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SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549



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FORM 10-K



|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ------------------------------------------------------------------------------------



For the fiscal year endedDecember 31, 2003



OR



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



For the transition period from
 to
.



Commission file number 0-26476



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GLYCOGENESYS, INC.

(Exact name of Company as specified in its charter)



|                                                             |  |                                     
|------------------------------------------------------------ |  | ------------------------------------
|Nevada                                                       |  | 33-0231238                          
|State or other jurisdiction of incorporation or organization |  | (I.R.S. Employer Identification No.)



Park Square
Building

31 St. James Avenue, 8th Floor

Boston, Massachusetts 02116

(Address of principal executive offices, including postal code.)



(617) 422-0674

(Registrants telephone number, including area code)



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



Name of each exchange on which registered



Title of each class



None



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



|                    |  |             
|------------------- |  | ------------
|Title of each class |  | Common Stock



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Indicate by check mark whether the Company (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 Company 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. ̈



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 at June 30, 2003 of the voting stock of the Registrant held by non-affiliates (based on the closing price of $0.85 on the
Nasdaq SmallCap market on that date) was approximately $22,365,000.



The number of shares outstanding each of the Registrants classes of common stock, as of March 26, 2004 was 49,637,497



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PART I



This Annual Report on Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Forward-looking statements are made throughout this document. Typically, the use of the words
believe, anticipate, plan, expect, seek, estimate and similar expressions identify forward-looking statements. Moreover, unless a passage described a historical event, the
statement should be considered a forward-looking statement. All forward-looking statements involve risks and uncertainty. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. Our actual results may differ materially from the results anticipated in the
forward-looking statements. Without limiting the foregoing, any statements contained in this Annual Report on Form 10-K that relate to future plans, events or performance are forward-looking statements that involve risks and uncertainties, including
but not limited to, risks of product development (such as failure to demonstrate efficacy or safety), risks related to United States Food and Drug Administration (FDA) and other regulatory procedures, the results of financing efforts,
market acceptance risks, the impact of competitive products and pricing, the results of current and future licensing, joint ventures and other collaborative relationships, developments regarding intellectual property rights and litigation, and other
risks identified in the section titled Quantitative and Qualitative Disclosures about Market RiskCertain Factors that May Affect Future Results included herein which discuss factors that could contribute to such material
differences. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives
and plans of the Company will be achieved. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.



ITEM
1.    BUSINESS



Overview



GlycoGenesys, Inc. (together, with its subsidiaries, as
the context requires, the Company) is a biotechnology company developing novel pharmaceutical products based on carbohydrate compounds and related technologies. The Companys lead drug candidate GCS-100, a potential treatment for
multiple forms of solid tumors and bloodborne cancers, completed a Phase II(a) clinical trial for pancreatic cancer the results of which were announced in October 2002 and completed a Phase II(a) clinical trial for colorectal cancer the results of
which were announced in March 2001. We announced the results of a Phase I dose escalation trial in October 2003, dosing in patients at levels up to 80 mg/m2. In December 2002, the Company and Elan International Services, Ltd. (EIS) and
Elan Corporation, plc (together with EIS, Elan) terminated their joint venture (SafeScience Newco, Ltd.) formed in July 2001 to advance GCS-100 in the field of oncology and as a result, the Company regained all rights to GCS-100.



The Companys near-term objectives are to continue to
proceed through the various phases of United States Food and Drug Administration (FDA) clinical trials for GCS-100 and to secure the necessary financial resources to conduct such trials, either through repartnering with a large
biotechnology or pharmaceutical company or raising funds in the capital market or a combination of both.



The Companys business was founded in 1992 as IGG International, Inc. to pursue carbohydrate-based pharmaceutical research for cancer therapeutics.
In 1995, the Company merged with Alvarada Inc., a publicly-traded corporation having no active operations. In 1998, the Company changed its name to SafeScience, Inc. and in October 2001 the Company changed its name to GlycoGenesys, Inc. The
Companys principal executive offices are located at 31 St. James Avenue, 8th Floor, Boston, MA 02116 and the telephone number is (617) 422-0674. The Companys homepage is located on the World Wide Web at http://www.glycogenesys.com.



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GlycoGenesys, Inc.



GlycoGenesys has three wholly-owned subsidiaries, International Gene Group, Inc. (IGG), SafeScience Products,
Inc. (SafeScience Products)and SafeScience Newco, Ltd. (SafeScience Newco). These subsidiaries are currently non-operating subsidiaries.



GlycoGenesys develops human therapeutics, primarily GCS-100, a complex carbohydrate intended to fight bloodborne and solid tumor cancers and their
metastasis, either as a monotherapy or in combination with approved chemotherapies. In addition to the intellectual property it owns relating to GCS-100, the Company has exclusive licenses from David Platt and Wayne State University and the Barbara
Ann Karmanos Cancer Institute relating to GCS-100.



Scientific Background of GCS-100



GCS-100 is a complex polysaccharide derived from citrus pectin isolated from the peel and pulp of citrus fruits through a proprietary hydrolysis process. GlycoGenesys is evaluating GCS-100 as a potential anti-cancer therapy based on a large
body of pre-clinical research. This research has shown that GCS-100 may interact with carbohydrate binding receptors to modulate multiple cellular processes, such as proliferation, migration, cell-cell adhesion and programmed cell death.



The results from publicly presented pre-clinical studies and published
literature demonstrate several mechanisms of action associated with GCS-100 in selectively regulating the cellular functions of cancer cells. These include the ability to block the spread of cancer cells (anti-metastatic), cut off the blood supply
to tumor cells (anti-angiogenic), and trigger programmed cell death (pro-apoptotic). It is believed that these mechanisms of action are, in part, regulated through the interaction of GCS-100 with carbohydrate receptors such as galectin-3 and growth
factors such as vascular endothelial growth factor (VEGF). Additionally, GCS-100 can cause the disruption of mitochondria function, leading to cancer cell death. The Company continues to conduct research in collaboration with leading
experts in these areas to increase our understanding of GCS-100s diverse actions.



One of GCS-100s mechanisms of action, anti-metastasis, involves inhibiting the spread of cancer cells from the primary site to other areas of the body. Galectin-3 is found within, on the surface and around the
outside of cancer cells. Galectin-3 is over expressed and its activity is increased in a variety of cancers during the process of metastasis. It is believed that by binding to galectin-3, GCS-100 interferes with the metastatic process preventing the
spread of cancer cells beyond the primary tumor. Animal models demonstrate that administration of GCS-100 can decrease the number of metastases to secondary sites and/or inhibit the growth of primary tumors.



GCS-100 has also been shown to act as an anti-angiogenesis agent. VEGF, a
naturally occurring protein, is known to play an important role in angiogenesis. One of the activities of GCS-100 involves interfering with the binding of VEGF with endothelial cells. By interfering with the interaction of VEGF and endothelial
cells, GCS-100 may inhibit the formation of new blood vessels to cancer cells, thus inhibiting angiogenesis. The recently approved drug, Avastin, works by inhibiting angiogenesis. In addition, galectin-3 can induce an increase in, and promote the
development of, endothelial cells that lead to new blood vessels. By binding to galectin-3, GCS-100 may interfere with this process.



The third mechanism of action is the ability to selectively induce apoptosis in cancer cells. Apoptosis is a natural mechanism by which cells
self-destruct. Apoptosis plays an important role in normal cell development, cell aging and defense against viral infection. Many types of cancer have developed an ability to inhibit apoptosis through the over expression of anti-apoptotic or
survival proteins. These proteins may be found on the surface of cellular organelles called mitochondria that generate energy for cellular function. One of these survival proteins, Bcl-2, when over expressed can inhibit the ability of
substances to get into and out of mitochondria. This inhibition by Bcl-2 prevents the escape of a protein, cytochrome-c, that triggers a cascade of events leading to cell death. Bcl-2 also reduces the ability of many approved chemotherapeutic agents
to induce apoptosis through mitochondrial pathways. Research has shown that galectin-3 may play a similar role to Bcl-2 in cancer



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cell death. By binding to galectin-3, GCS-100 may encourage apoptosis. Pre-clinical research has also shown that GCS-100 can induce cancer cell apoptosis in
both Bcl-2 over expressing as well as normally expressing Bcl-2 cancer cell lines.



Clinical Trial History



Early Phase I clinical trials of GCS-100, at sites including the M.D. Anderson Cancer Center in Houston, Texas, were completed in 1999. Phase I clinical trials are intended to assess toxicity; GCS-100 showed no dose
limiting toxicity in patients in this trial.



A Phase II(a)
clinical trial for colorectal cancer was completed in 2001 and a Phase II(a) clinical trial for pancreatic cancer was completed in 2002. Phase II clinical trials are designed to help determine both the safety and efficacy of a potential drug, which
may involve several sets of trials (Phase II(a), Phase II(b), etc.). These Phase II(a) trials were conducted at sites including the Beth Israel Deaconess Medical Center in Boston, Massachusetts; University of Chicago Pritzker School of Medicine; and
Sharp Health Care in San Diego, California.



On March 23, 2001,
we announced that GCS-100 demonstrated positive clinical activity in colorectal cancer patients in a Phase II(a) clinical trial at dose levels of 20 mg/m2. Specifically, eight of 23 patients, of which 19 were evaluable, experienced tumor
stabilization for periods of 1.6 to 5.6 months before disease state progression was observed, with one of the eight patients showing a period of tumor shrinkage. Of the eight patients experiencing tumor stabilization, four did so for a period of
three months or greater. On October 30, 2002, we announced that GCS-100 demonstrated positive clinical activity in pancreatic cancer patients in a Phase II(a) clinical trial at dose levels of 20 mg/m2. Specifically, seven of 20 patients, of which 16
were evaluable, experienced tumor stabilization for periods of 0.6 months to 13.6 months before disease state progression was observed with one of the seven patients showing a partial response. Of the seven patients experiencing tumor stabilization,
three did so for a period of four months or greater. There was no evidence of dose limiting toxicity in either of these trials. Based on the promising early data from the Phase II(a) colorectal and pancreatic trials, and the fact that higher doses
of GCS-100 than administered in the Phase II(a) colorectal and pancreatic trials had already been tested in animals, a Phase I dose escalation clinical trial to include multiple types of cancer patients began in February 2002. This trial was
conducted at Sharp Clinical Oncology Research Memorial Hospital in San Diego and the results were reported in October 2003. A total of 12 patients who failed standard therapy were enrolled at doses ranging from 30 mg/m2 to 80 mg/m2. No dose limiting
toxicity was observed. Five patients achieved stable disease for a period of at least three months. One of the five patients, as of the date of this report, still remains on GCS-100 after 23 months of treatment and has achieved a durable partial
response. Stable disease and partial response measurements are according to the Response Evaluation Criteria in Solid Tumors, or RECIST, standard.



Development Plans



The Company has developed a low ethanol manufacturing process for GCS-100. Benefits of this new process include the ability to decrease the potential risk
posed by ethanol when administering the drug at higher dosage levels and allows GCS-100 to be more readily administered with existing therapies in combination regimens.



In the second quarter of 2004, the Company plans to initiate a Phase I dose escalation trial with the low ethanol
formulation of GCS-100. This trial will identify the safety, pharmacokinetics and maximum tolerated dose of GCS-100 when given as monotherapy in up to 30 patients with advanced cancer. Following identification of the maximally tolerated dose, Phase
II trials will begin in late 2004 to test the safety and efficacy of GCS-100 monotherapy administered at the dose defined by the Phase I trial. These trials will target specific cancer indications based upon pre-clinical bioactivity data in
appropriate animal models and data from previous clinical trials.



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Phase I/II trials will be started in late 2004 and 2005 to examine the safety, efficacy and optimal
dosing of GCS-100 in combination with standard chemotherapeutics. Specific indications including bloodborne and/or solid tumors will be chosen based upon pre-clinical bioactivity data in appropriate animal models. These additional trials are planned
to enroll 15 patients each with the option of expanding the size and population based upon review of clinical activity. Commencing these proposed trials will be dependent on securing the necessary financial resources, either through re-partnering
with a large biotechnology or pharmaceutical company or raising funds in the capital market or a combination of both.



The FDA has published a series of regulations and guidelines that establish procedures to expedite the development and approval process for drugs intended
to treat life-threatening and severely-debilitating illnesses, such as cancer, or that address unmet needs. These FDA initiatives include such programs as Fast Track Drug Designation, Accelerated Approval, Priority Review and Expanded Access. In
late 2004 or early 2005, the Company plans to request Fast Track Drug Designation to expedite the drug approval process of GCS-100 as a monotherapy. The Company currently plans to file for an NDA in 2006 using data obtained from its monotherapy
program. Additional NDA filings will be pursued in 2006/2007 based upon monotherapy and/or combination trials in one or more specific indications. It should be noted that GCS-100, whether delivered intravenously or by other methods, may not prove
effective in reducing or eliminating the spread of cancer in humans, be safe at higher doses or be granted accelerated or other approvals by the FDA.



The Company has retained Glenmere Clinical Research, Inc., a contract research organization (CRO) and Medidata Solutions, Inc., a provider of electronic
data capture services, to support its clinical trial program. Together, they provide clinical research management, medical and safety monitoring, data management and medical writing and regulatory services.



In March 2004, we opened our own laboratory which will enable us to conduct
much of the development work ourselves that we previously used third parties to conduct. The lab will also help us assess potential new drug candidates, both in-licensed and internally developed.



The estimated amount expended by the Company during the fiscal years ending
December 31, 2001, 2002 and 2003 on Company sponsored research and development activities was approximately $266,500, $107,000 and $64,000, respectively, exclusive of amounts totaling $2,319,000, $2,606,000 and $1,782,000, respectively, paid to
consulting companies or clinical research organizations.



Pipeline Development



In
addition to expanding the clinical trial program for GCS-100, the Company intends to devote resources to adding one or more drug candidates. The Companys efforts will focus on exploring the therapeutic potential of existing compounds in
diseases other than their original indication and/or adding new compounds, either licensed from outside sources or developed internally. For example, although the Company is currently focused on oncology, it believes GCS-100 may have applications
outside oncology in areas in which inflammation and angiogenesis plays a role and intends to explore these in the future. Priority will be given to drug candidates which provide therapeutic activity in diseases that are life threatening or
debilitating, have an unmet medical need and for which Phase I/II clinical trials can be initiated in a relatively short period of time and that primarily exploit some aspect of glycobiology and/or oncology.



The Company seeks to add at least one new compound to its pre-clinical
development program during the next 12 months.



SafeScience Products, Inc.



Historically, SafeScience Products developed agriculture products and developed, marketed and distributed chemically-safe consumer and commercial products.



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In the agricultural area, SafeScience Products developed and/or licensed products that include a plant
defense booster (Elexa), approved by the U.S. Environmental Protection Agency (the EPA) for application to crops and other plants against certain fungal diseases. An additional insecticidal product (Bb447) was developed against both
indoor and outdoor insect pests and is EPA-approved. We plan to sell or dispose of both product areas. We have entered into an agreement with a third party to purchase the Elexa product line on certain agreed terms, subject to customary conditions.
We do not expect to receive material upfront payments for the sale of our agricultural products area.



Manufacturing; Source of Materials



The Company has established manufacturing relationships with two firms, Hollister-Stier LLC and Sigma-Aldrich, Inc. for the production of GCS-100. The
Company believes its current relationships will provide the capability to meet its anticipated requirements for GCS-100 for the foreseeable future. The Company conducts qualification audits on its contract-manufacturing vendors and performs periodic
audits to assure continued cGMP compliance.



Materials and
components are selectively sourced from suppliers nationally. Raw material for the manufacture of GCS-100 is available from a number of suppliers. The Company has good working relationships with its manufacturers and suppliers. Nonetheless, the
Company does not have long term arrangements with its manufacturers or suppliers and the Companys research and development efforts could be disrupted if the current manufacturers would have to be replaced.



Government Regulation



Certain of the Companys activities are subject to extensive federal
and state laws and regulations controlling the development, testing, manufacture, distribution, labeling and promotion of pharmaceutical products. Pharmaceutical products are subject to regulation as drugs or biologics by the FDA. Pharmaceutical
products are also regulated in most foreign countries by similar governmental agencies in those countries. Compliance with FDA regulations often results in substantial costs relating to demonstrating safety and effectiveness through clinical testing
of new products, for the preparation and filing of registration documents in their required formats and for other similar purposes. Moreover, there are no assurances that the Company will receive necessary approvals.



Food and Drug Administration Regulation



The FDA approval process consists of three steps that all new drugs and
biologicals must follow. These steps are:



1.  Preclinical investigation



2.  Investigational New Drug (IND) application (including human clinical trials Phases I-III)



3.  New Drug Application (NDA) (FDA review and approval)



In addition, the FDA may impose post-approval requirements (known as Phase IV) on the applicant to further study some aspect
of the product. The applicant is also required to conduct post-market surveillance and is subject to periodic reporting requirements on its drug product.



The FDA has published a series of regulations to establish procedures designed to expedite the development, evaluation and marketing of drugs intended to
treat life-threatening and severely-debilitating illnesses, such as cancer. These FDA initiatives include such programs as Fast Track Drug Designation, Accelerated Approval, Priority Review and Expanded Access. The Companys regulatory strategy
is to leverage these existing initiatives for expediting the development of cancer treatments.





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Human clinical trials are generally conducted in three phases, normally involving progressively larger
numbers of patients. Phase I clinical trials are concerned primarily with learning more about the safety of a drug, by determining the drugs toxicity, as well as its metabolism and pharmacologic action. Typically oncology-related Phase I
trials involve 20-40 patients, which may take a year or longer to complete. Phase I trials have been completed for GCS-100 up to a dose level of 80 mg/m2. Additional Phase I trials at even higher doses with the low ethanol formulation of GCS-100 are
planned in 2004 both as monotherapy and in combination with standard therapies, consistent with available financial resources.



Assuming the results of Phase I testing present no unmanageable toxicity or unacceptable safety risks, Phase II trials generally begin. The primary
objective of this stage of clinical testing is to determine whether the drug is effective in treating the disease or condition for which it is intended. Phase II studies may take a year or longer and can involve 200 or more patients for each type of
disease or illness tested and can involve several sets of trials (II(a), II(b), etc.). These studies are often randomized controlled trials that also attempt to identify short-term side effects and risks in people whose health is impaired. The cost
per patient is estimated at $30,000 to $70,000. Phase II(a) trials of GCS-100 at doses of 20 mg/m2for the treatment
of pancreatic and colorectal cancers have been completed. The Company plans to commence monotherapy and combination therapy Phase II trials in late 2004 and/or 2005 at doses based on the Phase I dose escalation trials using the low ethanol
formulation of GCS-100.



The objective of Phase III clinical
trials is to develop safety and efficacy information that will support FDA approval so that the drug can be marketed. Phase III trials generally involve hundreds of patients, usually at multiple sites, with the objectives of expanding on the
research carried out in Phase II, developing safety and efficacy information to include in the package insert, and learning how the drug compares with existing, approved drugs for a particular indication for use. Consistent with available financial
resources, the Company plans to commence a Phase III trial in 2005/2006.



Prior to marketing a new drug, the Company must prepare and submit an NDA for review and approval by the FDA. In this step, all the information generated in the clinical trials, along with preclinical, chemistry,
manufacturing and controls, pharmacokinetic data and labeling will be submitted to the FDA for review and, if acceptable to demonstrate safety and effectiveness, the drug will be approved for marketing.



Subsequent to, or as a condition of FDA approval, the FDA may impose
post-approval, or Phase IV, requirements on the applicant to further study some aspects of the product. The applicant is also required to conduct post-marketing surveillance and is subject to periodic reporting requirements on its drug product. The
time required to complete all of these steps averages seven years, but can take significantly longer. There is no assurance that the Company will ever receive FDA approval of any of its products.



Competition



The Company faces significant competition from firms currently engaged in
the pharmaceutical and biotechnology industries.



GCS-100, the
Companys lead drug candidate, being developed for the treatment of various forms of cancer, addresses large markets, which are already populated with several biotechnology and large pharmaceutical companies. These companies utilize different
drug discovery platforms, including but not limited to small molecules, protein-based drugs, liposome technology, and genomics. The drug development industry is intensely competitive. According to industry surveys, there are approximately over 400
new drug candidates in development to treat various types of cancer, many of them for multiple indications. According to the PhRMA, approximately 170 pharmaceutical and biotechnology companies and the National Cancer Institute are conducting these
efforts. It is estimated that 100 biotechnology companies have more than 100 drug candidates in later stages of clinical development than GCS-100 for acute, life threatening disease, and late stage disease, and that over forty percent of these drug
candidates are being developed to treat various types of cancer. Many of the Companys actual or potential competitors have significantly greater financial resources and/or drug



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development experience than the Company has. There is no assurance that other carbohydrate-based or non-carbohydrate-based drugs with similar clinical
effects to GCS-100 may not already be in development by other companies or that other companies may not successfully develop such drugs in the future.



Product Liability



The testing, marketing and sale of pharmaceutical products entails a risk of product liability claims by patients and others. In the event of a successful
suit against us, payments and damage to our reputation could have a material adverse effect on our business and financial condition. Even if such suit is unsuccessful, our reputation could be damaged and litigation costs and expenditure of
management time on such matters could adversely effect our business and financial condition.



Patent Status and Protection of Proprietary Technology



On January 26, 2001, the Company executed an agreement, which has been amended on May 14 and November 7, 2001 and September 12, 2003, with Wayne State
University and the Barbara Ann Karmanos Cancer Institute. This agreement grants the Company an exclusive world-wide license to patents, patent applications, and other intellectual property related to GCS-100 Material issued, developed,
or applied for by Wayne State University and the Barbara Ann Karmanos Cancer Institute. This agreement adds the rights to these issued patents and patent applications to the Companys existing patent portfolio, which consolidates the rights to
all of the parties existing GCS-100 intellectual property within the Company. Pursuant to this agreement, the Company made license payments totaling $1,935,000. Additional payments of up to $3,000,000 are contingent upon reaching future
commercialization milestones.



The Company granted Wayne State
University and the Barbara Ann Karmanos Cancer Institute warrants to jointly purchase 1,500,000 shares of common stock at $1.15 that are fully vested. The value of the warrants vested of $1,046,730 and $615,262 were included in operations in 2001
and 2002, respectively. No compensation expense was recorded in 2003 as the warrants were fully vested by 2002.



In order to maintain its rights under this agreement, the Company must, on the first occurrence of the following milestones, jointly pay Wayne State
University and the Barbara Ann Karmanos Cancer Institute: (a) $500,000 within thirty (30) days following the date on which the Company commences Phase III clinical drug investigations relating to GCS-100; (b) $1,000,000 within thirty (30) days
following the date on which the Company makes an NDA submission to the FDA relating to GCS-100; and (c) $1,500,000 within thirty (30) days following the date on which the FDA approves an NDA of the Company covering GCS-100. In addition, the Company
must pay $10,000 per month until FDA approval of GCS-100, which payments are offset against the 2% royalty on net sales of GCS-100 owed jointly to Wayne State University and the Barbara Ann Karmanos Cancer Institute.



David Platt, the Companys former Chairman, CEO and Director, has
granted the Companys IGG subsidiary an exclusive, world-wide license, including the right to sublicense, for all products covered by certain patents, (if and when granted) or patent applications that he has developed (including patent
applications related to GCS-100). Pursuant to the license agreement, the Company has relinquished one of the patent applications in six foreign jurisdictions where such application could not result in an issued patent because of prior art. IGG is
responsible for payment of all costs connected with obtaining and maintaining the patents. In the case of GCS-100, David Platt is entitled to a royalty of 2% of all net sales, subject to a minimum royalty payment of $50,000 per year beginning with
the year ended December 31, 2002. A $50,000 license payment to David Platt was accrued at December 31, 2003 and paid in January 2004. The Company is currently in a dispute with David Platt regarding alleged breaches by the Company of the License
Agreement and has indicated he will terminate the agreement if the alleged breaches are not cured. The Company believes these allegations are without merit. See Legal Proceedings-Platt License for more information.



The Company owns, or is the exclusive licensee of, all of its intellectual
property. This intellectual property includes 13 issued US patents that have expiration dates ranging from 2013 to 2022; five of these 13 patents



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relate to GCS-100. The intellectual property also includes seven foreign patents having expiration dates ranging from 2015 to 2017. Five of these seven
foreign patents relate to GCS-100. The Companys intellectual property further includes 12 pending US patent applications, of which 11 relate to GCS-100; and 41 pending foreign patent applications of which 30 relate to GCS-100. As the Company
develops GCS-100, it may discover more about GCS-100s characteristics and manufacturing, which will require additional patent prosecution. Thus, the Company continually evaluates its technology to determine whether to make further patent
filings.



To the extent that the Company currently relies upon
unpatented, proprietary technology, processes and know-how and the protection of such intellectual property by confidentiality agreements, there can be no assurance that others may not independently develop similar technology and know-how or that
confidentiality will not be breached. The Company believes its intellectual property rights are significant and that the loss of all or a substantial portion of such rights could have a material adverse effect on its business, financial condition
and results of operation. There is no assurance that any patents will ever be granted on the Companys unpatented intellectual property.



Uncertainties Associated with Research and Development Activities



The Company intends to continue its research and development activities on its human therapeutic products. Research and
development activities, by their nature, preclude definitive statements as to the time required and costs involved in reaching certain objectives although the costs of these activities will be significant. If research and development requires more
funding than anticipated, the Company will have to reduce product development efforts or seek additional financing. There can be no assurance that the Company would be able to secure any necessary additional financing or that such financing would be
available on favorable terms.



Dependence Upon Key Personnel



The Company relies greatly in its efforts on the services
and expertise of its current senior officers: Bradley J Carver, CEO, President, Treasurer and Interim Chairman of the Board of Directors; and John W. Burns, Senior Vice President, Chief Financial Officer and Secretary and member of the Board of
Directors. The operation and future success of the Company could be adversely affected in the event the Company were to lose their services.



Employees



At December 31, 2003 the Company had 13 employees on a full-time basis and also employed one part-time worker. As of March 26, 2004 the Company had 14
full time employees and one part-time worker. Under the Companys current clinical trial and business plan, it may add over 15 additional employees over the course of the next two years, as needs develop.



Consultants



The Companys clinical, regulatory and scientific research and
development team has grown by recruiting additional people, as consultants, from the biotechnology industry. Each consultant has many years of experience in specific areas of drug development, including pre-clinical, toxicology, regulatory, quality
control and analytical development.



During 2003, we
recruited additional members to our development team, both full time employees and consultants, and to our Scientific Advisory Board with diverse and complementary industry experience to assist management in the design of clinical trials, compliance
with the regulatory process of the FDA, manufacturing and scientific development.



ITEM 2.    PROPERTIES.



The Companys offices are located at the Park Square Building, 8th Floor, 31 St. James Avenue, Boston, Massachusetts 02116. The Company leases a total of 11,300 square feet of office space, which exceeds the Companys current
space requirements. The Companys laboratory occupies 3,123 square feet of leased space located at Building 600, One Kendall Square, Cambridge, Massachusetts 02139. In addition to the Companys leased space in Massachusetts, the Company is
conducting research, development and manufacturing at various facilities on a contract basis.



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ITEM 3.    LEGAL PROCEEDINGS.



Platt LitigationOn January 29, 2004, David Platt commenced suit against the Company and certain current and
former directors of the Company in the Massachusetts Superior Court, Suffolk County. In his Complaint, Platt seeks damages for alleged breach of his severance agreement with the Company, including the failure to pay approximately $180,000 in monthly
severance benefits and alleged breaches in connection with maintenance by the Company of certain restrictions on Platts sale of stock. The Complaint further asserts claims against certain current and former directors of the Company for alleged
breaches of fiduciary duty in failing to assist in the removal of restrictive legends on David Platts shares. Platt also purports to state claims for double or treble damages, as well as attorney fees, under General Laws Chapter 93A, Section
11, the Massachusetts Unfair Trade Practice Act. The case has been assigned under case number 04-0398 and will be heard in the Business Litigation Session of the Suffolk County Superior Court. The Company believes these claims are without merit.



On February 23 2004, the Company filed its answer and
counterclaimed against David Platt for breach of his severance agreement, against Pro-Pharmaceuticals, Inc. for tortious interference with the severance agreement, and against Platt and Pro-Pharmaceuticals, Inc. for misappropriation of proprietary
rights and for unfair and deceptive acts. The Company seeks monetary damages and injunctive relief to prevent David Platt and Pro-Pharmaceuticals from engaging in certain competitive activities relating to the use of polysaccharides to treat cancer
and further seeks the assignment by David Platt and Pro-Pharmaceuticals of certain intellectual property to the Company. Under the counterclaim for unfair and deceptive acts, the Company is seeking treble damages as well as attorneys fees.



Platt LicenseOn January 13, 2004, the Company
notified David Platt of its intention to seek arbitration regarding his alleged breaches of the Companys license agreement with him dated January 7, 1994, as amended (the License Agreement). In particular, the Company sought to
enforce its rights under the License Agreement to controlthe prosecution of the patent applications subject to the License Agreement. On February 18, 2004, the Company received a letter from David Platt alleging breaches of its obligations under the
License Agreement, specifically failure to: (i) take necessary steps to perfect U.S. Patent Application Serial No. 08/024,487 (the 487 Application), (ii) use its best efforts to commercialize the 487 Application and (iii)
provide royalty reports. The letter further notified the Company of his intention to terminate the License Agreement if such alleged breaches are not cured within 60 days from the date of the letter.



On February 23, 2004, the Company provided the royalty reports requested by
the February 18 letter, which showed no royalties due for any of the periods covered. The Company believes the other breaches alleged by David Platt are wholly without merit.



On February 23, 2004, the Company formally initiated arbitration to enforce its rights under the License Agreement to
control the prosecution of the licensed patent applications. Platt answered on March 17, 2004, in connection with the arbitration, with counterclaims, including a claim seeking termination of the License Agreement.



