UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C.

                                    FORM 10-K

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995

                                       OR

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

           For the transition period from ____________ to ____________

                         COMMISSION FILE NUMBER 1-10352

                           COLUMBIA LABORATORIES, INC.
               (Exact name of Company as specified in its charter)

         DELAWARE                                                 59-2758596
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

         2665 SOUTH BAYSHORE DRIVE, PH II-B
         MIAMI, FLORIDA                                      33133
(Address of principal executive offices)                     (Zip Code)

Company's telephone number, including area code: (305) 860-1670

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

COMMON STOCK, $.01 PAR VALUE                        AMERICAN STOCK EXCHANGE
  (Title of each class)                      (Name of exchange where registered)

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

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

         The aggregate market value of Columbia Laboratories, Inc. Common Stock,
$.01 par value, held by non-affiliates, computed by reference to the price at
which the stock was sold as of March 15, 1996:
$294,753,068

         Number of shares of Common Stock of Columbia Laboratories, Inc. issued
and outstanding as of March 15, 1996: 27,704,873

<PAGE>

                                     PART I

ITEM 1. BUSINESS

GENERAL DESCRIPTION OF BUSINESS

         Columbia Laboratories, Inc. (the "Company") was incorporated as a
Delaware corporation in December 1986. The Company's objective is to develop on
a worldwide basis a portfolio of women's prescription and over-the-counter
products, including those which help prevent sexually transmitted diseases.
Columbia's products primarily utilize the Company's patented bioadhesive
delivery technology, the Bioadhesive Delivery System.

         Formulated products utilizing the Bioadhesive Delivery System consist
principally of a polymer, polycarbophil, and an active ingredient. The
Bioadhesive Delivery System is based upon the principle of bioadhesion, a
process by which the polymer adheres to epithelial surfaces and to mucin, a
naturally occurring secretion of the mucous membranes. The polymer remains
attached to epithelial surfaces and/or the mucin and is discharged upon normal
cell turnover or upon the detachment of the mucin from the mucous membranes, a
physiological process which, depending upon the area of the body, occurs every
12 to 72 hours. This extended period of attachment permits the Bioadhesive
Delivery System to be utilized in products when extended duration of
effectiveness is desirable or required.

         The Company's initial efforts have applied the technology to women's
health care products that can be sold as cosmetics and over-the-counter drugs,
which do not require governmental or regulatory approval. The Company has
focused on women's health care because of the significant number of
women--particularly of post-menopausal age--whose health and hygiene needs have
not been met by available products and because the Company has found vaginal
delivery to be particularly effective. The Company intends to continue to
develop products that improve the delivery of previously approved drugs.

         The Company is currently engaged solely in one business segment -- the
development and sale of pharmaceutical products and cosmetics. See footnote 7 to
the consolidated financial statements for information on foreign operations.

         The Company's principal executive offices are located at 2665 South
Bayshore Drive, Miami, Florida 33133, and its telephone number is (305)
860-1670. The Company's subsidiaries, all of which are wholly-owned, are
Columbia Laboratories (Bermuda) Ltd. ("Columbia Bermuda"), Columbia Laboratories
(France) SARL ("Columbia France"), Columbia Laboratories (UK) Limited ("Columbia
UK"), Columbia Laboratories (Ireland) Limited ("Columbia Ireland") and Columbia
Research Laboratories, Inc. ("Columbia Research").

PRODUCTS

         REPLENS\registered trademark\. In November 1989, the Company introduced
Replens, the first product utilizing the Bioadhesive Delivery System, in the
United States. Replens replenishes vaginal moisture on a sustained basis and
relieves the discomfort associated with vaginal dryness. The Company introduced
Replens in England and Ireland in December 1990. The Company's original
commercialization strategy was to market Replens through its own sales force.

         In 1991, in an attempt to gain mass marketing power and access to
worldwide markets quickly, the Company developed and executed an alternative
marketing strategy. The Company has entered into strategic alliance agreements
for the marketing and distribution of Replens with: (i) Warner-Lambert Company
under which Warner-Lambert Company markets Replens in the United States; (ii) a
subsidiary of Johnson and Johnson under which that subsidiary markets Replens in
Italy; (iii) Roussel-UCLAF under which Roussel markets Replens in France,
certain French overseas territories and Greece; (iv) Nippon Sanofi K.K.
(formerly Sterling-Winthrop Inc.) under which Sanofi markets Replens in South
America, Central America and Australia and will market Replens in Portugal; (v)
Teva Pharmaceutical under which Teva will market Replens in Israel; (vi) Logos
Pharmaceuticals

                                      -2-

<PAGE>

(Pty) Limited under which Logos markets Replens in South Africa and the sixteen
countries of sub-Saharan Africa; (vii) LASA SA under which LASA SA markets
Replens in Spain; (viii) Unipath Ltd. under which Unipath markets Replens in the
United Kingdom; (ix) Roberts Pharmaceutical Corporation under which Roberts
markets Replens in Canada; (x) Vifor SA under which Vifor will market Replens in
Switzerland and Liechtenstein and (xi) Hermes H/F under which Hermes markets
Replens in Iceland.

         As a result of having marketed Replens in the United States and
England, which demonstrated the market for Replens, the Company has been able to
negotiate agreements with its strategic alliance partners pursuant to which the
Company manufactures Replens and in return receives as revenue approximately 24%
to 30% of its partners' selling price of the product. These companies are
responsible for all marketing and distribution costs of Replens in their
territories. There can be no assurance that any of the companies with whom the
Company has entered into these agreements will aggressively or successfully
market the product. Prior to entering into these strategic alliance agreements,
the Company lost money on Replens as a result of the significant amounts the
Company was required to spend on product promotion. As part of these agreements,
certain of the strategic alliance partners have the right of first option or
right of first refusal, in the applicable countries, to license future
gynecological products developed by the Company.

          In December 1992, the United Kingdom Medicines Control Agency ("MCA")
granted a General Sales License for Replens to be sold in the UK for the
symptomatic relief of vaginal dryness in postmenopausal women and, when used
regularly, for the reduction of pH to levels normally found in premenopausal
women. Replens had previously been sold in the UK under the cosmetic regulations
which restricted the claims that the Company could make for the product. The
Company believes that Replens is now the only non-hormonal product approved for
vaginal moisturization and reduction of pH in the UK. In the United States,
Replens is sold as a cosmetic.

         In February 1994, the European Union recommended to its member
countries, based on consultation from each of the countries, that Replens be
approved as a drug. Currently, eleven of the twelve countries agree with the
European Union's recommendation and the Company believes that licenses from
these individual countries will be issued within the next several months.

         While the strategic alliance agreements in the United States and abroad
have not produced desired unit sales as quickly as planned, the Company believes
it has established effective working relationships with its partners which the
Company believes form a solid foundation to build sales of Replens and the other
products in the development pipeline. However, the Company is exploring
alternatives to such strategic alliances where appropriate. In addition, upon
granting of the European multistate license, Replens should become a
reimbursable product in certain countries. The Company believes that sales of
Replens in Europe should increase once the licenses are granted. The Company's
success to a great extent is dependent on the marketing efforts of its strategic
alliance partners, over which the Company has limited ability to influence.

         ADVANTAGE 24\registered trademark\. During 1993, Advantage 24, the
Company's 24 hour sustained release contraceptive gel, was qualified to be sold
in the United States, under the existing FDA monograph for nonoxynol-9
spermicidal products. In September 1994, the Company entered into a license and
distribution agreement with Lake Pharmaceutical, Inc. under which Lake markets
Advantage 24 in the United States. Roberts will market Advantage 24 in Canada.

         Among Advantage 24's benefits is its slow release characteristic which
permits the spermicide to be effective for up to 24 hours, in contrast with
conventional spermicides that must be applied at most two hours prior to
intercourse. The slow release feature is derived from the Company's Bioadhesive
Delivery System, which enables the nonoxynol-9 to adhere to the cervix. Broader
claims relating to prevention of sexually transmitted diseases (STD's) will be
requested upon completion, if successful, of clinical studies now underway. The
Company expects that within 12 months it will have sufficient data to apply for
regulatory approval on the broader claims. In Europe, the Company intends to
register Advantage 24 as an over-the-counter drug.

                                      -3-

<PAGE>

         Additionally, the United Nations Global Program on AIDS (formerly known
as the World Health Organization Global Program on AIDS) has completed a 600
women safety study on Advantage 24. Analysis of the data generated indicates
that Advantage 24, as used in the study, was free of any serious side effects.
In addition, Advantage 24 was shown to be safer than any other nonoxynol-9
product studied. Studies to determine the efficacy of Advantage 24 in preventing
the heterosexual transmission of HIV and other STD's have recently begun in a
National Institutes of Health sponsored study in Kenya. Additional U.N. studies
are scheduled to begin shortly in Thailand, India and the Ivory Coast.

         CRINONE\trademark\ TVG. The Company's first prescription drug is a
sustained release, vaginally delivered, natural progesterone product. Crinone
TVG utilizes the Company's patented Bioadhesive Delivery System which enables
the progesterone to achieve a "First Uterine Pass Effect"\copyright\.
Progesterone is preferentially delivered to the uterus and high systemic
concentrations are avoided. This allows the therapeutic effects of progesterone
to be maximized while side effects are minimized.

         Crinone TVG has been approved in the U.K. and Finland for the
prevention of hyperplasia and endometrial cancer in postmenopausal women
receiving Hormone Replacement Therapy ("HRT"), for use in IN VITRO fertilization
procedures, to help reduce the symptoms of Premenstrual Syndrome ("PMS"), for
menstrual irregularities, dysmenorrhea, dysfunctional uterine bleeding, and for
infertility due to inadequate progesterone production. In France, Crinone TVG
has been approved for use in IN VITRO fertilization procedures. Additional
indications in France are anticipated during 1996.

         The Company has also submitted registration files covering Crinone TVG
to other European regulatory authorities. Additional country approvals are
expected during 1996. The Company anticipates filing a New Drug Application
(NDA) in the United States in mid 1996.

         During 1993, the Logos Replens Agreement was amended such that Logos
will also be the exclusive distributor of Crinone TVG in South Africa and the
sixteen countries of sub-Saharan Africa. As part of the agreement, the Company
received upfront licensing fees and expects to receive ongoing revenue from
manufacturing and product sales.

