the right to manufacture covered products. In the case of those licenses which grant only marketing rights or require the licensee to produce and package product from Senetek-supplied bulk, we contract with third parties for the
manufacture and/or filling and labeling of the skincare products covered by such licenses. While we rely on particular suppliers for the raw materials and componentry used in the manufacture of such products we do not anticipate any problems with
supply of such materials. We have licensed a third party to manufacture and sell the cell lines licensed to us for production of monoclonal antibodies.



With regard to our ED medication, Invicorp, the active ingredients, VIP and PMS are currently available from suppliers in quantities believed to be
adequate for the Companys requirements following marketing approval in Europe. These suppliers have developed synthetic production methods that are included in the product marketing application updates with regulatory authorities in Europe. We
believe that, should these suppliers become unavailable or unable to supply in required volumes, alternative sources of approvable supplies are available.



Competition



The bulk of our current revenues are derived from licenses to manufacture and/or market products containing our patented Kinetin ingredient, with smaller
amounts being derived from agreements for the manufacture and sale of non-core skincare and consumer products and cell lines for the production of monoclonal antibodies used in research. While our patents and patent licenses currently protect us
from competition from sales of products within the specific scope of our patents and license rights, many companies are engaged in the development and marketing of products competitive with our patented and licensed products. Regarding our ED
products, all necessary governmental marketing approvals have not yet been obtained. Assuming they are obtained we or our commercial partners will compete with many other companies having established products in the marketplace including Pfizer,
Schwarz Pharma, and Vivus, which market Caverject, Edex and MUSE, respectively. We believe Invicorp offers advantages over these therapies including a favorable side effect profile, high level of efficacy in organic ED, natural erection and
termination, and shorter time to onset. Pfizer, Inc. with its Viagra product controls the bulk of the oral therapy market, which currently represents in excess of 92% of the worldwide ED market. We consider Invicorp to be complimentary to rather
than competitive with the oral therapy market as it addresses the needs of patients for whom the oral therapies are not effective or well-tolerated.



The biopharmaceutical, pharmaceutical and cosmeceutical industries are highly competitive. We compete and will continue to compete with research and
development programs at biotechnology, biopharmaceutical, pharmaceutical and cosmeceutical companies, as well as academic institutions, government agencies and public and private organizations throughout the world. Virtually all of our existing or
potential competitors have substantially greater financial, technical and human resources and name recognition than do we and are better equipped to research, develop, patent, conduct pre-clinical testing and human clinical trials, manufacture, and
market products. These companies have the capability and resources to develop or acquire and market products that compete with our existing and planned products, and the timing of the market introduction of our own and our competitors products
will be important competitive factors affecting our future results.



We cannot predict the extent to which any of the products we are currently developing, including Invicorp and Reliaject, will become commercially viable. Assuming that Invicorp and related delivery vehicles are



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approved for sale in the additional territories in which approvals are currently being sought, we believe that competition will be based, among other things,
on product efficacy, ease of administration, convenience, speed of onset, price and third party reimbursement. Regarding our future viability, our competitive position also depends upon our ability to contract for effective and productive research
and attract and retain qualified personnel to develop and effectively exploit the results of such research. We expect competition to intensify in all fields in which we are involved.



Government Regulation



General



The research, pre-clinical development, clinical trials, manufacturing and marketing of the products comprising our Pharmaceuticals Segment are subject to
extensive regulation, including pre-marketing approval requirements, of the FDA and equivalent foreign regulatory agencies. Product development and approval within this regulatory framework takes a number of years and involves the expenditure of
substantial resources. Many products ultimately do not reach the market because of toxicity or lack of effectiveness as demonstrated by required testing. Furthermore, regulatory agencies may suspend clinical trials at any time if it is believed that
the subjects participating in such trials are being exposed to unacceptable health risks. In addition, there can be no assurance that this regulatory framework will not change or that additional regulations will not arise at any stage during product
development that may affect approval, delay an application, or require additional expenditures. Accordingly, we cannot assure that clinical trials related to any products currently in development by us will be completed successfully within any
specified time period, if at all, or that pre-marketing approvals based on such trials will be granted.



While the business currently comprising our existing Skincare Segment generally is not subject to pre-marketing approval, various statutes and regulatory
restrictions apply to this business in the United States and most other countries. For future compounds the Company will consider taking some through the drug approval process, not necessarily mutually exclusive of the cosmeceutical route.



Product Approval-United States



In the United States, the Federal Food, Drug and Cosmetic Act and the Public
Health Service Act govern the testing, manufacture, safety, efficacy, labeling, storage, record keeping, approval, advertising and promotion of our pharmaceuticals. The steps required before a pharmaceutical product may be marketed in the United
States include:



| |  |  | Preclinical laboratory testing;
| | - |  | -------------------------------



| |  |  | Submission to the FDA of an Investigational New Drug Application which must become effective before human clinical trials may be commenced;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | Submission of a New Drug Application to the FDA; and
| | - |  | ----------------------------------------------------



| |  |  | FDA approval of the New Drug Application prior to any commercial sale or shipment of the drug.
| | - |  | ----------------------------------------------------------------------------------------------



Clinical trials of new pharmaceuticals in humans are designed to establish both the safety and the efficacy of the
pharmaceutical in treating a particular disease or condition. These studies are usually conducted in three phases of testing. In Phase I, a small number of volunteers are given the new compound in order to identify toxicities and characterize the
compounds behavior in humans. In Phase II, small numbers of patients with the targeted disease are given the compound to test its efficacy in treating the targeted disease and to establish dose levels. Phase III studies are large-scale studies
designed to confirm a compounds efficacy for the targeted disease and identify toxicities that might not have been seen in smaller studies. Once adequate data have been obtained in clinical testing to demonstrate that the compound is both safe
and effective for the intended use, all available data is submitted to the FDA as part of the New Drug Application.



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Seneteks Investigational New Drug application to the FDA was withdrawn and we do not intend to
pursue clinical trials and the filing of a New Drug Application with the FDA for Invicorp unless we can locate an acceptable partner with adequate financial and technical resources. Pursuit of any regulatory approval in the United States would
likely follow completion of pre-marketing approvals in Europe.



Current FDA regulations govern the manufacture, labeling, advertising and marketing of over the counter drug products covered by the Federal Food, Drug and Cosmetics Act, which are required to obtain pre-market approval if they do not fall
within the parameters of FDA-issued monographs. Currently, such regulations do not apply to non-drugs, such as Kinetin, though the FDA does regulate issues such as labeling and has the power to seize such products found to be
adulterated. However, there can be no assurance that the Federal Food, Drug and Cosmetics Act or the regulations there under will not be changed so as to subject non-drug products to increased regulation.



Product ApprovalOther Countries



Marketing of pharmaceutical products in other countries requires regulatory
approval from the notified bodies in each particular country. The current approval process varies from country to country, and the time to approval may vary from that required for FDA approval, although the review of clinical studies by regulatory
agencies in foreign jurisdictions to establish the safety and efficacy of the product generally follows a similar process to that in the United States. Similarly, non-pharmaceutical products generally are not subject to pre-marketing approval
requirements in foreign countries although they are regulated in a manner similar to the United States and, in the case of certain countries such as Japan, such products may require reformulation to remove ingredients not considered acceptable by
the particular country.



Invicorp was approved for marketing in
Denmark in July 1998 and renewed in May 2003. In June 2000 the New Zealand Medicines Assessment Advisory Committee granted a Marketing Authorization Approval for Invicorp in New Zealand. In October 2000, the United Kingdom Medicines Control Agency
granted a Marketing Authorization for a special dose of Invicorp in the United Kingdom, where it is currently sold to physicians for prescribing on a named patient basis. An application for Marketing Authorization Approvals under the
European Mutual Recognition Procedure (MRP) has been initiated, with Denmark being selected as the Reference Member State.



During the later part of 2003, the Company determined it does not have the financial or technical resources to complete the MRP regulatory filing for
Europe. Accordingly, the Company is seeking an appropriate partner that has the requisite financial and technical resources to first progress with the MRP in Europe and secondly prepare for discussions with the U.S. FDA, regarding the number and
scope of Invicorp pre-clinical and clinical trials In this connection, we are working with Quintiles, a leading provider of information, technology and services to the pharmaceuticals industry, to support our efforts to contract with a partner with
the goal of bringing Invicorp to market in Europe and in the US as efficiently as possible. The future success of Invicorp in Europe and the United States will be dependent on finding the appropriate corporate partner.



Post-Approval



The marketing and manufacture of pharmaceutical products are subject to
post-approval regulatory review, and later discovery of previously unknown problems with a product, manufacturer or facility may result in the regulatory agencies requiring further clinical research or imposing restrictions on the product or the
manufacturer, including withdrawal of the product from the market. Additionally, any adverse reactions or events involving such products must be reported to these agencies. Previously unidentified adverse events or an increased frequency of adverse
events occurring post-approval could result in labeling modifications, additional contraindications and other restrictions that could adversely affect future marketability. Ultimately, marketing approvals may be withdrawn if compliance with
regulatory standards is not maintained or if a product is found to present an unacceptable risk. Any such restriction, suspension or revocation of regulatory approvals could have a material adverse effect on us.



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Third-Party Reimbursement



We believe that the availability of third-party reimbursement of all or a portion of the cost of Invicorp therapy may affect
the overall marketability of Invicorp and its related delivery systems.



In the United States, government-funded and private insurance programs reimburse or pay directly the cost of many medical treatments, prescription drugs and medical devices. The U.S. Health Care Financing Administration (HCFA)
sets reimbursement policy for the Medicare program in the United States, and has established a national coverage policy for the diagnosis and treatment of ED in Medicare beneficiaries. Private insurance coverage for ED treatment, however, varies
widely across the United States, and the introduction and popularity of Pfizers Viagra® resulted in some plans establishing broad coverage exclusions for ED treatment. As Viagra is an oral therapy and therefore in a different usage category, we believe that such coverage
exclusions will not apply to Invicorp because it is an injectable product.



Outside of the United States, most third-party reimbursement programs are governmentally funded. In some countries, no reimbursement currently is made for ED therapy, while other countries limit the amount of
reimbursement or require that ED treatment be related to specify other medical conditions. In addition, in certain European countries, the sales price of a product must be approved. The pricing review period often begins after market approval is
granted. Restrictions on the pricing of Invicorp could adversely affect the profitability of the Pharmaceuticals Segment.



Intellectual Property



We rely on a combination of patents, trade secrets, trademarks and confidentiality agreements to protect our business interests. We believe that patents
are of material importance to the success of our royalty-driven business model and that trademarks are also of significance, particularly within our Skincare Segment. Our policy is to file patent applications to protect inventions and improvements
considered important to the development of our business in the principal countries where protection from manufacture or marketing of infringing products is commercially warranted. Typically, U.S. patents expire 17 years after the grant date and
foreign patents expire up to 20 years after filing of the patent application. As of December 31, 2003 we held approximately 87 issued patents, including patents for Invicorp for the use of VIP and PMS
in the treatment of ED, granted in 19 countries and pending in sixteen other countries, patents for Kinetin and Zeatin for ameliorating the effects of aging on
skin, granted in 26 countries and pending in eight other countries, patents for Kinetin and Zeatin for ameliorating the effects of hyperproliferative skin diseases, including psoriasis, granted in
15 countries, and autoinjector patents for the delivery of therapeutic ingredients, granted in 20 countries and pending in eight other countries. In
January 2003 we were granted a patent in one country for cytokinins (including Kinetin) in the treatment of inflammatory diseases.



It is noted, however, that patents, including those for pharmaceuticals and skincare ingredients, generally involve complex legal and factual issues. In
the United States, for example, the first person to conceive and document a novel invention is generally entitled to patent it, even if another person who subsequently conceived the invention was the first person to file a patent application on it.
This issue of priority of invention is further complicated by the fact that patent applications in the United States are maintained in secrecy until a patent is issued or denied, generally years after filing. Accordingly, a patent-holder may be
subject to interference proceedings in the U.S. Patent and Trademark Office (PTO) long after the patent was issued based upon another partys claim of earlier invention. Furthermore, as only novel inventions are patentable, a
patent-holder may be subject to proceedings in the PTO or in federal court attacking the validity of the patent based on alleged obviousness or so-called prior art, or based on alleged improprieties in prosecuting the patent in the PTO.
Issues of novelty and abuse of patent also arise under the laws of most foreign countries in which we hold patents or have filed patent applications. We have successfully defended against claims of invalidity and unenforceability of our Kinetin
patents. However, while we believe that our patents are valid and enforceable, there can be no assurance that if, in the future, we must enforce any one or more of our patents, or such patents



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are challenged by a third party, such patents ultimately would be upheld. Similarly, while we believe that our products do not infringe the valid claims of
any third partys patents, there can be no assurance that we would prevail if a third party sought to enforce its patent against us by a suit for an injunction or damages.



Interference and similar proceedings in the PTO or equivalent foreign patent offices, whether brought by us to protect our
patents or brought by a third party challenging such patents, are time-consuming, disruptive of management and highly costly, and injunctive and other patent litigation in court is likely to be many times more time-consuming, disruptive and costly.
Furthermore, in the United States (unlike many foreign countries) a party generally is not entitled to reimbursement of its legal fees and expenses even if it is wholly successful in its prosecution or defense, so that we could be exposed to costs
which could have a material adverse effect on our business even if we were successful in enforcing our patents against an infringer or successful in defending against proceedings to invalidate our patents or proceedings alleging breach by us of a
third partys patents. Additionally, if we were unsuccessful in proceedings challenging our patents, third parties licensed by us under those patents might seek to terminate such licenses and cease paying royalties. If we were unsuccessful in
defending against a claim that we had infringed a third partys patent, even unknowingly, we could be subject to a permanent injunction against engaging in the infringing business as well as an award of damages measured by the profits obtained
from past infringement. Additionally, because of our relative lack of financial and management resources, we could be less able than our competitors to bear such risks.



Employees



As of December 31, 2003, we had thirteen full-time employees, comprised of three employees located in our office in St. Neots, United Kingdom and ten
persons at our Napa, California headquarters.



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RISK FACTORS



As stated in the preamble to this Annual Report on Form 10-K, this document contains numerous forward-looking statements
which we believe to be a fair reflection of our risks and opportunities. However, such statements by their nature are future-related and involve substantial uncertainties. In addition to those factors referred to elsewhere in Part I of this Annual
Report, particularly the Sections in Item 1 entitled Competition, Government Regulation and Intellectual Property, and in Part II of this Annual Report, particularly in Item 7, Managements Discussion
and Analysis of Financial Condition and Results of Operations, we have identified the following factors that may affect whether future events may differ materially from the expectations described in such forward-looking statements.



Limited Product Offering and Relatively Fixed Revenue
Stream.    Substantially all of our current revenue base is derived from license fees on our patented Kinetin ingredient, which is being amortized into income over the terms of the licenses, and royalties earned on
licensees sale of such licensed products which are generally paid quarterly. In addition, part of current revenues reflect the retained portion of royalties received from Signet on sales of cell lines for production of monoclonal antibodies
that are not remitted to the Foundation under the terms of our license agreement with it. If our patents on Kinetin were successfully challenged and our Kinetin licensees sought to terminate their licenses, our revenue stream would be substantially
curtailed, and if the Foundations patents were successfully challenged, the Foundation failed to renew its license with us beginning in 2004, or if the State of New York ceased supporting the Foundation, our sublicense with Signet would yield
substantially reduced revenues. Additionally, our present revenue stream is tied to our licensees sales of licensed product and accordingly is relatively fixed unless new territories are launched or expansion occurs in existing territories.
Should we be faced with significant cash requirements in connection with gaining regulatory approvals of our biopharmaceutical products currently in development or in connection with protecting our patents or defending against patent infringement
litigation, our capital resources might be inadequate to fund our capital needs, as described below.



Concentrated Revenue Base.    In 2003, three of our customers, Valeant, Revlon and The Body Shop, accounted for 55%, 20% and
11%, respectively of our total revenue. At December 31, 2003, two customers, Revlon and The Body Shop, represent approximately 43% and 13%, respectively of our net trade receivables. Subsequent to December 31, 2003, 100% of the above mentioned
accounts receivable were collected in full. However, while we have no security for payment of such trade receivables, we believe that all of such customers are credit-worthy and committed to fully performing their license obligations. Nevertheless,
should any of such customers cease paying receivables when due or cease performing under their respective licenses, our results would be adversely affected.



Reliance on other Organizations and Companies for research and development, sales and marketing performance.    We rely on a
number of significant collaborative relationships for a large part of our research and development, sales and marketing performance. The collaborations with Valeant, The Body Shop, Revlon and other licensees in addition to our research
collaborations, pose a number of risks including our inability to control whether our licensee will devote significant resources to our products, disputes may arise with respect to ownership to rights of technology developed, disagreements with
corporate partners could lead to delays in commercializing products, and our contracts with our corporate partners may fail to provide adequate protection if one of our partners fails to perform. To date, we have been unable to establish any
significant relationships for Invicorp.



Limited Capital
Resources.    As described under Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations, all of our indebtedness is from a single source pursuant to agreements under
which our funding source has substantial control over our ability to incur additional debt, sell equity or dispose of assets, substantially all of which are pledged as security for our borrowings. In the event that we are unable to fund continued
product development and governmental marketing approvals of our pharmaceutical products or such unbudgeted expenses as the defense of our position in patent litigation through our operating cash flow or by raising additional cash through equity
offerings, we would currently be largely dependent upon this source for additional funding, and if we were unable to arrange for funding upon acceptable



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terms, our business could be materially adversely affected. Although we are currently exploring additional financing alternatives to help us with any
possible periods of cash flow deficiencies during 2004, there can be no assurance that we will be able to close any such transactions. The Companys recent settlement of the OMP lawsuit more fully described in Item 3 will provide the Company
with $1.5 million in April 2004 and help satisfy the Companys requirement for additional working capital in 2004.



In the event that we are unable to obtain further funding or the costs of development and operations prove greater than anticipated, we may be required to
curtail our operations or seek alternative financing arrangements. Additional financing may not be available to us on favorable terms or at all. If we have insufficient funds or are unable to raise additional funds, we may be required to delay,
reduce or cease certain of our programs.



In the event that we
are able to obtain further funding, any future financings may result in the substantial dilution of stockholders interests and may result in future investors being granted rights superior to those of existing stockholders.



Fluctuating Operating Results and ADS
price.    Our operating results have fluctuated in the past and are likely to do so in the future. These fluctuations could cause our stock price to decline. Because many of our expenses are relatively fixed in the
short-term, our earnings will decline if revenue declines in a given quarter. This could be due to delays in recognizing revenue or for other reasons. In particular, research and development and general and administrative expenses are not affected
directly by variations in revenue. Due to fluctuations in our revenue and operating expenses, we believe that period-to-period comparisons of our results of operations are not a good indication of our future performance. In future quarters, our
operating results could be below the expectations of securities analysts or investors. In that case, our stock price could fluctuate significantly or decline.



Intellectual Property and Enforcement.    Our success will depend in part on our ability to obtain and maintain meaningful
patent protection for our products, both in the United States and in other countries. Our inability to do so could harm our competitive position. We rely on our issued and pending patent applications in the United States and in other countries to
protect a large part of our intellectual property and our competitive position. We cannot assure you that any of the currently pending or future patent applications will issue as patents, or that any patents issued to us will not be challenged,
invalidated, held unenforceable or circumvented. Further, we cannot assure you that our intellectual property rights will be sufficiently broad to prevent third parties from producing competing products similar in design to our products.



In addition to patent protection, we also rely on protection of trade
secrets, know-how and confidential and proprietary information. We generally enter into confidentiality agreements with our employees, consultants and our collaborative partners upon commencement of a relationship with us. However, we cannot assure
you that these agreements will provide meaningful protection against the unauthorized use or disclosure of our trade secrets or other confidential information or that adequate remedies would exist if unauthorized use or disclosure were to occur. The
exposure of our trade secrets and other proprietary information would impair our competitive advantages and could have a material adverse effect on our operating results, financial condition and future growth prospects. Further, we cannot assure you
that others have not or will not independently develop substantially equivalent know-how and technology.



Our commercial success also depends in part on avoiding the infringement of other parties patents or proprietary rights and the breach of any
licenses that may relate to our technologies and products. We are aware of several third-party patents that may relate to our technology. We believe that we do not infringe these patents but cannot assure you that we will not be found in the future
to infringe these or other patents or proprietary rights of third parties, either with products we are currently developing or with new products that we may seek to develop in the future. If third parties assert infringement claims against us, we
may be forced to enter into license arrangements with them. We cannot assure you that we could enter into the required licenses on commercially reasonably terms, if at all. The failure to obtain necessary licenses or to implement alternative
approaches may prevent us from commercializing products under development and would impair our ability to be commercially competitive.



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The defense and prosecution, if necessary, of intellectual property suits, United States Patent and
Trademark Office interference proceedings and related legal and administrative proceedings would result in substantial expense to us and significant diversion of effort by our technical and management personnel. An adverse determination in
litigation or interference proceedings to which we may become a party could subject us to significant liabilities to third parties, could put our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at
risk of not issuing.



Further, there is a risk that some of our
confidential information could be compromised during the discovery process of any litigation. During the course of any lawsuit, there may be public announcements of the results of hearings, motions and other interim proceedings or developments in
the litigation. If securities analysts or investors perceive these results to be negative, it could have a substantial negative effect on the trading price of our stock.



Regulation by Government Agencies.    The production and sale of pharmaceutical products is
highly regulated. Our ability and the ability of our partners to secure regulatory approval for our products and to continue to satisfy regulatory requirements will determine our future success. We may not receive required regulatory approvals for
our products or receive approvals in a timely manner. In particular, the United States Food and Drug Administration and comparable agencies in foreign countries, including the European Medicines Evaluation Agency and the Medicines Control Agency in
the United Kingdom, must approve human therapeutic and preventive products before they are marketed. This approval process can involve lengthy and detailed laboratory and clinical testing, sampling activities and other costly and time-consuming
procedures. While the time required to obtain approval varies, it can take several years. Delays in obtaining regulatory approvals could adversely affect the marketing of products and our ability to receive product revenues or royalties. We cannot
guarantee that we will be able to obtain the necessary approvals for clinical testing or for the manufacturing and marketing of any products that we develop.



Listing.    As a listed company on the NASDAQ Small Cap Market, the Company is subject to certain financial and qualitative
factors in order to retain its listing. If the Company is unable to maintain such requirements, the Company could be subject to delisting or movement to a less desirable stock exchange. If the Company is unable to maintain such listing, the Company
and its shareholders could suffer share price declines and liquidity issues relative to its stock and higher cost of capital to the Company.



New Product Pipeline.    As a result of regulatory and competitive uncertainties, along with potentially limited funding
sources, no assurance can be given that new products can be successfully developed and marketed. We have a pipeline of new products and new indications for existing products in development, and should we be successful in developing and obtaining
marketing approvals for these products and locating an appropriate licensee, to the extent required, we expect to be successful in our business plan.



Competitive ED Therapies.    There can be no assurance that new competitive injectable ED medications will not be developed to
fulfill many if not all of ED patients needs that are currently unmet, or that our injection therapy will in fact gain acceptance. Oral medications currently represent approximately 92% of the worldwide market for ED treatment because of their
ease of use and non-invasive path of administration. Pfizers Viagra, Eli Lillys Cialis and Bayer/GlaxoSmithKlines Levitra represents virtually all of this oral medication market. We believe that there will nevertheless be a market
for our Invicorp ED injectable therapy because of its greater efficacy, favorable side-effect and contraindication profiles, and relatively aesthetic delivery systems.



Research and Development.    Our field is characterized by extensive research efforts. Our
research could prove unproductive. Furthermore, other companies could engage in research or development which renders our programs superfluous or obsolete. This is true for all companies that operate in this same field. Other companies with whom we
compete may have greater financial resources to undertake additional and more effective research.



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We face possible exposure to liability for our products.    During recent
years, lawsuits resulting in very substantial liability have been filed against companies engaged in the sale of pharmaceutical and other medical-related products or devices which have subsequently proved harmful to human health. Many of these cases
have exposed companies to liability long after the products have been brought to market even though, at the time of their development, based on extensive research, there were no perceived risks of injury. Thus, notwithstanding United States Food and
Drug Administration or other foreign governmental approval, we cannot assure you that we will not be subject to liability from the use of our products, or that our product liability coverage will be adequate to protect against future claims.
Management intends to have third parties manufacture and distribute certain of our products in order to lessen our liability. However, we cannot assure you that this result will be achieved.



Competitive Impacts on our Market for Skincare
Ingredients.    We face intense competition for the discovery and development of ingredients to address signs of photoaging and other skincare conditions from large, global companies with far greater research, development and
marketing resources than ours, and there can be no assurance that our existing products or new products developed for our Skincare Segment will maintain market acceptance in competition with existing and new offerings of our competitors.



Management Infrastructure.    As of December
31, 2003, we employed 13 people. In February 2004, we announced our plan to close our UK office. We currently employ 13 people, and have a very small, though we believe highly qualified and motivated, management team. Should we lose significant
management resources and be unable to attract high caliber replacements to continue implementing our business plan, we could be materially adversely affected. There can be no assurance that we will be able to staff our requirements in a manner
adequate to support our planned growth.



ITEM 2PROPERTIES



We lease
approximately 31,000 square feet in Napa, California for our headquarters. The headquarters facility includes approximately 7,300 square feet of manufacturing space and 23,700 square feet of research, marketing and administrative space. The lease
for the Napa facility expires in December 2007. We also lease 900 square feet of office space in St Neots, United Kingdom, under a 5-year lease with a 3 month rolling break option. The Company expects to terminate the lease in the United Kingdom
during 2004. During October 2003, the Company entered into a quarterly cancelable lease agreement at a business park adjacent to Aarhus University in Denmark. The facility will be used for research and development and is expected to be renovated and
equipped by mid 2004. The cost to build out and equip the facility is estimated at approximately $250,000 to $300,000. The lease requires quarterly payments of approximately $21,000 and can be cancelled by giving 3 months notice.



ITEM 3LEGAL PROCEEDINGS



On
April 11, 2003, we filed a lawsuit against OMP, Inc. in the Los Angeles County Superior Court for common law misappropriation, breach of confidence, breach of contract, breach of implied covenant of good faith and fair dealing, intentional and
negligent interference with prospective economic advantage, statutory and common law unfair competition, and unjust enrichment. We sought damages in an amount to be proven at trial as well as restitution, injunctive relief and specific performance.
On October 28, 2003, OMP filed a lawsuit against Senetek in the United States District Court for the Northern District of California for violation of the Sherman Act and unfair competition as a result of Seneteks alleged abuse of patents. In
March 2004, the Company announced that it had settled all litigation pending between Senetek and OMP. Under the terms of the settlement, in exchange for Senetek granting OMP the ongoing non-exclusive right to market and sell specified Obagi-K
products containing Kinetin in Japan limited to its existing channel of trade, until the last of Seneteks patents has expired, Senetek will receive an up front payment of $1.5 million and an additional $500,000 based on future sales in Japan
of skin care products containing Kinetin under the Obagi name. Payment of the $1.5 million is expected by early April 2004, with the balance expected to be paid quarterly over the next 12 to 18 months. Under the settlement, Senetek retains rights to
license others to distribute Kinetin products in Japan.



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On June 2, 2003, the Company commenced a lawsuit in the High Court of Justice, Chancery Division, in
London, England against Eagle-Picher Technologies, LLC and Eagle-Picher Industries Inc., both Ohio corporations. The complaint alleges that the Defendants failed to perform under an April 1998 agreement under which they agreed to manufacture and
supply phentalomine mesylate meeting required pharmacopoeial specifications for use as an active ingredient in the Companys proprietary Invicorp® erectile dysfunction drug. The Companys complaint seeks repayment of the $492,000 purchase price paid in advance, and of $494,000 paid
for validation studies and batches, as well as other amounts to be proven at trial for regulatory filings required when the Company was forced to transfer manufacturing of phentalomine mesylate to an alternative supplier. The defendants have
responded, denying certain of our allegations, we have replied, and the parties are exchanging documents and witness statements as a prerequisite to a trial to be scheduled for mid 2004.



On August 6, 2003, the Company filed a complaint against Uwe Thieme, a Senetek Director, and his brother, Heiko Thieme, in
the United States District Court for the Northern District of California. The complaint alleged that the Thieme Brothers solicited proxies for the 2003 Annual General Meeting in a manner that violated the federal securities laws. On August 7, 2003
the Court ordered the postponement of the Annual Meeting until November 5, 2003, prohibited the Thieme Brothers from soliciting proxies with respect to the Annual Meeting until the later of August 22, 2003 or the date on which they have filed a
definitive proxy statement with the Securities and Exchange Commission as required by law, and precluded Senetek from soliciting additional proxies with respect to the Annual Meeting until the earlier of August 22, 2003 or the date on which the
Thieme Brothers filed a definitive proxy statement with the Securities and Exchange Commission as required by law. On November 3, 2003, the Court ordered the postponement of the Annual Meeting until December 18, 2003. On December 15, 2003 the
Company settled its lawsuit against the Thieme Brothers. Under the terms of the settlement, Senetek agreed to dismiss its claims against the Thieme Brothers, and Uwe Thieme agreed to dismiss his counterclaim against Senetek for defense costs,
expense indemnification and insurance coverage. In addition, the parties agreed to a procedure for selecting a Director to replace Uwe Thieme. Senetek agreed that it will nominate and recommend Uwe Thieme for re-election to the Board until such time
as Uwe Thieme is replaced by a mutually acceptable Director, Uwe Thieme agreed to withdraw his nomination of Peter Stockfisch for election as a Director, and the Thiemes agreed to abstain from voting on any resolutions at the 2003 Annual General
Meeting and to refrain from making any nominations for election of Directors or soliciting any proxies for the 2003 and 2004 Annual General Meetings. Finally, Senetek agreed to pay a portion of the Thiemes legal fees in the amount of $65,000,
and the parties exchanged mutual general releases of all claims.