On March 15, 2004, the Company filed for a court order requiring Platt to
return control of the licensed applications, pursuant to the License Agreement, to the Company to permit the Company to respond to office actions issued by the U.S. Patent and Trademark Office. Platt responded with a counterclaim to terminate the
License Agreement. On March 29, 2004, a court order was issued requiring Platt, until such time as an arbitrator is appointed, to advise the Company in writing of any significant action he plans to take with respect to the licensed applications, and
give the Company 48 hours to respond in writing to his intended actions. In the event that the Company opposes the proposed action, it has the right to seek review of the action by the court prior to any action by Platt. Similarly, the court granted
the Company the right to recommend to Platt that he take certain actions and he is required to respond to the Companys requests within 48 hours. In the event he refuses to take the proposed action, the Company has the right to seek review by
the court.



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



None.



10



---

PART II



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



(a)  Market Information



In May 1998, the Companys securities became traded on the Nasdaq
(Small Cap) market under the symbol SAFS. On October 31, 2001 the symbol was changed to GLGS reflecting the Companys name change to GlycoGenesys, Inc. Prior to May 1998, the Companys securities were traded over-the-counter by the
National Association of Securities Dealers, Inc. under the symbol IGGI. The table shows the high and low sales prices of Companys common stock during 2002 and 2003:



|              |  |       |  |      
|------------- |  | ----- |  | -----
|              |  | Sales
|              |  | High  |  | Low  
|Quarter Ended |  |       |  |      
|2002          |  |       |  |      
|March 31      |  | 2.430 |  | 1.250
|June 30       |  | 1.600 |  | 0.630
|September 30  |  | 1.000 |  | 0.410
|December 31   |  | 0.890 |  | 0.260
|2003          |  |       |  |      
|March 31      |  | 0.500 |  | 0.180
|June 30       |  | 1.390 |  | 0.300
|September 30  |  | 1.950 |  | 0.450
|December 31   |  | 2.100 |  | 1.100



(b)  Holders



As of December 31,
2003, the Company had 507 holders of record of its common stock. This number does not include those beneficial owners whose securities are held in street name. The total number of stockholders is estimated to be approximately 8,000.



(c)  Dividends



The Company has never paid a cash dividend on its common stock and has no
present intention to declare or pay cash dividends on the common stock in the foreseeable future. The Company intends to retain any earnings that it may realize in the foreseeable future to finance its operations. Future dividends, if any, will
depend on earnings, financing requirements and other factors.



(d)  Sales of Unregistered Securities



Set forth in chronological order below is information regarding the number of shares of capital stock issued by the Company during the three months ended December 31, 2003. Further included is the consideration, if any, received by the
Company for such shares, and information relating to the section of the Securities Act or rule of the Securities and Exchange Commission under which exemption from registration was claimed.



1. On October 22, 2003, the Company issued 55,556 shares of
Common Stock upon the exercise of a warrant by an accredited investor for a total of $50,555.96.



2. On October 16, 2003, the Company issued 8,000 shares of Common Stock upon the exercise of a warrant by an accredited investor for a
total of $80.



3. On November 7 and 13, 2003,
the Company issued a total of 105,555 shares of Common Stock upon the exercise of warrants by three accredited investors for a total of $78,110.70.



11



---

4. On November 13, 2003,the Company issued 260,000 shares of Common Stock upon the
exercise of a warrant by an accredited investor for a total of $2,600.



5. On November 17, 2003, the Company issued 100,500 shares of Common Stock upon the exercise of a warrant by an accredited investor for a total of $91,455.



No underwriters were used in connection with these sales and issuances. The sales and issuance of these securities were exempt from
registration under the Securities Act pursuant to Section 4(2) of the Securities Act and the rules and regulations thereunder (including Rule 506 under Regulation D) on the basis that the transactions did not involve a public offering. All of the
foregoing securities are deemed restricted securities for the purposes of the Securities Act.



ITEM 6.    SELECTED FINANCIAL DATA



Selected Consolidated Financial Data



The selected financial data presented below has been derived from the financial statements of the Company. The following table summarizes certain financial information and should be read in conjunction with
Managements Discussion and Analysis of Financial Conditions and Results of Operations and the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. The consolidated statement of
operations data set forth below for the fiscal years ended December 31, 2001, 2002 and 2003 and the consolidated balance sheet data as of December 31, 2002 and 2003 are derived from the Companys consolidated financial statements which have
been audited by Deloitte & Touche LLP, independent auditors, for the fiscal years ended December 31, 2001, 2002 and 2003 and which are included elsewhere in this Annual Report on Form 10-K. The consolidated statement of operations data for the
years ended December 31, 1999 and 2000 as well as the consolidated balance sheet data as of December 31, 1999, and 2000 are derived from the consolidated financial statements audited by Arthur Andersen LLP not included in this Annual Report on Form
10-K. The information shown below may not be indicative of the Companys future results of operations.



12



---

|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |            |  
|------------------------------------------------------------------------ |  | ----------------------- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | - |  | ---- | ----------- | - |  | - | ---------- | -
|                                                                         |  | As of December 31,      |            
|                                                                         |  | 1999                    |             |   | 2000 |   |             | 2001 |  |   | 2002        |   |  | 2003 |            
|Balance Sheet Data:                                                      |  |                         |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |            |  
|Cash and cash equivalents                                                |  | $                       | 3,377,067   |   |      | $ | 2,547,353   |      |  | $ | 7,977,910   |   |  | $    | 6,299,006   |   |  | $ | 3,193,575  |  
|Working capital                                                          |  |                         | 2,574,719   |   |      |   | 1,768,337   |      |  |   | 5,703,600   |   |  |      | 5,541,248   |   |  |   | 2,130,785  |  
|Total assets                                                             |  |                         | 5,493,524   |   |      |   | 5,779,117   |      |  |   | 8,888,436   |   |  |      | 7,129,563   |   |  |   | 3,964,753  |  
|Other equity(1)                                                          |  |                         |            |   |      |   | 866,216     |      |  |   | 15,091,827  |   |  |      |            |   |  |   |           |  
|Stockholders equity (deficit)(1)                                        |  |                         | 4,521,117   |   |      |   | 1,845,751   |      |  |   | (8,927,246  | ) |  |      | 6,039,408   |   |  |   | 2,600,306  |  
|                                                                         | 
|                                                                         |  | Year Ended December 31, |            
|                                                                         |  | 1999                    |             |   | 2000 |   |             | 2001 |  |   | 2002        |   |  | 2003 |            
|Statement of Operations Data:                                            |  |                         |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |            |  
|Research and development(2)                                              |  |                         | 3,929,898   |   |      |   | 6,182,150   |      |  |   | 4,291,064   |   |  |      | 1,961,033   |   |  |   | 4,081,944  |  
|General and administrative                                               |  |                         | 5,837,861   |   |      |   | 4,093,507   |      |  |   | 4,045,088   |   |  |      | 3,838,348   |   |  |   | 3,574,268  |  
|Restructuring charge (credit)(3)                                         |  |                         |            |   |      |   | 1,478,956   |      |  |   | (177,283    | ) |  |      |            |   |  |   |           |  
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |            |  
|Total operating expenses                                                 |  |                         | (9,767,759  | ) |      |   | (11,754,613 | )    |  |   | (8,158,869  | ) |  |      | (5,799,381  | ) |  |   | (7,656,212 | )
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |            |  
|Other income (expense):                                                  |  |                         |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |            |  
|Equity in loss of SafeScience Newco, Ltd.(4)                             |  |                         |            |   |      |   |            |      |  |   | (14,188,470 | ) |  |      | (4,418,206  | ) |  |   |           |  
|Interest income                                                          |  |                         | 353,492     |   |      |   | 216,842     |      |  |   | 187,721     |   |  |      | 96,056      |   |  |   | 25,457     |  
|Other income (expense)                                                   |  |                         | (8,063      | ) |      |   | (243,373    | )    |  |   | (33,345     | ) |  |      | 7,354       |   |  |   | 8,554      |  
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |            |  
|Total other income (expense)                                             |  |                         | 345,429     |   |      |   | (26,531     | )    |  |   | (14,034,094 | ) |  |      | (4,314,796  | ) |  |   | 34,011     |  
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |            |  
|Loss from continuing operations                                          |  |                         | (9,422,330  | ) |      |   | (11,781,144 | )    |  |   | (22,192,963 | ) |  |      | (10,114,177 | ) |  |   | (7,622,201 | )
|Loss from discontinued operations(5)                                     |  |                         | (2,879,388  | ) |      |   | (5,489,167  | )    |  |   | (533,200    | ) |  |      |            |   |  |   |           |  
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |            |  
|Net loss                                                                 |  |                         | (12,301,718 | ) |      |   | (17,270,311 | )    |  |   | (22,726,163 | ) |  |      | (10,114,177 | ) |  |   | (7,622,201 | )
|Accretion of preferred stockdividends(6)                                 |  |                         |            |   |      |   |            |      |  |   | (404,273    | ) |  |      | (2,725,387  | ) |  |   | (426,481   | )
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |            |  
|Net loss applicable to common stock                                      |  | $                       | (12,301,718 | ) |      | $ | (17,270,311 | )    |  | $ | (23,130,436 | ) |  | $    | (12,839,564 | ) |  | $ | (8,048,682 | )
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |            |  
|Basic and diluted net loss per common stock from continuing operations   |  |                         | (0.59       | ) |      |   | (0.64       | )    |  |   | (0.82       | ) |  |      | (0.35       | ) |  |   | (0.20      | )
|Basic and diluted net loss per common stock from discontinued operations |  |                         | (0.18       | ) |      |   | (0.30       | )    |  |   | (0.02       | ) |  |      |            |   |  |   |           |  
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |            |  
|Basic and diluted net loss per common stock                              |  |                         | (0.77       | ) |      |   | (0.94       | )    |  |   | (0.84       | ) |  |      | (0.35       | ) |  |   | (0.20      | )
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |            |  
|Weighted average number of common shares outstanding                     |  |                         | 16,060,783  |   |      |   | 18,314,819  |      |  |   | 27,612,000  |   |  |      | 37,133,591  |   |  |   | 40,869,582 |  
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |            |  



For a more detailed
discussion regarding uncertainties see Note 1 of the Notes to Consolidated Financial Statements. For more detailed discussion of significant items that materially affect the comparability of the information reflected above, please refer to the
following footnotes of the financial statements contained herein:

---

|(1) |  | Other equity in 2000 includes the value of 729,445 shares issued upon the cashless exercise of an adjustable warrant, which was recorded in an amount equal to the fair market value.
Other equity in 2001 includes the fair value of Series A, B and C preferred shares. Such amounts were reclassified to stockholders equity in the subsequent year. See Note 6 of the Notes to Consolidated Financial Statements.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



13



---

|(2) |  | Research and development expenses in 2001 and 2002 exclude research and development costs incurred by SafeScience Newco, Ltd. The Companys share of such costs is included with
the Companys Equity in loss of SafeScience Newco, Ltd. See Note 3 of the Notes to Consolidated Financial Statements.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) |  | Restructuring charge (credit) in 2000 reflects the Companys reduction of the scope of operations in consumer and industrial products, resulting in a charge in 2000 including
severance and related expenses and a credit in 2001.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) |  | Equity in loss of SafeScience Newco, Ltd. reflects the Companys share of the losses of SafeScience Newco, Ltd. during the period July 10, 2001 through December 18, 2002. See
Note 3 of the Notes to Consolidated Financial Statements.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) |  | Discontinued operations reflect the cost of the discontinuance of consumer and industrial products in November 2000. See Note 4 of the Notes to Consolidated Financial
Statements.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) |  | See Note 6 of the Notes to Consolidated Financial Statements regarding the accretion of dividends on preferred stock.
|--- |  | ---------------------------------------------------------------------------------------------------------------------



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



The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report.



Overview



GlycoGenesys, Inc. is a biotechnology company developing carbohydrate-based drugs. Our lead drug candidate, GCS-100, a potential treatment for multiple
forms of solid tumors and bloodborne cancers, completed a Phase II(a) clinical trial for pancreatic cancer in April 2002 and completed a Phase II(a) clinical trial for colorectal cancer in March 2001. We began a Phase I dose escalation trial in
February 2002 dosing in patients at up to 80 mg/m2 and announced the results of this trial in October 2003.



During 2003, we made improvements to our manufacturing process to remove substantially all the ethanol from the final formulation of GCS-100 and have
manufactured this low-ethanol product in preparation for our upcoming clinical trial program. In addition, during 2003, we have recruited additional members to our development team, both full time employees and consultants, and to our Scientific
Advisory Board with diverse and complementary industry experience to assist management in the design of clinical trials, compliance with the regulatory processes of the FDA, manufacturing and scientific development.



Our clinical trial program using the low-ethanol formulation of GCS-100 is
planned to begin in April/May 2004 with a Phase I dose escalation trial to test GCS-100 as a monotherapy in up to 30 patients. Phase I/II trials are planned to test GCS-100 in combination with standard chemotherapies which will enroll 15 patients
each with the option of expanding the size based on a review of clinical activity. Phase II trials are planned in an indication of cancer with unmet clinical needs evaluating GCS-100s safety and efficacy as a monotherapy. Additional Phase II
trials are planned to evaluate GCS-100 each in combination with different approved chemotherapeutic agents. The Phase II program could enroll over 300 patients. We will determine the cancer indications for the Phase II clinical trial program based
on an evaluation of all pre-clinical and clinical data, as well as considering the current unmet clinical needs and the shortest timeline for approval. Our clinical trial program is subject to our having sufficient financial resources.



At the end of 2003, we had $3.2 million of cash available, however, we
completed a financing in January 2004 resulting in $4.3 million of net proceeds. As of March 26, 2004, we have $5.5 million of cash on hand. Research and development expenses in 2004 are expected to be significantly higher than in 2003 primarily due
to the planned clinical trial program. The Phase I trials described in the previous paragraph may cost approximately



14



---

$4 million and the Phase II trials described in the previous paragraph may cost approximately $15 million. The amount of clinical trial expense incurred in
2004 will depend on the timing of such trials. We expect to have less third-party development expenses, but higher in-house development expenses in 2004 due to the start-up of our own laboratory facilities. We expect payroll expenses to increase as
we begin hiring additional staff members, adding approximately 15 persons over the next two years. Early hires will include analytical chemists in connection with the laboratory. G&A expenses are expected to increase primarily due to increased
insurance and regulatory compliance costs, and for increased travel related to clinical trials. We believe that our financial risks will be somewhat higher as 2004 unfolds as we incur a higher fixed cost base due to opening the laboratory, making
commitments to conduct the clinical trials, hiring additional staff and legal costs.



We must raise significant additional funds to move forward in the product development/clinical trial process. Our financial strategy for 2004 and beyond is to secure the necessary financial resources to pay for the
development of GCS-100, either through repartnering with a large biotechnology or pharmaceutical company or raising funds in the capital markets or a combination of both.



We have also developed two agricultural products (Elexa, a registered trademark of ours and Bb447), which we plan to sell or
dispose of. We have entered into an agreement with a third party to purchase the Elexa product line on certain agreed terms, subject to customary conditions. We do not expect to receive material upfront payments for the sale of our agricultural
products.



Critical Accounting Policies



The Companys significant accounting policies are described in note 2
of the notes to the consolidated financial statements included in this report. The Companys critical accounting policies are those that are important to the portrayal of the Companys financial condition and operating results and require
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.



The Company believes that its most critical accounting policies are as follows:



Termination of Joint Venture With ElanIn December 2002, the
Company terminated its joint venture with Elan. Pursuant to the termination agreement, the Company acquired all of Elans equity interest in SafeScience Newco in exchange for a royalty interest on certain future revenues and payments related to
GCS-100. Under the termination agreement, such royalty payments, if any, are to be reduced by certain development costs to be incurred by the Company. A discounted cash flow analysis was applied to both the estimated future royalty payments and the
offsetting development costs to be incurred by the Company to measure the cost of the acquisition and the related liability. The valuation of the royalty liability was determined using an income approach, discounted based on the estimated likelihood
that such payments will ultimately be required to be made. Based upon this analysis, the Company believes that the fair value of the development costs to be reimbursed by Elan approximates the fair value of the estimated future royalty payments,
accordingly no liability for the future contingent royalty payments has been reflected in the Companys financial statements.



Accrued clinical research organization costsThe preparation of financial statements requires our management to make estimates and assumptions
that affect the reported amount of assets and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reported period. Specifically, our management must make estimates
of costs incurred to date but not yet invoiced in relation to external clinical research organization, or CRO, costs. Management analyzes the progress of clinical trials, invoices received and budgeted costs when evaluating the adequacy of the
accrued liability. Significant management judgments and estimates must be made and used in connection with the accrued balance in any accounting period. While the Company bases its judgments and estimates on historical experience and other
assumptions that management believes are appropriate and reasonable under current circumstances, actual results may differ from those estimates. Any changes to these estimates would affect both our operating results and cash flows.



15



---

Results of Operations:    Year Ended December 31, 2003 versus Year Ended
December 31, 2002



We had a net loss applicable to common
stock of $8,048,682 for the year ended December 31, 2003 versus a net loss applicable to common stock of $12,839,564 for the year ended December 31, 2002. The net loss applicable to common stock for the year ended December 31, 2003 included a charge
of $426,481 for dividends accreted on our Series B convertible preferred stock compared to a charge of $2,725,387 for dividends accreted on our Series A and B convertible preferred stock for the year ended December 31, 2002.



Research and Development ExpensesDeveloping carbohydrate-based
therapeutic compounds is our primary business focus and to a lesser extent, we formerly developed nontoxic agricultural products. Both areas are, or were, in the research and development phase and explanations of the changes in both areas from
year-to-year are described in this section.



Our research and
development expenses for the years ended December 31, 2003 and 2002 were reported in the following financial statement captions:



|                                      |  |                          |           |      |   |          
|------------------------------------- |  | ------------------------ | --------- | ---- | - | ---------
|                                      |  | Years Ended December 31,
|                                      |  | 2002                     |           | 2003
|GCS-100:                              |  |                          |           |      |   |          
|Equity in loss of SafeScience Newco   |  | $                        | 4,221,887 |      |   |         
|R&D                                   |  | $                        | 1,616,633 |      | $ | 3,858,421
|                                      |  |                          |           |      |   |          
|Total GCS-100                         |  |                          | 5,838,520 |      |   | 3,858,421
|Other ProductsR&D                    |  |                          | 344,400   |      |   | 223,523  
|                                      |  |                          |           |      |   |          
|Total Research & Development expenses |  | $                        | 6,182,920 |      | $ | 4,081,944
|                                      |  |                          |           |      |   |          



Total research and
development expenses for the year ended December 31, 2003 decreased by approximately $2,100,976, or 34%, from the year ended December 31, 2002.



Total GCS-100 development expenses of $3,858,421 represent a decrease of $1,980,099 from the $5,838,520 of expenses incurred during the year ended
December 31, 2002. This decrease is primarily attributable to a reduction of license fees paid to Wayne State University of $795,000 and non-cash research and development expenses of $615,000 in connection with warrants issued to Wayne State
University and the Barbara Ann Karmanos Cancer Institute to purchase common stock that vested during 2002. Cost of managing our clinical trials decreased $957,000, or 77%, to $288,000 during the year ended December 31, 2003 from $1,245,000 for the
year ended December 31, 2002, primarily due to completion of the field work on both the colorectal and pancreatic trials. These reductions were partially offset by increased production costs for GCS-100 of $401,000 to create inventory for future
trials. However, as described earlier, we believe our development expenses for 2004 will increase significantly as a result of additional clinical trials.



In July 2001, the Company transferred its rights to GCS-100 in the field of oncology to SafeScience Newco in connection with the formation of a joint
venture with Elan. Costs related to GCS-100 incurred after the transfer to SafeScience Newco, which were on behalf of SafeScience Newco, were expensed by SafeScience Newco. These research and development costs were incurred either by the Company or
EIS on behalf of SafeScience Newco. We reported our share of such expenses as a component of our equity in the loss of SafeScience Newco. All expenses associated with development of GCS-100 incurred prior to the formation of SafeScience Newco were
recorded in the line item Research & Development (R&D) in the Consolidated Statement of Operations. Following the termination of the joint venture with Elan, on December 18, 2002, expenses associated with the development of
GCS-100 are again charged to R&D expenses.



Research and
development expenses for Elexa-4 and Bb-447, our agricultural compounds, which consisted primarily of wages, consulting and license fees, decreased $120,877, or 35%, to $223,523 for the year ended December 31, 2003 from $344,400 for the year ended
December 31, 2002. The decrease reflects the Companys de-emphasis of its agricultural products.



16



---

General and Administrative ExpensesGeneral and administrative expenses decreased to
$3,574,268 for the year ended December 31, 2003 from $3,838,348 for the year ended December 31, 2002, a decrease of $264,080, or 7%. This decrease was principally attributable to reductions of approximately (i) $370,000 in professional fees, (ii)
$98,000 in investor relations expenses, (iii) $55,000 in office-related expenses, (iv) $49,000 in outside consulting expenses, (v) $43,000 in non-cash expenses, (vi) $37,000 in annual report costs and (vii) $17,000 in travel expenses. These
decreases were partially offset by (i) increased payroll expense of $228,000, (ii) $163,000 of expenses charged to SafeScience Newco and included as a component of equity in loss of SafeScience Newco and (iii) a premium increase of $134,000 for
director and officer liability insurance.



Interest
IncomeInterest income decreased to $25,457 for the year ended December 31, 2003 from $96,056 for the year ended December 31, 2002, a decrease of $70,599, or 73%. This decrease was attributable to a reduction in cash available for
investment and lower rates of return on those investments.



Results of Operations:    Year Ended December 31, 2002 versus Year Ended December 31, 2001



We had a net loss applicable to common stock of $12,839,564 for the year ended December 31, 2002 versus a net loss applicable to common stock of
$23,130,436 for the year ended December 31, 2001. The net loss applicable to common stock for the year ended December 31, 2002 included a charge of $2,725,387 for dividends accreted on our Series A and B convertible preferred stock compared to a
charge of $404,273 for dividends accreted on our Series A convertible preferred stock for the year ended December 31, 2001.



We had a loss from continuing operations of $10,114,177 for the year ended December 31, 2002 versus a loss from continuing operations of $22,192,963 for
the year ended December 31, 2001. The loss for the year ended December 31, 2002 included a charge in the amount of $4,418,206 related to our equity in the loss of SafeScience Newco, compared to a charge in the amount of $14,188,470 related to our
equity in the loss of SafeScience Newco for the year ended December 31, 2001.



Research and Development ExpensesDeveloping carbohydrate-based therapeutic compounds is our primary business focus and to a lesser extent, we formerly developed nontoxic agricultural products. Both areas
are, or were, in the research and development phase and explanations of the changes in both areas from year-to-year are described in this section.



Our research and development expenses for the years ended December 31, 2001 and 2002 were reported in the following financial statement captions:



|                                      |  |                          |            |      |   |          
|------------------------------------- |  | ------------------------ | ---------- | ---- | - | ---------
|                                      |  | Years Ended December 31,
|                                      |  | 2001                     |            | 2002
|GCS-100:                              |  |                          |            |      |   |          
|Equity in loss of SafeScience Newco   |  | $                        | 14,066,372 |      | $ | 4,221,887
|R&D                                   |  |                          | 3,973,678  |      |   | 1,616,633
|                                      |  |                          |            |      |   |          
|Total GCS-100                         |  |                          | 18,040,050 |      |   | 5,838,520
|Other ProductsR&D                    |  |                          | 317,386    |      |   | 344,400  
|                                      |  |                          |            |      |   |          
|Total Research & Development expenses |  | $                        | 18,357,436 |      | $ | 6,182,920
|                                      |  |                          |            |      |   |          



Total research and
development expenses for the year ended December 31, 2002 decreased by approximately $12,174,516, or 66%, from the year ended December 31, 2001.



Total GCS-100 development expenses of $5,838,520 for the year ended December 31, 2002 represent a decrease of $12,201,530, or 68%, from the $18,040,050 of
expenses incurred during the year ended December 31, 2001. This decrease is primarily attributable to the expense incurred in conjunction with the license fee paid to Elan by SafeScience Newco in the amount of $15,000,000 in 2001, $12,015,000
(80.1%) of which was



17



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included in the equity in loss of SafeScience Newco during the year ended December 31, 2001. Other decreases include reductions of approximately (i) $607,000
in reduced costs associated with clinical trials, (ii) $431,000 in non-cash compensation related to warrants granted to Wayne State University and the Barbara Ann Karmanos Cancer Institute as compensation for a license, (iii) $344,000 in license
fees paid to Wayne State University, (iv) $250,000 in GCS-100 production expense, and (v) $148,000 in expenses for sponsored research. . These reductions were partially offset by increases in clinical, professional, analytical and consulting
services of approximately $880,000, costs incurred by Elan related to GCS-100 included in the equity in loss of SafeScience Newco of approximately $376,000, staffing-related expenses of approximately $255,000 and royalty payments of approximately
$50,000.



Research and development expenses for Elexa-4 and
Bb-447, our agricultural compounds, which consisted primarily of wages, consulting, registration and license fees, increased $27,014, or 9%, to $344,400 for the year ended December 31, 2002 from $317,386 for the year ended December 31, 2001. The
increase reflects additional field trials performed in 2002 and additional federal and state registrations.



General and Administrative ExpensesGeneral and administrative expenses decreased to $3,838,348 for the year ended December 31, 2002 from
$4,045,088 for the year ended December 31, 2001, a decrease of $206,740, or 5%. This decrease was principally attributable to reductions of approximately (i) $233,000 in non-cash compensation for stock options granted to employees, (ii) $118,000 in
outside consulting expenses, (iii) $74,000 in expenses charged to SafeScience Newco and included as a component of our equity in loss of SafeScience Newco, (iv) $71,000 in legal expenses, and (v) $26,000 in public relations expenses, partially
offset by increased expenses for accounting of approximately $216,000 and insurance of approximately $52,000.



Interest IncomeInterest income decreased to $96,056 for the year ended December 31, 2002 from $187,721 for the year ended December 31, 2001,
a decrease of $91,665, or 49%. This decrease was attributable to a reduction in cash available for investment and lower rates of return on those investments.



Liquidity and Capital Resources



Since inception, the Company has funded its operations primarily with the proceeds from equity securities totaling approximately $67.4 million. For the
year ended December 31, 2003, the Companys operations utilized cash of approximately $7,052,000, primarily to fund the operating loss. This use of cash was offset by equity financings that resulted in net proceeds of approximately $4,166,000
to the Company. In 2002, the Companys operations utilized cash of approximately $8,398,000, which was offset by equity financings that resulted in net proceeds of approximately $6,897,000.



Capital expenditures for the years ended December 31, 2002 and 2003, which
totaled $177,662 and $178,836, respectively, primarily related to computer and office equipment. The Company has no significant commitments for the purchase of equipment, product manufacturing facilities or marketing efforts at present. The Company
leases office facilities under an operating lease that ends in March 2005 and laboratory space under an operating lease that ends in January 2007. Rent expense for these spaces will be approximately $543,000 in 2004. The Company anticipates that its
current offices and lab will be adequate for its space requirements for the foreseeable future.



The Company has retained Glenmere Clinical Research, Inc., a contract research organization (CRO) and Medidata Solutions, Inc., a provider of
electronic data capture services, to support its clinical trial program. They provide clinical research management, medical and safety monitoring, data management and medical writing and regulatory services. The total cost of Glenmere and
Medidatas services are estimated to be approximately $590,000, for the initial Phase I dose escalation monotherapy trial which is expected to be paid through March 2005. In addition, the CRO costs associated with the planned future Phase I and
Phase II/III trials are estimated at $650,000 for fixed costs for each trial plus $10,000 per patient. There are additional non-CRO costs associated



18



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with planned future clinical trials of approximately $20,000 per patient. The Company expects to incur substantial additional operating costs, including
costs related to ongoing and planned research and development activities and preclinical studies.



The Company is seeking to expand its product pipeline under development. Potential new product candidates will either be developed internally or licensed
by the Company. The cost related to the development of new product candidates is projected to be in the range of $100,000 to $250,000 during the twelve months ended December 31, 2004, although it could be higher.



As of December 31, 2003, the Companys cash and cash equivalents were
approximately $3,194,000, as compared to approximately $6,299,000 as of December 31, 2002. In January 2004, the Company raised approximately $4.3 million in net proceeds from the sale of common stock and warrants to purchase common stock. The
Company has a $100,000 stand-by line of credit with a bank secured by the Companys cash and cash equivalents, which had no outstanding balance as of December 31, 2003 and secured letters of credit in the aggregate amount of $148,128 which is
held as security for deposits required by its lease of office and lab space. The Company terminated its stand-by letter of credit on March 8, 2004. The Company has no other commercial financing sources at present but may seek such sources in the
future. It is not known whether additional funds could be borrowed from stockholders or other sources.



As of March 26, 2004, the Companys cash and cash equivalents were approximately $5,539,000



The Companys future is dependent upon its ability to obtain financing
to fund its operations. As of March 26, 2004, the Company has not obtained commitments from any existing or potential investors to provide additional financing. The Company expects to incur substantial additional operating costs, including costs
related to ongoing research and development activities, preclinical studies and clinical trials. To the extent that the Company is unable to raise additional capital on a timely basis, management may prioritize research activities to conserve cash.
In the event additional financing is not obtained, the Company may be required to significantly reduce or curtail operations.



The Company believes that its existing funds will be sufficient to fund its operating expenses and capital requirements into the third quarter of 2004
consistent with prioritizing R&D expenditures. The Company intends to raise additional equity financing.



Off Balance Sheet Arrangements



We do not have any off-balance sheet arrangements (as such term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a
current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.