         In May 1995, the Company entered into a worldwide, except for South
Africa, license and supply agreement with American Home Product Corporation
("AHP") under which the Wyeth-Ayerst division of AHP will market Crinone. Under
the terms of the agreement, the Company has received $9.5 million in milestone
payments to date and will continue to receive additional milestone payments and
a significant percentage of sales.

         OTHER PRODUCTS. The Company also markets Advanced Formula Legatrin
PM\registered trademark\, for the relief of occasional pain and sleeplessness
associated with minor muscle aches such as night leg cramps; Vaporizer in a
bottle\registered trademark\, a portable cough suppressant for the temporary
relief of a cough due to the common cold; and Diasorb\registered trademark\, a
pediatric antidiarrheal product. These products do not utilize the Bioadhesive
Delivery System.

RESEARCH AND DEVELOPMENT

         The Company expended $7,812,488 in 1995, $8,976,047 in 1994 and
$5,290,912 in 1993, on research and development activities. The increase in
expenditures are primarily the result of costs associated with contracting for,
supervising and administering the clinical studies on the Company's Crinone TVG
and Advantage 24 products. These studies are coordinated from the Company's New
York and Paris offices.

         SPC3 (SYNTHETIC POLYMERIC CONSTRUCTION #3). In December 1993, the
Company entered into an Option and License Agreement with a French research
group based in Marseille, France, pursuant to which it was granted an option to
obtain an exclusive license to the North and South American rights to a
potential AIDS treatment. The option cost $2 million, of which $1.1 million was
paid in December 1993 and the remaining $900,000 was paid in February 1994. The
potential product has been granted a Clinical Trials Exemption ("CTX") in the
United Kingdom and clinical trials in humans are now underway. In addition, an
Investigational New Drug

                                      -4-

<PAGE>

application to start U.S. clinical trials has been approved. The purpose of
these trials is to determine the optimal dosage of SPC3 in late stage
seropositive patients.

         The option, which must be exercised upon the occurrence of certain
events, expires in December 1998. Upon exercise of the option, the Company will
be required to pay an additional $5 million. If the Company does not exercise
its option upon the occurrence of certain events, the Company's rights to the
option are terminated.

         The synthetic molecule, which could prove to be a breakthrough in the
treatment of AIDS, is a multibranched peptide, a type of protein, which blocks
entrance of the HIV (AIDS) virus into susceptible human cells and prevents
syncytia formation. Syncytia formation fuses lymphocytes (white cells) together
with the infected cells causing the death of large numbers of uninfected
lymphocytes. SPC3 protects the human cells including CD4+ lymphocytes,
macrophages and CD4- negative cells by obstructing entry of the HIV virus.
In-vitro studies have demonstrated that SPC3 effectively blocks entrance of all
strains of the virus into human cells, unlike previously tested antiviral agents
and vaccines that are strain specific. The relative specificity of the SPC3
peptide for its receptor ensures that it is free of the significant side effects
associated with the reverse transcriptuse and protease inhibitors used in
current treatments.

         Up to now, the only treatments available for AIDS patients act by
stopping the virus from multiplying rapidly. The Marseille molecule, according
to a recent paper published in the Journal of France's Academy of Sciences,
could prevent the virus from attacking healthy cells in two ways: (i) in
lymphocytes, the white blood cells that are a key part of the body's immune
system and (ii) in macrophages, a type of white blood cell that is often a
vehicle for transmitting the virus to the brain.

PATENTS, TRADEMARKS AND PROTECTION OF PROPRIETARY INFORMATION

         The Company purchased the patents underlying the Bioadhesive Delivery
System from Bio-Mimetics, Inc. ("Bio-Mimetics"). The Company has the exclusive
right to the use of the Bioadhesive Delivery System subject to certain third
party licenses issued by Bio-Mimetics that have been assigned to the Company and
certain restrictions on the assignment of the patents. See "Management's
Discussion and Analysis of Financial Conditions and Results of Operations."

         The basic patent that covers the Bioadhesive Delivery System was issued
in the United States in 1986 and by the European Patent Office in 1992.
Corresponding patents have also been issued in Canada and Australia. A
corresponding application is currently pending in Japan. The Company is
continuing to develop the core Bioadhesive Delivery System and has filed patent
applications covering tissue moisturization, vaginal moisturization,
progesterone delivery and use of nonoxynol-9 in an anti-sexually transmitted
disease formulation. These applications are currently pending in the U.S. Patent
and Trademark Office, the European Patent Office, and elsewhere, worldwide.
While patent applications do not ensure the ultimate issuance of a patent, it is
the Company's belief that patents based on these applications will issue.

         In addition to the patents discussed above, the Company has two
additional patents that cover ophthalmic treatment products. These two patents
also underlie an agreement to share technology with InSite Vision Incorporated
("Insite"). Under this agreement, the Company obtained from Insite the worldwide
rights to market ophthalmic veterinary products which utilize Insite's sustained
release gel technology. In addition, the Company obtained the right to market,
in all parts of the world except North America and portions of Asia, ophthalmic
over-the-counter drugs which utilize Insite's sustained release gel technology.
In exchange, Insite obtained from the Company the worldwide rights to market
prescription ophthalmic products which utilize the Company's Bioadhesive
Delivery System. In addition, InSite obtained the right to market, in North
America and portions of Asia, ophthalmic over-the-counter drugs which utilize
the Company's Bioadhesive Delivery System.

         Because the Company operates on a worldwide basis, the Company seeks
worldwide patent protection for its technology and products. While having patent
protection cannot ensure that no competitors will emerge, this is a fundamental
step in protecting the technologies of the Company.

                                      -5-
<PAGE>

         The Company has filed "Replens", "Advantage 24" and "Crinone" as
trademarks in countries throughout the world. Applications for the registration
of trademarks do not ensure the ultimate registration of these marks. The
Company believes these marks will be registered. In addition, there can be no
assurance that such trademarks will afford the Company adequate protection or
that the Company will have the financial resources to enforce its rights under
such trademarks.

         The Company also relies on confidentiality and nondisclosure
agreements. There can be no assurance that other companies will not acquire
information which the Company considers to be proprietary. Moreover, there can
be no assurance that other companies will not independently develop know-how
comparable to or superior to that of the Company.

MANUFACTURING

         During 1991, the Company introduced a new, more efficient and less
expensive manufacturing and packaging process for the production of Replens and
its future women's health care products. The process, called "form, fill and
seal," is a single step process whereby the redesigned applicator is created,
filled and sealed in one process. Replens is currently being manufactured and
packaged, utilizing the process developed by the Company, by third-party
manufacturers in Europe. In 1991, the Company placed orders for approximately
$2.7 million of manufacturing equipment. As of December 31, 1995 and 1994,
$945,000 of this equipment was completed and is included in machinery and
equipment in the accompanying consolidated balance sheet. Deposits on
manufacturing equipment totaling approximately $1 million are included in other
assets in the December 31, 1995 and 1994 consolidated balance sheets. Due to
production delays, the Company does not expect to take delivery of this
equipment until 1996 or 1997.

         Medical grade, cross-linked polycarbophil, the polymer used in the
Company's products utilizing the Bioadhesive Delivery System, is currently
available from only one supplier, B.F. Goodrich Company ("Goodrich"). The
Company believes that Goodrich will supply as much of the material as the
Company may require because the Company's products rank among the highest
value-added uses of the polymer. There can be no assurance that Goodrich will
continue to supply the product. In the event that Goodrich cannot or will not
supply enough of the product to satisfy the Company's needs, the Company will be
required to seek alternative sources of polycarbophil. There can be no assurance
that an alternative source of polycarbophil will be obtained.

         All of the other raw materials used by the Company for its products
utilizing the Bioadhesive Delivery System are available from several sources.

OVER-THE-COUNTER DRUGS

         GENERAL. The Company currently markets three over-the-counter drugs:
Advanced Formula Legatrin PM, for the relief of occasional pain and
sleeplessness associated with minor muscle aches such as night leg cramps;
Diasorb, a pediatric antidiarrheal product; and Vaporizer in a bottle, a
portable cough suppressant. These over-the-counter drugs are manufactured by
third-party manufacturers. All of the raw materials used by the Company for its
over-the-counter drugs are available from several sources.

         The over-the-counter drugs are sold to drug wholesalers and chain drug
stores. The Company utilizes approximately 20 drug manufacturers' representative
firms to make calls on the Company's trade customers. The manufacturers'
representatives receive commissions based on sales made within their respective
territories. The Company supports the activities of the manufacturers'
representatives by advertising in medical and consumer publications, direct
mailings and convention participation.

         LEGATRIN. In February 1989, the Company acquired from Scholl, Inc., a
subsidiary of Schering-Plough Corporation, the North American rights to the
product Legatrin and the related trademark, for $300,000 and the assumption of
certain liabilities approximating $41,000. The FDA, in 1988, initiated a review
to determine

                                      -6-

<PAGE>

whether drugs containing quinine sulfate for night leg cramps, an ingredient in
Legatrin, should remain on the market. The FDA issued a final monograph, which
became effective on February 22, 1995, restricting manufacturer's from selling
over-the-counter quinine sulfate based-products for the relief of night leg
cramps. As a result, in February 1995 introduced Advanced Formula Legatrin PM.

SALES

         The following tables sets forth the percentage of the Company's
consolidated net sales by product, for each product accounting for 15% or more
of consolidated net sales in any of the three years ended December 31, 1995.

                                   1995             1994              1993
                                   ----             ----              ----
          Replens                   30%              39%               42%
          Legatrin PM/Legatrin      52               49                48
          Other products            18               12                10
                                   ---              ---               ---
                                   100%             100%              100%
                                   ===              ===               ===

The Company anticipates the percentage of sales attributable to Legatrin PM and
the other products to decrease in future years as additional products utilizing
the Bioadhesive Delivery System are introduced. Warner-Lambert accounted for
approximately 21%, 27% and 29% of 1995, 1994 and 1993 consolidated net sales,
respectively. A retail customer accounted for approximately 16%, 14% and 11% of
1995, 1994 and 1993 consolidated net sales, respectively.