As previously disclosed, in the course of responding to a document request in April 2003 as part of an unrelated Securities and Exchange Commission investigation focused on a firm not affiliated with the Company, the Company became aware of
certain documents suggesting that during 2002 Company executives might have supplied non-public financial information to two securities analysts in an effort to correct draft research reports that contained information the executives considered
overly-optimistic. The Board of Directors appointed an independent Committee of non-management Directors which engaged outside securities counsel to conduct a full internal investigation and in June 2003 voluntarily reported the results to the
Commissions office conducting the unrelated investigation. In late March, the Commission staff sent to the Companys legal counsel a letter advising that the staff is considering recommending commencement of a proceeding alleging
violations of Section 13(a) of the Securities Exchange Act of 1934 and Commission Regulation FD, and inviting the submission of a response. Senetek is engaged in discussions with the Commission staff regarding settlement of the matter. Senetek does
not anticipate any amounts paid in connection with this matter will have a material impact on the future results of operations or financial condition of the Company.



ITEM 4SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



On December 18, 2003, after a court ordered delay of its originally scheduled August 8, 2003 Annual General Meeting, the Company conducted its Annual General Meeting related to fiscal 2002. At the meeting, the
shareholders approved the re-election of directors George Fellows, Kevin McCarthy and Anthony Williams. Continuing as directors for the Company but not subject to re-election were directors Frank Massino, Andreas



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Tobler, Uwe Thieme and Dr. Franklin Pass. As detailed in the Item 3 Legal Proceedings, the Company resolved a matter in December 2003 related to its annual
general meeting, including the election of certain directors. Legal fees, proxy solicitation costs and settlement costs related to this legal matter totaled approximately $617,000 for fiscal 2003.



The following will summarize the matters that were put to vote at the annual
general meeting and the vote received.



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            |  |               |  |                            
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- |  | ------------- |  | ---------------------------
|Summary of Matters Submitted for Shareholder vote                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | Votes For  |  | Votes Against |  | Abstain and Brokernon-votes
|Re-elect George Fellows as Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | 13,124,145 |  | 3,944,070     |  | 233,919                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            | 
|Re-elect Kevin McCarthy as Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | 13,068,762 |  | 3,973,734     |  | 259,638                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            | 
|Re-elect Anthony Williams as Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | 13,412,607 |  | 3,622,389     |  | 267,138                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            | 
|To receive the Companys annual accounts for the financial year ended December 31, 2002 together with the last directors report and auditors report on those accounts, and to
approve the last directors remuneration report                                                                                                                                                                                                                                                                                       |  | 13,894,241 |  | 3,076,513     |  | 331,380                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            | 
|To appoint BDO Seidman, LLP and BDO Stoy Hayward as the Companys independent auditors at a remuneration determined by the directors.                                                                                                                                                                                                                                                                                                                                                                                 |  | 14,224,429 |  | 2,758,696     |  | 319,009                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            | 
|THAT the rules of the Senetek No. 1 Executive Share Option Scheme for Employees be varied by deleting Clause 3 in its entirety and substituting it with the following: Subject
to Clause 6 below, the number of shares in respect of which options may be granted on any given day, when added to the number of shares in respect of which options have been previously granted (and it not exercised, have not then ceased to be
capable of exercise), shall not exceed 6,000,000.                               |  | 12,242,911 |  | 4,690,760     |  | 368,463                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            | 
|THAT the rules of the Senetek No. 2 Executive Share Option Scheme for non-Executive Directors and Consultants be varied by deleting Clause 3 in its entirety and substituting it with
the following: Subject to Clause 6 below, the number of shares in respect of which options may be granted on any given day, when added to the number of shares in respect of which options have been previously granted (and if not exercised, have
not then ceased to be capable of exercise), shall not exceed 4,000,000. |  | 12,652,266 |  | 4,256,211     |  | 393,657                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            | 
|THAT all grants of options previously made under the No. 1 Plan and the No. 2 Plan (collectively, the Plans) be deemed to have been made in accordance with the rules of such Plans as
amended in accordance with the two respective resolutions above.                                                                                                                                                                                                                                                             |  | 12,713,791 |  | 4,183,210     |  | 406,133                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            | 
|THAT the Articles of Association of the Company be amended by deleting the first sentence of Article 83 and substituting it with the following: Each Director shall be paid out of the funds
of the Company by way of fees for his services a sum not exceeding pounds sterling 10,000 per annum.                                                                                                                                                                                                                   |  | 13,137,297 |  | 3,727,489     |  | 437,348                    



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PART II



ITEM 5MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS



There is currently no established public trading market for our Ordinary shares. Senetek American Depositary shares (each representing one Ordinary share
and evidenced by one American Depositary Receipt) began trading on the over-the-counter market in the United States in November 1984 and have been traded through The NASDAQ Smallcap Market since May 1986. The Companys stock symbol is SNTK. The
depository for these shares is the Bank of New York.



The
following table sets out the range of high and low closing bid prices for the American Depositary shares during each quarter of our two most recent fiscal years, as reported by the NASDAQ Smallcap Market.



Fiscal Year Ended December 31, 2003



|               |  |      |      |     |   |     
|-------------- |  | ---- | ---- | --- | - | ----
|               |  | HIGH |      | LOW
|QUARTER ENDED: |  |      |      |     |   |     
|March 31       |  | $    | 0.71 |     | $ | 0.47
|June 30        |  |      | 0.65 |     |   | 0.40
|September 30   |  |      | 0.65 |     |   | 0.37
|December 31    |  |      | 0.57 |     |   | 0.38



Fiscal Year Ended December 31, 2002



|               |  |      |      |     |   |     
|-------------- |  | ---- | ---- | --- | - | ----
|               |  | HIGH |      | LOW
|QUARTER ENDED: |  |      |      |     |   |     
|March 31       |  | $    | 1.22 |     | $ | 0.66
|June 30        |  |      | 1.04 |     |   | 0.61
|September 30   |  |      | 0.72 |     |   | 0.50
|December 31    |  |      | 0.77 |     |   | 0.49



As of March 26, 2004
there were approximately 215 holders of record of our Ordinary shares, and approximately 1,400 holders of record of American Depositary shares. The bid price of American Depositary Shares at March 26, 2004 was a high of $1.21 and a low of $1.13.



Dividends.    Senetek has not paid,
nor does it currently contemplate the payment of, any cash dividends on the Ordinary shares. The decision whether to pay, and the amount of any dividends, will be based upon, among other things, our earnings, capital requirements, financial
conditions and applicable law. Any dividend, either cash or stock, must be recommended by the Board of Directors and approved by the shareholders through the Board of Directors. The Board of Directors is, however, empowered to declare interim
dividends. However, under the English Companies Act of 1985, a limited company may not declare or pay cash dividends while it has an accumulated deficit. We had an accumulated deficit of $91,552,000 at December 31, 2003. Accordingly, the Board of
Directors will not be in a position to consider the question of dividends until the accumulated deficit has been absorbed by profits or by the application against the deficit with the approval of shareholders and the United Kingdom Companies
Court, which forms part of the Chancery Division of the High Court, of an equivalent figure forming part of the share premium on our balance sheet.



Recent Sales of Unregistered Securities



On September 4, 2003, the Company entered into a debt refinancing with Silver Creek Investments, Ltd., Bomoseen Investments, Ltd., Dandelion Investments,
Ltd., and Elstree Holdings, Ltd., the beneficial owners of the approximately $7.4 million notes payable obligation of the Company. In connection with the debt



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refinancing, the Company made a $2.5 million principal payment, extended the maturity date of the notes from April 2004 to April 2007, modified the interest
rate and granted the note holders warrants to purchase stock. The Company granted the note holders a 7 year warrant to purchase an aggregate 4,500,000 ordinary shares at $.40 per share. Related to this debt refinancing, the Company also issued
a seven year warrant to purchase 500,000 shares at $.40 to Alba Limited and a five year warrant to purchase 100,000 shares at $.62 per share to Ardour Capital LLC, for financial services in connection with the debt refinancing.



The Company received no proceeds from this transaction and will only receive
proceeds in the future if the warrants are exercised. The transaction was privately negotiated with the holders of the notes and did not involve any general solicitation or general advertisement. The issuance of the warrants was exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving a public offering.



Taxation



The following discussion describes the material US Federal income tax and UK tax consequences of the purchase, ownership and disposition of our shares or
ADSs (evidenced by ADRs) for beneficial owners:



| |  |  | who are residents of the United States for purposes of the current applicable United Kingdom/United States Income Tax Convention (either the Income Tax Convention or the
New Income Tax Convention, as described below under New Income Tax Convention) and the United Kingdom/United States Estate and Gift Tax Convention (the Estate and Gift Tax Convention and, together with the Income
Tax Convention, the Conventions);
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | whose ownership of our shares or ADSs is not, for the purposes of the Conventions, attributable to a permanent establishment in the United Kingdom;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | who otherwise qualify for the full benefits of the Conventions; and
| | - |  | -------------------------------------------------------------------



| |  |  | who are US holders (as defined below).
| | - |  | --------------------------------------



The statements of US federal income tax and UK tax laws set out below:



| |  |  | are based on the laws in force and as interpreted by the relevant taxation authorities as at the date of this annual report;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | are subject to any changes in US law or the laws of England and Wales, in the interpretation thereof by the relevant taxation authorities, or in the Conventions, occurring after
such date; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | are based, in part, on representations of the depositary, and assume that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its
terms.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



No assurance can be given that taxing
authorities or the courts will agree with this analysis.



This discussion does not address all aspects of US and UK taxation that may be relevant to you and is not intended to reflect the individual tax position of any beneficial owner, including tax considerations that arise from rules of
general application to all taxpayers or to certain classes of investors or that are generally assumed to be known by investors. The portions of this summary relating to US Federal taxation are based upon the US Internal Revenue Code of 1986, as
amended (the Code), its legislative history, existing and proposed US Treasury regulations promulgated thereunder, published rulings by the US Internal Revenue Service (IRS), and court decisions, all in effect as at the date
hereof, all of which authorities are subject to change or differing interpretations, which changes or differing interpretations could apply retroactively. This summary is limited to investors who hold our shares or ADSs as capital assets within the
meaning of Section 1221 of the Code, generally property held for investment, and this summary does not purport to deal with the US Federal or UK taxation consequences for investors in special tax situations, such as dealers in securities or
currencies, persons whose functional currency is not the US Dollar, life insurance companies, tax exempt



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entities, financial institutions, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings,
regulated investment companies, persons holding our shares or ADSs as part of a hedging, integrated, conversion or constructive sale transaction or straddle or persons subject to the alternative minimum tax, who may be subject to special rules not
discussed below. In particular, the following summary does not address the adverse tax treatment to you that would follow if you own, directly or by attribution, 10% or more of our outstanding voting share capital and we are classified as a
controlled foreign corporation for US Federal tax purposes.



As used herein, the term US holder means a beneficial owner of our shares or ADSs who or which is:



| |  |  | a citizen or resident of the United States;
| | - |  | -------------------------------------------



| |  |  | a corporation (or other entity that is treated as a corporation for US Federal income tax purposes) created or organized in or under the laws of the United States or any political
subdivision thereof;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an estate, the income of which is subject to US Federal income taxation regardless of its source; or
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | a trust (1) that is subject to the supervision of a court within the United States and the control of one or more US holders as described in section 7701(a)(30) of the Code or (2)
that has a valid election in effect under applicable US Treasury regulations to be treated as a US holder.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



If a partnership (or an entity that is treated as a partnership for US Federal income tax purposes) holds our shares or ADSs, the tax treatment of a
partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our shares or ADSs, you should consult your tax advisors.



The summary does not include any description of the tax laws of any State
or local government or of any jurisdictions other than the United States and the United Kingdom that may be applicable to the ownership of our shares or ADSs. You are urged to consult your own tax advisor regarding the US Federal, State, and
local tax consequences to you of the ownership of our shares or ADSs, as well as the tax consequences to you in the United Kingdom and any other jurisdictions.



For the purposes of the Conventions and the Code, you will be treated as the owner of our shares represented by the ADSs
evidenced by the ADRs.



New Income Tax Convention



The United States and the United Kingdom have recently
concluded a new income tax convention (the New Income Tax Convention). The New Income Tax Convention has been ratified by the competent authorities in both countries. The New Income Tax Convention is effective:



| |  |  | in respect of US or UK withholding taxes, for amounts paid on or after 1 May 2003;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | in the US, in respect of other taxes, for taxable periods beginning on or after 1 January 2004;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | in the UK, for individuals from 1 April 2004; and
| | - |  | -------------------------------------------------



| |  |  | in the UK, for corporations from the first financial year beginning on or after 1 April 2004;
| | - |  | ---------------------------------------------------------------------------------------------



except that a person entitled to the benefit of the existing Income Tax Convention may elect to remain subject to the terms of that
convention and not the New Income Tax Convention for a further period of one year.



The New Income Tax Convention contains rules that modify the treatment under the Income Tax Convention of US holders who own shares or ADSs of a UK corporation in several aspects. Throughout the following discussions,
we have included specific references to the new rules under the New Income Tax Convention as appropriate. You should consult your own tax advisors as to how the Income Tax Convention and New Income Tax Convention would affect you with respect to
your ownership of our shares or ADSs (including



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the application of the anti-conduit rules contained in the New Income Tax Convention) and if and how you should elect to defer the application of the New
Income Tax Convention.



Taxation of Capital Gains



United Kingdom



If you are not resident or ordinarily resident in the United Kingdom for UK
tax purposes, you will not be liable for UK tax on capital gains realized or accrued on the sale or other disposition of shares or ADSs unless the shares or ADSs are held in connection with your trade or business (which for this purpose includes a
profession or a vocation) carried on in the United Kingdom through a branch or agency and the shares or ADSs are or have been used, held or acquired for the purposes of such trade or business or such branch or agency.



A US holder who is an individual who has on or after 17 March 1998 ceased to
be resident or ordinarily resident in the United Kingdom in the preceding five years and who disposes of shares or ADSs during that period may also be liable for UK tax on capital gains notwithstanding that the person may not be resident in the
United Kingdom at the time of the disposal.



United States



Subject to the Passive Foreign Investment Company
discussion below, gain or loss realized by you on the sale or other disposition of the shares or ADSs will be subject to US Federal income tax as capital gain or loss in an amount equal to the difference between your tax basis in the shares or ADSs
and the amount realized on the disposition. The capital gain or loss will be long-term capital gain or loss if the US holder has held the shares or ADSs for more than one year at the time of the sale or exchange. A gain or loss realized by you
generally will be treated as US source gain or loss for US foreign tax credit purposes.



Passive Foreign Investment Company Considerations



Generally, for US Federal income tax purposes, we will be a passive foreign investment company, or a PFIC, for any taxable year if
either (1) 75% or more of our gross income is passive income or (2) 50% or more of the value of our assets, determined on the basis of a quarterly average, is attributable to assets that produce or are held for the production of passive
income. Passive income generally includes dividends, interest, royalties and rents not arising from the active conduct of a trade or business, and gains from the sale of assets that produce such income. If we are a PFIC in any taxable year that you
own our shares or ADSs, you may be subject to tax at the highest ordinary income rates applicable to you and pay interest on such tax based on your holding period in the shares of ADSs, on (1) a portion of any gain recognized on the sale of our
shares or ADSs and (2) any excess distribution paid on our shares or ADSs (generally, a distribution in excess of 125% of the average annual distributions paid by us in the three preceding taxable years).



Based on our current activities and assets, we do not believe that we are a
PFIC, and we do not expect to become a PFIC in the foreseeable future for US Federal income tax purposes. Our belief that we are not a PFIC and our expectation that we will not become a PFIC in the future are based on our current and planned
activities, and may change in the future. The determination of whether we are a PFIC is made annually. Accordingly, it may be possible that we will become a PFIC in the current or any future year due to changes in our asset or income composition.



UK Inheritance and Gift Tax



If you are an individual domiciled in the United States and are not a
national of the United Kingdom for the purposes of the Estate and Gift Tax Convention, any share or ADS beneficially owned by you will not be subject to UK inheritance tax on your death or on a gift made by you during your lifetime, provided that
any applicable US Federal gift or estate tax liability is paid, except where the share or ADS is part of the business property of



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your UK permanent establishment or pertains to your UK fixed base used for the performance of independent personal services. The Estate and Gift Tax
Convention generally provides for tax paid in the United Kingdom to be credited against tax payable in the United States, based on priority rules set out in that Convention, in the exceptional case where a share or ADS is subject to both UK
inheritance tax and US Federal gift or estate tax. Where the shares or ADSs have been placed in trust by a settlor who, at the time of the settlement, was a US holder, the shares or ADSs will generally not be subject to UK inheritance tax if
the settlor, at the time of the settlement, was domiciled in the United States for the purposes of the Estate and Gift Tax Convention and was not a national of the United Kingdom.



US Gift and Estates Taxes



If you are an individual US holder, you will be subject to US gift and estate taxes with respect to the shares or ADSs in
the same manner and to the same extent as with respect to other types of personal property.



UK Stamp Duty and Stamp Duty Reserve Tax



Subject to certain exemptions, stamp duty will be charged at the rate of 1.5% rounded up to the nearest £5, or there will be a charge to the stamp duty reserve tax at the rate of 1.5% on the amount or value of
the consideration paid, or in some circumstances the issue price or open market value, on a transfer or issue of shares (1) to, or to a nominee for, a person whose business is or includes the provision of clearance services, or (2) to, or to a
nominee for, a person whose business is or includes the issuing of depositary receipts. It is understood that the UK Inland Revenue Stamp Office considers the depositary to fall within one or the other of the above two categories. The stamp duty
reserve tax on the deposit of ordinary shares with the depositary will be payable by the person depositing those shares. Where stamp duty reserve tax is charged on a transfer of shares and ad valorem stamp duty is chargeable on the instrument
effecting the transfer, the amount of the stamp duty reserve tax charged is an amount equal to the excess, if any, of the stamp duty reserve tax charge due on the transfer after the deduction of the stamp duty paid.



You will not be entitled to a foreign tax credit with respect to any UK stamp
duty or stamp duty reserve tax, but may be entitled to a deduction subject to applicable limitations under the Code. You are urged to consult your own tax advisors regarding the availability of a deduction under their particular circumstances.



Transfers of ADRs



No UK stamp duty will be payable on an instrument transferring an ADR or on
a written agreement to transfer an ADR provided that the instrument of transfer or the agreement to transfer is executed and remains at all times outside the United Kingdom. Where these conditions are not met, the transfer of, or agreement to
transfer an ADR could, depending on the circumstances, attract a charge to ad valorem stamp duty at the rate of 0.5% of the value of the consideration (rounded up to the nearest £5) plus interest and penalties if not stamped within 30 days of
execution.



No stamp duty reserve tax will be payable in
respect of an agreement to transfer an ADR, whether made in or outside the United Kingdom.



Where no sale is involved and no transfer of beneficial ownership has occurred, a transfer of shares by the depositary or its nominee to the holder of an ADR upon cancellation of the ADR is subject to UK stamp duty of
£5 per instrument of transfer.



Issue and Transfer of
Ordinary Shares in Registered Form



Except in relation to
persons whose business is or includes the issue of depositary receipts of the provision of clearance services or their nominees, the allotment and issue of shares by us will not normally give rise to a charge to UK stamp duty or stamp duty reserve
tax.



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Transfers of shares, as opposed to ADSs, will attract ad valorem stamp duty normally at the rate of 0.5%
of the value of the consideration (rounded up to the nearest £5). A charge to stamp duty reserve tax, normally at the rate of 0.5% of the consideration, arises, in the case of an unconditional agreement to transfer shares, on the date of the
agreement, and in the case of a conditional agreement the date on which the agreement becomes unconditional. The stamp duty reserve tax is payable on the seventh day of the month following the month in which the charge arises. Where an instrument of
transfer is executed and duly stamped before the expiry of a period of six years beginning with the date of that agreement, any stamp duty reserve tax that has not been paid ceases to be payable, and if any stamp duty reserve tax has been paid a
claim may be made for its repayment.



Information
Reporting and Backup Withholding



Payments that relate
to the ordinary shares or ADSs that are made in the United States or by a US related financial intermediary will be subject to information reporting. Information reporting generally will require each paying agent making payments, which relate to a
share or ADS, to provide the IRS with information, including the beneficial owners name, address, taxpayer identification number, and the aggregate amount of dividends paid to such beneficial owner during the calendar year. These reporting
requirements, however, do not apply to all beneficial owners. Specifically, corporations, securities broker-dealers, other financial institutions, tax-exempt organizations, qualified pension and profit sharing trusts and individual retirement
accounts are all exempt from reporting requirements.



If you
are a depositary participant or indirect participant holding shares or ADSs on behalf of a beneficial owner, or paying agent making payments for a share or ADS, you may be required to backup withhold, as a backup against the beneficial owners
US Federal income tax liability, a portion of each payment of dividends on our shares or ADSs in the event that the beneficial owner of a share or ADS:



| |  |  | fails to establish its exemption from the information reporting requirements;
| | - |  | -----------------------------------------------------------------------------



| |  |  | is subject to the reporting requirements described above and fails to supply its correct taxpayer identification number in the manner required by applicable law; or
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | under-reports its tax liability.
| | - |  | --------------------------------



This backup withholding tax is not an additional tax and may be credited against US Federal income tax liability if the required information is furnished
to the IRS.



Taxation of Dividends



We have not included a detailed discussion of the tax consequences to
holders of ordinary shares or ADSs of the payment of dividends in light of the Companys present inability to pay dividends. As noted above, pursuant to the English Companies Act of 1985 a company may not pay a dividend while it has an
accumulated deficit. As of December 31, 2003, the Companys accumulated deficit is over $91 million.



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EQUITY COMPENSATION PLAN INFORMATION



|                                                           |  |                                                                                          |     |  |                                                                            |      |                                                                                                                                         |          
|---------------------------------------------------------- |  | ---------------------------------------------------------------------------------------- | --- |  | -------------------------------------------------------------------------- | ---- | --------------------------------------------------------------------------------------------------------------------------------------- | ---------
|Plan category                                              |  | Number ofsecurities to beissued uponexercise ofoutstandingoptions, warrantsand rights(a) |     |  | Weighted-averageexercise price ofoutstandingoptions, warrantsand rights(b) |      | Number ofsecurities remainingavailable for future issuanceunder equitycompensation plans(excluding securitiesreflected in column(a))(c)
|Equity compensation plans approved by security holders     |  | 6,388,125                                                                                |     |  | $                                                                          | 1.32 |                                                                                                                                         | 1,250,000
|Equity compensation plans not approved by security holders |  | 260,000                                                                                  | (1) |  |                                                                            | 1.50 |                                                                                                                                         |         
|                                                           |  |                                                                                          |     |  |                                                                            |      |                                                                                                                                         |          
|Total                                                      |  | 6,648,125                                                                                |     |  | $                                                                          | 1.33 |                                                                                                                                         | 1,250,000
|                                                           |  |                                                                                          |     |  |                                                                            |      |                                                                                                                                         |          

---

|(1) |  | Options were issued outside of a formal option plan and have a seven year life and an exercise price equal to the fair market value of the Companys stock on the date of grant.
200,000 of these options expire in mid 2004 and the remaining 60,000 expire in early 2005.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

ITEM 6SELECTED FINANCIAL DATA



The selected consolidated statements of operations data presented below for each of the years in the three-year period ended December 31, 2003 and the selected consolidated balance sheet data as of December 31, 2003 and 2002 have been
derived from and should be read in conjunction with our audited consolidated financial statements included in Part IV of this Report on Form 10-K. The selected consolidated statements of operations data for the years ended December 31, 1999 and 2000
and the selected consolidated balance sheet data as of December 31, 1999, 2000 and 2001 have been derived from the audited consolidated financial statements contained in our annual reports to shareholders. The presentation of consolidated balance
sheet data below for all periods presented reflects a reclassification of accrued compensation on stock option grants to share premium in stockholders deficit.



In accordance with the Financial Accounting Standards Board (FASB) Interpretation No. 44, which became effective July 2000,
we have changed our accounting principles for the recognition of stock compensation expense for our non-executive directors. We have non-executive directors within the scope of Accounting Principles Bulletin (APB) No. 25 and have
reported the cumulative effect of changing to this new accounting principle in net income for the period of the change. This change in accounting principle increased net income in 2000 by $1,038,000.



|                                                                                                                                                                            |  |                                         |        |   |      |   |         |  |   |         |   |  |         |        |   |  |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ------ | - | ---- | - | ------- |  | - | ------- | - |  | ------- | ------ | - |  | - | ------- | -
|                                                                                                                                                                            |  | Year ended December 31,                 |       
|                                                                                                                                                                            |  | 2003                                    |        |   | 2002 |   | 2001(1) |  |   | 2000(1) |   |  | 1999(1) |       
|                                                                                                                                                                            |  | ($ in thousands, except per share data) |       
|CONSOLIDATED STATEMENTS OF OPERATIONS DATA:                                                                                                                                 |  |                                         |        |   |      |   |         |  |   |         |   |  |         |        |   |  |   |         |  
|Revenues                                                                                                                                                                    |  | $                                       | 8,226  |   |      | $ | 9,409   |  | $ | 8,453   |   |  | $       | 3,534  |   |  | $ | 8,263   |  
|                                                                                                                                                                            |  |                                         |        |   |      |   |         |  |   |         |   |  |         |        |   |  |   |         |  
|Income (loss) from continuing operations before extraordinary loss on extinguishment of debt, change in accounting principle and discontinued
operations                    |  |                                         | (5,068 | ) |      |   | 847     |  |   | (19     | ) |  |         | (5,917 | ) |  |   | (11,862 | )
|Discontinued operations                                                                                                                                                     |  |                                         | 74     |   |      |   | 694     |  |   | 404     |   |  |         | 225    |   |  |   |        |  
|Cumulative effect of change in accounting principle                                                                                                                         |  |                                         |       |   |      |   |        |  |   |        |   |  |         | 1,038  |   |  |   |        |  
|                                                                                                                                                                            |  |                                         |        |   |      |   |         |  |   |         |   |  |         |        |   |  |   |         |  
|Net income (loss)                                                                                                                                                           |  | $                                       | (4,994 | ) |      | $ | 1,541   |  | $ | 385     |   |  | $       | (4,654 | ) |  | $ | (11,862 | )
|                                                                                                                                                                            |  |                                         |        |   |      |   |         |  |   |         |   |  |         |        |   |  |   |         |  
|EARNINGS PER SHARE:                                                                                                                                                         |  |                                         |        |   |      |   |         |  |   |         |   |  |         |        |   |  |   |         |  
|Basic and diluted income (loss) from continuing operations before extraordinary loss on extinguishment of debt, change in accounting
principle, and discontinued operations |  | $                                       | (.09   | ) |      | $ | 0.02    |  | $ |        |   |  | $       | (0.10  | ) |  | $ | (0.21   | )
|Discontinued operations                                                                                                                                                     |  |                                         |       |   |      |   | 0.01    |  |   | 0.01    |   |  |         |       |   |  |   |        |  
|Cumulative effect of change in accounting principle                                                                                                                         |  |                                         |       |   |      |   |        |  |   |        |   |  |         | 0.02   |   |  |   |        |  
|                                                                                                                                                                            |  |                                         |        |   |      |   |         |  |   |         |   |  |         |        |   |  |   |         |  
|Basic and diluted net income (loss) per Ordinary share outstanding                                                                                                          |  | $                                       | (0.09  | ) |      | $ | 0.03    |  | $ | (0.01   | ) |  | $       | (0.08  | ) |  | $ | (0.21   | )
|                                                                                                                                                                            |  |                                         |        |   |      |   |         |  |   |         |   |  |         |        |   |  |   |         |  

---

|(1) |  | Fiscal years 1999 to 2001 have been reclassified to account for the discontinued operations in 2002.
|--- |  | ----------------------------------------------------------------------------------------------------

See Note 14 to the consolidated financial statements.



|                                 |  |                    |       |      |   |        |  |      |       |      |   |       |  |   |      
|-------------------------------- |  | ------------------ | ----- | ---- | - | ------ |  | ---- | ----- | ---- | - | ----- |  | - | -----
|                                 |  | As of December 31,
|                                 |  | 2003               |       | 2002 |   | 2001   |  | 2000 |       | 1999
|                                 |  | ($ in thousands)  
|CONSOLIDATED BALANCE SHEET DATA: |  |                    |       |      |   |        |  |      |       |      |   |       |  |   |      
|Total assets                     |  | $                  | 4,627 |      | $ | 10,114 |  | $    | 8,809 |      | $ | 8,005 |  | $ | 9,647
|                                 |  |                    |       |      |   |        |  |      |       |      |   |       |  |   |      
|Long Term Liabilities            |  | $                  | 4,111 |      | $ | 7,990  |  | $    | 8,028 |      | $ | 8,828 |  | $ | 5,063
|                                 |  |                    |       |      |   |        |  |      |       |      |   |       |  |   |      



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ITEM 7MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



General



Senetek is a life sciences-driven product development and licensing company focused on the high growth market for dermatological and skincare products primarily addressing photoaging and age-related skin conditions.
Seneteks patented compound Kinetin, from which we generate substantially all of our revenue, is a naturally occurring cytokinin that has proven effective in treating the appearance of aging skin. Senetek has licensed Kinetin to leading global
and regional dermatological and skin care marketers including Valeant, The Body Shop and Revlon. Senetek works with leading researchers at the University of Aarhus, Denmark and also is collaborating with the Institute of Experimental Botany, Prague,
and with Beiersdorf AG, Hamburg, to identify and evaluate additional new biologically active compounds for the dermatological and skin care field. Senetek relies on the collaborations with it licensees and with research organizations to generate
substantially all of the Companys sales and to perform research and development. The Company considers this business its Skincare Segment and the Company intends to emphasize the operations of this business in 2004.



