##### 



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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the period 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: 000-50484



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Marshall Edwards, Inc.

(Exact name of registrant as specified in its charter)


|                                |  |                                     
|------------------------------- |  | ------------------------------------
|DELAWARE                        |  | 51-0407811                          
|(State or other jurisdiction of |  | (I.R.S. Employer Identification No.)
|incorporation or organization)  |  |                                     

140 Wicks Road, North Ryde, NSW, 2113 Australia
(Address of principal executive offices) (Zip Code)

(011) 61 2 8877- 6196
Registrants telephone number, including area code:



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

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

As of January 31, 2004, the number of shares outstanding of the issuers common
stock, $0.00000002 par value, was 56,938,000.



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##### 



MARSHALL EDWARDS, INC.

INDEX

|           |  |                                                                                                                                                                                           |  |     
|---------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                                                                                                                           |  | Page
|           |  |                                                                                                                                                                                           |  |     
|PART
I     |  | FINANCIAL INFORMATION                                                                                                                                                                     |  |     
|Item 1:    |  | Financial Statements (Unaudited)                                                                                                                                                          |  | 3   
|           |  | Consolidated Balance Sheets as of December 31, 2003 and June 30, 2003                                                                                                                     |  | 3   
|           |  | Consolidated Statements of Operations for the three months and six months
ended December 31, 2003 and 2002 and for the period from December 1, 2000
(inception) through December 31, 2003 |  | 4   
|           |  | Consolidated Statements of Cash Flows for the six months ended
December 31, 2003 and 2002 and for the period from December 1, 2000
(inception) through December 31, 2003                  |  | 5   
|           |  | Consolidated Statement of Stockholders Equity                                                                                                                                            |  | 6   
|           |  | Notes to Consolidated Financial Statements                                                                                                                                                |  | 7   
|Item 2:    |  | Managements discussion and Analysis of Financial Condition and
Results of Operation                                                                                                      |  | 13  
|Item 3:    |  | Quantitative and Qualitative Disclosures about Market Risk                                                                                                                                |  | 19  
|Item 4:    |  | Controls and Procedures                                                                                                                                                                   |  | 20  
|PART II    |  | OTHER INFORMATION                                                                                                                                                                         |  |     
|Item 2:    |  | Changes in Securities and Use of Proceeds                                                                                                                                                 |  | 21  
|Item 4:    |  | Submission of Matters to a Vote of Security Holders                                                                                                                                       |  | 23  
|Item 6:    |  | Exhibits and Reports on Form 8-K                                                                                                                                                          |  | 24  
|SIGNATURES |  | 25                                                                                                                                                                                       

2



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##### 



PART I FINANCIAL INFORMATION
Item 1: Financial Statements (Unaudited)

MARSHALL EDWARDS, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

|                                                                                                                                                                                                 |                                                     |                                                      |                                                |        |        |             |        |          |       |  |  | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------- | ---------------------------------------------------- | ---------------------------------------------- | ------ | ------ | ----------- | ------ | -------- | ----- |  |  | 
|                                                                                                                                                                                                 |                                                     |                                                      |                                                |        |        | December 31 |        | June 30 
|                                                                                                                                                                                                 |                                                     |                                                      |                                                |        |        | 2003        |        | 2003    
|                                                                                                                                                                                                 |                                                     |                                                      |                                                |        |        |             |        |         
|                                                                                                                                                                                                 |                                                     |                                                      |                                                |        |        | (unaudited) |        | (Note 1)
|                                                                                                                                                                                                 |                                                     |                                                      |                                                | ASSETS |        |             |        |          |       |  |  | 
|Current
          assets                                                                                                                                                                         |                                                     |                                                      |                                                |        |        |             |        |         
|                                                                                                                                                                                                 | Cash
          and cash equivalents                 | ****                                                 | **$**                                          | 32,304 | ****   | ****        | **$**  | 7,244    |      
|                                                                                                                                                                                                 | Prepaid
          expenses and other current assets | ****                                                 | ****                                           | 64     | ****   | ****        | ****   | 42       |      
|                                                                                                                                                                                                 | ****                                                | ****                                                 |                                                | ****   | ****   | ****        |        |         
|                                                                                                                                                                                                 |                                                     | Total
          current assets                       | ****                                           | ****   | 32,368 | ****        | ****   | ****     | 7,286 | 
|                                                                                                                                                                                                 | ****                                                | ****                                                 |                                                | ****   | ****   | ****        |        |         
|                                                                                                                                                                                                 |                                                     | Total
          assets                               | ****                                           | **$**  | 32,368 | ****        | ****   | **$**    | 7,286 | 
|                                                                                                                                                                                                 | ****                                                | ****                                                 |                                                | ****   | ****   | ****        |        |         
|                                                                                                                                                                                                 |                                                     |                                                      | LIABILITIES
          AND STOCKHOLDERS EQUITY |        |        |             |        |          |       |  | 
|Current
          liabilities                                                                                                                                                                    |                                                     |                                                      |                                                |        |        |             |        |         
|                                                                                                                                                                                                 | Accounts
          payable                          |                                                      | $                                              | 926    |        |             | $      | 433      |      
|                                                                                                                                                                                                 | Accrued
          expenses                          |                                                      |                                                | 526    |        |             |        | 278      |      
|                                                                                                                                                                                                 | Amount
          due to parent company              |                                                      |                                                | 5,245  |        |             |        | 642      |      
|                                                                                                                                                                                                 |                                                     |                                                      |                                                |        |        |             |        |          |      
|                                                                                                                                                                                                 |                                                     | Total
          current liabilities                  |                                                |        | 6,697  |             |        |          | 1,353 | 
|Stockholders
          equity:                                                                                                                                                                  |                                                     |                                                      |                                                |        |        |             |        |         
|Preferred
          stock, $0.01 par value, authorized 100,000 shares, none outstanding                                                                                                          |                                                     |                                                      |                                               |        |        |             |       |         
|Common
          stock, $0.00000002 par value, 113,000,000 authorized shares; shares
          issued and outstanding: 56,938,000 at December 31, 2003 and 52,032,000
          at June 30, 2003 |                                                     |                                                      |                                               |        |        |             |       |         
|Additional
          paid-in capital                                                                                                                                                             |                                                     |                                                      | 34,623                                         |        |        |             | 9,058  |         
|Deficit
          accumulated during development stage                                                                                                                                           |                                                     |                                                      | (8,952                                         | )      |        |             | (3,156 | )       
|Accumulated
          other comprehensive income                                                                                                                                                 |                                                     |                                                      |                                               |        |        |             | 31     |         
|                                                                                                                                                                                                 |                                                     |                                                      |                                                |        |        |             |        |          |      
|Total
          stockholders equity                                                                                                                                                             |                                                     |                                                      | 25,671                                         |        |        |             | 5,933  |         
|                                                                                                                                                                                                 |                                                     |                                                      |                                                |        |        |             |        |         
|                                                                                                                                                                                                 |                                                     | Total
          liabilities and shareholders equity |                                                | $      | 32,368 |             |        | $        | 7,286 | 
|                                                                                                                                                                                                 |                                                     |                                                      |                                                |        |        |             |        |         

See accompanying notes.