COMPETITION

          While the Company has entered into the strategic alliance agreements
for the marketing of Replens with large pharmaceutical companies, there can be
no assurance that the Company and its partners will have the ability to compete
successfully. The Company's success to a great extent is dependent on the
marketing efforts of its strategic alliance partners, over which the Company has
limited ability to influence. The markets which the Company and its strategic
alliance partners operate in or intend to enter are characterized by intense
competition. The Company and its partners compete against established
pharmaceutical and consumer product companies which market products addressing
similar needs. In addition, numerous companies are developing or, in the future,
may develop enhanced delivery systems and products competitive with the
Company's present and proposed products. Some of the Company's and its partners'
competitors possess greater financial, research and technical resources than the
Company or its partners. Moreover, these companies may possess greater marketing
capabilities than the Company or its partners, including the resources to
implement extensive advertising campaigns.

         Although the Company is not aware of any product incorporating
rate-controlled technology with respect to vaginal lubrication, the Company
believes that Replens competes in the same markets as K-Y Jelly\registered
trademark\ and Gyne-Moisturin\registered trademark\, vaginal lubricants marketed
by Johnson & Johnson Products, Inc. and Schering-Plough Corporation,
respectively. The Company also believes that Advantage 24, Legatrin PM and
Diasorb compete against numerous products in their respective categories and
that Vaporizer in a bottle\registered trademark\ competes against Vicks
Vaporsteam, a product distributed by Richardson-Vicks, Inc.

GOVERNMENT REGULATION

          The Company is subject to both the applicable regulatory provisions of
the FDA in the United States and the applicable regulatory agencies in those
foreign countries where its products are manufactured and/or distributed.

          As in the United States, a number of foreign countries require
premarketing approval by health regulatory authorities. Requirements for
approval may differ from country to country and may involve different types of
testing. There can be substantial delays in obtaining required approvals from
regulatory authorities after

                                      -7-

<PAGE>

applications are filed. Even after approvals are obtained, further delays may be
encountered before the products become commercially available.

          In the United States, manufacturers of pharmaceutical products are
subject to extensive regulation by various Federal and state governmental
entities relating to nearly every aspect of the development, manufacture and
commercialization of such products. The FDA, which is the principal regulatory
authority in the United States for such products, has the power to seize
adulterated or misbranded products and unapproved new drugs, to require their
recall from the market, to enjoin further manufacture or sale and to publicize
certain facts concerning a product. As a result of FDA regulations, pursuant to
which new pharmaceuticals are required to undergo extensive and rigorous
testing, obtaining premarket regulatory approval requires extensive time and
cash expenditures. The manufacturing of the Company's products which are either
manufactured and/or sold in the United States, is subject to current Good
Manufacturing Practices prescribed by the FDA. The labeling of over-the-counter
drugs in the United States, as well as advertising relating to such products,
are subject to the review of the Federal Trade Commission ("FTC") pursuant to
the general authority of the FTC to monitor and prevent unfair or deceptive
trade practices.

PRODUCT LIABILITY

          The Company may be exposed to product liability claims by consumers.
Although the Company presently maintains product liability insurance coverage in
the amount of $15 million, there can be no assurance that such insurance will be
sufficient to cover all possible liabilities. In the event of a successful suit
against the Company, insufficiency of insurance coverage could have a materially
adverse effect on the Company.

EMPLOYEES

          As of February 15, 1996, the Company had 29 employees, 5 in
management, 4 in marketing positions, 9 in research and development
administration and 11 in support functions. None of the Company's employees are
represented by a labor union. The Company believes that its relationship with
its employees is satisfactory.

         The Company has employment agreements with certain employees, some of
whom are also stockholders of the Company. See "Executive
Compensation--Employment Agreements."

ITEM 2. PROPERTIES

          As of February 15, 1996, the Company leases the following properties:

<TABLE>
<CAPTION>
                                                                                                       ANNUAL
    LOCATION                     USE                   SQUARE FEET           EXPIRATION                 RENT
    --------                     ---                   -----------           ----------                 ----
<S>                        <C>                           <C>               <C>                       <C>
Miami, FL                  Corporate office              3,900             September 1998            $  88,000
Paris, France              Research admin office         8,000             August 1998                 280,000
Paris, France              Business residence            2,000             June 2001                    70,000
New York, NY               Residential office            1,000             April 1998                   44,000
</TABLE>

ITEM 3. LEGAL PROCEEDINGS

         Certain law suits have been filed against the Company with respect to
product liability. In the opinion of management and counsel, none of these
lawsuits are material and they are all adequately reserved for or covered by
insurance or, if not so covered, are without any or have little merit or involve
such amounts that if disposed of unfavorably would not have a material adverse
effect on the Company.

                                      -8-

<PAGE>

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

         There were no matters submitted to a vote of stockholders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year covered by this report.

                                     PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

         The Company's $.01 par value Common Stock ("Common Stock") trades on
the American Stock Exchange under the symbol COB. The following table sets forth
the high and low sales prices of the Common Stock on the American Stock
Exchange, as reported on the Composite Tape.

                                               HIGH              LOW
                                               ----              ---
FISCAL YEAR ENDED DECEMBER 31, 1994

         First Quarter                         $6.75            $4.25
         Second Quarter                         6.00             4.25
         Third Quarter                          4.94             4.00
         Fourth Quarter                         5.38             4.00

FISCAL YEAR ENDED DECEMBER 31, 1995

         First Quarter                         $5.63            $4.06
         Second Quarter                         8.50             4.00
         Third Quarter                          9.88             6.63
         Fourth Quarter                         9.50             6.25

         At February 15, 1996, there were 561 shareholders of record of the
Company's Common Stock, although the Company estimates that there are
approximately 6,000 beneficial owners, 6 shareholders of record of the Company's
Series A Convertible Preferred Stock ("Series A Preferred Stock") and 4
shareholders of record of the Company's Series B Convertible Preferred Stock
("Series B Preferred Stock").

         The Series A Preferred Stock pays cumulative dividends at a rate of 8%
per annum payable quarterly. As of December 31, 1995, dividends of $98,079 have
been earned but have not been declared and are included in other long-term
liabilities in the accompanying consolidated balance sheet. Upon conversion of
any shares of Series A Preferred Stock, the Company is obligated to issue
additional shares of Common Stock having a market value equal to accrued but
unpaid dividends on the Series A Preferred Stock at the time of conversion.

         The Company has never paid a cash dividend on its Common Stock and does
not anticipate the payment of cash dividends in the foreseeable future. The
Company intends to retain any earnings for use in the development and expansion
of its business.

         Applicable provisions of the Delaware General Corporation Law may
affect the ability of the Company to declare and pay dividends on its Common
Stock as well as on its Preferred Stock. In particular, pursuant to the Delaware
General Corporation Law, a company may pay dividends out of its surplus, as
defined, or out of its net profits, for the fiscal year in which the dividend is
declared and/or the preceding year. Surplus is defined in the Delaware General
Corporation Law to be the excess of net assets of the company over capital.
Capital is defined to be the aggregate par value of shares issued.

                                      -9-

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

         The following consolidated selected financial data of the Company for
the five years ended December 31, 1995 (not covered by the auditors' report),
should be read in conjunction with the consolidated financial statements and
related notes thereto. See "Item 8. Financial Statements and Supplementary
Data."

<TABLE>
<CAPTION>

                                        1995         1994       1993         1992      1991
                                        ----         ----       ----         ----      ----
<S>                                   <C>          <C>         <C>         <C>        <C>
STATEMENT OF OPERATIONS DATA:

NET SALES                              $9,905       $8,769      $8,150      $9,173    $10,675
NET INCOME (LOSS)                        (959)     (12,994)    (10,453)     (8,536)   (14,548)
INCOME (LOSS) PER COMMON SHARE          (0.04)       (0.58)      (0.49)      (0.51)     (1.17)
WEIGHTED AVERAGE NUMBER
  OF COMMON SHARES OUTSTANDING         25,487       22,530      21,380      16,880      12,856

BALANCE SHEET DATA:

WORKING CAPITAL (DEFICIENCY)          ($1,968)     ($3,858)     $2,888     ($4,443)     $1,542
TOTAL ASSETS                            7,687        6,808      13,870       9,833      14,488
LONG-TERM DEBT                          -            6,218       5,474          58       1,692
STOCKHOLDERS' EQUITY (DEFICIT)          1,556       (6,192)      1,475      (6,991)       (720)
</TABLE>

Note: In March 1996, the Company completed a private placement of 1,358,000
shares of Common Stock raising net proceeds of approximately $12 million.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
        OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

          Cash and cash equivalents increased from approximately $690,000 at
December 31, 1994 to approximately $1.6 million at December 31, 1995, primarily
as a result of approximately $522,000 used for operating activities offset by
approximately $1.9 million received from the exercise of options and warrants.

          In March 1996, the Company completed a private placement of 1,358,000
shares of Common Stock raising net proceeds of approximately $12 million.

         In May 1995, the Company entered into a worldwide, except for South
Africa, license and supply agreement with American Home Product Corporation
("AHP") under which the Wyeth-Ayerst division of AHP will market Crinone. Under
the terms of the agreement, as of March 15, 1996, the Company has received $9.5
million in milestone payments and will continue to receive additional milestone
payments and a significant percentage of sales, which sales are expected to
commence during 1996.

          During 1994, the Company repaid $1,027,985 of long-term debt and
accrued interest through the issuance of 293,710 shares of Common Stock. In
addition, during 1995, the Company repaid an additional $4,787,069 of long-term
debt and accrued interest through the issuance of 1,273,905 shares of Common
Stock.

          In December 1993, the Company entered into an Option and License
Agreement with a French research group based in Marseille, France, pursuant to
which it was granted an option to obtain an exclusive license to the North and
South American rights to a potential AIDS treatment. The option cost $2 million,
of which $1.1 million was paid in December 1993 and the remaining $900,000 was
paid in February 1994. The potential product has been granted a Clinical Trials
Exemption ("CTX") in the United Kingdom and clinical trials in humans are

                                      -10-


<PAGE>

now underway. In addition, an Investigational New Drug Application to start U.S.
clinical trials has been approved. The purpose of these trials is to determine
the optimal dosage in late stage seropositive patients.