The Company also has developed and patented an intracavernous injection
therapy for the treatment of erectile dysfunction, including a compact, disposable, fully automatic, pre-filled injection system. The Company considers this particular business part of its Pharmaceutical Segment. The Company is actively seeking
business partners to assist with the financial and technical requirement of its sexual dysfunction and drug delivery business. In 2004, the Company expects to scale back the allocation of resources associated with these operations.



The financial statements set forth in Part IV of this Report have been
prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and are presented in U.S. dollars.



Material Changes in Financial Condition



During the year ended December 31, 2003, our liquid position, represented by cash and cash equivalents, decreased by $2,385,000 to $1,187,000. This
decrease is due primarily to the repayment of $2.5 million of notes payable in September 2003, extraordinary legal expense related to OMP litigation settled in March 2004, and the development of the Companys proprietary Kinetin Plus skincare
line and related infomercial, offset in part by the $3 million prepayment of royalties and product purchase price by Valeant. As a result of our loss for the year of $4,994,000 and the extraordinary cash outlays, our current ratio at December 31,
2003 was .74 compared to 3.18 at December 31, 2002.



Significant Trends



|                            |  |                  |        |    |      |   |       |      |  |   |       |  
|--------------------------- |  | ---------------- | ------ | -- | ---- | - | ----- | ---- |  | - | ----- | -
|                            |  | 2003             |        |    | 2002 |   |       | 2001 | 
|                            |  | ($ in thousands) |       
|Revenues                    |  | $                | 8,226  |    |      | $ | 9,409 |      |  | $ | 8,453 |  
|% Change                    |  |                  | (12.6  | )% |      |   | 11.3  | %    |  |   | 139.1 | %
|Operating Income (loss)     |  | $                | (3,487 | )  |      | $ | 2,281 |      |  | $ | 1,633 |  
|Net Income (Loss)           |  | $                | (4,994 | )  |      | $ | 1,541 |      |  | $ | 385   |  
|Current ratio               |  |                  | .74    |    |      |   | 3.18  |      |  |   | 1.94  |  
|Increase (Decrease) in Cash |  | $                | (2,385 | )  |      | $ | 1,758 |      |  | $ | 986   |  
|Principal payments on debt  |  | $                | 2,530  |    |      | $ | 20    |      |  | $ | 526   |  



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##### Table of Contents

RESULTS OF OPERATIONS



Our operations are carried out in the areas of pharmaceuticals development and drug delivery systems development (the
Pharmaceuticals Segment) and the supply of proprietary skincare products (the Skincare Segment) to licensees.



|                                                    |  |                         |        |   |      |   |        |      |  |   |        |  
|--------------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                    |  | Year Ended December 31, |       
|                                                    |  | 2003                    |        |   | 2002 |   |        | 2001 | 
|                                                    |  | ($ in thousands)        |       
|Operating Income (Loss) from Continuing Operations: |  |                         |        |   |      |   |        |      |  |   |        |  
|Pharmaceutical Segment:                             |  |                         |        |   |      |   |        |      |  |   |        |  
|Revenues                                            |  |                         |        |   |      |   |        |      |  |   |        |  
|Product sales                                       |  | $                       | 27     |   |      | $ | 27     |      |  | $ | 25     |  
|Royalties                                           |  |                         | 926    |   |      |   | 1,034  |      |  |   | 1,338  |  
|                                                    |  |                         |        |   |      |   |        |      |  |   |        |  
|Total Revenues                                      |  |                         | 953    |   |      |   | 1,061  |      |  |   | 1,363  |  
|Cost of sales                                       |  |                         | 274    |   |      |   | 295    |      |  |   | 379    |  
|                                                    |  |                         |        |   |      |   |        |      |  |   |        |  
|Gross profit                                        |  |                         | 679    |   |      |   | 766    |      |  |   | 984    |  
|Operating expenses                                  |  |                         |        |   |      |   |        |      |  |   |        |  
|Research & Development                              |  |                         | 958    |   |      |   | 1,161  |      |  |   | 303    |  
|Administration, Sales and Marketing                 |  |                         | 2,949  |   |      |   | 2,402  |      |  |   | 2,503  |  
|Impairment Charge                                   |  |                         | 2,451  |   |      |   |       |      |  |   |       |  
|                                                    |  |                         |        |   |      |   |        |      |  |   |        |  
|Total Operating Expenses                            |  |                         | 6,358  |   |      |   | 3,563  |      |  |   | 2,806  |  
|                                                    |  |                         |        |   |      |   |        |      |  |   |        |  
|Loss from operations                                |  | $                       | (5,679 | ) |      | $ | (2,797 | )    |  | $ | (1,822 | )
|                                                    |  |                         |        |   |      |   |        |      |  |   |        |  
|Skincare Segment:                                   |  |                         |        |   |      |   |        |      |  |   |        |  
|Revenues                                            |  |                         |        |   |      |   |        |      |  |   |        |  
|Product sales                                       |  | $                       | 3,959  |   |      | $ | 2,157  |      |  | $ | 4,191  |  
|Royalties & License fees                            |  |                         | 3,314  |   |      |   | 6.191  |      |  |   | 2,899  |  
|                                                    |  |                         |        |   |      |   |        |      |  |   |        |  
|Total Revenues                                      |  |                         | 7,273  |   |      |   | 8,348  |      |  |   | 7,090  |  
|Cost of sales                                       |  |                         | 1,127  |   |      |   | 697    |      |  |   | 1,091  |  
|                                                    |  |                         |        |   |      |   |        |      |  |   |        |  
|Gross Profit                                        |  |                         | 6,146  |   |      |   | 7,651  |      |  |   | 5,999  |  
|Operating expenses                                  |  |                         |        |   |      |   |        |      |  |   |        |  
|Research & Development                              |  |                         | 602    |   |      |   | 171    |      |  |   | 41     |  
|Administration, Sales and Marketing                 |  |                         | 3,352  |   |      |   | 2,402  |      |  |   | 2,503  |  
|                                                    |  |                         |        |   |      |   |        |      |  |   |        |  
|Total Operating Expenses                            |  |                         | 3,954  |   |      |   | 2,573  |      |  |   | 2,544  |  
|                                                    |  |                         |        |   |      |   |        |      |  |   |        |  
|Income from operations                              |  |                         | 2,192  |   |      |   | 5,078  |      |  |   | 3,455  |  
|                                                    |  |                         |        |   |      |   |        |      |  |   |        |  
|Operating (loss) Income                             |  | $                       | (3,487 | ) |      | $ | 2,281  |      |  | $ | 1,633  |  
|                                                    |  |                         |        |   |      |   |        |      |  |   |        |  



|                                                                       |  |                  |        |   |      |   |        |      |  |   |        |  
|---------------------------------------------------------------------- |  | ---------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                       |  | 2003             |        |   | 2002 |   |        | 2001 | 
|                                                                       |  | ($ in thousands) |       
|Overall income (loss) from continuing operations before Taxation:      |  |                  |        |   |      |   |        |      |  |   |        |  
|Pharmaceutical Segment:                                                |  |                  |        |   |      |   |        |      |  |   |        |  
|Loss from operations                                                   |  | $                | (5,679 | ) |      | $ | (2,797 | )    |  | $ | (1,822 | )
|Interest income                                                        |  |                  |       |   |      |   |       |      |  |   | 30     |  
|Interest (expense) including amortization of Debt discount             |  |                  | (1,584 | ) |      |   | (1,442 | )    |  |   | (1,558 | )
|Other expense, net                                                     |  |                  |        |   |      |   | (17    | )    |  |   | (62    | )
|                                                                       |  |                  |        |   |      |   |        |      |  |   |        |  
|Loss before tax                                                        |  | $                | (7,263 | ) |      | $ | (4,256 | )    |  | $ | (3,412 | )
|                                                                       |  |                  |        |   |      |   |        |      |  |   |        |  
|Skincare Segment:                                                      |  |                  |       |   |      |   |        |      |  |   |        |  
|Income from operations                                                 |  |                  | 2,192  |   |      |   | 5,078  |      |  |   | 3,455  |  
|Interest income (expense), net                                         |  |                  | 3      |   |      |   | 38     |      |  |   | (56    | )
|                                                                       |  |                  |        |   |      |   |        |      |  |   |        |  
|Income (loss) before tax                                               |  | $                | 2,195  |   |      | $ | 5,116  |      |  | $ | 3,399  |  
|                                                                       |  |                  |        |   |      |   |        |      |  |   |        |  
|Total overall income (loss) from continuing operations before taxation |  | $                | (5,068 | ) |      | $ | 860    |      |  | $ | (13    | )
|                                                                       |  |                  |        |   |      |   |        |      |  |   |        |  



The allocation of
Administration, Sales and Marketing Expenses have been historically allocated equally to each Segment. For fiscal 2003, approximately $400,000 of marketing related costs, including the development of an infomercial, have been allocated to the
skincare segment, all other administration, sales and marketing expenses have been allocated equally between the segments.



30



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##### Table of Contents

Revenues (Continuing Operations)



Substantially all of the Companys entire current revenue base is derived from license fees and royalties on its
patented Kinetin skin care ingredient and revenues on licensees sales of such licensed products. In addition, part of current revenues reflects the retained portion of royalties received from Signet on sales of cell lines for production of
monoclonal antibodies that are not remitted to the RFMH under the terms of the Companys license agreement with it. If the Companys patents on Kinetin were successfully challenged and the Companys Kinetin licensees sought to
terminate their licenses, the Companys revenue stream would be substantially curtailed, and if the RFMHs patents were successfully challenged or the RFMH failed to renew its license with the Company in 2004 for the cell lines covered by
the original license, the Companys sublicense with Signet would yield substantially reduced revenues. Additionally, the Companys present revenue stream is tied to its licensees sales of licensed product and accordingly is
relatively fixed by supply of product to meet consumer demand. Should the Company be faced with significant cash requirements in connection with gaining regulatory approvals of its products currently in development or in connection with protecting
its patents or defending against patent infringement litigation, the Companys capital resources might be inadequate to fund its capital needs, as described below.



Our revenues of $8,226,000 for the year ended December 31, 2003 were comprised of $28,000 from the sale of named patient ED
products, $925,000 of royalties earned from Signets sales of monoclonal antibodies, $3,314,000 from royalties payable on third party sales of skin care products and $3,959,000 from the direct sale of skincare products.



Our revenues of $9,409,000 for the year ended December 31, 2002 were
comprised of $27,000 from the sale of named patient ED products, $1,034,000 of royalties earned from Signets sales of monoclonal antibodies, $6,191,000 from royalties payable on third party sales of skin care products and $2,157,000 from the
direct sale of skincare products.



Our revenues of $8,453,000
for the year ended December 31, 2001 were comprised of $25,000 from the sale of named patient ED products, $1,338,000 of royalties earned from Signets sales of monoclonal antibodies, $2,899,000 from royalties payable on third party sales of
skin care products and $4,191,000 from the direct sale of skincare products.



The overall revenue decrease of 12.6% for the year ended December 31, 2003 compared to the year ended December 31, 2002 was represented by a decrease in skincare revenues of 12.9% and a decrease in pharmaceutical
sales, comprising named patient sales and monoclonal antibodies revenues of 10.2%.



The 12.9% decrease in sales of and royalties on skincare products during the twelve months ended December 31, 2003 compared to the twelve months ended December 31, 2002 was due to a number of factors including to the
loss of OMP, Inc. as a licensee. OMP had provided approximately $1 million in 2002 royalties primarily the result of unamortized license fees being recognized as revenue when the contract terminated. There was no revenue from the Japanese market
during the twelve months ended December 31, 2003 because of activities that are subject to our recently settled lawsuit against OMP. The decrease in sales and royalties during 2003 compared to 2002 was also due to decreased royalties from Revlon.
The decrease in Revlon royalty income of approximately $1,800,000 is primarily due to a lower average royalty rate resulting from Revlons reformulation of certain of its skin care products in 2003 to include its own patented active ingredient,
which reduced our royalty rate but did not produce additional unit volume. Revlon also had lower unit sales partially as a result of a significant product launch by Revlon in the second quarter of 2002 that was nonrecurring in 2003. The above
mentioned reduction in revenues was partially offset by the increased product sales and royalty income from Valeant of approximately $1.6 million and increased royalty income from The Body Shop, both domestic and international, of approximately
$300,000.



The 10.2% decrease in sales of and royalties on
pharmaceutical products was due primarily to the maturing nature of the monoclonal antibodies product line and the timing of orders received. The sales of monoclonal antibodies follow sales patterns determined by project driven research
organizations and are subject to fluctuations.



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The overall revenue increase of 11.3% for the year ended December 31, 2002 compared to the year ended
December 31, 2001 was represented by an increase in skincare revenues of 17.7% and a decrease in pharmaceutical sales, comprising named patient sales and monoclonal antibodies revenues, of 22.2%.



The 17.7% increase in overall skincare revenues was due mainly to increased
royalty income from licensees of $3.3 million, particularly from Revlon and The Body Shop. Also, included in the revenue increase was $872,000, recognized in the second quarter, of a remaining unamortized deferred license fee as a result of the
termination and settlement of our licensing agreement with OMP, Inc. on May 31, 2002. Overall revenue from OMP, Inc. increased approximately $700,000 from 2001 to 2002. Also included in royalty income was $211,000 resulting from a royalty audit of
one our licensees. However, these royalty income increases were partly offset by reduced product sales to ICN Pharmaceuticals of approximately $2.0 million.



The 22.2% decrease in pharmaceutical revenues, $1,061,000 in year 2002 vs. $1,363,000 in year 2001 was due to a decrease in sales volume. The sales of
monoclonal antibodies follow sales patterns determined by project driven research organizations and are subject to fluctuation.



Cost of Sales



Cost of sales for the year ended December 31, 2003, which includes contract manufacturing, material costs and royalty expense, was $1,401,000, up 41.2%
from the year ended December 31, 2002. Cost of sales as a percentage of sales was 17.0% for the year ended December 31, 2003 compared to 10.5% for the year ended December 31, 2002 and 17.4% for the year ended December 31, 2001. The cost of sales
expressed as a percentage of net revenues increased in 2003 compared to 2002 due to a higher percentage of revenue being from direct product sales of skin care products versus royalty income from skin care products. We earn a lower gross margin on
product sales versus royalty income. The increase in product cost of sales was directly related to increase in product sales to Valeant.



Cost of sales for the year ended December 31, 2002, which includes contract manufacturing, material costs and royalty expense, was $992,000, down 32.5%
from the year ended December 31, 2001, despite an 11.3% increase in revenues. Cost of sales as a percentage of sales was 10.5% for the year ended December 31, 2002 compared to 17.4% for the year ended December 31, 2001.



In the Pharmaceutical Segment, cost of sales for the year ended December 31,
2003 was $274,000, a decrease of 7.1% from $295,000 for the year ended December 31, 2002. This reduction was due to a 10.2% reduction in pharmaceutical sales. For the year ended December 31, 2002, the cost of sales was $295,000, a decrease of 22.2%
from $379,000 for the year ended December 31, 2001. This decrease was due primarily to the 22.7% reduction in royalty income during 2002 compared to 2001.



In the Skincare Segment, cost of sales for the year ended December 31, 2003 was $1,127,000, an increase of 61.7% from $697,000 for the year ended December
31, 2002. This increase was caused by an 83.5% increase in product sales. Cost of sales for the year ended December 31, 2002 of $697,000, a decrease of 36.1% compared to $1,091,000 is attributable to a higher percentage of revenue being royalty
based versus product sales.



Research and Development



Pharmaceutical Segment



Research and development expenses in the year ended December 31, 2003 were
$959,000, compared with $1,161,000 and $303,000 in 2002 and 2001, respectively.



The decrease of $202,000 in 2003 compared with 2002 was primarily due to lower consulting fees related to regulatory filing requirements associated with Invicorp. Included in Research and Development for 2003 is a
$141,000 inventory reserve related to write-off of specialized inventory components for drug delivery equipment.



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We expect future research and development spending for our sexual dysfunction products to decrease
substantially as we are attempting to develop strategic relationships with companies that can assume the cost of obtaining the necessary regulatory approvals and market the product in Europe and begin the regulatory process in the United States.



The increase of $858,000 in 2002 compared to 2001 was due to
higher levels of spending, mainly in the areas of expert consulting and process validation for the development of Invicorp as we proceeded with the MRP and finalized arrangements for the manufacture and supply of product. Increased efforts related
to the Companys efforts to gain approval and complete its drug delivery devices, Reliaject and Adrenaject, also resulted in increased development expenditures. We also engaged the services of a senior scientific consultant during the third
quarter of 2002.



We are continuing with minimal development of
our drug delivery device, Reliaject, while we attempt to sell the equipment. The majority of our focus is pursuing strategic relationships with companies that can provide the requisite financial and technical support. The Company does not anticipate
spending any significant research dollars on this product during 2004.



Overall we anticipate our research and development expenditures related to pharmaceutical products will be significantly lower in 2004 compared to those incurred in 2003.



Skincare Segment



Research and development expenses in the year ended December 31, 2003 were $602,000 compared with $171,000 and $41,000 in 2002 and 2001, respectively.



The increase of $431,000 in 2003 compared with 2002 is mainly
due to increased expenditures relating to the testing, evaluation and review of the new skin care compounds included in our proprietary Kinetin Plus line.



The $130,000 increased expenditures in 2002 compared to 2001 was primarily due to the increased funding provided to our research partners for the
development and testing of potential new skincare products.



We
anticipate that our research and development expenditures related to skincare products will increase in 2004 as we work towards developing Zeatin and other patented cytokinins, including building out the leased laboratory space in Denmark. The
estimated cost to buildout and equip the facility is $250,000 to $300,000. We will continue to seek to use strategic commercial partners in order to limit these expenditures.



Administration, Sales and Marketing



With the exception of $403,000 of sales and marketing expenses incurred in 2003 related to the business development of our own skincare product line,
Kinetin Plus, the Administration, Sales and Marketing expenses are allocated equally to each business segment.



Pharmaceutical Segment



Administration, Sales and Marketing expenses totaled $2,948,000 for 2003, compared with $2,402,000 for 2002 and $2,503,000 for 2001, respectively. The
$546,000 increase between 2002 and 2003 is primarily due to increased legal fees associated with litigation matters that were ongoing during 2003.



The decrease of $101,000 in 2002 compared to 2001 was mainly due to more efficient spending programs and the elimination of non-essential administration
activities.



The Company expects Administration, Sales and
Marketing expenses to decline in 2004 from the 2003 level as a result of anticipated reductions in legal fees and to a lesser extent decreased salary and benefits related a reduction in personnel that occurred in early 2004.



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Skincare Segment



Administration, Sales and Marketing expenses totaled $3,352,000 for 2003, compared with $2,402,000 for 2002 and $2,503,000
for 2001, respectively. The $950,000 increase between 2002 and 2003 is primarily due to increased legal fees associated with litigation matters that were ongoing during 2003 and approximately $400,000 spent related to our proprietary product line
Kinetin Plus, including the creation, test marketing and production of an infomercial, website and order fulfillment network in 2003.



The decrease of $101,000 in 2002 compared to 2001 was mainly due to more efficient spending programs and the elimination of non-essential administration
activities.



The Company expects Administration, Sales and
Marketing expenses to decline in 2004 from the 2003 level as a result of anticipated reductions in legal expenses, significantly lower costs related to Kinetin Plus and to a lesser extent decreased salary and benefits related a reduction in
personnel that occurred in early 2004.



Impairment Charge



During the 4thquarter of 2003, the Company determined in accordance with SFAS No. 144 Accounting for the Impairment of Long Lived Assets, that the specialized
drug delivery equipment known as Reliaject was impaired because the carrying value of the equipment was greater than the estimated Fair value of $250,000. In making this decision, the Company considered the history of the Reliaject, current
alternatives for the equipment, status of ongoing negotiations with possible acquirers, internal expertise for the specialized equipment, and the financial condition of the Company. As a result, a non-cash impairment charge of $2,451,000 was
recorded against the pharmaceutical segment. The asset is now separately classified on the balance sheet as Asset Held for Sale. The fair value of the asset was written down to a minimum value that would be expected to be received
excluding any future payments that the Company might receive and are not contingent upon future product sales, regulatory approval and other operational issues that the purchaser will likely need to resolve. The Company expects to consummate a
transaction for the Reliaject in fiscal 2004 but is expected to have some ongoing involvement with the equipment, including the receipt of possible future royalties depending on the ultimate success of installing and utilizing the equipment.



Other Income and Expense



April 1999 Refinancing



In April 1999, the Company received $4,751,000 (net of $249,000 in expenses)
in cash and refinanced the balance owed of $2,389,000 under a 1998 Credit Agreement with Windsor Capital, in exchange for new notes with Silver Creek Investments Limited, Dandelion Investments Limited, Bomoseen Investments Limited and Elstree
Holdings Limited, bearing interest at 8% per annum and originally maturing in April 2002. The notes require semi-annual payment of interest only until maturity and are secured by all of the Companys assets. Interest may be paid in cash or in
Ordinary shares of the Company.



In connection with the April
1999 re-financing and settlement agreement, the Company issued Series A, B and C warrants to purchase an aggregate of 3 million Ordinary shares at $1.20 per share, 3.3 million Ordinary shares at $1.50 per share and 1.2 million Ordinary shares at
$2.00 per share, respectively. The Series B and Series C warrants expire 10 years from the date of issuance.



June 2001 Refinancing



On June 20, 2001, the Company and its lenders amended their borrowing arrangement, whereby, the maturity of these notes was extended until April 2004. A
transaction fee amounting to 5% of the principal amount outstanding on these notes paid to Scorpion Holdings in Ordinary shares worth $369,000 and legal costs of $113,000 were incurred to effect this transaction. In connection with this amendment,
the terms of the warrants were also amended. The expiration date of the Series A warrants was extended to ten years from the



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date of issuance and the exercise price per share was adjusted to $1.00. The exercise price per share of the Series B and Series C warrants were adjusted to
$1.25 and $1.00 respectively.



As the outstanding borrowings
under the 1999 Securities Purchase Agreement were refinanced by modification of the notes with substantially different terms, the Company was required to recognize the excess of the sum of the fair value of the modified notes and the fair value
assigned to the warrant modification as compared to the carrying value of the previous notes net of unamortized issuance costs, as a loss on the extinguishment of debt. As the difference was insignificant, no loss on extinguishment was recorded in
2001.



September 2003 Refinancing



In September 2003, the Company and its lenders completed the refinancing of
its $7.4 million of Senior Secured Notes that were originally due in April 2004. Under the terms of the new agreement, Senetek made a principal payment of $2.5 million and the remaining outstanding balance of approximately $4.9 million was extended
and will bear interest at 8.5% until March 31, 2004 and subsequently increase to 9.75% until maturity in April 2007.



Annual principal payments equal to one-third of free cash flow, subject to minimum annual payments of $500,000, $750,000, and $750,000, respectively, will
be required for each of the years ended December 31, 2003, 2004 and 2005. These principal payments will be due on April 1 following the completion of these fiscal years. Although not yet finalized, the Company is in discussion to extend the $500,000
payment due April 1, 2004 until the end of 2004. In connection with the refinancing, the Company issued Series D Warrants to purchase 4.5 million shares at $0.40 per share for a 7.5 year period, and cancelled the outstanding Series C Warrants which
covered 1.2 million shares. The Series D Warrants allow for a reduction in the exercise price if the Company sells stock or grants options below $0.40 per share. No provisions of the previously issued and outstanding Series A and Series B Warrants
covering 6.3 million shares were modified.



As the outstanding
borrowings under the June 2001 Amended Securities Purchase Agreement were refinanced by modifications of the notes with substantially similar terms, the Company is required to account for the transaction as a modification and not a debt
extinguishment. As such, the fair value of the 4.5 million warrants issued with an exercise price of $0.40 per share is treated as additional notes payable discount and amortized until April 2007. The fair value of these warrants calculated using
the Black Scholes Model was estimated at $1,447,000 and has been added to the notes payable discount and is being amortized as additional interest expense until maturity of the note in April 2007. The fair value of the 600,000 warrants, issued to
financial advisors in the transaction with an exercise price of $0.40 to $0.62 per. share, was calculated at $193,000 using the Black Scholes Model and is treated as additional interest expense. Additional interest expense totaling $277,000 was
incurred and expensed related to this refinancing transaction in 2003.



The amortization of the discount on the notes, which is included in interest expense, amounted to $770,000 for the year ended December 31, 2003, compared to $864,000 and $1,095,000 for the years ended December 31, 2002 and 2001
respectively.



Also, included in interest expense for the year
ended December 31, 2003 is $814,000 of interest expense primarily related to the notes payable of $7,389,000, of which $277,000 relates to the debt modification in September 2003. Interest expense, excluding amortization of the notes payable
discount, was $578,000 and $519,000 for the years ended December 31, 2002 and 2001.



Taxation



Refer to Note 13 to the Financial
Statements for discussion of our net operating loss carry-forwards.



Liquidity and Capital Resources



As of
December 31, 2003 the Company had cash and equivalents of $1,187,000, a decrease of $2,385,000 since December 31, 2002. This decrease is due primarily to the repayment of $2.5 million of notes payable in



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September 2003, extraordinary legal expense related to OMP litigation settled in March 2004, and the development of the Companys proprietary Kinetin
Plus skincare line and related infomercial, offset in part by the $3 million prepayment of royalties and product sales by Valeant.



Although the Company incurred a large loss for the year, cash flow from continuing operations generated $231,000 primarily related to the receipt of $3
million prepaid product and royalty fees from Valeant. The Company will be impacted by this prepayment during 2004 as it will not receive any additional royalty payments from Valeant until such time that the $3 million has been earned. As of
December 31, 2003, approximately $800,000 of this deferred revenue balance remains. As a result of our loss for the year of $4,994,000 and the extraordinary cash outlays detailed above, our current ratio at December 31, 2003 was .74 compared to 3.18
at December 31, 2002.



Cash and cash equivalents increased by
$1,758,000 during 2002 to $3,572,000. This increase is due to increased revenues and an increase in the percentage of revenues represented by high margin royalty receipts. In addition, we increased our current ratio to 3.18 at December 31, 2002, a
substantial improvement from 1.94 as of December 31, 2001.



During fiscal 2004, the Company may have periods where additional working capital will be required. The level of our research and development expenditures in 2004 will be dictated by the availability of working capital. Many of our planned
expenditures, including the buildout and equipping of research space in Denmark that may cost up to $300,000, can be quickly scaled back if funds are not available. As a result of the Company receiving the majority of its revenue only on quarterly
basis, the Company might have periods of time when additional cash could be required. Any potential cash shortfall is expected to subside by not later than the third quarter as the $3 million prepayment of royalties by Valeant is expected to be
fully applied and unit sales by Valeant are expected to accelerate. The March 2004 settlement of the OMP lawsuit for which the Company will receive $1.5 million during April 2004 and another $500,000 in royalties payments over the next 12-18 months,
will positively impact our cash flow and working capital position. Presently the company is evaluating a number of different alternatives to raise additional cash, including debt financing, equity financing and possible modification of agreements
with licensees.



In April 1999, we issued $7,389,000 in
aggregate principal amount of secured promissory notes. The notes currently bear interest at a rate of 8.0% per year, payable semi-annually, and were originally due and payable in full in April 2002. On June 20, 2001 under an amendment to the
Securities Purchase Agreement the maturity of these notes was extended to April 2004. A transaction fee amounting to 5% of the principal amount outstanding was paid to Scorpion Holdings in Ordinary shares with respect to this transaction. The notes
require semi annual payment of interest only until maturity and are secured by our assets. Interest may be paid in cash or in Ordinary shares of Senetek. During 2003, the Company amended the notes by paying down $2,500,000, extending the maturity
date to 2007 and increasing the interest rate to 9.75% beginning in April 2004.



Because substantially all of the Companys borrowings are from a single source which has substantial control over the Companys ability to incur additional secured debt or dispose of assets, substantially
all of which are pledged as security for the Companys borrowings, in the event that the Company is unable to fund through its operating cash flow or proceeds from the sale of equity securities, continued product development and governmental
marketing approvals of its pharmaceutical products or such unbudgeted expenses as the defense of its position in patent litigation, it would currently be dependent upon this source for additional funding, and if it were unable to arrange for funding
upon acceptable terms, the Companys business could be materially adversely affected.



Our other most significant expenditure commitments are our research agreements, consulting agreements, employment agreements and property leases, whose details are outlined in the footnotes to the consolidated
financial statements.



Based upon projected operating results
for the year and the Companys ability to manage discretionary expenditures, the Company presently believes it will have adequate cash in 2004 to fund operations and necessary capital expenditures.