3



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MARSHALL EDWARDS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)

|                                           |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |      |        |            |        |    |        |        |        |                  |        |  
|------------------------------------------ | ----------------------------------- | ------------------------- | ------------------------ | ------ | ------------------ | ------ | ---------------- | ------ | ----------- | ---- | ---------- | ------ | ---- | ------ | ---------- | ------ | -- | ------ | ------ | ------ | ---------------- | ------ | -
|                                           |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |      |        |            |        |    |        |        |        | Period from     
|                                           |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |      |        |            |        |    |        |        |        | December 1,     
|                                           |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |      |        |            |        |    |        |        |        | 2000 (Inception)
|                                           |                                     |                           |                          |        | Three Months Ended |        | Six Months Ended |        | through    
|                                           |                                     |                           |                          |        | December 31,       |        | December 31,     |        | December 31
|                                           |                                     |                           |                          |        | 2003               |        | 2002             |        | 2003        |      | 2002       |        | 2003
|                                           |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |     
|Revenues:                                  |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |      |        |            |        |    |        |        |       
|                                           |                                     | Interest and other income |                          | $      | 25                 |        |                  | $      | 37          |      |            | $      | 46   |        |            | $      | 80 |        |        | $      | 198              |       
|                                           |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |      |        |            |        |    |        |        |        |                  |       
|                                           |                                     |                           | Total revenues           |        |                    | 25     |                  |        |             | 37   |            |        |      | 46     |            |        |    | 80     |        |        |                  | 198    |  
|                                           |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |      |        |            |        |    |        |        |       
|Operating expenses:                        |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |      |        |            |        |    |        |        |       
|                                           | Research
and development            |                           |                          | (346   | )                  |        |                  | (661   | )           |      |            | (1,129 | )    |        |            | (995   | )  |        |        | (3,222 | )               
|                                           | License fees                        |                           |                          | (4,250 | )                  |        |                  |       |             |      |            | (4,500 | )    |        |            |       |    |        |        | (5,000 | )               
|                                           | Selling, general and administrative |                           |                          | (174   | )                  |        |                  | (162   | )           |      |            | (281   | )    |        |            | (307   | )  |        |        | (968   | )               
|                                           | Foreign Exchange Gains(Losses)      |                           |                          | 63     |                    |        |                  | 63     |             |      |            | 68     |      |        |            | (27    | )  |        |        | 41     |                 
|                                           |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |      |        |            |        |    |        |        |        |                  |       
|                                           |                                     |                           | Total operating expenses |        |                    | (4,707 | )                |        |             | (760 | )          |        |      | (5,842 | )          |        |    | (1,329 | )      |        |                  | (9,149 | )
|                                           |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |      |        |            |        |    |        |        |       
|Loss from operations                       |                                     |                           | (4,682                   | )      |                    |        | (723             | )      |             |      | (5,796     | )      |      |        | (1,249     | )      |    |        | (8,951 | )     
|Income tax expense                         |                                     |                           |                         |        |                    |        |                 |        |             |      |           |        |      |        |           |        |    |        | (1     | )     
|                                           |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |      |        |            |        |    |        |        |        |                  |       
|Net loss arising during development stage  |                                     | $                         | (4,682                   | )      |                    | $      | (723             | )      |             | $    | (5,796     | )      |      | $      | (1,249     | )      |    | $      | (8,952 | )     
|                                           |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |      |        |            |        |    |        |        |       
|Net loss per common share:                 |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |      |        |            |        |    |        |        |       
|                                           | Basic and diluted                   |                           | $                        | (0.088 | )                  |        | $                | (0.014 | )           |      | $          | (0.110 | )    |        | $          | (0.024 | )  |        |        |        |                 
|                                           |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |      |        |            |        |    |        |        |       
|Weighted average common shares outstanding |                                     |                           | 53,356,097               |        |                    |        | 52,023,000       |        |             |      | 52,694,048 |        |      |        | 52,023,000 |        |    |        |        |       
|                                           |                                     |                           |                          |        |                    |        |                  |        |             |      |            |        |      |        |            |        |    |        |        |       

See accompanying notes.

4



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MARSHALL EDWARDS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

|                     |                                                                                           |                                           |       |                  |       |              |       |        |     |   |       |                  |       |  
|-------------------- | ----------------------------------------------------------------------------------------- | ----------------------------------------- | ----- | ---------------- | ----- | ------------ | ----- | ------ | --- | - | ----- | ---------------- | ----- | -
|                     |                                                                                           |                                           |       |                  |       |              |       |        |     |   |       | Period from     
|                     |                                                                                           |                                           |       |                  |       |              |       |        |     |   |       | December 1,     
|                     |                                                                                           |                                           |       |                  |       |              |       |        |     |   |       | 2000 (Inception)
|                     |                                                                                           |                                           |       | Six Months Ended |       | through     
|                     |                                                                                           |                                           |       | December 31,     |       | December 31,
|                     |                                                                                           |                                           |       | 2003             |       | 2002         |       | 2003  
|                     |                                                                                           |                                           |       |                  |       |              |       |       
|Operating activities |                                                                                           |                                           |       |                  |       |              |       |        |     |   |       |                 
|                     | Net loss arising during development stage                                                 |                                           | $     | (5,796           | )     |              | **$** | (1,249 | )   |   | **$** | (8,952           | )    
|                     | Adjustments to reconcile net loss to net cash
(used in) provided by operating activities: |                                           |       |                  |       |              |       |        |     |   |       |                  |      
|                     | Changes in operating assets and liabilities:                                              |                                           |       |                  |       |              |       |        |     |   |       |                  |      
|                     |                                                                                           | Prepaid expenses and other current assets |       |                  | (22   | )            |       |        | (9  | ) |       |                  | (64   | )
|                     |                                                                                           | Accounts payable                          |       |                  | (103  | )            |       |        | 215 |   |       |                  | 333   |  
|                     |                                                                                           | Accrued expenses                          |       |                  | (66   | )            |       |        |    |   |       |                  | 351   |  
|                     |                                                                                           | Amounts due to parent company             |       |                  | 4,500 |              |       |        |    |   |       |                  | 5,000 |  
|                     |                                                                                           |                                           |       |                  |       |              |       |        |     |   |       |                  |      
|                     | Net cash used in operating activities                                                     |                                           |       | (1,487           | )     |              |       | (1,043 | )   |   |       | (3,332           | )    
|Financing activities |                                                                                           |                                           |       |                  |       |              |       |        |     |   |       |                 
|                     | Net proceeds from issuance of Common Stock                                                |                                           |       | 25,565           |       |              |       |       |     |   |       | 34,623           |      
|                     | Amounts payable in connection with issuance of
Common Stock                               |                                           |       | 1,013            |       |              |       |       |     |   |       | 1,013            |      
|                     |                                                                                           |                                           |       |                  |       |              |       |        |     |   |       |                  |      
|                     | Net cash provided by financing activities                                                 |                                           |       | 26,578           |       |              |       |       |     |   |       | 35,636           |      
|                     | Effect of exchange rate changes on cash and cash
equivalents                              |                                           |       | (31              | )     |              |       |       |     |   |       |                 |      
|                     | Net increase (decrease) in cash and cash
equivalents                                      |                                           |       | 25,060           |       |              |       | (1,043 | )   |   |       | 32,304           |      
|                     | Cash and cash equivalents at beginning of period                                          |                                           |       | 7,244            |       |              |       | 9,164  |     |   |       |                 |      
|                     |                                                                                           |                                           |       |                  |       |              |       |        |     |   |       |                  |      
|                     | Cash and cash equivalents at end of period                                                |                                           | **$** | 32,304           |       |              | **$** | 8,121  |     |   | **$** | 32,304           |      
|                     |                                                                                           |                                           |       |                  |       |              |       |        |     |   |       |                 
|                     | Income taxes paid                                                                         |                                           |       |                 |       |              |       | 1      |     |   |       | 1                |      
|                     |                                                                                           |                                           |       |                  |       |              |       |        |     |   |       |                  |      

