U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-KSB
                                   (Mark One)
[X]       Annual Report Under Section 13 or 15(d) of the Securities Exchange Act
          of 1934 For the fiscal year ended December 31, 1998

[ ]     Transition Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934
                         Commission File Number: 0-21994

                             GLYKO BIOMEDICAL, LTD.
        (Exact name of small business issuer as specified in its charter)

            Canada                                   98-0195569
 (State of other jurisdiction of           (I.R.S. Employer Identification No.)
   incorporation or organization)

            371 Bel Marin Keys Blvd., #210, Novato, California 94949
               (Address of principal executive offices) (Zip Code)

                  Registrant's telephone number: (415) 382-3500



         Securities registered under Section 12(g) of the Exchange Act:
                           Common Stock, no par value
                                (Title of Class)

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

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure  will be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by  reference  in Part III to the Form 10-KSB or any  amendment to
this Form 10-KSB. X

State issuer's revenues for its most recent fiscal year: $1,159,916.

State the aggregate market value of the voting and non-voting common equity held
by  non-affiliates  computed  by  reference  to the price at which the stock was
sold,  or the average bid and asked  prices of such  equity,  $59,635,000  as of
February 28, 1999.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:  29,564,029 common shares outstanding
as of February 28, 1999.

Transitional small business disclosure format (check one)  Yes  No X


<PAGE>




                              GLYKO BIOMEDICAL, LTD.

                                     Part I

Item 1.   Description of Business

Glyko Biomedical,  Ltd. ("GBL" or the "Company") was incorporated by Certificate
and  Articles of  Incorporation  under the laws of Canada on June 26,  1992.  On
December  21,  1992,  simultaneously  with an  initial  public  offering  of the
Company's Common Shares on The Toronto Stock Exchange,  the Company acquired, in
a stock for stock exchange, 100 percent of the outstanding shares of Glyko, Inc.
incorporated on October 15, 1990,  under the laws of Delaware,  upon an exchange
of shares with the stockholders of Glyko, Inc. GBL was incorporated for the sole
purpose of acquiring Glyko, Inc. Both entities were under common control and the
share  exchange  was  accounted  for  in a  manner  similar  to a  pooling.  The
registered  office of the Company is Scotia  Plaza,  Suite 2100,  40 King Street
West, Toronto, Canada M5H 3C2.

On  October  25,  1996,  the  Company  formed   BioMarin   Pharmaceutical   Inc.
("BioMarin"),  a corporation incorporated under the laws of Delaware, to develop
the Company's  pharmaceutical  products. The principal office of BioMarin is 371
Bel Marin Keys Blvd., #210, Novato, California 94949.

BioMarin first began business on March 21, 1997 and issued  1,500,000  shares of
common  stock to GBL for  $1.5  million.  As  consideration  for the  grant of a
license to certain of Glyko, Inc.'s intellectual  property pursuant to a license
agreement  dated June 26,  1997,  BioMarin  issued GBL an  additional  7,000,000
shares of BioMarin  common stock.  At that time GBL held 100% of the outstanding
capital stock of BioMarin.  Beginning in October 1997,  BioMarin  raised capital
from third  parties with the result that at December 31, 1997,  GBL's  ownership
interest in BioMarin had been reduced to 41.3% of BioMarin's outstanding capital
stock.  As of December  31,  1997,  the  Company  began  recording  its share of
BioMarin's net loss utilizing the equity method of accounting. On June 30, 1998,
BioMarin raised net proceeds of $3.3 million as  consideration  for the issuance
of 598,535  shares  including a $1.0 million  investment  from GBL. On August 3,
1998 BioMarin raised an additional net proceeds of $8.1 million as consideration
for the issuance of 1,416,800  shares from third parties.  On September 4, 1998,
BioMarin received $8 million from Genzyme Corp.  ("Genzyme") upon execution of a
joint venture  agreement  pursuant to which BioMarin issued  1,333,333 shares of
common stock to Genzyme.  As a result of this joint venture agreement,  BioMarin
has a 50% interest in the income or loss of the joint venture,  BioMarin/Genzyme
LLC.


On October 7, 1998,  BioMarin acquired Glyko,  Inc., in a transaction  valued at
$14,500,500.  As  consideration  for the  acquisition of all of the  outstanding
shares of Glyko,  Inc.,  BioMarin issued 2,259,039 shares of common stock to the
Company,  assumed Glyko,  Inc.'s employee stock options  exercisable for 255,540
shares of BioMarin common stock, and paid $500 in cash. After this  transaction,
the Company's ownership of BioMarin was 41.7 percent at December 31, 1998.

BioMarin's  business comprises two segments.  BioMarin's Analytic and Diagnostic
Products  segment  represents the business  conducted on a stand-alone  basis by
Glyko,  Inc. while the  Pharmaceutical  Products segment  represents  BioMarin's
pharmaceutical development activities.

Since  its  inception,   the  Company  has  incurred  a  cumulative  deficit  of
$19,080,000  and GBL expects to continue to incur losses  during 1999 due to its
share of BioMarin's net loss resulting from the ongoing research and development
of BioMarin's  pharmaceutical  product candidates.  As a result of GBL's sale of
Glyko,  Inc.  on  October  7,  1998,  GBL has no  operating  activities  or paid
employees and its principal  asset is its  investment in BioMarin.  Accordingly,
without  further  investment  in other  companies  or  technologies,  management
believes that GBL has sufficient cash to sustain planned  operations.  While GBL
is not obligated to provide this capital,  in April,  1999, the Company  entered
into a convertible  note  arrangement with BioMarin in the amount of $4,300,000,
as part of a $26,000,000  convertible  note financing  which was closed on April
13, 1999.  BioMarin has an  accumulated  deficit of  $15,076,419 at December 31,
1998 and is  expected  to  incur  significant  losses  during  1999 and  beyond.
Management of BioMarin  believes that the  convertible  note  financing  will be
sufficient to meet its minimum  obligations  through December 31, 1999. However,
BioMarin  will seek  additional  financing in the near term to fully execute its
business strategies and meet its longer term obligations. Management of GBL does
not believe  that at December  31, 1998,  there has been any  impairment  of its
investment in BioMarin.

                                       1

<PAGE>





Pharmaceutical Products

BioMarin  is  currently  developing  pharmaceutical  products  through  its  own
internal  operations  and through  research  grants with  various  universities.
BioMarin has completed  pivotal  trials of its lead enzyme  replacement  product
("BM101") for Mucopolysaccharidosis  (MPS) I, a crippling and fatal disease that
afflicts young  children.  A Phase I pivotal trial was conducted under a Company
Investigational New Drug (IND) application that encompassed 10 patients with all
levels of severity of MPS I. BioMarin  received orphan drug  designation for its
enzyme  replacement  therapy in September 1997,  allowing BioMarin to market the
product  exclusively for seven years following U.S. Food and Drug Administration
("FDA")  approval if it is the first to gain such approval.  BioMarin focuses on
the development of products in five therapeutic  areas:  genetic diseases,  burn
and  wound  care,  fungal   infections,   male  pro-fertility  and  inflammation
(initially  psoriasis).  This  development  process  will  require  funding  and
BioMarin plans to raise additional cash to fund these projects.  BioMarin cannot
assure you that such funds will be  available or that this  development  process
will be successful.

BioMarin's Analytic and Diagnostic Products

Analytic Products

BioMarin manufactures and sells the following products:

-    A series of kits with chemicals,  enzymes, pre-cast gels, and standards for
     performing analyses of carbohydrates.
-    A  carbohydrate  analytical  system  based  on  electrophoresis   including
     computer   controlled   imaging  system  for  sample  analysis  and  report
     preparation.
-    Research products including carbohydrate enzymes, standards and related 
     materials.
-    Copyrighted, proprietary software for image analysis and data manipulation.

Products are marketed directly and through  authorized  distributors.  Customers
include  distributors of research products,  university  research  laboratories,
biotechnology companies and pharmaceutical companies.

Diagnostic Products

BioMarin's  FACE(R)  diagnostic  technology  gives  clinicians the capability to
detect the presence of specific  carbohydrate markers indicating certain disease
states.

In November 1995, Glyko,  Inc. received approval from the United States Food and
Drug Administration to market its diagnostic test for Lysosomal Storage 
Diseases, the Urinary Carbohydrate Analysis Test Kit.

A second-year SBIR II Grant in the amount of $290,234 was awarded for the period
from June 1, 1998, to May 31, 1999 to develop a  second-generation  confirmatory
test of Lysosomal Storage diseases

Patents and Trade Secrets

BioMarin and GBL entered into a License Agreement dated June 26, 1997,  pursuant
to which GBL granted BioMarin an exclusive, worldwide,  perpetual,  irrevocable,
royalty-free right and license to certain of Glyko,  Inc.'s,  GBL's wholly-owned
subsidiary at the time, worldwide patents, trade secrets,  copyrights, and other
proprietary rights to all know-how,  processes,  formulae,  concepts,  data, and
other such intellectual property,  whether patented or not, owned or licensed by
Glyko,  Inc.  as of the  date  of  the  license  agreement  for  application  in
therapeutic  uses,  including without  limitation,  drug discovery and genomics.
Under the same License  Agreement,  BioMarin  granted Glyko,  Inc. an exclusive,
worldwide,   perpetual,   irrevocable,   royalty-free   cross-license   to   all
improvements BioMarin may make upon the licensed intellectual property.

                                       2

<PAGE>




Competition

BioMarin's  Pharmaceutical  segment has many existing and potential competitors,
including large  pharmaceutical  companies and  biotechnology  companies.  These
competitors have several advantages over BioMarin, including:

     -   Greater financial resources

     -   More extensive (and possibly better) research and development programs,
         including experience in obtaining regulatory approval

     -   Greater manufacturing and marketing resources and experience

Another source of competition  arises from  universities  and public and private
research  institutions  in the  biopharmaceutical  and human  health care field.
While  these  organizations  primarily  have  educational  objectives,  they may
develop  proprietary  technology and acquire  patents that BioMarin may need for
the development of our products.

BioMarin believes that competition for its analytic and diagnostic  products and
services are established  alternative  technologies provided by other companies,
and services provided by laboratory and testing services firms. For example, the
FACE  Imaging  System   competes  with   alternative   carbohydrate   analytical
technologies,   including  capillary   electrophoresis,   high-pressure   liquid
chromatography, mass spectrometry and nuclear magnetic resonance spectrometry.

Government Regulation

BioMarin's  drug  candidates are subject to extensive  regulation by the federal
government,  principally  the FDA,  and by state  governments.  FDA  regulations
govern the development, testing, manufacturing,  advertising and selling of drug
products.  When BioMarin's  products are distributed abroad, they are subject to
regulations of foreign governments.

Before  BioMarin  can  commercially  sell its  products  in the  United  States,
BioMarin  must obtain FDA  approval for each drug and  indication  it intends to
commercialize.  The FDA approval process is typically lengthy and expensive, and
approval or the timing of approval is never certain. As part of the FDA approval
process,  BioMarin must  conduct,  at its own expense,  preclinical  studies and
clinical trials on each drug candidate.  Even if the FDA grants approval, it may
later withdraw its approval if BioMarin  fails to comply with their  regulations
or if subsequent  problems with BioMarin's drug candidates  occur.  FDA approval
may also limit the uses or indications for which  BioMarin's drug candidates may
be promoted and sold.

In addition,  manufacture of BioMarin's drug products must comply with the FDA's
current Good Manufacturing  Practice ("cGMP") regulations.  The cGMP regulations
govern quality control and  documentation  policies and  procedures.  BioMarin's
manufacturing  facilities are continuously  subject to inspection by the FDA and
the  State of  California,  before  and  after  product  approval.  BioMarin  is
currently in the process of developing  the  manufacturing  site and process for
commercial manufacture of its first drug candidate.  BioMarin's facility has not
been inspected by any governmental entity.  Before commercial  manufacturing may
commence, BioMarin must obtain regulatory approval of its manufacturing facility
and process. BioMarin cannot guarantee that it, or any potential manufacturer of
our drug  products,  will be able to  comply  with  cGMP  regulations.  Material
changes to the  manufacturing  processes  after approval are also subject to FDA
review and approval.

The  manufacture  and  sale  of  BioMarin's  analytic  products  do not  require
government  approval in the United States or Canada. The manufacture and sale of
medical diagnostic  products in the United States are controlled by the FDA, and
the  manufacture  and sale of analytic  products in Canada are controlled by the
Health Protection Branch ("HPB"). The laws of each country require the licensing
of manufacturing  facilities located in its jurisdiction,  carefully  controlled
clinical trials in humans and extensive  testing of products.  The  manufacturer
must  establish  the safety and  efficacy of its  products,  good  manufacturing
practices  and control over  marketing  activities  before it will be allowed to
market  and sell its  products.  The  safety and  efficacy  of a new  diagnostic
product  must  be  demonstrated   through  clinical  trials  carried  out  under
procedures  acceptable to the FDA or the HPB, as the case may be. In order to be
able to market and sell its diagnostic  products,  Glyko, Inc. must successfully
complete clinical trials.  The sales program is initiated by applying to the FDA
or the  HPB,  as the case may be,  for  permission  to  manufacture  and  market
products.  Glyko,  Inc.  must  submit  specific  information  on the  results of
carefully  controlled  clinical trials using blood or other  specimens  obtained
from humans. In addition, manufacturing methods and standards, and the stability
of the product  components must be presented to enable the regulatory  agency to
conclude that the product that may eventually be sold to the public has the same
composition  and  performance  as that  determined  to be  effective in clinical
trials. The controls on a new diagnostic product do not cease once it is on the
                                       3
<PAGE>
market and continued reporting of its performance must be submitted by the 
manufacturer to the FDA or the HPB, as the case may be. This is required to keep
the  product on the market.  Glyko,  Inc.  is unable to predict  whether  future
regulatory developments will affect Glyko, Inc.'s products under development.

                                       4

<PAGE>





                                  RISK FACTORS


Dependence on Investment in BioMarin

Since the October 7, 1998 sale of Glyko, Inc. to BioMarin, GBL's principal asset
has been its ownership of 41.7% of BioMarin's  outstanding  capital stock. GBL's
success is dependent on the successful operations of BioMarin including, but not
limited to,  BioMarin's  ability to receive FDA  approval of existing and future
pharmaceutical  product candidates,  BioMarin's ability to retain key personnel,
BioMarin's   ability  to  manufacture  and  market   products   effectively  and
successfully  and  BioMarin's  ability to raise  additional  cash to fund future
operations.  BioMarin is a  development  stage  company,  with its only revenues
currently being earned from the sale of its analytic and diagnostic products.

History of Operating Losses - Uncertainty of Future Profitability; Need for 
  Additional Financing

The Company's net loss for 1998 was $4,090,000.  The primary  components of this
loss were the  Company's  share of the net loss of BioMarin  accounted for under
the equity method of accounting and the loss of Glyko,  Inc. for the period from
January  1, 1998 to  October  7, 1998 (date of  acquisition  of Glyko,  Inc.  by
BioMarin).  The losses of Glyko,  Inc. from October 8, 1998 to December 31, 1998
have been  consolidated  into  BioMarin's  loss for that period.  GBL expects to
continue to incur  losses  during 1999 due to its share of  BioMarin's  net loss
resulting from BioMarin's  ongoing  research and  development of  pharmaceutical
product  candidates.  The  BioMarin  losses  do not have an  impact  on the cash
position  of GBL.  As a result of GBL's  sale of Glyko,  Inc.,  as of October 7,
1998, GBL has no operating  activities and its principal asset is its investment
in BioMarin.  Accordingly,  without  further  investments in other  companies or
technologies,  management  believes  that  GBL has  sufficient  cash to  sustain
planned  operations.  While GBL is not  obligated  to provide this  capital,  in
April,  1999,  the Company  entered into a  convertible  note  arrangement  with
BioMarin in the amount of $4,300,000,  as part of a $26,000,000 convertible note
financing  which was  closed  on April 13,  1999.  BioMarin  has an  accumulated
deficit of $15,076,419 at December 31, 1998 and is expected to incur significant
losses  during  1999  and  beyond.  Management  of  BioMarin  believes  that the
convertible  note financing  will be sufficient to meet its minimum  obligations
through December 31, 1999. However,  BioMarin will seek additional  financing in
the near term to fully execute its business  strategies and meet its longer term
obligations. Management of GBL does not believe that at December 31, 1998, there
has been any impairment of its investment in BioMarin.

Early Stage  Company;  Continuing  Operating  Losses;  Uncertainty  of Future 
Profitability;  Need for  Additional Financing

BioMarin  began  operations  in March  1997.  Since then,  BioMarin  has engaged
primarily in research and development.  BioMarin is in the  developmental  stage
and currently  has not  generated any revenues from any of its drug  candidates.
BioMarin has incurred net operating losses since inception, and, at December 31,
1998,  had an accumulated  deficit of  approximately  $15.1 million.  BioMarin's
losses mainly arise from expenses related to research and development, including
clinical trials for drug candidates,  and  administrative  costs associated with
operations.  BioMarin  expects  to spend  substantial  amounts in the future for
additional research and development  activities,  preclinical studies,  clinical
trials,  regulatory review and manufacturing  process  development and scale up.
Profits from the analytic and  diagnostic  products and services are expected to
be  insufficient  to offset  the  expenses  associated  with the  pharmaceutical
business. As a result,  BioMarin expects that operating losses will continue and
increase in 1999 and beyond.

Whether  BioMarin  will become  profitable  in the future will depend in part on
regulatory   approval  of  its  drug   candidates  and  BioMarin's   ability  to
successfully  manufacture  and market any  approved  drugs,  either by itself or
jointly with others.  The extent of  BioMarin's  future losses and the timing of
profitability  are highly  uncertain  and cannot be  accurately  predicted.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations."

No Currently Marketable Drug Products

None of  BioMarin's  drug  candidates  have received  regulatory  approval to be
commercially  marketed and sold. BioMarin has several drug candidates in various
stages of preclinical and clinical development.  BioMarin's first drug candidate
is  an  enzyme  replacement  therapy  for  MPS-I  that  is  not  expected  to be
commercially  available  in the United  States  until early in 2000.  BioMarin's
other drug candidates are not expected to be commercially available for at least
several years.
                                       5
<PAGE>
Prior to being  commercially  sold, all of BioMarin's  drug  candidates  require
significant   research  and  development,   laboratory   testing  and  extensive
preclinical  and  clinical  testing,   manufacturing   process  development  and
regulatory  approval.   Even  if  any  of  BioMarin's  drug  candidates  receive
regulatory  approval,  BioMarin cannot be certain it will be able to manufacture
any products at an  acceptable  cost, or that it will be successful in marketing
any products.

Risks Related to Clinical Trials; Uncertainties Regarding Drug Development

BioMarin  must show that its drug  candidates  are safe and effective for use in
the targeted  indication to receive  regulatory  approval for  commercial  sale.
Typically,  if a drug candidate is intended to treat a chronic disease,  such as
MPS-I,  the data must be gathered over an extended  period of time. In addition,
clinical  trials are  typically  conducted in three  phases.  The FDA  generally
requires two pivotal clinical trials which demonstrate  substantial  evidence of
safety and efficacy and appropriate  dosing in a broad patient population and at
multiple sites to support an application  for  regulatory  approval.  BioMarin's
strategy for the development of therapeutics for certain genetic disorders is to
conduct only one pivotal  trial on a small number of patients.  For example,  at
the end of  October  1998,  BioMarin  completed  what it  believes  is a pivotal
clinical trial on its first drug candidate  BM101.  Because of the small numbers
of  patients  treated  or  because  of  the  clinical   results,   BioMarin  may
successfully  obtain the data necessary to support regulatory  approval of BM101
or any future  drug  candidate.  The FDA may  request  additional  studies to be
conducted.

BioMarin is currently conducting a single clinical trial on one product,  BM101,
for the  treatment of MPS-I.  BioMarin has  conducted a clinical  trial on BM101
using the  endpoints  of  reduction  in liver or spleen size and a reduction  in
levels of certain  complex  carbohydrates  in urine.  BioMarin needs to validate
these endpoints by showing a clinical  benefit  associated with these endpoints.
In addition,  the FDA has requested BioMarin to conduct Phase IV studies to show
clinical  results in  additional  patients  with the most  severe form of MPS-I.
These  studies are not  required  for  approval of the BLA but must be completed
subsequently if the FDA approves the BLA for BM101.  If no clinical  benefit can
be shown that is associated with the endpoints,  then the FDA can take action to
rapidly revoke  approval and prevent  further  marketing of BM101. If BioMarin's
clinical trial fails to establish that BM101 is safe and effective, BioMarin may
decide to conduct further clinical trials,  which would  significantly  increase
expenses  and delay  product  launch.  If BioMarin  were  required to  undertake
additional  clinical  trials or expand its existing trial to include  additional
patients,  regulatory  approval  would be delayed.  Furthermore,  if new adverse
effects are identified after marketing, FDA approval may be revoked and the drug
no longer marketed.

BioMarin  must conduct  preclinical  studies in animals and  clinical  trials in
humans for each of its drug candidates  before BioMarin can seek FDA approval to
commercially  sell the drug  candidate.  The number of  preclinical  studies and
clinical  trials  required is expected to vary depending on the drug  candidates
and the regulatory pathway for the particular drug candidate.  BioMarin may need
to perform preclinical studies on multiple animal models using various doses and
formulations before it can begin clinical trials, which could result in a longer
time to  commercialization  of any drug  candidates.  For example,  in one early
preclinical  study,  use  of a low  concentration  of  an  enzyme  therapy  on a
particular  animal model did not show  successful  results while in a subsequent
preclinical study, use of a higher concentration of the same enzyme therapy on a
different  animal  model showed more  promising  results.  Furthermore,  even if
BioMarin  obtains  favorable  results in  preclinical  studies on  animals,  the
results in humans may be different.

There are many clinical trial risks. The results of initial  preclinical studies
and  clinical  trials can differ  from the  results  that may be  obtained  from
subsequent or more  extensive  testing or long-term  clinical  trials.  If final
clinical  results  are  adverse  or  inconclusive,  BioMarin  would not file for
regulatory approval.

Similar issues could arise with future drug  candidates  that reach the clinical
testing  phase.  BioMarin  may also  decide to  abandon  further  work on a drug
candidate.  As a  result,  BioMarin  cannot be  certain  that its  research  and
development,  including  preclinical and clinical testing,  will be successfully
completed.  BioMarin  cannot  guarantee that its drug candidates will obtain the
necessary regulatory approvals.

Finally,  delay or termination  of BioMarin's  clinical  trials may occur.  Many
factors can cause delay or termination, including:

      -    Slower patient enrollment than planned

      -    Lack of sufficient clinical supplies of the drug candidate

      -    Adverse medical events or side effects in treated patients

      -    Lack of efficacy of the drug candidate being tested

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<PAGE>
Initial Drug Candidates Target Small Patient Populations

BioMarin's  strategy  with respect to most of its drug  candidates  is to target
disorders  where the patient  populations  are small.  BioMarin's  initial  drug
candidates,   BM101  and  BM102,   target   patients   with  MPS-I  and  MPS-VI,
respectively. BioMarin estimates that in the United States and Canada, there are
only 1,050  patients with MPS-I and 170 to 340 with MPS-VI.  In addition,  other
drug candidates  BioMarin is developing are to treat  conditions,  such as other
genetic diseases and serious burns, with small patient  populations.  Due to the
fact that the  patient  populations  in these  markets  are small,  pricing  and
reimbursement  for  BioMarin's  drug  candidates  are  critical to its  success.
BioMarin cannot be certain that it will be able to obtain sufficient  pricing to
justify its product development efforts. BioMarin also cannot be certain that it
will be able to achieve sufficient penetration of these small markets to achieve
commercial success.