          The option, which must be exercised upon the occurrence of certain
events, expires in December 1998. Upon exercise of the option, the Company will
be required to pay an additional $5 million. If the Company does not exercise
its option upon the occurrence of certain events, the Company's rights to the
option are terminated.

         The FDA, in 1988, initiated a review to determine whether drugs
containing quinine sulfate for night leg cramps, an ingredient in Legatrin,
should remain on the market. The FDA issued a final monograph, which became
effective on February 22, 1995, restricting manufacturer's from selling
over-the-counter quinine sulfate based-products for the relief of night leg
cramps. As a result, the Company introduced Advanced Formula Legatrin PM.
Legatrin PM provides relief of occasional pain and sleeplessness associated with
minor muscle aches such as leg cramps. Sales of Legatrin and gross profit
derived from sales of Legatrin approximated $4 million and $3 million,
respectively, for each of the two years ended December 31, 1994. Sales and gross
profit derived from sales of Legatrin PM aggregated approximately $5 million and
$3.8 million, respectively, for the year ended December 31, 1995. There can be
no assurance as to what future sales of Legatrin PM will be.

          In connection with the 1989 purchase of the assets of Bio-Mimetics,
Inc., which assets consisted of the patents underlying the Company's Bioadhesive
Delivery System, other patent applications and related technology, the Company
pays Bio-Mimetics, Inc. a royalty equal to two percent of the net sales of
products based on the Bioadhesive Delivery System, to an aggregate of $7.5
million. The Company is required to prepay a portion of the remaining royalty
obligation, in cash or stock at the option of the Company, if certain conditions
are met.

          As of December 31, 1995, the Company has outstanding exercisable
options and warrants that, if exercised, would result in approximately $16
million of additional capital. However, there can be no assurance that such
options or warrants will be exercised.

          Significant expenditures anticipated by the Company in the near future
are concentrated on production commitments and research and development related
to new products. The Company has committed to spend an aggregate of
approximately $1.3 million on additional molding capacity at its suppliers
during 1996 and 1997.

          As of December 31, 1995, the Company had available net operating loss
carryforwards of approximately $39 million to offset its future U.S. taxable
income.

          In accordance with Statement of Financial Accounting Standards No.
109, as of December 31, 1995, other assets in the accompanying consolidated
balance sheet includes a deferred tax asset of approximately $14 million
(consisting primarily of a net operating loss carryforward) which has been fully
reserved as its ultimate realizability is not assured.

RESULTS OF OPERATIONS - YEARS ENDED DECEMBER 31, 1995 VERSUS DECEMBER 31, 1994
VERSUS DECEMBER 31, 1993

          Sales and gross margin remained relatively constant during 1994 and
1993. Sales have increased in 1995 primarily as a result of Advantage 24 now
being available on drug store shelves throughout the U.S., renewed sales
activity from the Company's OTC segment, including the introduction of Advanced
Formula Legatrin PM, as well as revenue from a research agreement which began in
late 1994. While the strategic alliance agreements in the United States and
abroad have not produced desired unit sales as quickly as planned, the Company
believes it has established effective working relationships with its partners
which the Company believes form a solid foundation to build sales of Replens and
the other products in the development pipeline. However, the Company is
exploring alternatives to such strategic alliances where appropriate. In
addition, upon granting of the European multistate licenses, Replens should
become a reimbursable product in certain countries. The Company believes that
sales of Replens in Europe should increase once the licenses are granted. The
Company's success is dependent to a great

                                      -11-


<PAGE>

extent on the marketing efforts of its strategic alliance partners, which the
Company has limited ability to influence.

          Selling and distribution expenses increased in 1995 as a result of the
costs associated with the introduction of Legatrin PM. The Company's strategic
alliance partners are responsible for all marketing and distribution costs of
Replens and Advantage 24 in their territories. There can be no assurance that
any of the companies with whom the Company has entered into these agreements
will aggressively or successfully market the products.

          General and administrative expenses have decreased as a result of cost
control programs implemented by the Company.

          Research and development expenditures have decreased as a result of
the completion of a majority of the clinical studies related to Crinone and
Advantage 24.

          Lease termination cost represents expenses incurred in relocating the
Company's corporate headquarters to a smaller premise and in closing the
Company's laboratory facility in Madison, Wisconsin. Of the total, $1.2 million
was paid through the issuance of 239,238 shares of Common Stock.

         License fees, net includes $8 million received as upfront and milestone
payments in connection with the licensing agreement with AHP.

          The increase in interest expense in 1994 was primarily the result of
the interest on the 1993 Notes and the Warrants. A majority of the 1993 Notes
were repaid in late 1994 and early 1995 through the issuance of Common Stock.

          The purchase of an option represents the cost to obtain an exclusive
license to the North and South American rights to a potential AIDS treatment.

          As a result, the net loss for 1995 was $959,472 or $.04 per share as
compared to net losses in 1994 of $12,993,889 or $.58 per share and $10,452,983
or $.49 per share in 1993.

IMPACT OF INFLATION

          Sales revenues, manufacturing costs, selling and distribution
expenses, general and administrative expenses and research and development costs
tend to reflect the general inflationary trends.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          The financial statements of the Company are annexed to this report on
pages F-1 through F-18. An index to the financial statements appears on page
F-1. The financial statement schedules are also annexed to this report on pages
S-1 through S-3. An index to the financial statement schedules appears on page
S-1.

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

          None.

                                      -12-

<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

          The executive officers and directors of the Company as of February 15,
1996 are as follows:

<TABLE>
<CAPTION>
         NAME                  AGE                         POSITION
         ----                  ---                         --------
<S>                            <C>       <C>
William J. Bologna             53        Chairman of the Board

Nicholas A. Buoniconti         55        Vice Chairman of the Board and Chief Operating Officer

Norman M. Meier                56        President, Chief Executive Officer and Director

Margaret J. Roell              36        Vice President--Finance and Administration, Chief
                                         Financial Officer, Secretary and Treasurer

Dominique de Ziegler, MD       48        Vice President--Pharmaceutical Development

Irwin L. Kellner               57        Director

John E. A. Kidd                51        Director

Lila E. Nachtigall, M.D.       62        Director
</TABLE>

         WILLIAM J. BOLOGNA has been a director of the Company since inception
and was elected Chairman of the Company's Board of Directors in January 1992.
From December 1988 to January 1992, Mr. Bologna served as Vice Chairman of the
Company's Board of Directors. In addition, since 1980, he has been Chairman of
Bologna & Hackett ("B&H"), an advertising agency specializing in pharmaceutical
products which has in the past performed services for various international
pharmaceutical companies. B&H ceased operations in May 1991. Prior to 1980, Mr.
Bologna was employed by William Douglas McAdams, Inc., a company engaged in the
marketing of pharmaceuticals, in a variety of positions, including Senior Vice
President. In 1965, Mr. Bologna received his B.S. in Pharmacy from Fordham
University. He received an MBA in Finance from Fordham University in 1971.

         NICHOLAS A. BUONICONTI has been a director of the Company since June
1991 and was elected Vice Chairman and Chief Operating Officer of the Company in
April 1992. Mr. Buoniconti, an attorney, is a member of the Massachusetts and
Florida Bar. From January 1990 to April 1992, he was a member of the law firm of
Nicholas A. Buoniconti, P.A. He held the position of President and Chief
Operating Officer of UST, a Fortune 500 company, from May 1987 to December 1989.
From 1985 to 1987, Mr. Buoniconti served as President and Chief Operating
Officer of U.S. Tobacco (which changed its name to UST), as well as serving on
the Board of Directors from 1978 to 1989. He has served as a member of the Board
of Directors of the Miami Project to Cure Paralysis, and is heavily involved in
the fund-raising efforts for the Project through the Marc Buoniconti Fund, named
for his son. Mr. Buoniconti is a former All-Pro linebacker for the Miami
Dolphins. Since 1978, he has co-hosted "Inside the NFL" on the Home Box Office
cable network. Mr. Buoniconti is also a director of American Bankers Insurance
Co., Innkeepers USA and The Sports Authority.

         NORMAN M. MEIER has been President, Chief Executive Officer and a
director of the Company since inception. From 1971 to 1977, Mr. Meier was Vice
President of Sales and Marketing for Key Pharmaceuticals, Inc., a company which
had been engaged in the marketing and sales of pharmaceuticals until its sale to
Schering-Plough Corporation in June 1986. From 1977 until June 1986, Mr. Meier
served as a consultant to Key Pharmaceuticals, Inc. In 1960, Mr. Meier received
his B.S. in Pharmacy from Columbia University. He received

                                      -13-

<PAGE>

his M.S. in Pharmacy Administration from Long Island University in 1964. Mr.
Meier is also a director of Universal Heights, Inc.

         MARGARET J. ROELL has been Vice President--Finance and Administration,
Chief Financial Officer, Treasurer and Secretary of the Company since June 1991.
Ms. Roell was employed by Arthur Andersen & Co., independent public accountants,
from 1981 to 1991 and was an audit manager with Arthur Andersen & Co. from 1986
to 1991.

         DOMINIQUE DE ZIEGLER, M.D. has been Vice President--Pharmaceutical
Development of the Company since January 1996. Dr. de Ziegler has been employed
by the Company since April 1992 as Director of Research Development. In
addition, from 1988 through 1991, Dr. de Ziegler was an Associate Professor at
the Department of Obstetrics and Gynecology, Hospital A. Beclere in Clamart,
France. In 1990, Dr. de Ziegler became a Dipolmat of the American Board of
Obstetrics and Gynecology, Reproductive Endocrinology and Infertility. Dr. de
Ziegler is a member of the American Fertility Society, the American Society for
Reproductive Endocrinogolists, The American Endocrine Society, the Society of
Gynecologic Investigation and the Association Francaise poour l'Etude de la
Menopause. Dr. de Zeigler has also been a journal editor and an "ad hoc"
reviewer for Fertility Sterility, Human Reproduction, The Journal of In Vitro
Fertilization and Embryo Transfer, Contraception Fertilite Sexualite and
Reproduction Humaine et Hormone.