See accompanying notes.

5



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##### 



MARSHALL EDWARDS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS
EQUITY
(In thousands, except share data)
(Unaudited)

|                                                                                         |                              |  |              |  |                 |   |            |  |               |   |               |        |             |   |     |   |  |   |        |        |  
|---------------------------------------------------------------------------------------- | ---------------------------- |  | ------------ |  | --------------- | - | ---------- |  | ------------- | - | ------------- | ------ | ----------- | - | --- | - |  | - | ------ | ------ | -
|                                                                                         |                              |  |              |  |                 |   |            |  |               |   | Deficit       |        |             |   |     |   |  |   |       
|                                                                                         |                              |  |              |  |                 |   |            |  |               |   | accumulated   |        | Accumulated |   |     |   | 
|                                                                                         |                              |  |              |  |                 |   |            |  |               |   | during        |        | other       |   |     |   | 
|                                                                                         |                              |  |              |  |                 |   | Additional |  | development   |   | comprehensive |        |             |   |    
|                                                                                         |                              |  | Common Stock |  | paid in capital |   | stage      |  | income/(loss) |   | Total        
|                                                                                         |                              |  |              |  |                 |   |            |  |               |   |              
|                                                                                         |                              |  | (shares)     |  |                 |   |            |  |               |   |               |        |             |   |     |   |  |   |       
|Balance
          at June 30, 2003                                                       |                              |  | 52,032,000   |  |                 | $ | 9,058      |  |               | $ | (3,156        | )      |             | $ | 31  |   |  | $ | 5,933  |       
|Net
          loss arising during development                                            |                              |  |              |  |                 |   |            |  |               |   |               |        |             |   |     |   |  |   |       |       
|                                                                                         | stage                        |  |              |  |                 |   |            |  |               |   |               | (5,796 | )           |   |     |   |  |   |        | (5,796 | )
|Foreign
          currency translation adjustments                                       |                              |  |              |  |                 |   |            |  |               |   |               |        |             |   | (31 | ) |  |   | (31    | )     
|                                                                                         |                              |  |              |  |                 |   |            |  |               |   |               |        |             |   |     |   |  |   |        |       
|                                                                                         | Comprehensive
          Loss |  |              |  |                 |   |            |  |               |   |               |        |             |   |     |   |  |   |        | (5,827 | )
|Common
          Stock issued November 30, 2003                                          |                              |  | 2,514,000    |  |                 |   | 10,056     |  |               |   |               |        |             |   |     |   |  |   | 10,056 |       
|Common
          Stock issued December 18, 2003
          (including 2,392,000 warrants) |                              |  | 2,392,000    |  |                 |   | 15,509     |  |               |   |               |        |             |   |     |   |  |   | 15,509 |       
|                                                                                         |                              |  |              |  |                 |   |            |  |               |   |               |        |             |   |     |   |  |   |        |       
|Balance
          at December 31, 2003                                                   |                              |  | 56,938,000   |  |                 | $ | 34,623     |  |               | $ | (8,952        | )      |             | $ |    |   |  | $ | 25,671 |       
|                                                                                         |                              |  |              |  |                 |   |            |  |               |   |               |        |             |   |     |   |  |   |        |       

See accompanying notes.

6



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##### 



MARSHALL EDWARDS, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
December 31, 2003

1.      Organization and Basis of Preparation of Financial Statements

The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Registration S-X.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States for complete
financial statements. The Company believes all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months and six months ended
December 31, 2003 are not necessarily indicative of the results that may be
expected for the year ending June 30, 2004 or any other period. The balance
sheet at June 30, 2003 has been derived from the audited financial statements
at that date. The financial statements and notes should be read in conjunction
with the audited financial statements for the year ended June 30, 2003 which
were included in the Companys Amendment No. 3 to Form S-1 filed December 10,
2003.

Marshall Edwards, Inc. (the Company) is a development stage company
incorporated in December 2000 as a wholly-owned subsidiary of Novogen Limited,
an Australian pharmaceutical company. The Company commenced operations in May
2002. The Company, including its wholly-owned Australian subsidiary, Marshall
Edwards Pty. Limited (MEPL) (together the MEI Group) is a pharmaceutical
company with a primary focus on the development and commercialization of drugs
for the treatment of cancer. The Company is presently engaged in the clinical
development and commercialization of a drug candidate called phenoxodiol. The
Company intends to develop phenoxodiol for use in a wide range of human
cancers. The Company operates primarily in Australia and the United States.

Novogen Limited and its subsidiary companies, has granted to the MEI Group an
exclusive license under its patent applications and the intellectual property
rights in the relevant know-how to develop, market and distribute all forms of
administering phenoxodiol for anti-cancer uses except topical applications. In
addition, the MEI Group has an exclusive first right and an exclusive last
right to match any proposed dealings by Novogen with its intellectual rights
in synthetic compounds, developed by or on behalf of Novogen that have known or
potential anti-cancer applications in all forms other than topical application.

The MEI Groups initial business focus is to continue the clinical program
currently under way for the development and commercialization of phenoxodiol.