Uncertainty of Pharmaceutical Pricing and Related Matters; Need for
Reimbursement

BioMarin's ability to successfully  commercialize its drug candidates depends on
the availability of reimbursement for such drugs from government health agencies
(such as Medicare and Medicaid in the United  States),  private health  insurers
and other  organizations.  The  course of  treatment  for MPS-I  using  BM101 is
expected to be expensive.  BioMarin expects patients to need ongoing  treatments
throughout their lifetimes.  BioMarin expects that families of patients will not
be capable of paying for this  treatment  themselves.  If medical  reimbursement
were denied for this treatment, there would be no commercially viable market for
BM101.

Third  party  payors  (such as  government  or  private  health  care  insurers)
carefully  review  and  increasingly  challenge  the price  charged  for  drugs.
Reimbursement  rates from private  companies vary  depending on the  third-party
payor,  the  insurance  plan  and  other  factors.   Reimbursement   systems  in
international   markets  vary  significantly  by  country  and  by  region,  and
reimbursement  approvals must be obtained on a country-by-country  basis or on a
named-patient basis. BioMarin cannot be certain that third-party payors will pay
for the costs of its drugs and the  courses of  treatment.  Even if  BioMarin is
able to obtain reimbursement from third-party payors, BioMarin cannot be certain
that  reimbursement  rates will be enough to allow BioMarin to profit from sales
of its drugs.

BioMarin  currently has no expertise in  reimbursement  and expects  through the
BioMarin/Genzyme  joint  venture  to  rely  on  Genzyme's  expertise  to  obtain
reimbursement for BM101.  BioMarin cannot predict what the  reimbursement  rates
will be. In  addition,  BioMarin  will  need to  develop  its own  reimbursement
expertise for future drug candidates, unless BioMarin enters into collaborations
with other companies with the necessary expertise.

BioMarin  expects that  reimbursement in the future will be subject to increased
restrictions both in the United States and internationally.  The escalating cost
of health care has led to  increased  pressure  on the health  care  industry to
reduce costs.  Governmental and private  third-party payors have proposed health
care reforms and cost reductions.  In the United States there have been a number
of federal and state proposals to control the cost of health care, including the
cost of drug treatments. In certain foreign markets, the government controls the
pricing  which  would  affect the  profitability  of drugs.  Current  government
regulations and possible  future  legislation  regarding  health care may affect
BioMarin's  future  revenues  from sales of its drugs and may  adversely  affect
BioMarin's business and prospects.


                                       7
<PAGE>


Government Regulation; No Assurance of Regulatory Approvals

BioMarin's  drug  candidates are subject to extensive  regulation by the federal
government,  principally  the FDA,  and by state  governments.  FDA  regulations
govern the development, testing, manufacturing,  advertising and selling of drug
products.  When BioMarin's  products are distributed abroad, they are subject to
regulations of foreign governments.

Before  BioMarin  can  commercially  sell its  products  in the  United  States,
BioMarin  must obtain FDA  approval for each drug and  indication  it intends to
commercialize.  The FDA approval process is typically lengthy and expensive, and
approval or the timing of approval is never certain. As part of the FDA approval
process,  BioMarin must  conduct,  at its own expense,  preclinical  studies and
clinical trials on each drug candidate.  Even if the FDA grants approval, it may
later withdraw its approval if BioMarin  fails to comply with their  regulations
or if subsequent  problems with BioMarin's drug candidates  occur.  FDA approval
may also limit the uses or indications for which  BioMarin's drug candidates may
be promoted and sold.

In addition,  manufacture of BioMarin's drug products must comply with the FDA's
current Good Manufacturing  Practice ("cGMP") regulations.  The cGMP regulations
govern quality control and  documentation  policies and  procedures.  BioMarin's
manufacturing  facilities are continuously  subject to inspection by the FDA and
the  State of  California,  before  and  after  product  approval.  BioMarin  is
currently in the process of developing  the  manufacturing  site and process for
commercial manufacture of its first drug candidate.  BioMarin's facility has not
been inspected by any governmental entity.  Before commercial  manufacturing may
commence, BioMarin must obtain regulatory approval of its manufacturing facility
and process. BioMarin cannot guarantee that it, or any potential manufacturer of
our drug  products,  will be able to  comply  with  cGMP  regulations.  Material
changes to the  manufacturing  processes  after approval are also subject to FDA
review and approval.

Uncertainty of Orphan Drug Designation

In September 1997,  BioMarin  received orphan drug  designation from the FDA for
BM101. In February 1999,  BioMarin  received orphan drug  designation for BM102.
Under the Orphan Drug Act, the FDA may  designate a product as an orphan drug if
it is a drug intended to treat a "rare disease or  condition."  The sponsor that
obtains the first FDA  approval  for a  designated  orphan drug for a given rare
disease  receives  marketing  exclusivity  for use of that  drug for the  orphan
indication for a period of seven years.

As part of BioMarin's business strategy, BioMarin intends to develop drugs which
may be eligible for FDA orphan drug designation. Because the extent and scope of
patent protection for BioMarin's drug candidates is uncertain,  then orphan drug
designation  is  particularly  important  for its products that are eligible for
such  designation . BioMarin plans to rely on the  exclusivity  period under the
orphan drug designation to maintain a competitive  position.  However,  BioMarin
does not know if the FDA  will  grant  orphan  drug  designation  for any of its
products  other than  BM101 and BM102 or  marketing  exclusivity  for any of its
products.  Even if BioMarin obtains drug designation,  BioMarin cannot guarantee
that exclusivity would effectively protect the product from competition.  Orphan
drug  designation  does not shorten the development or FDA review time of a drug
so  designated  nor give the drug any  advantage  in the FDA review or  approval
process.

                                       8
<PAGE>



Uncertain Ability to Protect Patents and Proprietary Technology and Information

Where  appropriate,  BioMarin seeks patent protection for certain aspects of its
technology.  However, for many of the enzymes BioMarin is developing,  including
BM101 and BM102, meaningful patent protection may not be available.  Composition
of matter patents will not be available for BM101 and BM102.

The patent  positions  of  biotechnology  companies  are  extremely  complex and
uncertain.  The scope and  extent of patent  protection  for some of  BioMarin's
products,  including  BM101,  are  particularly  uncertain  because  some of the
enzymes BioMarin is developing have existed in the public domain for many years.
This means that other parties have  published  the structure of the enzyme,  the
methods for  purifying  or  producing  the enzyme or the methods of treatment or
use. If such publications  exist, they can prevent our patent  applications from
issuing or can limit the scope of coverage for issued patents.

In addition,  BioMarin's owned and licensed  patents and patent  applications do
not assure the  protection  of its  intellectual  property for a number of other
reasons:

      -    BioMarin does not know whether its patent applications will result in
           actual patents. For example, BioMarin may not have developed a method
           for treating a disease before others develop similar methods.

     -    BioMarin's  competitors may interfere in our patent process, which can
          delay  the grant of a patent  and/or  reduce  the scope of its  patent
          protection.

      -    Even if BioMarin receives a patent, it may not provide much practical
           protection.  The  government  agencies  which grant  patents have not
           followed a consistent  policy.  If BioMarin receives a patent but its
           scope is  narrow,  then it will be easier for  competitors  to design
           products which do not infringe on BioMarin's patent.

      -    Enforcing patents is expensive and may absorb significant  management
           time. In litigation,  a competitor could claim that BioMarin's issued
           patents are not valid for a number of reasons.  If the court  agrees,
           BioMarin would lose that patent.

In addition, competitors also seek patent protection for their technology. There
are many patents in our field of technology,  and BioMarin cannot guarantee that
it does not  infringe on those  patents or that it will not  infringe on patents
granted in the future. If a patent holder believes  BioMarin's product infringes
on the patent, the patent holder may sue BioMarin even if it has received patent
protection  for its  technology.  If someone else claims  BioMarin  infringes on
their technology, BioMarin would face a number of issues, including:

      -    Defending a lawsuit which takes significant time and can be very
           expensive.

      -    If  the  court  decides  that  BioMarin's  product  infringes  on the
           competitor's patent, BioMarin may have to pay substantial damages for
           past infringement.

      -    The court may prohibit BioMarin from selling or licensing the product
           unless the patent holder licenses the patent to BioMarin.  The patent
           holder is not required to grant  BioMarin a license.  If a license is
           available,  BioMarin may have to pay  substantial  royalties or grant
           cross-licenses to its patents.

      -    Redesigning  BioMarin's  product so it does not  infringe  may not be
           possible and could require substantial funds and time.

It is  also  unclear  whether  BioMarin's  trade  secrets  will  provide  useful
protection. While BioMarin uses reasonable efforts to protect its trade secrets,
BioMarin's  employees or consultants may  unintentionally  or willfully disclose
BioMarin's  information  to  competitors.  Enforcing a claim that  someone  else
illegally   obtained  and  is  using  BioMarin's  trade  secrets,   like  patent
litigation, is expensive and time consuming. BioMarin cannot predict the outcome
of such litigation.  In addition, courts outside the United States are sometimes
less willing to protect trade secrets.

BioMarin may also support and  collaborate  in research  conducted by government
organizations or by universities. BioMarin cannot guarantee that it will be able
to acquire any  exclusive  rights to  technology  or products  derived from such
collaborations.  If  BioMarin  does not  obtain  required  licenses  or  rights,
BioMarin  could  encounter  delays in  product  development  while we attempt to
design  around  blocking   patents  or  even  be  prohibited  from   developing,
manufacturing or selling products requiring such licenses.  There is also a risk
that disputes may arise as to the rights to technology or products  developed in
collaboration with other parties.
                                       9
<PAGE>
Dependence on Corporate Partners and Collaborators

On  September  4, 1998,  BioMarin  entered  into an  agreement  with  Genzyme to
establish  a  joint  venture   dedicated  to  the  worldwide   development   and
commercialization  of BM101 to treat  MPS-I.  Under  the  agreement,  the  joint
venture is owned half by BioMarin and half by Genzyme.  Under the joint  venture
agreement,  Genzyme is responsible for obtaining  foreign  regulatory  approval,
handling sales and marketing of BM101 and obtaining reimbursement.

Furthermore,  the joint  venture is relying on Genzyme to provide its  expertise
and   know-how   that  it  has   developed   through  the  launch  and  sale  of
Ceredase/Cerezyme for Gaucher disease, a rare genetic disorder.  BioMarin cannot
guarantee  that Genzyme  will devote the  resources  necessary  to  successfully
market BM101. In addition,  either party may terminate the joint venture for any
reason.  If Genzyme  were to  terminate  the joint  venture,  BioMarin  would be
required to undertake Genzyme's responsibilities.  BioMarin has no experience in
marketing,  selling or obtaining  reimbursement  approval for any pharmaceutical
products.  In addition,  BioMarin would be required to pursue foreign regulatory
approvals.   Termination  of  the  joint  venture  could  therefore   result  in
significant  delays in product launch in the United States,  inability to obtain
third party  reimbursement  and delays or failure to obtain  foreign  regulatory
approval, any of which could adversely affect BioMarin's business and results of
operations.

BioMarin's  strategy for the  research,  development  and  commercialization  of
certain of its potential  products  includes the possibility  that BioMarin will
enter into various additional  arrangements with corporate partners,  licensors,
licensees  and  others.   If  BioMarin   develops  products  based  on  licensed
technologies,  BioMarin must pay royalties and make certain other  payments.  In
addition,  BioMarin plans to develop strategic  relationships with corporate and
academic partners to further the research,  development and commercialization of
drug candidates and proprietary  technologies.  As a result,  BioMarin's success
may also depend upon the success of these  relationships,  including  BioMarin's
partners' ability to fulfill their  responsibilities.  BioMarin cannot guarantee
that it will be able to develop any of the collaborative relationships necessary
to further  BioMarin's  business  strategy.  Even if BioMarin is able to develop
these  relationships,  BioMarin cannot be certain that these  relationships will
result in the successful research,  development and/or  commercialization of any
drug candidates or proprietary technologies. BioMarin also cannot guarantee that
its partnerships  will be exclusive.  Partners may still be able to develop drug
treatments and  technologies,  either  independently or with others that compete
with BioMarin's products.

Limited Drug Manufacturing Experience; Scale-Up Risk

BioMarin  currently has a contract with Harbor-UCLA to manufacture BM101 in very
limited quantities for use in preclinical studies and clinical trials.  BioMarin
has no experience  manufacturing any of its drug candidates in volumes that will
be  necessary  to  support  commercial  sales.  BioMarin  is in the  process  of
validating its first manufacturing  facility for commercial production of BM101.
BioMarin must develop additional manufacturing  facilities and capabilities.  In
addition,  the FDA must  approve  BioMarin's  manufacture  and any  third  party
manufacture of its drug candidates in commercial quantities.  BioMarin is in the
process of moving its  manufacturing  of BM101 to a new  facility.  BioMarin  is
required by the FDA to  demonstrate  compliance  with cGMP in its new  facility.
Because clinical  supplies of BM101 were produced in a different  facility,  the
FDA may require that BioMarin  conduct  additional  clinical  trials in order to
demonstrate  equivalence  with the drugs used in BioMarin's  clinical trial. The
FDA will also inspect BioMarin's  manufacturing facilities or those of its third
party  manufacturers  prior to  approval  to  determine  compliance  with cGMPs.
Failure to comply with cGMPs could  delay FDA  approval  and failure to maintain
compliance after FDA approval could result in recalls of BioMarin's  products or
other enforcement actions by the FDA.

BioMarin  is  currently   developing   approximately   23,000   square  feet  of
manufacturing  facilities  in its  Novato  location.  However,  BioMarin  cannot
guarantee that its manufacturing facilities under development will be sufficient
for  commercial  manufacturing  of BM101.  BioMarin  also cannot be certain that
development  of its  manufacturing  facilities  will occur on schedule.  Even if
BioMarin  can  establish  this  capacity,   BioMarin   cannot  be  certain  that
manufacturing costs will be commercially reasonable.

Before  BioMarin  receives  FDA  approval to market any of its drug  candidates,
BioMarin  will  need  to  expend  significant  financial  resources  on  process
development, manufacturing scale-up and on development of manufacturing capacity
to support  commercial  sales.  Manufacturers  often experience  difficulties in
scaling up production of new products,  including problems regarding  production
yields, purity, quality control and assurance,  shortages of qualified personnel
and compliance  with FDA  regulations.  If BioMarin were unable to establish and
maintain commercial scale manufacturing capabilities, sales of BioMarin products
would be adversely affected.

                                       10
<PAGE>



Limited Marketing and Sales Capability for Products

If BioMarin  markets the drug  candidates  that it is developing,  BioMarin will
have to increase its marketing and sales capabilities and establish distribution
channels. As discussed above, BioMarin has recently entered into a joint venture
with Genzyme where Genzyme will be  responsible  for marketing and  distributing
BM101 if it receives FDA approval.  BioMarin  cannot  guarantee  that it will be
able to establish  sales and  distribution  capabilities  or that BioMarin,  the
joint venture or any future collaborators will successfully sell any of its drug
candidates.

To increase  BioMarin's  marketing and distribution for both its drug candidates
and Glyko, Inc. products, BioMarin will have to increase its current sales force
and/or enter into additional third party marketing and distribution  agreements.
BioMarin  cannot  guarantee that it will be able to hire the qualified sales and
marketing personnel it will need in a timely manner, if at all. Nor can BioMarin
guarantee  that it will be able to enter  into  any  marketing  or  distribution
agreements on acceptable  terms or when needed.  If BioMarin cannot increase its
marketing capabilities as BioMarin intends, either through increasing BioMarin's
sales force or entering into agreements with third parties,  sales of BioMarin's
and Glyko, Inc.'s products may be adversely affected.

Management of Growth

BioMarin's  management,  administrative  and  operational  resources  have  been
growing at a rapid pace and BioMarin  expects this growth to continue.  BioMarin
recently  acquired  Glyko,  Inc. and entered into a joint  venture with Genzyme.
Accordingly,  BioMarin expects to hire more personnel, expand its facilities and
upgrade its information systems. Additionally, if the joint venture receives FDA
approval for BM101,  the joint venture will be required to devote the additional
resources to support the commercialization of BM101.

To manage  expansion  effectively,  BioMarin  needs to  continue  to develop and
improve its operational and financial systems, sales and marketing capabilities,
and expand, train, retain, manage and motivate its employees.  In addition, some
of BioMarin's senior management have limited or no experience  managing a public
company. BioMarin cannot guarantee that its systems, procedures or controls will
be adequate to support its  operations  or that its  management  will be able to
exploit  successfully  future market  opportunities  or successfully  manage its
relationships with customers and other third parties.  BioMarin cannot guarantee
that it will  continue to grow or, if BioMarin  does,  that it will  effectively
manage such growth.  BioMarin's  failure to manage growth would adversely effect
its business and prospects.

Competition

BioMarin's  Pharmaceutical  segment has many existing and potential competitors,
including large  pharmaceutical  companies and  biotechnology  companies.  These
competitors have several advantages over BioMarin, including:

     -   Greater financial resources

     -   More extensive (and possibly better) research and development programs,
         including experience in obtaining regulatory approval

     -   Greater manufacturing and marketing resources and experience

Such competitors may succeed in developing, manufacturing and marketing products
that are more  effective  and/or  more  cost  effective  than any of  BioMarin's
product candidates.  They may also succeed in obtaining regulatory approvals for
their products faster than we can obtain them,  including  obtaining orphan drug
designation,  or commercializing their products before we do. In addition, these
companies  will compete with BioMarin in attracting  qualified  personnel and in
attracting parties for licenses,  joint ventures or other  collaborations.  They
will also compete with BioMarin in attracting academic research  institutions as
partners  and  in  obtaining   licensing  of  such   institution's   proprietary
technology.   Several  biopharmaceutical   companies  have  already  established
themselves in the field of enzyme  therapeutics,  including Genzyme,  BioMarin's
joint venture partner.

Another source of competition  arises from  universities  and public and private
research  institutions  in the  biopharmaceutical  and human  health care field.
While  these  organizations  primarily  have  educational  objectives,  they may
develop  proprietary  technology and acquire  patents that BioMarin may need for
the  development of our products.  BioMarin will attempt to obtain  licenses for
such proprietary technology, if available.  BioMarin cannot guarantee it will be
able to obtain these licenses on acceptable terms, if at all. BioMarin will also
directly  compete with a number of these  organizations  in the  recruitment  of
personnel, especially scientists and technicians.

                                       11
<PAGE>

BioMarin believes that competition for its analytic and diagnostic  products and
services are established  alternative  technologies provided by other companies,
and services provided by laboratory and testing services firms. For example, the
FACE  Imaging  System   competes  with   alternative   carbohydrate   analytical
technologies,   including  capillary   electrophoresis,   high-pressure   liquid
chromatography,  mass spectrometry and nuclear magnetic resonance  spectrometry.
These  competitive  technologies  have  established  customer bases and are more
widely used and accepted by scientific  and technical  personnel in part because
they can be used for  non-carbohydrate  applications.  Companies  competing with
BioMarin may have greater financial,  manufacturing and marketing  resources and
experience.

BioMarin  believes  that the speed with which  others can develop  analytic  and
diagnostic products, complete clinical testing and regulatory approval processes
and supply  commercial  quantities  to the market will be important  competitive
factors.  There can be no assurance that others will not  independently  develop
similar products, duplicate BioMarin's products or design around its patents. In
addition  BioMarin  may be required to obtain  licenses to others'  patents.  No
assurance can be given that such  licenses can be obtained on acceptable  terms.
These  factors  could cause  BioMarin.  to  encounter  delays in product  market
introductions or adversely affect it's development or sale of products requiring
licenses  from third  parties.  BioMarin's  products and  technologies  could be
subject to claims of infringement by others. Patent conflicts and litigation can
be expensive,  and could have a material adverse effect on BioMarin's  financial
position and results of operations.

Substantial Capital Requirements

BioMarin expects to continue to spend substantial amounts for its operations for
the foreseeable  future.  Activities which will require additional  expenditures
include:  research and development  programs,  preclinical and clinical testing,
regulatory   processes,   establishment   of  commercial   scale   manufacturing
capabilities and expansion of sales and marketing  activities.  How much capital
BioMarin may need will depend on many factors, including:

      -    The progress, timing and scope of BioMarin's research and development
            programs

      -    The progress, timing and scope of BioMarin's preclinical and clinical
            testing

      -    The time and cost involved in obtaining regulatory approvals

      -    The cost of filing, prosecuting, defending and enforcing any patent 
            claims and other intellectual property rights

      -    Installing, validating and scaling-up manufacturing capacity

      -    Competing technological and market developments

      -    Changes and developments in BioMarin's existing collaborative, 
            licensing and other commercial relationships

      -    Any new collaborative, licensing and other commercial relationships 
            arrangements that BioMarin may establish

Moreover,  BioMarin's  fixed expenses such as rent,  license  payments and other
contractual  commitments  are  substantial  and are  likely to  increase  in the
future.

                                       12
<PAGE>


In the future, BioMarin may need to raise substantial additional capital to fund
operations. BioMarin cannot be certain that any financing will be available when
needed.  Even if financing is  available,  the terms may not be  attractive.  If
additional financing is raised by selling more stock, GBL's holdings will suffer
further dilution. In addition, BioMarin may be required to grant superior rights
to future  stockholders.  If BioMarin  fails to raise  additional  financing  as
BioMarin needs it,  BioMarin may have to slow or adversely  change its plans for
growth and its business and prospects may suffer.

Dependence on Qualified Personnel

BioMarin's  future growth and success depend on its ability to hire,  retain and
train its employees.  Because of the specialized scientific nature of BioMarin's
business, BioMarin relies heavily on its ability to attract and retain qualified
scientific, technical and managerial personnel. In particular, the loss of Grant
W. Denison,  Jr.,  Chairman and Chief Executive  Officer,  John C. Klock,  M.D.,
President and  Secretary or  Christopher  M. Starr,  Ph.D.,  Vice  President for
Research and  Development  would be detrimental  to BioMarin.  BioMarin does not
maintain insurance on the lives of Mr. Denison or Dr. Starr.

The  competition  for  qualified  personnel  in the  biopharmaceutical  field is
intense.  BioMarin  cannot be certain that it can continue to attract and retain
qualified personnel  necessary for the development of its business.  The loss of
the services of existing  personnel as well as the failure to recruit additional
key scientific, technical and managerial personnel in a timely manner would harm
BioMarin's research and development programs and its business and prospects.

Product Liability

BioMarin develops drug treatments for use in humans.  The nature of the business
exposes BioMarin to potential  product  liability risks inherent in the testing,
manufacturing  and marketing of human drug treatments.  BioMarin  currently does
not maintain  insurance  against product liability  lawsuits.  Although BioMarin
intends to obtain product liability  insurance,  BioMarin cannot be certain that
it will be able to  obtain  adequate  insurance  coverage.  BioMarin  cannot  be
certain that it can successfully  defend any product  liability  lawsuit brought
against BioMarin.  Even if BioMarin is able to establish insurance coverage, the
cost may be  prohibitive.  If BioMarin is the  subject of a  successful  product
liability claim which exceeds the limits of its insurance coverage, BioMarin may
incur  substantial  liabilities  which would  adversely  affect its business and
prospects.

Year 2000-Related Problems

                  The following is intended to constitute  "Year 2000  Readiness
Disclosure" under the Year 2000 Information and Readiness Disclosure
Act of 1998.