Payment Obligations



Our future, noncancellable, contractual commitments, are summarized in the following table:



|                          |  |                |     |      |   |      |  |      |     |      |   |            |  |   |     |  |   |  
|------------------------- |  | -------------- | --- | ---- | - | ---- |  | ---- | --- | ---- | - | ---------- |  | - | --- |  | - | -
|                          |  | (in thousands)
|                          |  | 2004           |     | 2005 |   | 2006 |  | 2007 |     | 2008 |   | Thereafter
|Lease Payments(1)         |  |                | 543 |      |   | 220  |  |      | 106 |      |   |           |  |   |    |  |   | 
|Purchase Obligations      |  |                | 94  |      |   |     |  |      |    |      |   |           |  |   |    |  |   | 
|License Payments(2)(3)(4) |  |                | 170 |      |   | 170  |  |      | 170 |      |   | 170        |  |   | 170 |  |   |  
|                          |  |                |     |      |   |      |  |      |     |      |   |            |  |   |     |  |   |  
|Total                     |  | $              | 807 |      | $ | 390  |  | $    | 276 |      | $ | 170        |  | $ | 170 |  | $ | 
|                          |  |                |     |      |   |      |  |      |     |      |   |            |  |   |     |  |   |  

---

|(1) |  | Rental payments for office space at 31 St. James, Boston, Massachusetts 02116 and for laboratory space at One Kendall Square, Cambridge, Massachusetts 02139.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | During 2001, the Company executed an agreement with Wayne State University and the Barbara Ann Karmanos Cancer Institute. This agreement grants the Company an
exclusive world-wide license to patents,
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



19



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| | patent applications, and other intellectual property related to GCS-100 Material issued, developed, or applied for by Wayne State University and
the Barbara Ann Karmanos Cancer Institute.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In order to maintain its rights under this agreement, the Company may be required to make additional payments of up to $3,000,000 which are contingent upon reaching future commercialization milestones. Specifically, the Company must on the
first occurrence of the following milestones: (a) pay Wayne State University and the Barbara Ann Karmanos Cancer Institute $500,000 within thirty (30) days following the date on which the Company commences Phase III clinical drug investigations
relating to GCS-100; (b) pay Wayne State University and the Barbara Ann Karmanos Cancer Institute $1,000,000 within thirty (30) days following the date on which the Company makes a new drug application (NDA) submission to the FDA
relating to GCS-100; and (c) pay Wayne State University and the Barbara Ann Karmanos Cancer Institute $1,500,000 within thirty (30) days following the date on which the FDA approves an NDA of the Company covering GCS-100. In addition, the Company
must pay $10,000 per month until FDA approval for GCS-100, which payments are offset against the 2% royalty jointly to Wayne State University and the Barbara Ann Karmanos Cancer Institute the Company must pay on net sales of GCS-100.



|(3) |  | In January 1994, the Company agreed that one of its founders, Dr. David Platt, would receive a royalty of 2% of net sales, in exchange for the licensed patent rights on certain
products being developed. The Company has agreed to pay all of the costs to procure and maintain any patents granted under this agreement. The agreement includes a requirement that the royalties paid in the ninth year of this agreement and all
subsequent years meet a minimum requirement of $50,000. The Company accrued a $50,000 liability as of December 31, 2003, which was subsequently paid in January 2004.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) |  | Pursuant to the Companys termination agreement with Elan regarding its SafeScience Newco joint venture, the Company acquired the preferred shares of SafeScience Newco held by
Elan in exchange for a royalty interest on certain future revenues and payments related to GCS-100. The Company will be obligated to pay Elan a percentage on certain net revenues, which include license fees, milestone payments,
royalties, net manufacturing profits, payments received in the disposition of GCS-100, particular research and development payments and premiums paid for the Companys common stock. The Company will not be obligated to make any payments to Elan
on payments the Company receives that are for reimbursement of direct expenses or contractually required to be used for certain research and development costs and for which the full time employee reimbursement rate does not exceed industry
standards. In addition, if the Company directly markets GCS-100, the Company will be obligated to pay Elan a percentage on the net sales of GCS-100. However, all such payments on net revenues or net sales, if any, due to Elan will be
offset by certain development costs incurred by the Company between the date of termination of the joint venture (December 18, 2002) and the date the Company enters into a partnering or other commercialization agreement.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Item 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURE AND MARKET RISK



Market Risk



The Company is exposed to market risk related to changes in interest rates
as well as changes in currency exchange rates as measured against the U.S. dollar and each other which could positively or negatively affect results of operations and retained earnings. As of December 31, 2003, the Company has evaluated its risk and
determined that any exposure to currency exchange is not significant to the Companys overall consolidated financial results. There can be no assurance that the Companys exposure will remain at these levels, especially in the event of
significant and sudden fluctuations in the value of local currencies. The Company does not use derivative financial instruments for speculative or trading purposes.



Interest Rate Sensitivity



The Company maintains short-term investments in an overnight money market account comprised of U.S. treasury bills. If market interest rates were to
increase immediately and uniformly by 10% from levels that existed at December 31, 2003, the fair value of the portfolio would change by an immaterial amount.



20



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Certain Factors That May Affect Future Results



You should carefully consider the risks described below before making an
investment decision. If any of the following risks actually occur, our business, financial condition or results of operations could be materially and adversely affected. In such case, the trading price of our common stock could decline, and you may
lose all or part of your investment.



WE HAVE EXPERIENCED
SIGNIFICANT LOSSES THROUGHOUT OUR HISTORY, WE EXPECT THESE LOSSES TO CONTINUE AND WE MAY NOT ACHIEVE PROFITABILITY IN THE FUTURE.



We began operations in 1993 and have not generated revenue from human therapeutic products. We do not expect to generate product revenue for several
years, if at all. We will not generate significant funds unless we receive payments in connection with any potential licensing, marketing or other partnering arrangement with other pharmaceutical or biotechnology companies, or we bring
pharmaceutical products to market. Excluding dividends accreted to preferred stock, we have incurred approximately $84.4 million of losses since our inception, including approximately $7.6 million for the year ended December 31, 2003. Extensive
losses can be expected to continue for the foreseeable future.



We also expect to continue to incur significant operating expenses and capital expenditures and anticipate that our expenses will increase substantially in the foreseeable future as we:



| |  |  | conduct clinical trials;
| | - |  | ------------------------



| |  |  | conduct research and development on existing and new product candidates;
| | - |  | ------------------------------------------------------------------------



| |  |  | make milestone and royalty payments;
| | - |  | ------------------------------------



| |  |  | seek regulatory approvals for our product candidates;
| | - |  | -----------------------------------------------------



| |  |  | commercialize our product candidates, if approved;
| | - |  | --------------------------------------------------



| |  |  | prosecute and maintain existing and future patent applications and patents;
| | - |  | ---------------------------------------------------------------------------



| |  |  | hire additional clinical, scientific and management personnel;
| | - |  | --------------------------------------------------------------



| |  |  | add operational, financial and management information systems and personnel; and
| | - |  | --------------------------------------------------------------------------------



| |  |  | identify and potentially in-license additional compounds or product candidates.
| | - |  | -------------------------------------------------------------------------------



WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL FUNDING, WHICH COULD REDUCE OUR ABILITY TO FUND, EXPAND OR CONTINUE
OPERATIONS.



We believe that our existing funds will
be sufficient to fund our operating expenses and capital requirements into the third quarter of 2004, allowing us to conduct the Phase I dose escalation monotherapy trial, with a low ethanol formulation of GCS-100. We intend to raise additional
capital through the sale of equity securities to support our additional planned Phase I dose escalation trials and continued operations. To the extent we are unable to raise sufficient funding for the additional Phase I dose escalation trials in the
capital markets, we will need to accelerate our efforts to repartner with a large biotechnology or pharmaceutical company and/or curtail our development efforts.



Our future is dependent on our ability to obtain additional financing to fund our operations. We expect to incur substantial
additional operating costs, including costs related to ongoing research and development activities, manufacturing, preclinical studies and clinical trials. Additional equity financing may result in dilution to our stockholders. At our current stock
price or if the market price of our common stock declines, some potential investors may either refuse to offer us any financing or will offer financing at unacceptable rates or on unfavorable terms. If we are unable to obtain financing necessary to
fund our operations, we may have to sell or liquidate GlycoGenesys or significantly reduce, curtail or cease our operations.



21



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WE HAVE RECEIVED A GOING CONCERN OPINION FROM OUR INDEPENDENT AUDITORS.



Our consolidated financial statements included in our Annual Report on Form
10-K for the year ended December 31, 2003 have been prepared on the assumption that we will continue as a going concern. Deloitte & Touche LLP issued a report dated March 29, 2004 that includes an explanatory paragraph stating that our recurring
losses from operations, accumulated deficit of $84.4 million as of December 31, 2003, and our expectation that we will incur substantial additional operating costs, including costs related to ongoing research and development activities, preclinical
studies and clinical trials, among other things, raise substantial doubt about our ability to continue as a going concern.



OUR FUTURE PROSPECTS ARE HEAVILY DEPENDENT ON THE RESULTS OF GCS-100.



While we seek to increase our portfolio of potential products, currently we are not developing a wide array of products.
Nearly all of our attention and resources are directed to the development of GCS-100. If GCS-100 is ultimately ineffective in treating cancer, does not receive the necessary regulatory approvals or does not obtain commercial acceptance, we will be
materially harmed.



WE ARE DEPENDENT ON THE SUCCESSFUL
OUTCOME OF CLINICAL TRIALS FOR GCS-100.



GCS-100 is
not currently approved for sale by the FDA or by any other regulatory agency in the world, and GCS-100 may never receive approval for sale or become commercially viable. Before obtaining regulatory approval for sale, GCS-100 or another product
candidate will be subjected to extensive preclinical and clinical testing to demonstrate safety and efficacy for a particular indication for humans in addition to meeting other regulatory standards. Our success will depend on the successful outcome
of our clinical trials with GCS-100.



There are a number of
difficulties and risks associated with clinical trials. The possibility exists that:



| |  |  | we may discover that GCS-100 or another product candidate may cause, alone or in combination with another therapy, harmful side effects;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we may discover that GCS-100 or another product candidate, alone or in combination with another therapy, does not exhibit the expected therapeutic results in humans;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | results from early trials may not be statistically significant or predictive of results that will be obtained from large-scale, advanced clinical trials;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we or the FDA may suspend the clinical trials of GCS-100 or another product candidate;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | patient recruitment may be slower than expected;
| | - |  | ------------------------------------------------



| |  |  | patients may drop out of our clinical trials; and
| | - |  | -------------------------------------------------



| |  |  | we may be unable to timely produce sufficient supplies of GCS-100 or another product candidate for clinical trials.
| | - |  | -------------------------------------------------------------------------------------------------------------------



Given the uncertainty surrounding the regulatory and clinical trial process,
we may not be able to develop safety, efficacy or manufacturing data necessary for approval of GCS-100 or another product candidate. In addition, even if we receive approval, such approval may be limited in scope and hurt the commercial viability of
such product. If we are unable to successfully obtain approval of and commercialize any product candidate, this would materially harm our business, impair our ability to generate revenues and adversely impact our stock price.



OUR ABILITY TO DEVELOP GCS-100 MAY BE HARMED IF WE ARE UNABLE TO FIND A
NEW DEVELOPMENT PARTNER.



On December 18, 2002, we and
EIS mutually terminated our joint venture and we acquired all of the outstanding capital stock of SafeScience Newco. SafeScience Newco received a total of approximately $7.3 million of research funds over the course of our joint venture with EIS. We
must either fund the development of GCS-100 ourselves or with a new development partner. If we are unable to find a development partner, our ability to develop and commercialize GCS-100, and our prospects as a whole, could be materially harmed.



22



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OUR FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY OR OUR INFRINGEMENT ON THE PROPERTY RIGHTS OF
OTHERS MAY IMPEDE OUR ABILITY TO OPERATE FREELY.



We
rely significantly upon proprietary technology and protect our intellectual property through patents, copyrights, trademarks and contractual agreements as appropriate. We own or exclusively license 13 issued U.S. patents having expiration dates
ranging from 2013 to 2022. Five of these 13 issued patents relate to GCS-100. We own or exclusively license seven foreign patents having expiration dates ranging from 2015 to 2017. Five of these seven foreign patents relate to GCS-100. We own or
exclusively license 12 pending U.S. patent applications, of which 11 relate to GCS-100 and 41 pending foreign patent applications, of which 30 relate to GCS-100. As we develop GCS-100, we may discover more about its characteristics and manufacturing
which will require additional patent prosecution. Thus, we continually evaluate our technology to determine whether to make further patent filings.



To the extent aspects of our technology may be unpatentable, we may determine to maintain such technology as trade secrets or we may protect such
unpatented technology by contractual agreements. Our unpatented technology or similar technology could be independently developed by others. In addition, the contractual agreements by which we protect our unpatented technology and trade secrets may
be breached. If technology similar to ours is independently developed or our contractual agreements are breached, our technology will be less valuable and our business will be harmed.



There is always a risk that issued patents may be subsequently invalidated, either in whole or in part, and this could
diminish or extinguish our patent protection for key elements of our technology. We are not involved in any such litigation or proceedings, nor are we aware of any basis for such litigation or proceedings. We cannot be certain as to the scope of
patent protection, if any, which may be granted on our patent applications.



The patents we exclusively license from Wayne State University and the Karmanos Cancer Institute and the patent applications we exclusively license from David Platt could become subject to a proceeding at the U.S.
Patent and Trademark Office to determine priority between them.



Our potential products or business activities could be determined to infringe intellectual rights of third parties despite our issued patents. Any claims against us or any purchaser or user of our potential products, including GCS-100,
asserting that such product or process infringes intellectual property rights of third parties, if determined adversely to us, could have a material effect on our business, financial condition or future operations. Any asserted claims of
infringement, with or without merit, could be time consuming, result in costly litigation, divert the efforts of our technical and management personnel, or require us to enter into royalty or licensing agreements, any of which could materially
adversely affect our operating results. Such royalty or licensing agreements, if required, may not be available on terms acceptable to us, if at all. In the event a claim is successful against us and we cannot obtain a license to the relevant
technology on acceptable terms, license a substitute technology or redesign our products to avoid infringement, our business, financial condition and operating results would be materially adversely affected.



WE DEPEND ON TECHNOLOGY LICENSED TO US BY THIRD PARTIES AND IF WE ARE
UNABLE TO CONTINUE LICENSING THIS TECHNOLOGY OUR FUTURE PROSPECTS MAY BE MATERIALLY ADVERSELY AFFECTED.



We license technology, including technology related to GCS-100, from third parties. We anticipate that we will continue to license technology from third
parties in the future. To maintain our license with David Platt we must pay an annual license fee equal to the greater of $50,000 or 2% of product sales. To maintain our license with Wayne State University and the Karmanos Cancer Institute we must,
among other things, pay Wayne State University and the Karmanos Cancer Institute up to $3 million in milestone payments, $10,000 per month until FDA approval (which payments are offset against future royalties), 2% royalties on product sales and
receive FDA or equivalent agency approval to sell GCS-100 by January 1, 2008.



23



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In February 2004, we received a letter from David Platt alleging breach of our license with him and
providing 60 days to cure such alleged breaches. We believe the breaches alleged by David Platt are without merit or have been cured; however, if David Platt were to succeed in terminating this agreement, we would be materially adversely affected.
See Legal Proceedings-Platt License for more information.



The technology we license from third parties would be difficult to replace. The loss of any of these technology licenses would result in delays in the development of our products until equivalent technology, if available, is identified,
licensed and integrated and could materially adversely affect our future prospects. The use of replacement technology from other third parties would require us to enter into license agreements with these third parties, which could result in higher
royalty payments and a loss of product differentiation, or alternatively may not be available.



WE EXPECT TO REMAIN DEPENDENT ON THIRD PARTIES FOR RESEARCH AND DEVELOPMENT ACTIVITIES NECESSARY TO COMMERCIALIZE OUR PRODUCTS.



In addition, we utilize the services of several scientific and technical consultants to oversee various aspects of our
protocol design, clinical trial oversight and other research and development functions. However, we contract out most of our research and development operations for GCS-100, utilizing third-party contract manufacturers such as Hollister-Stier LLC
and Sigma-Aldrich, Inc. to manufacture GCS-100, Incell Corporation, LLC and Pharm-Eco for assay and other development work and third-party contract research organizations, such as Glenmere Clinical Research to perform pre-clinical and/or clinical
studies in accordance with our designed protocols, as well as sponsoring research at medical and academic centers, such as the University of Arizona, St. Bartholomews and the Royal London School of Medicine, and Northeastern University.



Because we rely on third parties for much of our research and
development work, we have less direct control over our research and development. We face risks that these third parties may not be appropriately responsive to our timeframes and development needs and could devote resources to other customers.



IF THE THIRD PARTIES WE RELY ON FOR MANUFACTURING ARE
UNABLE TO PRODUCE THE NECESSARY AMOUNTS OF GCS-100, DO NOT MEET OUR QUALITY NEEDS OR TERMINATE THEIR RELATIONSHIPS WITH US, OUR BUSINESS WILL SUFFER.



We do not presently have our own manufacturing operations, nor do we intend to establish any unless and until, in the opinion of management, the size
and scope of our business so warrants. While we have established a manufacturing relationship with Hollister-Stier Laboratories LLC and Sigma-Aldrich, Inc. to provide us with GCS-100 that we believe will provide the capability to meet our
anticipated requirements for the foreseeable future, we have not entered into any long-term arrangements for manufacturing and such arrangements may not be obtained on desirable terms. For the foreseeable future, we will be dependent upon third
parties to manufacture GCS-100.



Our reliance on independent
manufacturers involves a number of risks, including the absence of adequate capacity, the unavailability of, or interruptions in, access to necessary manufacturing processes and reduced control over delivery schedules. Because our manufacturing
process is still in a development stage, any changes made to a final commercial manufacturing process may present technical problems to an independent manufacturer. Third-party manufacturers may not comply with FDA regulations, or other regulatory
requirements relating to the manufacturing of GCS-100, including compliance with good manufacturing practice, or GMP. We do not have control over, other than through contract, third-party manufacturers compliance with these regulations and
standards. If our manufacturers are unable or unwilling to continue manufacturing GCS-100 in required volumes, we will have to identify acceptable alternative manufacturers. If we need to change manufacturers, the FDA and corresponding foreign
regulatory agencies must approve these manufacturers in advance, which will involve testing and additional inspections to ensure compliance with FDA regulations and standards. The use of a new manufacturer may cause significant expense and
interruptions in supply if the new manufacturer has difficulty manufacturing GCS-100 to our specifications. Further, the introduction of a new manufacturer may increase the variation in the quality of GCS-100.



24



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MANY OF OUR COMPETITORS HAVE SUBSTANTIALLY GREATER RESOURCES THAN WE DO AND MAY BE ABLE TO DEVELOP
AND COMMERCIALIZE PRODUCTS THAT MAKE OUR POTENTIAL PRODUCTS NON-COMPETITIVE.



We face significant competition from firms currently engaged in the pharmaceutical and biotechnology industries.



GCS-100, our lead drug candidate, being developed for the treatment of various forms of cancer, addresses large markets, which are already populated with
several biotechnology and large pharmaceutical companies. These companies utilize different drug discovery platforms, including but not limited to small molecules, protein-based drugs, liposome technology, and genomics. The drug development industry
is intensely competitive. According to industry surveys, there are approximately over 400 new drug candidates in development to treat various types of cancer, many of them for multiple indications. According to the PhRMA, approximately 170
pharmaceutical and biotechnology companies and the National Cancer Institute are conducting these efforts. It is estimated that 100 biotechnology companies have more than 100 drug candidates in later stages of clinical development than GCS-100 for
acute, life threatening disease, and late stage disease, and that over forty percent of these drug candidates are being developed to treat various types of cancer. Many of our actual or potential competitors have significantly greater financial
resources and/or drug development experience than we have. There is no assurance that other carbohydrate-based or non-carbohydrate-based drugs with similar clinical effects to GCS-100 may not be successfully developed by other companies.



A biotechnology company such as ours must keep pace with rapid
technological change and faces intense competition. We compete with biotechnology and pharmaceutical companies for funding, access to new technology, research personnel and in product research and development. Many of these companies have greater
financial resources and more experience than we do in developing drugs, obtaining regulatory approvals, manufacturing and marketing. We also face competition from academic and research institutions and government agencies pursuing alternatives to
our products and technologies. We expect that GCS-100 and other product candidates, will face intense competition from existing or future drugs. In addition, our product candidates may face increasing competition from generic formulations or
existing drugs whose active components are no longer covered by patents. These generic formulations or drugs would present lower-priced competition.



In the two cancer types in which we have conducted Phase II(a) clinical trials, pancreatic and colorectal, there are many drugs being developed. We
believe, based on industry studies there are, including GCS-100, approximately 7 drugs in Phase I, 15 drugs in Phase II, 6 drugs in Phase III or pre-registration for treatment of pancreatic cancer. In addition, GCS-100, if it receives FDA approval
for pancreatic cancer, will face competition from existing drugs approved or used to treat pancreatic cancer. These drugs are fluorouracil (5-FU), Eli Lillys gemcitabine (Gemzar) and Supergens Mitozytrex. Combination studies utilizing
new drug candidates and Gemzar are ongoing and combination therapies of new drug candidates and Gemzar may present future competition. Aphtons G17DT currently being evaluated in combination with Gemzar in a double blinded Phase III clinical
trial.



We believe, based on industry studies, there are,
including GCS-100, approximately 12 drugs in Phase I, 24 drugs in Phase II, and 10 drugs in Phase III or in pre-registration for treatment of colorectal cancer. In addition, GCS-100, if it receives FDA approval for colorectal cancer, will face
competition from existing drugs approved or used to treat colorectal cancer. These drugs include Genenetechs Avastin, Roche Pharmaceuticals capecitabine (Xeloda), fluorouracil (Adrucil or 5-FU), leucovorin in combination with 5-FU,
Janssens levamisole (Ergamisol) in combination with 5-FU and Pharmacias irinotecan (Camptosar), Imclones Erbitux.



Our competitors may:



| |  |  | successfully identify drug candidates or develop products earlier than we do;
| | - |  | -----------------------------------------------------------------------------



| |  |  | obtain approvals from the FDA or foreign regulatory bodies more rapidly than we do;
| | - |  | -----------------------------------------------------------------------------------



25



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| |  |  | develop products that are more effective, have fewer side effects or cost less than our products; or
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | successfully market products that may compete with our product candidates.
| | - |  | --------------------------------------------------------------------------



The success of our competitors in any of these efforts would adversely affect our ability to develop, commercialize and market our product candidates.



OUR BUSINESSES ARE SUBJECT TO SIGNIFICANT GOVERNMENT
REGULATION AND FAILURE TO ACHIEVE REGULATORY APPROVAL OF OUR DRUG CANDIDATES WOULD SEVERELY HARM OUR BUSINESS.



The FDA regulates the development, testing, manufacture, distribution, labeling and promotion of pharmaceutical products in the United States pursuant to
the Federal Food, Drug, and Cosmetic Act and related regulations. We must receive premarket approval by the FDA prior to any commercial sale of GCS-100 or any other drug candidate. Before receiving such approval we must provide proof in human
clinical trials of the safety and efficacy of GCS-100 or any other drug candidates, which trials can take several years. In addition, we must show that we can produce GCS-100 or any other drug candidates consistently at quality levels sufficient for
administration in humans. Premarket approval is a lengthy and expensive process. We may not be able to obtain FDA approval for any commercial sale of any drug candidate. By statute and regulation, the FDA has 180 days to review an application for
approval to market a drug candidate; however, the FDA frequently exceeds the 180-day time period, at times taking up to 18 months. In addition, based on its review, the FDA may determine that additional clinical trials are required. Except for any
potential licensing or marketing arrangements with other pharmaceutical or biotechnology companies, we will not generate any revenues in connection with GCS-100 or any other drug candidates unless and until we obtain FDA approval to sell such
products in commercial quantities for human application.



REIMBURSEMENT PROCEDURES AND FUTURE HEALTHCARE REFORM MEASURES ARE UNCERTAIN AND MAY ADVERSELY IMPACT OUR ABILITY TO SUCCESSFULLY SELL OR LICENSE ANY PHARMACEUTICAL PRODUCT.



Our ability to successfully sell or license any pharmaceutical product will
depend in part on the extent to which government health administration authorities, private health insurers and other organizations will reimburse patients or providers for the costs of our future pharmaceutical products and related treatments. In
the United States, government and other third-party payers have sought to contain healthcare costs by limiting both coverage and the level of reimbursement for new pharmaceutical products approved for marketing by the FDA. In some cases, these
payers may refuse to provide any coverage for uses of approved products to treat medical conditions even though the FDA has granted marketing approval. Healthcare reform may increase these cost containment efforts. We believe that managed care
organizations and government health insurance programs may seek to restrict the use of new products, delay authorization to use new products or limit coverage and the level of reimbursement for new products. For example, the Medicare Prescription
Drug Improvement and Modernization Act of 2003 together with rule making by the Center for Medicare and Medicaid Services could effect drug coverage and payments by Medicare. Internationally, where national healthcare systems are prevalent, little
if any funding may be available for new products, and cost containment and cost reduction efforts can be more pronounced than in the United States.



IF WE ARE UNABLE TO ENTER INTO AGREEMENTS WITH THIRD PARTIES TO PROVIDE SALES, MARKETING AND DISTRIBUTION CAPABILITIES, OR TO CREATE THESE FUNCTIONS
OURSELVES, WE WILL NOT BE ABLE TO COMMERCIALIZE GCS-100 OR ANY OTHER PRODUCT CANDIDATES.



We do not have any sales, marketing or distribution capabilities. In order to commercialize GCS-100 or other product candidates, if any are approved, we
must either make arrangements with third parties to provide sales, marketing and distribution capabilities or acquire or internally develop these functions ourselves. If we obtain FDA approval for GCS-100 or any other product candidate, we intend to
rely on relationships with one or



26



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more pharmaceutical or biotechnology companies or other third parties with established distribution systems and direct sales forces to market GCS-100 or any
other product candidate. If we decide to market any of our product candidates directly, we must either acquire or internally develop a marketing and sales force with technical expertise and with supporting distribution capabilities. The acquisition
or development of a sales and distribution infrastructure would require substantial resources, which may divert the attention of our management and key personnel, and negatively impact our product development efforts. Moreover, we may not be able to
establish in-house sales and distribution capabilities or relationships with third parties. To the extent we enter into co-promotion or other licensing agreements, our product revenues are likely to be lower than if we directly marketed and sold our
product candidates, and any revenue we receive will depend upon the efforts of third parties, which may not be successful.



OUR GROWTH MAY BE LIMITED IF WE ARE UNABLE TO RETAIN AND HIRE ADDITIONAL QUALIFIED PERSONNEL AS NECESSARY.



Our success will depend on our ability to retain key employees and our
continuing ability to attract and retain highly qualified scientific, technical and managerial personnel. Under our current clinical trial and business plan, we may add over 15 employees during the course of the next two years, primarily technical
or scientific personnel, as needs develop. Competition for such personnel is intense and we may not be able to retain existing personnel or attract qualified employees in the future. Our current financial position, limited drug pipeline and small
size make it more difficult to compete for such personnel against larger, more diversified companies. At present, we employ 14 full-time employees and one part-time worker. We depend upon the personal efforts and abilities of our officers and
directors, including Bradley J Carver, our President, CEO and Interim Chairman of the Board and John W. Burns, our Senior Vice President, Chief Financial Officer and a director and would be materially adversely affected if their services ceased to
be available for any reason and comparable replacement personnel were not employed.



THE BIOTECHNOLOGY BUSINESS HAS A RISK OF PRODUCT LIABILITY, AND IN THE EVENT OF A SUIT AGAINST US, OUR BUSINESS COULD BE SEVERELY HARMED.



The testing, marketing and sale of biotechnology products entails a risk of product liability claims by patients and others.
While we currently maintain product liability insurance, such insurance may not be available at reasonable cost and in the event of a significant adverse event with a patient such insurance would likely be insufficient to cover the full amount of
the liability incurred. In the event of a successful suit against us, payments and damage to our reputation could have a material adverse effect on our business and financial condition. Even if such a suit is unsuccessful, our reputation could be
damaged and litigation costs and expenditures of management time on such matters could adversely affect our business and financial condition.



WE ARE CONTRACTUALLY OBLIGATED TO ISSUE SHARES IN THE FUTURE, INCLUDING SHARES TO BE ISSUED UPON THE CONVERSION OF OUTSTANDING PREFERRED STOCK AND
WARRANTS HELD BY EIS, WHICH WILL CAUSE SUBSTANTIAL DILUTION OF YOUR INTEREST IN US.



As of March 22, 2004, there were outstanding options to purchase 1,803,900 shares of common stock, at a weighted average exercise price of $1.99 per share and warrants to purchase 14,925,616 shares of common stock at
a weighted average exercise price of $2.02 per share. Moreover, we may in the future issue additional shares to raise capital, acquire other companies or technologies, to pay for services, or for other corporate purposes. Any such issuances will
have the effect of further diluting the interest of shareholders.



EIS owns 6,153.51 shares of our Series A preferred stock, 3,471.15 shares of our Series B preferred stock and 1,116.79 shares of our Series C convertible preferred stock. Each share of our Series A preferred stock, Series B preferred stock
and Series C preferred stock is convertible into 1,000 shares of our common stock, subject to anti-dilution adjustments, except 1,209.07 shares of Series A preferred stock which are convertible after December 18, 2004. The Series B preferred stock
bears a 7% dividend payable in Series B preferred stock,



27



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which compounds annually. Any accrued but unissued Series B preferred stock dividends would be converted into common stock upon conversion of the Series B
preferred stock. Accordingly, EIS could acquire upon exercise of warrants held by it and the conversion into common stock of all shares of Series A, Series B and Series C preferred stock held by it, including accrued dividends as of December 31,
2003 on the Series B preferred stock but no future dividends, a total of 12,041,076 shares of common stock. This amount of shares represents 24.3% of our common stock outstanding as of March 22, 2004. Pursuant to provisions in our agreement with
EIS, if the exercise or conversion of any of our securities held by EIS would result in EIS owning more than 9.9% of our common stock at any time, EIS may opt to receive non-voting securities instead of common stock.