         IRWIN L. KELLNER has been a director of the Company since May 1988. Dr.
Kellner is the Chief Economist for the Chase Regional Bank, a subsidiary of the
Chase Manhattan Bank, formed by the merger of the Chase Manhattan Bank with the
Chemical Bank in April 1996. In turn, Chemical merged with Manufacturers
Hanover ("MHT") in January 1992. Dr. Kellner has been employed by the Bank since
1970. From 1991 to 1996, Dr. Kellner was the Chief Economist for the Chemical
Bank, while from 1980 to 1991, Dr. Kellner was the Chief Economist for MHT. Dr.
Kellner, a past president of the Forecasters Club of New York and the New York
Association of Business Economists, holds membership, and has held a variety of
posts, in several professional associations, including the American Economic
Association, American Statistical Association and the National Association of
Business Economists. Dr. Kellner is also a governor of the Money Marketeers. His
other board memberships include the Juvenile Diabetes Foundation, the Children's
AIDS Network, North Shore University Hospital, the Don Monti Memorial Research
Foundation and Touro College's Barry Z. Levine School of Health Sciences.

         JOHN E. A. KIDD has been a director of the Company since April 1988 and
served as Chairman of the Board of Directors of the Company from December 1988
to December 1991. For approximately the past five years, Mr. Kidd has been an
Executive Director of a number of public companies located in the United
Kingdom, in which an investment company controlled by his family had been a
major investor.

         LILA E. NACHTIGALL, M.D. has been a director of the Company since
November 1992. Dr. Nachtigall has been employed by the New York University
School of Medicine since 1961. Dr. Nachtigall is currently a Professor of
Obstetrics and Gynecology. In addition, Dr. Nachtigall is the Clinic Coordinator
of GYN-Endocrine Clinic at Bellevue Hospital and Co-director of the
GYN-Endocrine Program and Director of Women's Wellness Division at New York
University Medical Center.

         During 1995, Messers. Bologna, Buoniconti and Meier and Ms. Roell each
had one late filing of a Form 4.

         All directors hold office until the next annual meeting of stockholders
and the election and qualification of their successors. Directors receive no
compensation for serving on the Board, except for the receipt of stock options
and the reimbursement of reasonable expenses incurred in attending meetings.
Officers are elected annually by the Board of Directors and serve at the
discretion of the Board. The Board of Directors has two standing committees, the
Audit Committee and the Compensation/Stock Option Committee.

                                      -14-

<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

         The tables, graph and descriptive information set forth below are
intended to comply with the Securities and Exchange Commission compensation
disclosure requirements applicable to, among other reports and filings, annual
reports on Form 10-Ks. This information is being furnished with respect to the
Company's Chief Executive officer ("CEO") and its three other executive
officers, other than the CEO, whose salary and bonus exceeded $100,000 for the
most recent fiscal year (collectively, the "Executive Officers").

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

                               ANNUAL COMPENSATION
                                                                       LONG-TERM
                                                                     COMPENSATION
                                                                     ------------
                                                                      SECURITIES
                                                                      UNDERLYING
NAME AND PRINCIPAL POSITION                   YEAR        SALARY      OPTIONS (1)
---------------------------                   ----        ------     ------------
<S>                                           <C>        <C>             <C>
Norman M. Meier                               1995       $218,000         50,000
 President and Chief                          1994        180,000        470,000
 Executive Officer                            1993        180,000        200,000

William J. Bologna                            1995        218,000         50,000
 Chairman of the Board                        1994        180,000        470,000
                                              1993        180,000        200,000

Nicholas A. Buoniconti                        1995        167,500         50,000
 Vice Chairman and                            1994        135,000        910,000
 Chief Operating Officer                      1993        135,000        200,000

Margaret J. Roell                             1995        120,000         15,000
 Vice President -                             1994        120,000           --
 Finance & Administration                     1993        120,000         20,000
 Chief Financial Officer
<FN>
(1) The options granted in 1993 to Messrs. Meier, Bologna and Buoniconti were
    canceled in 1994.
</FN>
</TABLE>


<TABLE>
<CAPTION>
                            OPTION GRANTS DURING 1995

                          NUMBER OF     % OF TOTAL
                         SECURITIES       OPTIONS                              GRANT
                         UNDERLYING     GRANTED TO   EXERCISE                  DATE
                          OPTIONS        EMPLOYEES    PRICE     EXPIRATION    PRESENT
NAME                      GRANTED         IN 1995     ($/SH)       DATE      VALUE (1)
----                    ------------    ----------   --------   ----------   ---------
<S>                        <C>              <C>        <C>       <C>         <C>
Norman M. Meier            50,000           16%        $7.25     7/20/2005   $272,500

William J. Bologna         50,000           16%         7.25     7/20/2005    272,500

Nicholas A. Buoniconti     50,000           16%         7.25     7/20/2005    272,500

Margaret J. Roell          15,000            5%         7.25     7/20/2005     81,750
<FN>
(1)  The estimated grant date present value reflected in the above table is
     determined using the Black-Scholes model. The material assumptions and
     adjustments incorporated in the Black-Scholes model in estimating the value
     of the options reflected in the above table include the following: (i) an
     exercise price of $7.25, equal to the fair market value of the underlying
     stock on the date of grant, (ii) an option term of ten years, (iii) an
     interest rate of 6.28% that represents the interest rate on a U.S. Treasury
     security with a maturity date corresponding to that of the option term,
     (iv) volatility of 59.214% calculated using daily stock prices for the
     one-year period prior to the grant date and (v) no annualized dividends
     paid with respect to a share of Common Stock at the date of grant. The
     ultimate values of the options will depend on the future price of the
     Company's Common Stock, which cannot be forecast with reasonable accuracy.
     The actual value, if any, an optionee will realize upon exercise of an
     option will depend on the excess of the market value of the Company's
     Common Stock over the exercise price on the date the option is exercised.
</FN>
</TABLE>

                                      -15-

<PAGE>

<TABLE>
<CAPTION>
    AGGREGATED OPTION EXERCISES DURING 1995 AND FISCAL YEAR END OPTION VALUES

                                                         NUMBER OF SECURITIES      VALUE OF UNEXERCISED
                                                        UNDERLYING UNEXERCISED         IN-THE-MONEY
                                                               OPTIONS AT               OPTIONS AT
                    SHARES ACQUIRED        VALUE           DECEMBER 31, 1995         DECEMBER 31, 1995
NAME                  ON EXERCISE        REALIZED     EXERCISABLE UNEXERCISABLE  EXERCISABLE  UNEXERCISABLE
----                  -----------        --------     ----------- -------------  -----------  -------------
<S>                        <C>           <C>              <C>         <C>        <C>             <C>
Norman M. Meier            -             $   -          470,000      50,000      $1,968,125      $65,625

William J. Bologna         -                 -          470,000      50,000       1,968,125       65,625

Nicholas A. Buoniconti     -                 -          910,000      50,000       3,810,625       65,625

Margaret J. Roell          -                 -          100,000      35,000         325,000       80,938
</TABLE>

EMPLOYMENT AGREEMENTS

         In January 1996, the Company entered into five-year employment
agreements with each of William J. Bologna and Norman M. Meier, to serve as
Chairman and President of the Company, respectively. Pursuant to their
respective employment agreements, each such employee is entitled to a base
salary of $250,000. In addition, each such employee was granted options to
purchase 150,000 shares of the Company's Common Stock at an exercise price of
$7.25. Pursuant to the terms of such agreements, each employee has agreed to
dedicate his services on a substantially full-time basis and has agreed for the
term of his agreement and for two years thereafter not to compete with the
Company.

         In April 1992, the Company entered into a five-year employment
agreement with Nicholas A. Buoniconti, to serve as Vice Chairman and Chief
Operating Officer of the Company. Pursuant to this agreement, Mr. Buoniconti is
paid an annual salary of $135,000. As additional compensation, Mr. Buoniconti
was granted options to purchase 250,000 and 400,000 shares of the Company's
Common Stock at exercise prices of $8.00 and $4.88 per share, respectively,
which options vest over five years. Pursuant to the terms of such agreement, Mr.
Buoniconti agreed to dedicate his services on a substantially full-time basis
and has agreed for the term of his agreement and for two years thereafter not to
compete with the Company. During 1994, in connection with Mr. Buoniconti
investing $200,000 into the Company, the exercise price of the options was
reduced to $4.375. As of July 1, 1995, Mr. Buoniconti's annual salary was
increased to $200,000.

         In July 1995, the Company entered into a three-year employment
agreement with Dominique de Ziegler, to serve as director of research
development. Pursuant to this agreement, Dr. de Ziegler is paid an annual salary
of $203,500. As additional compensation, Dr. de Ziegler was granted options to
purchase 25,000 shares of the Company's Common Stock at an exercise prices of
$7.25 per share. Pursuant to the terms of such agreement, Dr. de Ziegler agreed
to dedicate his services on a substantially full-time basis and has agreed for
the term of his agreement and for two years thereafter not to compete with the
Company.

         The exercise price of all of the options granted pursuant to the
aforementioned employment agreements are based on the closing price of the
Company's Common Stock on the American Stock Exchange on the day prior to grant.

                                      -16-

<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         As of February 15, 1996, directors and named executive officers,
individually and as a group, beneficially owned Common Stock as follows:

<TABLE>
<CAPTION>
              NAME OF                                         SHARES, NATURE OF INTEREST
         BENEFICIAL OWNER                               AND PERCENTAGE OF EQUITY SECURITIES(1)
         ----------------                               --------------------------------------
<S>                                                        <C>                   <C>
Norman M. Meier (3)                                        1,295,800               4.9%
William J. Bologna (2)                                     2,378,632               8.9%
Nicholas A. Buoniconti (3)                                   990,000               3.6%
Irwin L. Kellner (3)                                          89,500                *
John E. A. Kidd (3)                                          135,936                *
Lila E. Nachtigall (3)                                        32,000                *
Margaret J. Roell (3)                                        100,200                *
Dominique de Ziegler (3)                                      25,000                *
Officers and directors as a group (8 people)               5,047,068              17.7%
<FN>
 *   Represents less than 1 percent.