GBL has conducted a review of potential year-2000  compliance issues.  Since GBL
no longer offers  products and services for sale, GBL is focusing its inquiry on
the impact of these issues on its internal administrative  activities and on its
professional  service providers and other third parties.  GBL does not currently
anticipate  that it will incur  material  expenditures  in  connection  with any
products  or  services  it  previously  offered.  GBL may incur some  expense in
connection with this review, thought it does not currently anticipate that these
expenses will be material.

BioMarin is aware that,  potentially,  application  and system  programs  may be
unable to process  correctly date information for dates after December 31, 1999.
This year 2000 defect could cause the disruption or failure of computer systems.
If present in  BioMarin's  analytic and  diagnostic  products,  the defect could
expose  BioMarin to litigation or a significant  decrease in sales of BioMarin's
products. The year 2000 defect could affect both BioMarin's internal information
technology  systems and other  functional  systems  that use  embedded  computer
programs  for  control  or other  purposes.  The defect  could  also  affect the
information technology and other functional systems of suppliers of products and
services to BioMarin.  The defect  could  affect the overall  economy and have a
significant impact on BioMarin.

BioMarin has formed a team to review and resolve  those aspects of the year 2000
problem  which are within its direct  control and adjust to or  influence  those
aspects  which are not within  its direct  control.  The team has  reviewed  its
analytic  and  diagnostic  products  (including  those  under  development)  and
determined that these products do not use date data and are year 2000 compliant.
BioMarin's  biopharmaceutical products do not have any year 2000 exposure. Based
on  representations  from  its  vendors,  the team has  reviewed  the year  2000
compliance  status of its major  internal  information  technology  programs and
systems used for  administrative  requirements  and determined that such systems
are year 2000 compliant.  The team is in the process of reviewing other internal
functional systems that may have a year 2000 defect within the embedded computer
systems used for control.  BioMarin believes that it can resolve its significant
internal year 2000 compliance issues before the year 2000 with expenditures that
are currently  estimated  not to be material.  If BioMarin does not achieve on a
timely  basis  year  2000  compliance  for  its  internal  systems,   BioMarin's
operations and business could be adversely affected.

                                       13
<PAGE>

With respect to suppliers,  BioMarin does not currently process orders, payments
and other  business  communications  electronically  from  computer to computer.
However,  if  BioMarin's  suppliers  and  ultimate  customers  are not year 2000
compliant  within their own systems,  their  disruptions  could have significant
direct or indirect  impact on BioMarin's  operations  and  business.  Among many
potential  impacts,  the following are  representative  of  disruptions to which
BioMarin might be subject:

     -   Financial  institutions  may  not be  able to  process  checks,  accept
         deposits,  provide  records,  process  wire  transfers,  provide  stock
         ownership  and transfer  records and  facilitate  many other  financial
         transactions and services.
     -   Suppliers  may not be able to  process  orders,  manufacture  products,
         deliver in accordance with production schedules,  or in general provide
         the current level of timely products and services.
     -   Voice and data communication systems used by BioMarin and its customers
         and suppliers might be disrupted.
     -   Health care suppliers and third party payers may be unable to process  
         patient  records,  add to or modify the content of their  pharmacy  
         authorizations,  accept or make timely, accurate  payments,  and handle
         the many other data requirements of the
         modern  health care system.  The added costs for back-up  systems,  for
         temporary or  emergency  fixes and the ongoing  requirements  to handle
         critical  functions  on a timely  basis  combined  with  the  resultant
         managerial  distractions  may delay the review and  introduction of the
         new drugs and new therapeutic practices critical to BioMarin.

With regard to the impact on BioMarin's  operations  and business as a result of
year 2000  compliance  problems  incurred  by third  parties as  discuss  above,
BioMarin cannot  reasonably  assess the size,  onset and duration of the overall
impact.


                                       14


<PAGE>




Item 2.  Description of Property    None.

Item 3.  Legal Proceedings 


In July 1998, the claim by Millipore Corp.  relating to a facilities dispute and
other matters was settled. For additional disclosure regarding this dispute with
Millipore,  see Part II, Item 1 of Form  10-QSB for the quarter  ended March 31,
1998.

Item 4.  Submission of Matters to a Vote of Security-Holders    None.

                                       15
<PAGE>
                                     PART II

Item 5.  Market For Common Equity and Related Stockholder Matters

As of November  1993,  the  Company's  stock has been listed on the OTC Bulletin
Board under the symbol "GLYK".  The Company's Common Shares have been listed and
traded on The Toronto Stock Exchange (TSE) since December, 1992 under the symbol
"GBL." The following table sets forth the sales prices for the Common Shares for
the periods noted,  as reported by TSE.  Prices are the closing price on the TSE
during the periods indicated.

                                     Prices
                             (In Canadian Dollars)*
         Year              Period                     High             Low

         1997          First Quarter                  $0.70           $0.40
         1997          Second Quarter                 $0.96           $0.60
         1997          Third Quarter                  $1.05           $0.65
         1997          Fourth Quarter                 $1.40           $0.75
         1998          First Quarter                  $3.40           $1.20
         1998          Second Quarter                 $4.30           $2.60
         1998          Third Quarter                  $4.55           $3.05
         1998          Fourth Quarter                 $6.75           $3.35

*As of December 31, 1998, the Canadian dollar to U.S. dollar exchange rate was
  $0.6535.

Holders

As of  February  28,  1999,  there  were 173  holders  of record  of  29,564,029
outstanding Common Shares of the Company.  Additionally, on such date options to
acquire 449,560 of Common Shares and warrants to acquire 4,330,734 Common Shares
were outstanding.


Certain Canadian Federal Income Tax Considerations

The  following  is a  summary  of the  principal  Canadian  federal  income  tax
considerations  generally applicable to a person (a "United States holder") who,
for the purposes of the Income Tax Act (Canada) (the "Canadian Tax Act") and the
Convention  between Canada and the United States with respect to Taxes on Income
and Capital (the  "Convention")  and at all relevant  times,  is resident in the
United  States  and not  resident  in  Canada,  deals at arm's  length  with the
Company, holds Common Shares as capital property and does not use or hold and is
not deemed to use or hold the Common  Shares in  carrying on business in Canada.
Special  rules,  which are not discussed in this summary,  may apply to a United
States holder that is an insurer that carries on an insurance business in Canada
and elsewhere.

This summary is based on the current  provisions  of the  Convention  and of the
Canadian Tax Act and the regulations thereunder, all specific proposals to amend
the  Canadian Tax Act and the  regulations  announced by the Minister of Finance
(Canada) prior to the date hereof (the "Proposed  Amendments") and the published
administrative  practices of Revenue Canada,  Taxation. This summary assumes the
Proposed Amendments will be enacted in the form currently proposed. This summary
does not take into account or anticipate any changes in the governing law, other
than the Proposed  Amendments,  whether by federal,  governmental or legislative
decision  or  action,  nor does it take  into  account  the tax  legislation  or
considerations of any province, territory or foreign jurisdiction.

This  summary  is of a  general  nature  only  and is  not,  and  should  not be
interpreted  as, legal or tax advice to any particular  United States holder and
no  representation  is made with respect to the Canadian income tax consequences
to any  particular  person.  Accordingly,  United States  holders are advised to
consult their own tax advisors with respect to their particular circumstances.

Under the Canadian Tax Act and pursuant to the Convention,  Canadian withholding
tax will  apply to  dividends  on Common  Shares  paid or deemed to be paid to a
United  States  holder at the rate of 15  percent  of the  gross  amount of such
dividends.  However, in the case of a United States holder that is a corporation
which owns at least 10 percent of the voting stock of the  company,  the rate is
reduced to five percent of the gross amount of such dividends.

                                       16
<PAGE>

In general, a United States holder will not be subject to Canadian income tax on
capital gains arising on the disposition of Common Shares unless (i) at any time
in the five-year period  immediately  preceding the  disposition,  25 percent or
more of the issued shares of any class or series of the Company  belonged to the
United States holder, to persons with whom the United States holder did not deal
at arm's length, or to the United States holder and persons with whom he did not
deal at arm's length, and (ii) the value of the Common Shares at the time of the
disposition  is  derived  principally  from real  property  (as  defined  in the
Convention) situated in Canada.

A disposition of Common Shares to the Company  (unless the Company  acquires the
shares  in the open  market in the  manner in which  shares  would  normally  be
purchased by any member of the public)  will result in a deemed  dividend to the
United States holder equal to the amount by which the consideration  paid by the
Company to acquire the Common Shares exceeds the paid-up  capital of such shares
for purposes of the Canadian Tax Act. The amount of such deemed dividend will be
subject to the withholding tax described above.

Dividend Policy

No cash  dividends  were  paid on any  class of GBL  securities  in the last two
years.  The  Company  does  not  anticipate  the  payment  of  dividends  in the
foreseeable future. At present,  the Company's policy is to retain earnings,  if
any, to finance the development of its business. The payment of dividends in the
future will depend upon, among other factors,  the Company's  earnings,  capital
requirements and operating and financial condition.

Item 6.  Management's Discussion and Analysis of Financial Condition and Results
          of Operations

The  following  discussion  and analysis of financial  condition  and results of
operations  contains  certain forward looking  statements  within the meaning of
Section 27A of the U.S.  Securities Act of 1933, as amended,  and Section 21E of
the U.S.  Securities  Exchange Act of 1934,  as amended,  that involve risks and
uncertainties,  such as statements  regarding the Company's ongoing liquidity as
discussed in "Liquidity  and Capital  Resources."  The Company's  actual results
could differ  materially from the results  anticipated in these  forward-looking
statements.  Risks are identified in "Overview,  " "Results of Operations,"  and
"Liquidity and Capital Resources."

Overview

Glyko  Biomedical  Ltd. is a Canadian  holding company that at December 31, 1998
owned 41.7% of the  outstanding  capital stock of BioMarin  Pharmaceutical  Inc.
(BioMarin).  As of October 7, 1998,  BioMarin  owns 100% of the capital stock of
Glyko,  Inc.  Glyko,  Inc.  and  BioMarin  are  operating   companies  based  in
California.  On October 7, 1998, BioMarin acquired Glyko, Inc., in a transaction
valued  at  $14,500,500.  As  consideration  for the  acquisition  of all of the
outstanding  shares of Glyko,  Inc.,  BioMarin issued 2,259,039 shares of common
stock to the Company,  assumed Glyko,  Inc.'s employee stock options exercisable
for  255,540  shares  of  BioMarin  common  stock,  and paid  $500 in cash.  The
following  discussion and the  accompanying  consolidated  financial  statements
include the accounts of Glyko Biomedical Ltd. and through October 7, 1998 Glyko,
Inc.,  presented on a consolidated  basis plus BioMarin  presented on the equity
method of  accounting.  Subsequent to October 7, 1998, the results of operations
of  Glyko,  Inc.  have been  consolidated  into the  results  of  operations  of
BioMarin.  Numerical  references in the following  discussion are rounded to the
nearest thousand.

Since its  inception in October  1990,  Glyko,  Inc. has engaged in research and
development  of new  techniques  to analyze  and  manipulate  carbohydrates  for
research,  diagnostic and pharmaceutical purposes.  Glyko, Inc. developed a line
of analytic instrumentation  laboratory products that include an imaging system,
analysis  software and chemical  analysis kits.  Glyko,  Inc., as a wholly owned
subsidiary of BioMarin,  continues to develop  additional  chemical kits for use
with  the  imaging  system,  and  is  also  developing  a line  of  carbohydrate
diagnostic  products.  BioMarin  is engaged in the  discovery,  development  and
commercialization of carbohydrate enzyme therapeutics.

The Company's net loss for 1998 was $4,090,000.  The primary  components of this
loss were the  Company's  share of the net loss of BioMarin  accounted for under
the equity method of accounting and the loss of Glyko,  Inc. for the period from
January  1, 1998 to  October  7, 1998 (date of  acquisition  of Glyko,  Inc.  by
BioMarin).  The losses of Glyko,  Inc. from October 8, 1998 to December 31, 1998
have been  consolidated  into  BioMarin's  loss for that period.  GBL expects to
continue to incur  losses  during 1999 due to its share of  BioMarin's  net loss
resulting from BioMarin's  ongoing  research and  development of  pharmaceutical
product  candidates.  The  BioMarin  losses  do not have an  impact  on the cash
position  of GBL.  As a result of GBL's  sale of Glyko,  Inc.,  as of October 7,
1998, GBL has no operating  activities and its principal asset is its investment
in BioMarin. While GBL is not obligated to provide this capital, in April, 1999,
the Company  entered into a convertible  note  arrangement  with BioMarin in the
amount of $4,300,000,  as part of a $26,000,000 convertible note financing which
was closed on April 13, 1999. BioMarin has an accumulated deficit of $15,076,419
at December 31, 1998 and is expected to incur significant losses during 1999 and
beyond. Management of BioMarin believes that the convertible note financing will

                                       17
<PAGE>

be  sufficient  to meet its  minimum  obligations  through  December  31,  1999.
However,  BioMarin  will  seek  additional  financing  in the near term to fully
execute its business strategies and meet its longer term obligations. Management
of GBL does not believe that at December 31, 1998, there has been any impairment
of its investment in BioMarin.

Results of Operations

The principal operations of GBL relate to the operations of Glyko, Inc. The year
ended December 31, 1997,  include the  operations of Glyko,  Inc. for the entire
year.  For the year ended  December 31, 1998,  the  operations of Glyko are only
included  for the nine month and seven day period from  January 1, 1998  through
October 7, 1998. Glyko,  Inc.'s operations from October 8, 1998 through December
31, 1998 are reflected in the  accompanying  financials  statements  through the
Company's  equity in the loss of BioMarin.  Thus the comparisons  below, as they
relate to Glyko,  Inc.  are for twelve  months of 1997 versus nine months  seven
days of 1998.

Revenues in 1998 were $1,160,000 and consisted of sales of products and services
of $865,000  and other  revenues  representing  development  fees of $25,000 and
grant revenues of $270,000. Sales of products and services consisted of sales of
chemical  analysis  kits and  imaging  systems,  and fees  for  custom  analytic
services.  Revenues in 1997 were  $2,037,000  and consisted of sales of products
and  services  of  $1,176,000  and  other  revenues   representing   technology,
development  and licensing fees of $704,000 and grant revenues of $157,000.  The
decline in product  revenues in 1998 was due to a decrease  in sales  volume and
due to the sale of Glyko,  Inc.  to BioMarin in October  1998.  The  decrease in
other revenues was due to development, technology and licensing fees received in
1997 that did not recur in 1998.

Gross  margin on sales of products  and  services  was 67 percent in 1998 and 59
percent in 1997.  The increase in gross margin in 1998 was due to a  combination
of decreased  manufacturing  overhead expenses and an increase in product prices
that took effect in July 1997.

Research and development  expenses in 1998 were $680,000 compared to $606,000 in
1997, an increase of $74,000.  The increase in research and development expenses
was mainly due to the increase in lab personnel and lab supplies purchased.

Selling, general and administrative expense was $690,000 in 1998, an increase of
$127,000  from 1997  expense of  $563,000.  The increase is due to a reversal in
1997 of prior year's  expenses  accrued on GBL's  statement of operations  which
reduced  expenses in 1997 by $120,000 and a small  increase in  advertising  and
sales travel in 1998.

Equity in loss of BioMarin for 1998 was  $3,803,000  compared to $2,452,000  for
1997, an increase of $1,351,000.  The increase was due to the increased net loss
of BioMarin  partially  offset by a decrease in GBL's  percentage  ownership  of
BioMarin.

Interest  income  earned in 1998 and 1997 of $28,000 and $13,000,  respectively,
reflected earnings on cash invested in short term interest bearing accounts. The
increase in interest income in 1998 resulted from higher cash balances available
for  investment  compared  to  1997.  Interest  expense  in 1998  and  1997  was
immaterial.

Other  operating  expenses  in 1998 of  $(165,880)  represents  the  gain on the
settlement of a claim at an amount less than was provided for by the Company.

As a result of GBL's sale of Glyko, Inc. to BioMarin,  GBL anticipates having no
revenues and substantially lower expenses in 1999.

Liquidity and Capital Resources

The Company's cash position  increased by $2,040,000 in 1998 to $2,568,000.  Net
cash  proceeds of  $2,330,000  relating to the issuance of common stock from the
exercise  of stock  options  and  warrants  and a  private  placement  financing
relating to a technology  and  licensing  fee  agreement  and $945,000  from the
settlement of intercompany receivables was partially offset by the investment in
BioMarin of $1,000,000 and net cash used in operating activities of $236,000.

Since  its  inception,   the  Company  has  incurred  a  cumulative  deficit  of
$19,080,000  and GBL expects to continue to incur losses  during 1999 due to its
share of BioMarin's  net loss  resulting from  BioMarin's  ongoing  research and
development of pharmaceutical  product candidates.  As a result of GBL's sale of
Glyko, Inc., as of October 7, 1998, GBL has limited operating activities and its
principal  asset is its  investment in BioMarin.  Accordingly,  without  further
investments in other companies or technologies, management believes that GBL has
sufficient  cash to sustain  planned  operations.  While GBL is not obligated to
provide this capital,  in April,  1999,  the Company  entered into a convertible
note  arrangement  with  BioMarin  in the  amount  of  $4,300,000,  as part of a
$26,000,000 convertible note financing which was closed on April 13, 1999.

                                       18
<PAGE>

BioMarin has an  accumulated  deficit of $15,076,419 at December 31, 1998 and is
expected to incur  significant  losses  during 1999 and  beyond.  Management  of
BioMarin believes that the convertible note financing will be sufficient to meet
its minimum obligations  through December 31, 1999. However,  BioMarin will seek
additional  financing in the near term to fully execute its business  strategies
and meet its longer term obligations. Management of GBL does not believe that at
December 31, 1998,  there has been any impairment of its investment in BioMarin.
See "Risk  Factors  -  Dependence  on  Investment  in  BioMarin,"  "-History  of
Operating Losses - Uncertainty of Future Profitability."

Item 7.  Financial Statements
The  information  required to be filed in this item appears on pages F.2 to F.35
and is incorporated herein by reference.

Item 8. Changes in and Disagreements With Accountants on Accounting and 
         Financial Disclosure.

Not applicable.

                                       19

<PAGE>



                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons

Directors and Executive Officers

The directors and executive officers of the company are as follows:

                                                                    Year Joined
         Name                     Age         Position                 Company


  R. William Anderson(1)(2)       57    Director                         1990
  Brian K. Brandley, Ph.D.        42    Managing Director                1998
  John H. Craig                   51    Secretary and Director           1992
  John S. Glass                   62    Director                         1994
  John C. Klock, M.D. (1)         54    President, Chief Executive 
                                         Officer and Director            1990
  Gwynn R. Williams(1)(2)         65    Director                         1990
  Mark I. Young                   43    Assistant Secretary and Director 1997

(1)      Member of Audit Committee
(2)      Member of Compensation Committee

All directors hold office until the next annual meeting of stockholders or until
their successors are elected and qualified.  Officers are appointed by the Board
of  Directors  and serve at the  discretion  of the  Board.  There are no family
relationships among the officers and directors of the Company.

Mr. R. William  Anderson has served as a Director since 1992.  Mr.  Anderson has
served as Chief Financial Officer and Vice President, Finance and Administration
of BioMarin since June 1998. Mr. Anderson served as the Vice President,  Finance
and  Chief   Financial   Officer  at  Fusion  Medical   Technologies,   Inc.,  a
biotechnology  company in drug delivery  systems,from  1997 to 1998, as the Vice
President,  Finance and Chief  Financial  Officer at Fidus  Medical  Technology,
Inc., a medical technology company in cardiac arrhythmias, from 1996 to 1997, as
a Director of Recombinant  Capital, a consulting firm, from 1994 to 1996, and as
the  Vice   President,   Finance  and  Chief   Financial   Officer  of  Glycomed
Incorporated,  a  biotechnology  company,  from  1989 to 1994.  Previously,  Mr.
Anderson was the Chief Financial Officer at Chiron Corporation,  a biotechnology
company and a  Controller  and  Director of  Financial  Planning and Analysis at
Syntex Laboratories,  a pharmaceutical  company. Mr. Anderson received a B.S. in
Engineering from the United States Military  Academy,  an M.S. in Administration
from George Washington University and an M.B.A. from the Harvard Graduate School
of Business Administration.

Brian K.  Brandley,  Ph.D.  has served as the  Managing  Director of the Company
since April 1998.  Dr.  Brandley was an Assistant  Professor at Rush  University
from  1995 to  1998,  and was the  Senior  Scientist,  Head of Cell  Biology  at
Glycomed  Incorporated  from 1988 to 1995. In 1978, Dr. Brandley received a B.S.
in Biology from the University of Miami. In 1979, Dr. Brandley  received an M.S.
in Biology  from the  University  of Miami.  In 1982,  Dr.  Brandley  received a
Ph.D.in Biology from the University of Sydney,Australia.

Mr.  John H. Craig has served as a Director  and  Secretary  of the  Corporation
since 1992 and has been a solicitor and partner with Cassels Brock and Blackwell
and previously with Holden Day Wilson,  Toronto law firms, since 1973. Mr. Craig
is a  director  of a number of public  companies  listed  on the  Toronto  Stock
Exchange.

Mr.  John S.  Glass  has  served as a  Director  since  August  1994 and is Vice
President and Chief Financial Officer of Milkhaus  Laboratory,  Inc., a clinical
stage biopharmaceutical company. In 1995 he was an independent consultant.  From
1968 to 1994 he served in various  capacities  at  Millipore  Corporation,  most
recently as Director of Investor  Relations and Vice  President of Millicorp,  a
venture capital subsidiary.  Previously Mr. Glass was a research and development
manager at Polaroid Corporation.  Mr. Glass holds a Masters degree in management
from the Massachusetts Institute of Technology.

Dr.  John C.  Klock has  served as a  director,  President  and Chief  Executive
Officer of the Company since  December  1992 and has served as Chief  Accounting
Officer since October 1996. Dr. Klock is a founder and has

                                       20
<PAGE>

served as the  President of Glyko,  Inc.  from 1989 to present.  Dr. Klock was a
founder of Glycomed  Incorporated at which he served as Vice President,  Medical
Affairs from 1987 to 1990. Dr. Klock was a scientific  director at the Institute
of Cancer  Research at California  Pacific Medical Center from 1981 to 1987. Dr.
Klock was formerly an academic  physician  and  carbohydrate  researcher  at the
University of  California  at San  Francisco  from 1982 to 1986, a researcher at
Murex  Corporation  from 1984 to 1985. Dr. Klock received a B.S. in Zoology from
Louisiana  State  University,  Baton  Rouge and  received  an M.D.  from  Tulane
University.

Mr. Gwynn R.  Williams  has served as a director  since  December  1992 and is a
founder of Glyko,  Inc.(established  in 1990).  In 1984,  Mr.  Williams  founded
AstroMed  Limited  and  Astroscan   Limited,   UK  manufacturers  of  scientific
equipment, which entities have since merged into Life Science Resources Ltd. Mr.
Williams was a partner in Arthur  Andersen & Co. from 1971 to 1982.  Previously,
Mr. Williams was a mathematician with General Motors Research from 1961 to 1970,
and with British Steel from 1958 to 1960. Mr. Williams also served as a director
of Life Science  Resources,  Ltd.  from June 1986 to August 1998.  Mr.  Williams
received a B.S. in Theoretical Physics from the University of Wales in 1955.

Mr. Mark I. Young has served a Director of the Corporation  since March 1997 and
has been the Assistant  Secretary of the Corporation  since 1992. Mr. Young is a
solicitor and partner with Cassels  Brock and Blackwell  practicing in the areas
of corporate  commercial and securities law. Mr. Young is an officer or director
of a number of public companies listed on The Toronto Stock Exchange.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company's officers and directors,
as well as  persons  who own ten  percent or more of a  registered  class of the
Company's equity  securities,  to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock and other equity  securities
of the Company  Officers,  directors  and ten percent or more  stockholders  are
required by SEC  regulations  to furnish the Company  with copies of all Section
16(a) forms they file.