In May 2002, the Company sold 2,523,000 shares of its common stock and
2,523,000 warrants, raising proceeds of $9,022,000, net of $1,070,000 of
transaction costs. The warrants were exercisable prior to November 30, 2003 at
an exercise price of $4.00 per share. The common stock was listed for trading
on the London Stock Exchanges Alternative Investment Market (AIM).
Following the listing, Novogen Limited retained 95.1% of the Companys common stock.

7



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##### 



In June 2003, 9,000 warrants were exercised, resulting in proceeds to the
Company of $36,000. In November 2003 the remaining 2,514,000 warrants were
exercised at an exercise price of $4.00 per share with proceeds to the Company
of $10,056,000.

In December 2003, the Company sold 2,392,000 common stock units at a public
offering price of $7.50 per unit. Each common stock unit consisted of:



| |  |  | one share of common stock; and                                                                                              
| | - |  | ----------------------------------------------------------------------------------------------------------------------------
|
| |  |  | one warrant to purchase a share of common stock, exercisable
prior to December 18, 2006 at an exercise price equal to $9.00.

In connection with the December 2003 offering, the Companys common stock and
warrants commenced trading separately on the Nasdaq National Market. The
Company received proceeds of $15,509,000, net of $2,431,000 transaction costs
in the December 2003 offering. Following the offering, Novogen Limited
retained 86.9% of the Companys common stock.

2.      Accounting Policies

Revenue Recognition

Interest

The only revenue earned to date is interest on cash balances.

Principles of Consolidation

The consolidated financial statements include the accounts of Marshall Edwards,
Inc. and its wholly-owned subsidiary, Marshall Edwards Pty. Limited.
Significant intercompany accounts and transactions have been eliminated in
consolidation.

Estimates

The preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported
in the financial statements and the accompanying notes. Actual results could
differ from those estimates.

Cash and cash equivalents

Cash on hand and in banks and short-term deposits are stated at the nominal
value. The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.

8



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##### 



Income Taxes

Income taxes have been provided for using the liability method in accordance
with FASB Statement No. 109, Accounting for Income Taxes. Under this method,
deferred tax assets and liabilities are recognized and measured using enacted
tax rates in effect for the year in which the differences are expected to be
recognized. Valuation allowances are established against the recorded deferred
income tax assets to the extent that management believes that it is more likely
than not that a portion of the deferred income tax assets are not realizable.

Fair Value of Financial Instruments

The carrying amounts of the Companys financial instruments, including cash and
cash equivalents and accounts payable approximate fair value.

Foreign Currency Translation

The financial statements of MEPL have been translated into U.S. dollars in
accordance with FASB Statement No. 52, Foreign Currency Translation. Assets
and liabilities are translated into U.S. dollars using the exchange rates in
effect at the balance sheet date. Income statement amounts have been translated
using the average exchange rate for the periods. Realized gains and losses from
foreign currency transactions are reflected in the consolidated statements of
operations.

Research and Development Expenses

Research and development expenses relate primarily to the cost of conducting
human clinical trials of phenoxodiol. Research and development costs are
charged to expense as incurred.

Stock-Based Compensation

The Companys stock option plan provides for the grant of options to employees
of the Novogen Group. To date no options have been issued under the plan.

Basic and Diluted Loss Per Share

Basic and diluted earnings or loss per share is calculated in accordance with
FASB Statement No. 128, Earnings Per Share. In computing basic earnings or
loss per share, the dilutive effect of stock options are excluded, whereas for
diluted earnings per share they are included unless the effect is
anti-dilutive.

Comprehensive Loss

Comprehensive loss is comprised of net loss and other comprehensive loss. Other
comprehensive loss includes certain changes in shareholders equity that are
excluded from net loss. Comprehensive loss for all periods presented has been
reflected in the Consolidated Statement of Shareholders Equity.

9



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3.     Loss Per Share

The following table sets forth the computation of basic and diluted net loss
per common share:

|                                                                   |  |                    |            |                  |  |                                   |            |      |  |       |            |   |  |       |            |  
|------------------------------------------------------------------ |  | ------------------ | ---------- | ---------------- |  | --------------------------------- | ---------- | ---- |  | ----- | ---------- | - |  | ----- | ---------- | -
|                                                                   |  | Three Months Ended |            | Six Months Ended
|                                                                   |  | December 31        |            | December 31     
|                                                                   |  | 2003               |            | 2002             |  | 2003                              |            | 2002
|                                                                   |  |                    |            |                  |  |                                   |            |     
|                                                                   |  |                    |            |                  |  | (In Thousands, except share data) |            |      |  |      
|Numerator                                                          |  |                    |            |                  |  |                                   |            |      |  |       |            |   |  |       |            |  
|Net loss arising during development stage                          |  | **$**              | (4,682     | )                |  | **$**                             | (723       | )    |  | **$** | (5,796     | ) |  | **$** | (1,249     | )
|Effect of dilutive securities                                      |  |                    |           |                  |  |                                   |           |      |  |       |           |   |  |       |           |  
|                                                                   |  |                    |            |                  |  |                                   |            |      |  |       |            |   |  |       |            |  
|Numerator for diluted earnings per share                           |  | **$**              | (4,682     | )                |  | **$**                             | (723       | )    |  | **$** | (5,796     | ) |  | **$** | (1,249     | )
|                                                                   |  |                    |            |                  |  |                                   |            |      |  |       |            |   |  |       |            |  
|Denominator                                                        |  |                    |            |                  |  |                                   |            |      |  |       |            |   |  |       |            |  
|Denominator for basic earnings per share -
weighted-average shares |  |                    | 53,356,097 |                  |  |                                   | 52,023,000 |      |  |       | 52,694,048 |   |  |       | 52,023,000 |  
|Effect of dilutive securities                                      |  |                    |           |                  |  |                                   |           |      |  |       |           |   |  |       |           |  
|                                                                   |  |                    |            |                  |  |                                   |            |      |  |       |            |   |  |       |            |  
|Dilutive potential common shares                                   |  |                    | 53,356,097 |                  |  |                                   | 52,023,000 |      |  |       | 52,694,048 |   |  |       | 52,023,000 |  
|                                                                   |  |                    |            |                  |  |                                   |            |      |  |       |            |   |  |       |            |  

4.     Financial Instruments

The fair value of financial assets and liabilities approximates their carrying
value in the Consolidated Balance Sheets because they are short term and at
market rates of interest.

5.     Expenditure Commitments

At December 31, 2003, the Company had contracted to conduct research and
development expenditures of approximately $352,000. Such amounts are expected
to be incurred within the next year.