(1)  Includes shares issuable upon exercise of both options and warrants which
     are currently exercisable or which may be acquired within 60 days and
     shares issuable upon conversion of the Series A and Series B Preferred
     Stock (12.36 for the Series A Preferred Stock and 20.57 for the Series B
     Preferred Stock).

(2)  Includes 20,570 shares issuable upon conversion of 1,000 shares of Series B
     Preferred Stock. Includes 470,000 shares issuable upon exercise of options,
     which are currently exercisable or which may be acquired within 60 days.
     Includes 98,062 shares beneficially owned by Mr. Bologna's spouse.

(3)  Includes shares issuable upon exercise of options, which are currently
     exercisable or which may be acquired within 60 days, to purchase 470,000
     with respect to Mr. Meier, 910,000 with respect to Mr. Buoniconti, 50,000
     shares with respect to Dr. Kellner, 85,936 shares with respect to Mr. Kidd,
     32,000 shares with respect to Dr. Nachtigall, 100,000 shares with respect
     to Ms. Roell and 25,000 shares with respect to Dr. de Ziegler.
</FN>
</TABLE>

         As of February 15, 1996, the following table sets forth information
regarding the number and percentage of Common Stock held by all persons who are
known by the Company to beneficially own or exercise voting or dispositive
control over 5% or more of the Company's outstanding Common Stock:

                                 NUMBER OF SHARES
         NAME AND ADDRESS       BENEFICIALLY OWNED          PERCENT OF CLASS
         ----------------       ------------------          ----------------
Strome Susskind Investment
  Management, L.P. (1)
100 Wilshire Blvd.
Santa Monica, CA                     2,396,400                     9.1%

(1)  Based on information included on Schedule 13G dated February 13, 1996.

                                      -17-

<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         During 1993, the Company loaned Messrs. Meier and Bologna, $80,000 and
$110,350, respectively. The notes, which bear interest at 10% per annum and are
unsecured but with full recourse, are due on or before December 7, 1996.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AND
         REPORTS ON FORM 8-K

FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

         Indexes to financial statements and financial statement schedules
appear on F-1 and S-1, respectively.

<TABLE>
<CAPTION>
EXHIBITS
<S>      <C>   <C>
3.1      --    Restated Certificate of Incorporation of the Company, as amended(2)
3.2      --    By-laws of Company(1)
10.1     --    Employment Agreement dated as of January 1, 1996, between the Company and Norman M. Meier
10.2     --    Employment Agreement dated as of January 1, 1996, between the Company and William J. Bologna
10.3     --    1988 Stock Option Plan, as amended, of the Company(7)
10.4     --    Joint Venture Agreement for Replens-Sweden  dated June 20, 1990, between Columbia Ireland, Sovro
               KB and Columbia Linc Sweden AB(3)
10.5     --    Licensing and Distribution Agreement dated January 15, 1991, between the Company and Janssen
               Pharmaceutica, N.V.(4)
10.6     --    License Agreement dated March 20, 1991, between the Company and Sterling Drug, Inc.(3)
10.7     --    Agreement for Replens-Italy  dated as of February 19, 1991, between Janssen  Farmaceutica S.p.A
               and Columbia Laboratories (Ireland) Limited(4)
10.8     --    Distribution Agreement between Columbia Laboratories (Ireland) Limited and Roussel UCLAF(4)
10.9     --    Joint Venture  Agreement for Replens-Spain dated as of July 23, 1991, between the Company and
               Sterling Drug Inc.(4)
10.10    --    License and Supply Agreement between Warner-Lambert Company and the Company dated December 5,
               1991(5)
10.11    --    Asset Purchase, License and Option Agreement, dated November 22, 1989(2)
10.12    --    Employment Agreement dated as of April 15, 1992, between the Company and Nicholas A.
               Buoniconti(6)
10.13    --    License and Supply Agreement for Crinone between Columbia Laboratories, Inc. (Bermuda) Ltd. and
               American Home Products dated as of May 21, 1995(8)
21       --    Subsidiaries of the Company
23       --    Consent of Independent Certified Public Accountants
27       --    Financial Data Schedule (for SEC use only)
<FN>
(1)            Incorporated by reference to the Registrant's Registration Statement on Form S-1 (File No.
               33-22062-A) declared effective on July 28, 1988.
(2)            Incorporated by reference to the Registrant's Registration statement on Form S-1 (File No.
               33-31962) declared effective on May 14, 1990.
(3)            Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended
               December 31, 1990.

                                      -18-


<PAGE>

(4)            Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the three
               months ended June 30, 1991.
(5)            Incorporated by reference to the Registrant's Current Report on Form 8-K, filed on January 2,
               1992.
(6)            Incorporated by reference to the Registrant's Registration Statement on Form S-1 (File No.
               33-35723) declared effective on May 28, 1992.
(7)            Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended
               December 31, 1993.
(8)            Incorporated by reference to the Registrant's Registration Statement on Form S-1 (File No.
               33-60123) declared effective August 28, 1995.
</FN>
</TABLE>

REPORTS ON FORM 8-K

         None.

                                      -19-

<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                          INDEX TO FINANCIAL STATEMENTS

                                                                           PAGE
                                                                           ----
Report of Independent Certified Public Accountants                          F-2

Consolidated Balance Sheets
  As of December 31, 1995 and 1994                                          F-3


Consolidated Statements of Operations
  for the Three Years Ended December 31, 1995                               F-5


Consolidated Statements of Stockholders' Equity (Deficit)
  for the Three Years Ended December 31, 1995                               F-6


Consolidated Statements of Cash Flows
  for the Three Years Ended December 31, 1995                               F-8


Notes to Consolidated Financial Statements                                  F-11

                                      F-1

<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
   of Columbia Laboratories, Inc.:

We have audited the accompanying consolidated balance sheets of Columbia
Laboratories, Inc. (a Delaware corporation) and subsidiaries as of December 31,
1995 and 1994, and the related consolidated statements of operations,
stockholders' equity (deficit) and cash flows for each of the three years in the
period ended December 31, 1995. 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 Columbia Laboratories, Inc. and
subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.

                                                ARTHUR ANDERSEN LLP

Miami, Florida,
   February 2, 1996.

                                      F-2

<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                        AS OF DECEMBER 31, 1995 AND 1994

                                     ASSETS

                                                           1995           1994
                                                        ----------    ----------
CURRENT ASSETS:
  Cash and cash equivalents                             $1,628,952    $  689,749
  Accounts receivable, net of allowance
    for doubtful accounts of $105,437
    and $98,370 in 1995 and 1994, respectively           1,266,964       904,277
  Inventories                                              953,913     1,117,243
  Prepaid expense                                          213,723       125,832
                                                        ----------    ----------
    Total current assets                                 4,063,552     2,837,101
                                                        ----------    ----------

PROPERTY AND EQUIPMENT:
  Leasehold improvements                                    74,303        15,162
  Machinery and equipment                                1,571,246     1,394,788
  Furniture and fixtures                                   131,670        70,597
                                                        ----------    ----------
                                                         1,777,219     1,480,547
  Less-Accumulated depreciation
    and amortization                                       855,126       564,924
                                                        ----------    ----------
                                                           922,093       915,623
                                                        ----------    ----------

INTANGIBLE ASSETS, net                                   1,563,817     1,786,037

OTHER ASSETS                                             1,137,208     1,268,803
                                                        ----------    ----------
                                                        $7,686,670    $6,807,564
                                                        ==========    ==========

                                   (Continued)

                                      F-3

<PAGE>

<TABLE>
<CAPTION>
                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                        AS OF DECEMBER 31, 1995 AND 1994

                                   (Continued)

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                                               1995            1994
                                                                           ------------    ------------
<S>                                                                        <C>             <C>
CURRENT LIABILITIES:
  Current portion of long-term debt                                        $    156,751    $       --
  Accounts payable                                                            3,423,339       3,707,966
  Accrued expenses                                                              956,647       1,059,960
  Deferred revenue                                                            1,081,522       1,540,549
  Estimated liability for returns and allowances                                413,899         387,075
                                                                           ------------    ------------
      Total current liabilities                                               6,032,158       6,695,550
                                                                           ------------    ------------

LONG-TERM DEBT, net of current portion                                             --         6,217,649

OTHER LONG-TERM LIABILITIES                                                      98,079          86,743

COMMITMENTS AND CONTINGENCIES (Note 5)

STOCKHOLDERS' EQUITY (DEFICIT):
  Preferred stock, $.01 par value; 1,000,000 shares authorized;
     Series A Convertible Preferred Stock,
      1,323 and 1,515 shares issued and
      outstanding  in 1995 and 1994,  respectively
      (liquidation preference of $132,300 at  December 31, 1995)                     13              15
     Series B Convertible Preferred Stock,
      1,750 and 2,000 shares issued and
      outstanding  in 1995 and 1994,  respectively
      (liquidation preference of $175,000 at  December 31, 1995)                     18              20
  Common stock, $.01 par value; 40,000,000
    shares authorized; 25,982,373 and 23,778,897
    shares issued and outstanding in 1995 and 1994, respectively                259,824         237,789
  Capital in excess of par value                                             73,067,014      64,206,507
  Accumulated deficit                                                       (71,812,828)    (70,853,356)
  Cumulative translation adjustment                                              42,392         216,647
                                                                           ------------    ------------
    Total stockholders' equity (deficit)                                      1,556,433      (6,192,378)
                                                                           ------------    ------------
                                                                           $  7,686,670    $  6,807,564
                                                                           ============    ============
</TABLE>

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

                                      F-4

<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                   FOR THE THREE YEARS ENDED DECEMBER 31, 1995

                                        1995           1994            1993
                                   ------------    ------------    ------------
NET SALES                          $  9,904,633    $  8,769,064    $  8,150,227

COST OF GOODS SOLD                    5,430,458       5,539,424       5,077,816
                                   ------------    ------------    ------------
    Gross profit                      4,474,175       3,229,640       3,072,411
                                   ------------    ------------    ------------

OPERATING EXPENSES:
  Selling and distribution            2,897,312       2,036,353       2,571,164
  General and administrative          2,870,416       2,799,863       3,491,201
  Research and development            7,812,488       8,976,047       5,290,912
  Lease termination cost                   --              --           238,282
                                   ------------    ------------    ------------
    Total operating expenses         13,580,216      13,812,263      11,591,559
                                   ------------    ------------    ------------