To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company or written  representations  that no other reports were
required,  during the  fiscal  year  ended  December  31,  1998,  all  officers,
directors,  and ten percent stockholders  complied with all Section 16(a) filing
requirements except that the Forms 5 for all officers, directors, and 10 percent
stockholders were filed late.

                                       21

<PAGE>


Item 10.  Executive Compensation

EXECUTIVE COMPENSATION

Summary Compensation Table

The following  table contains  information  about the  compensation  paid to, or
earned by, those who were, at December 31, 1998, the President,  Chief Executive
Officer and Chief Financial  Officer of the Company and the Managing Director of
the Company, being the only executive officers of the Company (collectively, the
"Named Executive  Officers").  Specific aspects of their  compensation are dealt
with in further detail in subsequent tables.

Glyko Biomedical Ltd.:

<TABLE>
============================ =======   ======================================== ==================

<CAPTION>
Name and Principal Position                                                         Long-term
                             Year               Annual Compensation               Compensation
                                      ----------- ---------- ------------------ ==================


                                                                                Securities Under
                                                               Other Annual      Options Granted
                                        Salary      Bonus      Compensation            (#)
                                       (U.S.$)     (U.S.$)        (U.S.$)
============================ -------- ----------- ---------- ------------------ ==================
<S>                          <C>      <C>         <C>        <C>                <C>    
John C. Klock
President, Chief Executive
Officer,
Chief Financial Officer,
and Director
                             1998         18,750     --             --                  11,290(2)
                             1997         97,226     --             --                  64,740(2)
                             1996        187,297     --             --                  75,876(2)

============================ -------- ----------- ---------- ------------------ ------------------
Brian Brandley(1)
Managing Director            1998        101,602     --             --                 150,000(2)

============================ ======== =========== ========== ================== ==================

<FN>
(1)  On  April 1,  1998,  Brian  Brandley,  Ph.D.  was  appointed  as  
     Managing  Director  of the  Company  and Christopher M. Starr, Ph.D. 
     resigned as Vice President of Research and Development.
(2) Options  were  assumed by  BioMarin  as part of the sale of Glyko,  Inc.  on
    October 7, 1998. See "Interest of Insiders in Material Transactions."
</FN>
</TABLE>

                                       22

<PAGE>

BioMarin Pharmaceutical Inc.(1):

<TABLE>
============================ ======== ========================================= ==================
<CAPTION>

Name and Principal Position                                                         Long-term
                             Year               Annual Compensation               Compensation
                                      ----------- ------------ ---------------- ==================



                                                                Other Annual    Securities Under
                                                                Compensation     Options Granted
                                        Salary       Bonus         (U.S.$)             (#)
                                       (U.S.$)      (U.S.$)
============================ -------- ----------- ------------ ---------------- ==================
<S>                          <C>      <C>         <C>          <C>              <C>

John C. Klock                1998        222,450   87,500(2)         --              300,000
President  and Director      1997        146,914      --             --                --
============================ -------- ----------- ------------ ---------------- ------------------

R. William Anderson          1998         90,484      --             --              200,000
Vice-President, Finance
and Administration and
Chief Financial Officer

============================ ======== =========== ============ ================ ==================

<FN>
(1)  The Company owns 41.7% of BioMarin.  Certain  officers and directors of the
     Company are also officers and directors of BioMarin.
(2) Includes amounts paid in 1999 for 1998.
</FN>
</TABLE>


Option Grants in 1998

Pursuant to the Company's stock option plan (the "Plan"), options under the Plan
may be granted for any term up to ten years, are non-assignable, and are subject
to earlier termination upon the termination of an optionee's  employment for any
cause including retirement,  permanent disability but not death. In the event of
death of an  optionee,  his  estate may be  entitled  for a period of six months
thereafter  to exercise  any option  which a deceased  optionee  would have been
entitled  to  exercise  if then  alive  but in any  event  not after the date of
expiration of the option.  No individual  may hold options to purchase more than
5% of the total number of the Company's  Common Shares  outstanding from time to
time.

<TABLE>

<CAPTION>
                          Number of       % of Total
                          Securities      Options Granted
                      Underlying Options  to Employees in
Name                      Granted(1)      Financial Year      Exercise Price
                                                             (Cdn.$/Security)   Expiration Date

------------------------- -------------- ------------------- ------------------ -------------------
<S>                       <C>            <C>                 <C>                <C>

John C.  Klock              11,290(2)            5%                $1.25            31-DEC-02

------------------------- -------------- ------------------- ------------------ -------------------

Brian Brandley             150,000(2)           64%                $3.45            31-MAR-03

------------------------- -------------- ------------------- ------------------ -------------------
<FN>

(1)      Securities Under Options Granted refers to Common Shares.
(2)      Options granted in 1998 were assumed by BioMarin as part of the Glyko,
          Inc. sale on October 7, 1998.
</FN>
</TABLE>

                                       23
<PAGE>



       Aggregate Option Exercises and Fiscal Year End Option Value Table

<TABLE>
============================ ============= ============== =================================== ====================================

<CAPTION>

                                                                 Number of Securities
                                                                      Underlying                     Value of Unexercised
                                                                Unexercised Options at              in-the-money Options at
                                                                  December 31, 1998                  December 31, 1998(1)

                                                          --------------- ------------------- ------------------ ------------------



                                Shares
                               Acquired        Value
                             on Exercise     Realized                                            Exercisable     Unexercisable
           Name                               (Cdn.$)      Exercisable      Unexercisable          (Cdn.$)           (Cdn.$)
---------------------------- ------------- -------------- --------------- ------------------- ------------------ ------------------ 
<S>                          <C>           <C>            <C>             <C>                 <C>                <C>
R. William Anderson                20,000        $48,000          90,520          --                   $535,340         --
---------------------------- ------------- -------------- --------------- ------------------- ------------------ ------------------ 
Brian Brandley (2)                --            --                28,125        121,875                 $92,812      $495,000
---------------------------- ------------- -------------- --------------- ------------------- ------------------ ------------------ 
John H. Craig                      20,000        $48,000          90,520          --                   $535,340         --
---------------------------- ------------- -------------- --------------- ------------------- ------------------ ------------------ 
John S. Glass                      20,000        $20,000          87,000          --                   $515,100         --
---------------------------- ------------- -------------- --------------- ------------------- ------------------ ------------------ 
John C. Klock(2) (3)              534,672     $1,106,167         140,616          --                   $923,646         --
---------------------------- ------------- -------------- --------------- ------------------- ------------------ ------------------ 
Gwynn R. Williams                  20,000        $48,000          90,520          --                   $535,340         --
---------------------------- ------------- -------------- --------------- ------------------- ------------------ ------------------ 
Mark I. Young                     --            --                39,000          --                   $228,300         --
============================ ============= ============== =============== =================== =================== =================

<FN>
(1)    Based on the closing price of Common Shares on the Toronto Stock Exchange
       on December 31, 1998 of $6.75.
(2)    As part of the sale of Glyko, Inc. on October 7, 1998, these options have
       now been converted into options to purchase shares of BioMarin.
(3)  These Common Shares acquired were purchased by a loan from the Company. 
       See  "Indebtedness of Directors, Executive Officers And Senior Officers."
</FN>
</TABLE>

Compensation Of  Directors

On January 22, 1998, each  non-executive  director of the Company was granted an
option to purchase 16,000 Common Shares at an exercise price of Cdn.$1.25 (which
options  expire on  December  31,  2002) in lieu of  monetary  compensation  for
services rendered in their capacity as directors.

Employment Agreement

Dr. Klock's Glyko, Inc.  employment agreement has been replaced by an employment
agreement with BioMarin whereby, Dr. Klock is to devote 100% of his time to
BioMarin.

Stock Option Plan

The Company has a stock option plan (the "Plan") under which options to purchase
Common  Shares  may be  granted  by the board of  directors  of the  Company  to
directors,  officers,  consultants  and key  employees of the  Company.  Options
granted under the Plan may either be "incentive stock options" under Section 422
of the United States Internal Revenue Code, or non-statutory  options.  The Plan
is  administered  by the board of directors of Glyko.  Options granted under the
Plan will have an exercise  price which will not be less than the market  price,
less any  permissible  discounts,  of the Common Shares on the date prior to the
date of grant,  which market price is deemed to be the closing  sales price,  or
the closing  bid price if no sales were  reported,  of the Common  Shares on any
established  stock  exchange  or  national  market  system upon which the Common
Shares are listed, including The Toronto Stock Exchange, or, if listed upon more
than one exchange or system,  the exchange or system with the greatest volume of
trading in Common Shares on the date prior to the date of grant, or, if there is
no established market for the Common Shares, the fair market value of the Common
Shares as determined by the board of directors. Options will be exercisable over
a number of years specified at the time of the grant which cannot exceed ten

                                       24
<PAGE>

years.  The aggregate  number of Common Shares subject to options  granted under
the Plan  cannot  exceed  three  million  Common  Shares and no one  optionee is
entitled to hold options exceeding five percent of the Common Shares outstanding
at the time of the  grant.  Also,  the  maximum  number of  shares  which may be
reserved for issuance to insiders  under the Plan shall not exceed 10 percent of
common shares outstanding at the time of the grant.

Incentive stock options  granted under the Plan terminate  within 90 days of the
termination of an optionee's employment. Non-statutory options granted under the
Plan  terminate  within  a  period  of time  following  the  termination  of the
optionee's  employment,  consulting or officer or director relationship which is
determined by the board of directors. Options also terminate within 12 months of
the death or total and permanent  disability of the  optionee.  Options  granted
under the Plan are not  transferable.  As of February 28, 1999  449,560  options
(net of exercised options) had been approved by the board of directors.

Options  will  only  be  granted  in  compliance  with   applicable   securities
legislation,  and the Plan will be operated in conformity with the  requirements
of any stock  exchange  upon which the Common  Shares of the  Company may become
listed.

                                       25
<PAGE>


Item 11.  Security Ownership of Certain Beneficial Owners and Management

The following table lists certain information  regarding beneficial ownership of
the Glyko's  Common Shares as of February 28, 1999, by (i) those persons who own
more than 5 percent of the  Company's  common stock,  (ii) the  Company's  Chief
Executive  Officer,  (iii) each of the Company's  directors,  and (iv) the total
amount of Common Shares held by the Company's officers and directors as a group.
<TABLE>

------------------------------ ---------------------------------- ---------------------- =======================
<CAPTION>

                                Name and Address of Beneficial    Number of Shares Held     Percent of Class
       Title of Class                        Owner

------------------------------ ---------------------------------- ---------------------- =======================
<S>                            <C>                                <C>                    <C>  
Common Shares                  New York Life Insurance Company             4,185,000(1)          13.6%
                               51 Madison Avenue
                               New York, NY 10010

------------------------------ ---------------------------------- ---------------------- =======================

Common Shares                  LaMont Asset Management                     3,759,069(2)          12.7%
                               Baarerstrasse 10
                               P.O. box 4639
                               6304 Zug, Switzerland


------------------------------ ---------------------------------- ---------------------- =======================
Common Shares                  Gwynn R. Williams                          3,485,188 (3)          11.6%
                               c/o Life Science Research Ltd.
                               3rd Floor Salisbury House
                               15 Victoria Street
                               Douglas, Isle of Man
                               British Isles, UK


------------------------------ ---------------------------------- ---------------------- =======================
Common Shares                  Trianon Opus One Inc.                          1,764,000           6.0%
                               Julius Baer Securities Inc.
                               330 Madison Avenue
                               New York, NY  10017


------------------------------ ---------------------------------- ---------------------- =======================
Common Shares                  John C. Klock                                 627,817(4)           2.1%
                               c/o  BioMarin Pharmaceutical
                               371 Bel Marin Keys Blvd. #210
                               Novato, CA  94949


------------------------------ ---------------------------------- ---------------------- =======================
Common Shares                  John H. Craig                                 113,521(5)            *
                               c/o Cassels Brock & Blackwell,      
                               Scotia Plaza, Suite 2100,
                               40 King Street West
                               Toronto, ON  M5H 3C2


------------------------------ ---------------------------------- ---------------------- =======================
Common Shares                  R. William Anderson                           92,520 (6)            *
                               c/o  BioMarin Pharmaceutical
                               371 Bel Marin Keys Blvd. #210
                               Novato, CA  94949
------------------------------ ---------------------------------- ---------------------- =======================
</TABLE>



                                       26
<PAGE>

<TABLE>

------------------------------ ---------------------------------- ---------------------- =======================
<CAPTION>


                                Name and Address of Beneficial    Number of Shares Held     Percent of Class
       Title of Class                        Owner

------------------------------ ---------------------------------- ---------------------- =======================
<S>                            <C>                                <C>                    <C>  



------------------------------ ---------------------------------- ---------------------- =======================
Common Shares                  John S. Glass                                109,000 (7)            *
                               Milkhaus Laboratory, Inc.
                               48 Main Street
                               Boxford, MA  01921


------------------------------ ---------------------------------- ---------------------- =======================
Common Shares                  Mark I. Young                                  42,000(8)            *
                               c/o Cassels Brock & Blackwell,
                               Scotia Plaza, Suite 2100, 40
                               King Street West,
                               Toronto, ON  M5H 3C2


------------------------------ ---------------------------------- ---------------------- =======================
Common Shares                  All Officers and Directors                  4,470,046(9)          14.8%

------------------------------ ---------------------------------- ---------------------- =======================
<FN>

* Less than 1%

(1) Includes  1,311,562  Common  Shares  issuable  upon exercise of common share
    purchase warrants.
(2) Includes  20,000  Common  Shares  issuable  upon  exercise  of common  share
    purchase warrants.
(3) Includes  92,520 Common Shares  issuable upon exercise of options  within 60
    days of February 28, 1999 and 312,568  Common Shares  issuable upon exercise
    of common share purchase warrants.
(4) Includes  2,000 Common Shares  issuable  upon exercise of options  within 60
    days of February 28, 1999.
(5) Includes  41,000 Common Shares  issuable upon exercise of options  within 60
    days of February 28, 1999.
(6) Includes  92,520 Common Shares  issuable upon exercise of options  within 60
    days of February 28, 1999.
(7) Includes  41,000 Common Shares  issuable upon exercise of options  within 60
    days of February 28, 1999.
(8) Includes  41,000 Common Shares  issuable upon exercise of options  within 60
    days of February 28, 1999 (9) Includes  337,560 Common Shares  issuable upon
    exercise of options  within 60 days of February 28, 1999 and 312,568  Common
    Shares issuable upon exercise of common share purchase warrants.
</FN>
</TABLE>


Item 12.  Certain Relationships and Related Transactions

On March 21, 1997,  the Company  closed a Cdn.$2.0  million  financing (the Q197
Financing)  to fund the  start-up of  BioMarin  Pharmaceutical,  Inc.  which was
formed to develop the  Company's  pharmaceutical  products.  As a result of this
financing, the Company issued 4.0 million units at Cdn.$0.50 per unit, each unit
consisting  of one common  share and one common  share  purchase  warrant.  Each
warrant can be exercised  for one share of common stock at Cdn.$1.00  per share,
expiring on March 21, 1999.  An additional  280,000  units and 280,000  warrants
together  valued at  approximately  $161,000 were  distributed to the brokers in
exchange  for  services  rendered in  connection  with the Q197  Financing.  The
Company utilized the Black-Scholes model to value all the warrants issued in the
Q197 Financing at approximately $496,000. As a result of additional funds raised
by  BioMarin  during  1997 and 1998 (see  Footnote 6 to Glyko  Biomedical,  Ltd.
Financial Statements),  the Company's ownership in BioMarin was reduced to 41.7%
of BioMarin's outstanding common stock at December 31, 1998.

BioMarin and the Company  entered into a License  Agreement dated June 26, 1997,
pursuant  to  which  the  Company  granted  BioMarin  an  exclusive,  worldwide,
perpetual, irrevocable, royalty-free right and license to all current and future
worldwide patents, trade secrets, copyrights and other proprietary rights to all
know-how,  processes,  formulae,  concepts,  data and  other  such  intellectual
property,  whether  patented or not,  owned or licensed by the Company.  and its
subsidiaries  as of the date of the License  Agreement.  Under the same  License
Agreement,  BioMarin granted the Company. a cross-license,  similar in scope, to
all improvements BioMarin may make upon the licensed  intellectual  property. As
consideration for this license,  BioMarin issued the Company 7,000,000 shares of
BioMarin common stock.

In June  1997,  the  Company  granted  options to  purchase  23,000  shares of 
the  Company's  common  stock to Mr. Anderson,  Mr. Craig,  Mr. Glass,  
Mr.  Williams and Mr. Young for their services as directors,  granted options to
purchase  64,740 shares of the Company's  common stock to Dr. John Klock as an 
incentive  bonus and granted options to purchase  40,350  shares of the  
Company's  common  stock to Dr. Starr as an  incentive  bonus.  Each option was
exercisable at Cdn.$0.65 per share.

In January  1998,  the Company  granted  options to purchase  16,000  shares of
the  Company's  common stock to Mr. Anderson,  Mr. Craig,  Mr. Glass, 
Mr.  Williams and Mr. Young for their services as directors,  granted options to

                                       27
<PAGE>


purchase  11,290  shares of the  Company's  common stock to Dr. John Klock as an
incentive  bonus and granted  options to purchase  6,920 shares of the Company's
Common  Stock  to Dr.  Chris  Starr  as an  incentive  bonus.  Each  option  was
exercisable at Cdn.$1.25 per share.

In May 1998,  the  Company  granted  options to purchase  150,000  shares of the
Company's  common stock at an exercise price of Cdn.$3.45 per share to Dr. Brian
Brandley as consideration for his acceptance of his employment with Glyko, Inc.

As previously  discussed,  BioMarin assumed Glyko, Inc.'s employee stock options
(previously  exercisable for shares of GBL stock) exercisable for 255,540 shares
of BioMarin common stock as part of the sale of Glyko, Inc. to BioMarin.

Prior to the sale of Glyko,  Inc. to BioMarin,  the Company subleased office and
lab space,  certain  administrative  and research and  development  functions to
BioMarin.  BioMarin  reimburses  the  Company  for rent,  salaries  and  related
benefits and other  administrative costs and the Company reimburses BioMarin for
salaries and related benefits. BioMarin reimbursed the Company a net $183,000 in
1998 and a net $241,000 in 1997. Subsequent to the sale of Glyko, Inc., BioMarin
moved its corporate headquarters and laboratory to other buildings in Novato and
no longer  subleases  from the  Company.  The Company also  provided  analytical
services  and  products to BioMarin  at a 27%  discount in 1998 and 1997.  Total
receipts to the  Company  from sales to  BioMarin  totaled  $113,000 in 1998 and
$39,000 in 1997.  Glyko, Inc.  continues to reimburse  BioMarin for salaries and
other shares expenses and continues to provide analytical  services and products
to BioMarin.

On October 7, 1998,  GBL sold 100% of the  outstanding  capital  stock of Glyko,
Inc. to BioMarin.  As  consideration  for such sale,  BioMarin issued  2,259,039
shares of common stock of BioMarin to GBL,  agreed to assume options to purchase
up to 585,969  shares of the GBL's  common stock which  options were  previously
issued to employees of Glyko, Inc. (such  "assumption"  meaning the agreement by
each  optionee to accept share of BioMarin  common  stock upon  exercise of such
options in lieu of the Company's  Common  Shares) and paid GBL $500 in cash. The
shares of BioMarin common stock were valued at $6.00 per share, yielding a total
value  of   $13,554,234,   and  the  options   assumed  were  valued  using  the
Black-Scholes  pricing model at $945,766,  which, when combined with the $500 in
cash, resulted in total consideration of $14,500,500.

Dr.  John  Klock,  the  President  and a director  of the  Company,  is also the
President and a director of BioMarin.  In June 1997,  Dr. Klock was sold 800,000
shares of  BioMarin's  common stock for a purchase  price of $800,000,  paid for
with a full recourse  note,  secured by the  underlying  stock,  due on July 31,
2000.  Mr.  Gwynn  Williams,  who is a director  of the Company and also a major
stockholder  of GBL, is also a director of  BioMarin,  and in such  capacity was
previously  granted an option to purchase  20,000  shares of  BioMarin's  common
stock at an  exercise  price of $1.00 per  share.  Mr.  Raymond W.  Anderson,  a
director of the  Company,  is also an officer of BioMarin  and on June 22, 1998,
was granted an option to purchase  200,000 shares of BioMarin's  common stock at
an exercise price of $4.00 per share.

In November  1998,  GBL loaned  $712,261 to Dr. John Klock to exercise  expiring
stock  options.  The loan is  secured by the  underlying  stock and is with full
recourse

In January  1999,  the Company  granted  options to purchase  4,000  shares of 
the  Company's  Common  Stock to Mr. Anderson,  Mr.  Craig,  Mr.  Glass,  
Dr. Klock,  Mr.  Williams and Mr. Young for their  services as directors at an
exercise price of Cdn.$6.00 per share.


                                       28
<PAGE>




Item 13.  Exhibits, List and Reports on Form 8-K

(a)      Documents  are filed as exhibits to this  report as  enumerated  in the
         Index to Exhibits hereto, Part III Item I.

(b)      Reports on Form 8-K

   No reports were filed on Form 8-K during the quarter ended December 31, 1998.

                                    Part III

Item 1.           Index to Exhibits


     Exhibit                             Description
     Number                                                                    
      2.1     Share Exchange Agreement between Glyko Biomedical, Ltd. and 
              BioMarin Pharmaceutical Inc. dated September 15, 1998.
      3.1     Registrant's  Articles of Incorporation and Bylaws (filed as
              exhibit 3.1 to Form 10-SB Registration Statement No. 0-21994
              dated August 6, 1993 and incorporated herein by reference).
      3.2     Restated  Certificate of Incorporation of BioMarin  Pharmaceutical
              Inc.(filed as exhibit 3.1 to Form 10-QSB dated September 30, 1997,
              and incorporated herein by reference).
      3.3     Bylaws of BioMarin  Pharmaceutical,  inc. (filed as exhibit 3.2 to
              Form 10-QSB dated September 30, 1997, and  incorporated  herein by
              reference).
      4.1     Registrant's  Articles  of  Incorporation  and  Bylaws  (filed  as
              exhibit 3.1 to Form 10-SB Registration Statement No. 0-21994 dated
              August 6, 1993 and incorporated herein by reference).
     10.1     License Agreement between Registrant, and Astroscan, Ltd. and 
              Astromed, Ltd. (filed as exhibit 10.4 to Form 10-SB Registration 
              Statement No. 0-21994  dated  August 6, 1993 and incorporated 
              herein by reference).
     10.2     License  Agreement  between  Registrant and Glycomed  Incorporated
              (filed as exhibit 10.5 to Form 10-SB  Registration  Statement  No.
              0-21994   dated  August  6,  1993  and   incorporated   herein  by
              reference).
     10.3     Glyko  Biomedical  Share Option Plan - 1994 (filed as exhibit 10.1
              to Form  10-QSB  dated June 30,  1994 and  incorporated  herein by
              reference).
     10.4     Development and Supply  Agreement  between  Registrant and Bio-Rad
              Laboratories, Inc., dated February 16, 1995 (filed as exhibit 10.1
              to Form 10-KSB  dated March 31,  1996 and  incorporated  herein by
              reference).
     10.5     International Distribution Agreement between Registrant and 
              Toyobo Co., Ltd. and MC Medical. Inc. dated September 12, 1995 
              (filed as exhibit 10.2 to Form 10-KSB dated March 31, 1996 and 
              incorporated herein by reference).
     10.6     Commercial  Lease  between  Registrant  and  Douglas R. Kaye dated
              December  23, 1996 (filed as exhibit  10.1 to Form  10-KSB/A  date
              December 31, 1996 and incorporated herein by reference.)
     10.7     Toyobo Distribution  Agreement  (confidential  portions of exhibit
              have been omitted pursuant to a request for confidential treatment
              and filed separately with the  Commission).  Filed as exhibit 10.1
              to Form 10-QSB dated March 31, 1997,  and  incorporated  herein by
              reference.
     10.8     First   Amendment   to  Bio-Rad   Laboratories,   Inc.   Agreement
              (confidential  portions of exhibit have been omitted pursuant to a
              request for  confidential  treatment and filed separately with the
              Commission).  Filed as exhibit  10.1 to Form 10-QSB dated June 30,
              1997, and incorporated herein by reference.
     10.9     License Agreement between Glyko Biomedical Ltd. and BioMarin 
              Pharmaceutical, Inc. (filed as Exhibit 10 to Form 10-QSB dated 
              September 30, 1997, and incorporated herein by reference.)
     22.1     Notice of Annual Meeting of Shareholders,  1997 Annual Information
              Circular,  Form of Proxy and Policy 41 Form.  Filed as  Definitive
              14A  documents  on  May  18,  1998,  and  incorporated  herein  by
              reference.
     22.2     Notice of Special Meeting of Shareholders, 1998 Annual Information
              Circular and Form of Proxy.  Filed as Definitive  14A documents on
              February 4, 1999, and incorporated herein by reference.
     27.1     Financial Data Schedule (see Financial Data Schedule hereto 
               attached at page 66)


<PAGE>
                                   SIGNATURES

         Pursuant  to the  requirements  of Section 13 or 15(d) of the  Exchange
Act,  the  registrant  caused  this  Report to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                                          GLYKO BIOMEDICAL LTD.