WE MUST COMPLY WITH THE LISTING REQUIREMENTS OF THE NASDAQ SMALLCAP
MARKET OR OUR COMMON STOCK MAY DECLINE AND THE LIQUIDITY OF AN INVESTMENT IN OUR SECURITIES WOULD DECREASE.



Our common stock could be delisted from The Nasdaq SmallCap Market for the following reasons, among others:



| |  |  | if the closing bid price of our common stock falls below $1.00 per share for thirty (30) consecutive business days;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | if our market capitalization falls below $35 million and we have less than $2,500,000 in stockholders equity; or
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | if the value of our common stock held by our stockholders (other than our directors, executive officers and 10% stockholders) is less than $1,000,000.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



There are other quantitative and qualitative criteria of the Nasdaq SmallCap
Market which if violated could lead to delisting of our common stock.



We may not be able to maintain our compliance with Nasdaq continued listing requirements in the future. We received a letter from Nasdaq on August 8, 2003 that the bid price of our common stock had been below $1.00 for 30 consecutive
business days and that we had a 180-day grace period, until February 4, 2004, to achieve a bid price of at least $1.00 for a period of 10 consecutive business days or face delisting. In September 2003, we received a letter from Nasdaq that we
complied with the minimum bid price requirement. We have on several previous occasions received notice from Nasdaq that we failed to meet certain of its listing requirements. We have been successful in regaining compliance on those occasions. Our
stockholders equity was approximately $2.6 million as of December 31, 2003. Our market capitalization was $69.0 million on December 31, 2003 and was $52.6 million on March 26, 2004.



If Nasdaq delisted our common stock, we would likely seek to list our common stock for quotation on a regional stock
exchange. However, if we were unable to obtain listing or quotation on such market or exchange, trading of our common stock would occur in the over-the-counter market on an electronic bulletin board for unlisted securities or in what are commonly
known as the pink sheet. In addition, delisting from Nasdaq and failure to obtain listing or quotation on such market or exchange would subject our common stock to so-called penny stock rules. These rules impose additional
sales practice and market making requirements on broker-dealers who sell and/or make a market in such securities, such as disclosing offer and bid prices and compensation received from a trade to a purchaser and sending monthly account statements to
purchasers. Consequently, broker-dealers may be less willing or able to sell and/or make a market in our common stock. These rules also require that purchasers be accredited investors, which would reduce the number of investors who could purchase
our shares. Additionally, an investor would find it more difficult to dispose of, or to obtain accurate quotations for the price of, our common stock. As a result of delisting, it may become more difficult for us to raise funds through the sale of
our securities.



28



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BECAUSE THE CURRENT AND POTENTIAL MEMBERS OF OUR BOARD OF DIRECTORS COULD CONTROL A SIGNIFICANT
PERCENTAGE OF OUR COMMON STOCK, THEY COULD EXERCISE SUBSTANTIAL CONTROL OVER US.



The holders of the common stock do not have cumulative voting rights. Our directors, two of whom are executive officers of GlycoGenesys, own approximately 5.4% collectively of our common stock outstanding as of March
22, 2004. One of the conditions of the transactions between us, Elan and EIS required that we expand our board of directors at our 2002 annual stockholders meeting at which time EIS could appoint one director. EIS decided not to appoint a
director at our 2002 annual stockholders meeting but may choose to do so in the future as long as they own at least 10% of our common stock (assuming exercise or conversion of convertible or exercisable securities held by EIS). If EIS appoints
a director, members of the board of directors and their affiliates would own approximately 5.7% of our common stock outstanding as of March 22, 2004, assuming EIS has not converted or exercised any of our securities held by it, and the same number
of shares are outstanding at such time as are currently outstanding. If EIS and our directors were to have converted or exercised all of our securities held by them, the members of our board of directors and their affiliates would own approximately
24.9% of the common stock outstanding as of March 22, 2004, assuming the number of shares outstanding at such time equals the number of shares currently outstanding plus the number of shares issued on exercise or conversion of securities held by EIS
and our directors. This concentration of ownership would allow these stockholders to substantially influence all matters requiring stockholder approval and could have the effect of delaying or preventing a change in control or otherwise discouraging
a potential acquirer from attempting to obtain control of us, which in turn could materially adversely affect our stock price.



OUR STOCK PRICE COULD DECLINE IF A SIGNIFICANT NUMBER OF SHARES BECOME AVAILABLE FOR SALE.



As of March 22, 2004, approximately 11,494,670 shares of common stock
presently issued and outstanding are Restricted Securities as that term is defined in Rule 144 promulgated under the Act. In general, a person (or persons whose shares are aggregated) who has satisfied a one year holding period may sell,
within any three month period, an amount of restricted securities which does not exceed the greater of 1% of the then outstanding shares of common stock or the average weekly trading volume during the four calendar weeks prior to such sale.
Restricted securities can be sold, under certain circumstances, without any quantity limitation, by persons who are not affiliates of GlycoGenesys and who have beneficially owned the shares for a minimum period of two years. The sale of these
restricted shares as well as the shares registered under our nine effective registration statements, shall increase the number of free-trading shares and may have a depressive effect on the price of our securities. Moreover, such sales, if
substantial, might also adversely affect our ability to raise additional equity capital.



THE PRICE OF OUR COMMON STOCK HAS BEEN VOLATILE, WHICH COULD RESULT IN SUBSTANTIAL LOSSES BY YOU.



The market price of our common stock, which is traded on the National Association of Securities Dealers Automated Quotation system (NasdaqSmall Cap)
has been, and may continue to be, highly volatile. During the twelve months ending February 29, 2004, our common stock has traded at prices ranging from $0.18 to $2.10 per share. Factors such as announcements of clinical trial results, financings,
legal proceedings, technological innovations or new products, either by us or by our competitors or third parties, as well as market conditions within the biotechnology and pharmaceutical industries, may have a significant impact on the market price
of our common stock.



In addition, the stock market has from
time to time, and especially in the last few years, experienced extreme price and volume fluctuations, particularly in the biotechnology sector, which have often been unrelated to the operating performance of particular companies. Current market
conditions are particularly unstable and there is a large degree of uncertainty at this time. In general, biotechnology stocks tend to be volatile even during periods of relative market stability because of the high rates of failure and substantial
funding requirements associated with biotechnology companies. Market conditions and conditions of the biotechnology sector could negatively impact the price of our common stock.



29



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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



INDEPENDENT AUDITORS REPORT



To the Board of Directors and Stockholders of GlycoGenesys, Inc.:



We have audited the accompanying consolidated balance sheets of GlycoGenesys,
Inc. and subsidiaries (the Company) as of December 31, 2003 and 2002 and the related consolidated statements of operations, stockholders equity (deficit), and cash flows each for the three years in the period ended December 31,
2003. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.



We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of GlycoGenesys, Inc. and 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.



The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred recurring losses from operations and had an accumulated deficit of $84.4 million as of December 31, 2003. The
Company expects to incur substantial additional operating costs, including costs related to ongoing research and development activities, preclinical studies and clinical trials. In the event additional financing is not obtained, the Company may be
required to significantly reduce or curtail operations. These matters raise substantial doubt about the Companys ability to continue as a going concern. Managements plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the outcome of this uncertainty.



/s/    DELOITTE & TOUCHE LLP



Boston, Massachusetts

March 29, 2004



F-1



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GLYCOGENESYS, INC.



CONSOLIDATED BALANCE SHEETS



ASSETS



|                                          |  |              |           |      |   |          
|----------------------------------------- |  | ------------ | --------- | ---- | - | ---------
|                                          |  | December 31,
|                                          |  | 2002         |           | 2003
|CURRENT ASSETS:                           |  |              |           |      |   |          
|Cash and cash equivalents                 |  | $            | 6,299,006 |      | $ | 3,193,575
|Prepaid expenses and other current assets |  |              | 332,397   |      |   | 301,657  
|                                          |  |              |           |      |   |          
|Total current assets                      |  |              | 6,631,403 |      |   | 3,495,232
|                                          |  |              |           |      |   |          
|PROPERTY AND EQUIPMENT, AT COST:          |  |              |           |      |   |          
|Computer, office and laboratory equipment |  |              | 637,372   |      |   | 683,975  
|Furniture and fixtures                    |  |              | 294,291   |      |   | 294,291  
|Motor vehicles                            |  |              | 25,026    |      |   | 25,026   
|                                          |  |              |           |      |   |          
|                                          |  |              | 956,689   |      |   | 1,003,292
|Less accumulated depreciation             |  |              | 578,502   |      |   | 693,569  
|                                          |  |              |           |      |   |          
|                                          |  |              | 378,187   |      |   | 309,723  
|                                          |  |              |           |      |   |          
|OTHER ASSETS:                             |  |              |           |      |   |          
|Restricted cash                           |  |              | 108,128   |      |   | 148,128  
|Other                                     |  |              | 11,845    |      |   | 11,670   
|                                          |  |              |           |      |   |          
|Total other assets                        |  |              | 119,973   |      |   | 159,798  
|                                          |  |              |           |      |   |          
|Total assets                              |  | $            | 7,129,563 |      | $ | 3,964,753
|                                          |  |              |           |      |   |          





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





F-2



---

GLYCOGENESYS, INC.



CONSOLIDATED BALANCE SHEETS



LIABILITIES AND STOCKHOLDERS EQUITY



|                                                                                                                                                                |  |              |             |   |      |   |             |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------- | - | ---- | - | ----------- | -
|                                                                                                                                                                |  | December 31, |            
|                                                                                                                                                                |  | 2002         |             |   | 2003 |  
|CURRENT LIABILITIES:                                                                                                                                            |  |              |             |   |      |   |             |  
|Accounts payable                                                                                                                                                |  | $            | 591,785     |   |      | $ | 813,032     |  
|Accrued liabilities                                                                                                                                             |  |              | 351,758     |   |      |   | 493,717     |  
|Net liabilities of discontinued operations                                                                                                                      |  |              | 146,612     |   |      |   | 57,698      |  
|                                                                                                                                                                |  |              |             |   |      |   |             |  
|Total current liabilities                                                                                                                                       |  |              | 1,090,155   |   |      |   | 1,364,447   |  
|                                                                                                                                                                |  |              |             |   |      |   |             |  
|Commitments and contingencies                                                                                                                                   |  |              |             |   |      |   |             |  
|STOCKHOLDERS EQUITY:                                                                                                                                           |  |              |             |   |      |   |             |  
|Preferred stock, $0.01 par value, liquidation value $21,045,615 and $21,472,096 at December 31, 2002 and 2003, respectively                                     |  |              | 108         |   |      |   | 108         |  
|Common stock, $.01 par value                                                                                                                                    |  |              |             |   |      |   |             |  
|Authorized200,000,000 shares at December 31, 2002 and 2003 Issued and outstanding37,251,457 and 46,032,096 shares at December 31, 2002 and 2003, respectively |  |              | 372,515     |   |      |   | 460,321     |  
|Additional paid-in capital                                                                                                                                      |  |              | 85,144,543  |   |      |   | 89,254,349  |  
|Deferred compensation                                                                                                                                           |  |              |            |   |      |   | (14,513     | )
|Note receivable from former officer-issuance of common stock                                                                                                    |  |              | (2,675,000  | ) |      |   | (2,675,000  | )
|Accumulated deficit                                                                                                                                             |  |              | (76,802,758 | ) |      |   | (84,424,959 | )
|                                                                                                                                                                |  |              |             |   |      |   |             |  
|Total stockholders equity                                                                                                                                      |  |              | 6,039,408   |   |      |   | 2,600,306   |  
|                                                                                                                                                                |  |              |             |   |      |   |             |  
|Total liabilities and stockholders equity                                                                                                                      |  | $            | 7,129,563   |   |      | $ | 3,964,753   |  
|                                                                                                                                                                |  |              |             |   |      |   |             |  





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





F-3



---

GLYCOGENESYS, INC.



Consolidated Statements of Operations



|                                                                         |  |                          |             |   |      |   |             |      |  |   |            |  
|------------------------------------------------------------------------ |  | ------------------------ | ----------- | - | ---- | - | ----------- | ---- |  | - | ---------- | -
|                                                                         |  | Years Ended December 31, |            
|                                                                         |  | 2001                     |             |   | 2002 |   |             | 2003 | 
|OPERATING EXPENSES:                                                      |  |                          |             |   |      |   |             |      |  |   |            |  
|Research and development                                                 |  | $                        | 4,291,064   |   |      | $ | 1,961,033   |      |  | $ | 4,081,944  |  
|General and administrative                                               |  |                          | 4,045,088   |   |      |   | 3,838,348   |      |  |   | 3,574,268  |  
|Restructuring charge (credit)                                            |  |                          | (177,283    | ) |      |   |            |      |  |   |           |  
|                                                                         |  |                          |             |   |      |   |             |      |  |   |            |  
|Total operating expenses                                                 |  | $                        | 8,158,869   |   |      | $ | 5,799,381   |      |  | $ | 7,656,212  |  
|                                                                         |  |                          |             |   |      |   |             |      |  |   |            |  
|Operating loss                                                           |  | $                        | (8,158,869  | ) |      | $ | (5,799,381  | )    |  | $ | (7,656,212 | )
|Other income (expense):                                                  |  |                          |             |   |      |   |             |      |  |   |            |  
|Equity in loss of SafeScience Newco, Ltd.                                |  |                          | (14,188,470 | ) |      |   | (4,418,206  | )    |  |   |           |  
|Interest income                                                          |  |                          | 187,721     |   |      |   | 96,056      |      |  |   | 25,457     |  
|Other income (expense)                                                   |  |                          | (33,345     | ) |      |   | 7,354       |      |  |   | 8,554      |  
|                                                                         |  |                          |             |   |      |   |             |      |  |   |            |  
|Total other income (expense)                                             |  |                          | (14,034,094 | ) |      |   | (4,314,796  | )    |  |   | 34,011     |  
|Loss from continuing operations                                          |  |                          | (22,192,963 | ) |      |   | (10,114,177 | )    |  |   | (7,622,201 | )
|Loss from discontinued operations                                        |  |                          | (533,200    | ) |      |   |            |      |  |   |           |  
|                                                                         |  |                          |             |   |      |   |             |      |  |   |            |  
|Net loss                                                                 |  |                          | (22,726,163 | ) |      |   | (10,114,177 | )    |  |   | (7,622,201 | )
|Accretion of preferred stock dividends                                   |  |                          | (404,273    | ) |      |   | (2,725,387  | )    |  |   | (426,481   | )
|                                                                         |  |                          |             |   |      |   |             |      |  |   |            |  
|Net loss applicable to common stock                                      |  | $                        | (23,130,436 | ) |      | $ | (12,839,564 | )    |  | $ | (8,048,682 | )
|                                                                         |  |                          |             |   |      |   |             |      |  |   |            |  
|Basic and diluted net loss per common stock from continuing operations   |  | $                        | (0.82       | ) |      | $ | (0.35       | )    |  | $ | (0.20      | )
|Basic and diluted net loss per common stock from discontinued operations |  |                          | (0.02       | ) |      |   |            |      |  |   |           |  
|                                                                         |  |                          |             |   |      |   |             |      |  |   |            |  
|Basic and diluted net loss per common stock                              |  | $                        | (0.84       | ) |      | $ | (0.35       | )    |  | $ | (0.20      | )
|                                                                         |  |                          |             |   |      |   |             |      |  |   |            |  
|Weighted average number of common shares outstanding                     |  |                          | 27,612,020  |   |      |   | 37,133,591  |      |  |   | 40,869,582 |  
|                                                                         |  |                          |             |   |      |   |             |      |  |   |            |  





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



F-4



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GLYCOGENESYS, INC.



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2001, 2002, AND 2003



|                                                                                                       |  |              |  |                 |         |                            |           |        |                       |     |  |   |            |   |  |   |         |  
|------------------------------------------------------------------------------------------------------ |  | ------------ |  | --------------- | ------- | -------------------------- | --------- | ------ | --------------------- | --- |  | - | ---------- | - |  | - | ------- | -
|                                                                                                       |  | Common Stock |  | Preferred Stock |         | Additional Paid-In Capital |           |        | Deferred Compensation |    
|                                                                                                       |  | Shares       |  | Amount          |         | Shares                     |           | Amount |                       |    
|BALANCE, DECEMBER 31, 2000                                                                             |  | 23,998,504   |  | $               | 239,985 |                            |          |        |                       |    |  | $ | 48,243,184 |   |  |   |        |  
|Common stock issued as part of private placements, net of $906,227 in issuance costs                   |  | 5,624,516    |  |                 | 56,246  |                            |          |        |                       |    |  |   | 6,585,043  |   |  |   |        |  
|Common stock issued pursuant to exercise of warrants                                                   |  | 765,526      |  |                 | 7,655   |                            |          |        |                       |    |  |   | 858,922    |   |  |   |        |  
|Common stock issued for license purchase                                                               |  | 160,000      |  |                 | 1,600   |                            |          |        |                       |    |  |   | 198,400    |   |  |   |        |  
|Exercise of common stock options                                                                       |  | 195,000      |  |                 | 1,950   |                            |          |        |                       |    |  |   | 273,614    |   |  |   |        |  
|Common stock issued for services and wages                                                             |  | 125,406      |  |                 | 1,254   |                            |          |        |                       |    |  |   | 107,355    |   |  |   |        |  
|Amortization of value of warrants issued for license                                                   |  |             |  |                 |        |                            |          |        |                       |    |  |   | 1,046,730  |   |  |   |        |  
|Accreted dividends on Series A Preferred stock                                                         |  |             |  |                 |        |                            |          |        |                       |    |  |   | (404,273   | ) |  |   |        |  
|Common stock issued as part of private placements, net of $318,330 in issuance costs                   |  | 2,700,000    |  |                 | 27,000  |                            |          |        |                       |    |  |   | 3,191,670  |   |  |   |        |  
|Net loss                                                                                               |  |             |  |                 |        |                            |          |        |                       |    |  |   |           |   |  |   |        |  
|                                                                                                       |  |              |  |                 |         |                            |           |        |                       |     |  |   |            |   |  |   |         |  
|BALANCE, DECEMBER 31, 2001                                                                             |  | 33,568,952   |  |                 | 335,690 |                            |          |        |                       |    |  |   | 60,100,645 |   |  |   |        |  
|Common stock issued as part of private placements, net of $581,119 in issuance costs                   |  | 3,128,588    |  |                 | 31,286  |                            |          |        |                       |    |  |   | 5,200,091  |   |  |   |        |  
|Common stock issued pursuant to exercise of warrants                                                   |  | 415,779      |  |                 | 4,158   |                            |          |        |                       |    |  |   |           |   |  |   |        |  
|Exercise of common stock options                                                                       |  | 16,100       |  |                 | 161     |                            |          |        |                       |    |  |   | 2,336      |   |  |   |        |  
|Common stock issued for services and wages                                                             |  | 122,038      |  |                 | 1,220   |                            |          |        |                       |    |  |   | 41,602     |   |  |   |        |  
|Amortization of value of warrants issued for license                                                   |  |             |  |                 |        |                            |          |        |                       |    |  |   | 615,262    |   |  |   |        |  
|Series B convertible preferred issued as part of private placements, net of $341,503 in issuance costs |  |             |  |                 |        |                            | 2,608.44  |        | $                     | 26  |  |   | 4,092,849  |   |  |   |        |  
|Accreted dividends on preferred stock                                                                  |  |             |  |                 |        |                            | 1,209.07  |        |                       | 13  |  |   |           |   |  |   |        |  
|Reclassification of preferred stock                                                                    |  |             |  |                 |         |                            | 6,923.94  |        |                       | 69  |  |   | 15,091,758 |   |  |   |        |  
|Net loss                                                                                               |  |             |  |                 |        |                            |          |        |                       |    |  |   |           |   |  |   |        |  
|                                                                                                       |  |              |  |                 |         |                            |           |        |                       |     |  |   |            |   |  |   |         |  
|BALANCE, DECEMBER 31, 2002                                                                             |  | 37,251,457   |  | $               | 372,515 |                            | 10,741.45 |        | $                     | 108 |  | $ | 85,144,543 |   |  |   |        |  
|Common stock issued as part of private placements, net of $326,262 in issuance costs                   |  | 7,487,037    |  |                 | 74,870  |                            |          |        |                       |    |  |   | 3,702,873  |   |  |   |        |  
|Common stock issued pursuant to exercise of warrants                                                   |  | 1,168,755    |  |                 | 11,688  |                            |          |        |                       |    |  |   | 367,505    |   |  |   |        |  
|Exercise of common stock options                                                                       |  | 19,024       |  |                 | 190     |                            |          |        |                       |    |  |   | 8,470      |   |  |   |        |  
|Deferred compensation to consultants                                                                   |  |             |  |                 |        |                            |          |        |                       |    |  |   | 32,016     |   |  |   | (14,513 | )
|Common stock issued to investors                                                                       |  | 105,823      |  |                 | 1,058   |                            |          |        |                       |    |  |   | (1,058     | ) |  |   |        |  
|Net loss                                                                                               |  |             |  |                 |        |                            |          |        |                       |    |  |   |           |   |  |   |        |  
|                                                                                                       |  |              |  |                 |         |                            |           |        |                       |     |  |   |            |   |  |   |         |  
|BALANCE, DECEMBER 31, 2003                                                                             |  | 46,032,096   |  | $               | 460,321 |                            | 10,741.45 |        | $                     | 108 |  | $ | 89,254,349 |   |  | $ | (14,513 | )
|                                                                                                       |  |              |  |                 |         |                            |           |        |                       |     |  |   |            |   |  |   |         |  

(continued)



F-5



---

|                                                                                                 |  |                                    |            |   |                     |   |             |                                      |  |   |             |  
|------------------------------------------------------------------------------------------------ |  | ---------------------------------- | ---------- | - | ------------------- | - | ----------- | ------------------------------------ |  | - | ----------- | -
|                                                                                                 |  | Note Receivable From FormerOfficer |            |   | Accumulated Deficit |   |             | Total Stockholders Equity (Deficit) | 
|BALANCE, DECEMBER 31, 2000                                                                       |  | $                                  | (2,675,000 | ) |                     | $ | (43,962,418 | )                                    |  | $ | 1,845,751   |  
|Common stock issued as part of private placements, net of $906,227 in issuance costs             |  |                                    |           |   |                     |   |            |                                      |  |   | 6,641,289   |  
|Common stock issued pursuant to exercise of warrants                                             |  |                                    |           |   |                     |   |            |                                      |  |   | 866,577     |  
|Common stock issued for license purchase                                                         |  |                                    |           |   |                     |   |            |                                      |  |   | 200,000     |  
|Exercise of common stock options                                                                 |  |                                    |           |   |                     |   |            |                                      |  |   | 275,564     |  
|Common stock issued for services and wages                                                       |  |                                    |           |   |                     |   |            |                                      |  |   | 108,609     |  
|Amortization of value of warrants issued for license                                             |  |                                    |           |   |                     |   |            |                                      |  |   | 1,046,730   |  
|Accreted dividends on Series A Preferred stock                                                   |  |                                    |           |   |                     |   |            |                                      |  |   | (404,273    | )
|Common stock issued as part of Private placements, net of $318,330 in issuance costs             |  |                                    |           |   |                     |   |            |                                      |  |   | 3,218,670   |  
|Net loss                                                                                         |  |                                    |           |   |                     |   | (22,726,163 | )                                    |  |   | (22,726,163 | )
|                                                                                                 |  |                                    |            |   |                     |   |             |                                      |  |   |             |  
|BALANCE, DECEMBER 31, 2001                                                                       |  |                                    | (2,675,000 | ) |                     |   | (66,688,581 | )                                    |  |   | (8,927,246  | )
|Common stock issued as part of private placements, net of $581,119 in issuance costs             |  |                                    |           |   |                     |   |            |                                      |  |   | 5,231,377   |  
|Common stock issued pursuant to exercise of warrants                                             |  |                                    |           |   |                     |   |            |                                      |  |   | 4,158       |  
|Exercise of common stock options                                                                 |  |                                    |           |   |                     |   |            |                                      |  |   | 2,497       |  
|Common stock issued for services and wages                                                       |  |                                    |           |   |                     |   |            |                                      |  |   | 42,822      |  
|Amortization of value of warrants issued for license                                             |  |                                    |           |   |                     |   |            |                                      |  |   | 615,262     |  
|Series B Preferred stock issued as part of private placements, net of $341,503 in issuance costs |  |                                    |           |   |                     |   |            |                                      |  |   | 4,092,875   |  
|Accreted dividends on preferred stock                                                            |  |                                    |           |   |                     |   |            |                                      |  |   | 13          |  
|Reclassification of preferred stock                                                              |  |                                    |           |   |                     |   |            |                                      |  |   | 15,091,827  |  
|Net loss                                                                                         |  |                                    |           |   |                     |   | (10,114,177 | )                                    |  |   | (10,114,177 | )
|                                                                                                 |  |                                    |            |   |                     |   |             |                                      |  |   |             |  
|BALANCE, DECEMBER 31, 2002                                                                       |  | $                                  | (2,675,000 | ) |                     | $ | (76,802,758 | )                                    |  | $ | 6,039,408   |  
|Common stock issued as part of private placements, net of $326,262 in issuance costs             |  |                                    |           |   |                     |   |            |                                      |  |   | 3,777,743   |  
|Common stock issued pursuant to exercise of warrants                                             |  |                                    |           |   |                     |   |            |                                      |  |   | 379,193     |  
|Exercise of common stock options                                                                 |  |                                    |           |   |                     |   |            |                                      |  |   | 8,660       |  
|Deferred compensation to consultants                                                             |  |                                    |           |   |                     |   |            |                                      |  |   | 17,503      |  
|Common stock issued to investors                                                                 |  |                                    |           |   |                     |   |            |                                      |  |   |            |  
|Net loss                                                                                         |  |                                    |           |   |                     |   | (7,622,201  | )                                    |  |   | (7,622,201  | )
|                                                                                                 |  |                                    |            |   |                     |   |             |                                      |  |   |             |  
|BALANCE, DECEMBER 31, 2003                                                                       |  | $                                  | (2,675,000 | ) |                     | $ | (84,424,959 | )                                    |  | $ | 2,600,306   |  
|                                                                                                 |  |                                    |            |   |                     |   |             |                                      |  |   |             |  

(concluded)



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



F-6



---

GLYCOGENESYS, INC.