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Contractual Obligations



The Company has contractual obligations only through 2007 to make future payments under its long-term note, non-cancelable lease agreements and
employment contracts. The following table sets forth these contractual obligations:



|                                              |  |      |       |      |   |       |      |  |   |       |     |       |   |       |  |   |      
|--------------------------------------------- |  | ---- | ----- | ---- | - | ----- | ---- |  | - | ----- | --- | ----- | - | ----- |  | - | -----
|                                              |  | 2004 |       | 2005 |   |       | 2006 |  |   | 2007  |     | Total
|Notes payableprincipal (8%-9.75% fixed rate) |  | $    | 500   |      | $ | 750   | (1)  |  | $ | 750   | (1) |       | $ | 2,889 |  | $ | 4,889
|Other long term debt                          |  |      | 30    |      |   | 30    |      |  |   | 8     |     |       |   |      |  |   | 68   
|Minimum rental commitments                    |  |      | 269   |      |   | 475   |      |  |   | 384   |     |       |   | 401   |  |   | 1,529
|Employment contracts                          |  |      | 945   |      |   | 590   |      |  |   | 319   |     |       |   |      |  |   | 1,854
|                                              |  |      |       |      |   |       |      |  |   |       |     |       |   |       |  |   |      
|                                              |  | $    | 1,744 |      | $ | 1,845 |      |  | $ | 1,461 |     |       | $ | 3,290 |  | $ | 8,340
|                                              |  |      |       |      |   |       |      |  |   |       |     |       |   |       |  |   |      

---

|(1) |  | Principal payments equal to the lesser of $750,000 or 1/3 the annual free cash flow defined by the note agreement. Thus required principal payments could be in excess of $750,000.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Government Policy



It is our opinion that there are no aspects of government policy which, as
far as can be foreseen, are likely to have a material effect on the conduct of our business, except as generally described in Part I, Item 1, of this Form 10-K under the heading Government Regulation.



Impact of Inflation



We believe that inflation has not had any material effect on the results of our operations to date.



Critical Accounting Policies



In December 2001, the Securities and Exchange Commission requested that all
registrants list their three to five most critical accounting policies in Managements Discussion and Analysis of Financial Condition and Results of Operations. The Securities and Exchange Commission indicated a critical
accounting policy is one which is both important to the portrayal of the companys financial condition and results and requires managements most difficult, subjective or complex judgments, often as a result of the need to make
estimates about the effect of matters that are inherently uncertain. Our significant accounting policies are described in the Notes to the consolidated financial statements included in this Form 10-K. We believe that the following accounting
policies fit the definition of critical accounting policies. The critical accounting policies were discussed with the audit committee.



Revenue Recognition



Revenue from the sale of the Companys skincare products and named patient sales of Invicorp is recognized at the time of shipment, which is when
legal title and risk of loss is transferred to the Companys customers, and is recorded at the net invoiced value of goods supplied to customers after deduction of sales and value added tax where applicable. Royalties received from our licensee
on their sale of monoclonal antibodies are recognized in accordance with the contract. Under the contract, royalties received on Level 1 sales which represents Seneteks original customer base, are at a higher rate than royalties received on
Level 2 sales. Royalty income from Level 1 and Level 2 sales is recognized by Senetek on the basis of the Level 1 and Level 2 sales reports received from our licensee. Fees received from the licensing of manufacturing and distribution rights for our
skincare products are deferred and recognized as revenue as earned, which is generally on a straight-line basis over the life of the contract. Royalties from the Companys skincare licensees are recognized based on estimates that approximate
the point products have been sold by the licensees. The Company receives sales reports from the licensee and based upon this information, plus subsequent cash receipts, records royalty revenue. Royalty revenue is generally paid by the Licensee
within 60 days of quarter end. Estimates are adjusted to reflect actual results within one quarter of product shipment. Historically, license revenue has not differed significantly from managements estimates.



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Impairment of Goodwill and Other Long-lived Assets



We assess the impairment of goodwill and other long-lived assets such as property and equipment whenever events or changes
in circumstances indicate that the carrying value may not recoverable. Factors we consider important which could trigger an impairment review include the following:



| |  |  | Significant underperformance relative to expected historical or projected future operating results;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | Significant changes in the manner of our use of the acquired assets or the strategy for our overall business;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | Significant negative industry or economic trends.
| | - |  | -------------------------------------------------



When we determine that the carrying value of goodwill and other long-lived assets and property and equipment may not be recoverable based upon the
existence of one or more of the above indicators of impairment, we measure any impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current
business model.



In August 2001, the Financial Accounting
Standards Board (FASB) issued SFAS No.144, Accounting for the Impairment or Disposal of Long-Lived Assets. This statement superseded SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
disposed of. The statement retains the previously existing accounting requirements related to the recognition and measurement of the impairment of long-lived assets to be held and used while expanding the measurement requirements of long-lived
assets to be disposed of by sale to include discontinued operations. It also expands the previous reporting requirements for discontinued operations to include a component of an entity that either has been disposed of or is classified as held for
sale. In accordance with these standards, we review the carrying value of the Companys property and equipment and intangible assets for impairment in value whenever events or changes in circumstances indicate that the carrying amount of assets
may not be recoverable. The determination of fair value is a critical and complex consideration when assessing impairment under SFAS No. 144 that involves significant assumptions and estimates. These assumptions and estimates were based on our best
judgments. The $2,451,000 Impairment Charge recorded in the 4thquarter of 2003 relating to the Reliaject equipment
involves many estimates because of the specialized nature of the equipment.



On January 1, 2002, Statements of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets became effective, and as a result, we ceased amortizing this goodwill. We
recorded approximately $133,332 of goodwill amortization during 2001 and would have recorded $133,332 in goodwill amortization during 2003 and 2002. In lieu of amortization, we were required to perform an initial impairment review of our goodwill in
2002 and an annual impairment review thereafter. Based upon the analysis performed, no goodwill impairment is currently required. However, there can be no assurance that a future impairment charge might not be required.



Income Taxes



As a result of our historical losses, we have significant deferred tax assets that could be utilized if we generate future
taxable income and are required to pay income taxes. However, pursuant to the change in ownership provisions of the Tax Reform Act of 1986, utilization of our net operating loss carryover may be limited if a cumulative change of
ownership of more than 50% occurs within any three-year period. We have not determined if such a change in ownership has occurred or the amount of the loss carryover limitation, if any. We believe that our current business model will ultimately lead
to sustained profitability and that the deferred tax asset will have value, but due to our lack of profitable historical operating history, potential limitations on usage of operating losses and general uncertainty, we provided for a 100% valuation
allowance against our entire deferred tax asset. Should our operating results and analysis of change in ownership provisions indicate that our profitability is more likely than not to lead to the utilization of all or a portion of the
deferred tax asset, we will reverse all or a portion of our valuation allowance. Subsequent changes to the estimated net realizable value of the deferred tax asset could cause our provision for income taxes to vary significantly from period to
period, although our cash tax payments would remain unaffected until the benefit of the NOL is utilized, assuming that a change in ownership does not limit those losses.



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Impact of Recently Issued Accounting Standards



See Note 2n to the Consolidated Financial Statements for a summary of recently issued accounting pronouncements.



ITEM 7AQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Our primary market risks include fluctuations in interest rates, variability in interest rate spread relationships (i.e., Prime to LIBOR spreads) and
exchange rate variability.



We believe that fluctuations in
interest rates and currency exchange rates in the near term would not materially affect our consolidated operating results, financial position or cash flows as we have limited risks related to interest rate and currency exchange rate fluctuations.



Foreign Currencies



We have operations in the United Kingdom, where the functional currency is
the pound sterling. We follow currency translation principles established by Statement of Financial Accounting Standards (SFAS) No. 52. All assets and liabilities in the balance sheets of the UK operation are translated at period-end
exchange rates. All income and expenditure items in the profit and loss account of the UK operation are translated at average monthly exchange rates. Translation gains and losses arising from the translation of the financial statements of the UK
operation are not included in determining net income but are accumulated in a separate component of stockholders equity. Foreign currency transaction gains and losses are included in the determination of net income in the period in which they
occur. We do not use any methods to hedge the effect of changes in the pound sterling exchange rate.



ITEM 8FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



See Item 14(a)(1) and 14(a)(2) of Part IV of this Report on Form 10-K.



ITEM 9CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS



None



ITEM 9ACONTROLS AND PROCEDURES



Our chief executive officer and our principal financial officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31,
2003. Based on that evaluation, our chief executive officer and our principal financial officer have concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information that we are required to
disclose in reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified by the Exchange Act rules.



It should be noted that any system of controls, however well designed and operated, can provide only reasonable assurance regarding managements
control objectives. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any
design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.



During the quarter ended December 31, 2003, there were no changes to our internal controls over financial reporting which were identified in connection
with the evaluation of our disclosure controls and procedures required by the Exchange Act rules and which have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.



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PART III



ITEM 10DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT



We currently have seven Directors.



|                 |  |                                                                   |  |               |  |    
|---------------- |  | ----------------------------------------------------------------- |  | ------------- |  | ---
|Name             |  | Position with Company                                             |  | DirectorSince |  | Age
|Frank J. Massino |  | Chairman of the Board of Directors and Chief Executive Officer    |  | 1998          |  | 56 
|Uwe Thieme       |  | Director                                                          |  | 1998          |  | 62 
|Andreas Tobler   |  | Director and Chief Operating Officer and Managing DirectorEurope |  | 1998          |  | 53 
|Franklin Pass    |  | Director                                                          |  | 2002          |  | 66 
|George Fellows   |  | Director                                                          |  | 2003          |  | 60 
|Anthony Williams |  | Director                                                          |  | 2003          |  | 57 
|Kevin McCarthy   |  | Director                                                          |  | 2003          |  | 43 



Mr. Massino became
Chairman and Chief Executive Officer of Senetek PLC in November 1998. Prior to becoming Chairman and Chief Executive Officer of Senetek, Mr. Massino served as President of Carme Cosmeceutical Sciences, Inc., a wholly-owned subsidiary of Senetek.
Drawing on professional management experience at major corporations such as Glaxo, Ortho Pharmaceutical Corporation, Johnson & Johnson, Pfizer and IBM, Mr. Massino has reshaped the corporate structure of Senetek, defined its strategic direction
and focused us soundly on our core competencies. During his career, Mr. Massino has successfully negotiated more than 40 licensing agreements with major pharmaceutical companies. For nine years he held executive management positions at Ortho
Pharmaceutical, including Director of Business Development and New Products, and in 1982 was named Division Manager of the Year. While at Ortho, Mr. Massino was involved in the development of Renova, which in 1995, was also approved for
anti-aging applications under the Renova trademark, and directed major product launches. As Product Director of Marketing and Division Sales Manager at Glaxo Inc., he repositioned a mature line of corticosteroids into a $60 million psoriasis
business, successfully launched two new ethical pharmaceutical products and championed the internal development of two critically important product line extensions. Mr. Massino holds a degree in Finance and Chemistry from the University of Illinois
and is a graduate of the Marketing Management Program of the Columbia Executive Program at Columbia University and the Management of Managers Program of the Graduate School of Business Administration at the University of Michigan. Mr. Massino is
highly experienced in drug delivery technology and holds a patent on a drug delivery device. He is an active member of the Licensing Executives Society.



Dr. Uwe Thieme was appointed a director in April 1998. He qualified as a Doctor of Medicine at the University of Gottingen in 1968 and became a Board
Certified Radiologist in 1975. He currently practices as a senior partner in a private Radiology practice and is a Board Member of the German Radiology Association (GRA) and the German Radiology Science Association (GRSA). He
is a member of the management advisory committee for the GRSAs 8.1 billion Deutsche Mark pension fund. Until recently he has held the positions of Deputy Mayor of the City of Goslar and Deputy Governor of the County of Goslar, Germany. Since
November, 2001 Dr. Thieme has served as the President of the City Council of Goslar, Germany.



Andreas O. Tobler was appointed a director in November 1998 and as Seneteks Chief Operating Officer and Managing DirectorEurope on October 1, 2002. Previously, Mr. Tobler was Managing Director of
Technology Brain Source GmbH, a Swiss-based financial & technology advisory company which acted as a consultant to Senetek from January 2002 until October 2002. He is also Chairman of Online Capital Group, Inc., a US-Swiss based financial
services company and a Director at Online Capital Inc. From 2000 to January 2002, Mr. Tobler acted as CEO of Mediphore-Biotechnologie AG, an Austrian based biotechnology company. Mr. Tobler held senior positions at Sector Communications, Inc.
(19981999), Cornerstone Financial Corporation, New York (19961998), and Nextgen Communications Corp. (19911996). Mr. Toblers past



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experience also includes Managing Partner, Royal Trust Bank (Switzerland), Zurich (19881991); Vice President and Head of Corporate Finance Citibank,
Zurich (19871988); and Vice President and Head of Capital Markets, Credit Suisse, New York (19821987). Mr. Tobler has a law degree from the University of Zurich and a Masters degree from New York University.



Dr. Franklin Pass was appointed a director in February 2002. Since March 2001
he has been Vice Chairman of Antares Pharma, Inc., which develops and markets pharmaceutical delivery systems, and is Managing Director at Cherry Tree Securities, a Minnesota-based investment banking group which provided consulting services to the
Company from January 2002 to June 2002. Previously, Dr. Pass was Chairman and CEO of Antares Pharma, Inc., BioSeeds International, Ltd., and Molecular Genetics, Inc. (MGI Pharma, Inc.), which he co-founded. He served as CEO of Medi-ject Corp. from
1993 to 2001. He has served as Director of the American Academy of Dermatology, Director of Dermatology at the Albert Einstein College of Medicine, and Clinical Professor at the University of Minnesota, Department of Dermatology. He received his
medical degree from the University of Minnesota, School of Medicine.



Mr. George Fellows was appointed a director in June 2003. Since July 2003, Mr. Fellows has been an advisor to Investcorp, a New York City-based global investment group, providing general management advice with a focus on sales and
marketing. From December 1999 through June 2003, Mr. Fellows was engaged in management and marketing consulting. From February 1993 through December 1999, Mr. Fellows was, successively, President, Revlon U.S.A., Chief Operating Officer, and
President and Chief Executive Officer of Revlon, Inc., a global beauty products manufacturing and marketer. Mr. Fellows is a director of VF Corporation, a company listed on the New York Stock Exchange, and has been a director and member of the
Executive Committee of the National Association of Chain Drug Stores and of The Cosmetics, Toiletries and Fragrances Association. Mr. Fellows received a B.S. degree with honors from City College of The City of New York, an M.B.A. with honors from
Columbia Business School, and graduated from the Harvard Advanced Management Program.



Mr. Anthony Williams was appointed a director in February 2003. He is a Corporate Partner at Coudert Brothers LLP and specializes in mergers and acquisitions. During his 30 years at Coudert Brothers, Mr. Williams has
served as Chairman of the Executive Committee from 1993 to 2001 and as Administrative Partner, responsible for worldwide operations. He is a graduate of Harvard University and New York University School of Law. He has been admitted to the Bar at the
United States Supreme Court, the State of New York and State of California. Mr. Williams sits on the board of the following companies and organizations: RAG American Coal Holdings, Inc., DBT America Inc., Trautman Wasserman & Company Inc., IE
Holdings, Ltd., Brook Capital Corporation, Plymouth Holdings Limited, River Ventures, Inc., Fenn Wright & Manson and the German American Chamber of Commerce.



Mr. Kevin McCarthy was appointed a director in February 2003. He is President of Scorpion Holdings Inc., a company involved
in private equity investing, including sourcing, structuring, executing and monitoring portfolio investments. He has held the position since 1995. From 1993 until 1995, Mr. McCarthy served as Senior Vice President and Chief Financial Officer of
Rosecliff Inc., an investment company based in New York. Previously, Mr. McCarthy served 10 years with Ernst & Young, in Boston, San Jose and New York, becoming a partner in the Mergers and Acquisitions group in 1993. Mr. McCarthy sits on the
board of the following companies: San Francisco Toymakers, Inc., Walk About Computers Inc., Pac Pizza LLC and American Staffing LLC.



Board Compensation



Beginning in 2003, non-employee directors received a quarterly $2,500 cash stipend. Beginning in 2004, the Company has established a Deferred Compensation
Plan that allows the directors to receive their directors stipend in stock. The stock will not be issued until the end of the fiscal year or until the director departs from the Board. The number of shares of stock will be calculated quarterly
based upon the average trading price of the stock.



41



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New directors are typically given a stock option grant of 150,000 the time of joining the Board. There is
currently no separate stock option plan exclusively for non employee directors that provides for fixed annual grants to non-employee directors. During fiscal 2003, George Fellows, Anthony Williams and Kevin McCarthy were each granted an option for
150,000. Additionally, in December 2003, Anthony Williams was granted an option for 100,000 shares upon accepting the role of Vice Chairman of the Board of Directors.



We have retained certain Directors from time to time to provide consulting services in their areas of expertise. Prior to
his resignation from the Board of Directors and his commencement as an employee of the Company, effective April 1, 2003, Wade Nichols received $45,000 in consulting fees in 2003.



We maintain stock option plans for employees, including Directors, and non-executive Directors and our consultants, as
described under Stock Option Plans below.



Executive Officers



Frank J. Massino, Chairman
and Chief Executive Officer (see above).



Andreas Tobler, Chief
Operating Officer (see above).



Wade H. Nichols, age 61, has
served as Executive Vice President, Corporate Development, and General Counsel of the Company since April 2003, and prior to that was a Director of the Company from February 2002. Prior to that, Mr. Nichols was employed for 23 years by Revlon, Inc.,
a global beauty products manufacturer and marketer, retiring from that company as Executive Vice President and Chief Administrative Officer in 2001. Mr. Nichols is an attorney. He received a B.A. degree with honors from Yale College and an LL.B.
degree with honors from Columbia Law School.



Stewart Slade,
age 45, is Vice President for European Operations and Company Secretary. Mr. Slade has been with Senetek since 1997. From January 2000 to December 2002, he was the Companys Acting Principal Financial Officer. From July 1998 to January 2000,
Mr. Slade was the Companys Chief Financial Officer, and from April 1998 to June 1998, the Companys Chief Accountant. From October 1997 to May 1998, he served as a financial consultant to the Company. Mr. Slade holds a Bachelor of Science
degree in Chemistry from the University of Leeds and is a member of the Institute of Chartered Accounts in England and Wales.



Brad Holsworth, age 43, became Chief Financial Officer of Senetek on March 1, 2003. During January and February 2003 Mr. Holsworth provided consulting
services to the Company for which he was compensated $16,000. From 2000 to February 2003, Mr. Holsworth was Chief Financial Officer for WideOrbit Inc. and Prescient Capital LLC, affiliated companies in the media software licensing and money
management businesses. From 1999 to 2000, Mr. Holsworth served as Principal for Finance and Accounting of Bank of America Securities. From 1982 to 1999, Mr. Holsworth worked in public accounting, the last 4 years as a partner at BDO Seidman, LLP.
Mr. Holsworth served as a Director and Chairman of the audit committee for U.S. Home and Garden, a NASDAQ traded company, from 1999 until March 2004 when a merger was consummated. Mr. Holsworth is also a Director of WideOrbit, Inc. Mr.
Holsworth holds a B.S. in Accounting from the University of Santa Clara and is a member in good standing with the American Institute of Certified Public Accountants and the California Society of CPAs.



Financial Expert



The Board of Directors has determined that George Fellows, a member of the
Audit Committee, qualifies as an audit committee financial expert, and is independent, as defined in the applicable SEC rules.



Section 16(a) Beneficial Ownership Reporting Compliance



Under Section 16(a) of the United States Securities Exchange Act of 1934, Seneteks Directors, executive officers and any persons holding more
than 10% of our equity securities are required to report their ownership of



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equity securities and any changes in their ownership, on a timely basis, to the SEC. To our knowledge, based solely on materials provided and representation
made to us, for the fiscal year ended December 31, 2003, all reports required by Section 16(a) were filed on a timely basis.



Code of Ethics



The Company has adopted a code of ethics that applies to its chief executive officer and senior financial officers. A copy of this code of ethics can be
found on the Companys website at senetekplc.com. In the event of any amendment to, or waiver from, the code of ethics, the Company will publicly disclose the amendment or waiver by posting the information on its website.



ITEM 11EXECUTIVE COMPENSATION



Summary
Compensation Table



The following table sets forth certain
information concerning the compensation of the Executive Officers and their capacity at December 31, 2003.



|                                                                                                          |  |              |  |                     |                       |                       |   |          |                       |           |     |  |     |                    |          
|--------------------------------------------------------------------------------------------------------- |  | ------------ |  | ------------------- | --------------------- | --------------------- | - | -------- | --------------------- | --------- | --- |  | --- | ------------------ | ---------
|Name and Principal Position                                                                               |  | FiscalYear   |  | Annual Compensation |                       | Long-TermCompensation |   |          | All OtherCompensation |          
|                                                                                                          |  | Salary       |  | Bonus               |                       | Options(1)            |   |         
|Frank Massino Chairman and Chief Executive Officer                                                        |  | 200320022001 |  | $$$                 | 319,000290,000250,000 |                       | $ | 50,000 |                       | 900,000 |     |  | $$$ | 24,84765,24812,000 | (2)(4)(3)
|Stewart Slade Vice President European Operations Acting Principal Financial Officer and Company Secretary |  | 200320022001 |  | $$$                 | 122,580116,580116,580 |                       |   |       |                       | 50,000  |     |  | $$$ | 9,1338,2508,250    | (3)(3)(3)
|Andreas Tobler Chief Operating Officer And Managing DirectorEurope                                       |  | 200320022001 |  | $$                  | 198,00049,500        |                       |   |       |                       |        |     |  | $$  | 6,000141,000      | (6)(6)   
|Wade Nichols Executive Vice President, Corporate Development and General Counsel                          |  | 200320022001 |  | $                   | 173,459             |                       |   |       |                       | 150,000  |     |  | $$  | 50,400105,200     | (5)(5)   
|Brad Holsworth Chief Financial Officer                                                                    |  | 200320022001 |  | $                   | 150,455             |                       |   |       |                       | 25,000  | (7) |  | $   | 21,000           | (7)      

---

|(1) |  | Options entitle the grantee to purchase Ordinary Shares from Senetek. There is no public trading market for our Ordinary Shares, although there is a trading market in the United
States for Ordinary Shares represented by American Depositary Shares. Any subsequent conversion from Ordinary Shares into American Depositary Shares, evidenced by American Depositary Receipts, entails the grantee paying UK Inland Stamp Duty Reserve
Tax at 1.5% on the deemed market value or, in certain cases, on the exercise price, of the shares so converted, and a present fee of either $0.03 or $0.02 per Ordinary Share converted into an American Depositary Share, to The Bank of New York, the
US Depositary for such conversion.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Car allowance of $1,000 per month and car expense reimbursement.
|--- |  | ----------------------------------------------------------------

|(3) |  | Car allowance.
|--- |  | --------------

|(4) |  | Car allowance, car expense reimbursement and payment for accrued but unused vacation.
|--- |  | -------------------------------------------------------------------------------------

|(5) |  | Consulting fees of $45,000 in 2003 and $105,000 in 2002 prior to becoming an employee in April 2003. Car allowance of $600 per month commencing with employment.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) |  | Payment for consulting services for the period January 1, 2002 to September 30, 2002 plus $500 per month car allowance commenced October 2002.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------

|(7) |  | Consulting fees of $16,000 plus an option to purchase 25,000 shares of common stock prior to commencing employment in March 2003. Car allowance of $500 per month commencing with
employment.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Employment Contracts, Termination of Employment and Change of Control Provisions



We have entered into an employment contract with Mr. Massino. Mr. Massino
has a three year evergreen contract. The contract provides for a salary of $319,000 per annum (as approved by the Board on December 20, 2002), an automobile allowance of $1,000 per month and reimbursement of related automobile expense. The contract
provides for up to three years of additional compensation in the event of a change of control.



We have entered into an employment contract with Mr. Tobler. Mr. Tobler has an employment contract with an effective term from October 1, 2002 until October 1, 2005. The contract provides for a salary of $198,000 per
annum and an automobile allowance of $500 per month. The contract provides for certain guaranteed payments for up to three years in the event of a hostile change of control.



In March 2003, the Company entered into an employment contract with Brad Holsworth, Chief Financial Officer that runs from
March 2003 to April 2005. The contract provides an annual salary of $185,000 plus a $500 monthly automobile allowance. The contract provides for certain guaranteed payments for up to three years in the event of a hostile change of control.



In April 2003, the Company entered into an employment
agreement with Wade Nichols, its Executive Vice President, Corporate Development and General Counsel from April 2003 to March 2005. The contract provides an annual salary of $243,000 plus a $600 monthly automobile allowance. The contract provides
for certain guaranteed payments for up to three years in the event of hostile change of control



Stock Option Plans



We
have two stock option plans pursuant to which options to purchase our Ordinary shares may be granted. The first plan relates to the grant of options to employees, including employee Directors, and officers of Senetek. The second plan relates to the
grant of options to non-executive (non-employee) Directors and consultants. In both cases, the exercise price of these options may not be less than the fair market value of American Depositary share representing one of our Ordinary shares on the
date of grant. Additionally, from time to time certain options have been issued outside the plans.



OPTION GRANTS IN LAST FISCAL YEAR



|     |  |                                                |  |                                                             |    |                       |     |                           |  |                                                                                                         |  | 
|---- |  | ---------------------------------------------- |  | ----------------------------------------------------------- | -- | --------------------- | --- | ------------------------- |  | ------------------------------------------------------------------------------------------------------- |  | 
|Name |  | Number of SecuritiesUnderlying Options Granted |  | Percentage ofTotal OptionsGranted toEmployees inFiscal Year |    | Exercise orBase Price |     | Option TermExpirationDate |  | Potential RealizableValue at AssumedAnnual Rates of StockPrice Appreciation forIndividual Grants
in2002
|     |  |                                                |  |                                                             | 5% |                       | 10%



No options were granted to executive
management employees during fiscal 2003.



Aggregated Option
Exercise During 2003 and Fiscal Year-End Option Values



|             |  |                           |             |                  |               |                                                                               |             |                                                                 |               |   |  |  
|------------ |  | ------------------------- | ----------- | ---------------- | ------------- | ----------------------------------------------------------------------------- | ----------- | --------------------------------------------------------------- | ------------- | - |  | -
|Name         |  | SharesAcquired onExercise |             | ValueRealized($) |               | Number of Securities Underlying Unexercised Options at Fiscal Year-Ended 2003 |             | Value of Unexercised In-the-Money Option atFiscal Year-End 2003
|             |  |                           | Exercisable |                  | Unexercisable |                                                                               | Exercisable |                                                                 | Unexercisable
|F. Massino   |  |                          |             |                 |               | 2,837,500                                                                     |             | 762,500                                                         |               |  |  | 
|S. Slade     |  |                          |             |                 |               | 185,000                                                                       |             | 65,000                                                          |               |  |  | 
|A. Tobler    |  |                          |             |                 |               | 845,000                                                                       |             |                                                                |               |  |  | 
|W. Nichols   |  |                          |             |                 |               | 150,000                                                                       |             |                                                                |               |  |  | 
|B. Holsworth |  |                          |             |                 |               | 25,000                                                                        |             |                                                                |               |  |  | 



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Compensation Committee Interlocks and Insider Participation



Mr. Williams, Mr. McCarthy and Mr. Fellows, who are members of our
Compensation Committee, are not current or former officers or employees of Senetek or any of its subsidiaries. No executive officer served as a director or member of the compensation committee of another entity, one of whose executive officers
served as our director or as a member of our compensation committee.



Security Ownership



ITEM 12SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



The following table sets forth certain information regarding the beneficial ownership of Seneteks outstanding Ordinary shares as of March 25, 2003
by each of Seneteks Directors, who is a stockholder; (ii) our Chief Executive Officer; (iii) our other executive officers currently in office; (iv) all executive officers and directors of Senetek as a group; and (v) each person believed by
Senetek to own beneficially more than 5% of our outstanding Ordinary shares. Except as indicated by the notes to the following table, the holders listed below have sole voting power and investment power over the shares beneficially held by them. The
address of each of our Directors and executive officers is that of Senetek.



|                                                             |  |                                     |        |  |                       |  
|------------------------------------------------------------ |  | ----------------------------------- | ------ |  | --------------------- | -
|Name of Beneficial Owner                                     |  | Number ofSharesBeneficiallyOwned(1) |        |  | Percentageof Class(1) |  
|Frank J. Massino                                             |  | 3,063,800                           | (2)    |  | 4.9                   | %
|Uwe Thieme                                                   |  | 280,200                             | (2)    |  | *                     |  
|Andreas Tobler                                               |  | 855,200                             | (2)    |  | 1.4                   |  
|Stewart Slade                                                |  | 189,000                             | (2)    |  | *                     |  
|Franklin Pass                                                |  | 150,000                             | (2)    |  | *                     |  
|George Fellows                                               |  |                                    |        |  |                       |  
|Wade Nichols                                                 |  | 180,000                             | (2)    |  | *                     |  
|Kevin McCarthy                                               |  | 200,600                             | (2)(3) |  | *                     |  
|Anthony Williams                                             |  | 150,000                             | (2)    |  | *                     |  
|Bradley D. Holsworth                                         |  | 26,000                              | (2)    |  | *                     |  
|All Directors and Executive Officers as a group (10 persons) |  | 5,094,800                           |        |  | 8.0                   | %

---

|* |  | Less than one percent
|- |  | ---------------------

|(1) |  | For purposes of this table, a person or a group of persons is deemed to have beneficial ownership as of a given date of any shares which that person has the right to
acquire within 60 days after that date. For purposes of computing the percentage of outstanding shares held by each person or group of persons named above on a given date, any shares which that person or persons has the right to acquire within 60
days after that date are deemed to be outstanding, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Includes the following number of shares issuable upon exercise of options or warrants that are currently exercisable or will become exercisable within 60 days of March 25, 2004: Mr.
Massino: 2,987,500; Dr. Thieme: 280,000; Mr. Tobler: 845,000; Mr. Slade: 185,000; Dr. Pass: 150,000; Mr. Holsworth: 25,000; and Mr. Nichols 150,000.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Includes 6,000 Ordinary shares held as custodian for a minor. Excludes 341,747 shares held by Scorpion Holdings, Inc., issued in respect of investment banking services rendered
during 2001, and warrants to purchase 11,333,333 Ordinary shares held by entities or individuals for which Scorpion Holdings acts as an investment advisor.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



ITEM 13CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



Beginning in 2003, non-employee directors received a quarterly $2,500 cash stipend. Beginning in 2004, the Company has established a Deferred Compensation Plan that allows the directors to receive their
directors stipend in stock. The stock will not be issued until the end of the fiscal year or until the director departs from the Board. The number of shares of stock will be calculated quarterly based upon the average trading price of the
stock.