Dated:  April 15, 1999                    By:  \s\ John C. Klock, M.D.
----------------------------              ------------------------------
                                          John C. Klock, M.D.
                                          President and Chief Executive Officer

                                POWER OF ATTORNEY

         KNOW  ALL MEN BY THESE  PRESENTS,  that  each  person  whose  signature
appears below constitutes and appoints John C. Klock, his attorney-in-fact, with
the  power  of  substitution,  for him in any and all  capacities,  to sign  any
amendments  to the  Report on Form  10-KSB and to file the same,  with  exhibits
thereto and other  documents in connection  therewith,  with the  Securities and
Exchange  Commission,  hereby  ratifying  and  confirming  all that each of said
attorneys-in fact, or his substitute or substitutes,  may do or cause to be done
by virtue hereof.

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  Registrant and in the capacities and
on the dates indicated.

            Signature                       Title                     Date

\s\ John C. Klock, M.D.                                          April 15, 1999
-----------------------------------                             ----------------
John C. Klock, M.D.                 President, Chief Executive
                                     Officer, Director
                                     and Chief Accounting Officer
\s\ Brian K. Brandley                                            April 15, 1999
-----------------------------------                             ----------------
Brian K. Brandley, Ph.D.            Managing Director

\s\ R. William Anderson                                          April 15, 1999
-----------------------------------                             ----------------
R. William Anderson                 Director

\s\ John S. Craig                                                April 15, 1999
-----------------------------------                              ---------------
John H. Craig                       Secretary and Director

\s\ John S. Glass                                                April 15, 1999
-----------------------------------                              ---------------
John S. Glass                       Director

\s\ Gwynn R. Williams                                            April 15, 1999
-----------------------------------                              ---------------
Gwynn R. Williams                   Director

\s\ Mark I. Young                                                April 15, 1999
-----------------------------------                              ---------------
Mark I Young                        Assistant Secretary 
                                       and Director



                                       30
<PAGE>




                          Index to Financial Statements


Glyko Biomedical Ltd.'s Consolidated Financial Statements
Report of ndependent Public Accountants                           F.2
Consolidated Balance Sheets at December 31, 1998 and 1997         F.3
Consolidated Statements of Operations for the years ended 
December 31, 1998 and 1997                                        F.4 
Consolidated Statements of Stockholders' Equity (Deficit)
for the years ended December 31, 1998 and 1997                    F.5  
Consolidated Statements of Cash Flows
for the years ended December 31, 1998 and 1997                    F.6 
Notes to Consolidated Financial Statements                        F.7 to F.13

BioMarin  Pharmaceutical, Inc.'s Consolidated Financial Statements
Report ofIndependent Public Accountants                           F.14
Consolidated  Balance Sheets at December 31, 1998 and
December 31, 1997 F.15  Consolidated  Statements of Operations
for the year ended December 31, 1998 and the periods
from March 21, 1997  (inception) to December 31, 1998 and 1997    F.16
Consolidated  Statements of Stockholders' Equity
for the year  ended  December  31,  1998 and the  periods
from  March 21,  1997 (inception) to December 31, 1998 and 1997   F.17
Consolidated  Statements of Cash Flows for the year ended
December  31, 1998 and the periods from March 21, 1997
(inception) to December 31, 1998 and 1997                         F.19 
Notes to  Consolidated  Financial Statements                      F.20 to F.34


                                      F.1

<PAGE>






                    Report of Independent Public Accountants



       To the Stockholders of Glyko Biomedical Ltd.:



       We have audited the  accompanying  consolidated  balance  sheets of Glyko
       Biomedical  Ltd. and  subsidiaries  (the Company) as of December 31, 1998
       and  1997  and  the  related   consolidated   statements  of  operations,
       stockholders'  equity  (deficit) and cash flows for the years then ended.
       These  financial  statements  are  the  responsibility  of the  Company's
       management.  Our  responsibility  is  to  express  an  opinion  on  these
       financial statements based on our audits.

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

       In our  opinion,  the  financial  statements  referred  to above  present
       fairly,  in all  material  respects,  the  financial  position  of  Glyko
       Biomedical  Ltd. and  subsidiaries  as of December 31, 1998 and 1997, and
       the results of their  operations  and their cash flows for the years then
       ended in conformity with generally accepted accounting principles.





                             \s\ Arthur Andersen LLP

       San Francisco, California                    Arthur Andersen LLP
       February 17 , 1999
       (Except for the matter discussed in the
       fourth paragraph of Note 1, for which
        the date is April 13, 1999)

                                      F.2
<PAGE>

                         PART I. - FINANCIAL INFORMATION

ITEM 1.  Financial Statements


                             GLYKO BIOMEDICAL, LTD.
                           CONSOLIDATED BALANCE SHEETS
                                (In U.S. dollars)
<TABLE>
<CAPTION>

                                                                                             December 31,
                                                                   -----------------------------------------------------

                                                                            1998                          1997
                                                                   ------------------------      -----------------------
<S>                                                                <C>                          <C>
Assets
Current assets:
    Cash and cash equivalents                                                  $ 2,567,824                 $    528,280
    Trade receivables                                                                    -                      141,743
    Inventories                                                                          -                       95,210
    Note receivable                                                                100,000                            -
    Other current assets                                                             9,710                       15,179
                                                                   ------------------------      -----------------------
       Total current assets                                                      2,677,534                      780,412
Investment in BioMarin Pharmaceutical Inc.                                       7,674,729                    3,025,990
Property, plant and equipment, net                                                       -                      118,910
Note receivable from stockholder                                                   712,261                            -
Other assets                                                                             -                        2,206
                                                                   ------------------------      -----------------------
       Total assets                                                           $ 11,064,524                  $ 3,927,518
                                                                   ========================      =======================

Liabilities and Stockholders' Equity
Current liabilities:
    Accounts payable                                                          $          -                     $ 38,916
    Accrued liabilities                                                            411,109                      393,408
    Deferred rent and related costs                                                      -                      365,880
                                                                   ------------------------      -----------------------
       Total current liabilities                                                   411,109                      798,204

Stockholders' equity:
    Common stock,  no par value,  unlimited  shares  authorized,  28,020,234 and
       21,573,044 shares issued and outstanding at December 31, 1998
       and December 31, 1997, respectively                                      17,963,167                   13,154,224
    Additional paid in capital                                                  11,222,691                    4,068,564
    Common stock warrants and options                                              547,285                      929,585
    Deferred compensation                                                                -                      (33,364)
    Accumulated deficit                                                        (19,079,728)                 (14,989,695)
                                                                   ------------------------      -----------------------
       Total stockholders' equity                                               10,653,415                    3,129,314
                                                                   ------------------------      -----------------------
       Total liabilities and stockholders' equity                             $ 11,064,524                  $ 3,927,518
                                                                   ========================      =======================

</TABLE>


        The accompanying notes are an integral part of these statements.

                                      F.3
<PAGE>


                                         GLYKO BIOMEDICAL, LTD.
                                 CONSOLIDATED STATEMENTS OF OPERATIONS
                                           ( in U.S. dollars)


<TABLE>
<CAPTION>

                                                                           Year Ended December 31,
                                                                -----------------------------------------
                                                                       1998                  1997
                                                                -------------------   -------------------
<S>                                                             <C>                   <C>    
      Sales of products and services                                     $ 865,164           $ 1,175,699
      Other revenues                                                       294,752               860,935
                                                                -------------------   -------------------
        Total revenues:                                                  1,159,916             2,036,634

Expenses:
      Cost of products and services                                        284,860               482,770
      Research and development                                             679,783               605,803
      Selling, general and administrative                                  689,617               562,888
      Other                                                               (165,880)                    -
                                                                -------------------   -------------------
        Total expenses:                                                  1,488,380             1,651,461
                                                                -------------------   -------------------
Income (loss) from operations                                             (328,464)              385,173
Equity in loss of BioMarin Pharmaceutical Inc.                          (3,803,058)           (2,452,422)
Interest income                                                             42,822                12,610
Other loss                                                                  (1,333)               (1,219)
                                                                -------------------   -------------------
Net loss                                                              $ (4,090,033)         $ (2,055,858)
                                                                ===================   ===================


Net loss per common share, basic and diluted                               $ (0.17)              $ (0.10)
                                                                ===================   ===================

Weighted average number of shares
      used in computing per share amounts                               23,873,798            20,536,058
                                                                ===================   ===================
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      F.4


<PAGE>

                             GLYKO BIOMEDICAL, LTD.
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                (In U.S. dollars)


<TABLE>
<CAPTION>

                                       Common Stock                           Common               
                                ----------------------------    Additional    Stock       Deferred     Accumulated
                                    Shares        Amount     Paid In Capital Warrants    Compensation    Deficit        Total
                                ------------- ------------- ---------------- ---------- -------------- ------------- -------------

<S>                             <C>           <C>           <C>              <C>        <C>            <C>           <C>           
Balance at December 31, 1995      14,567,944  $ 11,304,356        $ -         $ 278,085      $ -       $ (11,357,978)  $   224,463

Net loss for the year                      -             -          -             -            -          (1,575,859)   (1,575,859)

Exercise of stock options                100            48          -             -            -                   -            48

Issuance of common stock 
and warrants in a private
placement financing, net 
of issuance costs of $152,156      2,675,000       898,661          -           155,812        -                   -     1,054,473

                                ------------- ------------- ----------------- ---------- ------------- ------------- -------------
Balance at December 31, 1996      17,243,044  $ 12,203,065        $ -         $ 433,897      $ -       $ (12,933,837)   $ (296,875)

Net loss for the year                      -             -          -                 -        -          (2,055,858)   (2,055,858)

Exercise of stock options             50,000        22,976          -                 -        -                   -        22,976

Grant of options to consultants            -             -       90,152               -     (33,364)               -        56,788

Issuance of common stock 
and warrants in a private
placement financing, net of
issuance costs of $160,881         4,280,000       928,183           -          495,688         -                  -     1,423,871

Additional paid in capital
resulting from the sale of
common stock by BioMarin
Pharmaceutical, Inc.                       -             -    3,978,412               -         -                  -     3,978,412
                                ------------- ------------- ----------------- ---------- ------------- ------------- -------------
Balance at December 31, 1997      21,573,044   $13,154,224   $4,068,564        $929,585      ($33,364) ($14,989,695)    $3,129,314

Net loss for the year                      -             -            -               -             -    (4,090,033)    (4,090,033)

Exercise of stock options          1,467,516     1,469,081            -               -             -             -      1,469,081

Exercise of stock warrants         4,825,643     3,269,122            -         (382,300)           -             -      2,886,822

Issuance of stock pursuant
to licensing contract                100,000        70,740            -               -             -             -         70,740

Issuance of stock pursuant 
to a consulting agreement             54,031             -            -               -             -             -              -

Amortization of deferred
compensation                               -             -            -               -        33,364             -         33,364

Additional paid in capital 
resulting from the sale of
common stock by BioMarin 
Pharmaceutical, Inc.                       -             -      7,154,127              -             -             -     7,154,127


                                  ------------- ------------- --------------- ----------- ------------- ------------- -------------
Balance at December 31, 1998       28,020,234   $17,963,167    $11,222,691     $547,285       $ -      ($19,079,728)   $10,653,415
                                  ============= ============= =============== =========== ============= ============= =============
</TABLE>


        The accompanying notes are an integral part of these statements.

                                      F.5

<PAGE>


                             GLYKO BIOMEDICAL, LTD.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in U.S. dollars)

<TABLE>
<CAPTION>
                                                                                   Year ended December 31,
                                                                           ----------------------------------------
                                                                                 1998                   1997
                                                                           -----------------      -----------------
<S>                                                                        <C>                    <C>
Cash flows from operating activities:
    Net loss                                                                   $ (4,090,033)          $ (2,055,858)

Adjustments to reconcile  net loss to net cash  provided by (used in)  operating
    activities:
    Depreciation and amortization                                                         -                115,481
    Equity in the loss of BioMarin Pharmaceutical Inc.                            3,803,058              2,452,422
    Amortization of deferred compensation                                            33,364                      -
    Loss on disposal of property and equipment                                            -                  1,452
    Changes in assets and liabilities:
      Trade receivables                                                                   -                 14,433
      Inventories                                                                         -                (26,758)
      Other current assets                                                           (9,710)                10,840
      Accounts payable                                                                    -               (135,816)
      Accrued liabilities                                                            27,556                (30,907)
      Deferred rent and related costs                                                     -                 96,162
                                                                           -----------------      -----------------
    Total adjustments                                                             3,854,268              2,497,309
                                                                           -----------------      -----------------
      Net cash provided by (used in) operating activities                          (235,765)               441,451

Cash flows from investing activities:
    Investment in BioMarin Pharmaceutical Inc.                                   (1,000,002)            (1,500,000)
    Purchases of property, plant and equipment                                            -                (71,010)
    Deconsolidation of Glyko, Inc. assets                                          (267,347)                     -
    Settlement of amounts due from Glyko, Inc.                                    1,212,278                      -
                                                                           -----------------      -----------------
      Net cash used in investing activities                                         (55,071)            (1,571,010)

Cash flows from financing activities:
    Notes receivable issued for the exercise of stock options                      (100,000)                     -
    Net proceeds from the issuance of common stock and warrants
      in a private placement                                                              -              1,423,871
    Net proceeds from the issuance of common stock
      pursuant to a technology and license agreement                                 70,740                      -
    Proceeds from the exercise of stock options and
      common stock warrants                                                       2,359,640                 22,976
                                                                           -----------------      -----------------
      Net cash provided by financing activities                                   2,330,380              1,446,847

                                                                           -----------------      -----------------
Net increase in cash                                                              2,039,544                317,288
Cash and cash equivalents, beginning of period                                      528,280                210,992
                                                                           -----------------      -----------------
Cash and cash equivalents, end of period                                        $ 2,567,824              $ 528,280
                                                                           =================      =================


Supplemental disclosure of non-cash financing activities:
    Common stock and common stock warrants issued
    in exchange for financing services                                               $ -              $ 160,881
    Note receivable issued for the exercise of stock options                      $ 712,261               $ -
</TABLE>


        The accompanying notes are an integral part of these statements.

                                      F.6

<PAGE>



                              GLYKO BIOMEDICAL LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.      The Company and Description of the Business
        Glyko  Biomedical Ltd. (the Company or GBL) is a Canadian  company which
        was established in 1992 to acquire all of the outstanding  capital stock
        of Glyko, Inc., a Delaware corporation. The Company was incorporated for
        the sole purpose of  acquiring  Glyko,  Inc.  Both  entities  were under
        common  control and the share  exchange  was  accounted  for in a manner
        similar to a pooling.  Since its inception in October 1990,  Glyko, Inc.
        has engaged in research and development of new techniques to analyze and
        manipulate  carbohydrates  for research,  diagnostic and  pharmaceutical
        purposes.  Glyko, Inc. has developed a line of analytic  instrumentation
        laboratory  products that include an imaging system,  analysis  software
        and chemical analysis kits.

        In October 1996, GBL formed BioMarin  Pharmaceutical Inc. (BioMarin),  a
        Delaware  corporation in the development stage, to develop the Company's
        pharmaceutical  products.  BioMarin  began  business  on March 21,  1997
        (inception) and subsequently  issued 1,500,000 shares of common stock to
        GBL for $1.5 million.  As consideration  for a certain license agreement
        dated June 1997, BioMarin issued GBL 7,000,000 shares of BioMarin common
        stock.  Beginning in October 1997,  BioMarin  raised  capital from third
        parties  with the result  that at December  31,  1997,  GBL's  ownership
        interest in BioMarin had been reduced to 41.3% of BioMarin's outstanding
        capital stock.  As of December 31, 1997, the Company began recording its
        share of BioMarin's  net loss utilizing the equity method of accounting.
        On June 30, 1998,  BioMarin raised net proceeds of $3.3 million (598,535
        shares) including a $1.0 million  investment from GBL. On August 3, 1998
        BioMarin  raised an  additional  $8.1  million  from third  parties.  On
        September  4, 1998,  BioMarin  received $8 million  from  Genzyme  Corp.
        ("Genzyme")  upon  execution  of a  joint  venture  agreement  in  which
        BioMarin issued  1,333,333  shares of common stock to Genzyme.  BioMarin
        has a 50%  interest  in  the  income  or  loss  of  the  joint  venture,
        BioMarin/Genzyme, LLC.

        On October 7, 1998, GBL sold to BioMarin 100% of the outstanding capital
        stock of Glyko,  Inc. in exchange  for  2,259,039  shares of  BioMarin's
        common stock. In addition, BioMarin agreed to assume options, previously
        issued to employees of Glyko,  Inc., to purchase up to 585,969 shares of
        GBL's common stock  (exercisable  into 255,540 shares of BioMarin common
        stock) and BioMarin  paid $500 in cash.  As of December  31,  1998,  GBL
        owned 41.7% of BioMarin's outstanding capital stock.

       Since its inception, GBL has incurred a cumulative deficit of $19,079,728
       and the Company  expects to continue to incur  losses  during 1999 due to
       its share of BioMarin's net loss resulting from the ongoing  research and
       development of BioMarin's  pharmaceutical product candidates. As a result
       of GBL's  sale of  Glyko,  Inc.  on  October  7,  1998,  GBL has  limited
       operating  activities  and  its  principal  asset  is its  investment  in
       BioMarin.  Accordingly,  without further investment in other companies or
       technologies, management believes that GBL has sufficient cash to sustain
       planned operations.  BioMarin will require additional capital.  While GBL
       is not obligated to provide this  capital,  in April,  1999,  the Company
       entered into a convertible  note  arrangement with BioMarin in the amount
       of $4,300,000,  as part of a $26,000,000 convertible note financing which
       was closed on April 13,  1999.  BioMarin  has an  accumulated  deficit of
       $15,076,419  at December  31,  1998 and is expected to incur  significant
       losses during 1999 and beyond.  Management of BioMarin  believes that the
       convertible  note  financing  will  be  sufficient  to meet  its  minimum
       obligations  through  December  31,  1999.  However,  BioMarin  will seek
       additional  financing  in the near  term to fully  execute  its  business
       strategies and meet its longer term  obligations.  Management of GBL does
       not believe that at December 31, 1998,  there has been any  impairment of
       its investment in BioMarin.


2.      Summary of Significant Accounting Policies

        The accompanying consolidated financial statements and related footnotes
        have been prepared in conformity with U.S. generally accepted accounting
        principles  using U.S.  dollars as all of the Company's  operations were
        located in the United  States.  The  consolidated  financial  statements
        include the accounts and  operations  of the Company and Glyko,  Inc for
        the year ended December 31, 1997 and for the period from January 1, 1998
        through  October  7,  1998,  the  date of the  sale of  Glyko,  Inc.  to
        BioMarin. The results of operations of BioMarin have been reported in

                                      F.7
<PAGE>

        the Company's financial statements for the years ended December 31, 1998
        and 1997,  based on the  equity  method  of  accounting.  Subsequent  to
        October 7, 1998,  the results of  operations  of Glyko,  Inc.  have been
        consolidated into the results of operations of BioMarin.

        All  significant   intercompany  accounts  and  transactions  have  been
        eliminated.  Certain balances in the prior years have been  reclassified
        to conform with the current year presentation.

        Use of Estimates:

        The preparation of the Company's  consolidated  financial  statements in
        conformity  with  generally  accepted  accounting   principles  requires
        management  to make certain  estimates and  assumptions  that effect the
        reported  amounts  of  assets  and  liabilities  and the  disclosure  of
        contingent  assets  and  liabilities  at the  dates of the  consolidated
        financial  statements and the reported  amounts of revenues and expenses
        during the  reporting  periods.  Actual  results could differ from those
        estimates.  Significant  estimates  made by  management  at December 31,
        1997,  include allowance for doubtful accounts  receivable,  and certain
        other reserves, including an accrual for deferred rent.

        Cash and Cash Equivalents:

       Cash  and cash  equivalents  consist  of  amounts  held  with  banks  and
       short-term investments with original maturities of 90 days or less.

       Inventories:

       Inventories  consist of analytic kits and  instrument-based  systems held
       for  sale.  Inventories  are  stated  at the  lower  of  cost  (first-in,
       first-out method) or estimated market value.

        Property, Plant and Equipment:

       Property,   plant  and  equipment  are  stated  at  cost.  The  cost  and
       accumulated depreciation for property, plant and equipment sold, retired,
       or  otherwise  disposed  of are  relieved  from  the  accounts,  and  the
       resulting gains or losses are reflected in the consolidated statements of
       operations.  Depreciation is computed using the straight-line method over
       the following estimated useful lives:

                           Office furniture                       5 years
                           Computer equipment                     3 years
                           Lab and production equipment           5 years

       Sale of Glyko, Inc. and Investment in BioMarin Pharmaceutical Inc.

       BioMarin  acquired Glyko,  Inc. from GBL through the exchange of BioMarin
       stock for Glyko,  Inc. stock and accounted for the acquisition based upon
       the fair market value of the BioMarin  stock  issued,  the  assumption of
       responsibility for certain stock options previously issued to Glyko, Inc.
       employees (see Note 1), and $500 in cash. In consolidating  Glyko,  Inc.,
       BioMarin recorded intangible assets,  including  goodwill,  to the extent
       that the fair market value of the stock  issued  exceeded the fair market
       value of the tangible assets of Glyko,  Inc.  acquired.  GBL recorded the
       stock of BioMarin received at the historical cost basis of its investment
       in Glyko,  Inc.  GBL accounts for its  investment  in BioMarin  using the
       equity  method  of  accounting.  However,  as it  has  not  recorded  its
       investment in BioMarin at fair market value, it does not record its share
       of  the  losses  recorded  by  BioMarin  related  to  the  write  off  or
       amortization of intangible assets recorded on acquisition of Glyko, Inc.