Consolidated Statements of Cash Flows



|                                                                                             |  |                          |             |   |      |   |             |      |  |   |            |  
|-------------------------------------------------------------------------------------------- |  | ------------------------ | ----------- | - | ---- | - | ----------- | ---- |  | - | ---------- | -
|                                                                                             |  | Years Ended December 31, |            
|                                                                                             |  | 2001                     |             |   | 2002 |   |             | 2003 | 
|Cash flows from Operating Activities:                                                        |  |                          |             |   |      |   |             |      |  |   |            |  
|Net loss                                                                                     |  | $                        | (22,726,163 | ) |      | $ | (10,114,177 | )    |  | $ | (7,622,201 | )
|Adjustments to reconcile net loss to net cash used in operating and discontinued activities: |  |                          |             |   |      |   |             |      |  |   |            |  
|Stock-based compensation expense to non-employees                                            |  |                          | 382,223     |   |      |   | 42,822      |      |  |   | 17,503     |  
|Amortization of value of warrants issued for license                                         |  |                          | 1,046,730   |   |      |   | 615,262     |      |  |   |           |  
|Common stock issue for license purchase                                                      |  |                          | 200,000     |   |      |   |            |      |  |   |           |  
|Equity adjustment in SafeScience Newco, Ltd.                                                 |  |                          | 14,188,470  |   |      |   | 4,418,206   |      |  |   |           |  
|Depreciation                                                                                 |  |                          | 112,912     |   |      |   | 140,658     |      |  |   | 130,822    |  
|Services exchanged for equipment                                                             |  |                          |            |   |      |   |            |      |  |   | 116,478    |  
|Changes in assets and liabilities:                                                           |  |                          |             |   |      |   |             |      |  |   |            |  
|Due from SafeScience Newco, Ltd.                                                             |  |                          | (892,691    | ) |      |   | (1,806,187  | )    |  |   |           |  
|Prepaid expenses and other current assets                                                    |  |                          | 16,235      |   |      |   | (60,498     | )    |  |   | 30,740     |  
|Accounts payable                                                                             |  |                          | (265,743    | ) |      |   | (503,087    | )    |  |   | 221,247    |  
|Accrued liabilities                                                                          |  |                          | 580,587     |   |      |   | (950,445    | )    |  |   | 141,959    |  
|Net liabilities of discontinued operations                                                   |  |                          | (581,791    | ) |      |   | (180,168    | )    |  |   | (88,914    | )
|                                                                                             |  |                          |             |   |      |   |             |      |  |   |            |  
|Net cash used in operating and discontinued activities                                       |  |                          | (7,939,231  | ) |      |   | (8,397,614  | )    |  |   | (7,052,366 | )
|                                                                                             |  |                          |             |   |      |   |             |      |  |   |            |  
|Cash flows from investing activities:                                                        |  |                          |             |   |      |   |             |      |  |   |            |  
|Purchase of property and equipment                                                           |  |                          | (16,733     | ) |      |   | (177,662    | )    |  |   | (178,836   | )
|Deposits                                                                                     |  |                          | 189,650     |   |      |   | (175        | )    |  |   | (39,825    | )
|Loans to related parties                                                                     |  |                          | 128,659     |   |      |   |            |      |  |   |           |  
|                                                                                             |  |                          |             |   |      |   |             |      |  |   |            |  
|Net cash provided by (used in) investing activities                                          |  |                          | 301,576     |   |      |   | (177,837    | )    |  |   | (218,661   | )
|                                                                                             |  |                          |             |   |      |   |             |      |  |   |            |  
|Cash flows from financing activities:                                                        |  |                          |             |   |      |   |             |      |  |   |            |  
|Proceeds from sale of common stock, net of issuance costs                                    |  |                          | 9,859,959   |   |      |   | 5,231,377   |      |  |   | 3,777,743  |  
|Proceeds from exercise of warrants and stock options                                         |  |                          | 2,300       |   |      |   | 6,655       |      |  |   | 387,853    |  
|Proceeds from sale of Series B preferred stock, net of issuance costs                        |  |                          | (125,377    | ) |      |   | 1,658,515   |      |  |   |           |  
|Proceeds from sale of Series C preferred stock, net of issuance costs                        |  |                          | 1,331,330   |   |      |   |            |      |  |   |           |  
|Proceeds from stock subscription receivable                                                  |  |                          | 2,000,000   |   |      |   |            |      |  |   |           |  
|                                                                                             |  |                          |             |   |      |   |             |      |  |   |            |  
|Net cash provided by financing activities                                                    |  |                          | 13,068,212  |   |      |   | 6,896,547   |      |  |   | 4,165,596  |  
|                                                                                             |  |                          |             |   |      |   |             |      |  |   |            |  
|Net increase (decrease) in cash and cash equivalents                                         |  |                          | 5,430,557   |   |      |   | (1,678,904  | )    |  |   | (3,105,431 | )
|Cash and cash equivalents, beginning balance                                                 |  |                          | 2,547,353   |   |      |   | 7,977,910   |      |  |   | 6,299,006  |  
|                                                                                             |  |                          |             |   |      |   |             |      |  |   |            |  
|Cash and cash equivalents, ending balance                                                    |  | $                        | 7,977,910   |   |      | $ | 6,299,006   |      |  | $ | 3,193,575  |  
|                                                                                             |  |                          |             |   |      |   |             |      |  |   |            |  
|Supplemental disclosure of noncash financing activities:                                     |  |                          |             |   |      |   |             |      |  |   |            |  
|Reclassification of preferred stock                                                          |  | $                        |            |   |      | $ | 15,091,827  |      |  | $ |           |  
|                                                                                             |  |                          |             |   |      |   |             |      |  |   |            |  
|Series A preferred stock issued for investment in SafeScience Newco, Ltd.                    |  | $                        | 12,015,000  |   |      | $ |            |      |  | $ |           |  
|                                                                                             |  |                          |             |   |      |   |             |      |  |   |            |  
|Issuance of common stock upon exercise of adjustable warrant                                 |  | $                        | 866,216     |   |      | $ |            |      |  | $ |           |  
|                                                                                             |  |                          |             |   |      |   |             |      |  |   |            |  
|Series B preferred stock issued for expenses of joint venture                                |  | $                        | 1,466,601   |   |      | $ | 2,434,360   |      |  | $ |           |  
|                                                                                             |  |                          |             |   |      |   |             |      |  |   |            |  
|Dividends accreted on Series A and Series B preferred stock                                  |  | $                        | 404,273     |   |      | $ | 2,725,387   |      |  | $ | 426,481    |  
|                                                                                             |  |                          |             |   |      |   |             |      |  |   |            |  
|Supplemental disclosure of cash flow information:                                            |  |                          |             |   |      |   |             |      |  |   |            |  
|Cash paid for interest                                                                       |  | $                        | 33,345      |   |      | $ |            |      |  | $ |           |  
|                                                                                             |  |                          |             |   |      |   |             |      |  |   |            |  



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



F-7



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003



(1)    ORGANIZATION AND OPERATIONS



GlycoGenesys, Inc. (together with its subsidiaries, the Company,) was formed in 1992 for the research and development of pharmaceutical products based on carbohydrate chemistry. At December 31, 2003, GlycoGenesys, Inc. has three
wholly owned subsidiaries: International Gene Group, Inc., SafeScience Newco, Ltd. and SafeScience Products, Inc. These subsidiaries are non-operating. The Company currently focuses on the development of carbohydrate-based pharmaceutical products
and related technologies in connection with oncology. The Company has also developed agricultural products, some of which are also based upon carbohydrate chemistries. The therapeutic products will be either licensed from or jointly developed with
third parties. The Company maintains an office in Boston, Massachusetts.



In July 2001, the Company and Elan International Services, Ltd. (EIS) formed a joint venture in Bermuda (SafeScience Newco, Ltd.) for the purpose of furthering the development of the Companys drug
candidate GCS-100 in the field of oncology. The joint venture agreement was subsequently terminated on December 18, 2002 (See Note 3).



As of December 31, 2003, the Company has an accumulated deficit of approximately $84.4 million. In the most recent fiscal year, the Company reported a net
loss of $7.6 million and used approximately $7.2 million in cash for operations.



The Companys future is dependent upon its ability to obtain financing to fund its operations. The Company expects to incur substantial additional operating costs, including costs related to ongoing research and
development activities, preclinical studies and clinical trials. Principal risks to the Company include the need to obtain adequate financing to fund future operations, the successful development and marketing of pharmaceutical products, ability to
enter into collaborative partnerships, United States Food and Drug Administration approval, dependence on key individuals and competition from substitute products and larger companies.



Despite its accumulated deficit, the Company had a net working capital position of approximately $2.1 million at December
31, 2003. The Company believes that its existing funds will be sufficient to fund its operating expenses and capital requirements into the third quarter of 2004. The Company intends to raise additional equity financing to support its continued
operations. Since inception, the Company has funded its operations primarily through the proceeds from equity securities. Through December 31, 2003, the Company had been successful in raising approximately $67.4 million from such sales of equity
securities.



The Company has not obtained commitments from any
existing or potential investors to provide additional financing as of March 26, 2004. In the event additional financing is not obtained, the Company may be required to significantly reduce or curtail operations to conserve cash. There is substantial
doubt that the Company will have the ability to continue as a going concern and, therefore, may be unable to realize its assets and discharge its liabilities in the normal course of business. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or to amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.



(2)    SIGNIFICANT ACCOUNTING POLICIES



(a)  Principles of Consolidation



The Companys consolidated financial statements include the accounts of
GlycoGenesys, Inc. and its wholly owned subsidiaries: International Gene Group, Inc., SafeScience Products, Inc., and since December 18, 2002, SafeScience Newco, Ltd. All material intercompany transactions and accounts have been eliminated in the
consolidated financial statements.



F-8



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



(b)  Use of Estimates



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



(c)  Cash and Cash Equivalents, and Restricted Cash



The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be
cash equivalents. Cash and cash equivalents at December 31, 2002 and 2003 include approximately $573,023 and $218,275 in cash and approximately $5,725,983 and $2,975,300 in cash equivalents, respectively, held in an overnight investment account,
which is reinvested daily in government securities funds and money market funds. Restricted cash represents funds held under irrevocable standby letters of credit. The letters of credit serve as a security for the Companys facility leases. The
funds are being held in an investment account. Such amounts are classified as long-term assets.



(d)  Impairment of Long-Lived Assets



The Company assesses long-lived assets and identifiable intangibles for impairment whenever there is an indication that the carrying amount of the asset
may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted cash flows generated by those assets to their net carrying value. The amount of impairment loss, if any, will generally be measured by the
difference between the net book value of the assets and the estimated fair value of the related assets.



(e)  Depreciation



The Company provides for depreciation using straight-line and accelerated declining balance methods to allocate the cost of property and equipment over
their estimated useful lives as follows:



|                                          |  |                     
|----------------------------------------- |  | --------------------
|Asset Classification                      |  | EstimatedUseful Life
|Computer, office and laboratory equipment |  | 3  5 years         
|Furniture and fixtures                    |  | 7 years             
|Motor vehicles                            |  | 4 years             



(f)  Research and Development



Research and development costs, which consist primarily of expenses for clinical trials, preclinical research, drug manufacturing for clinical trials, sponsored research, consultants, supplies and testing, are charged to operations as
incurred.



F-9



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



(g)  Net Loss Per Share



The Company applies Statement of Financial Accounting Standards
(SFAS) No. 128, Earnings per Share. Basic loss per share is computed using the weighted-average number of common shares outstanding. The dilutive effect of the potential common shares consisting of outstanding stock options
and warrants is determined using the treasury stock method. The following were excluded from the diluted loss per share calculation because their impact would be antidilutive:



|                                                   |  |            |  |            |  |           
|-------------------------------------------------- |  | ---------- |  | ---------- |  | ----------
|                                                   |  | 2001       |  | 2002       |  | 2003      
|Warrants                                           |  | 8,227,230  |  | 11,222,024 |  | 12,397,417
|Options                                            |  | 1,116,542  |  | 1,417,115  |  | 1,525,600 
|Shares issuable upon conversion of preferred stock |  | 7,088,931  |  | 10,854,174 |  | 11,105,046
|                                                   |  |            |  |            |  |           
|                                                   |  | 16,432,703 |  | 23,493,313 |  | 25,028,063
|                                                   |  |            |  |            |  |           



(h)  Disclosures About Segments of an Enterprise



SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information, establishes standards for reporting information regarding operating segments in annual financial statements and requires
selected information for those segments to be presented in interim financial reports issued to stockholders. SFAS No. 131 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are
identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in making decisions on how to allocate resources and assess
performance. Due to the discontinuation of its consumer and commercial products business (see Note 4), the Company operates in one segment.



(i)  Concentrations of Risk



The Company has no significant off-balance-sheet risk or credit risk concentrations. The Company maintains its cash and cash equivalents with a financial
institution and invests in investment-grade securities.



(j)  Financial Instruments



The
estimated fair values of the Companys consolidated financial instruments, which include cash equivalents, and accounts payable, approximate their carrying value due to the short maturity of these instruments.



(k)  Stock-based compensation plans



The Company has stock-based employee compensation plans that are described
more fully in Note 5. The Company accounts for these plans under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee
compensation cost is reflected in the Consolidated Statements of Operations, as all options granted under these plans have an exercise price equal to or greater than the market value of the underlying common stock on the dates of grant. The
following table illustrates the effect on net loss and net loss per common share if the Company had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation.



F-10



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



|                                                                                                        |  |      |             |   |      |   |             |      |  |   |            |  
|------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | ---- |  | - | ---------- | -
|                                                                                                        |  | 2001 |             |   | 2002 |   |             | 2003 | 
|Net loss applicable to common stock, as reported                                                        |  | $    | (23,130,436 | ) |      | $ | (12,839,564 | )    |  | $ | (8,048,682 | )
|Total stock-based employee compensation expense determined under fair value based method for all awards |  |      | (1,022,669  | ) |      |   | (837,169    | )    |  |   | (469,039   | )
|                                                                                                        |  |      |             |   |      |   |             |      |  |   |            |  
|Pro forma net loss applicable to common stock                                                           |  | $    | (24,153,105 | ) |      | $ | (13,676,733 | )    |  | $ | (8,517,721 | )
|                                                                                                        |  |      |             |   |      |   |             |      |  |   |            |  
|Basic and diluted net loss per common stock, as reported                                                |  | $    | (0.84       | ) |      | $ | (0.35       | )    |  | $ | (0.20      | )
|                                                                                                        |  |      |             |   |      |   |             |      |  |   |            |  
|Pro forma basic and diluted net loss per common stock                                                   |  | $    | (0.87       | ) |      | $ | (0.37       | )    |  | $ | (0.21      | )
|                                                                                                        |  |      |             |   |      |   |             |      |  |   |            |  



The preceding pro
forma results were calculated using the Black-Scholes option-pricing model. The following assumptions were used for the years ended December 31, 2001, 2002 and 2003, respectively: (1) risk-free interest rates of 5.2%, 4.8% and 4.0%; (2) dividend
yields of 0.0%; (3) expected lives of 5, 9.3 and 7.6 years; and (4) volatility of 150%, 133% and 138%. The weighted average fair value of options granted during the years ended December 31, 2001, 2002 and 2003 was $1.36, $1.53 and $0.47,
respectively. Results may vary depending on the assumptions applied within the model.



Stock or other equity-based compensation for non-employees is accounted for under the fair value-based method as required by SFAS No. 123 and Emerging Issues Task Force (EITF) Issue No. 96-18,
Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services and other related interpretations. Under this method, the equity-based instrument is valued at
either the fair value of the consideration received or the equity instrument issued on the date of grant. The resulting compensation cost is recognized and charged to operations over the service period, which is usually the vesting period.



(l)  Income Taxes



The Company recognizes deferred tax assets and liabilities for the expected
future tax consequences of events that have previously been included in either the Companys consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the differences between the financial
accounting and tax bases of assets and liabilities using tax rates expected to be in effect for the year in which the differences are expected to reverse. A valuation allowance is provided against net deferred tax assets where management believes it
is more likely than not that the asset will not be realized.



(3)    JOINT VENTURE WITH ELAN INTERNATIONAL SERVICES



At the time SafeScience Newco, Ltd. was formed in July 2001, EIS purchased 2,700,000 shares of the Companys common stock, 1,116.79 shares of the Companys Series C non-voting convertible preferred stock
(Series C Preferred Stock), which is convertible at the option of the holder into the Companys common stock at anytime after July 10, 2003, and a five-year warrant to purchase 381,679 shares of common stock at an exercise price of
$2.43 per share. The aggregate purchase price of $5,000,000 was paid in cash.



Also, EIS was issued 4,944.44 shares of the Companys newly created Series A convertible preferred stock (Series A Preferred Stock) valued at $12,015,000 (See Note 6). Each share is convertible into
1,000 shares of common stock, subject to anti-dilution rights. The Series A Preferred Stock was, at EISs option, exchangeable for non-voting preferred shares of SafeScience Newco, Ltd. (Newco Preferred Shares), originally issued to
the Company and representing 30.1% of the aggregate outstanding shares of SafeScience Newco, Ltd. (Aggregate Newco Shares).



F-11



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



The Company used the $12,015,000 from its issuance of the Series A Preferred Stock to acquire 80.1%
of the Aggregate Newco Shares. This acquisition consisted of 100% of the voting common shares of SafeScience Newco, Ltd. (Newco Common Shares) and 60.2% of the Newco Preferred Shares, which represented 50.0% and 30.1%, respectively, of
the Aggregate Newco Shares. In addition, EIS contributed $2,985,000 to SafeScience Newco, Ltd. to acquire 39.8% of the Newco Preferred Shares, which represented 19.9% of the Aggregate Newco Shares.



In addition, Elan granted SafeScience Newco, Ltd. a license to Elans
proprietary drug delivery technology for a license fee of $15,000,000 and the Company granted SafeScience Newco, Ltd. a license to GCS-100 in the field of oncology as an integral part of these transactions. Upon SafeScience Newco, Ltd.s
completing this transaction, the cost of the Elan license was expensed at inception as a research and development cost by SafeScience Newco, Ltd. because revenues resulting from such technology were not likely in the foreseeable future. The
Companys share of this expense was approximately $12,015,000 and is included in equity in loss of SafeScience Newco, Ltd. in the accompanying consolidated statement of operations for the year ended December 31, 2001.



On December 18, 2002, the Company entered into a termination agreement with
Elan for the termination of the Companys joint venture. Pursuant to the termination agreement, the Company acquired Elans Newco Preferred Shares in exchange for a royalty interest on certain future revenues and payments related to
GCS-100. Under the termination agreement, such royalty payments, if any, are to be offset by certain development costs to be incurred by the Company. The Company regained all intellectual property, development and marketing rights to GCS-100. The
Company now owns 100% of the Aggregate Newco Shares. In addition, the Company received approximately $1.9 million for net reimbursement of R&D expenditures relating to GCS-100 and issued Elan 1,176.47059 shares of GlycoGenesys Series B
convertible preferred stock, convertible into GlycoGenesys common stock at $1.70 per share.



A discounted cash flow analysis was applied to both the estimated future royalty payments and the offsetting development costs to be incurred by the Company to measure the cost of the acquisition and the related
liability. The valuation of the royalty liability was determined using an income approach, discounted based on the estimated likelihood that such payments will ultimately be required. Based upon this analysis, the Company believes that the fair
value of the development costs to be reimbursed by Elan approximates the fair value of the estimated future royalty payments. Accordingly no liability for the future contingent royalty payments has been reflected in the Companys financial
statements.



In connection with the joint venture termination,
the exchange feature of GlycoGenesys Series A Preferred Stock, which allowed Elan to convert its Series A Preferred Stock into an additional 30% interest in SafeScience Newco, and the mandatory redemption feature were cancelled. GlycoGenesys Series
A Preferred Stock is now only convertible into GlycoGenesys common stock at $2.43 a share. As a result of the cancellation of the exchange feature, the Company reclassified its Series A Preferred Stock into stockholders equity, which increased
its equity by approximately $13.1 million. In addition, the Company issued 1,209.07 shares of Series A Preferred Stock to Elan representing the acceleration of dividends on the Series A Preferred Stock through September 2004, which were originally
scheduled to be paid annually through July 2007. No further dividends will be paid.



During the period the joint venture was in operation, EIS had retained significant minority investor rights that the Company considered to be participating rights as defined in EITF Issue 96-16
Investors Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholder Has Certain Approval or Veto Rights. EISs participating rights prevented the Company from exercising
sole control over SafeScience Newco, Ltd. Accordingly, the Company did not consolidate the financial statements of SafeScience Newco, Ltd. but instead accounted for its investment in SafeScience Newco, Ltd. using the equity



F-12



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



method. Because the Company obtained control of SafeScience Newco on December 18, 2002, SafeScience Newco has been consolidated with the Companys
consolidated financial statements since that date. SafeScience Newco had operating expenses and a net loss of $17,713,455 and $5,147,882 for the years ended December 31, 2001 and 2002, respectively.



(4)    DISCONTINUED OPERATIONS



The Company terminated operations of its consumer and commercial product
business areas on February 23, 2001 and began the process of liquidating the assets and liabilities pertaining to those operations.



The net losses of these operations are included in the statements of operations under discontinued operations for the year ended December 31, 2001 are
detailed as follows:



|                                  |  |      |          |  
|--------------------------------- |  | ---- | -------- | -
|                                  |  | 2001 |         
|Revenues                          |  | $    |         |  
|Cost of goods sold                |  |      | 186,629  |  
|                                  |  |      |          |  
|Gross margin                      |  |      | (186,629 | )
|                                  |  |      |          |  
|Marketing                         |  |      |         |  
|General and administrative        |  |      | 346,571  |  
|Research and development          |  |      |         |  
|                                  |  |      |          |  
|Total expenses                    |  |      | 346,571  |  
|                                  |  |      |          |  
|Operating loss                    |  |      | (533,200 | )
|Provision for loss on disposal    |  |      |         |  
|                                  |  |      |          |  
|Loss from discontinued operations |  | $    | (533,200 | )
|                                  |  |      |          |  



There were no
operating activities associated with discontinued operations for the years ended December 31, 2002 and 2003.



(5)    STOCKHOLDERS EQUITY (DEFICIT)



(a) Authorized Shares



The authorized capital stock of GlycoGenesys, Inc. consists of 205,000,000 shares consisting of 200,000,000 shares of common stock, $0.01 par value per
share, of which 46,032,096 were outstanding as of December 31, 2003 and 5,000,000 shares of preferred stock of which 10,741.45 shares were outstanding as of December 31, 2003.



(b) Sales of Common Stock



In 2001, the Company sold 775,000, 2,700,000, 470,370 and 4,280,362 shares of common stock at a weighted average price of $1.13, $1.31, $1.35 and $1.33
per share, respectively. Warrants to purchase 420,000, 381,679, 235,186 and 2,311,402 shares of common stock were included in each transaction, respectively. The warrants had weighted average exercise prices of $2.46, $2.43, $1.90 and $1.77,
respectively.



In 2002, the Company sold 3,128,588 shares of
common stock at a weighted average price of $1.86 per share. Warrants to purchase 2,256,457 shares of common stock at a weighted average exercise price of $2.25 and



F-13



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



903,243 shares at an exercise price of $0.01 were issued in connection with this transaction. The Company also issued warrants to purchase 250,873 shares of
common stock to brokers. The Company issued 415,779 shares of common stock for warrants exercised for proceeds of $4,158 and 122,038 shares of common stock for services rendered valued at $42,822.



In 2003, the Company sold 7,487,037 shares of common stock at a weighted
average price of $0.54 per share. Warrants to purchase 2,246,111 shares of common stock at a weighted average exercise price of $0.86 were issued in connection with this transaction. The Company also issued warrants to purchase 98,037 shares of
common stock to brokers. The Company issued 1,168,755 shares of common stock for warrants exercised for proceeds of $379,193 and 19,024 shares of common stock for options exercised by employees for proceeds of $8,660.



(c) Stock Option Plans



The Company has a Nonqualifying Stock Option Plan (1996 Plan)
and has registered 500,000 shares of common stock with the Securities and Exchange Commission for future issuance under option agreements. The exercise price of each option will be determined by the Board of Directors and must be exercised within
ten years from the date of issuance. The Company may issue these options to its officers, directors, employees, consultants and advisors. As of December 31, 2003, no shares were available for future grant.



Effective December 1, 1998, the Company adopted the 1998 Stock Option Plan
(1998 Plan) under which 600,000 shares of common stock were reserved for issuance under option agreements. As with the 1996 Plan, the exercise price of each option will be determined by the Board of Directors and may be issued to
officers, directors, employees and consultants. Additionally, the options must be exercised within 10 years from the date of issuance. As of December 31, 2003, 194,394 shares were available for future grant.



Effective June 7, 2000, the Company adopted the 2000 Stock Incentive Plan
(the 2000 Plan) under which 1,000,000 shares of common stock were reserved for issuance under option agreements, stock appreciation rights, stock awards and performance awards. On June 5, 2001, the 2000 Plan was amended to increase the
number to 2,250,000 shares of common stock reserved for issuance. As with the 1998 Plan, the exercise price of each option will be determined by the Board of Directors and may be issued to officers, directors, employees and certain consultants and
advisors. Additionally, the options must be exercised within 10 years from date of issuance. As of December 31, 2003 options to purchase 867,676 shares were available for future grant.



Effective June 7, 2003, the Company adopted the 2003 Omnibus Stock Incentive Plan (the 2003 Plan) under which
1,825,000 shares of common stock were reserved for issuance under option agreements, stock appreciation rights, stock awards and performance awards. As with the 2000 Plan, the exercise price of each option will be determined by the Board of
Directors and may be issued to officers, directors, employees and certain consultants and advisors. Additionally, the options must be exercised within 10 years from date of issuance. As of December 31, 2003 options to purchase 1,825,000 shares were
available for future grant.



F-14



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



The following table summarizes stock option activity related to employees and consultants:



|                                 |  |                 |   |  |                                       |     
|-------------------------------- |  | --------------- | - |  | ------------------------------------- | ----
|                                 |  | Number ofShares |   |  | WeightedAverageExercisePrice PerShare
|Balance, December 31, 2000       |  | 1,163,417       |   |  |                                       | 6.39
|Granted                          |  | 425,629         |   |  |                                       | 0.72
|Exercised                        |  | (195,000        | ) |  |                                       | 0.01
|Cancelled                        |  | (275,504        | ) |  |                                       | 5.34
|                                 |  |                 |   |  |                                       |     
|Balance, December 31, 2001       |  | 1,118,542       |   |  |                                       | 5.69
|Granted                          |  | 693,500         |   |  |                                       | 1.69
|Exercised                        |  | (16,100         | ) |  |                                       | 0.16
|Cancelled                        |  | (378,827        | ) |  |                                       | 9.80
|                                 |  |                 |   |  |                                       |     
|Balance, December 31, 2002       |  | 1,417,115       |   |  | $                                     | 2.69
|Granted                          |  | 422,000         |   |  |                                       | 0.51
|Exercised                        |  | (19,024         | ) |  |                                       | 0.46
|Cancelled                        |  | (294,491        | ) |  |                                       | 2.76
|                                 |  |                 |   |  |                                       |     
|Balance, December 31, 2003       |  | 1,525,600       |   |  | $                                     | 2.11
|                                 |  |                 |   |  |                                       |     
|Exercisable at December 31, 2001 |  | 806,869         |   |  | $                                     | 6.67
|                                 |  |                 |   |  |                                       |     
|Exercisable at December 31, 2002 |  | 844,973         |   |  | $                                     | 3.19
|                                 |  |                 |   |  |                                       |     
|Exercisable at December 31, 2003 |  | 1,042,305       |   |  | $                                     | 2.62
|                                 |  |                 |   |  |                                       |     



The following table
presents weighted-average price and life information about significant option groups outstanding at December 31, 2003



|                         |  |                     |  |                                                       |  |                                 |      |                    |           |                                 |   |     
|------------------------ |  | ------------------- |  | ----------------------------------------------------- |  | ------------------------------- | ---- | ------------------ | --------- | ------------------------------- | - | ----
|                         |  | Options Outstanding |  | Options Exercisable                                  
|Range of Exercise Prices |  | NumberOutstanding   |  | Weighted Average RemainingContractual Life (in years) |  | Weighted Average Exercise Price |      | Number Exercisable |           | Weighted Average Exercise Price
|$0.2700  $0.2700        |  | 260,200             |  | 9.20                                                  |  | $                               | 0.27 |                    | 62,575    |                                 | $ | 0.27
|0.4000    0.7154        |  | 155,300             |  | 9.29                                                  |  |                                 | 0.51 |                    | 75,542    |                                 |   | 0.50
|0.8100    1.0100        |  | 25,300              |  | 5.19                                                  |  |                                 | 0.92 |                    | 15,858    |                                 |   | 0.87
|1.4700    1.4700        |  | 155,800             |  | 7.72                                                  |  |                                 | 1.47 |                    | 140,800   |                                 |   | 1.47
|1.5900    1.8300        |  | 157,700             |  | 5.16                                                  |  |                                 | 1.76 |                    | 100,000   |                                 |   | 1.78
|2.0900    2.0900        |  | 371,300             |  | 8.01                                                  |  |                                 | 2.09 |                    | 247,530   |                                 |   | 2.09
|2.3500    3.0000        |  | 105,000             |  | 6.18                                                  |  |                                 | 2.63 |                    | 105,000   |                                 |   | 2.63
|3.4375    3.4375        |  | 10,000              |  | 1.53                                                  |  |                                 | 3.44 |                    | 10,000    |                                 |   | 3.44
|4.9700    4.9700        |  | 225,000             |  | 6.53                                                  |  |                                 | 4.97 |                    | 225,000   |                                 |   | 4.97
|5.5000    5.5000        |  | 60,000              |  | 4.92                                                  |  |                                 | 5.50 |                    | 60,000    |                                 |   | 5.50
|                         |  |                     |  |                                                       |  |                                 |      |                    |           |                                 |   |     
|$0.2700  $5.5000        |  | 1,525,600           |  | 7.46                                                  |  | $                               | 2.11 |                    | 1,042,305 |                                 | $ | 2.62
|                         |  |                     |  |                                                       |  |                                 |      |                    |           |                                 |   |     



F-15



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



(d) Warrants



The following table summarizes all warrant activity in connection with equity financing:



|                               |  |                       |   |  |                                         |      
|------------------------------ |  | --------------------- | - |  | --------------------------------------- | -----
|                               |  | Common Stock Warrants
|                               |  | Number ofShares       |   |  | WeightedAverageExercise Price Per Share
|Balance, December 31, 2000     |  | 2,665,104             |   |  |                                         | 4.01 
|Granted                        |  | 6,385,857             |   |  |                                         | 1.51 
|Exercised                      |  | (765,526              | ) |  |                                         | 0.00 
|Cancelled                      |  | (58,205               | ) |  |                                         | 11.34
|                               |  |                       |   |  |                                         |      
|Balance, December 31, 2001     |  | 8,227,230             |   |  |                                         | 2.07 
|Granted                        |  | 3,410,573             |   |  |                                         | 1.63 
|Exercised                      |  | (415,779              | ) |  |                                         | 0.01 
|                               |  |                       |   |  |                                         |      
|Balance, December 31, 2002     |  | 11,222,024            |   |  | $                                       | 2.10 
|Granted                        |  | 2,344,148             |   |  |                                         | 0.86 
|Exercised                      |  | (1,168,755            | ) |  |                                         | 0.33 
|                               |  |                       |   |  |                                         |      
|Balance, December 31, 2003     |  | 12,397,417            |   |  | $                                       | 2.04 
|                               |  |                       |   |  |                                         |      
|Exercisable, December 31, 2001 |  | 7,400,667             |   |  | $                                       | 1.96 
|                               |  |                       |   |  |                                         |      
|Exercisable, December 31, 2002 |  | 11,222,024            |   |  | $                                       | 2.10 
|                               |  |                       |   |  |                                         |      
|Exercisable, December 31, 2003 |  | 12,397,417            |   |  | $                                       | 2.04 
|                               |  |                       |   |  |                                         |      



Warrants issued to
certain investors contain anti-dilution provisions which require the exercise price to be adjusted for securities transactions sold at prices lower than the then current exercise price.



During 2001, the Company granted 1,500,000 warrants in connection with the
licensing agreement discussed in Note 9, 3,348,267 warrants in connection with the issuance of common stock discussed in Note 5(b) and 1,537,590 warrants issued to other investors in the Company pursuant to financings in 2000.



During 2002, the Company granted 3,410,573 warrants in connection with the
issuance of common stock discussed in Note 5(b) and the Series B stock issued in December 2002.



During 2003, the Company granted 2,344,148 warrants in connection with the issuance of common stock discussed in Note 5(b).





(6)    PREFERRED STOCK



(a)    Authorized, Issued and Outstanding



The Companys preferred stock, $0.01 par value, consisted of the following at December 31, 2002 and 2003:



Series A convertible preferred stock, 7,500 shares authorized; 6,153.51 shares issued and outstanding as of December 31, 2002 and 2003.



F-16



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



Series B convertible preferred stock, 6,000 shares authorized; 3,471.15 shares issued and outstanding
as of December 31, 2002 and 2003.



Series C convertible
preferred stock, 1,117 shares authorized; 1,116.79 shares issued and outstanding as of December 31, 2002 and 2003.