10



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6.     Segment Information

The Companys focus is to continue the clinical program currently underway for
the development and commercialization of phenoxodiol.

|                              |  |                    |        |                    |  |     |        |           |  |   |       |   |  |   |       |  
|----------------------------- |  | ------------------ | ------ | ------------------ |  | --- | ------ | --------- |  | - | ----- | - |  | - | ----- | -
|                              |  | Three Months Ended |        | Three Months Ended
|                              |  | December 31, 2003  |        | December 31, 2002 
|                              |  |                    |        |                   
|                              |  | USA                |        | Australia          |  | USA |        | Australia
|                              |  |                    |        |                    |  |     |        |          
|Loss from operations          |  | $                  | (45    | )                  |  | $   | (4,637 | )         |  | $ | (42   | ) |  | $ | (681  | )
|Segment assets at December 31 |  |                    | 35,417 |                    |  |     | 2,235  |           |  |   | 8,941 |   |  |   | 1,194 |  

|                     |  |                   |     |                   |  |     |        |           |  |   |     |   |  |   |        |  
|-------------------- |  | ----------------- | --- | ----------------- |  | --- | ------ | --------- |  | - | --- | - |  | - | ------ | -
|                     |  | Six Months Ended  |     | Six Months Ended 
|                     |  | December 31, 2003 |     | December 31, 2002
|                     |  |                   |     |                  
|                     |  | USA               |     | Australia         |  | USA |        | Australia
|                     |  |                   |     |                   |  |     |        |          
|Loss from operations |  | $                 | (51 | )                 |  | $   | (5,745 | )         |  | $ | (71 | ) |  | $ | (1,178 | )

7.      Related Party Transactions

License Agreement

The License Agreement is an agreement under which Novogen grants to MEPL a
worldwide non-transferable license to conduct clinical trials and commercialize
and distribute all forms of phenoxodiol except topical applications. The
agreement covers uses of phenoxodiol in the field of prevention, treatment or
cure of cancer in humans. The license is exclusive until the expiration of the
last relevant Novogen patent right in the world and thereafter is nonexclusive.
MEPL or Novogen may terminate the agreement with three months notice. Amounts
payable to Novogen under terms of the license agreement are as follows:



| | 1. |  | A lump sum license fee of $5,000,000 is payable to Novogen on
November 1, 2002 or later on the date when the cumulative total of all
funds received from debt or equity issuances and revenue received from
commercialization (income other than sales) and sales of phenoxodiol
products exceeds $25,000,000. A lump sum license fee of $5,000,000
became payable to Novogen in December 2003 and was paid on February 5,
2004.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | A lump sum license fee of $5,000,000 is payable to Novogen on
November 1, 2003 or later on the date when the cumulative total of all
funds received from debt or equity issuances and revenue received from
commercialization (income other than sales) and sales of phenoxodiol
products exceeds $50,000,000.                                                                                                                  

In addition to the amounts above, MEPL must pay Novogen 2.5 % of all net sales
and 25% of commercialization income. After the exclusivity period of the
license, 1.5% of net sales must be paid to Novogen.

Amounts payable for milestone license fees under the License Agreement for the
calendar years

11



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ended December 31 are as follows:

|                              |      |  |           |           | 
|----------------------------- | ---- |  | --------- | --------- | 
|Calendar Year                 |      |  |           |          
|                              |      | 
|                              | 2004 |  |           | 2,000,000 | 
|                              | 2005 |  |           | 4,000,000 | 
|Each calendar year thereafter |      |  | 8,000,000 |          

Any amounts payable to Novogen under the above milestone payments will be
reduced for amounts paid under the lump sum license fee requirements above.

License Option Deed

The License Option Deed grants MEPL an exclusive right to accept and an
exclusive right to match any proposed third-party dealing by Novogen of its
intellectual property rights in other synthetic compounds that have known or
potential anti-cancer applications in all forms other than topical
applications.

Services Agreement

Neither MEI nor MEPL currently intends to directly employ any staff and Novogen
will provide or procure services reasonably required by the MEI Group relating
to the development and commercialization of phenoxodiol. Novogen will provide
these services at cost plus a 10% mark-up. The Company may terminate the
agreement with three months notice.

Manufacturing License and Supply Agreement

Under the terms of the Manufacturing License and Supply Agreement, Novogen will
supply phenoxodiol in its primary manufactured form for the clinical trial
development program and phenoxodiols ultimate commercial use. Novogen will
supply phenoxodiol at cost plus a 50% markup. The Company or Novogen may
terminate the agreement at any time.

Transactions amounting to $441,989 and $906,456 were made under the Services
Agreement and the Manufacturing License and Supply Agreement with Novogen
during the three months and six months ended December 31, 2003, respectively,
and $179,170 is included in accounts payable at December 31, 2003.

12



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Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operation

Special Note Regarding Forward-Looking Statements

This quarterly report includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Security Exchange Act of 1934, as amended. All statements other than
statements of historical facts contained in this quarterly report, including
statements regarding the future financial position, business strategy and plans
and objectives of management for future operations, are forward-looking
statements. The words believe, may, will, estimate, continue,
anticipate, intend, should, plan, expect, and similar expressions, as
they relate to the Company, are intended to identify forward-looking
statements. The Company has based these forward-looking statements largely
on current expectations and projections about future events and financial
trends that it believes may affect financial condition, results of operations,
business strategy and financial needs. These forward-looking statements are
subject to a number of risks, uncertainties and assumptions, including, among
other things:



| |  |  | receipt of regulatory approvals;               
| | - |  | -----------------------------------------------
|
| |  |  | successful completion of clinical trials;      
|
| |  |  | future expenses and financing requirements; and
|
| |  |  | competition and competitive factors.           

These risks are not exhaustive. Other sections of this quarterly report may
include additional factors which could adversely impact business and financial
performance. Moreover, the Company operates in a very competitive and rapidly
changing environment. You should not rely upon forward-looking statements as
predictions of future events. The Company cannot assure you that the events
and circumstances reflected in the forward-looking statements will be achieved
or occur. Although it believes that the expectations reflected in the
forward-looking statements are reasonable, the Company cannot guarantee future
results, levels of activity, performance or achievements.

The following discussion is qualified in its entirety by, and should be read in
conjunction with, the more detailed information set forth in financial
statements and the notes thereto appearing elsewhere in this report.

Overview

The Company is a development stage company incorporated on December 1, 2000 as
a wholly-owned subsidiary of Novogen. The Company commenced operations in May
2002 and its business purpose is the development and commercialization of
drugs for the treatment of cancer. The Company is presently engaged in the
clinical development of the anti-cancer drug phenoxodiol. Novogen has granted
to the Company an exclusive non-transferable license under its patent rights
and intellectual rights in its relevant know-how to develop market and
distribute all forms of administering phenoxodiol for anti-cancer uses, except
topical applications. Novogen currently owns approximately 86.9% of the
outstanding shares of common stock.