        During the period from October 7, the date of acquisition of Glyko, Inc,
       to  December  31,  1998,  BioMarin  recorded  a charge to  operations  of
       $2,625,000  in connection  with the write-off of in-process  research and
       development  acquired in the purchase of Glyko, Inc. and $271,274 for the
       amortization  of goodwill and other  intangible  assets,  which are being
       amortized over ten years.  In recording its share of BioMarin's  loss for
       this  period,  GBL reduced  this loss for its share of the  write-off  of
       in-process   technology  and  the  amortization  of  goodwill  and  other
       intangible assets.

       In  addition,  to the extent  that the  issuance  of stock by BioMarin to
       third parties results in an increase in or decrease in the Company's

                                      F.8
<PAGE>

       ownership  of the net  assets of  BioMarin,  the  Company  reflects  this
       increase or decrease as paid-in capital as reflected in the  consolidated
       statements of stockholders'  equity (deficit) and an increase or decrease
       in its investment in BioMarin.

       Product Sales:

       The Company  recognizes  product  revenues and related cost of sales upon
       shipment of products.  Service revenues are recognized upon completion of
       services as evidenced by the transmission of reports to customers.  Other
       revenues,  principally  licensing and  distribution  fees, are recognized
       upon completion of applicable contractual obligations.

       At times, the Company has received payments in advance for future product
       shipments or hardware  maintenance and service  contracts.  Such payments
       are  classified  as  deferred  revenue on the  accompanying  consolidated
       balance sheets. Upon shipment of products,  revenue is recognized and the
       corresponding  liability  (deferred  revenue) is reduced.  Revenues  from
       maintenance  and service  contracts are recognized  monthly pro rata over
       the period of the  contract  and the  corresponding  liability  (deferred
       revenue) is reduced.

       During  1994,  the Company  recorded a charge to  operations  of $219,811
       related to the termination of an agreement with one of its  stockholders.
       This  charge was the  estimated  fair  value of 500,000  shares of common
       stock to be received by the  stockholder  in settlement of the agreement.
       The Toronto Stock  Exchange has not permitted the issuance of the 500,000
       shares  because  the  transaction  is not  considered  arms  length.  The
       stockholder  was a stockholder in the Company from 1990 until April 1998.
       At  December  31, 1998 the  liability  of $219,811 is included in accrued
       liabilities in the accompanying consolidated balance sheets.

       Net Loss per Share:

       Potentially  dilutive  securities  outstanding  at December  31, 1998 and
       1997,  respectively,  include  options  for the  purchase  of 548,290 and
       2,424,402  shares of common  stock and  warrants  for the purchase of 5.8
       million and 10.9 million shares of common stock.  These  securities  were
       not  considered  in the  computation  of dilutive  loss per share because
       their effect would be anti-dilutive for the years ended December 31, 1998
       and 1997.

       New Accounting Standards

       During the year ended  December  31, 1998,  the Company  adopted SFAS No.
       131,   "Disclosures   about   Segments  of  an  Enterprise   and  Related
       Information".  The  Company  concluded  that it has  only  one  operating
       segment.

       In June 1998,  the FASB issued SFAS No. 133,  "Accounting  for Derivative
       Instruments and Hedging Activities." SFAS No. 133, which is effective for
       fiscal  years  beginning  after June 15,  1999 is not  expected to have a
       material  impact  on the  Company's  financial  position  or  results  of
       operations.



3.     Property, Plant and Equipment

       Property,  plant and equipment at December 31, 1998 and 1997 consisted of
the following:

                                  December 31,
                                    1998 1997
                                               ---------------  ---------------
              Lab equipment                         $-               $229,701
              Computer equipment                     -                 94,712
              Production equipment                   -                 37,164
              Office furniture                       -                 13,510
              Leasehold improvements                 -                 68,343
                                                ---------------  ---------------
                                                     -                443,430
                                                ---------------  ---------------
              Less accumulated depreciation           -              (324,520)
                                                ---------------  ---------------
              Property, plant and equipment, net     $-              $118,910
                                                ===============  ===============
                                      F.9
<PAGE>

4.    Income Taxes

       The Company's deferred tax asset at December 31, 1998 and 1997 is:

                                  December 31,
                                    1998 1997
                                                ---------------  ---------------
              Net  operating loss carryovers        $563,000         $5,153,000
              Research and development expenses            -                  -
                  capitalized for tax purposes             -             62,000
              Research and development
                  credit carryovers                        -            593,000
              Issuance costs                           6,000            137,000
              Other temporary differences                  -           (255,000)
                                                ---------------  ---------------
                                                      649,000         5,690,000
              Valuation allowance                    (649,000)       (5,690,000)
                                                ---------------  ---------------
              Net deferred tax asset                   $-               $-
                                                ===============  ===============


       The reconciliation of the effective tax rate is as follows:

<TABLE>
<CAPTION>
                                                                   December 31,
                                                      1998                              1997
                                         Amount                %          Amount               %
                                      ------------------ ------------- ------------------ ------------
<S>                                   <C>                <C>           <C>                <C>  
U.S. Statutory tax rate               $(1,391,000)         (34)%         $(699,000)        (34)%
State taxes, net of federal
income tax benefit                       (245,000)          (6)%          (123,000)         (6)%
Effects of international                                                                   
losses and loss in equity of
subsidiary                               1,610,000           39%            933,000         45 %
Research and development tax
credit                                           -             -           (56,000)         (2)%
Loss carryforward utilized                       -             -          (105,000)         (5)%
Other                                       26,000            1%              4,000            -
Change in valuation allowance                    -
                                                               -             46,000          2 %
                                      ------------------ ------------- ------------------ ------------
Provision for income taxes                 $     -           0 %            $   -            0 %
                                      ================== ============= ================== ============
</TABLE>

       In connection  with the sale of Glyko,  Inc., the U.S.  federal and state
       net tax operating loss carryforwards and the related valuation allowances
       were consolidated into the financial statements of BioMarin.

       At December 31, 1998,  the Company has net operating  loss  carryforwards
       for Canadian  income tax  purposes of  approximately  $1.3 million  which
       expire from 1999 to 2003.

5.       Note Receivable
       As part of its  compensation  for  certain  services,  GBL  issued  stock
       options to a consulting group.  These options are in the process of being
       approved  by the  Toronto  Stock  Exchange.  GBL loaned  $100,000  to the
       consulting  group in  anticipation  that the Toronto Stock Exchange would
       approve the stock options. The excess of the fair market value of the GBL
       stock at December 31, 1998 over the exercise price of the options


                                      F.10
<PAGE>
       significantly  exceeds  the amount of the loan.  The  options are held as
       security for the loan. This note was repaid in full in 1999.

       In  November  1998,  GBL loaned  $712,261 to an officer of the Company to
       exercise expiring stock options.  The loan is secured by the stock and is
       a full recourse note

6.      Commitments and Contingencies

       In July 1998,  the claim by  Millipore  Corp.  relating  to a  facilities
       dispute and other matters was settled, resulting in a gain of $165,880 as
       the amount of the ultimate settlement was less than the amount previously
       provided for by the Company.  This was  recognized in the second  quarter
       and six-month ended June 30, 1998 results of operations.


7.      Stockholders' Equity

       On March  21,  1997,  the  Company  closed a  Cdn.$2.0  million  (USD$1.4
       million)  financing (the Q197 Financing) to fund the start-up of BioMarin
       Pharmaceutical   Inc.   which  was  formed  to  develop   the   Company's
       pharmaceutical  products.  As a result  of this  financing,  the  Company
       issued 4.0 million units at Cdn.$0.50 per unit,  each unit  consisting of
       one common share and one common share purchase warrant.  Each warrant can
       be  exercised  for one  share of common  stock at  Cdn.$1.00  per  share,
       expiring  on March 21,  1999.  An  additional  280,000  units and 280,000
       warrants valued at approximately $161,000 were distributed to the brokers
       in exchange for services  rendered in connection with the Q197 Financing.
       The Company  utilized the  Black-Scholes  model to value all the warrants
       issued in the Q197 Financing at approximately  $496,000. The Company used
       the proceeds of the offering and  additional  cash to purchase  1,500,000
       common shares of BioMarin for $1.5 million.

       BioMarin and the Company have entered into a License Agreement dated June
       26, 1997,  pursuant to which the Company  granted  BioMarin an exclusive,
       worldwide, perpetual, irrevocable,  royalty-free right and license to all
       current and future worldwide patents, trade secrets, copyrights and other
       proprietary rights to all know-how,  processes,  formulae, concepts, data
       and other such intellectual  property,  whether patented or not, owned or
       licensed  by the  Company.  and its  subsidiaries  as of the  date of the
       License Agreement. As consideration for this license, BioMarin issued the
       Company 7,000,000 shares of BioMarin common stock. Under the same License
       Agreement,  BioMarin  granted the Company.  a  cross-license,  similar in
       scope,  to  all   improvements   BioMarin  may  make  upon  the  licensed
       intellectual property.

       On October 7, 1998, GBL sold to BioMarin 100% of the outstanding  capital
       stock of Glyko,  Inc.  in exchange  for  2,259,039  shares of  BioMarin's
       common stock plus BioMarin agreed to assume options, previously issued to
       employees  of Glyko,  Inc.,  to  purchase  up to 585,969  shares of GBL's
       common stock  (exercisable  into 255,540 shares of BioMarin common stock)
       and BioMarin  paid $500 in cash. As a result of this  transaction,  as of
       December 31, 1998,  GBL's share of BioMarin's  outstanding  capital stock
       increased  from  36.2% to 41.7%.  The  exercise  of  BioMarin  options or
       warrants will result in a further reduction of GBL's ownership percentage
       and  future  fundraising  efforts  of  BioMarin  may  result in a similar
       reduction of GBL's ownership percentage.  To the extent that the issuance
       of common stock by BioMarin to third parties at a per share price greater
       than or less than the per share  carrying  value of GBL's  investment  in
       BioMarin,  the  resulting  gain or loss is  reflected  as an  increase or
       decrease, respectively, in additional paid in capital in the consolidated
       balance  sheet.  During  1998,  the  Company  recorded an increase to its
       additional  paid in  capital  by  $7,154,127  as a result  of the sale of
       common stock by BioMarin.

8.        Stock Option Plan

       The  Company has a stock  option  plan (the Plan) under which  options to
       purchase  common  stock  may be  granted  by the  Board of  Directors  to
       directors,  officers, consultants and key employees at not less than fair
       market  value,  less any  permissible  discounts,  on the date of  grant.
       Options granted under the Plan may be incentive stock options (as defined
       under Section 422 of the U.S. Internal Revenue Code) or non-statutory

                                      F.11
<PAGE>
       stock options.  Options are exercisable  over a number of years specified
       at the time of the grant  which  cannot  exceed  ten years.  The  maximum
       aggregate  number of shares  which may be granted and sold under the Plan
       is 3,000,000 shares.

       The Company  accounts  for the Plan under APB Opinion No. 25, under which
       no compensation  cost has been recognized,  except for options granted to
       consultants,  because,  under the Option Plan, the option  exercise price
       equals the market  value of stock on the date of grant.  In general,  the
       Plan options vest over 48 months and all options  expire after 5 years or
       90 days after employee termination.

       Had compensation  cost for the Plan been determined  consistent with FASB
       Statement No. 123, the  Company's  net loss would have been  increased to
       the following pro forma amounts:

                                                 1998                  1997
          Net loss      As reported         $(4,090,033)          $(2,055,858)
                        Pro forma             (4,283,405)         $(2,138,587)

          Net loss per  As reported            $(0.17)              $(0.10)
             common     Pro forma              $(0.18)              $(0.10)
             share

       Because the Statement  123 method of  accounting  has not been applied to
       options  granted  prior to  January  1,  1995,  the  resulting  pro forma
       compensation  cost may not be  representative  of that to be  expected in
       future years.


                                      F.12
<PAGE>


       A summary of the status of the Company  stock option plan at December 31,
       1998 and 1997 and changes during the years then ended is presented in the
       table and narrative below:

<TABLE>
<CAPTION>
                                                          1998                              1997

                                                Shares         Wtd avg ex         Shares        Wtd avg ex
                                                                price (2)                        price (2)
                                            ---------------- ---------------- ---------------- --------------
<S>                                         <C>              <C>              <C>              <C>    
           Outstanding beginning
              of year                             2,424,402    Cdn. $1.22           2,254,597   Cdn. $ 1.36
           Granted (1)                              314,550    Cdn. $2.40             528,870   Cdn. $ 0.71
           Exercised                            (1,467,516)    Cdn. $1.52            (50,000)   Cdn. $ 0.65
           Assumed (3)                            (585,969)    Cdn. $1.51                   -        -
           Canceled                               (137,177)    Cdn. $1.38           (309,065)   Cdn. $ 1.41
                                            ----------------                  ----------------
           Outstanding at end of                                                                
               year                                 548,290    Cdn. $0.85           2,424,402   Cdn. $1.22
                                            ----------------                  ----------------
           Exercisable at end of year               548,290                         2,045,312
           Weighted average fair
               value of options granted           Cdn $1.29                        Cdn. $0.50
<FN>

            (1)    In 1997,  includes 150,000 options issued to consultants with
                   an average fair value of $ 0.22 per option  excluded from pro
                   forma net loss and pro forma net loss per common share.

            (2)    The US$ equivalent of Canadian $1.00 at December 31, 1998 was
                   approximately $0.6535. The weighted average exercise price is
                   quoted in Cdn.$ as the  Company's  Common  Stock is traded on
                   the Toronto Stock Exchange.

            (3)   In  connection  with  the sale of  Glyko,  Inc.  to  BioMarin,
                  effective  October 7, 1998,  BioMarin agreed to assume 585,969
                  options to  purchase  common  stock of GBL  (exercisable  into
                  255,540 shares of common stock of BioMarin.)
</FN>
</TABLE>

       There  are  2,065,906  options  available  for  grant  under  the plan at
       December 31, 1998. The average remaining  contractual life of the options
       outstanding at December 31, 1998 is 2 years.

       The fair value of each option  granted is  estimated on the date of grant
       using  the   Black-Scholes   option  pricing  model  with  the  following
       weighted-average   assumptions   used  for   grants  in  1998  and  1997,
       respectively:  risk-free  weighted  average interest rates of 5.4 and 5.3
       percent;  expected  dividend  yield of zero  percent;  expected life of 4
       years for the Plans' options; expected volatility of 65 and 87 percent.

9.     Related Party Transactions

       The Company has entered into certain  transactions  with its stockholders
       since its inception.  These transactions include the purchase of supplies
       and  equipment  and rental of the  Company's  facilities.  Total costs of
       these  transactions  for the years ended  December 31, 1998 and 1997 were
       approximately $0 and, $20,060, respectively.

       Prior to the sale of Glyko,  Inc.  to  BioMarin,  the  Company  subleased
       office  and lab  space  to,  and  performed  certain  administrative  and
       research and development functions for BioMarin.  BioMarin reimbursed the
       Company for rent, salaries and related benefits and other  administrative
       costs and the  Company  reimburses  BioMarin  for  salaries  and  related
       benefits.  BioMarin  reimbursed  the Company a net $183,000 in 1998 and a
       net $241,000 in 1997. The Company also provided  analytical  services and
       products to BioMarin at a 27% discount in 1998 and 1997.  Total  receipts
       to the  Company  from  sales to  BioMarin  totaled  $113,000  in 1998 and
       $39,000 in 1997.




                                      F.13
<PAGE>




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Stockholders of BioMarin Pharmaceutical Inc.:

We have audited the consolidated balance sheets of BioMarin  Pharmaceutical Inc.
(a Delaware  corporation in the  development  stage) as of December 31, 1998 and
1997,  and  the  related  consolidated  statements  of  operations,  changes  in
stockholders'  equity,  and cash flows for the year ended  December 31, 1998 and
the periods from March 21, 1997  (inception)  to December 31, 1997, and December
31, 1998. These consolidated  financial statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated  financial  statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
BioMarin  Pharmaceutical  Inc. as of December 31, 1998 and 1997, and the results
of its  operations  and its cash flows for the year ended  December 31, 1998 and
the periods from March 21, 1997  (inception)  to December 31, 1997, and December
31, 1998, in conformity with generally accepted accounting principles.



                                            \s\ Arthur Anderson LLP
San  Francisco,  California                 Arthur  Andersen LLP 
March 17, 1999 (Except for the
matter discussed in Note 12, 
for which the date is April 13, 1999)


                                      F.14
<PAGE>



                          BIOMARIN PHARMACEUTICAL INC.
                         (a development-stage company)

                          CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 1998 AND 1997


<TABLE>
<CAPTION>
                                                                                            1998                1997
                                                                                        --------------     ---------------

                                        ASSETS                                                                            
CURRENT ASSETS:
<S>                                                                                      <C>               <C>          
   Cash and cash equivalents                                                             $  9,413,662      $   5,987,433
   Short-term investments                                                                    1,975,800           900,827
   Accounts receivable, net                                                                    148,396                --
   Due from Glyko Biomedical, Ltd.                                                             114,005            79,607
   Due from joint venture                                                                      418,712                --
   Inventories                                                                                  71,730                --
   Prepaid expenses                                                                            676,214           539,445
                                                                                        --------------
                                                                                                           ---------------
                Total current assets                                                        12,818,519         7,507,312
PROPERTY AND EQUIPMENT, net                                                                  6,223,058           145,683
GOODWILL AND OTHER INTANGIBLE ASSETS                                                        11,703,726                --
INVESTMENT IN JOINT VENTURE                                                                    684,657                --
DEPOSITS                                                                                        79,142                --
                                                                                        --------------     --------------
                Total assets                                                             $ 31,509,102      $   7,652,995
                                                                                        ==============     ===============

                         LIABILITIES AND STOCKHOLDERS' EQUITY                                                             
CURRENT LIABILITIES:
   Accounts payable                                                                      $  1,340,355      $     168,062
   Accrued liabilities                                                                         640,016            43,395
   Due to Glyko, Inc.                                                                               --            61,072
   Notes payable short-term                                                                     24,366                --
                                                                                        --------------
                                                                                                           ---------------
                Total current liabilities                                                    2,004,737           272,529
LONG-TERM LIABILITIES:  Long-term portion of notes payable                                     109,845                --
                                                                                                           ---------------
                                                                                        --------------
                Total liabilities                                                            2,114,582           272,529
                                                                                        --------------     ---------------
STOCKHOLDERS' EQUITY:
   Common stock, $0.001 par value:  30,000,000 shares authorized, 26,176,180 and                                          
     20,566,500 shares issued and outstanding at December 31, 1998 and 1997,                                              
     respectively                                                                               26,176            20,567
   Additional paid-in capital                                                               47,867,868        12,548,924
   Warrants                                                                                    128,240           128,240
   Deferred compensation                                                                      (986,425)         (217,000)
   Notes receivable from stockholders                                                       (2,564,920)       (2,337,500)
   Deficit accumulated during the development stage                                        (15,076,419)       (2,762,765)
                                                                                        --------------     ---------------
                Total stockholders' equity                                                  29,394,520         7,380,466
                                                                                        --------------     ---------------
                Total liabilities and stockholders' equity                               $ 31,509,102      $   7,652,995
                                                                                        ==============     ===============
</TABLE>


      The accompanying notes are an integral part of these statements.

                                      F.15
<PAGE>



                          BIOMARIN PHARMACEUTICAL INC.
                          (a development-stage company)

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE YEAR ENDED DECEMBER 31, 1998, AND FOR THE
          PERIODS FROM MARCH 21, 1997 (INCEPTION) TO DECEMBER 31, 1997
                              AND DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                                                  Period from              Period from
                                                                                 March 21, 1997           March 21, 1997
                                                           Year Ended           (Inception), to          (Inception), to
                                                       December 31, 1998       December 31, 1997        December 31, 1998
                                                      ---------------------   ---------------------    ---------------------


REVENUES:
<S>                                                   <C>                     <C>                      <C>            
   Revenues--products and services                       $       250,297          $          --           $       250,297
   Revenues from joint venture                                   837,457                     --                   837,457
   Revenues--other                                               102,655                     --                   102,655
                                                      ---------------------   ---------------------    ---------------------

                Total revenues                                1,190,409                     --                 1,190,409

OPERATING COSTS AND EXPENSES:                                                                                               
   Cost of goods sold                                           107,942                     --                   107,942
   Research and development                                  10,502,636              1,913,795                12,416,431
   General and administrative expenses                        3,530,886                914,299                 4,445,185
                                                      ---------------------   ---------------------    ---------------------

                Loss from operations                        (12,951,055)            (2,828,094)              (15,779,149)

INTEREST INCOME                                                 684,572                 65,329                   749,901

EQUITY IN LOSS OF JOINT VENTURE                                 (47,171)                    --                   (47,171)
                                                      ---------------------   ---------------------    --------------------- 

                Net loss                                $   (12,313,654)         $  (2,762,765)          $   (15,076,419)
                                                      =====================   =====================    =====================

NET LOSS PER SHARE, basic and diluted                       $(0.55)                 $(0.34)                  $(0.93)
                                                      =====================   =====================    =====================


WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                 22,488,481              8,136,475                16,184,162
                                                      =====================   =====================    =====================

</TABLE>

        The accompanying notes are an integral part of these statements.