    Loss from operations             (9,106,041)    (10,582,623)     (8,519,148)
                                   ------------    ------------    ------------

OTHER INCOME (EXPENSE):
  License fees                        8,054,883         174,741         561,297
  Interest income                       135,799          61,030          89,540
  Interest expense                     (178,592)     (2,479,610)       (431,983)
  Purchase of option                       --              --        (2,000,000)
  Other, net                            134,479        (167,427)       (152,689)
                                   ------------    ------------    ------------
                                      8,146,569      (2,411,266)     (1,933,835)
                                   ------------    ------------    ------------

    Net loss                       $   (959,472)   $(12,993,889)   $(10,452,983)
                                   ============    ============    ============


NET LOSS PER COMMON SHARE          $      (0.04)   $      (0.58)   $      (0.49)
                                   ============    ============    ============

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING          25,487,000      22,530,000      21,380,000
                                   ============    ============    ============

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

                                      F-5

<PAGE>

<TABLE>
<CAPTION>
                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                   FOR THE THREE YEARS ENDED DECEMBER 31, 1995

                                       SERIES A                  SERIES B
                                    PREFERRED STOCK           PREFERRED STOCK             COMMON STOCK
                                ------------------------  ------------------------  -------------------------
                                 NUMBER OF                  NUMBER OF                 NUMBER OF
                                   SHARES      AMOUNT        SHARES      AMOUNT         SHARES      AMOUNT
                                -----------  -----------  ----------- ------------  ------------ ------------
<S>                                 <C>          <C>         <C>           <C>       <C>            <C>
BALANCE, January 1, 1993             2,190          $22       12,750         $127    17,305,419     $173,054
Issuance of common stock            -            -            -            -          3,992,002       39,920
Options exercised                   -            -            -            -            531,568        5,316
Warrants exercised                  -            -            -            -            220,668        2,207
Issuance of warrants                -            -            -            -             -            -     
Conversion of preferred stock         (275)          (3)      (5,000)         (50)      106,249        1,062
Accumulated dividends on
  preferred stock                   -            -            -            -             -            -     
Translation adjustment              -            -            -            -             -            -     
Net loss                            -            -            -            -             -            -     
                                -----------  -----------  ----------- ------------  ------------ ------------
BALANCE, December 31, 1993           1,915           19        7,750           77    22,155,906      221,559
Issuance of common stock            -            -            -            -            126,061        1,261
Options exercised                   -            -            -            -             20,000          200
Warrants exercised                  -            -            -            -          1,060,000       10,600
Conversion of debt                  -            -            -            -            293,710        2,937
Conversion of preferred stock        (400)          (4)      (5,750)         (57)       123,220        1,232
Accumulated dividends on
  preferred stock                   -            -            -            -             -            -     
Translation adjustment              -            -            -            -             -            -     
Net loss                            -            -            -            -             -            -      
                                -----------  -----------  ----------- ------------  ------------ ------------
BALANCE, December 31, 1994           1,515           15        2,000           20    23,778,897      237,789
</TABLE>

<TABLE>
<CAPTION>
                                 CAPITAL IN                CUMULATIVE
                                 EXCESS OF    ACCUMULATED  TRANSLATION
                                 PAR VALUE     DEFICIT     ADJUSTMENT      TOTAL
                                -----------  ------------  -----------  -------------
<S>                             <C>          <C>             <C>        <C>
BALANCE, January 1, 1993        $39,615,396  $(47,406,484)    $626,799  $ (6,991,086)
Issuance of common stock         16,644,494       -             -         16,684,414
Options exercised                   474,689       -             -            480,005
Warrants exercised                  296,727       -             -            298,934
Issuance of warrants              1,912,500       -             -          1,912,500
Conversion of preferred stock        (1,009)      -             -           -
Accumulated dividends on
  preferred stock                   (16,307)      -             -            (16,307)
Translation adjustment              -             -           (440,589)     (440,589)
Net loss                            -        (10,452,983)       -        (10,452,983)
                                -----------  -----------    ----------   -----------
BALANCE, December 31, 1993       58,926,490  (57,859,467)      186,210     1,474,888
Issuance of common stock            525,739       -             -            527,000
Options exercised                    28,600       -             -             28,800
Warrants exercised                3,714,400       -             -          3,725,000
Conversion of debt                1,025,048       -             -          1,027,985
Conversion of preferred stock        (1,171)      -             -           -
Accumulated dividends on
  preferred stock                   (12,599)      -             -            (12,599)
Translation adjustment              -             -             30,437        30,437
Net loss                            -        (12,993,889)       -        (12,993,889)
                                -----------  -----------    ----------   -----------
BALANCE, December 31, 1994       64,206,507  (70,853,356)      216,647    (6,192,378)
</TABLE>

                                   (Continued)

                                      F-6

<PAGE>

<TABLE>
<CAPTION>
                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                   FOR THE THREE YEARS ENDED DECEMBER 31, 1995
                                   (Continued)

                                       SERIES A                  SERIES B
                                    PREFERRED STOCK           PREFERRED STOCK             COMMON STOCK
                                ------------------------  ------------------------  -------------------------    CAPITAL IN
                                 NUMBER OF                 NUMBER OF                  NUMBER OF                   EXCESS OF
                                  SHARES       AMOUNT        SHARES      AMOUNT        SHARES       AMOUNT        PAR VALUE
                                -----------  -----------  ----------- ------------  ------------ ------------  --------------
<S>                                 <C>          <C>          <C>          <C>       <C>            <C>          <C>
BALANCE, January 1, 1995             1,515          $15        2,000          $20    23,778,897     $237,789     $64,206,507
Issuance of common stock            -            -            -            -            112,611        1,127         639,519
Options exercised                   -            -            -            -            161,000        1,610         757,828
Warrants exercised                  -            -            -            -            227,118        2,271       1,152,110
Conversion of debt                  -            -            -            -          1,695,232       16,952       6,322,457
Conversion of preferred stock         (192)          (2)        (250)          (2)        7,515           75             (71)
Accumulated dividends on
  preferred stock                   -            -            -            -             -            -              (11,336)
Translation adjustment              -            -            -            -             -            -              -      
Net loss                            -            -            -            -             -            -              -      
                                -----------  -----------  ----------- ------------  ------------ ------------  --------------
BALANCE, December 31, 1995           1,323          $13        1,750          $18    25,982,373     $259,824     $73,067,014 
                                ===========  ===========  =========== ============  ============ ============  ==============
</TABLE>

<TABLE>
<CAPTION>
                                                     CUMULATIVE
                                 ACCUMULATED         TRANSLATION
                                   DEFICIT           ADJUSTMENT         TOTAL
                                -------------     --------------    ------------
<S>                              <C>              <C>                <C>
BALANCE, January 1, 1995         $(70,853,356)    $     $216,647     $(6,192,378)
Issuance of common stock             -                    -              640,646
Options exercised                    -                    -              759,438
Warrants exercised                   -                    -            1,154,381
Conversion of debt                   -                    -            6,339,409
Conversion of preferred stock        -                    -              -
Accumulated dividends on
  preferred stock                    -                    -              (11,336)
Translation adjustment               -                  (174,255)       (174,255)
Net loss                             (959,472)            -             (959,472)
BALANCE, December 31, 1995      -------------     --------------     -----------
                                 $(71,812,828)           $42,392      $1,556,433
                                =============     ==============     ===========
</TABLE>

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

                                      F-7

<PAGE>

<TABLE>
<CAPTION>

                   COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                   FOR THE THREE YEARS ENDED DECEMBER 31, 1995

                                                           1995           1994            1993
                                                      -------------   -------------   -------------
<S>                                                   <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                            $   (959,472)   $(12,993,889)   $(10,452,983)
  Adjustments to reconcile net loss to net
    cash used in operating activities-
      Depreciation and amortization                        520,066         440,496         496,984
      Provision for (recovery of) doubtful accounts          7,067          (3,030)          4,734
      Provision for returns and allowances                  37,445         168,215         233,969
      Lease termination cost                                  --              --           112,007
      Write-down of property and equipment                    --              --           216,133
      Write-down of inventories                            251,043         888,277         451,460
      Interest expense                                     (19,035)      1,738,635         173,865

  Changes in assets and liabilities-
    (Increase) decrease in:
      Accounts receivable                                 (429,570)         43,773        (469,726)
      Inventories                                          (87,713)        868,688         (31,914)
      Prepaid expenses                                     (54,454)         78,365         (87,374)
      Other assets                                         (74,615)         20,548        (510,804)

    Increase (decrease) in:
      Accounts payable                                     239,589       1,171,080      (1,617,947)
      Accrued expenses                                     215,748        (616,010)      1,579,201
      Deferred revenue                                    (157,410)       (387,993)       (144,738)
      Estimated liability for returns and
        allowances                                         (10,621)        (92,287)       (344,203)
                                                      ------------    ------------    ------------
        Net cash used in operating activities             (521,932)     (8,675,132)    (10,391,336)
                                                      ------------    ------------    ------------
</TABLE>

                                   (Continued)

                                       F-8

<PAGE>

<TABLE>
<CAPTION>
                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                   FOR THE THREE YEARS ENDED DECEMBER 31, 1995

                                   (Continued)

                                                       1995            1994            1993
                                                   -------------   -------------   -------------
<S>                                                <C>             <C>             <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment               $   (309,091)   $   (275,210)   $   (118,023)
  Proceeds from sale of investment                         --              --            25,817
                                                   ------------    ------------    ------------
    Net cash used in investing activities              (309,091)       (275,210)        (92,206)
                                                   ------------    ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of long-term debt                 --              --         7,250,000
  Repayments of notes payable and long-term debt        (91,954)        (37,527)       (192,024)
  Repayment of amounts owed to minority
    shareholders of a subsidiary                           --              --        (2,500,000)
  Proceeds from issuance of common stock                 78,146         500,000       9,448,813
  Proceeds from exercise of options and warrants      1,913,819       3,753,800         778,939
                                                   ------------    ------------    ------------
    Net cash provided by financing activities         1,900,011       4,216,273      14,785,728

EFFECT OF EXCHANGE RATE CHANGES ON CASH                (129,785)        142,989         (62,143)
                                                   ------------    ------------    ------------
NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS                                      939,203      (4,591,080)      4,240,043

CASH AND CASH EQUIVALENTS,
  beginning of year                                     689,749       5,280,829       1,040,786
                                                   ------------    ------------    ------------
CASH AND CASH EQUIVALENTS,
  end of year                                      $  1,628,952    $    689,749    $  5,280,829
                                                   ============    ============    ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION
  Interest paid                                    $    107,132    $    573,338    $     29,857
                                                   ============    ============    ============
</TABLE>

                                   (Continued)

                                       F-9

<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                   FOR THE THREE YEARS ENDED DECEMBER 31, 1995

                                   (Continued)

SUPPLEMENTAL SCHEDULE OF NONCASH
 OPERATING AND FINANCING ACTIVITIES:

      During 1995 and 1994, the Company repaid $6,339,409 and $1,027,985,
respectively, of long-term debt and accrued interest through the issuance of
1,695,232 and 293,710 shares, respectively, of Common Stock.