The Companys main focus during fiscal 2003 and in the first half of fiscal
2004 was to undertake human clinical testing of phenoxodiol. The Company does
not employ any staff directly but obtain services from Novogen under a services
agreement. The Company has

13



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incurred losses since inception and expects to incur operating losses and
generate negative cash flows from operations for the foreseeable future as it
expands research and development activities and moves phenoxodiol into later
stages of development. As of December 31, 2003, the Company had accumulated
losses of $8,952,000.

Expenses have consisted primarily of costs associated with conducting the
clinical trials of phenoxodiol and costs incurred under the license agreement
and the services and manufacturing agreements with Novogen including the costs
of the clinical trial drug supplies.

To date, operations have been funded primarily through the sale of equity
securities.

The Company expects that quarterly and annual operating results of operations
will fluctuate for the foreseeable future due to several factors including the
timing and extent of research and development efforts and the outcome and
extent of clinical trial activities. The Companys limited operating history
makes accurate prediction of future operating results difficult or impossible.

Critical Accounting Estimates

The preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported
in the financial statements and the accompanying notes. Actual results could
differ from those estimates.

Estimates have been used in determining the expense liability under certain
clinical trial contracts where services have been performed but not yet
invoiced. The actual costs of those services could differ in amount and timing
from the estimates used in completing the financial results.

Clinical trial expenses of $342,000 have been included in the financial
statements for the six months ended December 31, 2003, of which $351,000 had
been accrued at December 31, 2003. These estimates are based on the number of
patients in each trial and the patient treatment cycle.

Clinical research contracts may vary depending on the clinical trial design and
protocol. Generally the costs, and therefore estimates, associated with
clinical trial contracts are based on the number of patients, patient treatment
cycles, the type of treatment and the outcome being measured. The length of
time before actual amounts can be determined will vary depending on length of
the patient cycles and the timing of the invoices by the clinical trial
partners.

Results of Operations

The Company recorded a consolidated loss of $5,796,000 and $1,249,000 for the
six months ended December, 31, 2003 and 2002, respectively. The Company recorded a
consolidated loss of $4,682,000 and $723,000 for the three months ended
December 31, 2003 and 2002, respectively. The Company has not generated any
revenues from
operations since inception.

14



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The Company has, however received interest on cash assets of $135,000 from
December 1, 2000 to December 31, 2003.

The Companys consolidated operating expenses for the six months ended December
31, 2003 were $5,842,000 versus $1,329,000 for the six months ended December
31, 2002. Significant items of operating expenses include the costs associated
with conducting clinical trials of pheneoxodiol, license fees, research and
development, selling general and administrative expenses and foreign exchange
gains and losses. For the six months ended December 31, 2003 and 2002 operating
expenses included $342,000 and $546,000, respectively, of costs associated with
conducting the clinical trials of phenoxodiol. The license fee of $5,000,000
became due and payable in December 2003 under the terms of the licensing
agreement with Novogen following the exercise of warrants and the receipt of
proceeds from the offering completed in December 2003. As a result, $4,500,000
of license fee expense is included in the Consolidated Statement of Operations
for the six months ended December 2003. The remaining $500,000 had been
expensed in the year ended June 2003. Costs incurred under the services and
manufacturing agreements with Novogen including the costs of the clinical trial
drug supplies were $906,000 and $576,000 for the six months ended December 31,
2003 and 2002 respectively. The increase in costs incurred under the services
and manufacturing agreements related mainly to increased cost of the drug used
in clinical trials reflecting the higher drug doses used in clinical trials
during the six months ended December 31, 2003.

Consolidated operating expenses for the three months ended December 31 2003
were $4,707,000 versus $760,000 for the three months ended December 31, 2002.
Major operating expenses in the three months ended December 31, 2003 included
$4,250,000 of license fees incurred under the license agreement with Novogen.
This amount represents the remaining amount of the $5,000,000 license fee due
to Novogen following the exercise of warrants and the receipt of proceeds from
the offering completed in December 2003. During the three months ended December
31, 2003 $473,000 was included as costs incurred under the terms of the
services and manufacturing agreements with Novogen including the costs of the
clinical trial drug supplies, compared to $254,000 for the three months ended
December 31, 2002.

Research and Development Expenses

Research and development expenses consist mainly of clinical trial
expenditures, payments to Novogen for research support services under the terms
of the services agreement and the cost of phenoxodiol used in the clinical
trials supplied by Novogen under the terms of the manufacturing license and
supply agreement. Research and development expenses were $1,129,000 for the six
months ended December 31, 2003, compared to $995,000 for the six months ended
December 31, 2002, an increase of $134,000. The increase was mainly due to the
increased cost of drug supplied for clinical trials. Research and development
expenses amounted to $346,000 for the three months ended December 31, 2003,
down from $661,000 for the three months ended December 31, 2002. This decrease
was due to the reduction in accrued clinical trial expenses reflecting the
smaller patient numbers being treated as the current clinical trials near
completion.

Research and development costs incurred since inception through December 31,
2003 amount to $3,222,000.

15



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Research and development costs are expensed as they are incurred and are
expected to increase in the future as the phenoxodiol clinical program
progresses.

Historical research and development costs and clinical trial costs have not
been documented on a project by project basis. In addition, research and
development resources are supplied by Novogen across several projects. As a
result, the costs incurred for each clinical project cannot be stated precisely
on a project by project basis.

The Company expects that a large percentage of research and development
expenses in the future will be incurred in support of current and future
clinical development programs. These expenditures are subject to a number of
uncertainties in timing and cost to completion.

The duration and cost of clinical trials may vary significantly over the life
of a project as a result of:



| |  |  | the number of sites included in the trials;               
| | - |  | ----------------------------------------------------------
|
| |  |  | the length of time required to enroll suitable patients;  
|
| |  |  | the number of patients that participate in the trials; and
|
| |  |  | the efficacy and safety profile of the product.           

The Companys strategy also includes the option of entering into collaborative
arrangements with third parties to participate in the development and
commercialization of phenoxodiol. In the event third parties have control over
the clinical development process, the completion date would largely be under
the control of that third party.

As a result of these uncertainties, the Company is unable to determine the
duration of or completion costs for research and development projects or when
and to what extent it will receive cash inflows from the commercialization and
sale of phenoxodiol.

The Company intends to continue the clinical development of phenoxodiol and to
assess the opportunity to license other cancer drugs developed by Novogen as
the opportunities arise.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist mainly of expenses
associated with accounting and auditing, professional fees public relations and
administration fees paid to Novogen under the terms of the services agreement.
Total selling, general and administrative expenses for the six months ended
December 31, 2003 were $281,000 a decrease of $26,000 verses the six months
ended December 31, 2002 amount of $307,000. The decrease was primarily due to a
reduction in public relation expenses and legal fees, partially offset by an
increase in share registry costs. Selling general and administrative expenses
amounted to $174,000 for the three months ended December 31, 2003, an increase
of $12,000 over the three months ended December 2002.