                                      F.16
<PAGE>

                          BIOMARIN PHARMACEUTICAL INC.
                          (a development stage company)

                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
      FOR THE PERIOD FROM MARCH 21, 1997 (INCEPTION), TO DECEMBER 31, 1997,
                  FOR THE YEAR ENDED DECEMBER 31, 1998, AND FOR
        THE PERIOD FROM MARCH 21, 1997 (INCEPTION), TO DECEMBER 31, 1998





   <TABLE>
<CAPTION>
                                                                                      Additional
                                                            Common Stock               Paid-in                 Warrants
                                                    ---------------- ------------                    ------------- ---------------
                                                         Shares         Amount         Capital          Shares         Amount
                                                    ---------------- ------------ ------------------ ------------- ---------------

<S>                                                 <C>              <C>          <C>                <C>           <C>              
  BALANCE, MARCH 21, 1997                                      --    $      --     $        --             --      $       --

     Issuance of common stock to Glyko
      Biomedical, Ltd. on March 21, 1997, 
      for cash, $1.00 per share                         1,500,000       1,500        1,498,500             --              --
     Issuance of common stock to Glyko 
      Biomedical, Ltd. in June 1997 in exchange
      for technology, $1.00 per share                   7,000,000       7,000           (7,000)            --              --
     Issuance of common stock in October 1997,
      $1.00 per share (net of issuance costs of
      $439,720, including the issuance of 
      299,000 shares of common stock,
      $1.00 per share, and warrants to purchase                                                                                     
      an additional 299,000 shares of common 
      stock for brokerage services)                     4,039,000       4,039        3,595,241        299,000          47,840
     Issuance of common stock to employees
       in exchange for notes in October 1997, 
       $1.00 per share                                  2,500,000       2,500        2,497,500             --             --
     Issuance of common stock and warrants
       on December 31, 1997, $1.00 per share
       (net of issuance costs of $592,309,
       including  the  issuance  of 502,500
       shares of common  stock,  $1.00 per
       share, and warrants to purchase an
       additional 502,500 shares
       of common stock for brokerage services)          5,527,500       5,528        4,929,663        502,500          80,400
     Common stock options granted in
       exchange for services                                   --          --           35,020             --              --
     Interest on notes receivable                              --          --               --             --              --
     Net loss for the period from 
      March 21, 1997 (inception), to December 31, 1997         --          --               --             --              --

                                                 ---------------- ------------ ------------------ ------------- ---------------
  BALANCE, DECEMBER 31, 1997                           20,566,500   $  20,567    $  12,548,924        801,500      $  128,240
                                                 ================ ============ ================== ============= ===============
</TABLE>



        The accompanying notes are an integral part of these statements.
                                      F.17

<PAGE>
                         BIOMARIN PHARMACEUTICAL INC.                          
                          (a development stage company)

                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
      FOR THE PERIOD FROM MARCH 21, 1997 (INCEPTION), TO DECEMBER 31, 1997,
                  FOR THE YEAR ENDED DECEMBER 31, 1998, AND FOR
        THE PERIOD FROM MARCH 21, 1997 (INCEPTION), TO DECEMBER 31, 1998



<TABLE>
<CAPTION>
                                                                          Notes        Accumulated Deficit                          
                                                       Deferred            from            Development       Stockholders'
                                                     Compensation      Stockholders           Stage              Equity
                                                  ----------------- ------------------ ------------------- -----------------

<S>                                               <C>               <C>                <C>                 <C>                  
  BALANCE, MARCH 21, 1997                          $        --       $           --      $           --     $           --

     Issuance of common stock to Glyko
      Biomedical, Ltd. on March 21, 1997,
      for cash, $1.00 per share                             --                   --                  --          1,500,000
     Issuance of common stock to Glyko 
       Biomedical, Ltd. in June 1997 in exchange
       for technology, $1.00 per share                      --                   --                  --                 --
     Issuance of common stock in October 1997,
       $1.00 per share (net of issuance costs of
       $439,720, including the issuance of
       299,000 shares of common stock,
       $1.00 per share, and warrants to purchase                                                                                    
       an additional 299,000 shares of common
       stock for brokerage services)                        --                   --                  --          3,647,120
     Issuance of common stock to employees  
       in exchange for notes in October 1997,
       $1.00 per share                                (200,000)          (2,300,000)                 --                 --
     Issuance of common stock and warrants
       on December 31, 1997, $1.00 per
       share (net of issuance costs of $592,309, 
       including  the  issuance  of 502,500  shares
       of common  stock,  $1.00 per share, and 
       warrants to purchase an additional 502,500
       shares of common stock for brokerage services)       --                   --                  --          5,015,591
     Common stock options granted in  
       exchange for services                           (17,000)                  --                  --             18,020
     Interest on notes receivable                           --              (37,500)                 --            (37,500)
     Net loss for the period from 
      March 21, 1997 (inception), to December 31, 1997      --                   --          (2,762,765)        (2,762,765)

                                                ----------------- ------------------ -------------------  -----------------
  BALANCE, DECEMBER 31, 1997                        $  (217,000)      $  (2,337,500)     $   (2,762,765)     $   7,380,466
                                                ================= ================== ===================  =================
</TABLE>


        The accompanying notes are an integral part of these statements.

                                      F.17

<PAGE>

                          BIOMARIN PHARMACEUTICAL INC.
                          (a development stage company)

                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
      FOR THE PERIOD FROM MARCH 21, 1997 (INCEPTION), TO DECEMBER 31, 1997,
                  FOR THE YEAR ENDED DECEMBER 31, 1998, AND FOR
        THE PERIOD FROM MARCH 21, 1997 (INCEPTION), TO DECEMBER 31, 1998



<TABLE>
<CAPTION>

                                                                                  Additional
                                                        Common Stock               Paid-in                 Warrants
                                               ---------------- ------------                    ------------- ---------------
                                                     Shares         Amount          Capital          Shares         Amount
                                               ---------------- ------------ ------------------ ------------- ---------------

<S>                                            <C>              <C>          <C>                <C>           <C>                
  BALANCE, JANUARY 1, 1998                          20,566,500   $  20,567    $  12,548,924        801,500      $  128,240

     Issuance of common stock on June 30, 1998,
      for cash,  $6.00 per share (net of issuance
      costs of $263,208,  including the issuance
      of 31,368 shares of common stock, $6.00 per
      share, for brokerage services)                   598,535         598        3,327,404             --              --
     Issuance of common stock on July 14, 1998,
       for cash, $6.00 per share (net of issuance
       costs of $387,474, including the issuance
       of 64,579 shares of common stock, $6.00 per 
       share, for brokerage services)                1,385,414       1,386        7,923,624             --              --
     Issuance of common stock on August 3, 1998,
       for cash, $6.00 per share (net of issuance
       costs of $12,318, including the issuance
       of 2,053 shares of common stock, $6.00 per
       share, for brokerage services)                   31,386          31          175,967             --              --
     Issuance of common stock to Genzyme 
       Corporation on September 4, 1998, 
       for cash, $6.00 per share                     1,333,333       1,333        7,998,665             --              --
     Issuance of common stock to Glyko 
       Biomedical, Ltd. for the purchase
       of Glyko, Inc. on October 7, 1998,                                                                                       
       for common shares, $6.00 per share 
       and the assumption of options of 
       Glyko, Inc. employees (see Note 1)            2,259,039       2,259       14,859,063             --              --
     Exercise of common stock options                    1,973           2            1,971             --              --
     Interest on notes receivable                           --          --               --             --              --
     Deferred compensation on stock options                 --          --        1,032,250             --              --
     Amortization of deferred compensation                  --          --               --             --              --
     Net loss                                               --          --               --             --              --

                                               ---------------- ------------ ------------------ ------------- ---------------
  BALANCE, DECEMBER 31, 1998                        26,176,180      $26,176  $   47,867,868        801,500        $128,240
                                               ================ ============ ================== ============= ===============
</TABLE>


        The accompanying notes are an integral part of these statements.

                                      F.18
<PAGE>                         

                          BIOMARIN PHARMACEUTICAL INC.
                          (a development stage company)

                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
      FOR THE PERIOD FROM MARCH 21, 1997 (INCEPTION), TO DECEMBER 31, 1997,
                  FOR THE YEAR ENDED DECEMBER 31, 1998, AND FOR
        THE PERIOD FROM MARCH 21, 1997 (INCEPTION), TO DECEMBER 31, 1998



<TABLE>
<CAPTION>

                                                                             Notes       Accumulated Deficit
                                                                           Receivable          During             Total
                                                          Deferred           from            Development       Stockholders'
                                                        Compensation      Stockholders         Stage              Equity
                                                     ----------------- ------------------ ------------------- -----------------

<S>                                                  <C>               <C>                <C>                 <C>                   
  BALANCE, JANUARY 1, 1998                             $     (217,000)  $  (2,337,500)     $    (2,762,765)    $     7,380,466

     Issuance of common stock on June 30, 1998,
       for cash,  $6.00 per share (net of issuance
       costs of $263,208, including the issuance
       of 31,368 shares of common stock, $6.00 per
       share, for brokerage services)                              --              --                   --           3,328,002
     Issuance of common stock on July 14, 1998,
       for cash, $6.00 per share (net of issuance
       costs of $387,474, including the issuance
       of 64,579 shares of common stock, $6.00 per
       share, for brokerage services)                              --              --                   --           7,925,010
     Issuance of common stock on August 3, 1998,
       for cash, $6.00 per share (net of issuance
       costs of $12,318, including the issuance
       of 2,053 shares of common stock, $6.00 per
       share, for brokerage services)                              --              --                   --             175,998
     Issuance of common stock to Genzyme
      Corporation on September 4, 1998,
      for cash, $6.00 per share                                    --              --                   --           7,999,998
     Issuance of common stock to Glyko
       Biomedical, Ltd. for the purchase
       of Glyko, Inc. on October 7, 1998,                                                                                   
       for common shares, $6.00 per share
       and the assumption of options of
       Glyko, Inc. employees (see Note 1)                          --              --                   --          14,861,322
     Exercise of common stock options                              --              --                   --               1,973
     Interest on notes receivable                                  --        (133,000)                  --            (133,000)
     Deferred compensation on stock options                (1,032,250)             --                   --                  --
     Amortization of deferred compensation                    262,825         (94,420)                  --             168,405
     Net loss                                                      --              --          (12,313,654)        (12,313,654)

                                                     ----------------- ------------------ ------------------- -----------------
  BALANCE, DECEMBER 31, 1998                           $     (986,425)  $  (2,564,920)        $(15,076,419)    $    29,394,520
                                                     ================= ================== =================== =================

</TABLE>

        The accompanying notes are an integral part of these statements.


                                      F.18




<PAGE>



                          BIOMARIN PHARMACEUTICAL INC.
                          (a development-stage company)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
          FOR THE YEAR ENDED DECEMBER 31, 1998 AND FOR THE PERIODS FROM
      MARCH 21, 1997 (INCEPTION) TO DECEMBER 31, 1997 AND DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                                                                         Period from          Period from           
                                                                      Year Ended       (Inception), to      (Inception), to
                                                                     December 31,        December 31,         December 31,
                                                                         1998                1997                 1998
                                                                   -----------------   -----------------    -----------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                <C>                 <C>                  <C>          
   Net loss                                                         $(12,313,654)        $(2,762,765)        $(15,076,419)
   Adjustments to reconcile net loss to net cash used in                                                                     
     operating activities:                                                                                                   
       Depreciation                                                      307,645               4,790              312,435
       Amortization of deferred compensation                             262,825                  --              262,825
       Amortization of goodwill                                          271,274                  --              271,274
       Compensation in the form of common stock and common                    --                                             
         stock options                                                                        18,020               18,020
       Loss from joint venture                                            47,131                  --               47,131
       Write-off of in-process technology                              2,625,000                  --            2,625,000
   Changes in operating assets and liabilities:
     Accounts receivable                                                (148,396)                 --             (148,396)
     Due from Glyko Biomedical, Ltd.                                     (34,398)            (79,607)            (114,005)
     Due from joint venture                                             (418,712)                 --             (418,712)
     Inventories                                                         (71,730)                 --              (71,730)
     Prepaid expenses                                                   (136,769)           (539,445)            (676,214)
     Deposits                                                            (79,142)                 --              (79,142)
     Accounts payable                                                  1,172,293             168,062            1,340,355
     Accrued liabilities                                                 596,621              43,395              640,016
     Due to Glyko, Inc.                                                  (61,072)             61,072                   --
                                                                   -----------------   -----------------    -----------------
                Net cash used in operating activities                 (7,981,084)         (3,086,478)         (11,067,562)
                                                                   -----------------   -----------------    -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                                 (6,385,020)           (150,473)          (6,535,493)
   Investment in joint venture                                          (731,788)                 --             (731,788)
   Sale of short-term investments                                     (1,074,973)           (900,827)          (1,975,800)
                                                                   -----------------   -----------------    -----------------
                Net cash used in investing activities                 (8,191,781)         (1,051,300)          (9,243,081)
                                                                   -----------------   -----------------    -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from note payable                                            134,211                  --              134,211
   Bridge loan                                                                --             880,000              880,000
   Accrued interest on notes receivable from stockholders               (227,420)            (37,500)            (264,920)
   Proceeds from sale of common stock, net of issuance costs          19,692,303           9,282,711           28,975,014
                                                                   -----------------   -----------------    -----------------
                Net cash provided by financing activities             19,599,094          10,125,211           29,724,305
                                                                   -----------------   -----------------    -----------------
                Net increase in cash and cash equivalents              3,426,229           5,987,433            9,413,662
CASH AND CASH EQUIVALENTS:
   Beginning of period                                                 5,987,433                  --                   --
                                                                   -----------------   -----------------    -----------------
   End of period                                                    $  9,413,662         $ 5,987,433         $  9,413,662
                                                                   =================   =================    =================
</TABLE>

            The accompanying notes are an integral part of these statements.

                                      F.19
<PAGE>




                          BIOMARIN PHARMACEUTICAL INC.
                          (a development-stage company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Operations and Business Risks

BioMarin  Pharmaceutical  Inc.  (BioMarin  or the  Company) is a privately  held
biopharmaceutical  company  specializing  in  the  discovery,   development  and
commercialization of carbohydrate enzyme therapeutics.  Since inception in 1997,
BioMarin has applied its  proprietary  enzyme  technology to the  development of
products  in five  therapeutic  areas:  genetic  diseases,  burn and wound care,
fungal infections,  pro-fertility and inflammation (psoriasis).  With its recent
acquisition of Glyko,  Inc.,  BioMarin added analytical and diagnostic  products
and services in the area of carbohydrate  biology.  BioMarin was incorporated on
October 25, 1996,  in the state of Delaware.  BioMarin  first began  business on
March 21, 1997 (inception), and issued 1,500,000 shares of common stock to Glyko
Biomedical,  Ltd.  (GBL) for  $1,500,000.  Beginning in October  1997,  BioMarin
issued  stock to outside  investors,  resulting  in GBL's  ownership of BioMarin
being reduced to 41.3 percent at December 31, 1997.

Since  inception,  the Company has devoted  substantially  all of its efforts to
research and development activities,  including preclinical studies and clinical
trials,  the  establishment  of  laboratory  and  clinical  scale  manufacturing
facilities, clinical manufacturing, and related administrative activities.

On  September  4, 1998,  the Company  entered  into an  agreement  with  Genzyme
Corporation  (Genzyme) to establish a joint venture dedicated to the development
and    commercialization    of    (alpha)-L-iduronidase    (BM101)    to   treat
mucopolysaccharidosis-I (MPS-I) (Note 8).

On October 7, 1998, the Company acquired Glyko,  Inc., a wholly owned subsidiary
of GBL, in a transaction  valued at  $14,500,500.  The transaction was accounted
for as a purchase and resulted in Glyko, Inc. becoming a wholly owned subsidiary
of the  Company.  Glyko,  Inc.  provides  products  and  services  that  perform
sophisticated  carbohydrate  analysis for research  institutions  and commercial
laboratories.  As  consideration  for the  acquisition of all of the outstanding
shares of Glyko, Inc.,  BioMarin issued 2,259,039 shares of common stock to GBL,
assumed Glyko,  Inc.'s employee stock options  exercisable for 255,540 shares of
BioMarin  common stock,  and paid $500 in cash (see Note 11). GBL's ownership of
BioMarin was 41.7 percent at December 31, 1998.

Through  December  31,  1998 the  Company  had  accumulated  losses  during  its
development stage of $15,076,419 and has continued to incur  significant  losses
subsequent to December 31, 1998.  Management  expects to incur further losses in
1999 and beyond.  As further  discussed  in Note 12, the Company  entered into a
convertible  note  financing  in the amount of  $26,000,000  on April 13,  1999.
Management believes that this financing will be sufficient to meet the Company's
minimum  obligations  through at least December 31, 1999.  However,  the Company
will  seek  additional  financing  in the  near  term to  execute  its  business
strategies and meet its longer term obligations.

                                      F.20
<PAGE>

The Company's lead product candidate,  BM101, has completed clinical trials, and
a Biologics  License  Application  (BLA) is  expected  in 1999.  There can be no
assurance  that  the  Company's   research  and  development   efforts  will  be
successfully  completed  or that  its  products  will be  shown  to be safe  and
effective.  There can be no  assurance  that its  products  will be approved for
marketing  by the  U.S.  Food and Drug  Administration  (FDA) or any  equivalent
foreign   government   agency  or  that  its  products   will  be   successfully
commercialized or achieve any significant degree of market acceptance.

BioMarin's  core   technology  is  based  on  the  biological   applications  of
carbohydrate-active  enzymes in therapeutic indications. In June 1997, rights to
certain related  technology were  transferred to BioMarin by GBL in exchange for
7,000,000 shares of BioMarin common stock (see Note 3). Certain of the Company's
products  rely  on   proprietary   technology   and  patents  owned  by  certain
universities and other institutions and licensed to BioMarin. These universities
also provide research and development services.  Cessation of relationships with
these universities could significantly affect the Company's future operations.

In order to grow  significantly,  the Company must expand its efforts to develop
new  products in  pharmaceutical  applications.  The  Company  will also need to
establish  manufacturing  capabilities  and to  develop  marketing  capabilities
and/or  enter into  collaborative  arrangements  with third  parties  having the
capacity for such manufacturing or marketing.

BioMarin's  product   candidates  require  regulatory   approval  by  government
agencies.  This includes preclinical and clinical testing and approval processes
in the United States and other  countries.  Approvals can take several years and
can  require   substantial   expenditures.   There  can  be  no  assurance  that
difficulties  or excessive  costs will not be encountered by the Company in this
process,  which could delay or preclude the Company's marketing of its products.
There can be no  assurance  that any of  BioMarin's  current  or future  product
candidates  will be  successfully  developed,  prove to be effective in clinical
trials,  receive required regulatory approvals,  be capable of being produced in
commercial quantities at reasonable costs, gain reasonable reimbursement levels,
or be successfully marketed.

In addition, the Company is subject to a number of risks, including the need for
additional  financing,  dependence on key personnel,  small patient  population,
patent protection, significant competition from larger organizations, dependence
on corporate partners and collaborators,  and expected increased restrictions on
reimbursement, as well as other changes in the healthcare industry.

Basis of Presentation

These consolidated  statements include the accounts of BioMarin,  Glyko, Inc., a
wholly owned subsidiary of BioMarin, and BioMarin Genetics, Inc., a wholly owned
subsidiary of BioMarin formed for the purpose of the joint venture  discussed in
Note 8. All significant intercompany transactions have been eliminated.

Concentration of Credit Risk

Financial  instruments that may potentially subject the Company to concentration
of credit risk consist  principally of cash,  cash  equivalents,  and short-term
investments.  All cash, cash equivalents,  and short-term investments are placed
in financial institutions with strong credit ratings, which minimizes the risk

                                      F.21
<PAGE>

of loss due to  nonpayment.  The Company has not  experienced  any losses due to
credit impairment or other factors related to its financial instruments.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting   principles  requires  management  to  make  certain  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of contingent  assets and  liabilities  at the dates of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.  Significant
estimates  made by management  include  determination  of progress to date under
research and development contracts (see Notes 6 and 8).

Cash and Cash Equivalents

For the  statements of cash flows,  the Company treats liquid  investments  with
original maturities of less than three months as cash and cash equivalents.

Available-for-Sale Securities

The Company records its investment securities as available-for-sale  because the
sale of such securities may be required prior to maturity.

Inventories

Inventories  consist of analytic  kits,  and  instrument-based  systems held for
sale.  Inventories are stated at the lower of cost (first-in,  first-out method)
or estimated  market  value.  All  inventories  at December 31, 1998,  belong to
Glyko, Inc.

 Investment in Joint Venture and Related Revenue

Under the terms of the Company's joint venture  agreement with Genzyme (Note 8),
the Company  and  Genzyme  have each agreed to provide 50 percent of the funding
for the joint venture.  All research and development,  sales and marketing,  and
other  activities  performed  by Genzyme  and the Company on behalf of the joint
venture  are  billed to the joint  venture  at cost.  Any  profits  of the joint
venture will be shared  equally by the two parties.  Losses of the joint venture
($1,769,257  at December 31, 1998) are  allocated in  proportion  to the funding
provided by each joint venture  partner.  Through  December 31, 1998, each joint
venture partner had provided $1,569,285 of funding to the joint venture.

During the year ended December 31, 1998, the Company billed $1,674,915 under the
agreement,  of which  $837,457,  or 50  percent,  was  recognized  as revenue in
accordance with the Company's  policy of recognizing  revenue to the extent that
research and development  costs billed have been funded by Genzyme.  At December
31, 1998, the Company had a receivable of $418,712 related to these billings.

The  Company  accounts  for its  investment  in the joint  venture on the equity
method.  Accordingly,  the Company recorded a reduction in its investment in the
joint venture of $884,628 during the year ended December 31, 1998,  representing
its 50 percent  share of the loss of the joint  venture.  The  percentage of the
research and development costs billed to the joint venture that was funded by

                                      F.22
<PAGE>

the Company (50 percent,  or $837,457) was recorded as a credit to the Company's
equity in the loss of the joint venture.

Research and Development

Research and development  expenses include the expenses associated with contract
research and  development  provided to third parties,  research and  development
provided in connection with the joint venture including  clinical and regulatory
costs,  and internal  research and development  costs.  Research and development
costs are expensed as incurred.

Property and Equipment

Property and equipment are stated at cost.  Depreciation  is computed  using the
straight-line method.  Leasehold improvements are amortized over the life of the
asset or the term of the lease, whichever is shorter.  Significant additions and
improvements  are  capitalized,  while  repairs and  maintenance  are charged to
expense as incurred.

Property and equipment consisted of the following:
<TABLE>
<CAPTION>

                                                             December 31
                                                ------------------------------------    -------------------------
                                                                                               Estimated
                                                      1998               1997                 Useful Lives
                                                -----------------  -----------------    -------------------------

<S>                                             <C>                <C>                  <C>    
Computer hardware and software                    $    161,994        $   27,688                3 years
Office furniture and equipment                         372,037                --                5 years
Laboratory equipment                                 3,468,978           119,002                5 years
                                                                                           Shorter of life of
Leasehold improvements                               2,532,484             3,783          asset or lease term
                                                -----------------  -----------------

                                                     6,535,493           150,473                                 
Less:  Accumulated depreciation                       (312,435)           (4,790)
                                                -----------------  -----------------

         Total, net                               $  6,223,058        $  145,683                                 
                                                =================  =================
</TABLE>

Depreciation  expense for the year ended  December  31, 1998 and for the periods
from March 21, 1997  (inception)  to December 31, 1997 and 1998,  was  $307,645,
$4,790, and $312,435, respectively.

Goodwill and Other Intangible Assets

In  connection  with the  acquisition  of Glyko,  Inc.  discussed in Note 1, the
Company  acquired certain  intangible  assets  including  developed  technology,
customer  relationships  and  goodwill.  These assets are being  amortized  over
approximately 10 years.

The  purchase  price  of  $14,500,500  was  allocated  to the net  tangible  and
intangible assets acquired,  based on the relative fair value of these assets as
determined  in an  independent  appraisal.  In connection  with this  allocation
$2,625,000 was expensed as a charge for the purchase of in-process  research and
development. In performing this allocation, the Company considered,  among other
factors,  Glyko, Inc.'s technology research and development  projects in-process
at the  date  of  acquisition.  With  regard  to  the  in-process  research  and
development  projects,  the  Company  considered  factors  such as the  stage of
development of the technology at the time of acquisition, the importance of each

                                      F.23
<PAGE>


project  to  the  overall  development  plan,  alternative  future  use  of  the
technology  and the  projected  incremental  cash flows from the  projects  when
completed and any associated risks.

Total  amortization  expense  from  October  7, 1998 (date of  acquisition),  to
December 31, 1998, was $271,274.

Accrued Liabilities

Accrued liabilities consisted of the following:

                                   December 31
                             ----------- ---- -------------
                                1998              1997
                             -----------      -------------

Vacation                      $ 123,274        $   25,579
Other                           516,742            17,816
                             -----------       ------------

        Total                 $ 640,016        $   43,395
                             ===========      =============

Product Sales

The Company  recognizes product revenues and related cost of sales upon shipment
of products.  Service  revenues are  recognized  upon  completion of services as
evidenced  by  the  transmission  of  reports  to  customers.   Other  revenues,
principally  licensing and distribution  fees, are recognized upon completion of
applicable contractual obligations.

Revenue from the joint  venture is  recognized  to the extent that  research and
development costs billed by the Company have been funded by Genzyme.

Net Income (Loss) per Share

Basic net income (loss) per share is calculated by dividing net income (loss) by
the weighted average common shares  outstanding  during the period.  Diluted net
income per share is calculated by dividing net income by the weighted average of
common  stock  outstanding  and  potential  common  shares  during  the  period.
Potential  common shares include  dilutive  shares issuable upon the exercise of
outstanding common stock options,  warrants,  and contingent issuances of common
stock. For periods in which the Company has losses, such potential common shares
are excluded from the computation of diluted net loss per share, as their effect
is antidilutive.