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##### Table of Contents

New directors are typically given an option to purchase 150,000 shares upon joining the Board. There is
currently no separate stock option plan exclusively for non employee directors that provide for fixed annual grants to non-employee directors. During fiscal 2003, George Fellows, Anthony Williams and Kevin McCarthy were each granted an option to
purchase 150,000 shares. Additionally, in December 2003, Anthony Williams was granted an option to purchase 100,000 shares upon accepting the role of Vice Chairman of the Board of Directors.



We have retained certain Directors from time to time to provide consulting
services in their areas of expertise. Prior to his resignation from the Board of Directors and his commencement as an employee of the Company in effective April 1, 2003, Wade Nichols received $45,000 in consulting fees in 2003. Anthony Williams, a
director of the Company, is a partner of Coudert Brothers LLP, a law firm that renders legal services to the company.



During 2003, the Company entered into a month to month consulting agreement with Cherry Tree Development, LLC to act as an advisor related to
Companys licensing of its proprietary sexual dysfunction drug, Invicorp, and drug delivery system, Reliaject. Cherry Tree Development, LLC, an entity affiliated with board member Dr. Franklin Pass, was compensated a total of $36,000 for their
services during 2003.



The Company is required to pay the two
discoverers of Kinetin an equal royalty based on the Company revenues from Kinetin. One of the discoverers of Kinetin is Dr. Brian Clark, the Chief Scientist for the Company, Total royalty expense related to Kinetin Sales for 2003, 2002, and 2001
totaled $163,000, $116,000, and $81,000, respectively, of which Dr. Clark received 50%.



ITEM 14PRINCIPAL ACCOUNTANT FEES AND SERVICES



The Audit Committee of the Board of Directors appointed BDO Seidman, LLP as independent accountants to examine our consolidated financial statements for the year ending December 31, 2003 and to render other
professional services as required.



Aggregate fees billed by
our principal accountants, BDO Seidman, LLP and its United Kingdom member firm BDO Stoy Hayward for audit services related to the most recent two years, and for other professional services billed in the most recent two fiscal years, were as follows:



|                             |  |      |         |      |   |        
|---------------------------- |  | ---- | ------- | ---- | - | -------
|Type of Service              |  | 2003 |         | 2002
|Audit Fees (1)               |  | $    | 180,000 |      | $ | 224,000
|Other Audit-Related Fees (2) |  |      | 3,000   |      |   | 18,000 
|Tax Fees (3)                 |  |      | 51,000  |      |   | 186,000
|                             |  |      |         |      |   |        
|Total                        |  | $    | 224,000 |      | $ | 428,000
|                             |  |      |         |      |   |        

---

|(1) |  | Audit Fees:This category includes fees for the audit of our annual financial statements, review of the financial statements included in our quarterly reports on Form 10-Q
and services that are normally provided by the independent auditors in connection with statutory and regulatory filings or engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or
as a result of, the audit or the review of interim financial statements and statutory audits required by non-U.S. jurisdictions.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Other-Audit Related Services. Services for special royalty audits.
|--- |  | ------------------------------------------------------------------

|(3) |  | Tax Fees: This category consists of fees for professional services rendered by BDO Seidman and BDO Stoy Hayward for United States and United Kingdom tax compliance including
tax return preparation, technical tax advice and tax planning.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Audit Committee has established a policy governing our use of BDO Seidman LLP and BDO Stoy Hayward LLP (collectively BDO) for non-audit services. Under the policy, management may use BDO non-audit
services that are permitted under SEC rules and regulations, provided that management obtains the Audit Committees approval before such services are rendered. In fiscal 2003, all fees identified above under the captions Audit-Related
Fees and Tax Fees that were billed by BDO were approved by the Audit Committee.



The Audit Committee has determined the rendering of other professional services for audit related matters, tax compliance and tax advice by BDO is
compatible with maintaining BDOs independence.



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PART IV



ITEM 15EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K



(a)(1) The following consolidated financial statements are included in Item 8:



|                                                                                                               |  |            
|-------------------------------------------------------------------------------------------------------------- |  | -----------
|                                                                                                               |  | Page       
|Report of IndependentCertified Public Accountants                                                              |  | F-2        
|Consolidated Balance Sheet as of December 31, 2003 and 2002                                                    |  | F-3        
|Consolidated Statement of Operations for the Years Ended December 31, 2003, 2002 and 2001                      |  | F-4        
|Consolidated Statement of Stockholders (Deficit) Equity for the Years Ended December 31, 2003, 2002, and 2001 |  | F-5        
|Consolidated Statement of Cash Flows for the Years Ended December 31, 2003, 2002 and 2001                      |  | F-6        
|Notes to Consolidated Financial Statements                                                                     |  | F-7 to F-27



(a)(2) The following
financial statement schedules are submitted herewith:



Schedule II is included in Item 8.



(a)(3) The
following Exhibits are filed or incorporated by reference as part of this Report on Form 10-K:



|      |  |                                                                                                                                                                                                  
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1   |  | Certificate of Incorporation of Senetek PLC.                                                                                                                                                     
|      | 
|      |  | Filed as an Exhibit with corresponding Exhibit Number to Registrants Registration Statement on Form F-1, Registration No. 33-3535,
and incorporated herein by reference.                        
|      | 
|3.2   |  | Memorandum and Articles of Association of Senetek PLC (defining the rights of security holders, subject to the provisions of the United
Kingdom Companies Act 1985).                             
|      | 
|      |  | Filed as an Exhibit with corresponding Exhibit Number to Registrants Registration Statement on Form F-1, Registration No. 33-3535,
and incorporated herein by reference.                        
|      | 
|10.1  |  | Senetek No. 1 Share Option Scheme for Employees.                                                                                                                                                 
|      | 
|      |  | Filed as an Exhibit to Registrants Report on Form S-8 on October 8, 1993, Registration No. 33-70136, and incorporated herein by
reference.                                                      
|      | 
|10.2  |  | Asset Purchase Agreement dated as of July 31, 1995, between Carme International, Inc. a wholly owned subsidiary of Senetek PLC and Carme
Inc.                                                    
|      | 
|      |  | Filed as an Exhibit on Form 8-K, dated October 10, 1995 (as amended), and incorporated herein by reference.                                                                                      
|      | 
|10.3  |  | Senetek No. 2 Executive Share Option Scheme for Non-Executive Directors and Consultants.                                                                                                         
|      | 
|      |  | Filed as an Exhibit to Registrants Registration Statement on Form S-8 on October 8, 1993, Registration No. 33-70136, and incorporated
herein by reference.                                      
|      | 
|10.4  |  | Amended and restated Deposit Agreement dated November 6, 1992 between Senetek PLC and The Bank of New York.                                                                                      
|      | 
|      |  | The form of such Agreement was filed as an Exhibit on Form F-6 with the Securities and Exchange Commission on March 19, 1992, Registration
No. 33-46638, and is incorporated herein by reference.
|      | 
|10.14 |  | Service Agreement dated December 30, 1998 between Senetek PLC and Mr. F. J. Massino.                                                                                                             
|      | 
|      |  | Filed as an exhibit to Registrants Annual Report on Form 10-K for the year ended December 31, 1998 and incorporated herein by
reference.                                                        



47



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##### Table of Contents

|      |  |                                                                                                                                                                 
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.16 |  | Securities Purchase Agreement dated April 13, 1999 by and among Senetek PLC and certain other parties thereto.                                                  
|      | 
|      |  | Filed as an exhibit to Registrants Annual Report on Form 10-K for the year ended December 31, 1998 and incorporated herein by
reference.                       
|      | 
|10.17 |  | Securities Purchase Agreement (Securities Purchase Agreement) dated April 14, 1999 between Senetek PLC and the various
purchasers designated in the agreement.
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by
reference.                               
|      | 
|10.18 |  | Form of Senior Secured Note due April 14, 2002 issued by Senetek PLC pursuant to the Securities Purchase Agreement.                                             
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by
reference.                               
|      | 
|10.19 |  | Form of Series A Warrant issued by Senetek pursuant to the Securities Purchase Agreement.                                                                       
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by
reference.                               
|      | 
|10.20 |  | Form of Series B Warrant issued by Senetek pursuant to the Securities Purchase Agreement.                                                                       
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by
reference.                               
|      | 
|10.21 |  | Form of Series C Warrant issued by Senetek pursuant to the Securities Purchase Agreement.                                                                       
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by
reference.                               
|      | 
|10.22 |  | Registration Rights Agreement dated as of April 14, 1999 among Senetek PLC and the parties designated therein.                                                  
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by
reference.                               
|      | 
|10.23 |  | Security Agreement dated as of April 14, 1999 by and between Senetek PLC and the parties designated therein.                                                    
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by
reference.                               
|      | 
|10.24 |  | Pledge Agreement dated as of April 14, 1999 by and between Senetek PLC and the parties designated therein.                                                      
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by
reference.                               
|      | 
|10.25 |  | Pledge Agreement dated April 14, 1999 by and between Senetek Drug Delivery Technologies Inc. and the parties designated
therein.                                
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by
reference.                               
|      | 
|10.26 |  | Guaranty dated as of April 14,1999 executed by Senetek Drug Delivery Technologies Inc. and Carme Cosmeceutical Sciences
Inc.                                    
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by
reference.                               
|      | 
|10.27 |  | Patent and Security Agreement dated as of April 14, 1999 between Senetek PLC and the parties designated therein.                                                
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by
reference.                               



48



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|      |  |                                                                                                                                                                                       
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.28 |  | Fixed and Floating Security Document dated April 14, 1999 executed by Senetek PLC in favor of the Collateral Agent named
therein.                                                     
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by
reference.                                                     
|      | 
|10.30 |  | Settlement Agreement dated April 13, 1999 among Senetek PLC and the parties named therein.                                                                                            
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by
reference.                                                     
|      | 
|10.31 |  | Form of Amended Series A Warrant issued by Senetek pursuant to the Securities Purchase Agreement.                                                                                     
|      | 
|      |  | Filed as an exhibit to Amendment No. 1 of Registrants Registration Statement on Form S-3, Registration No. 333-37782, filed on
January 23, 2001 and incorporated herein by reference.
|      | 
|10.32 |  | Form of Amended B Warrant issued by Senetek pursuant to the Securities Purchase Agreement.                                                                                            
|      | 
|      |  | Filed as an exhibit to Amendment No. 1 of Registrants Registration Statement on Form S-3, Registration No. 333-37782, filed on
January 23, 2001 and incorporated herein by reference.
|      | 
|10.33 |  | Form of Amended C Warrant issued by Senetek pursuant to the Securities Purchase Agreement.                                                                                            
|      | 
|      |  | Filed as an exhibit to Amendment No. 1 of Registrants Registration Statement on Form S-3, Registration No. 333-37782, filed on
January 23, 2001 and incorporated herein by reference.
|      | 
|10.34 |  | First Amendment to the Securities Purchase Agreement dated as of June 20, 2001 by and among Senetek PLC and certain the various purchasers
designated in the agreement.               
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by
reference.                                                     
|      | 
|10.35 |  | Form of Amended and Restated Senior Secured Note due April 14, 2004 issued by Senetek PLC pursuant to the First Amendment to the Securities
Purchase Agreement.                       
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by
reference.                                                     
|      | 
|10.36 |  | Form of Amended and Restated Series A Warrant, issued by Senetek PLC pursuant to the First Amendment to the Securities Purchase
Agreement.                                            
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by
reference.                                                     
|      | 
|10.37 |  | Form of Amended and Restated Series B Warrant, issued by Senetek PLC pursuant to the First Amendment to the Securities Purchase
Agreement.                                            
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by
reference.                                                     
|      | 
|10.38 |  | Form of Amended and Restated Series C Warrant, issued by Senetek PLC pursuant to the First Amendment to the Securities Purchase
Agreement.                                            
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by
reference.                                                     



49



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##### Table of Contents

|      |  |                                                                                                                                                              
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.39 |  | Amended and Restated Registration Rights Agreement dated as of June 20, 2001 among Senetek PLC and the parties designated
therein.                           
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by
reference.                            
|      | 
|10.40 |  | First Amendment to the Security Agreement dated as of June 20, 2001 by and between Senetek PLC and the parties designated
therein.                           
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by
reference.                            
|      | 
|10.41 |  | First Amendment to the Pledge Agreement dated as of June 20, 2001 by and between Senetek PLC and the parties designated
therein.                             
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by
reference.                            
|      | 
|10.42 |  | First Amendment to the Pledge Agreement dated as of June 20, 2001 by and between Senetek Drug Delivery Technologies, Inc. and the parties
designated therein.
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by
reference.                            
|      | 
|10.43 |  | First Amendment to the Guaranty dated as of June 20, 2001 executed by Senetek Drug Delivery Technologies, Inc. and Carme Cosmeceutical
Sciences, Inc.        
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the Quarter ended June 30, 2001 and incorporated herein by
reference.                            
|      | 
|10.44 |  | First Amendment to the Patent and Trademark Security Agreement dated as of June 20, 2001 by and between Senetek PLC and the parties
designated therein.      
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the Quarter ended June 30, 2001 and incorporated herein by
reference.                            
|      | 
|10.45 |  | Investment Advice Agreement dated as of June 20, 2001 by and between Senetek PLC and Scorpion Investments, Inc.                                              
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the Quarter ended June 30, 2001 and incorporated herein by
reference.                            
|      | 
|10.46 |  | Revolving Credit Agreement dated as of June 20, 2001 by and between Senetek PLC and Wallington Investments, Ltd.                                             
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the Quarter ended June 30, 2001 and incorporated herein by
reference.                            
|      | 
|10.47 |  | Form of Revolving Note, issued by Senetek PLC pursuant to the Revolving Credit.                                                                              
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-Q for the Quarter ended June 30, 2001 and incorporated herein by
reference.                            
|      | 
|10.48 |  | Distribution Agreement dated as of October 15, 1998, by and between Carme Cosmeceutical Sciences, Inc. and ICN
Pharmaceuticals.                              
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-K for the fiscal year ended December 31, 2001 and incorporated herein by
reference.                    
|      | 
|10.49 |  | License and Supply Agreement dated as of May 26, 2000 by and between Senetek PLC and Buth-Na-Bodhaige, Inc.                                                  
|      | 
|      |  | Filed as an exhibit to Registrants Report on Form 10-K for the fiscal year ended December 31, 2001 and incorporated herein by
reference.                    



50



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|       |  |                                                                                                                                          
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------
|10.50  |  | License Agreement dated as of June 8, 2000 between Senetek PLC and Revlon Consumer Products Corporation.                                 
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-K for the fiscal year ended December 31, 2001 and incorporated herein by
reference.
|       | 
|10.51  |  | Production and Marketing Agreement dated as of August 15, 2000 between Senetek PLC and Signet Laboratories, Inc.                         
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-K for the fiscal year ended December 31, 2001 and incorporated herein by
reference.
|       | 
|10.52  |  | Warrant to Purchase 1,000,000 Ordinary Shares of Senetek PLC issued June 8, 2000 to Revlon Consumer Products
Corporation.                
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-K for the fiscal year ended December 31, 2001 and incorporated herein by
reference.
|       | 
|10.53  |  | Amendment to Agreement dated as of November 30, 2000 by and between Senetek PLC and Buth-Na-Bodhaige.                                    
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-K for the Fiscal Year ended December 31, 2001 and incorporated herein by
reference.
|       | 
|10.54  |  | First Amendment to License Agreement dated June 8, 2000 by and between Senetek PLC and Revlon Consumer Products
Corporation.             
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-K for the Fiscal Year ended December 31, 2001 and incorporated herein by
reference.
|       | 
|*10.55 |  | Development and Distribution Agreement dated November 12, 2002 by and between Senetek PLC and Douglas Pharmaceuticals
Limited.           
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-K for the Fiscal Year ended December 31, 2002 and incorporated herein by
reference.
|       | 
|*10.56 |  | License Agreement dated March 12, 2002 by and between Senetek PLC and Enprani Co., Ltd.                                                  
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-K for the Fiscal Year ended December 31, 2002 and incorporated herein by
reference 
|       | 
|*10.57 |  | License and Supply Agreement dated November 12, 2002 by and between Senetek PLC and Shaklee Corporation.                                 
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-K for the Fiscal Year ended December 31, 2002 and incorporated herein by
reference 
|       | 
|*10.58 |  | License Agreement dated September 30, 2002 by and between Senetek and Vivier Pharma Inc.                                                 
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-K for the Fiscal Year ended December 31, 2002 and incorporated herein by
reference 
|       | 
|*10.59 |  | License Agreement dated January 1, 2003 by and between Senetek PLC and Panion & BF Biotech, Inc                                          
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-Q for the period ended March 31, 2003 and incorporated herein by
reference         
|       | 
|10.60  |  | Employment contract dated March 3, 2003 between the Company and Bradley D. Holsworth                                                     
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-Q for the period ended March 31, 2003 and incorporated herein by
reference.        



51



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##### Table of Contents

|       |  |                                                                                                                                                                        
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*10.61 |  | License Agreement dated March 21, 2003 by and between Senetek PLC and LaviPharm S.A.                                                                                   
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-Q for the period ended March 31, 2003 and incorporated herein by
reference                                       
|       | 
|10.62  |  | Employment contract dated April 1, 2003 between the Company and Wade Nichols.                                                                                          
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-Q for the period ended June 30, 2003 and incorporated herein by
reference                                        
|       | 
|10.63  |  | Research Collaboration Agreement dated June 10, 2003 by and between Senetek PLC and Beiersdorf A.G.                                                                    
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-Q for the period ended June 30, 2003 and incorporated herein by
reference                                        
|       | 
|*10.64 |  | Cooperative Research and Development Agreement dated June 11, 2003 by and between Senetek PLC and Institute of Experimental Botany, Academy
of Sciences, Czech Republic
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-Q for the period ended June 30, 2003 and incorporated herein by
reference                                        
|       | 
|10.65  |  | Second Amendment to the Securities Purchase Agreement dated September 4, 2003 by and between Senetek PLC and various purchasers designated
in the Agreement.           
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-Q for the period ended September 30, 2003 and incorporated herein by
reference                                   
|       | 
|10.66  |  | Amendment No. 1 to the Amended and Restated Registration Rights Agreement dated September 4, 2003.                                                                     
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-Q for the period ended September 30, 2003 and incorporated herein by
reference                                   
|       | 
|10.67  |  | Form of Second Amended and Restated Senior Secured Notes Due April 1, 200 dated September 4, 2003                                                                      
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-Q for the period ended September 30, 2003 and incorporated herein by
reference                                   
|       | 
|10.68  |  | Form of Series D Warrant issued by Senetek PLC pursuant to the Second Amendment to the Securities Purchase Agreement dated September 4,
2003                           
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-Q for the period ended September 30, 2003 and incorporated herein by
reference                                   
|       | 
|*10.69 |  | License Agreement dated August 1, 2003 between ICN Pharmaceuticals, Inc. and Senetek PLC                                                                               
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-Q for the period ended September 30, 2003 and incorporated herein by
reference                                   
|       | 
|*10.70 |  | Amendment #1 dated December 1, 2003 to the license agreement dated August 1, 2003 between Valeant Pharmaceuticals (formerly ICN
Pharmaceuticals) and Senetek PLC       
|       | 
|21     |  | Subsidiaries of Senetek PLC.                                                                                                                                           
|       | 
|       |  | Filed as an exhibit to Registrants Report on Form 10-K for the Fiscal Year ended December 31, 2001 and incorporated herein by
reference.                              
|       | 
|23     |  | Consent of Independent Certified Public Accountants.                                                                                                                   
|       | 
|24     |  | Power of Attorney. Included on the signature page to this Annual Report on Form 10-K.                                                                                  



52



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##### Table of Contents

|     |  |                                                                                                                               
|---- |  | ------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                            
|     | 
|31.2 |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                            
|     | 
|32   |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002



|* |  | Confidential treatment has been requested as to certain portions of those exhibits.
|- |  | -----------------------------------------------------------------------------------



(b) Reports on Form 8-K



A Current Report on Form 8-K dated November 14, 2003 was filed announcing the Financial Results and Investor conference call for the
quarter ended September 30, 2003



A Current
Report on Form 8-K dated December 5, 2003 was filed announcing the settlement of the lawsuit with the Thieme Brothers.



A Current Report on form 8-K dated December 19, 2003 was filed announcing the results of the shareholder vote from our December 18, 2003
Annual General Meeting.



53



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##### Table of Contents

SIGNATURES



Pursuant to the
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Napa, State of California, on this 29th
day of March, 2004.



SENETEK PLCBy:

/s/    F. J.
MASSINOFrank J. Massino Chairman of the Board and Chief Executive Officer




POWER OF
ATTORNEY TO SIGN AMENDMENTS



KNOW ALL MEN BY THESE
PRESENTS, that each person whose signature appears below does hereby constitute and appoint Frank J. Massino and Bradley D. Holsworth, and each of them, with full power of substitution and full power to act without the other, his true and lawful
attorney-in-fact and agent to act for him in his name, place and stead, in any and all capacities to sign any or all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits hereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to all intents and purposes, as they or he
might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof.



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons
in the capacities and on the dates indicated.



|                                           |  |                                                                                 |  |               
|------------------------------------------ |  | ------------------------------------------------------------------------------- |  | --------------
|Signature                                  |  | Title                                                                           |  | Date          
|                                           |  |                                                                                
|/s/    F. J. MASSINOFrank J. Massino       |  | Chairman of the Board and Chief Executive Officer (Principal Executive Officer) |  | March 29, 2004
|                                           |  |                                                                                
|/s/    B. D. HOLSWORTHBradley D. Holsworth |  | Chief Financial Officer (Principal Financial and Accounting Officer)            |  | March 29, 2004
|                                           |  |                                                                                
|/s/    A. TOBLERA. Tobler                  |  | Director                                                                        |  | March 29, 2004
|                                           |  |                                                                                
|/s/    U. THIEMEU. Thieme                  |  | Director                                                                        |  | March 29, 2004
|                                           |  |                                                                                
|/s/    K.
MCCARTHYKevin
McCarthy           |  | Director                                                                        |  | March 29, 2004
|                                           |  |                                                                                
|/s/    F. PASSF. Pass                      |  | Director                                                                        |  | March 29, 2004
|                                           |  |                                                                                
|/s/    G. FELLOWSG. Fellows                |  | Director                                                                        |  | March 29, 2004
|                                           |  |                                                                                
|/s/    A. WILLIAMSAnthony Williams         |  | Director                                                                        |  | March 29, 2004



54



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##### Table of Contents

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                                                |  |            
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------
|                                                                                                                                                |  | Page       
|                                                                                                                                                | 
|Report of Independent Certified Public Accountants                                                                                              |  | F-2        
|                                                                                                                                                | 
|Consolidated Balance Sheets December 31, 2003 and 2002                                                                                          |  | F-3        
|                                                                                                                                                | 
|Consolidated Statements of Operations for the years ended December 31, 2003, 2002 and 2001                                                      |  | F-4        
|                                                                                                                                                | 
|Consolidated Statements of Stockholders (Deficit) Equity and Comprehensive (loss) Income for the years ended December 31, 2003, 2002, and 2001 |  | F-5        
|                                                                                                                                                | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001                                                      |  | F-6        
|                                                                                                                                                | 
|Notes to the Consolidated Financial Statements                                                                                                  |  | F-7 to F-27
|                                                                                                                                                | 
|Schedule IIValuation and Qualifying Accounts                                                                                                  |  | S-1        



---

##### Table of Contents

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



To Board of Directors and

Stockholders of Senetek PLC



We have audited the accompanying consolidated balance sheets of Senetek PLC and its subsidiaries as of December 31, 2003 and 2002, and the related
statements of operations, stockholders (deficit) equity and comprehensive (loss) income and cash flows for each of the three years in the period ended December 31, 2003. We have also audited Schedule II  Valuation and Qualifying Accounts
(the Schedule). These financial statements and the Schedule are the responsibility of Senetek PLCs management. Our responsibility is to express an opinion on these consolidated financial statements and the Schedule based on our audits.



We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. These standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and Schedule are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and Schedule. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements and Schedule. 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 Senetek PLC
and its subsidiaries at December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United
States of America.



As discussed in Note 2g to the consolidated
financial statements, the Company changed its method of accounting for goodwill in 2002.



Also, in our opinion, Schedule II presents fairly, in all material respects, the information set forth therein.



/s/    BDO SEIDMAN,
LLPBDO Seidman, LLP




San Francisco, California

March 19, 2004



F-2



---

##### Table of Contents

SENETEK PLC



CONSOLIDATED
BALANCE SHEETS

($ in thousands, except share and per share amounts)



|                                                                                                                                      |  |              |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ---- | - | ------- | -
|                                                                                                                                      |  | December 31, |        
|                                                                                                                                      |  | 2003         |         |   | 2002 |  
|ASSETS (Note 9)                                                                                                                       |  |              |         |   |      |   |         |  
|Current Assets                                                                                                                        |  |              |         |   |      |   |         |  
|Cash and Cash Equivalents                                                                                                             |  | $            | 1,187   |   |      | $ | 3,572   |  
|Trade Receivables (net of allowance for doubtful accounts of $10,000 in 2003 and $0 in 2002) (Note 3)                                 |  |              | 660     |   |      |   | 1,311   |  
|Receivables related to disposed asset group (net of allowance for doubtful accounts of $35,000 in 2003 and $107,000 in 2002 (Note
14) |  |              |        |   |      |   | 128     |  
|Non-trade Receivables (net of provisions of $33,000 in 2003 and 2002)                                                                 |  |              | 22      |   |      |   | 27      |  
|Inventory (net of provision of $320,000 in 2003 and $82,000 in 2002) (Note 4)                                                         |  |              | 386     |   |      |   | 408     |  
|Prepaids and Deposits                                                                                                                 |  |              | 304     |   |      |   | 111     |  
|                                                                                                                                      |  |              |         |   |      |   |         |  
|Total Current Assets                                                                                                                  |  |              | 2,559   |   |      |   | 5,557   |  
|Property & Equipmentnet (Note 5)                                                                                                     |  |              | 510     |   |      |   | 3,249   |  
|Asset held for sale (Note 5)                                                                                                          |  |              | 250     |   |      |   |        |  
|Goodwill (Note 6)                                                                                                                     |  |              | 1,308   |   |      |   | 1,308   |  
|                                                                                                                                      |  |              |         |   |      |   |         |  
|Total Assets                                                                                                                          |  | $            | 4,627   |   |      | $ | 10,114  |  
|                                                                                                                                      |  |              |         |   |      |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                                                                        |  |              |         |   |      |   |         |  
|Current Liabilities                                                                                                                   |  |              |         |   |      |   |         |  
|Accounts Payable                                                                                                                      |  | $            | 1,287   |   |      | $ | 573     |  
|Accrued Liabilities (Note 7)                                                                                                          |  |              | 688     |   |      |   | 1,000   |  
|Deferred Revenue and License Fees (Note 2d )                                                                                          |  |              | 970     |   |      |   | 172     |  
|Notes Payable  Current (Note 9)                                                                                                      |  |              | 500     |   |      |   |        |  
|                                                                                                                                      |  |              |         |   |      |   |         |  
|Total Current Liabilities                                                                                                             |  |              | 3,445   |   |      |   | 1,745   |  
|                                                                                                                                      |  |              |         |   |      |   |         |  
|Long Term Liabilities                                                                                                                 |  |              |         |   |      |   |         |  
|Notes Payable, net of current portion and discount of $1,795,000 in 2003 and $1,118,000 in 2002 (Note 9)                              |  |              | 2,594   |   |      |   | 6,271   |  
|Other Long Term Liabilities (Note 16)                                                                                                 |  |              | 68      |   |      |   | 98      |  
|Deferred License Fees (Note 2d)                                                                                                       |  |              | 1,449   |   |      |   | 1,621   |  
|Commitments, Contingencies and Subsequent Event (Notes 16 and 17)                                                                     |  |              |         |   |      |   |         |  
|Stockholders Equity (Deficit) (Notes 10,11 and 12)                                                                                   |  |              |         |   |      |   |         |  
|Ordinary shares                                                                                                                       |  |              |         |   |      |   |         |  
|Authorized shares: $0.08 (5 pence) par value: 100,000,000 Issued and Outstanding shares 2003 and 2002: 59,052,153                     |  |              | 4,763   |   |      |   | 4,763   |  
|Share Premium                                                                                                                         |  |              | 83,806  |   |      |   | 82,125  |  
|Accumulated Deficit                                                                                                                   |  |              | (91,552 | ) |      |   | (86,558 | )
|Accumulated Other Comprehensive IncomeCurrency Translation                                                                           |  |              | 54      |   |      |   | 49      |  
|                                                                                                                                      |  |              |         |   |      |   |         |  
|Total Stockholders Equity (Deficit)                                                                                                  |  |              | (2,929  | ) |      |   | 379     |  
|                                                                                                                                      |  |              |         |   |      |   |         |  
|Total Liabilities and Stockholders Equity (Deficit)                                                                                  |  | $            | 4,627   |   |      | $ | 10,114  |  
|                                                                                                                                      |  |              |         |   |      |   |         |  



See accompanying notes
to consolidated financial statements.