(b)    Classification of Preferred Stock



Prior to April 16, 2002, the Companys Series B and C preferred stock were reported as temporary equity because each contained features that could
result in the redemption of such shares for cash at the option of the holder. On April 16, 2002, the appropriate provisions of the Series B and C stock agreements were amended, and, accordingly, the Company reclassified the Series B and C preferred
stock to stockholders equity.



Prior to December 18,
2002, the Companys Series A preferred stock was reported as temporary equity because it was exchangeable by the holder into assets of the Company. In connection with the termination of the Companys joint venture agreement with Elan on
December 18, 2002, the exchange feature was cancelled, and, accordingly, the Company reclassified the Series A preferred stock to stockholders equity (see Note 3).



(c)    Rights and Preferences



Series A Preferred Stock



Dividends



If the Board of Directors declares a dividend on outstanding shares of Common Stock or any other capital stock that is junior to or on par with the Series
A Preferred Stock, the holders of Series A Preferred Stock will be entitled to receive the same amount of dividends as would be declared payable on the number of shares of Common Stock into which the shares of Series A Preferred Stock could be
converted on the record date for such dividend.



Liquidation



Upon the Companys
liquidation, dissolution or winding up, upon a change in control approved by the Board of Directors or a sale of all or substantially all of the assets of the Company (each a Liquidation), the holders of Series A Preferred Stock will be
entitled to receive before any distribution or payment is made to the holders of Common Stock or any other series of preferred stock ranking, as to liquidation rights, junior to the Series A Preferred Stock, and subject to the liquidation rights and
preferences of any class or series of preferred stock senior to, or on a parity with, the Series A Preferred Stock as to liquidation preferences, an amount equal to $2,430 per share, as adjusted for stock splits, stock dividends, recapitalizations
and the like, plus any accrued and unpaid dividends.



If, upon
a Liquidation, the assets and funds available for distribution to stockholders are insufficient to pay the holders of Series A Preferred Stock the full amounts to which they are entitled, then the holders of Series A Preferred Stock will share
ratably, together with the holders of capital stock with the same liquidation preferences, in any distribution of available assets, pro rata in proportion to the full liquidation preference to which each holder is entitled.



After payment is made in full to the holders of Series A Preferred Stock and
the holders of capital stock with equivalent liquidation preferences, the remaining assets available for distribution will be distributed among the



F-17



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



holders of Common Stock, the holders of Series A Preferred Stock and the holders of capital stock with equivalent liquidation preferences based on the number
of shares of Common Stock held by each, assuming conversion of any other class or series of capital stock convertible into shares of Common Stock. The liquidation preference of the Series A Preferred Stock was $14,953,030 as of December 31, 2003.



Voting Rights



Holders of Series A Preferred Stock are not entitled to vote on matters
submitted to a vote of stockholders, except to (i) amend the articles of incorporation so as to affect adversely the shares of Series A Preferred Stock, (ii) change the rights of the holders of the Series A Preferred Stock in any other respect, or
(iii) authorize, create, designate or issue any additional equity securities having any rights that are senior or pari passu to the Series A Preferred Stock with respect to liquidation preference or rights to dividends or distributions, which shall
require the approval of at least a majority of the outstanding shares of Series A Preferred Stock, voting separately as a class.



Conversion



Each share of Series A Preferred Stock is convertible at any time after two years after issuance, at the option of the holder, into the number of shares
of Common Stock equal to the Series A liquidation preference divided by $2.43. The applicable conversion rate will be adjusted upon the occurrence of various dilutive and other events specified in the Companys articles of incorporation. In the
event of a merger in which our stockholders own less than 50% of the surviving entity, all of the outstanding shares of Series A Preferred Stock will automatically convert at our option or upon the election of the holders of at least a majority of
the outstanding shares of Series A Preferred Stock, into Common Stock at the applicable conversion rate.



Anti-Dilution Adjustments



The conversion rate for the Series A Preferred Stock will be adjusted upon the occurrence of various events, such as stock splits, recapitalizations,
mergers and consolidations, distribution of dividends payable in shares of our Common Stock, and certain issuances of capital stock at below the lower of the Series A conversion price and 75% of the fair market value of the Common Stock as described
in the articles of incorporation.



Redemption



In connection with the joint venture termination on
December 18, 2002, discussed in Note 3, the mandatory redemption feature on the Series A Preferred Stock was cancelled.



Series B Preferred Stock



Dividends



The Series B Preferred Stock receives a 7% annual dividend, payable in kind. If the Board of Directors declares a dividend on outstanding shares of Common
Stock or any other capital stock that is junior to or on par with the Series B Preferred Stock, the holders of Series B Preferred Stock will be entitled to receive the same amount of dividends as would be declared payable on the number of shares of
Common Stock into which the shares of Series B Preferred Stock could be converted on the record date for such dividend.



F-18



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



Liquidation



Upon a Liquidation, the holders of Series B Preferred Stock will be entitled to receive before any distribution or payment
is made to the holders of Common Stock or any other series of preferred stock ranking, as to liquidation rights, junior to the Series B Preferred Stock, and subject to the liquidation rights and preferences of any class or series of preferred stock
senior to, or on a parity with, the Series B Preferred Stock as to liquidation preferences, an amount equal to $1,700 per share, as adjusted for stock splits, stock dividends, recapitalizations and the like, plus any accrued and unpaid dividends.



If, upon a Liquidation, the assets and funds available for
distribution to stockholders are insufficient to pay the holders of Series B Preferred Stock the full amounts to which they are entitled, then the holders of Series B Preferred Stock will share ratably, together with the holders of capital stock
with the same liquidation preferences, in any distribution of available assets, pro rata in proportion to the full liquidation preference to which each holder is entitled.



After payment is made in full to the holders of Series B Preferred Stock and the holders of capital stock with equivalent
liquidation preferences, the remaining assets available for distribution will be distributed among the holders of Common Stock, the holders of Series B Preferred Stock and the holders of capital stock with equivalent liquidation preferences based on
the number of shares of Common Stock held by each, assuming conversion of any other class or series of capital stock convertible into shares of Common Stock. The liquidation preference of the Series B Preferred Stock was $6,519,068 as of December
31, 2003.



Voting Rights



Holders of Series B Preferred Stock are not entitled to vote on matters
submitted to a vote of stockholders, except to (i) amend the articles of incorporation so as to affect adversely the shares of Series B Preferred Stock, (ii) change the rights of the holders of the Series B Preferred Stock in any other respect, or
(iii) authorize, create, designate or issue any additional equity securities having any rights that are senior or pari passu to the Series B Preferred Stock with respect to liquidation preference or rights to dividends or distributions, which shall
require the approval of at least a majority of the outstanding shares of Series B Preferred Stock, voting separately as a class.



Conversion



Each share of Series B Preferred Stock is convertible at any time after December 31, 2003, at the option of the holder, into the number of shares of
Common Stock equal to the Series B liquidation preference divided by $1.70. The applicable conversion rate will be adjusted upon the occurrence of various dilutive and other events specified in the articles of incorporation. In the event of a merger
in which the Companys stockholders own less than 50% of the surviving entity, all of the outstanding shares of Series B Preferred Stock will automatically convert at the Companys option or upon the election of the holders of at least a
majority of the outstanding shares of Series B Preferred Stock, into Common Stock at the applicable conversion rate.



Anti-Dilution Adjustments



The conversion rate for the Series B Preferred Stock will be adjusted upon the occurrence of various events, such as stock splits, recapitalizations,
mergers and consolidations, distribution of dividends payable in shares of the Companys Common Stock, and certain issuances of capital stock at below the lower of the Series B conversion price and 75% of the fair market value of the Common
Stock as described in the Companys articles of incorporation.



F-19



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



Redemption



Shares of Series B Preferred Stock are not redeemable.



Series C Preferred Stock



Dividends



The Series C Preferred Stock do not bear a dividend.



Liquidation



Upon our liquidation, dissolution or winding up, upon a change in control or a sale of all or substantially all of the assets of the Company, the holders
of Series C Preferred Stock will be entitled to receive, together and on the same basis as the holders of Common Stock and subject to the rights of holders of senior classes or series of capital stock, our assets in proportion to the number of
shares of Common Stock into which the Series C Preferred Stock held by such holder are convertible.



Voting Rights



Except as required by law, holders of Series C Preferred Stock are not entitled to vote on matters submitted to holders of Common Stock or any other class
of capital stock.



Conversion



Each share of Series C Preferred Stock is convertible at any time after two
years after issuance, at the option of the holder, into 1,000 shares of Common Stock. The applicable conversion rate will be adjusted upon the occurrence of various dilutive and other events specified in the Companys articles of incorporation.
In the event of a merger in which the Companys stockholders own less than 50% of the surviving entity, all of the outstanding shares of Series C Preferred Stock will automatically convert at the Companys option or upon the election of
the holders of at least a majority of the outstanding shares of Series C Preferred Stock, into Common Stock at the applicable conversion rate.



Anti-Dilution Adjustments



The conversion rate for the Series C Preferred Stock will be adjusted upon the occurrence of various events, such as stock splits, recapitalizations,
mergers and consolidations described in our articles of incorporation.



Redemption



Shares of Series C
Preferred Stock are not redeemable.



(7)    RELATED
PARTY TRANSACTIONS



On June 15, 1999, the Company entered
into a transaction whereby Mr. Salter, its former executive vice president, relinquished an option to purchase 100,000 shares of common stock for a price of $0.01 per share which would have vested on January 1, 2000 and, in exchange, the Company
issued to him a stock option for



F-20



---

GLYCOGENESYS, INC.

(f/k/a SafeScience, Inc.)



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



250,000 shares of common stock at an exercise price of $10.70 per share, the estimated fair market value of the common stock on the date of the transaction.
The option was exercised immediately. The Company loaned Mr. Salter an amount representing the entire exercise price. The principal balance of this note is $2,675,000, and accrues interest at 4.92% per annum, compounded semi-annually. Mr. Salter
pledged the 250,000 shares of common stock as collateral. The loan is non-recourse and is secured by the pledged shares. All outstanding principal, together with accrued interest in the unpaid principal balance of this note, will be due on June 15,
2004. The principal balance outstanding as of December 31, 2002 and 2003 is $2,675,000 and is reported as a reduction of stockholders equity in the accompanying consolidated balance sheets.



(8)    COMMITMENTS AND CONTINGENCIES



(a)  Clinical Trials



The Company has retained Glenmere Clinical Research, Inc., a contract
research organization (CRO) and Medidata Solutions, Inc., a provider of electronic data capture services, to support its clinical trial program. They provide clinical research management, medical and safety monitoring, data management
and medical writing and regulatory services. The total cost of Glenmere and Medidatas services are estimated to be approximately $590,000, for the initial Phase I dose escalation monotherapy trial which is expected to be paid through March
2005. In addition, the CRO costs associated with the planned future Phase I and Phase II/III trials are estimated at $650,000 for fixed costs for each trial plus $10,000 per patient. There are additional non-CRO costs associated with the
Companys planned future clinical trials of approximately $20,000 per patient.



(b)  Leases



The Company leases office space in Boston, Massachusetts, under an operating lease expiring in March 2005 and laboratory space in Cambridge, Massachusetts under an operating lease expiring on January 1, 2007. The
Company also leases certain equipment under operating leases.



Minimum future payments under the operating leases as of December 31, 2003 for each of the next three calendar years are approximately as follows:



|                          |  |        |    
|------------------------- |  | ------ | ---
|Years ending December 31, |  | ($000)
|2004                      |  |        | 543
|2005                      |  |        | 220
|2006                      |  |        | 106
|                          |  |        |    
|                          |  | $      | 869
|                          |  |        |    



Rent expense in the
accompanying consolidated statements of operations was approximately $397,000, $411,000 and $382,000, in 2001, 2002 and 2003, respectively.



(c)  Joint Venture Termination



In connection with the termination of the Companys SafeScience Newco joint venture, the Company agreed to make royalty payments to Elan on certain
future revenues and payments related to GCS-100. The Company will be obligated to pay Elan a percentage on certain net revenues, which include license fees, milestone payments, royalties, net manufacturing profits, payments received in
the disposition of GCS-100, particular research and development payments and premiums paid for the Companys common stock. The



F-21



---

GLYCOGENESYS, INC.

(f/k/a SafeScience, Inc.)



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



Company will not be obligated to make any payments to Elan on payments the Company receives that are for reimbursement of direct expenses or contractually
required to be used for certain research and development costs and for which the full time employee reimbursement rate does not exceed industry standards. In addition, if the Company directly markets GCS-100, the Company will be obligated to pay
Elan a percentage on the net sales of GCS-100. However, all such payments on net revenues or net sales, if any, due to Elan will be offset by certain development costs incurred by the Company between the date of termination of the joint
venture (December 18, 2002) and the date the Company enters into a partnering or other commercialization agreement.



(d)  Stand-by Line of Credit



The Company has a $100,000 stand-by line of credit which is secured by the Companys cash and cash equivalents and which has no outstanding balance
at December 31, 2003. The Company terminated this line of credit on March 8, 2004.



(9)    LICENSING AGREEMENTS



During 2001, the Company executed an agreement with Wayne State University and the Barbara Ann Karmanos Cancer Institute. This agreement grants the Company an exclusive world-wide license to patents, patent applications, and other
intellectual property related to GCS-100 Material issued, developed, or applied for by Wayne State University and the Barbara Ann Karmanos Cancer Institute. This agreement adds the rights to these issued patents and patent applications
to the Companys existing patent portfolio, which consolidates the rights to all of the parties existing GCS-100 intellectual property within the Company.



The Company also granted Wayne State University and the Barbara Ann Karmanos Cancer Institute warrants to jointly purchase
1,500,000 shares of common stock at $1.15 that have fully vested. Under this agreement, Wayne State University and the Barbara Ann Karmanos Cancer Institute were required to support the advancement of GCS-100 material over a two year period. During
the years ended December 31, 2002 and 2001, the Company recorded expense of $615,262 and $1,046,730, respectively, related to the warrants that vested under this agreement during those years and expense of $795,336 and $1,139,664 related to the
license fees.



In order to maintain its rights under this
agreement, the Company may be required to make additional payments of up to $3,000,000 which are contingent upon reaching future commercialization milestones. Specifically, the Company must on the first occurrence of the following milestones: (a)
pay Wayne State University and the Barbara Ann Karmanos Cancer Institute $500,000 within thirty (30) days following the date on which the Company commences Phase III clinical drug investigations relating to GCS-100; (b) pay Wayne State University
and the Barbara Ann Karmanos Cancer Institute $1,000,000 within thirty (30) days following the date on which the Company makes a new drug application (NDA) submission to the FDA relating to GCS-100; and (c) pay Wayne State University and
the Barbara Ann Karmanos Cancer Institute $1,500,000 within thirty (30) days following the date on which the FDA approves an NDA of the Company covering GCS-100. In addition, the Company must pay $10,000 per month until FDA approval for GCS-100, of
which $36,333 has been paid through December 31, 2003, which is reflected in research and development in the Consolidated Statements of Operations. Such payments are offset against the 2% royalty jointly to Wayne State University and the Barbara Ann
Karmanos Cancer Institute the Company must pay on net sales of GCS-100.



In January 1994, the Company agreed that one of its founders, David Platt, would receive a royalty of 2% of net sales, in exchange for the licensed patent rights on certain products being developed. The Company has agreed to pay all of the
costs to procure and maintain any patents granted under this agreement. The agreement



F-22



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



includes a requirement that the royalties paid in the ninth year of this agreement (2002) and all subsequent years meet a minimum requirement of $50,000. If
this requirement is not met, David Platt may terminate the agreement and retain the patent rights. The Company may terminate the agreement on 60 days notice. The Company accrued a $50,000 liability as of December 31, 2003, which was
subsequently paid.



On January 13, 2004, the Company notified
David Platt of its intention to seek arbitration regarding his alleged breaches of the Companys license agreement with David Platt dated January 7, 1994, as amended (the License Agreement) in order to enforce its rights under the
License Agreement to control the prosecution of the patent applications subject to the License Agreement. On February 18, 2004, the Company received a letter from David Platt alleging breaches of the License Agreement and notifying the Company of
his intention to terminate the License Agreement if such alleged breaches are not cured within 60 days from the date of the letter. The alleged breaches are the Companys failure to: (i) take necessary steps to perfect U.S. Patent Application
Serial No. 08/024,487 (the 487 Application), (ii) use its best efforts to commercialize the 487 Application and (iii) provide royalty reports.



On February 23, 2004, the Company provided royalty reports as required under the License Agreement, curing any breach
related to the royalty reports. The Company believes the other allegation of breaches by David Platt are wholly without merit.



On February 23, 2004, the Company formally initiated arbitration to enforce its rights under the License Agreement to control the prosecution of the
licensed patent applications. Platt answered on March 17, 2004, with counterclaims, including a claim seeking termination of the License Agreement.



On March 15, 2004, the Company filed for a court order requiring Platt to return control of the licensed applications, pursuant to the License Agreement,
to the Company to permit the Company to respond to office actions issued by the U.S. Patent and Trademark Office. Platt responded with a counterclaim to terminate the License Agreement. On March 29, 2004, a court order was issued requiring Platt,
until such time as an arbitrator is appointed, to advise the Company in writing of any significant action he plans to take with respect to the licensed applications, and give the Company 48 hours to respond in writing to his intended actions. In the
event that the Company opposes the proposed action, it has the right to seek review of the action by the court prior to any action by Platt. Similarly, the court granted the Company the right to recommend to Platt that he take certain actions and he
is required to respond to the Companys requests within 48 hours. In the event he refuses to take the proposed action, the Company has the right to seek review by the court.



(10)    INCOME TAXES



At December 31, 2003, the Company has net operating loss carryforwards for federal income tax purposes of $64,028,090 which expire through 2023. The
Company also has certain tax credits available to offset future federal and state income taxes, if any. Net operating loss carryforwards and credits are subject to review and possible adjustments by the Internal Revenue Service and may be limited in
the event of certain cumulative changes in excess of 50% in the ownership interests of significant stockholders over a three-year period.



F-23



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



The components of the Companys deferred tax assets follow:



|                                 |  |      |             |   |      |   |             |  
|-------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                 |  | 2002 |             |   | 2003 |  
|Net operating loss carryforwards |  | $    | 22,080,000  |   |      | $ | 25,784,000  |  
|Tax credit carryforwards         |  |      | 850,000     |   |      |   | 1,016,000   |  
|Temporary differences            |  |      | 1,266,000   |   |      |   | 750,000     |  
|                                 |  |      |             |   |      |   |             |  
|Total deferred tax assets        |  |      | 24,196,000  |   |      |   | 27,550,000  |  
|Less valuation allowance         |  |      | (24,196,000 | ) |      |   | (27,550,000 | )
|                                 |  |      |             |   |      |   |             |  
|Deferred tax assets              |  | $    |            |   |      | $ |            |  
|                                 |  |      |             |   |      |   |             |  



In evaluating
realizability of these deferred tax assets, management has considered the Companys short operating history, the volatility of the market in which it competes and the operating losses incurred to date, and it believes that given the
significance of this evidence, a full valuation reserve against its deferred tax assets is required as of December 31, 2002 and 2003. The increase in the valuation allowance during these periods primarily relates to the increase in the
Companys net operating loss carryforwards.



(11)    EMPLOYEE BENEFIT PLAN



The Company has a 401(k) Plan (the Plan), pursuant to which employees may defer compensation for income tax purposes under Section 401(k) of the Internal Revenue Code. Substantially all of the Companys employees are
eligible to participate in the Plan. Participants may contribute up to 20% of their annual compensation to the Plan, subject to certain limitations. The Company could match a discretionary amount as determined by the Board of Directors. The Company
did not make any contributions to the Plan during 2001, 2002 and 2003.



(12)    QUARTERLY FINANCIAL DATA (UNAUDITED)



Unaudited quarterly financial data for 2002 and 2003 is summarized below.



|                                            |  |                |        |   |               |   |        |                |  |   |               |   |  |               |        |   |               |   |        |                |  |   |               |   |  |   |        |   |  |   |        |  
|------------------------------------------- |  | -------------- | ------ | - | ------------- | - | ------ | -------------- |  | - | ------------- | - |  | ------------- | ------ | - | ------------- | - | ------ | -------------- |  | - | ------------- | - |  | - | ------ | - |  | - | ------ | -
|                                            |  | Quarters Ended |       
|                                            |  | Mar. 31, 2002  |        |   | June 30, 2002 |   |        | Sept. 30, 2002 |  |   | Dec. 31, 2002 |   |  | Mar. 31, 2003 |        |   | June 30, 2003 |   |        | Sept. 30, 2003 |  |   | Dec. 31, 2003 |  
|OPERATING EXPENSES:                         |  |                |        |   |               |   |        |                |  |   |               |   |  |               |        |   |               |   |        |                |  |   |               |   |  |   |        |   |  |   |        |  
|Research and development                    |  | $              | 1,011  |   |               | $ | 247    |                |  | $ | 303           |   |  | $             | 400    |   |               | $ | 841    |                |  | $ | 656           |   |  | $ | 965    |   |  | $ | 1,620  |  
|General and administrative                  |  |                | 736    |   |               |   | 1,049  |                |  |   | 1,020         |   |  |               | 1,033  |   |               |   | 977    |                |  |   | 904           |   |  |   | 870    |   |  |   | 823    |  
|                                            |  |                |        |   |               |   |        |                |  |   |               |   |  |               |        |   |               |   |        |                |  |   |               |   |  |   |        |   |  |   |        |  
|Total expenses                              |  |                | 1,747  |   |               |   | 1,296  |                |  |   | 1,323         |   |  |               | 1,433  |   |               |   | 1,818  |                |  |   | 1,560         |   |  |   | 1,835  |   |  |   | 2,443  |  
|                                            |  |                |        |   |               |   |        |                |  |   |               |   |  |               |        |   |               |   |        |                |  |   |               |   |  |   |        |   |  |   |        |  
|Operating loss                              |  |                | (1,747 | ) |               |   | (1,296 | )              |  |   | (1,323        | ) |  |               | (1,433 | ) |               |   | (1,818 | )              |  |   | (1,560        | ) |  |   | (1,835 | ) |  |   | (2,443 | )
|OTHER INCOME/ (EXPENSE):                    |  |                |        |   |               |   |        |                |  |   |               |   |  |               |        |   |               |   |        |                |  |   |               |   |  |   |        |   |  |   |        |  
|Equity in loss of SafeScience Newco, Ltd.   |  |                | (931   | ) |               |   | (1,301 | )              |  |   | (1,205        | ) |  |               | (981   | ) |               |   |       |                |  |   |              |   |  |   |       |   |  |   |       |  
|Other income (expense)                      |  |                | (1     | ) |               |   | 2      |                |  |   | 4             |   |  |               | 2      |   |               |   | 1      |                |  |   | 1             |   |  |   | 1      |   |  |   | 5      |  
|Interest income                             |  |                | 28     |   |               |   | 30     |                |  |   | 22            |   |  |               | 16     |   |               |   | 9      |                |  |   | 7             |   |  |   | 4      |   |  |   | 5      |  
|                                            |  |                |        |   |               |   |        |                |  |   |               |   |  |               |        |   |               |   |        |                |  |   |               |   |  |   |        |   |  |   |        |  
|Net loss                                    |  |                | (2,651 | ) |               |   | (2,565 | )              |  |   | (2,502        | ) |  |               | (2,396 | ) |               |   | (1,808 | )              |  |   | (1,552        | ) |  |   | (1,830 | ) |  |   | (2,433 | )
|Accreted dividends on preferred stock       |  |                | (239   | ) |               |   | (257   | )              |  |   | (285          | ) |  |               | (1,945 | ) |               |   | (102   | )              |  |   | (103          | ) |  |   | (105   | ) |  |   | (116   | )
|                                            |  |                |        |   |               |   |        |                |  |   |               |   |  |               |        |   |               |   |        |                |  |   |               |   |  |   |        |   |  |   |        |  
|Net loss applicable to common stock         |  | $              | (2,890 | ) |               | $ | (2,822 | )              |  | $ | (2,787        | ) |  | $             | (4,341 | ) |               |   | (1,910 | )              |  |   | (1,655        | ) |  |   | (1,935 | ) |  |   | (2,549 | )
|                                            |  |                |        |   |               |   |        |                |  |   |               |   |  |               |        |   |               |   |        |                |  |   |               |   |  |   |        |   |  |   |        |  
|Basic and diluted net loss per common stock |  | $              | (0.08  | ) |               | $ | (0.08  | )              |  | $ | (0.07         | ) |  | $             | (0.12  | ) |               | $ | (0.05  | )              |  | $ | (0.04         | ) |  | $ | (0.05  | ) |  | $ | (0.06  | )
|                                            |  |                |        |   |               |   |        |                |  |   |               |   |  |               |        |   |               |   |        |                |  |   |               |   |  |   |        |   |  |   |        |  
|Total                                       |  | $              | (0.08  | ) |               | $ | (0.08  | )              |  | $ | (0.07         | ) |  | $             | (0.12  | ) |               | $ | (0.05  | )              |  | $ | (0.04         | ) |  | $ | (0.05  | ) |  | $ | (0.06  | )
|                                            |  |                |        |   |               |   |        |                |  |   |               |   |  |               |        |   |               |   |        |                |  |   |               |   |  |   |        |   |  |   |        |  



F-24



---

GLYCOGENESYS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



---

|* |  | Quarterly diluted net loss per common stock are the same amounts as basic net loss per common stock for each quarter presented.
|- |  | -------------------------------------------------------------------------------------------------------------------------------



(13)    SUBSEQUENT EVENTS



(a) Financing.



In January 2004, the Company raised approximately $4.3 million in net
proceeds from institutional and accredited investors. The Company issued 3,450,000 shares of common stock at $1.25 per share and issued warrants to purchase 962,500 shares of common stock at an exercise price per share of $2.70, exercisable for a
period of five years. In addition, the Company issued warrants to purchase 1,380,000 and 340,000 shares of common stock at an exercise price per share of $1.25 and $1.47, respectively, each exercisable through April 5, 2004.



(b) Litigation.



On February 3, 2004, the Company received a complaint filed against it and
certain of its directors by David Platt, its former CEO and Chairman. The complaint alleges breach of his termination agreement with the Company and breach of fiduciary duties, violations of M.G.L. c. 93A and breach of the covenant of good faith and
fair dealing. The Company believes the lawsuit is frivolous and without merit. It intends to vigorously defend this suit.



On February 23, 2004, the Company filed counterclaims against David Platt and Pro-Pharmaceuticals, Inc. in connection with the lawsuit commenced by David
Platt. The counterclaims include, among others, breach by David Platt of his separation agreement with the Company, tortious interference claims against Pro-Pharmaceuticals and misappropriation of proprietary rights claims against David Platt and
Pro-Pharmaceuticals.



F-25



---

ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE



None



ITEM 9A.    CONTROLS AND PROCEDURES



(a) Evaluation of Disclosure Controls and Procedures



The Companys management carried out an evaluation,
under the supervision and with the participation of the Companys President and Chief Executive Officer and Senior Vice President and Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2003, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Companys President and Chief Executive
Officer along with the Companys Senior Vice President and Chief Financial Officer concluded that the Companys disclosure controls and procedures as of December 31, 2003 are effective in timely alerting them to material information
relating to the Company (including its consolidated subsidiaries) required to be included in the Companys periodic filings under the Exchange Act.



(b) Changes in Internal Control Over Financial Reporting



No changes in the Companys internal control over financial reporting have come to managements attention that have materially affected, or
are reasonably likely to materially affect, the Companys internal control over financial reporting.



PART III



ITEM
10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



Directors and Executive Officers



Directors



The Board of Directors presently is comprised of five directors. Set forth below is certain information with respect to each of the directors of the
Company.



Bradley J Carver, 42, the Chief Executive Officer
since June 2000, has been President and Treasurer and a member of the Board of Directors of the Company since March 1995 and has been the President, Chief Financial Officer, Treasurer and a member of the Board of Directors of IGG since February
1993. Mr. Carver is a Class III director whose term expires in 2004. Mr. Carver was elected interim Chairman of the Board of Directors in February 2003. Mr. Carver has been President, Chief Financial Officer, Treasurer and a member of the Board of
Directors of SafeScience Products, Inc., a wholly owned subsidiary of the Company since its inception on June 23, 1995. Mr. Carver received a Bachelor of Arts degree in management from Michigan State University in 1983.



John W. Burns, 58, has been the Companys Chief Financial Officer since
January 2000, Senior Vice President since March 2001, and a Class I Director, whose term expires in 2005, since June 2002. Prior thereto, Mr. Burns was the CFO/Senior Vice President, Finance & Business Operations for South Shore Hospital, a
regional healthcare services provider based in South Weymouth, MA, from February 1993 to February 1999. Prior thereto, Mr. Burns was the Vice President/Treasurer and a subsidiary CFO/Vice President, Finance for Eastern Enterprises, a NYSE company
engaged in energy and marine transportation. Mr. Burns has also held corporate finance and treasury positions with Allied-Signal, Citicorp Investment Bank, and International Paper. Mr. Burns holds a Master of Business Administration in Finance from
New York University and a Doctor of Philosophy degree in Mathematics from Stevens Institute of Technology.



30



---

David W. Dube, 48, has been a director of the Company since May 1998. Mr. Dube is a Class III director
whose term expires in 2004. Mr. Dube is a member of the Audit and Compensation Committees of the Board of Directors. Since April 2001, Mr. Dube has been President of Peak Capital Corporation, a corporate finance and management advisory firm. From
October 1999 to March 2001, Mr. Dube was President and Chief Operating Officer of Kings Road Entertainment, Inc., an entertainment and educational products company. Mr. Dube was Senior Vice President and Chief Financial Officer of FAB Capital
Corporation, a merchant banking and securities investment firm, and served in various other capacities from September 1997 through October 1999. Prior thereto, Mr. Dube was the President and Chief Executive Officer of Optimax Industries, Inc., a
publicly traded company with interests in the horticultural, decorative giftware and truck part accessories industries. Mr. Dube serves on the boards of directors of publicly-traded CNE Group, Inc., and New World Wine Group, Ltd. Mr. Dube holds a
Bachelors Degree in business administration and a masters degree in taxation from Suffolk University and a masters degree in accounting from Bentley College. Mr. Dube is a Certified Public Accountant in the state of New Hampshire, and
holds general and principal securities licenses.