Potentially dilutive securities include:
<TABLE>
<CAPTION>

                                                                      December 31
                                                         ---------------------------------------
                                                               1998                  1997
                                                         -----------------     -----------------

<S>                                                      <C>                   <C>    
Options to purchase common stock                              2,801,240               297,000
Warrants to purchase common stock                               801,500               801,500
                                                         -----------------     -----------------

                Total                                         3,602,740             1,098,500
                                                         =================     =================
</TABLE>

                                      F.24
<PAGE>
Segment Reporting

For the year ended December 31, 1998, the Company adopted the provisions of SFAS
No. 131,  "Disclosures about Segments of an Enterprise and Related Information".
The  Company  operates  two  segments.   The  Analytic  and  Diagnostic  segment
represents the operations of Glyko,  Inc. which involve the manufacture and sale
of analytic and diagnostic products.  The Pharmaceutical  segment represents the
research   and   development   activities   related  to  the   development   and
commercialization of carbohydrate enzyme therapeutics. Management of the Company
has concluded that the  operations of the Analytic and  Diagnostic  segment are,
and will  continue  to be,  immaterial  with  respect to the  Company's  overall
activities and, thus, disclosure of segment information is not required.

New Accounting Standards

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments  and  Hedging  Activities."  SFAS No. 133 is not  expected to have a
material impact on the Company's financial position or results of operations.

2.  BRIDGE LOANS:

In the third  quarter of 1997,  the Company drew upon a bridge loan from certain
stockholders  in the amount of  $880,000.  This bridge loan was  converted  into
880,000 shares of common stock in the fourth quarter of 1997.

3. STOCKHOLDERS' EQUITY:

Common Stock and Warrants

On March 21, 1997,  BioMarin's  parent  company,  GBL,  provided  initial equity
funding by purchasing 1,500,000 shares of common stock for $1,500,000.

BioMarin  and GBL have  entered  into a License  Agreement  dated June 26, 1997,
pursuant  to which GBL  granted  BioMarin an  exclusive,  worldwide,  perpetual,
irrevocable, royalty-free right and license to certain of its worldwide patents,
trade  secrets,  copyrights,  and  other  proprietary  rights  to all  know-how,
processes,  formulae,  concepts,  data,  and other such  intellectual  property,
whether patented or not, owned or licensed by GBL and its subsidiaries as of the
date of the license  agreement for  application in therapeutic  uses,  including
without  limitation,  drug  discovery and genomics.  As  consideration  for this
license, BioMarin issued to GBL 7,000,000 shares of BioMarin common stock. Under
the same  License  Agreement,  BioMarin  granted  GBL an  exclusive,  worldwide,
perpetual, irrevocable,  royalty-free cross-license to all improvements BioMarin
may make upon the licensed intellectual property.

As disclosed in the accompanying statements of stockholders' equity, the Company
closed a number of private placements in 1997 and 1998. In connection with these
placements, an entity with which the chief executive officer and chairman of the
board is affiliated (see Note 7) was issued a total of 899,500 shares (valued at
$1,389,500) and warrants (valued at $128,240) to purchase an additional  801,500
shares of common stock. These issuances were made for brokerage services

                                      F.25
<PAGE>


rendered in connection with these placements and were accounted for as a cost of
raising capital. The warrants expire on various dates in 2001.

In connection with the October 1997 placement,  the Company  received notes from
three executive officers (see below) of the Company to purchase 2,500,000 shares
of common stock.  These notes earn  interest at an annual rate of 6 percent.  In
addition,  880,000  shares  were  issued to  stockholders  to retire an $880,000
bridge loan.

Notes Receivable from Stockholders

Notes  receivable from  stockholders  relate to shares issued in October 1997 to
three executive  officers of the Company,  bear interest at 6 percent per annum,
and are due on July  31,  2000,  or on the date of the  employee's  termination,
whichever is earlier. The notes are secured by the underlying stock and are with
full  recourse.  Interest was imputed at nine percent,  resulting in an interest
discount and related deferred compensation of $200,000, which is being amortized
over the life of the notes. Amortization expense for the year ended December 31,
1998, and for the periods from March 21, 1997 (inception),  to December 31, 1997
and 1998, was $94,420, $37,500, and $131,920, respectively.

Deferred Compensation

In connection  with certain  stock option grants during the year ended  December
31, 1998, the Company  recognized  deferred  compensation  totaling  $1,032,250,
which is being  amortized over the four-year  estimated  service  periods of the
grantees.  Amortization  expense  recognized  during the year ended December 31,
1998, was $168,405.

4.  INCOME TAXES:

The  significant  components of net deferred tax assets and  liabilities  are as
follows:
<TABLE>
<CAPTION>

                                                                                December 31
                                                                   ---------------------------------------
                                                                         1998                 1997
                                                                   ------------------   ------------------

<S>                                                                <C>                  <C>          
Net operating loss carryforwards                                    $    9,792,000       $   1,052,000
Research and development credit carryforwards                            1,760,000             210,000
Research and development capitalized                                        50,000                   0
Other                                                                     (160,000)           (255,000)
Valuation allowance                                                    (11,442,000)         (1,007,000)
                                                                   ------------------   ------------------
Net deferred tax asset                                              $           --       $          --
                                                                   ==================   ==================
</TABLE>

                                      F.26

<PAGE>
The net  operating  loss  carryforwards  and  research  and  development  credit
carryforwards  include the net operating  loss  carryforwards  ($4,567,000)  and
research and development credits carryforwards  ($701,000) and related valuation
allowances ($5,269,000) of Glyko, Inc.

The reconciliation of the effective tax rate is as follows:

<TABLE>
<CAPTION>
                                                                      Period from March 21,     Period from March 21,
                                                 Year ended           1997 (Inception), to      1997 (Inception), to
                                             December 31, 1998          December 31, 1997         December 31, 1998
                                          -------------------------  ------------------------  ------------------------
                                              Amount           %           Amount            %           Amount          %
                                          ---------------   ---------  ----------------   ---------  ---------------  ---------

<S>                                        <C>              <C>        <C>                <C>        <C>              <C> 
U.S. statutory tax rate                    $ (4,164,000)      (34)      $   (821,000)      (34)       $ (4,985,000)     (33)
State taxes, net of federal income tax                                                                                         
   benefit                                     (735,000)       (6)          (145,000)       (6)           (880,000)      (6)
Research and development tax credit            (634,000)       (5)          (142,000)       (5)           (776,000)      (5)
Other                                           656,000         5            149,000         5             805,000        5
Change in valuation allowance                 4,877,000        40            959,000        40           5,836,000       39
                                          ---------------   ---------  ----------------   ---------  ---------------  ---------
Provision for income taxes                 $       --            --     $         --           --     $         --         --
                                          ===============   =========  ================   =========  ===============  =========
</TABLE>

As of December 31, 1998,  net operating  loss  carryforwards  are  approximately
$24.1 million and $12.4 million for federal and California  income tax purposes,
respectively. These federal and state carryforwards expire beginning in the year
2011 and 2004, respectively.

The Company also has research and development credits available to reduce future
federal and California  income taxes,  if any, of  approximately  $1,760,000 and
$580,000,   respectively,   at  December  31,  1998.  These  federal  and  state
carryforwards expire beginning in 2012 and 2013, respectively.

The net  operating  loss  carryforwards  and  research and  development  credits
related to Glyko,  Inc.  as of October 7, 1998,  can only be  utilized to offset
future taxable income and tax, respectively, if any, of Glyko, Inc. In addition,
the Tax Reform Act of 1986 contains  provisions that may limit the net operating
loss carryforwards and research and development  credits available to be used in
any given year should certain events occur,  including sale of equity securities
and other changes in ownership.  The acquisition of Glyko,  Inc. and the related
issuance of stock  represented  a change of  ownership  under these  provisions.
There can be no assurance that the Company will be able to utilize net operating
loss carryforwards and credits before expiration.

Deferred  income  taxes are recorded to reflect the tax  consequences  on future
years of differences  between the tax basis of assets and  liabilities and their
financial reporting amounts at each period-end. The Company has a cumulative net
operating  loss  carryforward  since  inception,  resulting  in net deferred tax
assets. A valuation allowance is placed on the net deferred tax assets to reduce
them to an assumed net realizable value of zero.

5.  STOCK OPTION PLANS:

The  Company's  1997  Stock  Option  Plan (the Plan)  provides  for the grant of
incentive common stock options and nonstatutory common stock options to

                                      F.27

<PAGE>
employees,  directors,  and  consultants of the Company.  The maximum  aggregate
number of  shares  that may be  optioned  and sold  under the Plan is  5,000,000
shares.

Had compensation cost for the Plan been determined  consistent with SFAS No. 123
for option grants to employees,  the effect on the Company's net loss would have
been as follows:

<TABLE>
<CAPTION>
                                                                         Period from            Period from
                                                                       March 21, 1997          March 21, 1997
                                                   Year Ended          (Inception), to        (Inception), to
                                               December 31, 1998      December 31, 1997      December 31, 1998
                                               -------------------   --------------------    -------------------

<S>                                            <C>                   <C>                    <C>            
Net loss as reported                            $    (12,313,654)       $   (2,762,765)       $  (15,076,419)
Pro forma effect of SFAS No. 123                        (468,000)               (1,640)             (469,640)
                                               -------------------   --------------------    -------------------

Pro forma net loss                              $    (12,781,654)       $   (2,764,405)       $  (15,546,059)
                                               ===================   ====================    ===================

Net loss per common share as reported                      (0.55)                 (0.34)                 (0.93)
                                               ===================   ====================    ===================

Pro forma loss per common share                            (0.57)                 (0.34)                 (0.96)
                                               ===================   ====================    ===================
</TABLE>


                                      F.28
<PAGE>



A summary of the status of the Company's stock option plan is as follows:
<TABLE>
<CAPTION>

                                                                Weighted                                      
                                                                 Average    Exercisable    Weighted Average
                                                                Exercise     at End of      Fair Value of
                                                Option Shares     Price        Year        Options Granted
                                                --------------------------------------------------------------

<S>                                              <C>            <C>        <C>                 <C>
Outstanding at March 21, 1997                             --     $   --

   Granted                                           297,000        1.00                        $0.22
   Exercised                                              --         --
   Canceled                                               --         --
                                                ---------------

Outstanding at December 31, 1997                     297,000        1.00       232,000                        
                                                                           ==============

   Granted                                         2,507,660        4.18                        $2.40
   Exercised                                          (1,973)       1.00
   Canceled                                           (1,447)       1.00
                                                ---------------

Outstanding at December  31, 1998                  2,801,240       $3.84       761,609                        
                                                ===============            ==============
</TABLE>


There are 2,198,760  options  available for grant under the Plan at December 31,
1998.  The average  remaining  contractual  life of the options  outstanding  at
December 31, 1998, is four years.

As of December  31,  1998,  the  2,801,240  options  outstanding  consist of the
following:

<TABLE>
<CAPTION>
    Number of Options                           Weighted Average        Number of Options
       Outstanding          Exercise Price      Contractual Life           Exercisable
-------------------------- ------------------ ---------------------- ------------------------

<S>                        <C>               <C>                     <C>                     
          398,020                $1.00                3.88                     347,333
          255,540                 2.30                3.11                     180,846
        1,548,000                 4.00                9.03                     202,875
          599,680                 6.00                4.69                      30,555
--------------------------                                          ------------------------

        2,801,240                                                              761,609
==========================                                           ========================
</TABLE>

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes  option  pricing  model with the  following  assumptions  used for
grants  in 1997 and  1998:  risk-free  interest  rates  ranging  from 5.2 to 6.2
percent;  expected dividend yield of 0 percent;  expected life of four years for
the Plan's options; and expected volatility of 0 percent.


                                      F.29
<PAGE>

6.  COMMITMENTS AND CONTINGENCIES:

Lease Commitments

The Company  leases  office space and research and testing  laboratory  space in
various facilities under operating  agreements expiring at various dates through
2009.  Future  minimum  lease  payments  for the year ended  December  31 are as
follows:

1999                               $1,336,910
2000                                1,173,573
2001                                1,019,827
2002                                1,014,837
2003                                  866,405
Thereafter                          2,820,662
                                ---------------

         Total                   $  8,232,214
                                ===============

Rent expense for the year ended December 31, 1998 and for the periods from March
21, 1997 (inception), to December 31, 1997 and 1998, was $380,1873, $34,613, and
$414,800, respectively.

Research and Development Funding Commitments

The Company uses experts and laboratories at universities and other institutions
to perform  research and development  activities.  The Company has also licensed
technology from certain institutions.  Funding commitments to these institutions
for the year ended December 31 are as follows:

      1999                         $1,076,335
      2000                            305,900
      2001                             50,000
      2002                             50,000
      2003                             50,000
                                ---------------

         Total                   $  1,532,235
                                ===============

Consulting Agreements

BioMarin had agreements with two consultants  whereby the consultants  were paid
cash and granted  common  stock  options in exchange for  services.  Options for
206,000 shares of common stock were granted in satisfaction  for these services.
These  options were valued at $35,020 and were  expensed  during the period from
March 21, 1997 (inception), through December 31, 1997.

Product Liability and Lack of Insurance

The Company is subject to the risk of exposure  to product  liability  claims in
the event  that the use of its  technology  results in  adverse  effects  during
testing or commercial sale. The Company currently does not maintain product

                                      F.30
<PAGE>


liability insurance.  There can be no assurance that the Company will be able to
obtain product liability insurance coverage at economically  reasonable rates or
that such insurance will provide adequate coverage against all possible claims.

7. RELATED-PARTY TRANSACTIONS:

BioMarin has contractual agreements for office space and certain administrative,
research,  and development functions with Glyko, Inc. BioMarin reimbursed Glyko,
Inc. for rent, salaries and related benefits,  and other  administrative  costs.
Glyko, Inc. also reimburses BioMarin for salaries and related benefits. BioMarin
also reimbursed Glyko, Inc. for a net $205,418,  $240,848,  and $446,266 for the
year ended December 31, 1998, and the periods from March 21, 1997 (inception) to
December 31, 1997 and 1998.

As discussed in Note 3, during August 1997,  the Company  entered into an agency
agreement with an entity with which the chief executive  officer and chairman of
the board is  affiliated.  During June 1998,  the Company  entered into a second
agency  agreement.  The Company issued a total of 899,500 shares of common stock
and warrants to purchase  another  801,500 shares of common stock to this entity
and its  affiliates  for  brokerage  services  pursuant  to the  terms  of these
agreements, also discussed in Note 3.

In addition, at December 31, 1998 and 1997, the Company had recorded amounts due
from GBL of $114,005, and $79,607 respectively.

8.  COLLABORATIVE AGREEMENTS:

Genzyme

Effective  September  4,  1998,  the  Company  entered  into an  agreement  (the
Collaboration  Agreement) with Genzyme to establish a joint venture dedicated to
the worldwide  development  and  commercialization  of BM101 to treat MPS-I.  In
conjunction with the formation of the joint venture,  the Company  established a
wholly owned subsidiary,  BioMarin  Genetics,  Inc. The Company has a 49 percent
interest in the joint venture, BioMarin Genetics, Inc. has a 1 percent interest,
and Genzyme has the remaining 50 percent interest.

Under the  Collaboration  Agreement,  BioMarin and Genzyme are each  required to
make capital contributions to the joint venture in an amount equal to 50 percent
of costs and expenses associated with the development and  commercialization  of
BM101.   The  parties  also  agree  to  share  the  profits  equally  from  such
commercialization.  In addition,  Genzyme purchased 1,333,333 shares of BioMarin
common stock at $6.00 per share for total  proceeds of  $7,999,998  in a private
placement and is obligated to purchase an additional $10,000,000 of common stock
at the initial public offering price in a private placement  concurrent with the
initial public offering of the Company's  stock.  Genzyme has also agreed to pay
BioMarin $12,100,000 in cash upon FDA approval of the BLA for BM101.

Other Agreements

The Company is engaged in research and development  collaborations  with various
academic  institutions,  commercial  research  groups,  and other entities.  The
agreements provide for sponsorship of research and development by the Company

                                      F.31
<PAGE>

and  may  also  provide  for  exclusive  royalty-bearing  intellectual  property
licenses  or rights of first  negotiation  regarding  licenses  to  intellectual
property development under the collaborations.  Typically,  these agreements are
terminable for cause by either party upon 90 days' written notice.

9.  COMPENSATION PLANS:

Employment Agreements

The Company has entered into  employment  agreements  with seven officers of the
Company.  All of these  agreements are  terminable  without cause by the Company
upon six months'  prior  notice,  or by the  officer  upon three  months'  prior
written  notice to the  Company,  with the Company  obligated  to pay salary and
benefits  hereunder until such  termination.  The annual  salaries  committed to
under these agreements total approximately $1,000,000.

401(k) Plan

The Company participates in the Glyko Retirement Savings Plan (the 401(k) Plan).
Most employees  (the  Participants)  are eligible to  participate  following the
start of their  employment,  on the earlier of the next  occurring  January 1 or
July  1.  Participants  may  contribute  up  to  15  percent  of  their  current
compensation  to the  401(k)  Plan or an amount up to a  statutorily  prescribed
annual limit.  The Company pays the direct  expenses of the 401(k) Plan but does
not currently match or make contributions to employee accounts.

1997 Stock Plan

In  November  1997,  the Board  adopted,  and in April  1998,  the  stockholders
approved,  the  1997  Stock  Plan  (the  1997  Plan),  which  provided  for  the
reservation  of a total of 3,000,000  shares of common stock for issuance  under
the 1997 Plan. In December  1998,  the Board  adopted,  and in January 1999, the
stockholders  approved,  an amendment to the 1997 Plan to increase the number of
shares reserved for issuance under it to an aggregate of 5,000,000 and to add an
"evergreen  provision"  providing for an annual increase in the number of shares
which may be optioned or sold under the 1997 Plan  without  need for  additional
Board or stockholder  action to approve such increase  (which  increase shall be
the lesser of 4 percent of the then-outstanding capital stock, 2,000,000 shares,
or a lower  amount set by the Board).  The 1997 Plan  provides  for the grant of
stock  options  and the  issuance  of  restricted  stock by the  Company  to its
employees, officers, directors, and consultants.

1998 Employee Stock Purchase Plan

In  December  1998 the  Board  adopted,  and in  January  1999 the  stockholders
approved,  the 1998 Employee  Stock  Purchase Plan (the 1998 Purchase  Plan).  A
total of 250,000  shares of Company  common stock has been reserved for issuance
under the 1998 Purchase Plan,  plus annual  increases equal to the lesser of 0.5
percent of the outstanding capital stock, 200,000 shares, or a lesser amount set
by the Board. As of December 31, 1998, no shares have been issued under the 1998
Purchase Plan. The  implementation  of this plan is contingent on the completion
of an initial public offering.

1998 Director Option Plan

The 1998 Director  Option Plan (the  Director  Plan) was adopted by the Board of
Directors in December 1998 and approved by the stockholders in January 1999. The
Director Plan provides for the grant of nonstatutory stock options to

                                      F.32
<PAGE>


nonemployee  directors.  A total of 200,000 shares of Company common stock, plus
an annual  increase  equal to the number of shares needed to restore the maximum
aggregate  number of shares  available  for sale under the Director  Plan or the
lesser of 0.5 percent of the outstanding  capital stock,  200,000  shares,  or a
lesser  amount set by the  Board,  have been  reserved  for  issuance  under the
Director  Plan.  As of December  1998,  no options have been  granted  under the
Director Plan.

In January 1999, the Board granted  621,774 stock options under the 1997 Plan to
employees  and  directors  of the  Company  at $7.00 per share and  subsequently
granted 55,000 stock options to employees of the Company at $7.00 per share. The
Company's  management  estimates that these stock option prices reflect  current
market value.

10.  SUPPLEMENTAL CASH FLOW INFORMATION:

The following noncash transactions took place for the periods presented:
<TABLE>
<CAPTION>

                                                                                    Period from              Period from
                                                                                  March 21, 1997           March 21, 1997
                                                          Year Ended              (Inception), to          (Inception), to
                                                       December 31, 1998         December 31, 1997        December 31, 1998
                                                     ----------------------    ----------------------    --------------------



<S>                                                  <C>                       <C>                       <C>         
Common stock issued in exchange for notes                           $--            $  2,500,000             $  2,500,000
Compensation in the form of common stock and                                                                                 
   common stock options                                              --                  18,020                   18,020

Common stock and common stock warrants issued in                                                                             
   exchange for brokerage services                              588,000                 929,740                1,517,740

Bridge loan converted to common stock                                --                 880,000                  880,000
</TABLE>

11.  GLYKO, INC.:

On October 7, 1998, the Company  entered into an agreement to acquire all of the
outstanding stock of its affiliate,  Glyko, Inc. The total consideration for the
acquisition was $14,500,500,  comprising 2,259,039 shares of common stock of the
Company,  valued at $6.00 per share,  the  assumption of options held by certain
Glyko,  Inc.  employees  to purchase  shares of GBL's common  stock,  which will
require  255,540  shares  of the  Company's  common  stock to be issued if fully
exercised, and $500 in cash. The acquisition was accounted for as a purchase.


                                      F.33
<PAGE>



The following unaudited pro forma consolidated  financial  information  reflects
the  results of  operations  for the year ended  December  31,  1998 and for the
periods from March 21, 1997 (inception), to December 31, 1997 and 1998 as if the
acquisition  had  occurred  on January 1, 1998 and March 21,  1997  (inception),
respectively: <TABLE> <CAPTION>

                                                                                 Period from                         
                                                                                  March 21,           Period from
                                                                              1997 (Inception),     March 21, 1997
                                                            Year ended         to December 31,      (Inception), to
                                                         December 31, 1998           1997          December 31, 1998
                                                        --------------------  -------------------  ------------------

<S>                                                     <C>                   <C>                  <C>         
Revenues                                                  $  2,530,325          $  1,995,562         $  4,345,887
Loss from operations                                       (13,044,201)           (6,027,890)         (17,532,186)
Net loss                                                   (12,379,832)           (5,953,934)         (16,797,384)
Net loss per share, basic and diluted                            (0.56)                (0.57)               (0.93)

Weighted average number of common shares outstanding        24,214,135            10,464,474           18,133,509
</TABLE>

12.  SUBSEQUENT EVENT:

On April 13,  1999,  the  Company  entered  into a  convertible  note  financing
agreement in the amount of $26,000,000. Of this amount, GBL invested $4,300,000.
These notes bear interest at 10 percent per annum.

All  unpaid  principal,  together  with all  unpaid  interest,  shall be due and
payable  upon  the  earlier  of  (a)  April  2002  (the  "Maturity  Date"),  (b)
immediately  prior to a sale of all of the assets of the  Company or a merger or
acquisition  of the  Company  with  another  entity,  or (c) an  initial  public
offering with net proceeds to the Company of at least $20,000,000.

On the Maturity  Date,  in lieu of any  repayment  in cash,  the Company has the
right to convert the amounts owed under the notes,  in whole or part, into fully
paid and nonassessable shares of common stock of the Company.

At any time  prior to the  Maturity  Date,  the notes  automatically  convert to
shares of common  stock of the  Company  immediately  prior to (a) any merger or
acquisition of the Company,  (b) a sale of all the assets of the Company, or (c)
an  initial  public  offering  with  net  proceeds  to the  Company  of at least
$20,000,000.

The  price at which the  notes  will  convert  into  shares  of common  stock is
initially  set at $10.00 per share and is subject  to  certain  adjustments  for
possible  future events.  The convertible  note agreement also contains  certain
anti-dilutive provisions.

                                      F.34