F-3



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##### Table of Contents

SENETEK PLC



CONSOLIDATED
STATEMENTS OF OPERATIONS



|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|-------------------------------------------------------------- |  | ------------------------------------------ | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                               |  | Year Ended December 31                     |       
|                                                               |  | 2003                                       |        |   | 2002 |   |        | 2001 | 
|                                                               |  | ($ in thousands, except for pershare data) |       
|Revenue (Note 3)                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Product Sales                                                  |  | $                                          | 3,986  |   |      | $ | 2,184  |      |  | $ | 3,896  |  
|Royalties & Licensing Fees                                     |  |                                            | 4,240  |   |      |   | 7,225  |      |  |   | 4,557  |  
|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Total Revenue                                                  |  |                                            | 8,226  |   |      |   | 9,409  |      |  |   | 8,453  |  
|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Cost of SalesProducts                                         |  |                                            | 997    |   |      |   | 494    |      |  |   | 1,093  |  
|Royalties & Licensing (Note 17)                               |  |                                            | 404    |   |      |   | 498    |      |  |   | 377    |  
|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Total Cost of Sales                                            |  |                                            | 1,401  |   |      |   | 992    |      |  |   | 1,470  |  
|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Gross Profit                                                   |  |                                            | 6,825  |   |      |   | 8,417  |      |  |   | 6,983  |  
|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Operating Expenses:                                            |  |                                            |        |   |      |   |        |      |  |   |        |  
|Research & Development                                         |  |                                            | 1,560  |   |      |   | 1,332  |      |  |   | 344    |  
|Administration, Sales and Marketing (Note 17)                  |  |                                            | 6,301  |   |      |   | 4,804  |      |  |   | 5,006  |  
|Impairment Charges (Note 5 )                                   |  |                                            | 2,451  |   |      |   |       |      |  |   |       |  
|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Total Operating Expenses                                       |  |                                            | 10,312 |   |      |   | 6,136  |      |  |   | 5,350  |  
|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Operating Income (Loss)                                        |  |                                            | (3,487 | ) |      |   | 2,281  |      |  |   | 1,633  |  
|Interest Income                                                |  |                                            | 12     |   |      |   | 38     |      |  |   | 30     |  
|Other (Expense) net                                            |  |                                            | (9     | ) |      |   | (17    | )    |  |   | (62    | )
|Interest Expense (including amortization of discount) (Note 9) |  |                                            | (1,584 | ) |      |   | (1,442 | )    |  |   | (1,614 | )
|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Income (Loss) from continuing operations before income taxes   |  |                                            | (5,068 | ) |      |   | 860    |      |  |   | (13    | )
|Provision for income taxes (Note 13)                           |  |                                            |       |   |      |   | (13    | )    |  |   | (6     | )
|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Income (Loss) from continuing operations                       |  |                                            | (5,068 | ) |      |   | 847    |      |  |   | (19    | )
|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Discontinued Operations (Note 14):                             |  |                                            |        |   |      |   |        |      |  |   |        |  
|Gain on Sale of Operations                                     |  |                                            |       |   |      |   | 400    |      |  |   |       |  
|Interest Income                                                |  |                                            | 113    |   |      |   |       |      |  |   |       |  
|Royalties & Licensing Fees                                     |  |                                            | (39    | ) |      |   | 332    |      |  |   | 404    |  
|Provision for Income Taxes (Note 13)                           |  |                                            | 0      |   |      |   | (38    | )    |  |   |       |  
|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Income from Discontinued Operations                            |  |                                            | 74     |   |      |   | 694    |      |  |   | 404    |  
|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Net Income (Loss) available to Ordinary Shareholders           |  | $                                          | (4,994 | ) |      | $ | 1,541  |      |  | $ | 385    |  
|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Earnings per share:                                            |  |                                            |        |   |      |   |        |      |  |   |        |  
|Basic and Diluted Income (Loss) from Continuing operations     |  | $                                          | (.09   | ) |      | $ | .02    |      |  | $ |       |  
|Basic and Diluted Income from Discontinued Operations          |  |                                            |       |   |      |   | .01    |      |  |   | 0.01   |  
|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Basic and Diluted Income (Loss)                                |  | $                                          | (.09   | ) |      | $ | 0.03   |      |  | $ | 0.01   |  
|                                                               |  |                                            |        |   |      |   |        |      |  |   |        |  
|Weighted average Basic Ordinary shares Outstanding             |  |                                            | 59,052 |   |      |   | 59,052 |      |  |   | 58,775 |  
|Weighted average Diluted Ordinary shares Outstanding           |  |                                            | 59,052 |   |      |   | 59,140 |      |  |   | 58,805 |  



See accompanying notes
to consolidated financial statements.



F-4



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##### Table of Contents

SENETEK PLC



CONSOLIDATED
STATEMENT OF STOCKHOLDERS EQUITY/(DEFICIT) AND

COMPREHENSIVE (LOSS) INCOME

($ in thousands except for share date)



|                                                                      |  |            |  |        |       |              |   |                    |  |   |                                                         |   |  |                                  |    |   |  |   |        |  
|--------------------------------------------------------------------- |  | ---------- |  | ------ | ----- | ------------ | - | ------------------ |  | - | ------------------------------------------------------- | - |  | -------------------------------- | -- | - |  | - | ------ | -
|                                                                      |  | Shares     |  | Amount |       | SharePremium |   | AccumulatedDeficit |  |   | AccumulatedOtherComprehensiveIncome-CurrencyTranslation |   |  | NetStockholdersEquity/(Deficit) |   
|Balances, January 1, 2001:                                            |  | 58,432,117 |  | $      | 4,720 |              | $ | 80,018             |  | $ | (88,484                                                 | ) |  | $                                | 23 |   |  | $ | (3,723 | )
|Ordinary shares issued for Notes Payable extension (Note 9)           |  | 341,747    |  |        | 24    |              |   | 345                |  |   |                                                        |   |  |                                  |   |   |  |   | 369    |  
|Ordinary shares issued for interest payment on Notes payable          |  | 278,289    |  |        | 19    |              |   | 277                |  |   |                                                        |   |  |                                  |   |   |  |   | 296    |  
|Stock Based Compensation                                              |  |           |  |        |      |              |   | 223                |  |   |                                                        |   |  |                                  |   |   |  |   | 223    |  
|Value of warrant modification for extension of notes payable (Note 9) |  |           |  |        |      |              |   | 1,063              |  |   |                                                        |   |  |                                  |   |   |  |   | 1,063  |  
|Comprehensive (Loss) Income                                           |  |            |  |        |       |              |   |                    |  |   |                                                         |   |  |                                  |    |   |  |   |        |  
|Net Income                                                            |  |           |  |        |      |              |   |                   |  |   | 385                                                     |   |  |                                  |   |   |  |   | 385    |  
|Translation loss                                                      |  |           |  |        |      |              |   |                   |  |   |                                                        |   |  |                                  | (3 | ) |  |   | (3     | )
|                                                                      |  |            |  |        |       |              |   |                    |  |   |                                                         |   |  |                                  |    |   |  |   |        |  
|Total Comprehensive (loss) Income                                     |  |           |  |        |      |              |   |                   |  |   | 385                                                     |   |  |                                  | (3 | ) |  |   | 382    |  
|                                                                      |  |            |  |        |       |              |   |                    |  |   |                                                         |   |  |                                  |    |   |  |   |        |  
|Balances, December 31, 2001:                                          |  | 59,052,153 |  |        | 4,763 |              |   | 81,926             |  |   | (88,099                                                 | ) |  |                                  | 20 |   |  |   | (1,390 | )
|Stock Based Compensation                                              |  |           |  |        |      |              |   | 199                |  |   |                                                        |   |  |                                  |   |   |  |   | 199    |  
|Comprehensive Income:                                                 |  |            |  |        |       |              |   |                    |  |   |                                                         |   |  |                                  |    |   |  |   |        |  
|Net Income                                                            |  |           |  |        |      |              |   |                   |  |   | 1,541                                                   |   |  |                                  |   |   |  |   | 1,541  |  
|Translation Gain                                                      |  |           |  |        |      |              |   |                   |  |   |                                                        |   |  |                                  | 29 |   |  |   | 29     |  
|                                                                      |  |            |  |        |       |              |   |                    |  |   |                                                         |   |  |                                  |    |   |  |   |        |  
|Total Comprehensive Income                                            |  |           |  |        |      |              |   |                   |  |   | 1,541                                                   |   |  |                                  | 29 |   |  |   | 1,570  |  
|                                                                      |  |            |  |        |       |              |   |                    |  |   |                                                         |   |  |                                  |    |   |  |   |        |  
|Balances, December 31, 2002:                                          |  | 59,052,153 |  |        | 4,763 |              |   | 82,125             |  |   | (86,558                                                 | ) |  |                                  | 49 |   |  |   | 379    |  
|Options Exercised                                                     |  |            |  |        |       |              |   |                    |  |   |                                                        |   |  |                                  |   |   |  |   |        |  
|Fair value of options issued to consultants                           |  |           |  |        |      |              |   | 41                 |  |   |                                                        |   |  |                                  |   |   |  |   | 41     |  
|Warrants issued for debt refinancing                                  |  |           |  |        |      |              |   | 1,640              |  |   |                                                        |   |  |                                  |   |   |  |   | 1,640  |  
|Comprehensive (Loss) Income                                           |  |            |  |        |       |              |   |                    |  |   |                                                         |   |  |                                  |    |   |  |   |        |  
|Net Loss                                                              |  |           |  |        |      |              |   |                   |  |   | (4,994                                                  | ) |  |                                  |   |   |  |   | (4,994 | )
|Translation Gain                                                      |  |           |  |        |      |              |   |                   |  |   |                                                        |   |  |                                  | 5  |   |  |   | 5      |  
|                                                                      |  |            |  |        |       |              |   |                    |  |   |                                                         |   |  |                                  |    |   |  |   |        |  
|Total Comprehensive (Loss) Income                                     |  |           |  |        |      |              |   |                   |  |   | (4,994                                                  | ) |  |                                  | 5  |   |  |   | (4,989 | )
|                                                                      |  |            |  |        |       |              |   |                    |  |   |                                                         |   |  |                                  |    |   |  |   |        |  
|Balances, December 31, 2003:                                          |  | 59,052,153 |  | $      | 4,763 |              | $ | 83,806             |  | $ | (91,552                                                 | ) |  | $                                | 54 |   |  | $ | (2,929 | )
|                                                                      |  |            |  |        |       |              |   |                    |  |   |                                                         |   |  |                                  |    |   |  |   |        |  





See accompanying notes to consolidated financial statements.



F-5



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##### Table of Contents

SENETEK PLC



CONSOLIDATED
STATEMENTS OF CASH FLOWS



|                                                                                                |  |                         |        |   |      |   |       |      |  |   |       |  
|----------------------------------------------------------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                                                                |  | Year Ended December 31, |       
|                                                                                                |  | 2003                    |        |   | 2002 |   |       | 2001 | 
|                                                                                                |  | ($ in thousands)        |       
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                           |  |                         |        |   |      |   |       |      |  |   |       |  
|Net Income (Loss)                                                                               |  | $                       | (4,994 | ) |      | $ | 1,541 |      |  | $ | 385   |  
|Gain on disposal of discontinued operations                                                     |  |                         |       |   |      |   | (362  | )    |  |   |      |  
|Income from discontinued operations                                                             |  |                         | (74    | ) |      |   | (332  | )    |  |   | (404  | )
|                                                                                                |  |                         |        |   |      |   |       |      |  |   |       |  
|Income (loss) from continuing operations                                                        |  |                         | (5,068 | ) |      |   | 847   |      |  |   | (19   | )
|Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: |  |                         |        |   |      |   |       |      |  |   |       |  
|Depreciation and Amortization                                                                   |  |                         | 129    |   |      |   | 132   |      |  |   | 624   |  
|Impairment Charges                                                                              |  |                         | 2,451  |   |      |   |      |      |  |   |      |  
|Bad Debt and inventory reserves                                                                 |  |                         | 248    |   |      |   | 23    |      |  |   |      |  
|Stock Option Compensation                                                                       |  |                         | 41     |   |      |   | 199   |      |  |   | 223   |  
|Warrants issued as interest for debt refinancing                                                |  |                         | 193    |   |      |   |      |      |  |   |      |  
|Amortization of Discount on notes payable                                                       |  |                         | 770    |   |      |   | 864   |      |  |   | 1,095 |  
|Other                                                                                           |  |                         |       |   |      |   |      |      |  |   | 12    |  
|Changes in Assets and Liabilities:                                                              |  |                         |        |   |      |   |       |      |  |   |       |  
|Trade Receivables                                                                               |  |                         | 641    |   |      |   | 477   |      |  |   | (663  | )
|Non-trade Receivables                                                                           |  |                         | 5      |   |      |   | 35    |      |  |   | (14   | )
|Receivable from Employee                                                                        |  |                         |       |   |      |   |      |      |  |   | 10    |  
|Inventory                                                                                       |  |                         | (216   | ) |      |   | (106  | )    |  |   | 284   |  
|Prepaids and Deposits                                                                           |  |                         | (193   | ) |      |   | 11    |      |  |   | 58    |  
|Accounts Payable and Accrued Liabilities                                                        |  |                         | 402    |   |      |   | (406  | )    |  |   | (52   | )
|Deferred Revenue and License Fees                                                               |  |                         | 626    |   |      |   | (930  | )    |  |   | (188  | )
|                                                                                                |  |                         |        |   |      |   |       |      |  |   |       |  
|Net Cash Provided by Continuing Operations                                                      |  |                         | 29     |   |      |   | 1,146 |      |  |   | 1,370 |  
|Net Cash Provided by Discontinued Operations                                                    |  |                         | 202    |   |      |   | 225   |      |  |   | 300   |  
|                                                                                                |  |                         |        |   |      |   |       |      |  |   |       |  
|Net Cash Provided by Operating Activities                                                       |  |                         | 231    |   |      |   | 1,371 |      |  |   | 1,670 |  
|                                                                                                |  |                         |        |   |      |   |       |      |  |   |       |  
|                                                                                                |  |                         |       
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                           |  |                         |        |   |      |   |       |      |  |   |       |  
|Proceeds from Sale of Discontinued Operations                                                   |  |                         |       |   |      |   | 362   |      |  |   |      |  
|Purchase of Property & Equipment                                                                |  |                         | (91    | ) |      |   | (82   | )    |  |   | (42   | )
|                                                                                                |  |                         |        |   |      |   |       |      |  |   |       |  
|Net Cash Provided (Used) by Investing Activities                                                |  |                         | (91    | ) |      |   | 280   |      |  |   | (42   | )
|                                                                                                |  |                         |        |   |      |   |       |      |  |   |       |  
|                                                                                                |  |                         |       
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                           |  |                         |        |   |      |   |       |      |  |   |       |  
|Principal Payment on debt                                                                       |  |                         | (2,530 | ) |      |   | (20   | )    |  |   | (526  | )
|Costs of Financingdebt issue costs                                                             |  |                         |       |   |      |   |      |      |  |   | (113  | )
|Other Loans and Overdrafts                                                                      |  |                         |       |   |      |   | 98    |      |  |   |      |  
|                                                                                                |  |                         |        |   |      |   |       |      |  |   |       |  
|Net cash provided (used) by Financing Activities                                                |  |                         | (2,530 | ) |      |   | 78    |      |  |   | (639  | )
|                                                                                                |  |                         |        |   |      |   |       |      |  |   |       |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                            |  |                         | (2,390 | ) |      |   | 1,729 |      |  |   | 989   |  
|Cash and Cash Equivalents at the Beginning of the year                                          |  |                         | 3,572  |   |      |   | 1,814 |      |  |   | 828   |  
|Effects of Exchange Rate Changes on Cash                                                        |  |                         | 5      |   |      |   | 29    |      |  |   | (3    | )
|                                                                                                |  |                         |        |   |      |   |       |      |  |   |       |  
|Cash and Cash Equivalents at the End of the Year                                                |  | $                       | 1,187  |   |      | $ | 3,572 |      |  | $ | 1,814 |  
|                                                                                                |  |                         |        |   |      |   |       |      |  |   |       |  
|Supplemental disclosures of cash flow information                                               |  |                         |        |   |      |   |       |      |  |   |       |  
|Interest                                                                                        |  | $                       | 537    |   |      | $ | 602   |      |  | $ | 591   |  
|Income Taxes                                                                                    |  |                         | 163    |   |      |   | 13    |      |  |   | 6     |  



Non-cash financing transactions:



In September 2003,
the Company issued 4.5 million warrants to the holders of notes payable, valued at $1,447,000, in connection with the Notes Payable refinancing. The value of the warrants is being treated as additional discount on the Notes Payable.



In September 2003, the Company issued 600,000 warrants valued at $193,000 to
financial advisors for their services in connection with the Notes Payable Refinancing. The value of the warrants was treated as additional interest expense in the quarter ended September 30, 2003.



See accompanying notes to consolidated financial statements



F-6



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##### Table of Contents

SENETEK PLC



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS



1.    Activities



Senetek PLC, together with its subsidiaries (the
Company which may be referred to as Senetek), is a public limited company organized under the laws of England in 1983. Senetek has three wholly-owned subsidiaries, Senetek Drug Delivery Technologies Inc. (SDDT)
and Senetek Asia (HK) Limited, corporations formed by Senetek under the laws of Delaware and Hong Kong, respectively, and Carme Cosmeceutical Sciences Inc. (CCSI), a Delaware corporation acquired by Senetek in 1995.



Senetek is a life sciences-driven enterprise engaged in developing and
marketing proprietary products that fulfill consumer needs related to aging. Our business is comprised of two business segments, biopharmaceuticals, currently principally addressing sexual dysfunction (the Pharmaceuticals Segment), and
dermatological/skincare compounds principally addressing photoaging and other skincare needs (the Skincare Segment).



In 1999, Senetek began implementing a program to build a high-margin revenue stream with satisfactory and replicable profitability by focusing our
resources on completing development and marketing approvals of core biopharmaceuticals and drug delivery technology and building a global, royalty-based distribution system across all channels of trade for our core skincare technology. As an adjunct
to this program, we have out-licensed the development and marketing of our non-core biopharmaceutical and consumer products and outsourced manufacturing.



Senetek also granted a license to a third party to sell monoclonal antibodies purchased from outside suppliers for research into diagnostic procedures for
Alzheimers Disease and other cell lines for research purposes.



On December 31, 2002, Senetek closed a transaction in which U.S. International Trading Corporation (USITC) purchased our rights to the Mill Creek personal care line, the Silver Fox hair care line and other brands acquired by us
in our 1995 acquisition of Carme Inc. We had licensed these product lines to USITC since 1999, and USITC made the purchase under a purchase option provided for in the license agreement. See Note 14 for additional information.



Subsidiary Undertakings



SDDT (formerly named MEIS Corporation) was incorporated in the State of
Delaware in December 1993. Its main activity is the development, production and distribution of the auto-injector systems for use with our erectile dysfunction compound.



CCSI (formerly named Carme International, Inc.) was incorporated in the State of Delaware in June 1995. Its main activity is
the supply of skincare products to various segments of the skincare market.



Senetek Asia (HK) Limited was incorporated in Hong Kong in March 2001. It is presently dormant but its main activity will be to promote Seneteks business in Asia.



2.    Principal Accounting Policies



(a)  Basis of Consolidation



The consolidated financial statements incorporate the accounts of Senetek
PLC and its wholly owned subsidiaries, CCSI, SDDT and Senetek Asia (HK) Limited. All significant intercompany balances and transactions have been eliminated in consolidation. The accounts have been prepared in accordance with U.S. generally accepted
accounting principles (U.S. GAAP).



F-7



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##### Table of Contents

SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



(b)  Use of Estimates



The preparation of financial statements in conformity with generally accepted accounting principles requires us to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures; contingent assets and liabilities at the date of the financial statements; and, the reported amounts of revenue and expenses during the reporting
period. Accordingly, actual results could differ from those estimates. It is at least reasonably possible that the significant estimates used will change within a year.



See Note 5 for a detailed description of the Asset Impairment Charge recorded by the Company during the 4thquarter of 2003.



(c)  Cash and Cash Equivalents



For the purposes of the statement of cash flows and balance sheet, we consider any highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.



At times, cash balances
may be in excess of FDIC insurance limits. The Company has not experienced any losses with respect to bank balances in excess of government provided insurance.



(d)  Revenues and Accounts Receivable



Revenue from the sale of the Companys skincare products and named patient sales of Invicorp is recognized at the time of shipment, which is when
legal title and risk of loss is transferred to the Companys customers and is stated at the net invoiced value of goods supplied to customers after deduction of sales and value added tax where applicable. Royalties received from our licensee on
their sale of monoclonal antibodies are recognized in accordance with the contract. Under the contract, royalties received on Level 1 sales which represents Seneteks original customer base, are at a higher rate than royalties received on Level
2 sales. Royalty income from Level 1 and Level 2 Sales are recognized by Senetek on the basis of the Level 1 and Level 2 sales reports received from our licensee. Fees received from the licensing of manufacturing and distribution rights for our
skincare products are deferred and recognized as revenue as earned, which is generally on a straight-line basis over the life of the contract. Royalties from the Companys skincare licensees are recognized based on estimates that approximate
the point products have been sold by the licensees. Estimates are adjusted to reflect actual results within one quarter of product shipment. Historically, license revenue has not differed significantly from managements estimates.



During fiscal 2003, the Company entered into an amended license agreement
with Valeant Pharmaceuticals whereby Valeant prepaid $3 million for product purchases and royalty payments. The $3 million prepaid balance is reduced as product is sold to Valeant and when Valeant sells its product to its customers and the Company
earns a royalty. As of December 31, 2003, approximately $798,000 of the deferred revenue balance has not yet been earned by the Company and is classified as a current liability. The remaining current and long term portion of deferred revenue and
license fees relates to a prepaid license fee received from Revlon in fiscal year 2000 which is amortized at the rate of approximately $172,000 per year over the remaining life of the agreement.



Accounts receivable are uncollateralized customer obligations due under
normal trade terms and under the terms of respective license agreements. The terms of most license agreements require quarterly royalty payments due 30 days after the quarter end. We perform continuing credit evaluations of our customers
financial condition.



Senior management reviews accounts
receivable on a monthly basis to determine if any receivables will potentially be uncollectible. We include any accounts receivable balances that are determined to be uncollectible, along with a general reserve, in our overall allowance for doubtful
accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Based on the information available to us, we believe our allowance for doubtful accounts as of December 31, 2003 is adequate.



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SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



(e)  Inventories and Inventory Reserves



Inventories, constituting finished goods, raw materials and work-in-progress
are stated at the lower of cost or market value. Cost is determined using the average costing method.



Reserves for slow moving and obsolete inventories are developed based on historical experience, product demand and shelf life of a product. We
continuously evaluate the adequacy of our inventory reserves and make adjustments to the reserves as required.



(f)  Property and Equipment



Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a straight line basis using the following estimated
useful lives:



| |  |  | Office Furniture, Fixtures and Equipment: 3 to 15 years
| | - |  | -------------------------------------------------------



| |  |  | Laboratory equipment: 5 years
| | - |  | -----------------------------



| |  |  | Leasehold improvements are amortized over the estimated useful lives of the assets or the related lease term, whichever is the shorter.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



(g)  Goodwill



Intangible assets consist of goodwill arising from business combinations.
Prior to 2002, goodwill, representing the excess of the purchase price over the estimated fair value of the net assets of the acquired business (Carme), was amortized over the period of expected benefit of 15 years. However, effective January 1,
2002, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, which requires that the Company cease amortization of all intangible assets having indefinite useful
economic lives. Such assets including goodwill, are not to be amortized until their lives are determined to be finite, however, a recognized intangible asset with an indefinite useful life should be tested for impairment annually or on an interim
basis if events or circumstances indicate that the fair value of the asset has decreased below its carrying value. At December 31, 2003 and 2002, the Company evaluated its goodwill and determined that fair value had not decreased below carrying
value and no adjustment to impair goodwill was necessary in accordance with SFAS No. 142.



(h)  Impairment of Long-Lived Assets



In August 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This statement superceded SFAS No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be disposed of. The statement retains the previously existing accounting requirements related to the recognition and measurement of the impairment of long-lived assets to be
held and used while expanding the measurement requirements of long-lived assets to be disposed of by sale to include discontinued operations. It also expands the previous reporting requirements for discontinued operations to include a component of
an entity that either has been disposed of or is classified as held for sale. In accordance with these standards, we review the carrying value of the Companys property and equipment and intangible assets for impairment in value whenever events
or changes in circumstances indicate that the carrying amount of assets may not be recoverable. See Note 5.



(i)  Research and Development



Expenditures on research and development are expensed as incurred.



(j)  Foreign Exchange



We follow currency translation principles established by SFAS No. 52 Foreign Currency Translation. All assets
and liabilities in the balance sheets of foreign branches and subsidiaries whose functional currency is other



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SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



than U.S. dollars are translated at period-end exchange rates. All income and expenditure items in the profit and loss account of foreign branches and
subsidiaries whose functional currency is other than U.S. dollars are translated at average monthly exchange rates. Translation gains and losses arising from the translation of the financial statements of foreign branches and subsidiaries whose
functional currency is other than the U.S. dollar are not included in determining net income but are accumulated in a separate component of stockholders equity. Foreign currency transaction gains and losses are included in the determination of
net income in the period in which they occur. The functional currency of our United Kingdom operation is the pound sterling.



(k)  Calculation of the Number of Shares and Net Income (Loss) per Share



Earnings per share were computed under the provisions of SFAS No. 128, Earnings per Share. Basic earnings per
share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share incorporate the incremental shares issuable upon the assumed exercise of stock options and warrants using the treasury
stock method. The following is a reconciliation of the numerators and denominators of the basic and fully diluted earnings per share computation.



|                                                                    |  |                |        |   |      |   |        |  |   |        |  
|------------------------------------------------------------------- |  | -------------- | ------ | - | ---- | - | ------ |  | - | ------ | -
|                                                                    |  | December 31,   |       
|                                                                    |  | 2003           |        |   | 2002 |   | 2001   | 
|                                                                    |  | (in thousands) |       
|Numerator:                                                          |  |                |        |   |      |   |        |  |   |        |  
|Income (loss) from continuing operations                            |  | $              | (5,068 | ) |      | $ | 847    |  | $ | (19    | )
|Income from discontinued operations (Note 15)                       |  |                | 74     |   |      |   | 694    |  |   | 404    |  
|                                                                    |  |                |        |   |      |   |        |  |   |        |  
|Net Income (Loss)                                                   |  | $              | (4,994 | ) |      | $ | 1,541  |  | $ | 385    |  
|                                                                    |  |                |        |   |      |   |        |  |   |        |  
|Denominator:                                                        |  |                |        |   |      |   |        |  |   |        |  
|Basic weighted average Ordinary shares outstanding                  |  |                | 59,052 |   |      |   | 59,052 |  |   | 58,755 |  
|Stock options in the money calculated using Treasury Stock Method |  |                |       |   |      |   | 88     |  |   | 50     |  
|                                                                    |  |                |        |   |      |   |        |  |   |        |  
|Diluted weighted average Ordinary Shares outstanding                |  |                | 59,052 |   |      |   | 59,140 |  |   | 58,805 |  
|                                                                    |  |                |        |   |      |   |        |  |   |        |  



Options and Warrants
to purchase 18,083,000, 15,153,000 and 9,563,000 were outstanding at December 31, 2003, 2002 and 2001 but were not included in the computation of excluded from the calculation of diluted earnings per share as their effect would have been
antidilutive.



(l)  Financial Instruments



The carrying values of cash, receivables and current
liabilities, approximate their fair values due to the short term nature of these items. The estimated fair value of our long term notes payable at December 31, 2003 and 2002 are approximately $3,700,000 and $6,500,000. The carrying values of these
notes at December 31, 2003 and 2002 are $3,094,000 and $6,271,000. Fair value is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.



(m)  Income Taxes



We recognize deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or tax returns. Accordingly, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and
liabilities using enacted rules in effect for the year in which differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.



A valuation allowance is established to reduce the deferred
tax assets when we determine it is more likely than not that the related tax benefits will not be realized. We intend to periodically review the valuation of our deferred tax assets in light of expected future operating results.



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SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



(n)  Recent Accounting Pronouncements



In June 2002, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities, which addresses accounting for restructuring and similar costs. SFAS No. 146 supersedes previous accounting
guidance, principally Emerging Issues Task Force (EITF) Issue No. 94-3, Liability Recognition for Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring). SFAS No. 146 requires companies to recognize
costs associated with exit or disposal of activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. This statement is effective for exit or disposal activities that are initiated after December 31, 2002.
The adoption of SFAS No. 146 did not have any immediate impact on our results of operations or financial condition.



In November 2002, EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables (EITF 00-21) was issued. EITF 00-21 addresses certain
aspects of the accounting by a vendor for arrangements under which it will perform multiple revenue-generating activities and how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting. EITF
00-21 is effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The adoption of EITF 00-21 does not have a material effect on our results of operations or financial condition.