16



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Foreign Exchange Gains/(Losses)

Foreign exchange gains/losses occur when revaluing cash denominated in foreign
currencies and upon consolidation of MEIs wholly owned Australian subsidiary
Marshall Edwards Pty Ltd (MEPL), which has US dollars as its functional
currency and also has foreign currency transactions. Further, MEPLs accounts
and financial statements are denominated in Australian dollars. For the six
months ended December 31, 2003 exchange gains were $68,000 compared to exchange
losses of $27,000 for the six months ended December 31, 2002. Foreign exchange
gains were $63,000 for the three months ended December 31, 2003 and $63,000 for
the three months ended December 31, 2002.

Liquidity and Capital Resources

At December 31, 2003, the Company had cash resources of $32,304,000 compared to
$7,244,000 at June 30, 2003. The increase is due almost exclusively to the sale
of common stock through the exercise of warrants in November 2003 and as a
result of a public offering of common stock units in December 2003. Funds are
invested in short-term money market accounts, pending use. The implementation
of the business plan is dependent on the Companys ability to maintain adequate
cash resources to complete the clinical development program.

Cash used in operating activities for the six months ended December 31, 2003
was $1,487,000 compared to $1,043,000 for the same period in 2002. The loss
from operations of $5,796,000 for the six months ended December 31, 2003
included a provision of $4,500,000 representing the amounts due to Novogen
under the terms of the licence agreement ($500,000 had been provided in the
prior year). The increase in cash outflow of $444,000 resulted from payments of
operating expenses including clinical trial costs and drug supplies.

Cash provided from financing activities for the six months ended December 31,
2003 was $26,578,000.

In November 2003, 2,514,000 warrants were exercised at an exercise price of
$4.00. These warrants were issued as part of the sale of common stock in May
2002. Proceeds from the exercise of the warrants were $10,056,000.

In December 2003, the Company completed an initial public offering in the
United States of 2,392,000 common stock units at an initial public offering
price of $7.50 per unit. Each common stock unit consists of:



| |  |  | one share of common stock; and                                                      
| | - |  | ------------------------------------------------------------------------------------
|
| |  |  | one warrant to purchase a share of common stock at an
exercise price equal to $9.00.

The net proceeds of the December 2003 offering to the Company were
approximately $15,509,000. At December 31, 2003 offering expenses of $1,013,000
were included in accounts payable and accrued expenses.

17



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The Company intends to use the proceeds of the offering as follows:



| |  | Approximately $1.1 million to commence Phase II clinical trials of
phenoxodiol as a monotherapy in earlier stage cancers;                                                                                                                                                                             
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Approximately $4.2 million to commence Phase II clinical trials of
phenoxodiol in combinational therapy with other anti-cancer drugs for
late stage chemo-resistant tumors; and                                                                                                                       
| 
| |  | The balance for other corporate purposes, including potential payments
to Novogen under the terms of the license agreement, potential
licensing of other cancer compounds developed by Novogen and potential
expansion of the clinical trial program for phenoxodiol to include
other forms of cancer.

Based on current plans, the Company believes that it will have sufficient cash
resources to fund operations at least through the end of the current fiscal
year and to complete the current Phase lb/IIa and Phase II clinical trial
program, commence Phase II clinical trials of phenoxodiol as a monotherapy in
early stage cancer, and to commence Phase II clinical trials of phenoxodiol in
combinational therapy with other anti-cancer drugs for late stage chemo
resistant tumors. Ongoing operations through the conduct of the clinical trial
program will continue to consume cash resources without generating revenues.

If the Phase III clinical program, which is a multi-center study measuring
efficacy in a large number of patients is undertaken, additional funds will be
required to complete the program. The Company is not able to reasonably
estimate at this time either the amount required or when that amount will need
to be raised. This will to a large extent be influenced by the number of
patients enrolled in the trial, which can only be determined accurately upon
completion of Phase II trials. If the Phase II trials are successful the
Company will seek to raise the funds required to complete Phase III trials or
enter into a collaborative arrangement with a major pharmaceutical company.

The Company must pay amounts to Novogen under the license agreement with
Novogen when certain milestones are met. For details of the amounts payable see
note 7 to the Financial Statements Related Party Transactions, included under
Item 1.

The Company does not intend to incur any significant capital expenditures in
the foreseeable future.

18



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Item 3: Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

The Company places cash in on call deposits with high quality financial
institutions.

The Company does not use derivative financial instruments.

The Company does not consider the effects of interest rate movements to be a
material risk to its financial condition.

Foreign Currency Risk

The Company conducts a portion of its business in various currencies, primarily
in U.S. and Australian dollars. At December 31, 2003, the Company had not
established a foreign currency hedging program. Net foreign exchange gains
during the six months ended December 31, 2003 were $68,000 compared with net
exchange losses of $27,000 during the six months ended December 31, 2002.
Foreign exchange losses occur upon consolidation of the
Companys wholly-owned subsidiary Marshall Edwards Pty Ltd
which has a U.S. dollar functional currency and also has foreign currency
transactions and whose accounts are denominated in Australian dollars.

The Company does not consider the effects of foreign currency movements to be a
material risk to its financial condition.

19



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Item 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures

At the end of the period covered by this report, the Companys management, with
the participation of the Companys principal executive officer and principal
financial officer, evaluated the effectiveness of the Companys disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended). Based on that evaluation, the
Companys principal executive officer and principal financial officer have
concluded that the Companys disclosure controls and procedures were designed
and were functioning effectively to provide reasonable assurance that the
information required to be disclosed by the Company in reports filed under the
Securities Exchange Act of 1934 was recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commissions rules and forms.

Changes in Internal Controls

There were no changes in the Companys internal controls over financial
reporting during the three months ended December 31, 2003 that have materially
affected, or are reasonably likely to materially affect, the Companys internal
control over financial reporting.

Limitations on the Effectiveness of Controls

The Company believes that a control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Because of inherent limitations in
all control systems, no evaluation of controls can provide absolute assurance
that all control issues, if any, within a company have been detected.