Michael E.
Hanson, 56, has been a director of the Company since September 2002. Mr. Hanson is a Class II director whose term expires in 2006. Mr. Hanson is a member of the Audit and Compensation Committees of the Board of Directors. Since January 2002, Mr.
Hanson has been a Founding Partner of Barnard Life Sciences, LLC, a venture capital and health care consulting firm. He served as a director of MGI Pharma, Inc., an oncology-focused biopharmaceutical company, from May 1998 through May 2001. Prior
thereto, Mr. Hanson, for nearly 25 years, served in a variety of management positions in sales, marketing and new product development at Eli Lilly and Company. At the time of his retirement from Eli Lilly, he was President of the Internal Medicine
Business Unit, which included cardiovascular and oncology products, and a member of the Operations Committee. While at Eli Lilly, at various times he was Director of New Product Planning and Licensing; Executive Director of Japan Business Planning;
President and General Manager of Eli Lilly Japan KK; and Vice President of Lilly Research Laboratories. Mr. Hanson holds a B.S. in Pharmacy from North Dakota State University, an M.S. in Hospital Pharmacy Administration from the University of
Minnesota and is a graduate of the Advanced Management Program from Harvard Business School.



Theodore J. Host, 58, has been a director of the Company since December 1998. Mr. Host is a Class I director whose term expires in 2005. Mr. Host is a member of the Audit and Compensation Committees of the Board of
Directors. Since October 2001, Mr. Host has been the CEO and Director, and from November 1999 until October 2001 was President, CEO, and a Director of Prestige Brands International, a consumer products company. Mr. Host worked with McCown DeLeeuw
& Co. to create a consumer products start up company from March 1996 to November 1999. Prior thereto, Mr. Host served as the President and Chief Operating Officer, and later Chief Executive Officer, of The Scotts Company, a lawn care company.
Mr. Host holds a Bachelor of Arts degree in business and a Master of Arts degree in business from New York University.



In addition to Messrs. Carver and Burns who are listed as being directors of the Company, the Company has the following executive officers:



Frederick E. Pierce, II, 42, has been the Companys Vice President of
Business Development since August 2002 and the Companys Vice President of Finance and Investor Relations since June 1998. Prior to joining the Company, Mr. Pierce was at Lehman Brothers, where he was the New England private client services
liaison to healthcare investment banking. In addition, Mr. Pierce had over seven additional years experience at Kidder Peabody and Merrill Lynch. Mr. Pierce received a B.S. in chemistry from Hampshire College.



William O. Fabbri, 35, has been the Companys General Counsel since
September 2002. From September 1996 to August 2002, Mr. Fabbri was a member of the corporate department of the international law firm of McDermott, Will & Emery. While at McDermott, Will & Emery, Mr. Fabbri was actively involved in
securities offerings, public company reporting matters and various strategic corporate transactions. Mr. Fabbri holds a J.D., magna cum laude, from Boston University School of Law and received his B.A. from Wesleyan University.



31



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Compliance with Section 16(a) of the Securities Exchange Act of 1934



Section 16(a) of the Securities Exchange Act of 1934 requires the
Companys officers and directors, and persons who own more than 10% of the Companys outstanding shares of Common Stock (collectively, Section 16 Persons), to file initial reports of ownership and reports of changes in
ownership with the Commission and Nasdaq. Section 16 Persons are required by Commission regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms received by it, or
written representations from certain Section 16 Persons that all Section 16(a) reports required to be filed for such persons had been filed, the Company believes that during the fiscal year ended December 31, 2003 the Section 16 Persons complied
with all Section 16(a) filing requirements applicable to them except for the inadvertent late filing of a Form 4 by each of Bradley Carver, John Burns, William Fabbri, Patrick Joyce and Frederick Pierce and a Form 5 by Patrick Joyce.



Audit Committee and Audit Committee Financial Expert



The Companys Audit Committee consists of David Dube, Michael Hanson and
Theodore Host, each of whom qualify as independent under the standards established by the SEC and Nasdaq for members of audit committees. The Companys Board of Directors has determined that there are two audit committee financial experts
serving on its audit committee, one of whom is David Dube



Code of Ethics and Business Conduct



The
Company has adopted a code of ethics and business conduct that applies to all of its employees, including its principal executive officer, principal financial officer, principal accounting officer or controller, and its directors. The Company
undertakes to provide to any person without charge, upon request, a copy of its code of ethics and business conduct. Requests may be directed to GlycoGenesys, Inc. 31 St. James Ave. Boston, Massachusetts; attention: General Counsel, or by calling
617-422-0674.



ITEM 11.    EXECUTIVE COMPENSATION



The following table sets forth the compensation earned
during 2003, 2002, and 2001 for services rendered during such period by the chief executive officer, chief financial officer, vice president of business development and general counsel (the named executive officers).



Summary Compensation Table



|                                                                     |  |              |                             |                     |                       |                       |     |                       |  |                      |  |     |                 |          
|-------------------------------------------------------------------- |  | ------------ | --------------------------- | ------------------- | --------------------- | --------------------- | --- | --------------------- |  | -------------------- |  | --- | --------------- | ---------
|Name and Position(s)                                                 |  | Year         |                             | Annual Compensation |                       | Long-TermCompensation |     | All OtherCompensation | 
|                                                                     |  |              | SecuritiesUnderlyingOptions |                    
|                                                                     |  | Salary       |                             | Bonus               |                       |                      
|Bradley J Carver, Chief Executive Officer,President and Treasurer(1) |  | 200320022001 |                             | $$$                 | 225,866220,000191,667 |                       | $$$ | 28,09913,80535,000    |  | 78,000131,00070,400  |  | $$$ | 1,3443021,795   | (2)(3)(3)
|                                                                     |  |              |                             |                     |                      
|John W. Burns, Senior Vice President and Chief Financial Officer     |  | 200320022001 |                             | $$$                 | 205,333200,000178,750 |                       | $$$ | 17,03010,45825,000    |  | 68,900100,000125,400 |  | $$$ | 4,5522,6832,033 | (3)(3)(3)
|                                                                     |  |              |                             |                     |                      
|Frederick E. Pierce, II, Vice President of Business Development(4)   |  | 20032002     |                             | $$                  | 154,000150,000        |                       | $$  | 9,5795,883            |  | 31,60050,000         |  | $$  | 3,4932,049      | (3)(3)   
|                                                                     |  |              |                             |                     |                      
|William O. Fabbri, General Counsel(5)                                |  | 20032002     |                             | $$                  | 160,00053,333         |                       | $$  | 9,8252,070            |  | 12,20050,000         |  | $$  | 1,075114        | (2)(2)   

---

|(1) |  | In February 2003, Mr. Carver was elected Chairman of the Board on an interim basis.
|--- |  | -----------------------------------------------------------------------------------



|(2) |  | Consists of life and long-term disability insurance premiums.
|--- |  | -------------------------------------------------------------



32



---

|(3) |  | Consists of transportation-related payments and life and long-term disability insurance premiums.
|--- |  | -------------------------------------------------------------------------------------------------



|(4) |  | In August 2002, Mr. Pierce was appointed to the position of Vice President of Business Development. Prior to August 2002, Mr. Pierce was Vice President of Finance and Investor
Relations. Mr. Pierces compensation for 2002 reflects all 2002 compensation.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) |  | In September 2002, Mr. Fabbri joined the Company as General Counsel.
|--- |  | --------------------------------------------------------------------



Option Grant Table.    The following table set forth certain information regarding options granted during the year ended
December 31, 2003 to the named executive officers.



OPTION
GRANTS DURING YEAR ENDED DECEMBER 31, 2003



|                        |  |                                                 |     |  |                                                            |   |        |                                |      |                |         |                                                                                                 |        |  |       
|----------------------- |  | ----------------------------------------------- | --- |  | ---------------------------------------------------------- | - | ------ | ------------------------------ | ---- | -------------- | ------- | ----------------------------------------------------------------------------------------------- | ------ |  | ------
|                        |  | Individual Grants                               |     |  |                                                            |  
|Name                    |  | Number ofSecuritiesUnderlyingOptions Granted(#) |     |  | Percent of TotalOptionsGrantedto Employeesin FiscalYear(1) |   |        | Exercise orBase Price($/Share) |      | ExpirationDate |         | Potential Realizable Value atAssumed Annual Rates of Stock PriceAppreciation for Option Term(2)
|                        |  |                                                 |     |  | 5%($)                                                      |   | 10%($)
|Bradley J Carver        |  | 78,000                                          | (3) |  | 22.2                                                       | % |        | $                              | 0.27 |                | 3/13/13 |                                                                                                 | 13,244 |  | 33,564
|John W. Burns           |  | 68,900                                          | (3) |  | 19.6                                                       | % |        | $                              | 0.27 |                | 3/13/13 |                                                                                                 | 11,699 |  | 29,648
|Frederick E. Pierce, II |  | 31,600                                          | (3) |  | 9.0                                                        | % |        | $                              | 0.27 |                | 3/13/13 |                                                                                                 | 5,366  |  | 13,598
|William O. Fabbri       |  | 12,200                                          | (3) |  | 3.5                                                        | % |        | $                              | 0.27 |                | 3/13/13 |                                                                                                 | 2,072  |  | 5,250 

---

|(1) |  | Based on options to purchase an aggregate of 352,000 shares granted to officers and employees during the fiscal year ended December 31, 2003.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | These columns show the hypothetical gains or option spreads of the options granted based on the fair market value of the Common Stock on the date of grant and assumed annual
compound share appreciation rates of 5% and 10% over the full term of the options. The assumed rates of appreciation are mandated by the SEC and do not represent the Companys estimate or projection of future share prices. Actual gains, if any,
on option exercises will depend on the timing of such exercise and the future performance of the Common Stock. Values are net of the option exercise prices, but do not include deductions for taxes or other expenses associated with the exercise.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) |  | The options vest quarterly in equal installments over a three-year period.
|--- |  | --------------------------------------------------------------------------



Year-end Option Table.    The following table sets forth certain information regarding options exercised during the year ended
December 31, 2003 by the named executive officers.



AGGREGATE
OPTION EXERCISES AS OF DECEMBER 31, 2003

AND YEAR-END OPTION VALUES



|                        |  |                                    |             |                  |               |                                                                      |             |                                                   |               |        |  |       
|----------------------- |  | ---------------------------------- | ----------- | ---------------- | ------------- | -------------------------------------------------------------------- | ----------- | ------------------------------------------------- | ------------- | ------ |  | ------
|Name                    |  | Number ofSharesAcquired OnExercise |             | ValueRealized($) |               | Number of SecuritiesUnderlying Unexercised Options atFiscal Year-End |             | Value of UnexercisedOptions at Fiscal Year-End(1)
|                        |  |                                    | Exercisable |                  | Unexercisable |                                                                      | Exercisable |                                                   | Unexercisable
|Bradley J Carver        |  |                                   |             |                 |               | 126,233                                                              |             | 102,167                                           |               | 24,567 |  | 71,955
|John W. Burns           |  |                                   |             |                 |               | 243,291                                                              |             | 100,009                                           |               | 22,969 |  | 64,010
|Frederick E. Pierce, II |  |                                   |             |                 |               | 119,233                                                              |             | 40,367                                            |               | 9,807  |  | 29,151
|William O. Fabbri       |  |                                   |             |                 |               | 23,883                                                               |             | 38,317                                            |               | 23,343 |  | 38,683

---

|(1) |  | Value is based on the closing price of the Common Stock on December 31, 2003 of $1.50 less the applicable option exercise price.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------



33



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Compensation Committee Report on Executive Compensation



The Compensation Committee of the Board of Directors of the Company, of
which all independent directors are members, determines the cash and other incentive compensation, if any, to be paid to the Companys executive officers and employees.



Executive compensation consists of both cash and equity-based compensation. Cash compensation is comprised of base salary
and bonus. Base salary is determined with reference to market norms either pursuant to employment agreements entered into with executive officers or pursuant to at-will arrangements. For 2003, bonus compensation (both cash and options) was based on
a number of factors relating to the Companys financial and operational performance, including capital raising, operating within budget, enhancing market value of the Company, enhancing its intellectual property portfolio, clinical trial,
manufacturing and preclinical progress regarding GCS-100, expanding the potential indications for GCS-100 and adding to the Companys Scientific Advisory Board. Bonus payments are made at the discretion of the Compensation Committee following
the end of the year.



Equity-based compensation is comprised of
stock option grants. The Company believes that equity-based compensation closely aligns the economic interest of the Companys executive officers with the economic interests of the Companys shareholders. The Compensation Committee reviews
the outstanding unvested options of the key executives from time to time and may grant additional options to encourage the retention of key executives. The Compensation Committee has retained an outside executive compensation firm to provide
recommendations regarding executive compensation, particularly with respect to peers in the biotechnology industry and assistance regarding establishing a compensation philosophy. Executive compensation decisions and grants of stock options made by
the Compensation Committee were based in large part upon such recommendations.



The Chief Executive Officers compensation generally is based on the same policies and criteria as the Companys other executive officers. Mr. Carvers base salary was increased from $220,000 to
$228,800 on May 1, 2003. In January and March 2004, Mr. Carver received a total bonus of $28,099 and was granted options for a total of 74,400 shares of common stock at an exercise price of $1.37 per share for 2003. In establishing Mr. Carvers
compensation, the factors described above are taken into account. The Compensation Committee believes that Mr. Carvers compensation, including salary, bonus and stock options, falls within the Companys compensation philosophy and are
within industry norms. The Companys compensation policy was developed with the help and advice of an independent compensation consultant. Based upon a review of peer companies and the industry in which the Company operates, the independent
compensation consultant provided the Company with a report on option grants to existing employees and new hires, as well as a cash bonus plan. The objective of a formal compensation policy is to enable the Company to attract and retain qualified
executives, and reward executives for performance against a number of Company goals agreed upon for the long-term maximization of shareholder value. The Compensation Committee has implemented this policy against which to assess executive
compensation.



The above report of the Compensation Committee
shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 and shall not otherwise
be deemed filed under such Acts.



Compensation Committee



David W. Dube

Michael E. Hanson

Theodore J. Host



34



---

Compensation Committee Interlocks and Insider Participation



During the fiscal year ended December 31, 2003, Mr. Dube, Mr. Hanson, and
Mr. Host served on the Compensation Committee. During the 2003 fiscal year, all executive officer compensation decisions were made by the Compensation Committee or the full Board of Directors. The Compensation Committee reviews and makes
recommendations regarding the compensation for top management and key employees of the Company, including salaries and bonuses. No member of the Compensation Committee during the 2003 fiscal year was an officer of the Company.



Director Compensation



The Companys directors who are not employees of the Company receive
cash compensation for their services equal to $2,000 per month. In addition, directors who are not employees of the Company receive $7,500 per year for service on the Audit Committee and $3,500 for service on the Compensation Committee. Each
Director who is not also an employee of the Company receives every two years non-qualified options to purchase 20,000 shares of Common Stock. The exercise price of such options equals the higher of the average of the closing price of the Common
Stock during the 20 trading days prior to the date of grant of the options and the closing price of the Common Stock on the date of grant. The options bear a term of ten years from the date of the grant and vest quarterly over a two-year period;
provided, that such vesting shall cease in the event the Director ceases to be a Director, in which case the shares vested prior thereto remain vested and exercisable for the remaining ten-year term.



In addition, directors who are not employees of the Company are granted
options to purchase 25,000 shares of Common Stock in connection with their joining the Board of Directors at an exercise price equal to the higher of the average of the closing stock price during the 20 trading days preceding the date of the option
grant and the closing price of the Common Stock on the date of grant. The options vest quarterly over three years and have a term of 10 years.



Directors who are employees of the Company or its affiliates do not receive any compensation for their services as a director. Accordingly, Messrs. Carver
and Burns were not compensated for their services as directors in 2003.



Employment Contracts



The Company has an
employment agreement with Mr. Carver, as CEO and President of the Company, effective as of June 30, 2002. The following summary does not purport to be complete and is subject to and is qualified in its entirety by reference to the employment
agreement. A copy of the employment agreement has been previously filed with the Securities and Exchange Commission.



The employment agreement expires on June 30, 2005, provided that if Mr. Carver is not notified within 90 days of the end of the term of the employment
agreement, the term is extended for one year. The employment agreement provides that Mr. Carver is entitled to an annual base salary of $220,000, increased to $228,800 on May 1, 2003, and to receive bonuses, in the discretion of the Compensation
Committee, based upon the Company and Mr. Carver meeting certain performance targets established by the Compensation Committee.



Under the terms of the employment agreement, if the Company terminates Mr. Carvers employment other than for Cause (as defined in the employment
agreement), or Mr. Carver terminates his employment for Good Reason (as defined in the employment agreement), then the Company shall continue to pay Mr. Carver his annual base salary and health benefits in effect at the time of termination for a
period of 12 months, to be paid at the time otherwise due, and any bonus not yet paid to Mr. Carver earned in the year prior to termination, to be paid at the time otherwise to have been paid, as if his employment had not been terminated. In
addition, any stock options vested at the time of or as a result of the termination shall be exercisable for the lesser of the remaining term of such options or five years.



35



---

In the event of termination of the employment of Mr. Carver by reason of death or Permanent Disability
(as defined in the employment agreement) of Mr. Carver, the Company shall pay to Mr. Carver or his estate or other successor in interest, at the time otherwise due, his annual base salary and any benefits due to Mr. Carver through the date of
termination, but reduced in the case of permanent disability by any payments received under any disability plan, program or policy paid for by the Company.



If the Company terminates the employment of Mr. Carver for Cause, or Mr. Carver terminates his employment with the Company without Good Reason, the
Company shall pay Mr. Carver his annual base salary and benefits earned through the date of termination, and the Company shall have no further obligations to Mr. Carver under his employment agreement.



Under the terms of the employment agreement, Mr. Carver is prohibited from
competing with the Company during the periods of his employment with the Company and for one year following the termination of such employment. During the one year period following termination, Mr. Carver shall not solicit any employees, customers,
consultants or advisors to the Company. Mr. Carver is also subject to nondisclosure and confidentiality provisions under the employment agreement, which provisions survive any termination of the employment agreement.



The options granted to Mr. Carver fully vest in the event of a change in
control of the Company.



The Company has an employment
agreement with Mr. Burns, as CFO and Senior Vice President of the Company, effective as of September 12, 2002. The following summary does not purport to be complete and is subject to and is qualified in its entirety by reference to the employment
agreement. A copy of the employment agreement has been previously filed with the Securities and Exchange Commission.



The employment agreement expires on September 12, 2005, provided that if Mr. Burns is not notified within 90 days of the end of the term of the employment
agreement, the term is extended for one year. The employment agreement provides that Mr. Burns is entitled to an annual base salary of $200,000, increased to $208,000 on May 1, 2003, and to receive bonuses, in the discretion of the Compensation
Committee, based upon the Company and Mr. Burns meeting certain performance targets established by the Compensation Committee.



Under the terms of the employment agreement, if the Company terminates Mr. Burns employment other than for Cause (as defined in the employment
agreement), or Mr. Burns terminates his employment for Good Reason (as defined in the employment agreement), then the Company shall continue to pay Mr. Burns his annual base salary and health benefits in effect at the time of termination for a
period of 9 months, to be paid at the time otherwise due, and any bonus not yet paid to Mr. Burns earned in the year prior to termination, to be paid at the time otherwise to have been paid, as if his employment had not been terminated. In addition,
any stock options vested at the time of or as a result of the termination shall be exercisable for the lesser of the remaining term of such options or three years.



In the event of termination of the employment of Mr. Burns by reason of death or Permanent Disability (as defined in the
employment agreement) of Mr. Burns, the Company shall pay to Mr. Burns or his estate or other successor in interest, at the time otherwise due, his annual base salary and any benefits due to Mr. Burns through the date of termination, but reduced in
the case of permanent disability by any payments received under any disability plan, program or policy paid for by the Company.



If the Company terminates the employment of Mr. Burns for Cause, or Mr. Burns terminates his employment with the Company without Good Reason, the Company
shall pay Mr. Burns his annual base salary and benefits earned through the date of termination, and the Company shall have no further obligations to Mr. Burns under his employment agreement.



Under the terms of the employment agreement, Mr. Burns is prohibited from
competing with the Company during the periods of his employment with the Company and for one year following the termination of such



36



---

employment. During the one year period following termination, Mr. Burns shall not solicit any employees, customers, consultants or advisors to the Company.
Mr. Burns is also subject to nondisclosure and confidentiality provisions under the employment agreement, which provisions survive any termination of the employment agreement.



The options granted to Mr. Burns fully vest in the event of a change in control of the Company.



STOCK PERFORMANCE GRAPH



The following graph compares the cumulative total return to shareholders of
Common Stock of the Company from December 31, 1998 through December 31, 2003 to cumulative total return of the Nasdaq Stock Market (U.S.) Index and the Nasdaq Biotechnology Index for the same period of time. The graph assumes $100 is invested in the
Companys stock and in each of the two indexes at the closing market quotations on December 31, 1998 and that dividends are reinvested. The performances shown on the graph are not necessarily indicative of future price performance.



LOGO



This stock price performance graph
shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K statement into any filing under the Securities Act of 1933, as amended, or the Exchange Act and shall not
otherwise be deemed filed under such Acts.



37



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ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.



The following table sets forth, to the Companys knowledge, as of March
22,2004 (unless otherwise noted), the beneficial ownership of the Companys Common Stock by (i) persons who beneficially own more than 5% of the Companys Common Stock, (ii) each director, (iii) each of the named executive
officers, and (iv) all directors and executive officers as a group.



|                                                            |  |                                    |  |                    |  
|----------------------------------------------------------- |  | ---------------------------------- |  | ------------------ | -
|Name and Address of Beneficial Owner                        |  | Number of BeneficiallyOwned Shares |  | Percent ofClass(1) |  
|Elan International Services, Ltd.(2)                        |  | 10,942,711                         |  | 18.1               | %
|Britannia Holdings Limited(3)                               |  | 3,152,427                          |  | 6.3                | %
|Bradley J. Carver(4)                                        |  | 2,777,784                          |  | 5.6                | %
|John W. Burns(5)                                            |  | 334,006                            |  | *                  |  
|Theodore J. Host(6)                                         |  | 105,399                            |  | *                  |  
|David W. Dube(7)                                            |  | 77,500                             |  | *                  |  
|Michael E. Hanson(8)                                        |  | 27,500                             |  | *                  |  
|Frederick E. Pierce, II(9)                                  |  | 140,746                            |  | *                  |  
|William O. Fabbri (10)                                      |  | 37,979                             |  | *                  |  
|Directors and Executive Officers as a group (7 persons)(11) |  | 3,500,914                          |  | 6.9                | %

---

*Represents less than 1% of the outstanding shares of
Common Stock.



|(1) |  | The information presented with respect to stock ownership and related percentage information is based on Common Stock as a percentage of the aggregate number of shares of Common
Stock outstanding. The number of shares of Common Stock outstanding, 49,637,497, does not include shares issuable upon the conversion of outstanding preferred stock, exercise of outstanding warrants or stock options or shares reserved for issuance
pursuant to the 1998 Stock Option Plan, 2000 Stock Incentive Plan. In determining the percent of class owned by each stockholder, the numerator includes the number of shares of outstanding Common Stock held by such stockholders plus all shares of
Common Stock that such stockholder has the right to acquire within 60 days of March 22, 2004, the date on which beneficial ownership is being determined. The denominator includes the total number of shares of Common Stock outstanding held by all
stockholders plus all shares of Common Stock which such stockholder has the right to acquire within 60 days of March 22, 2004.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | According to information contained in a Schedule 13D/A filing with the Securities and Exchange Commission on March 16, 2004, Elan International Services Ltd. has shared voting and
shared dispositive power with Elan Corporation, plc with respect to 149,301 shares of Common Stock, 829,583 shares issuable upon the exercise of warrants within 60 days of March 22, 2004 and 9,963,827 shares of Common Stock is issuable upon the
conversion of Series A, Series B and Series C Preferred stock within 60 days of March 22, 2004. The business address of Elan International Services, Ltd. is 102 St. James Court, Flatts, Smith Parish, Bermuda FL 04.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) |  | According to information contained in a Schedule 13G/A filing with the Securities and Exchange Commission on February 10, 2004 and our records, Britannia Holdings Limited has sole
voting and sole dispositive power with respect to 2,437,076 shares of Common Stock and 715,351 shares of Common Stock issuable upon the exercise of warrants within 60 days of March 22, 2004. The address of Britannia Holdings Ltd. is Unit 10,
Springates East, Government Road, Charlestown, Nevis
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) |  | Includes 169,098 shares issuable upon exercise of options within 60 days of March 22, 2004. The business address of Mr. Carver is c/o GlycoGenesys, Inc., Park Square Building, 31
St. James Avenue, 8thFloor, Boston, MA 02116.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) |  | Includes 280,480 shares issuable upon exercise of warrants and options within 60 days of March 22, 2004.
|--- |  | --------------------------------------------------------------------------------------------------------



|(6) |  | Includes 87,283 shares issuable upon exercise of warrants and options within 60 days of March 22, 2004.
|--- |  | -------------------------------------------------------------------------------------------------------



38



---

|(7) |  | Consists of 77,500 shares issuable upon exercise of options within 60 days of March 22, 2004.
|--- |  | ---------------------------------------------------------------------------------------------



|(8) |  | Consists of 27,500 shares issuable upon exercise of options within 60 days of March 22, 2004.
|--- |  | ---------------------------------------------------------------------------------------------



|(9) |  | Includes 134,746 shares issuable upon exercise of options within 60 days of March 22, 2004.
|--- |  | -------------------------------------------------------------------------------------------



|(10) |  | Consists of 37,979 shares issuable upon exercise of options within 60 days of March 22, 2004.
|---- |  | ---------------------------------------------------------------------------------------------



|(11) |  | Includes 814,586 shares issuable upon exercise of warrants and options within 60 days of March 22, 2004.
|---- |  | --------------------------------------------------------------------------------------------------------



Equity Compensation Plan Information

as of December 31, 2003



|                                                              |  |                                                                                           |  |                                                                          |      |                                                                                                |          
|------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------ | ---- | ---------------------------------------------------------------------------------------------- | ---------
|Plan Category                                                 |  | Number of securitiesto be issued upon exercise of outstanding options warrants and rights |  | Weighted-averageexercise price ofoutstanding options,warrants and rights |      | Number of securitiesremaining available for future issuance under equity compensation plans(1)
|Equity compensation plans approved by security holders(2)     |  | 1,495,600                                                                                 |  | $                                                                        | 2.09 |                                                                                                | 2,887,070
|Equity compensation plans not approved by security holders(3) |  | 30,000                                                                                    |  | $                                                                        | 3.00 |                                                                                                | 0        
|Total                                                         |  | 1,525,600                                                                                 |  | $                                                                        | 2.11 |                                                                                                | 2,887,070

---

|(1) |  | Excludes securities to be issued upon the exercise of outstanding options, warrants and rights.
|--- |  | -----------------------------------------------------------------------------------------------



|(2) |  | Consists of SafeScience, Inc. 1998 Stock Option Plan, GlycoGenesys, Inc. 2000 Stock Incentive Plan, as amended, and GlycoGenesys, Inc. 2003 Omnibus Incentive Plan.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) |  | Consists of 1996 Non-Qualifying Stock Option Plan. The 1996 Non-Qualifying Stock Option Plan (the 1996 Plan) provides for the grant of non-qualified stock options for an
aggregate of 500,000 shares to employees, officers, directors, consultants and advisors of the Company. The 1996 Plan is administered by the Compensation Committee which has the discretion to determine the amount, price, vesting and term of options
granted under the 1996 Plan, provided however, that no option may have a term longer than ten years and no option may be granted more than 10 years after the effective date of the 1996 Plan. The exercise price of options granted under the 1996 Plan
may be paid in cash, or at the discretion of the Compensation Committee, in shares of Common Stock of the Company (owned for at least 30 days) having a fair market value equal to the aggregate exercise price.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.



The Company entered into a termination agreement with
David Platt, its former chief executive officer and Chairman of the Board of Directors and former 5% stockholder, as of June 1, 2000. Pursuant to the terms of the termination agreement, the Company agreed to continue to pay David Platt his salary of
$180,000 he received as chief executive officer through June 29, 2002, subject to certain terms and conditions. The Company provided health insurance for David Platt through June 29, 2002. Platts obligations, including, among other things,
confidentiality, use or disclosure of company materials, assignment of inventions and non-competition contained in his employment agreement with the Company dated June 29, 1999 were maintained. In addition, David Platt agreed not to sell or
otherwise transfer his shares or options in the Company prior to June 29, 2002, and in consideration thereof, the Company granted certain piggyback, or incidental, registration rights. Platt agreed to reimburse the Company approximately $85,000 for
certain personal expenses and loans out of the proceeds of any sales by him of the Companys stock.



On January 7, 1994, as amended on April 14, 1999, the Companys subsidiary, IGG, entered into a licensing agreement with David Platt, its former
chief executive officer and Chairman of the Board of Directors and former 5% stockholder to pay David Platt a royalty of two percent (2%) of the net sales of the Companys GCS-100



39



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product. The Company also agreed to pay all of the costs to procure and maintain any patents granted under that agreement. The agreement includes a
requirement that the royalties paid in the sixth year of this agreement and all subsequent years meet a minimum threshold of $50,000. The parties executed an amendment to the agreement to delay the first year of this minimum threshold from 1999 to
2002. If this threshold is not met (or if the Company does not pay David Platt the difference between the amount of actual royalties and $50,000), he may terminate the agreement and retain the patent rights. The Company may terminate the agreement
on sixty days notice. The Company has made a royalty payment of $50,000 for 2003.