In November 2002, the Financial Accounting Standards Board (FASB)
issued FASB Interpretation (FIN) No. 45 Guarantors Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Othersan interpretation of FASB Statements No. 5, 57 and 107 and
rescission of FIN 34. The following is a summary of the Companys agreements that the Company has determined are within the scope of FIN 45.



Under its Articles of Association, the Company is required to indemnify its officers and directors for all costs, losses and liabilities they may incur as
a result of the officer or directors serving in such capacity subject to statutory restrictions. The term of the indemnification period is for the officers or directors lifetime.



The maximum potential amount of future payments the Company could be required
to make under the indemnification provisions contained in its bylaws is unlimited. However, the Company has a directors and officers liability insurance policy that limits its exposure and enables it to recover all or a portion of any
future amounts paid by the Company to indemnify a director or officer. As a result of its insurance policy coverage, the Company believes the estimated fair value of these indemnification obligations is minimal and has no liabilities recorded for
these agreements as of December 31, 2003.



The Company enters
into indemnification provisions under its agreements with other companies in its ordinary course of business, typically with licensees, research institutes at which studies are conducted, landlords, investment bankers and financial advisers. Under
these provisions the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of their performance of such agreements except in cases of their negligence or default.
These indemnification provisions often include indemnifications relating to representations made by the Company, including those with regard to intellectual property rights. These indemnification provisions generally survive termination of the
underlying agreement. In some cases, the Company has obtained insurance providing coverage for losses such as these, against which the Company has agreed to indemnify a third party. The maximum potential amount of future payments the Company could
be required to make under these indemnification provisions generally is limited. The Company has not incurred material costs in connection with defending these indemnification agreements. As a result, the Company believes the estimated fair value of
these obligations is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of December 31, 2003.



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##### Table of Contents

SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest
Entities (FIN 46). FIN 46 requires an investor with a majority of the variable interests in a variable interest entity to consolidate the entity and also requires majority and significant variable interest investors to provide
certain disclosures. A variable interest entity is an entity in which the equity investors do not have a controlling financial interest or the equity investment at risk is insufficient to finance the entitys activities without receiving
additional subordinated financial support from other parties. We do not have any variable interest entities that must be consolidated.



In May 2003, the FASB issued SFAS No. 150, Accounting For Certain Financial Instruments with Characteristics of Both Liabilities and
Equity, which establishes standards for how an issuer of financial instruments classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. Implementation of this standard did not have a material effect on our results of
operations or financial condition.



(o)  Reclassification



As of
December 31, 2002 we have reclassified $172,000 from accrued liabilities to deferred revenue and license fees to be consistent with the presentation in 2003.



(p)  Advertising Expenses



The Companys policy is to expense advertising costs as incurred. During the year ended December 31, 2003, the Company incurred advertising and
related costs of $283,000 related to the development and airing of its direct response infomercial. No advertising costs were incurred in prior years.



(q)  Stock Compensation Expense



Senetek accounts for its stock-based plans under APB No. 25 and provides pro forma disclosures for the compensation expense determined under the fair
value provisions of SFAS No. 123. The Company does not record compensation expense using the fair value provisions, because the alternative fair value accounting provided for under SFAS No. 123 requires the use of option valuation models that were
not developed for use in valuing employee stock options. Under APB No. 25, since the exercise price of Seneteks employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized.



Proforma information regarding net income and earnings per
share is required by SFAS No. 123, which also requires that the information be determined as if Senetek had accounted for its employee stock options granted subsequent to January 28, 1995 under the fair value method of that Statement. The fair value
for these options was estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted-average assumptions:



|                          |  |      |       |  |      |       |  |      |      
|------------------------- |  | ---- | ----- |  | ---- | ----- |  | ---- | -----
|                          |  | 2003 |       |  | 2002 |       |  | 2001 |      
|Risk free interest rate   |  | 4.0  | %     |  | 4.0  | %     |  | 5.0  | %    
|Expected dividend yield   |  | 0    | %     |  | 0    | %     |  | 0    | %    
|Expected stock volatility |  | 83   | %     |  | 71   | %     |  | 85   | %    
|Expected life of options  |  | 7.0  | years |  | 7.0  | years |  | 4.0  | years



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##### Table of Contents

SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For purposes of pro forma disclosures, the estimated fair value of the options is amortized to
expense over the options vesting period. For purposes of SFAS No. 123s disclosure requirements, the amended Employee Stock Purchase plan is considered a compensatory plan. Senetek pro forma information follows (in thousands, except for
per share information):



|                                                                           |  |                          |        |   |      |   |       |      |  |   |      |  
|-------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ----- | ---- |  | - | ---- | -
|                                                                           |  | Years ended December 31, |       
|                                                                           |  | 2003                     |        |   | 2002 |   |       | 2001 | 
|Net income (loss) as reported(1)                                           |  | $                        | (4,994 | ) |      | $ | 1,541 |      |  | $ | 385  |  
|Subtract Stock based compensation excluded from reported net income (loss) |  |                          | (615   | ) |      |   | (725  | )    |  |   | (679 | )
|                                                                           |  |                          |        |   |      |   |       |      |  |   |      |  
|Pro forma net income (loss)                                                |  | $                        | (5,609 | ) |      | $ | 816   |      |  | $ | (294 | )
|                                                                           |  |                          |        |   |      |   |       |      |  |   |      |  
|Pro forma basic and diluted income (loss) per common share                 |  | $                        | (0.10  | ) |      | $ | 0.01  |      |  | $ |     |  
|                                                                           |  |                          |        |   |      |   |       |      |  |   |      |  

---

|(1) |  | No stock based compensation for employees was included in the net income (loss) for any period.
|--- |  | -----------------------------------------------------------------------------------------------



The weighted-average fair values of options granted during fiscal years 2003, 2002 and 2001 were $.41, $.50 and $1.02
respectively.



(r)  Shipping and handling costs



The Company records shipping and handling fees billed to
customers as revenue included in product sales. Costs associated with shipping and handling activities are comprised of outbound freight and associated direct labor costs, and are recorded in cost of sales.



3.    Concentration of Risk



Our customers are principally in the United States. Accounts Receivable,
including those related to the disposed asset group, typically are unsecured. The allowance for doubtful accounts is established based on payment trends, age of the receivables and other economic factors. Three customers in our skincare sector
account for approximately 55%, 20% and 11% of our revenues in 2003 and 35%, 30% and 11% of our net revenue in 2002. Three customers account for 43%, 13% and 8% of our net trade receivables at December 31, 2003 and 52%, 13% and 13% of our net trade
receivables at December 31, 2002. There is therefore a significant concentration of credit risk with respect to these customers.



4.    Inventory



Inventory at the lower of cost or market value comprises the following:



|                 |  |                  |     |                   |   |    
|---------------- |  | ---------------- | --- | ----------------- | - | ---
|                 |  | December 31,2003 |     | December 31, 2002
|                 |  | ($ in thousands)
|Finished Goods   |  | $                | 183 |                   | $ | 82 
|Raw Materials    |  |                  | 172 |                   |   | 154
|Work in Progress |  |                  | 31  |                   |   | 172
|                 |  |                  |     |                   |   |    
|                 |  | $                | 386 |                   | $ | 408
|                 |  |                  |     |                   |   |    



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SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



5.    Property and Equipment and Assets Held for Sale



Property and equipment and Asset Held for Sale are summarized as follows:



|                                         |  |                  |       |                  |   |      
|---------------------------------------- |  | ---------------- | ----- | ---------------- | - | -----
|                                         |  | December 31,2003 |       | December 31,2002
|                                         |  | ($ in thousands)
|Cost:                                    |  |                  |       |                  |   |      
|Office Furniture, Fixtures and Equipment |  | $                | 1,445 |                  | $ | 1,365
|Laboratory equipment                     |  |                  | 363   |                  |   | 363  
|Leasehold Improvements                   |  |                  | 849   |                  |   | 837  
|Assets under construction(1)             |  |                  |      |                  |   | 2,702
|                                         |  |                  |       |                  |   |      
|                                         |  |                  | 2,657 |                  |   | 5,267
|                                         |  |                  |       |                  |   |      
|Accumulated depreciation                 |  |                  |       |                  |   |      
|Office Furniture, Fixtures and Equipment |  |                  | 1,321 |                  |   | 1,285
|Laboratory equipment                     |  |                  | 363   |                  |   | 363  
|Leasehold Improvements                   |  |                  | 463   |                  |   | 370  
|                                         |  |                  |       |                  |   |      
|                                         |  |                  | 2,147 |                  |   | 2,018
|                                         |  |                  |       |                  |   |      
|Net Carrying Value                       |  | $                | 510   |                  | $ | 3,249
|                                         |  |                  |       |                  |   |      
|Asset Held for Sale (1)                  |  | $                | 250   |                  | $ |     
|                                         |  |                  |       |                  |   |      

---

|(1) |  | During the 4thquarter of 2003, the Company
determined, in accordance with SFAS No. 144 Accounting for the Impairment of Long Lived Assets, that the specialized drug delivery equipment known as Reliaject was impaired because the carrying value of the equipment was greater than the
estimated Fair value of $250,000. In making the decision to dispose of the Reliaject, the Company considered the history of the Reliaject, current alternatives for the equipment, status of ongoing negotiations with possible acquirers, internal
expertise for the specialized equipment, and financial condition of the Company. As a result, an impairment charge of $2,451,000 was recorded against the pharmaceutical segment. The asset is now separately classified on the balance sheet as
Held for Sale. The fair value of the asset was written down to a minimum value that would be expected to be received excluding any future payments that the Company might receive and are not contingent upon future product sales,
regulatory approval and other operational issues that the purchaser will likely need to resolve. The Company expects to consummate a transaction for the Reliaject in fiscal 2004 but is expected to have some ongoing involvement with the equipment,
including the receipt of possible future royalties depending on the ultimate success of installing and utilizing the equipment.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



6.    Goodwill



In June 2001, the FASB finalized FASB No. 142, Goodwill and Other Intangible Assets (SFAS 142). SFAS 142 requires, among other things, that
companies no longer amortize goodwill, but instead test goodwill for impairment at least annually. In addition, SFAS 142 requires that we identify reporting units for the purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease amortization of intangible assets with an indefinite useful life.



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SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Had SFAS No. 142 been in effect prior to January 1, 2002, our reported net income (loss) for 2003,
2002 and 2001 would have been as follows (in thousands, except per share amounts):



|                                               |  |                         |        |   |      |   |       |  |   |    
|---------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ----- |  | - | ---
|                                               |  | Year Ended December 31,
|                                               |  | 2003                    |        |   | 2002 |   | 2001 
|Net Income:                                    |  |                         |        |   |      |   |       |  |   |    
|Reported                                       |  | $                       | (4,994 | ) |      | $ | 1,541 |  | $ | 385
|Goodwill amortization                          |  |                         |       |   |      |   |      |  |   | 133
|Adjusted                                       |  | $                       | (4,994 | ) |      |   | 1,541 |  |   | 518
|Basic and diluted net income per common share: |  |                         |        |   |      |   |       |  |   |    
|Reported                                       |  | $                       | (.09   | ) |      | $ | 0.03  |  | $ | .01
|Effect of goodwill amortization                |  |                         |       |   |      |   |      |  |   |   
|Adjusted                                       |  | $                       | (.09   | ) |      | $ | 0.03  |  | $ | .01



The Goodwill relates
to the acquisition of certain of the assets of Carme by CCSI in 1995 and is included in our skincare segment.



7.    Accrued Liabilities



Accrued liabilities comprise the following:



|                               |  |                  |     |                  |   |      
|------------------------------ |  | ---------------- | --- | ---------------- | - | -----
|                               |  | December 31,2003 |     | December 31,2002
|                               |  | ($ in thousands)
|Accrued Salaries and Benefits  |  | $                | 189 |                  | $ | 168  
|Legal and Professional Fees    |  |                  | 134 |                  |   | 112  
|Audit and Accountancy Fees     |  |                  | 185 |                  |   | 117  
|Accrued Rent                   |  |                  | 120 |                  |   | 111  
|Accrued Royalty                |  |                  |    |                  |   | 305  
|Accrued Income Taxes           |  |                  |    |                  |   | 111  
|Other Liabilities and Accruals |  |                  | 60  |                  |   | 76   
|                               |  |                  |     |                  |   |      
|                               |  | $                | 688 |                  | $ | 1,000
|                               |  |                  |     |                  |   |      



Customer advances
totaling $0 and $129,000 at December 31, 2003 and 2002, and included in accounts payable, relate to monies received to finance the purchase of raw material inventories for products supplied.



8.    Line of Credit



On June 20, 2001 we executed an agreement with Wallington Investments
Limited for a convertible secured line of credit up to $1 million. The line of credit bears interest at 8% per annum, is secured by the intellectual property rights of the Company and expired on June 20, 2002. The Company did not utilize this credit
facility.



9.    Notes Payable



April 1999 Refinancing



In connection with this refinancing and a settlement agreement, the Company
issued Series A, B and C warrants to purchase an aggregate of 3 million Ordinary shares at $1.20 per share, 3.3 million ordinary shares at $1.50 per share and 1.2 million ordinary shares at $2.00 per share. The Series A, B and Series C warrants
expire 10 years from the date of issuance, April 2009.



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SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In April 1999, we received $4,751,000 (net of $249,000 in expenses) in cash and refinanced the
balance owed of $2,389,000 under a 1998 Credit Agreement, in exchange for new notes bearing interest at 8% per annum and maturing in April 2004. The notes require semi annual payment of interest only until maturity and are secured by all of our
assets. Interest may be paid in cash or Ordinary shares that have been registered with the SEC.



In a side letter to the April 1999 Securities Purchase Agreement, it was agreed that the interest payable on the loans totaling $7,388,579 would be at the
rate of 9% per annum if the interest payments should be subject to UK withholding taxes. We had accrued interest at the rate of 9% from the inception of the loan but had paid the lenders interest at 8% in accordance with the main agreement. In
November 2001, we received clearance from the UK Inland Revenue that withholding taxes need not be accounted for on this loan. As a result, approximately $200,000 was credited back to interest expense in the fourth quarter of 2001.



June 2001 Refinancing



On June 20, 2001, the Company and its lenders amended their borrowing
arrangement, whereby, the maturity of these notes was extended until April 2004. A transaction fee amounting to 5% of the principal amount outstanding on these notes paid to Scorpion Holdings in Ordinary shares worth $369,000 and legal costs of
$113,000 were incurred to effect this transaction. In connection with this amendment, the terms of the warrants were also amended. The expiration date of the Series A warrants was extended to ten years from the date of issuance and the exercise
price was adjusted to $1.00 per share. The exercise price of the Series B and Series C warrants have been adjusted to $1.25 and $1.00 respectively.



As the outstanding borrowings under the 1999 Securities Purchase Agreement were refinanced by modification of the notes with substantially different terms
as defined by EITF 96-19, Debtors Accounting for a Modification or Extinguishment of a Debt Instrument, the Company is required to recognize the excess of the sum of the fair value of the modified notes and the fair value assigned to the
warrant modification as compared to the carrying value of the previous notes net of unamortized issuance costs, as a loss on the extinguishment of debt. As the difference was insignificant, no loss on extinguishment was recorded in 2001. After the
modification in June 2001, the carrying value of the note was $5,089,000. The discount of $2,300,000, which is related as the difference between the fair value and the carrying value of the note at June 30, 2001, is being amortized over the
remaining life of the note. Accordingly, the effective interest rate is approximately 19%.



September 2003 Refinancing



On September 4, 2003 the Company amended its Notes Payable agreement and concurrently made a principal payment of $2.5 million and extended the maturity date of the notes until April 2007. The amended and restated Notes Payable require
annual principal payments of the lesser of $500,000, increasing to $750,000 March 2005, or 1/3 of free cash flow as defined by the agreement. The first principal installment is due March 31, 2004. The interest rate is 8.5% until April 1, 2004 when
it increases to 9.75% until maturity. As the outstanding borrowings under the June 2001 Amended Securities Purchase Agreement were refinanced by modifications of the notes with substantially similar terms as defined by Emerging Issues Task Force
96-19, Debtors Accounting for a Modification or Extinguishment of a Debt Instrument, the Company is required to account for the transaction as a modification and not a debt extinguishment. As such, the fair value of the 4.5 million
warrants issued with an exercise price of $0.40 per share is treated as additional notes payable discount and amortized until April 2007. The fair value of these warrants calculated using the Black Scholes Model was estimated at $1,447,000 and has
been added to the notes payable discount and is being amortized as additional interest expense until maturity of the note in April 2007. As of December 31, 2003 the unamortized discount on the notes payable is $1,795,000. The effective interest rate
under the modified terms of the note, factoring in the



F-16



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SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



value of the warrants as calculated under the Black Scholes Model, is approximately 31%. The fair value of the 600,000 warrants, issued to financial advisors
in the transaction with an exercise price of $0.40 to $0.62 per. share, was calculated at $193,000 using the Black Scholes Model and is treated as additional interest expense. The fair value of warrants issued in connection with the debt refinancing
was calculated under the Black Scholes Model using a volatility of 83%, risk free rate of return of 4%, and a seven year life.



The amortization of the discount on the notes amounted to $770,000, $864,000 and $1,095,000 for the years ended December 31, 2003, and 2002 and 2001.



Future minimum annual payments mature as follows:



|                        |  |                        |          
|----------------------- |  | ---------------------- | ---------
|                        |  | Minimum Annual Payment
|Year ended December 31, |  |                        |          
|2004                    |  | $                      | 500,000  
|2005                    |  |                        | 750,000  
|2006                    |  |                        | 750,000  
|2007                    |  |                        | 2,889,000
|                        |  |                        |          
|                        |  | $                      | 4,889,000
|                        |  |                        |          



10.    Stock
Option Plan



In December 1985, we adopted a share option
plan (the No. 1 Plan) for employees. Under the No. 1 Plan, options to purchase Ordinary shares are granted by the Board of Directors, subject to the exercise price of the option being not less than the market value of an Ordinary share
on the grant date. After the first twelve months following the date of the grant, options are exercisable at the rate of 25 percent, for each full year of employment. In the event the optionees employment is terminated; the option may not be
exercised unless the Board of Directors so permits. The options expire seven years from the date of the grant. On May 16, 1997, shareholders approved the extension of the No. 1 Plan until December 1, 2005 and an increase in the number of shares
available for grant to 6,000,000.



The following table
summarizes option transactions under the No. 1 Plan for the three years ended December 31, 2003:



|                             |  |                          |   |  |                    |   |  |                               |     
|---------------------------- |  | ------------------------ | - |  | ------------------ | - |  | ----------------------------- | ----
|                             |  | SharesAvailableFor Grant |   |  | OptionsOutstanding |   |  | WeightedAverageExercise price
|Balance at January 1, 2001   |  | 632,475                  |   |  | 3,460,625          |   |  | $                             | 1.64
|Cancelled                    |  | 468,500                  |   |  | (468,500           | ) |  |                               | 1.81
|Granted                      |  | (65,000                  | ) |  | 65,000             |   |  |                               | 0.93
|                             |  |                          |   |  |                    |   |  |                               |     
|Balance at December 31, 2001 |  | 1,035,975                |   |  | 3,057,125          |   |  |                               | 1.59
|Cancelled                    |  | 182,250                  |   |  | (182,250           | ) |  |                               | 1.45
|Granted                      |  | (1,205,000               | ) |  | 1,205,000          |   |  |                               | 0.89
|                             |  |                          |   |  |                    |   |  |                               |     
|Balance at December 31, 2002 |  | 13,225                   |   |  | 4,079,875          |   |  |                               | 1.35
|Cancelled                    |  | 176,250                  |   |  | (176,250           | ) |  |                               | 1.20
|Granted                      |  | (42,500                  | ) |  | 42,500             |   |  |                               | 0.41
|                             |  |                          |   |  |                    |   |  |                               |     
|Balance at December 31, 2003 |  | 146,975                  |   |  | 3,946,125          |   |  | $                             | 1.39
|                             |  |                          |   |  |                    |   |  |                               |     



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##### Table of Contents

SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table summarizes information about the Executive No. 1 Plan options outstanding at
December 31, 2003.



|                       |  |                   |  |                                                  |  |                               |      |                   |           |                                                        |   |     
|---------------------- |  | ----------------- |  | ------------------------------------------------ |  | ----------------------------- | ---- | ----------------- | --------- | ------------------------------------------------------ | - | ----
|Range ofExercise Price |  | NumberOutstanding |  | WeightedAverageRemainingContractual Lifein years |  | WeightedAverageExercise Price |      | NumberExercisable |           | Weighted Average Exercise Price of Exercisable Options
|$0.41$0.55            |  | 342,500           |  | 6.09                                             |  | $                             | 0.53 |                   | 300,000   |                                                        | $ | 0.53
|$1.00$1.75            |  | 3,143,625         |  | 3.67                                             |  |                               | 1.38 |                   | 2,219,875 |                                                        |   | 1.47
|$2.00$2.19            |  | 435,000           |  | 2.08                                             |  |                               | 2.01 |                   | 432,500   |                                                        |   | 2.01
|$3.50$3.75            |  | 25,000            |  | 1.30                                             |  |                               | 3.62 |                   | 25,000    |                                                        |   | 3.62
|                       |  |                   |  |                                                  |  |                               |      |                   |           |                                                        |   |     
|$0.41$3.75            |  | 3,946,125         |  | 3.69                                             |  | $                             | 1.39 |                   | 2,977,375 |                                                        | $ | 1.47
|                       |  |                   |  |                                                  |  |                               |      |                   |           |                                                        |   |     



Not included in the
above are options granted to directors and certain employees outside the No. 1 Plan. The following table summarizes option transactions outside the No. 1 Plan in the years ended December 31, 2003, 2002 and 2001.



|                                        |  |                     |  |                               |     
|--------------------------------------- |  | ------------------- |  | ----------------------------- | ----
|                                        |  | Options Outstanding |  | WeightedAverageExercise Price
|Balance at December 31 2001, 2002, 2003 |  | 200,000             |  | $                             | 1.50
|                                        |  |                     |  |                               |     



There was no activity
during 2003, 2002 or 2001



The following table summarizes
information about the Outside No. 1 Plan Options outstanding at December 31, 2003.



|                        |  |                   |  |                                                    |  |                               |      |                   |         |                                                      |   |     
|----------------------- |  | ----------------- |  | -------------------------------------------------- |  | ----------------------------- | ---- | ----------------- | ------- | ---------------------------------------------------- | - | ----
|Range of Exercise Price |  | NumberOutstanding |  | WeightedAverage RemainingContractual Life in years |  | WeightedAverageExercise Price |      | NumberExercisable |         | Weighted AverageExercise Price ofExercisable Options
|$1.50                   |  | 200,000           |  | .5                                                 |  | $                             | 1.50 |                   | 200,000 |                                                      | $ | 1.50



In May 1987, we
adopted a share option plan (the No. 2 Plan) for Non-Executive Directors and Consultants. Under the No. 2 Plan, options to purchase Ordinary shares are granted by the Board of Directors, subject to the exercise price being not less than
the market value of an Ordinary share on the grant date. Options granted under this plan are exercisable in their entirety one year after the date of grant. In the event the optionee ceases to be a non-executive Director or consultant, the option
may not be exercised unless the Board of Directors so permits. The options expire seven years from the date of grant. On May 16, 1997 shareholders approved an extension of the Plan until December 1, 2005 and an increase in the number of shares
available for grant to 4,000,000.



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SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table summarizes option transactions under the No. 2 Plan for the three years ended
December 31, 2003:



|                             |  |                          |   |  |                    |   |  |                              |     
|---------------------------- |  | ------------------------ | - |  | ------------------ | - |  | ---------------------------- | ----
|                             |  | SharesAvailableFor Grant |   |  | OptionsOutstanding |   |  | WeightedAverageExerciseprice
|Balance at January 1, 2001   |  | 1,456,125                |   |  | 2,081,900          |   |  | $                            | 1.97
|Granted                      |  | (100,000                 | ) |  | 100,000            |   |  |                              | 1.88
|Cancelled                    |  | 319,900                  |   |  | (319,900           | ) |  |                              | 2.71
|                             |  |                          |   |  |                    |   |  |                              |     
|Balance at December 31, 2001 |  | 1,676,025                |   |  | 1,862,000          |   |  |                              | 1.84
|Granted                      |  | (850,000                 | ) |  | 850,000            |   |  |                              | 1.05
|Cancelled                    |  | 340,000                  |   |  | (340,000           | ) |  |                              | 1.98
|                             |  |                          |   |  |                    |   |  |                              |     
|Balance at December 31, 2002 |  | 1,166,025                |   |  | 2,372,000          |   |  |                              | 1.54
|Granted                      |  | (825,000                 | ) |  | 825,000            |   |  |                              | .55 
|Cancelled                    |  | 755,000                  |   |  | (755,000           | ) |  |                              | 1.51
|                             |  |                          |   |  |                    |   |  |                              |     
|Balance at December 31, 2003 |  | 1,096,025                |   |  | 2,442,000          |   |  | $                            | 1.21
|                             |  |                          |   |  |                    |   |  |                              |     



The following table
summarizes information about the No. 2 Plan for non-executive directors and consultants options outstanding at December 31, 2003.



|                       |  |                   |  |                                                   |  |                               |      |                   |           |                                                      |   |     
|---------------------- |  | ----------------- |  | ------------------------------------------------- |  | ----------------------------- | ---- | ----------------- | --------- | ---------------------------------------------------- | - | ----
|Range ofExercise Price |  | NumberOutstanding |  | WeightedAverageRemaining Contractual Lifein years |  | WeightedAverageExercise Price |      | NumberExercisable |           | Weighted AverageExercise Price ofExercisable Options
|$0.41$0.65            |  | 825,000           |  | 6.45                                              |  | $                             | 0.55 |                   |          |                                                      |   |    
|$1.00$1.88            |  | 1,417,000         |  | 4.06                                              |  | $                             | 1.36 |                   | 1,417,000 |                                                      | $ | 1.36
|$2.00                  |  | 100,000           |  | 1.81                                              |  | $                             | 2.00 |                   | 100,000   |                                                      | $ | 2.00
|$3.50                  |  | 50,000            |  | 1.51                                              |  | $                             | 3.50 |                   | 50,000    |                                                      | $ | 3.50
|$4.28                  |  | 50,000            |  | 1.40                                              |  | $                             | 4.28 |                   | 50,000    |                                                      | $ | 4.28
|                       |  |                   |  |                                                   |  |                               |      |                   |           |                                                      |   |     
|$1.31$4.28            |  | 2,442,000         |  | 4.67                                              |  | $                             | 1.21 |                   | 1,617,000 |                                                      | $ | 1.55
|                       |  |                   |  |                                                   |  |                               |      |                   |           |                                                      |   |     



Not included in the
above are options granted to non-executive directors and consultants outside the No. 2 Plan under the general powers granted to the directors for the allotment of equity securities, approved at the Annual General Meeting of the Company held on May
16, 1997.



The following table summarizes option transactions
outside the No. 2 Plan for the three years ended December 31, 2003.



|                                      |  |                    |   |  |                               |     
|------------------------------------- |  | ------------------ | - |  | ----------------------------- | ----
|                                      |  | OptionsOutstanding |   |  | WeightedAverageExercise price
|Balance at January 1, 2001            |  | 180,000            |   |  | $                             | 1.38
|Cancelled                             |  | (60,000            | ) |  |                               | 3.69
|                                      |  |                    |   |  |                               |     
|Balance at December 31, 2001          |  | 120,000            |   |  |                               | 1.50
|Cancelled in 2002                     |  | (60,000            | ) |  |                               | 1.25
|                                      |  |                    |   |  |                               |     
|Balance at December 31, 2002 and 2003 |  | 60,000             |   |  | $                             | 1.50
|                                      |  |                    |   |  |                               |     



There was no activity
during 2003.



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##### Table of Contents

SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table summarizes information about the outside No. 2 Plan for non-executive directors
and consultants options outstanding at December 31, 2003.



|                        |  |                   |  |                                                  |  |                               |      |                   |        |                                                      |   |     
|----------------------- |  | ----------------- |  | ------------------------------------------------ |  | ----------------------------- | ---- | ----------------- | ------ | ---------------------------------------------------- | - | ----
|Range of Exercise Price |  | NumberOutstanding |  | WeightedAverageRemainingContractual Lifein years |  | WeightedAverageExercise Price |      | NumberExercisable |        | Weighted AverageExercise Price of ExercisableOptions
|$1.50                   |  | 60,000            |  | 1.29                                             |  | $                             | 1.50 |                   | 60,000 |                                                      | $ | 1.50
|                        |  |                   |  |                                                  |  |                               |      |                   |        |                                                      |   |     



11.    Stock
Compensation Expense



Under U.S. Generally Accepted
Accounting Principles, we apply APB No. 25 and related interpretations in accounting for our option plans. No expense was recorded in 2003, 2002 or 2001 related to stock options issued to employees.



During 2003, we recognized $41,000 (2002: $199,000; 2000: $223,000) of
general and administrative expense plus an additional $193,000 recorded in interest expense in 2003, relating to all stock options and warrants awarded to non-employee Directors and consultants in exchange for consulting services based upon
remeasurements of fair value of the awards through the date at which performance is completed which were estimated using the Black Scholes option pricing model with the following assumptions:



Dividend yield of nil, volatility of 83%, (2002:71%, 2001:85%) risk free
investment rate of 4.0% (2001:5.0%, 2000:5%) and an expected life of 7 years (2002: 7 years, 2001: 4 years).