20



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PART II OTHER INFORMATION
Item 2: Changes in Securities and Use of Proceeds

(c)     In November 2003, the Company issued 2,514,000 shares of common stock upon
the exercise of 2,514,000 of the warrants issued in May 2002. Shares of 875,000
were issued upon exercise of the warrants to Oppenheimer International Growth
Funds, 875,000 of the shares issued upon exercise of the warrants were issued
to Mass Mutual International Equity Fund, 175,000 of the shares upon exercise
of the warrants were issued to MEI Phase II LP, 100,000 of the shares issued
upon exercise of the warrants were issued to Fosters Stockbroking Nominees Pty
Ltd, 20,000 of the shares issued upon exercise of the warrants were issued to
Mr. John P. OConnor, 110,000 of the shares issued upon exercise of the
warrants were issued to Leominster Company Ltd., 168,500 of the shares issued
upon exercise of the warrants were issued to Liberty Square Offshore Partners,
81,500 of the shares issued upon exercise of the warrants were issued to
Liberty Square Partners LP, 100,000 of the shares issued upon exercise of the
warrants were issued to ELL & Co. and 9,000 of the shares issued upon exercise
of the warrants were issued to Winterflood Securities Ltd. The Company received
$10,056,000 in connection with the exercise of the warrants. No general
solicitation was made by either the Company or any person acting on its
behalf; the shares issued upon exercise of the warrants are subject to transfer
restrictions; and certificates for the shares contain appropriate legends
stating that such securities have not been registered under the Securities Act
and may not be offered or sold absent registration or pursuant to an exemption
therefrom. No underwriters were involved in the foregoing sales of securities.
These transactions were exempt from registration pursuant to Section 4(2) of
the Securities Act of 1933 or Regulation S promulgated thereunder with respect
to the securities offered and sold outside the United States to investors who
were neither citizen nor residents of the United States.

(d)     The effective date of the registration statement (Registration No.
333-109129) filed on Form S-1 and registration statement (Registration No.
333-111291) filed on Form S-1 pursuant to Rule 462(b), both relating to the
initial public offering in the United States of common stock units (each unit
consisting of one share of the Companys common stock and one warrant to
purchase a share of the Companys common stock at an exercise price of $9.00
per share), was December 17, 2003. The Company registered a total of (i)
2,392,000 common stock units at an aggregate offering price of $15,640,000;
(ii) 2,392,000 shares of common stock underlying the units; (iii) 2,392,000
warrants underlying the units and (iv) 2,392,000 shares of common stock
underlying the warrants. The Company sold 2,392,000 common stock units at a
price of $7.50 per unit for an aggregate offering price of $17,940,000. Janney
Montgomery Scott LLC acted as underwriter and dealer manager for the offering.
The offering commenced on December 18, 2003 and closed on December 23, 2003.
Proceeds to the Company from the offering, after deduction of underwriting
discounts and commissions of approximately $806,000 and offering costs of
approximately $1.6 million, totalled approximately $15.5 million. None of the
expenses incurred in the offering were direct or indirect payments to
directors, officers, general partners or their associates, to persons owning
10% or more of any class of equity securities or to affiliates. As of December
31, 2003, the Company had not used any of the proceeds of the offering. During the
period following the offering through December 31, 2003, the Company had
sufficient cash resources on hand before taking into account the proceeds of
the offering to meet working capital and other needs. All proceeds of the
offering have been invested in short-term money market accounts.

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The Company intends to use the amount invested in short-term money market
accounts as follows:



| |  | Approximately $1.1 million to commence Phase II clinical trials of
phenoxodiol as a monotherapy in earlier stage cancers;                                                                                                                                                                             
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Approximately $4.2 million to commence Phase II clinical trials of
phenoxodiol in combinational therapy with other anti-cancer drugs for
late stage chemo-resistant tumors; and                                                                                                                       
| 
| |  | The balance for other corporate purposes, including potential payments
to Novogen under the terms of the license agreement, potential
licensing of other cancer compounds developed by Novogen and potential
expansion of the clinical trial program for phenoxodiol to include
other forms of cancer.

On February 5, 2004, $5 million of the offering proceeds were paid to Novogen
pursuant to the license agreement.

The occurrence of unforeseen events, opportunities or changed business
conditions, however, could cause us to use the net proceeds of the U.S. initial
public offering in a manner other than as described above.

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##### 



Item 4: Submission of Matters to a Vote of Security Holders

On December 9, 2003, the Company held its annual meeting of stockholders. At
the meeting, Stephen Breckenridge and Professor David M. de Kretser were
elected as directors by the stockholders to hold office until the annual
meeting of stockholders in 2006 and until their respective successors are
elected and qualified.

The votes with respect to the election of directors were cast in the following
manner:

|                              |  |                   |  |          |   |  |  | 
|----------------------------- |  | ----------------- |  | -------- | - |  |  | 
|                              |  | For               |  | Withheld
|                              |  |                   |  |         
|Name                          |  | (number of votes)
|                              |  |                  
|Stephen Breckenridge          |  | 49,695,000        |  |          | 0 | 
|Professor David M. de Kretser |  | 49,695,000        |  |          | 0 | 

The following are each of the Companys other directors whose term of office as
a director continued after the meeting: Dr. Graham Edmund Kelly; Christopher
Naughton; Philip Andrew Johnston; and Professor Paul John Nestel.

Stockholders who intend to present proposals at the 2004 Annual Meeting of
Stockholders must insure that such proposals are received by the Secretary not
later than June 16, 2004. Such proposals must meet the requirements of SEC
regulations to be eligible for inclusion in the Companys 2004 proxy materials.

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Item 6: Exhibits and Reports on Form 8-K

a) Exhibits

Exhibit Index

|         |  |                                                                                                                                                 
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibits |  |                                                                                                                                                 
|         |  |                                                                                                                                                 
|3.1      |  | Amended and Restated Certificates of Incorporation. (1)                                                                                         
|        
|3.2      |  | Amended and Restated Bylaws. (1)                                                                                                                
|        
|4.2      |  | Specimen Stock Certificate. (1)                                                                                                                 
|        
|31.1     |  | Certification required by Rule 13a-14(a) or Rule 15d-14(a)                                                                                      
|        
|31.2     |  | Certification required by Rule 13a-14(a) or Rule 15d-14(a)                                                                                      
|        
|32       |  | Certification required by Rule 13a-14(b) or Rule 15d-14(b) and
section 1350 of Chapter 63 of Title 18 of the United States Code (18
U.S.C 1350).



|(1) |  | Incorporated by reference to exhibits to the Registration
Statement on Form S-1 filed on December 18, 2003, as amended (Reg. No.
333-109129).
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | The Company did not file any reports on Form 8-K during the three
months ended December 31, 2003.                                            

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                        |  |                                                          
|----------------------- |  | ---------------------------------------------------------
|                        |  | MARSHALL EDWARDS, INC.                                   
|                        |  |                                                          
|                        |  | /s/ DAVID SEATON                                         
|                        |  |                                                          
|                        |  | David R. Seaton                                          
|                        |  | Chief Financial Offer                                    
|                        |  | (Duly Authorized Officer and
Principal Financial Officer)
|                        |  |                                                          
|Date: February 10, 2004 |  |                                                          

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