On December 18, 2002, the Company entered into a termination agreement with Elan, a current 5% stockholder, for the termination of Elans and the Companys joint venture, SafeScience Newco. Pursuant to the
termination agreement, the Company acquired the preferred shares of SafeScience Newco held by Elan in exchange for a royalty interest on certain future revenues and payments related to GCS-100. Under the termination agreement, such royalty payments,
if any, are to be offset by certain development costs incurred by the Company. The Company regained all intellectual property, development and marketing rights to GCS-100. The Company now owns 100% of the outstanding stock of SafeScience Newco. The
Company retained the right to use Elans proprietary drug delivery technology in the field of oncology for GCS-100.



ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES



Audit Fees



The Company estimates that the aggregate fees billed by Deloitte & Touche LLP for professional services rendered in connection with the audit of the
Companys annual financial statements set forth in the Companys Annual Report on Form 10-K as well as review of the Companys quarterly financial statements set forth in the Companys Quarterly Reports on Form 10-Q equal
approximately $102,500 and $101,500 for the years ended December 31, 2002 and 2003, respectively.



Audit-Related Fees



The
Company did not pay any fees for audit-related services to its independent auditors in either 2003 or 2002.



Tax Fees



The aggregate fees for tax services in 2003 and 2002 rendered by Deloitte & Touche LLP equal approximately $18,520 and $10,875, respectively. These
fees include work performed by the independent auditors primarily with respect to tax filings and tax planning.



All Other Fees



The aggregate fees for all other services for 2003 and 2002 rendered by Deloitte & Touche LLP equal approximately $99,150 and $159,300. These fees
include work performed by the independent auditors primarily with respect to matters related to filings with the Securities and Exchange Commission during 2002 and 2003 other than annual and quarterly reports and matters related to the termination
of the Companys joint venture with EIS in 2002 and 2003.



The Audit Committee has advised the Company that it has determined that the non-audit services rendered by the Companys independent auditors during the Companys most recent fiscal year are compatible with maintaining the
independence of such auditors.



40



---

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



(a) Documents filed as part of this report:



1) The following financial statements of GlycoGenesys, Inc.
are contained in Item 8 of Part II of this Form 10-K:



Report of Independent AuditorsDeloitte & Touche LLP



Consolidated Balance Sheets as of December 31, 2003 and 2002



Consolidated Statements of Operations for the years ended December 31, 2003, 2002 and 2001.



Consolidated Statements of Stockholders Equity (Deficit) for the years
ended December 31, 2003, 2002 and 2001.



Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001.



Notes to Consolidated Financial Statements



2) Financial Statement Schedules:



Financial statements of SafeScience Newco, Ltd. and Report of Independent AuditorsDeloitte & Touche LLP



Other financial statement schedules are omitted because the
required information is not present or not present in sufficient amounts to require submission of the schedule or because the information is reflected in the consolidated financial statements or notes thereto.



41



---

INDEPENDENT AUDITORS REPORT



To the Board of Directors and Stockholders of SafeScience Newco, Ltd.:



We have audited the accompanying balance sheet of SafeScience Newco, Ltd. (a development stage company) as of December 31,
2001 and the related statements of operations, stockholders equity, and cash flows for the period from inception (July 10, 2001) through December 31, 2001. These financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on our audit.



We conducted an audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for opinion.



In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position
of the Company at December 31, 2001 and the results of its operations and its cash flows for the period from inception (July 10, 2001) through December 31, 2001 in conformity with accounting principles generally accepted in the United States of
America.



The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. The Company is a development stage company engaged in the development of a pharmaceutical product. As discussed in Note 1 to the financial statements, the Company incurred a net
loss of $17.7 million for the period from inception through December 31, 2001, and had an accumulated deficit of $882,483 as of December 31, 2001. The Company expects to incur substantial additional operating costs, including costs related to
ongoing research and development activities. Future funding is subject to continued agreement of a business plan by the Companys owners. In the event funding is not obtained, the Company may be required to curtail operations. These matters
raise substantial doubt about the Companys ability to continue as a going concern. Managements plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.



/s/    DELOITTE & TOUCHE LLP



Boston, Massachusetts

May 29, 2002, except for Note 6, as to which the date is December 18, 2002



42



---

SafeScience Newco, Ltd.

(A Development Stage Company)



BALANCE SHEET



|                                                                                                                   |  |                   |             |  
|------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ----------- | -
|                                                                                                                   |  | December 31, 2001 |            
|ASSETS                                                                                                             |  |                   |             |  
|                                                                                                                   | 
|CURRENT ASSETS:                                                                                                    |  |                   |             |  
|Cash and cash equivalents                                                                                          |  | $                 | 19,054      |  
|Prepaid expenses                                                                                                   |  |                   | 2,250       |  
|                                                                                                                   |  |                   |             |  
|Total assets                                                                                                       |  | $                 | 21,304      |  
|                                                                                                                   |  |                   |             |  
|                                                                                                                   | 
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                                                     |  |                   |             |  
|                                                                                                                   | 
|CURRENT LIABILITIES:                                                                                               |  |                   |             |  
|Accounts payable to related parties                                                                                |  | $                 | 903,787     |  
|                                                                                                                   |  |                   |             |  
|Total current liabilities                                                                                          |  | $                 | 903,787     |  
|                                                                                                                   |  |                   |             |  
|STOCKHOLDERS EQUITY (DEFICIT):                                                                                    |  |                   |             |  
|Convertible preferred stock, $1.00 par value                                                                       |  |                   |             |  
|Authorized6,000 shares 6,000 shares issued and outstanding as of December 31, 2001 (liquidation value $7,500,000) |  |                   | 6,000       |  
|Common Stock, $1.00 par value                                                                                      |  |                   |             |  
|Authorized6,000 shares 6,000 shares issued and outstanding as of December 31, 2001                                |  |                   | 6,000       |  
|Additional Paid-in Capital                                                                                         |  |                   | 16,818,962  |  
|Deficit accumulated during the development stage                                                                   |  |                   | (17,713,445 | )
|                                                                                                                   |  |                   |             |  
|Total stockholders equity (deficit)                                                                               |  |                   | (882,483    | )
|                                                                                                                   |  |                   |             |  
|Total liabilities & stockholders equity (deficit)                                                                 |  | $                 | 21,304      |  
|                                                                                                                   |  |                   |             |  



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



43



---

SafeScience Newco, Ltd.

(A Development Stage Company)



STATEMENT OF OPERATIONS



|                           |  |                                                                     |             |  
|-------------------------- |  | ------------------------------------------------------------------- | ----------- | -
|                           |  | For The Periodfrom Inception(July 10, 2001)throughDecember 31, 2001 |            
|Operating expenses:        |  |                                                                     |             |  
|Research and development   |  | $                                                                   | 17,694,894  |  
|General and administrative |  |                                                                     | 18,551      |  
|                           |  |                                                                     |             |  
|Total operating expenses   |  |                                                                     | 17,713,445  |  
|                           |  |                                                                     |             |  
|Net loss                   |  | $                                                                   | (17,713,445 | )
|                           |  |                                                                     |             |  



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



44



---

SafeScience Newco, Ltd.

(A Development Stage Company)



STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT)



|                                             |                 |                             |                |              |                 |                           |                |                                    |   |       |                                    |   |            |  |   |             |   |  |   |             |  
|-------------------------------------------- | --------------- | --------------------------- | -------------- | ------------ | --------------- | ------------------------- | -------------- | ---------------------------------- | - | ----- | ---------------------------------- | - | ---------- |  | - | ----------- | - |  | - | ----------- | -
|                                             |                 | Convertible Preferred Stock |                | Common Stock |                 | Additional Paid-inCapital |                | DeficitAccumulatedDevelopmentStage |   |       | Total StockholdersEquity(deficit) |  
|                                             | Numberof Shares |                             | $1.00Par Value |              | Numberof Shares |                           | $1.00Par Value |                                    |   |      
|Inception of the Company:                    |                 |                             |                |              |                 |                           |                |                                    |   |       |                                    |   |            |  |   |             |   |  |   |             |  
|Issuance of preferred stock on July 10, 2001 |                 | 6,000                       |                | $            | 6,000           |                           |               |                                    |   |      |                                    | $ | 7,494,000  |  |   |            |   |  | $ | 7,500,000   |  
|Issuance of common stock on July 10, 2001    |                 |                            |                |              |                |                           | 6,000          |                                    | $ | 6,000 |                                    |   | 7,494,000  |  |   |            |   |  |   | 7,500,000   |  
|Capital contribution                         |                 |                            |                |              |                |                           |               |                                    |   |      |                                    |   | 1,830,962  |  |   |            |   |  |   | 1,830,962   |  
|Net Loss                                     |                 |                            |                |              |                |                           |               |                                    |   |      |                                    |   |           |  |   | (17,713,445 | ) |  |   | (17,713,445 | )
|                                             |                 |                             |                |              |                 |                           |                |                                    |   |       |                                    |   |            |  |   |             |   |  |   |             |  
|Balance, December 31, 2001                   |                 | 6,000                       |                | $            | 6,000           |                           | 6,000          |                                    | $ | 6,000 |                                    | $ | 16,818,962 |  | $ | (17,713,445 | ) |  | $ | (882,483    | )
|                                             |                 |                             |                |              |                 |                           |                |                                    |   |       |                                    |   |            |  |   |             |   |  |   |             |  



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



45



---

SafeScience Newco, Ltd.

(A Development Stage Company)



STATEMENT OF CASH FLOWS



|                                                                            |  |                                                                     |             |  
|--------------------------------------------------------------------------- |  | ------------------------------------------------------------------- | ----------- | -
|                                                                            |  | For The Periodfrom Inception(July 10, 2001)throughDecember 31, 2001 |            
|Cash flows from operating activities:                                       |  |                                                                     |             |  
|Net loss                                                                    |  | $                                                                   | (17,713,445 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                                                                     |             |  
|Write-off of acquired technology                                            |  |                                                                     | 15,000,000  |  
|Changes in assets and liabilities:                                          |  |                                                                     |             |  
|Prepaid expenses and other current assets                                   |  |                                                                     | (2,250      | )
|Accounts payable                                                            |  |                                                                     | 903,787     |  
|                                                                            |  |                                                                     |             |  
|Net cash used in operating activities                                       |  |                                                                     | (1,811,908  | )
|Cash flows from financing activities:                                       |  |                                                                     |             |  
|Capital contributions received                                              |  |                                                                     | 1,830,962   |  
|                                                                            |  |                                                                     |             |  
|Net cash provided by financing activities                                   |  |                                                                     | 1,830,962   |  
|                                                                            |  |                                                                     |             |  
|Net increase in cash and cash equivalents                                   |  |                                                                     | 19,054      |  
|Cash and cash equivalents, beginning balance                                |  |                                                                     |            |  
|                                                                            |  |                                                                     |             |  
|Cash and cash equivalents, ending balance                                   |  | $                                                                   | 19,054      |  
|                                                                            |  |                                                                     |             |  
|Supplemental disclosure of non-cash financing activities:                   |  |                                                                     |             |  
|Issuance of preferred stock and common stock for technology license         |  | $                                                                   | 15,000,000  |  
|                                                                            |  |                                                                     |             |  



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



46



---

SAFESCIENCE NEWCO, LTD.

(A Development Stage Company)



NOTES TO FINANCIAL STATEMENTS

(including data applicable to unaudited periods)

December 31, 2001



(1)    Operations



On July 10, 2001, GlycoGenesys, Inc. (GlycoGenesys, formerly known as SafeScience, Inc.) and Elan Corporation, plc (Elan) and EIS
International Services Ltd. (EIS), formed SafeScience Newco Ltd. (SafeScience Newco) an exempted Company incorporated in Bermuda. SafeScience Newco is owned by GlycoGenesys and EIS holding 80.1% and 19.9% fully-diluted
interests, respectively. GlycoGenesys and EIS own 100% and 0% of the common stock and 60.2% and 39.8% of the preferred stock of SafeScience Newco, respectively (see Note 6). The primary objective of SafeScience Newco is the business of development,
testing, registration, manufacturing, commercialization and licensing of GCS-100 as defined in the Subscription, Joint Development and Operating Agreement dated July 10, 2001 between EIS and GlycoGenesys.



On July 10, 2001, EIS acquired 4,944.44 shares of GlycoGenesys Series A
convertible exchangeable preferred stock (Series A Preferred Stock) for $12,015,000. The Series A Preferred Stock is convertible, at EISs option, into GlycoGenesys common stock or exchangeable into shares of SafeScience Newco preferred stock
held by GlycoGenesys representing a 30.1% interest in SafeScience Newco on a fully-diluted basis. Such exchange would increase EISs ownership in SafeScience Newco to 50% on a fully-diluted basis. GlycoGenesys used the Series A Preferred Stock
sale to purchase its 80.1% interest in SafeScience Newco on a fully-diluted basis. SafeScience Newco used this, along with EISs 19.9% investment on a fully-diluted basis, to pay $15.0 million to Elan for a license giving SafeScience Newco
rights to use EISs drug delivery technologies. Immediately, upon completing this transaction, the cost of the license was expensed as a research and development cost because revenue resulting from such technology was not likely in the
foreseeable future.



While GlycoGenesys owns 100% of the voting
common stock and 80.1% of the outstanding capital stock on a fully-diluted basis of SafeScience Newco, Ltd. EIS has retained significant minority investor rights that are considered participating rights as defined in Emerging Issues Task
Force (EITF) Issue 96-16, Investors Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholder Has Certain Approval or Veto Rights. EISs participating rights overcome the
presumption that GlycoGenesys exercises control over SafeScience Newco.



Upon continued agreement of a business plan, and once agreement has been reached on funding, GlycoGenesys and EIS contribute to SafeScience Newco in relation to their relative fully-diluted ownership interests (see Notes 5 and 6). In July
2001, GlycoGenesys entered into an $9,612,000 stock subscription agreement (the Securities Purchase Agreement) with EIS. The stock purchases under the Securities Purchase Agreement are restricted for GlycoGenesys funding of
SafeScience Newco. As of December 31, 2001 there had been 862.71 shares purchased under the Securities Purchase Agreement.



SafeScience Newco is in the development stage and is devoting substantially all of its efforts toward product research and development. SafeScience Newco
is subject to a number of risks similar to those of other development stage companies. Principal among these risks are the dependence on key individuals, the need to develop commercially usable products, competition from substitute products and
larger companies, and the need to obtain adequate financing necessary from GlycoGenesys and EIS to fund further product development (see Note 6).



The Company incurred a net loss of $17.7 million for the period from inception through December 31, 2001 and had an accumulated deficit of $882,483 as of
December 31, 2001. The Company expects to incur substantial additional operating costs, including costs related to ongoing research and development activities. As discussed above and in Note 6, future funding is subject to continued agreement of a
business plan by the Companys



47



---

SAFESCIENCE NEWCO, LTD.

(A Development Stage Company)



NOTES TO FINANCIAL STATEMENTS(Continued)

December 31, 2001



owners. In the event funding is not obtained, the Company may be required to curtail operations. These matters raise substantial doubt about the
Companys ability to continue as a going concern. The financial statements do not include any adjustments that might results from the outcome of this uncertainty.



(2)    Summary of Significant Accounting Policies



The accompanying financial statements reflect the application of certain accounting policies described below and elsewhere
in the notes to the financial statements.



(a)  Fair Value of Financial Instruments



The carrying amounts of SafeScience Newcos financial instruments, which include the amounts due to related parties, approximate their fair value.



(b)  Concentrations of Limited Suppliers



Certain materials used in SafeScience Newcos development process are procured from a single source. The failure of a supplier, including a
subcontractor, to deliver on schedule could delay or interrupt the development process and hereby adversely affect SafeScience Newcos operating results.



(c)  Use of Estimates



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



(d)  Research and Development Expenses



SafeScience Newco charges research and development expenses to operations as incurred. The cost of the license from Elan was immediately expensed because revenues resulting from such technology were not likely in the foreseeable future.



(e)  Comprehensive Loss



Comprehensive loss is defined as the change in stockholders deficit
during a period from transactions and other events and circumstances from non-owner sources. SafeScience Newcos net loss is equal to its comprehensive loss.



(f)  Organization Costs



All organization costs have been expensed as incurred.



(g)  Disclosures about Segments of an Enterprise



Operating segments are identified as components of an enterprise about which
separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions regarding resource allocation and assessing performance. To date, SafeScience Newco has viewed
its operations and manages its business as principally one operating segment.



48



---

SAFESCIENCE NEWCO, LTD.

(A Development Stage Company)



NOTES TO FINANCIAL STATEMENTS(Continued)

December 31, 2001



(3)    Income Taxes



Under current Bermuda law, SafeScience Newco is not required to pay any taxes in Bermuda on either income or capital gains.
SafeScience Newco has received an undertaking from the Minister of Finance in Bermuda that, in the event of such taxes being imposed, SafeScience Newco will be exempt from taxation until the year 2016.



(4)    Stockholders Deficit



(a)  Authorized Stock



SafeScience Newco has authorized capital stock of 12,000 shares, of which
6,000 are $1.00 par value common stock and 6,000 are $1.00 par value convertible preferred stock.



(b)  Common Stock



In July 2001, SafeScience Newco sold 6,000 shares of common stock at $1,250 per share resulting in net proceeds of $7,500,000.



(c)  Convertible Preferred Stock



In July 2001, SafeScience Newco sold 6,000 shares of convertible preferred
stock (Preferred Stock) at $1,250 per share resulting in net proceeds of $7,500,000. The rights, preferences and privileges of the Preferred Stock are as follows:



Voting Rights



Preferred stockholders do not have voting rights.



Dividends



Preferred stockholders are entitled to dividends as and when declared by the Board of Directors. Preferred stockholders are entitled to participate
equally on a pro rata basis in any dividend declared for the holders of common stock.



Liquidation Preference



In the event of liquidation, dissolution or winding-up of SafeScience Newco and before any distribution to common stockholders and any prior series of preferred stock, the holders of Preferred Stock are entitled to receive $1,250 per share,
respectively, plus all declared but unpaid dividends.



Conversion



Each share of Preferred
Stock is convertible, at the option of the holder, into one share of common stock, subject to adjustments for dilutive issuances of stock at any time after July 10, 2003.



49



---

SAFESCIENCE NEWCO, LTD.

(A Development Stage Company)



NOTES TO FINANCIAL STATEMENTS(Continued)

December 31, 2001



(5)    Related Party Transactions



SafeScience Newcos research and development and general and
administrative costs were paid for directly by the SafeScience Newco stockholders. These transactions are in the normal course of operations and amounts payable to these stockholders are summarized as follows:



|                          |  |                  |        
|------------------------- |  | ---------------- | -------
|                          |  | December 31,2001
|Due to GlycoGenesys, Inc. |  | $                | 884,515
|Due to Elan, plc          |  | $                | 19,272 
|                          |  |                  |        
|Total                     |  | $                | 903,787
|                          |  |                  |        



These balances are
unsecured and interest free with no set terms of repayment. They are classified as current liabilities as SafeScience Newco will reimburse GlycoGenesys and Elan upon its funding by its stockholders.



(6)    Subsequent events



On December 18, 2002, GlycoGenesys, Elan, EIS and SafeScience Newco entered
into an agreement which terminated the joint venture relationship between GlycoGenesys and EIS. Under the terms of the termination agreement, all joint venture agreements have been terminated and GlycoGenesys has regained all intellectual property
rights to GCS-100. In addition, GlycoGenesys has acquired EISs 19.9% interest in SafeScience Newco and now owns 100% of the outstanding capital stock of SafeScience Newco. EIS is eligible to receive a royalty on certain future revenues related
to GCS-100.



As discussed in Note 1, SafeScience Newcos
future is dependent upon its ability to obtain financing to fund its operations. SafeScience Newco has not obtained commitments from any existing or potential investors to provide additional financing. In the event additional financing is not
obtained, SafeScience Newco may be required to curtail operations.



50



---

Exhibits:



| | 3) |  | See (c) below.
| | -- |  | --------------



(b)  Reports on Form 8-K.



| | 1) |  | Current Report on Form 8-K filed with the Securities and Exchange Commission on October 22, 2003 reporting the issuance of a press release regarding the results of the
Companys Phase I dose escalation clinical trial for GCS-100 for cancer patients.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



(c)  Exhibits.



The following documents are incorporated herein by reference from the Registrants Form 10, as filed with the Securities and Exchange Commission, SEC
file No. 0-26476:



|     |  |                                                                
|---- |  | ---------------------------------------------------------------
|     | 
|3.1  |  | Articles of Incorporation of Alvarada, Inc.                    
|     | 
|3.2  |  | Amendment to the Articles of Incorporation dated March 1, 1995.
|     | 
|3.3  |  | Amendment to the Articles of Incorporation dated March 3, 1995.
|     | 
|3.4  |  | Amendment to the Articles of Incorporation dated May 23, 1995  
|     | 
|3.5  |  | Bylaws of Alvarada, Inc.                                       
|     | 
|3.6  |  | Articles of Incorporation of International Gene Group.         
|     | 
|3.7  |  | Bylaws of the Company of International Gene Group.             
|     | 
|3.8  |  | Articles of Incorporation of Agricultural Glycosystems, Inc.   
|     | 
|3.9  |  | Bylaws of the Company of Agricultural Glycosystems, Inc.       
|     | 
|4.1  |  | Specimen Stock Certificate.                                    
|     | 
|10.1 |  | Agreement and Plan of Reorganization.                          
|     | 
|10.2 |  | Licensing Agreement with Dr. Platt.                            



The following
documents are incorporated herein by reference from the Registrants Form S-8 Registration Statement filed with the Commission on May 14, 1996, SEC file No. 333-04764:



|     |  |                                   
|---- |  | ----------------------------------
|     | 
|10.5 |  | Non-Qualifying Stock Option Plan.*



The following
documents are incorporated herein by reference from the Registrants Form 10-K for the period ending December 31, 1997:



|     |  |             
|---- |  | ------------
|     | 
|99.1 |  | Office Lease



The following
documents are incorporated by reference from the Registrants Form 8-K filed on April 7, 2000:



|     |  |                                                                                                                                                   
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|10.1 |  | Securities Purchase Agreement by and among GlycoGenesys, Inc., Strong River Investments, Inc. and Montrose Investments Ltd., dated March
19, 2000.
|     | 
|10.4 |  | Registration Rights Agreement by and among GlycoGenesys, Inc., Strong River Investments, Inc. and Montrose Investments Ltd. dated March 29,
2000. 



51



---

The following documents are incorporated herein by reference from the Registrants Form 10-Q for the
quarter ending September 30, 2000:



|      |  |                           
|----- |  | --------------------------
|      | 
|10.23 |  | 1998 Stock Option Plan*   
|      | 
|10.24 |  | 2000 Stock Incentive Plan*



The following document
is incorporated herein by reference from the Registrants Form 8-K filed on January 3, 2001:



|     |  |                                                                                                                                               
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|10.1 |  | License Agreement by and among SafeScience, Inc., Wayne State University and the Barbara Ann Karmanos Cancer Institute dated January 26,
2001.



The following document
is incorporated herein by reference from the Registrants Form 8-K filed on May 23, 2001:



|     |  |                                                                                                                                                                                         
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|10.1 |  | Amendment No. 1 dated May 14, 2001 to the License Agreement by and among SafeScience, Inc., Wayne State University and the Barbara Ann
Karmanos Cancer Institute dated January 26, 2001.



The following
documents are incorporated herein by reference from the Registrants Form 8-K filed on June 29, 2001:



|     |  |                                                                                                                                    
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------
|     | 
|10.1 |  | Securities Purchase Agreement dated June 22, 2001 between SafeScience, Inc. and Elan International Services, Ltd.                  
|     | 
|10.5 |  | SafeScience Registration Rights Agreement dated as of June 29, 2001 between SafeScience, Inc. and Elan International Services,
Ltd.



The following
documents are incorporated herein by reference from the Registrants Form 10-Q for the quarter ending September 30, 2001:



|     |  |                                                                                                                                                                                              
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|4.1  |  | Certificate of Amendment to the Articles of Incorporation of the Company filed on October 31, 2001.                                                                                          
|     | 
|10.1 |  | Amendment No. 2 dated November 7, 2001 to the License Agreement by and among GlycoGenesys, Inc., Wayne State University and the Barbara Ann
Karmanos Cancer Institute dated January 26, 2001.



The following
documents are incorporated herein by reference from the Registrants 10-Q for the quarter ending June 30, 2002:



|     |  |                                                                                                            
|---- |  | -----------------------------------------------------------------------------------------------------------
|     | 
|3.1  |  | Certificate of Amendment to the Articles of Incorporation of the Company filed on June 18, 2002.           
|     | 
|10.1 |  | Consulting Agreement between the Company and Beardsworth Consulting Group, Inc. dated as of April 16, 2002.



The following
documents are incorporated herein by reference from the Registrants Form 10-Q for the quarter ending September 30, 2002:



|     |  |                                                                                                                                  
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------
|     | 
|10.1 |  | Employment Agreement between Bradley J. Carver and the Company dated as of September 12, 2002 and effective as of June 30,
2002.*
|     | 
|10.2 |  | Employment Agreement between John W. Burns and the Company dated as of September 12, 2002.*                                      
|     | 
|10.3 |  | Employment Letter between William O. Fabbri and the Company, dated July 1, 2002, as amended.*                                    



52



---

The following documents are incorporated herein by reference from the Registrants Form 8-K filed on
December 18, 2002:



|    |  |                                                                                                                                                  
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|    | 
|4.1 |  | Amended and Restated Certificate of Designations, Preferences and Rights of Series A, Series B and Series C Preferred Stock of
GlycoGenesys, Inc.



The following
documents are incorporated herein by reference from the Registrants Form 10-K for the year ending December 31, 2002:



|     |  |                                                                                                                                                                     
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|10.1 |  | Termination Agreement dated December 18, 2002, by and among GlycoGenesys, Inc., Elan International Services, Ltd., Elan Corporation plc,
and SafeScience Newco, Ltd.
|     | 
|10.2 |  | Development Supply Agreement dated December 17, 2002 between GlycoGenesys, Inc. and Hollister-Stier Laboratories, LLC                                               



The following document
is incorporated herein by reference from the Registrants Form 8-K filed on September 18, 2003:



|     |  |                                                                                                                                                                                                 
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|10.1 |  | Amendment No. 3 to License Agreement of January 26, 2001 by and between GlycoGenesys, Inc., Wayne State University and the Barbara Ann
Karmanos Cancer Institute dated as of September 12, 2003.



The following document
is incorporated herein by reference from the Registrants Form 10-Q for the quarter ended September 30, 2003:



|     |  |                                                                                                                         
|---- |  | ------------------------------------------------------------------------------------------------------------------------
|     | 
|10.1 |  | Development and Supply Agreement by and among Sigma-Aldrich Fine Chemicals and GlycoGenesys, Inc. dated August 20,
2003.



The following
documents are exhibits hereto:



|     |  |                                                                                                                                
|---- |  | -------------------------------------------------------------------------------------------------------------------------------
|     | 
|10.1 |  | Lease dated December 12, 2003, between GlycoGenesys, Inc. and One Kendall Square Associates, LLC.                              
|     | 
|14.1 |  | GlycoGenesys, Inc. Code of Business Ethics and Conduct                                                                         
|     | 
|21   |  | List of subsidiaries                                                                                                           
|     | 
|23.1 |  | Consent of Deloitte & Touche LLP                                                                                               
|     | 
|23.2 |  | Consent of Deloitte & Touche LLP                                                                                               
|     | 
|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.                            
|     | 
|32.1 |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.

---

|* |  | Constitutes management contract or compensatory plan or arrangement.
|- |  | --------------------------------------------------------------------



53



---

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 on Form 10-K
to be signed on its behalf by the undersigned, thereunto duly authorized, in Boston, Massachusetts on this 30th day of March, 2004.



GLYCOGENESYS, INC. (formerly known as SafeScience, Inc.)By:

/s/    BRADLEY J.
CARVERBradley J. Carver, Chief Executive Officer President and TreasurerBy:

/s/    JOHN W.
BURNSJohn W. Burns, Senior Vice President, Chief Financial Officer and SecretaryBy:

/s/    PATRICK J.
JOYCEPatrick J. Joyce, Principal Accounting Officer




KNOW ALL MEN BY
THESE PRESENT, that each person whose signature appears below constitutes and appoints Bradley J. Carver, as true and lawful attorney-in-fact and agent, with full power of substitution, for his and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Report on Form 10-K, and to file the same, therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying the confirming all that said attorney-in-fact and agent, or any substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.



Pursuant to the requirements of the Securities Exchange Act of 1934, this Report on Form 10-K has been signed by the following persons in the capacities and on the dates indicated:



|                                          |  |                                                                  |  |               
|----------------------------------------- |  | ---------------------------------------------------------------- |  | --------------
|Signatures                                |  | Title                                                            |  | Date          
|                                          |  |                                                                 
|/s/    BRADLEY J.
CARVERBradley J.
Carver |  | CEO, President, Treasurer and Chairman of the Board of Directors |  | March 30, 2004
|                                          |  |                                                                 
|/s/    JOHN W.
BURNSJohn W.
Burns         |  | SVP, CFO, Secretary and a member of the Board of Directors       |  | March 30, 2004
|                                          |  |                                                                 
|/s/    PATRICK J.
JOYCEPatrick J.
Joyce   |  | Principal Accounting Officer                                     |  | March 30, 2004
|                                          |  |                                                                 
|/s/    DAVID W.
DUBEDavid W. Dube         |  | Director                                                         |  | March 30, 2004
|                                          |  |                                                                 
|/s/    THEODORE J.
HOSTTheodore J.
Host   |  | Director                                                         |  | March 30, 2004
|                                          |  |                                                                 
|/s/    MICHAEL E.
HANSONMichael E.
Hanson |  | Director                                                         |  | March 30, 2004



54