12.    Shareholders Equity



During the year ended December 31, 2001, the outstanding Ordinary shares of Senetek increased by 620,036 to 59,052,153. The increase was represented by 341,747 Ordinary shares issued to Scorpion Holdings Inc as a 5%
transaction fee on the $7,389,000 loan extension from April 2002 to April 2004 and 278,289 Ordinary shares issued in exchange for the interest payment on the $7,389,000 loan for the first six months of 2001.



The following warrants were issued in association with the new Securities
Purchase Agreement and the Settlement Agreement, dated on April 14, 1999 and the refinancing in September 2003.



| |  |                               |  |                 |  |               
| |  | ----------------------------- |  | --------------- |  | --------------
| |  | WarrantsIssued andunexercised |  | ExercisePrice $ |  | ExpirationDate
| |  | 3,000,000                     |  | 1.00            |  | April 2009    
| |  | 3,333,333                     |  | 1.25            |  | April 2009    
| |  | 100,000                       |  | 0.62            |  | Sept. 2009    
| |  | 5,000,000                     |  | .40             |  | Sept. 2011    
| |  |                               |  |                 |  |               
| |  | 11,433,333                    |  |                 |  |               
| |  |                               |  |                 |  |               



The warrants referred
to above entitle the holder to purchase American Depository Receipts of the Company at the purchase prices referred to above at any time commencing 90 days from the date of subscription and prior to the expiration date. The offer and sale of the
warrants is being made in compliance with and in reliance upon the provision of Regulation S under the United States Securities Act of 1933, as amended. The above warrants are outstanding as of December 31, 2003.



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SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



13.    Taxation



Senetek is incorporated in England with two U.S. subsidiaries and one Hong Kong subsidiary. We are subject to United Kingdom
corporation tax on a worldwide basis with relief for foreign taxes in cases where double taxation relief agreements have been established. The U.S. subsidiaries are subject to United States tax on a worldwide basis (including state taxes) with
similar relief for foreign taxes.



|                                                   |  |                          |        |   |      |   |       |      |  |   |      |  
|-------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ----- | ---- |  | - | ---- | -
|                                                   |  | Years ended December 31, |       
|                                                   |  | 2003                     |        |   | 2002 |   |       | 2001 | 
|                                                   |  | $ thousands              |       
|Income from continuing and discontinued operations |  |                          |        |   |      |   |       |      |  |   |      |  
|Before income taxes included the following:        |  |                          |        |   |      |   |       |      |  |   |      |  
|US Income (Loss)                                   |  | $                        | (3,007 | ) |      | $ | 2,538 |      |  | $ | 967  |  
|Foreign (Loss)                                     |  |                          | (1,987 | ) |      |   | (946  | )    |  |   | (576 | )



Income tax expense is
comprised of the following:



|                                            |  |               |    |   |      |   |     |      |  |   |  
|------------------------------------------- |  | ------------- | -- | - | ---- | - | --- | ---- |  | - | -
|                                            |  | December 31  
|                                            |  | 2003          |    |   | 2002 |   |     | 2001
|                                            |  | ($ thousands)
|Current State taxes-continuing operations   |  | $             | 2  |   |      | $ | 52  |      |  | $ | 6
|Current Federal taxes continuing operations |  |               | (2 | ) |      |   | (39 | )    |  |   | 
|                                            |  |               |    |   |      |   |     |      |  |   |  
|                                            |  |               |   |   |      |   | 13  |      |  | $ | 6
|                                            |  |               |    |   |      |   |     |      |  |   |  
|Current State taxes-discontinued operations |  | $             |   |   |      | $ | 38  |      |  | $ | 
|                                            |  |               |    |   |      |   |     |      |  |   |  



Income tax expense
(benefit) differed from the amounts computed by applying the US federal income tax rate of 34% to pretax income losses from continuing operations as a result of the following:



|                                                                       |  |      |    |  |      |   |  |      |  
|---------------------------------------------------------------------- |  | ---- | -- |  | ---- | - |  | ---- | -
|                                                                       |  | 2003 |    |  | 2002 |   |  | 2001 |  
|Computed expected tax expense (benefit)                                |  | (34  | )% |  | 34   | % |  | 34   | %
|Permanent differences                                                  |  | 7    |    |  | 20   |   |  | 99   |  
|Utilization of tax loss carryforward                                   |  |     |    |  | (79  | ) |  | (183 | )
|Timing differences and losses for which no benefit has been recognized |  | 37   |    |  |     |   |  |     |  
|State tax expense (benefit), net of federal income tax benefit         |  | (3   | )  |  | 6    |   |  | 2    |  
|Foreign taxes (benefit)                                                |  | (7   | )  |  | 21   |   |  | 50   |  
|                                                                       |  |      |    |  |      |   |  |      |  
|Total tax expense-continuing operations                                |  |     |    |  | 2    | % |  | 2    | %
|                                                                       |  |      |    |  |      |   |  |      |  



Deferred tax assets
are comprised of the following:



|                                  |  |             |             |   |      |   |             |  
|--------------------------------- |  | ----------- | ----------- | - | ---- | - | ----------- | -
|                                  |  | December 31 |            
|                                  |  | 2003        |             |   | 2002 |  
|Net operating loss carry forwards |  | $           | 25,174,000  |   |      | $ | 25,653,000  |  
|Reserves and accruals             |  |             | 1,851,000   |   |      |   | 1,473,000   |  
|Tax Credits                       |  |             | 206,000     |   |      |   | 201,000     |  
|Other                             |  |             | 713,000     |   |      |   | 60,000      |  
|                                  |  |             |             |   |      |   |             |  
|Gross Deferred Tax Asset          |  |             | 27,944,000  |   |      |   | 27,387,000  |  
|Valuation Allowance               |  |             | (27,944,000 | ) |      |   | (27,387,000 | )
|                                  |  |             |             |   |      |   |             |  
|Net Deferred Tax Asset            |  | $           |            |   |      | $ |            |  
|                                  |  |             |             |   |      |   |             |  



F-21



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##### Table of Contents

SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Provisional tax losses available to us in the United Kingdom are estimated to be approximately
$38,300,000 at the end of fiscal year 2003. The deferred tax asset value of these losses is approximately $12,072,000 but no benefit has been recognized in the financial statements as the benefit is offset by an equal valuation allowance, because as
of December 31, 2003, we did not consider it more likely than not that the Company would generate taxable income to utilize such tax loss carry forward. Management is budgeting for improved performance and future operating results which may generate
future taxable income and it may reduce the valuation allowance when realization is deemed to be more likely than not. The United Kingdom tax-loss carry forwards are available indefinitely against profits from the same line of trade.



Our federal provisional tax losses available in the U.S. are estimated to be
approximately $35,360,000 at the end of fiscal year 2003. The deferred tax asset value of these losses is approximately $12,022,000 but no benefit has been recognized in the financial statements as the benefit is offset by an equal valuation
allowance because as of December 31, 2003 we did not consider it more likely than not that the Company would generate taxable income to utilize such tax loss carry forward. Management is budgeting for improved performance and future operating
results which may generate future taxable income and may reduce the valuation allowance when realization is deemed to be more likely, than not. Federal net operating losses expire at varying dates from 2008 through 2023. California net operating
losses are estimated to be approximately $18,518,000. The resulting deferred tax asset from California net operating losses is approximately $1,088,000. A 100% provision has also been established for this asset. California net operating losses
expire at varying dates from 2004 through 2013. Available operating losses could be limited if there was a greater than 50% change in ownership.



14.    Discontinued Operations



On December 31, 2002, we closed a transaction in which U.S. International Trading Corporation (USITC) purchased our rights to the Mill Creek personal care
line, the Silver Fox hair care line and other brands acquired by us in our 1995 acquisition of Carme Inc. (which are referred to hereafter as the intellectual property) for $400,000 cash, a promissory note of $2.3 million payable in 23 quarterly
installments commencing September 30, 2003 and the application of a deposit of $100,000 made by USITC in 1999 towards the agreed-upon purchase price of $2.8 million. Delivery of the intellectual property, which had no carrying value, was made on
December 31, 2002, concurrent with the receipt of $400,000 cash from USITC and the recording of title transfers by the Patent and Trademark Office.



We have accounted for this transaction as a sale of assets. Based on the prior history with the customer, the gain on the transaction will be recognized
when collection is probable, which is deemed to be when cash is received. Accordingly, the balance of the unpaid promissory note of $2.3 million will be netted with the deferred gain on our balance sheet. Any gain on the transaction in excess of the
initial payment of $400,000 and the previously unamortized portion of the $100,000 deposit made by USITC will be deferred until collection is deemed to be probable. All gains arising from this transaction will be classified as a component of
discontinued operations. Additionally, royalty and license income earned prior to the transaction date have been reclassified to discontinued operations.



During fiscal 2003, USITC paid the Company $113,000 of interest related to the above mentioned notes payable. As of December 31, 2003, USITC is delinquent
on scheduled principal and interest payments totaling approximately $398,000. The Company is currently working with USITC to bring the note current and assure timely performance in the future.



We had licensed the intellectual property to USITC since 1999, and USITC made
the purchase under a purchase option provided for in the license agreement. The purchase and sale agreement, among other things, terminated the 1999 license agreement. Other than the 1999 license agreement and the Du Barry product line license
agreement, there are no material existing relationships between USITC and Senetek.



F-22



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##### Table of Contents

SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



15.    Segment Information



The Companys reportable segments are strategic business units that offer different products and services. They are
managed separately because each business requires different technology and marketing strategies. We have two reportable segments: Pharmaceutical operations and skincare operations. The Pharmaceutical operations include biopharmaceuticals, drug
development, drug delivery development and the sale of monoclonal antibodies. The skincare operation includes the distribution of primarily Kinetin-based skincare products to a number of markets in North America and Asia. The accounting policies of
the segments are the same as those described in the summary of significant accounting policies. All inter-segment sales prices are market based. We evaluate performance based on operating results of the respective business units.



With the exception of $403,000 of sales and marketing expenses incurred in
2003 related to the development of its own skincare product line, Kinetin Plus, the Administration, Sales and Marketing expenses are allocated equally to each business segment.



|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|--------------------------------------------------------------------------------------------------- |  | ------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|INDUSTRY SEGMENTS                                                                                   |  | 2003          |        |   | 2002 |   |        | 2001 | 
|                                                                                                    |  | ($ thousands) |       
|Net Revenues                                                                                        |  |               |        |   |      |   |        |      |  |   |        |  
|Pharmaceuticals                                                                                     |  | $             | 953    |   |      | $ | 1,061  |      |  | $ | 1,363  |  
|Skincare                                                                                            |  |               | 7,273  |   |      |   | 8,348  |      |  |   | 7,090  |  
|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|Net Revenues for reportable segments and consolidated net sales                                     |  |               | 8,226  |   |      |   | 9,409  |      |  |   | 8,453  |  
|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|Operating (loss) income                                                                             |  |               |        |   |      |   |        |      |  |   |        |  
|Pharmaceuticals                                                                                     |  |               | (5,679 | ) |      |   | (2,797 | )    |  |   | (1,822 | )
|Skincare                                                                                            |  |               | 2,192  |   |      |   | 5,078  |      |  |   | 3,455  |  
|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|Total Operating Income (Loss) from continuing operations for reportable segments                    |  | $             | (3,487 | ) |      | $ | 2,281  |      |  | $ | 1,633  |  
|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|Pharmaceuticals:                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|Operating Loss                                                                                      |  | $             | (5,679 | ) |      | $ | (2,797 | )    |  | $ | (1,822 | )
|Interest Income                                                                                     |  |               |       |   |      |   |       |      |  |   | 30     |  
|Interest Expense                                                                                    |  |               | (1,584 | ) |      |   | (1,442 | )    |  |   | (1,558 | )
|Other Expense, Net                                                                                  |  |               |       |   |      |   | (17    | )    |  |   | (62    | )
|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|Loss From Continuing Operations Available to Ordinary Shareholders                                  |  |               | (7,263 | ) |      |   | (4,256 | )    |  |   | (3,412 | )
|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|Skincare:                                                                                           |  |               |        |   |      |   |        |      |  |   |        |  
|Operating Profit/(Loss)                                                                             |  |               | 2,192  |   |      |   | 5,078  |      |  |   | 3,455  |  
|Interest (Expense) income, net                                                                      |  |               | 3      |   |      |   | 38     |      |  |   | (56    | )
|Provision for taxation                                                                              |  |               |       |   |      |   | (13    | )    |  |   | (6     | )
|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|Income (Loss) from continuing operations available to Ordinary shareholders                         |  |               | 2,195  |   |      |   | 5,103  |      |  |   | 3,393  |  
|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|Income (loss) From Continuing Operations Available to Ordinary shareholders for reportable segments |  |               | (5,068 | ) |      |   | 847    |      |  |   | (19    | )
|Income from discontinued operations-skincare                                                        |  |               | 74     |   |      |   | 694    |      |  |   | 404    |  
|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|Net Income (loss)                                                                                   |  | $             | (4,994 | ) |      | $ | 1,541  |      |  | $ | 385    |  
|Assets:                                                                                             |  |               |        |   |      |   |        |      |  |   |        |  
|Pharmaceuticals                                                                                     |  | $             | 337    |   |      | $ | 3,025  |      |  | $ | 5,765  |  
|Skincare                                                                                            |  |               | 4,290  |   |      |   | 7,089  |      |  |   | 3,044  |  
|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|Total Consolidated Assets                                                                           |  | $             | 4,627  |   |      | $ | 10,114 |      |  | $ | 8,809  |  
|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|Capital Expenditures:                                                                               |  |               |        |   |      |   |        |      |  |   |        |  
|Pharmaceuticals                                                                                     |  | $             | 45     |   |      | $ | 82     |      |  | $ | 42     |  
|Skincare                                                                                            |  |               | 46     |   |      |   |       |      |  |   |       |  
|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|Total consolidated capital expenditures                                                             |  | $             | 91     |   |      | $ | 82     |      |  | $ | 42     |  
|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|Depreciation and Amortization:                                                                      |  |               |        |   |      |   |        |      |  |   |        |  
|Pharmaceuticals                                                                                     |  | $             | 64     |   |      | $ | 66     |      |  | $ | 449    |  
|Skincare                                                                                            |  |               | 65     |   |      |   | 66     |      |  |   | 175    |  
|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  
|Total Consolidated Depreciation and Amortization                                                    |  | $             | 129    |   |      | $ | 132    |      |  | $ | 624    |  
|                                                                                                    |  |               |        |   |      |   |        |      |  |   |        |  



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##### Table of Contents

SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                   |  |               |       |      |   |       |  |   |      
|---------------------------------- |  | ------------- | ----- | ---- | - | ----- |  | - | -----
|Geographic Areas                   |  | 2003          |       | 2002 |   | 2001 
|                                   |  | ($ thousands)
|Net Revenues-Continuing Operations |  |               |       |      |   |       |  |   |      
|United States                      |  | $             | 7,055 |      | $ | 6,915 |  | $ | 7,557
|United Kingdom                     |  |               | 28    |      |   | 27    |  |   | 25   
|Other foreign countries            |  |               | 1,143 |      |   | 2,467 |  |   | 871  
|                                   |  |               |       |      |   |       |  |   |      
|Total Consolidated                 |  | $             | 8,226 |      | $ | 9,409 |  | $ | 8,453
|                                   |  |               |       |      |   |       |  |   |      
|Long Lived Assets                  |  |               |       |      |   |       |  |   |      
|United States                      |  | $             | 2,068 |      | $ | 4,557 |  | $ | 4,607
|United Kingdom                     |  |               |      |      |   |      |  |   |     
|                                   |  |               |       |      |   |       |  |   |      
|                                   |  | $             | 2,068 |      | $ | 4,557 |  | $ | 4,607
|                                   |  |               |       |      |   |       |  |   |      



Our registered office
is located in the United Kingdom from which certain scientific research and development activities are operated. The majority of our employees are based in the United States from where we liaison with the U.S. investing public and from where the
primary sales and development of the skincare activities are directed.



16.    Commitments, Contingencies and Subsequent Event



(a)  Research



Under existing purchase orders, we are committed to provide funding for research programs and clinical trials of approximately $100,000 annually through September 2004.



(b)  Commitments Under Operating Leases



We lease certain office, laboratory and factory space and equipment under operating leases in the United Kingdom and,
through our subsidiaries SDDT Inc and Carme Cosmeceutical Sciences Inc., in the United States.



Minimum future lease payments under non-cancelable leases are as follows:



|                         |  |                        |      
|------------------------ |  | ---------------------- | -----
|Years Ending December 31 |  | Future Minimum Payment
|                         |  | ($ in thousands)      
|2004                     |  |                        | 269  
|2005                     |  |                        | 475  
|2006                     |  |                        | 384  
|2007                     |  |                        | 401  
|                         |  |                        |      
|                         |  | $                      | 1,529
|                         |  |                        |      



Rent expense was
approximately $327,000, 318,000, and $312,000 in 2003, 2002 and 2001 respectively.



(c)  Litigation



On April 11, 2003, we filed a lawsuit against OMP, Inc. in the Los Angeles County Superior Court for common law misappropriation, breach of confidence, breach of contract, breach of implied covenant of good faith and fair dealing,
intentional and negligent interference with prospective economic advantage, statutory and common law unfair competition, and unjust enrichment. We sought damages in an amount to be proven at trial as well as restitution, injunctive relief and
specific performance On October 28, 2003, OMP filed a lawsuit against Senetek in the United States District Court for the Northern District of California for violation of the Sherman Act and unfair competition as a result of Seneteks
alleged abuse of patents. On March 25, 2004, the



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##### Table of Contents

SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Company announced that it had settled a litigation that was pending between Senetek and, OMP. Under the terms of the settlement, in exchange for Senetek
granting OMP the ongoing non-exclusive right to market and sell its Obagi-K products containing Kinetin in Japan limited to its existing channel of trade, until the last of Seneteks patents has expired, Senetek will receive an up front payment
of $1.5 million and an additional $500,000 based on future sales in Japan of skin care products containing Kinetin under the Obagi name. Payment of the $1.5 million is expected by the end of March, with the balance expected to be paid quarterly over
the next 12 to 18 months. Under the settlement, Senetek retains rights to license others to distribute Kinetin products in Japan



On June 2, 2003, the Company commenced a lawsuit in the High Court of Justice, Chancery Division, in London, England against Eagle-Picher Technologies,
LLC and Eagle-Picher Industries Inc., both Ohio corporations. The complaint alleges that the Defendants failed to perform under an April 1998 agreement under which they agreed to manufacture and supply phentalomine mesylate meeting required
pharmacopoeial specifications for use as an active ingredient in the Companys proprietary Invicorp® erectile dysfunction drug. The Companys complaint
seeks repayment of the $692,000 purchase price paid in advance, and of $294,000 paid for validation studies, as well as other amounts to be proven at trial for validation studies and regulatory filings required when the Company was forced to
transfer manufacturing of phentalomine mesylate to an alternative supplier. The defendants have responded, denying certain of our allegations, we have replied, and the parties are exchanging documents and witness statements as a prerequisite to a
trial to be scheduled for mid 2004.



As previously disclosed,
in the course of responding to a document request in April 2003 as part of an unrelated Securities and Exchange Commission investigation focused on a firm not affiliated with the Company, the Company became aware of certain documents suggesting that
during 2002 Company executives might have supplied non-public financial information to two securities analysts in an effort to correct draft research reports that contained information the executives considered overly-optimistic. The Board of
Directors appointed an independent Committee of non-management Directors which engaged outside securities counsel to conduct a full internal investigation and in June 2003 voluntarily reported the results to the Commissions office conducting
the unrelated investigation. In late March, the Commission staff sent to the Companys legal counsel a letter advising that the staff is considering recommending commencement of a proceeding alleging violations of Section 13(a) of the
Securities Exchange Act of 1934 and Commission Regulation FD, and inviting the submission of a response. Senetek is engaged in discussions with the Commission staff regarding settlement of the matter. Senetek does not anticipate any amounts paid in
connection with this matter will have a material impact on the future results of operations or financial condition of the Company.



(d)  Employment Contracts



We have entered into employment agreements with some of our officers. An agreement with our CEO was effective from November 1, 1998 and continues until
December 31, 2006. The agreement will automatically renew unless specifically terminated by Senetek or the employee. If the employment agreement is terminated by Senetek, the employee will be entitled to an additional three years of compensation.
Effective January 1, 2003, annual compensation under the employment agreement is $319,000 and an automobile allowance of $1,000 per month, plus reimbursement of related automobile expenses.



The Company has entered into an employment contract with its Chief Operating
Officer that runs from October 2002 to October 2005. The contract provides an annual salary of $198,000 plus a $500 monthly automobile allowance. The contract provides for certain guaranteed payments for up to three years in the event of a hostile
change of control.



In March 2003, the Company entered into an
employment contract with its new Chief Financial Officer that runs from March 2003 to April 2005. The contract provides an annual salary of $185,000 plus a $500 monthly



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##### Table of Contents

SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



automobile allowance. The contract provides for certain guaranteed payments for up to three years in the event of a hostile change of control.



In April 2003, the Company entered into an employment agreement with its
Executive Vice President, Corporate Development and General Counsel from April 2003 to March 2005. The contract provides an annual salary of $243,000 plus a $600 monthly automobile allowance. The contract provides for certain guaranteed payments for
up to three years in the event of hostile change of control.



(e)  Settlement



During 2002, the
Company negotiated a settlement with a group of Danish doctors related to their foregoing royalties against future Invicorp sales. The Company will pay a total of $150,000 over the next 5 years, of which $7,500 is due quarterly through March 2007.
The Company recorded the entire $150,000 as expense in 2002. As of December 31, 2003, $98,000 is unpaid, of which $68,000 is in other long term liabilities and $30,000 in accrued expenses.



17.     Related Party Transactions



During June 2003, the Company entered into a month to month consulting
agreement with Cherry Tree Development, LLC to act as an advisor related to Companys licensing of their proprietary sexual dysfunction drug, Invicorp, and drug delivery system, Reliaject. Cherry Tree Development, LLC was compensated $12,000
for each month of service and is an entity affiliated with Franklin Pass, a member of the Companys Board of Directors. The agreement was terminated on August 31, 2003.



The Company is required to pay the discoverers of Kinetin, one of whom is the Chief Scientist for the Company, a royalty
based upon a percentage of Kinetin revenues received by the Company. Royalties related to Kinetin Sales for 2003, 2002, and 2001 totaled $163,000, $116,000, and $81,000 respectively. As of December 31, 2003 and 2002, $163,000 and $157,000 is
included in accrued expenses related to its obligation under the royalty agreement.



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##### Table of Contents

SENETEK PLC



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



18.    Quarterly Information (unaudited)



|                                                   |  |              |       |   |               |   |       |              |  |   |                  |   |  |      |        |   |  |   |        |  
|-------------------------------------------------- |  | ------------ | ----- | - | ------------- | - | ----- | ------------ |  | - | ---------------- | - |  | ---- | ------ | - |  | - | ------ | -
|                                                   |  | FirstQuarter |       |   | SecondQuarter |   |       | ThirdQuarter |  |   | FourthQuarter(A) |   |  | 2003 |       
|2003                                               |  |              |       |   |               |   |       |              |  |   |                  |   |  |      |        |   |  |   |        |  
|Net Revenue                                        |  | $            | 2,072 |   |               | $ | 1,498 |              |  | $ | 2,210            |   |  | $    | 2,446  |   |  | $ | 8,226  |  
|Gross Profit                                       |  |              | 1,746 |   |               |   | 1,222 |              |  |   | 1,815            |   |  |      | 2,042  |   |  |   | 6,825  |  
|Operating income (loss) from continuing operations |  |              | 342   |   |               |   | (521  | )            |  |   | (519             | ) |  |      | (2,789 | ) |  |   | (3,487 | )
|Income (Loss) from continuing operations           |  |              | (30   | ) |               |   | (870  | )            |  |   | (1,102           | ) |  |      | (3,066 | ) |  |   | (5,068 | )
|Income (loss) from discontinued operations         |  |              | (39   | ) |               |   |      |              |  |   |                 |   |  |      | 113    |   |  |   | 74     |  
|Net Income (loss)                                  |  |              | (69   | ) |               |   | (870  | )            |  |   | (1,102           | ) |  |      | (2,953 | ) |  |   | (4,994 | )
|Basic and diluted income (loss) per share:         |  |              |       |   |               |   |       |              |  |   |                  |   |  |      |        |   |  |   |        |  
|Continuing operations                              |  | $            |      |   |               | $ | (0.01 | )            |  | $ | (0.02            | ) |  | $    | (0.05  | ) |  | $ | (0.09  | )
|Discontinued operations                            |  |              |      |   |               |   |      |              |  |   |                 |   |  |      |       |   |  |   |       |  
|                                                   |  |              |       |   |               |   |       |              |  |   |                  |   |  |      |        |   |  |   |        |  
|Net Income (loss) per share                        |  | $            |      |   |               | $ | (0.01 | )            |  | $ | (0.02            | ) |  | $    | (0.05  | ) |  | $ | (0.09  | )
|                                                   |  |              |       |   |               |   |       |              |  |   |                  |   |  |      |        |   |  |   |        |  

---

|(A) |  | During the 4thQuarter of 2003, the Company
recorded an impairment charge of $2,451,000 related to certain specialized equipment.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------



|                                                   |  |              |       |               |   |              |  |                  |       |  |      |       |   |  |   |      
|-------------------------------------------------- |  | ------------ | ----- | ------------- | - | ------------ |  | ---------------- | ----- |  | ---- | ----- | - |  | - | -----
|                                                   |  | FirstQuarter |       | SecondQuarter |   | ThirdQuarter |  | FourthQuarter(B) |       |  | 2002
|2002                                               |  |              |       |               |   |              |  |                  |       |  |      |       |   |  |   |      
|Net Revenue                                        |  | $            | 2,492 |               | $ | 3,215        |  | $                | 2,095 |  | $    | 1,607 |   |  | $ | 9,409
|Gross Profit                                       |  |              | 2,088 |               |   | 3,044        |  |                  | 1,956 |  |      | 1,329 |   |  |   | 8,417
|Operating income (loss) from continuing operations |  |              | 766   |               |   | 1,436        |  |                  | 542   |  |      | (463  | ) |  |   | 2,281
|Income (loss) from continuing operations           |  |              | 422   |               |   | 1,087        |  |                  | 89    |  |      | (751  | ) |  |   | 847  
|Income from discontinued operations                |  |              | 82    |               |   | 83           |  |                  | 118   |  |      | 411   |   |  |   | 694  
|Net income (loss)                                  |  |              | 504   |               |   | 1,170        |  |                  | 207   |  |      | (340  | ) |  |   | 1,541
|Basic and diluted income (loss) per share:         |  |              |       |               |   |              |  |                  |       |  |      |       |   |  |   |      
|Continuing operations                              |  | $            | 0.01  |               | $ | 0.02         |  | $                |      |  | $    | (0.01 | ) |  | $ | 0.02 
|Discontinued operations                            |  |              |      |               |   |             |  |                  |      |  |      | 0.01  |   |  |   | 0.01 
|                                                   |  |              |       |               |   |              |  |                  |       |  |      |       |   |  |   |      
|Net Income (loss) per share                        |  | $            | 0.01  |               | $ | 0.02         |  | $                | 0.00  |  | $    | 0.00  |   |  | $ | 0.03 
|                                                   |  |              |       |               |   |              |  |                  |       |  |      |       |   |  |   |      

---

|(B) |  | During the 4thquarter of 2002, the Company
recorded a settlement expense of $150,000 related to future royalties on Invicorp (See note 16(e)). Additionally, the Company recorded royalty expense of approximately $80,000 based upon the resolution of prior royalty income earned.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

SCHEDULE II



SENETEK PLC

VALUATION AND QUALIFYING ACCOUNTS



|                                                   |  |                            |           |                                                  |   |                                          |  |   |                       |   |  |   |        
|-------------------------------------------------- |  | -------------------------- | --------- | ------------------------------------------------ | - | ---------------------------------------- |  | - | --------------------- | - |  | - | -------
|                                                   |  | Balance,Beginning ofPeriod |           | AdditionsCharges to Revenuesor Costs andExpenses |   | Deductions- Write-offsCharged to Reserve |  |   | Balance,End of Period
|ALLOWANCES AGAINST TRADE AND NON-TRADE RECEIVABLE |  |                            |           |                                                  |   |                                          |  |   |                       |   |  |   |        
|                                                   |  |                            |           |                                                 
|Year Ended December 31,                            |  |                            |           |                                                  |   |                                          |  |   |                       |   |  |   |        
|2003                                               |  | $                          | 140,000   |                                                  | $ | 10,000                                   |  | $ | (72,000               | ) |  | $ | 78,000 
|2002                                               |  |                            | 263,000   |                                                  |   | 13,000                                   |  |   | (136,000              | ) |  |   | 140,000
|2001                                               |  |                            | 1,022,000 |                                                  |   |                                         |  |   | (759,000              | ) |  |   | 263,000
|                                                   |  |                            |           |                                                 
|ALLOWANCES AGAINST INVENTORIES                    |  |                            |           |                                                  |   |                                          |  |   |                       |   |  |   |        
|                                                   |  |                            |           |                                                 
|Year Ended December 31,                            |  |                            |           |                                                  |   |                                          |  |   |                       |   |  |   |        
|2003                                               |  | $                          | 82,000    |                                                  | $ | 238,000                                  |  | $ |                      |   |  | $ | 320,00 
|2002                                               |  |                            | 72,000    |                                                  |   | 10,000                                   |  |   |                      |   |  |   | 82,000 
|2001                                               |  |                            | 92,000    |                                                  |   |                                         |  |   | (20,000               | ) |  |   | 72,000 



S-1