     In January 1993, the Company completed a private placement of 2.5 million
shares of Common Stock, raising net proceeds of approximately $9.5 million. In
addition, the Company repaid the amount owed to the minority shareholders of a
subsidiary through the payment of $2.5 million in cash and the issuance of
867,579 shares of Common Stock. The Company also repaid $1.6 million of
long-term debt through the payment of $100,000 in cash and the issuance of
375,000 shares of Common Stock.

     During 1993, the Company issued 239,238 shares of Common Stock in payment
of lease termination costs which totaled $1.2 million. In addition, during 1994
and 1993, the Company issued 5,008 and 10,300 shares of Common Stock,
respectively, in payment of consulting fees, which totaled $27,000 and $54,000,
respectively. During 1995, the Company issued 95,000 shares of Common Stock in
payment of legal fees aggregating $562,500.

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

                                       F-10

<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

    ORGANIZATION-

Columbia Laboratories, Inc. (the "Company") was incorporated as a Delaware
corporation in December 1986. The Company's objective is to develop on a
worldwide basis a portfolio of women's prescription and over-the-counter
products, including those which help prevent sexually transmitted diseases. The
Company's products primarily utilize the Company's patented bioadhesive delivery
technology.

    PRINCIPLES OF CONSOLIDATION-

The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany balances and transactions have
been eliminated in consolidation.

    ACCOUNTING ESTIMATES-

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

    ADJUSTMENT OF PRIOR YEARS' FINANCIAL STATEMENTS-

In December 1993, the Company entered into an Option and License Agreement
pursuant to which it was granted an option to obtain an exclusive license to the
North and South American rights to a potential AIDS treatment. The option cost
$2 million, which in accordance with Statement of Financial Accounting Standard
("SFAS") No. 2, should have been expensed when acquired in 1993. As a result,
the Company has restated its net loss for 1993 and 1994.

The effect of the restatement is to increase 1993 net loss by $2 million or
$(.09) per share and decrease 1994 net loss $400,000 or $.01 per share.

    FOREIGN CURRENCY-

The assets and liabilities of the Company's foreign subsidiaries are translated
into U.S. dollars at current exchange rates and revenue and expense items are
translated at average rates of exchange prevailing during the period. Resulting
translation adjustments are accumulated as a separate component of stockholders'
equity (deficit).

    INVENTORIES-

Inventories are stated at the lower of cost (first-in, first-out) or market.
Components of inventory cost include materials, labor and manufacturing
overhead. Inventories consist of the following:

                                                          DECEMBER 31,
                                                 -------------------------------
                                                    1995                 1994
                                                 ----------           ----------
Finished goods                                   $  831,794           $  260,666
Raw materials                                       122,119              856,577
                                                 ----------           ----------
                                                 $  953,913           $1,117,243
                                                 ==========           ==========

                                      F-11

<PAGE>

    PROPERTY AND EQUIPMENT-

Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed on the straight-line method over the estimated useful
lives of the respective assets, as follows:

                                                         YEARS
                                                        ------
              Machinery and equipment                   5 - 10
              Furniture and fixtures                         5

Costs of major additions and improvements are capitalized and expenditures for
maintenance and repairs which do not extend the life of the assets are expensed.
Upon sale or disposition of property and equipment, the cost and related
accumulated depreciation are eliminated from the accounts and any resultant gain
or loss is credited or charged to income.

    INTANGIBLE ASSETS-

Intangible assets consist of the following:

                                                           DECEMBER 31,
                                                 ------------------------------
                                                     1995               1994
                                                 -----------        -----------
Patents                                          $ 2,600,000        $ 2,600,000
Trademarks                                           341,000            341,000
                                                 -----------        -----------
                                                   2,941,000          2,941,000
Less accumulated amortization                     (1,377,183)        (1,154,963)
                                                 -----------        -----------
                                                 $ 1,563,817        $ 1,786,037
                                                 ===========        ===========

Patents are being amortized on a straight-line basis over their remaining lives
(through 2003). Trademarks are being amortized on a straight-line basis over ten
years.

Following the acquisition of any intangible assets, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the intangible asset may warrant revision or
that the remaining balance of the intangible asset may not be recoverable. When
factors indicate that a trademark or patent may be impaired, the Company uses an
estimate of the underlying product's undiscounted net income, including amounts
to be received over the remaining life of the intangible asset from license
fees, royalty income, and related deferred revenues, in measuring whether the
intangible asset is recoverable. Unrecoverable amounts are charged to
operations.

    INCOME TAXES-

As of December 31, 1995, the Company has U.S. tax net operating loss
carryforwards of approximately $39 million which expire through 2010. The
Company also has unused tax credits of approximately $782,000 which expire at
various dates through 2005. Utilization of net operating loss carryforwards may
be limited in any year due to limitations in the Internal Revenue Code.

In February 1992, the Financial Accounting Standards Board issued a new standard
on accounting for income taxes ("SFAS No. 109"). The Company adopted the new
accounting and disclosure rules as of January 1, 1993. Implementation of SFAS
No. 109 had no effect on the Company's reported financial position and net loss.
As of December 31, 1995 and 1994, other assets in the accompanying consolidated
balance sheets include deferred tax assets of approximately $14 million
(comprised primarily of a net operating loss carryforward) which have been fully
reserved for as their ultimate realizability is not assured.

                                      F-12

<PAGE>

    REVENUE RECOGNITION-

Sales are recorded as products are shipped and services are rendered. Royalties
and additional monies owed to the Company based on the strategic alliance
partners selling prices are recorded as revenue as sales are made by the
strategic alliance partners.

    LICENSE FEES-

License fees, net of related expenses, are recognized as other income when the
Company has no further obligations with respect to the payments and thus the
earnings process is complete.

    RESEARCH AND DEVELOPMENT COSTS-

Company sponsored research and development costs related to future products are
expensed as incurred. Costs related to research and development contracts are
charged to cost of sales upon recognition of the related revenue.

    LEASE TERMINATION COST-

Lease termination cost represents expenses incurred in relocating the Company's
corporate headquarters to a smaller premise and in closing the Company's
laboratory facility in Madison, Wisconsin. Of this amount, $1.2 million was paid
through the issuance of 239,238 shares of the Company's $.01 par value Common
Stock ("Common Stock").

    LOSS PER SHARE-

Loss per share is computed by dividing the net loss plus preferred dividends by
the weighted average number of shares of common stock outstanding during the
period. Shares to be issued upon the exercise of the outstanding options and
warrants or the conversion of the preferred stock are not included in the
computation of loss per share as their effect is antidilutive.

    STATEMENTS OF CASH FLOWS-

For purposes of the statements of cash flows, the Company considers all
investments purchased with a maturity of three months or less to be cash
equivalents.

(2) STRATEGIC ALLIANCE AGREEMENTS:

The Company has entered into strategic alliance agreements for the marketing and
distribution of Replens with: (i) Warner-Lambert Company under which
Warner-Lambert Company markets Replens in the United States; (ii) a subsidiary
of Johnson and Johnson under which that subsidiary markets Replens in Italy;
(iii) Roussel-UCLAF under which Roussel markets Replens in France, certain
French overseas territories and Greece; (iv) Nippon Sanofi K.K. (formerly
Sterling-Winthrop, Inc.) under which Sanofi markets Replens in South America,
Central America and Australia and will market Replens in Portugal; (v) Teva
Pharmaceutical under which Teva will market Replens in Israel; (vi) Logos
Pharmaceuticals (Pty) Limited under which Logos markets Replens in South Africa
and the sixteen countries of sub-Saharan Africa; (vii) LASA SA under which LASA
SA markets Replens in Spain; (viii) Unipath Ltd. under which Unipath markets
Replens and Feminesse\trademark\ in the United Kingdom; (ix) Roberts
Pharmaceutical Corporation under which Roberts markets Replens in Canada; (x)
Vifor SA under which Vifor will market Replens in Switzerland and Liechtenstein
and (xi) Hermes H/F under which Hermes markets Replens in Iceland. Pursuant to
these agreements, the Company has received advance payments, of which $1,081,522
and $1,540,549, respectively, are reflected as deferred revenue in the
accompanying December 31, 1995 and 1994 consolidated balance sheets,
respectively. These advance payments will be recognized as products are shipped
to the applicable strategic alliance partners or as sales are made by the
strategic alliance partners.

                                      F-13

<PAGE>

During 1993, the Logos agreement was amended such that Logos will also be the
exclusive distributor of the Company's progesterone product in South Africa and
the sixteen countries of sub-Saharan Africa. As part of the agreement, the
Company received upfront licensing fees as well as ongoing revenue from
manufacturing and product sales.

In September 1994, the Company entered into a license and distribution agreement
with Lake Pharmaceutical, Inc. under which Lake markets Advantage 24 in the
United States.

In May 1995, the Company entered into a worldwide, except for South Africa,
license and supply agreement with American Home Products ("AHP") under which the
Wyeth-Ayerst division of AHP will market Crinone. Under the terms of the
agreement, during 1995, the Company received $8 million in milestone payments.
An additional $1.5 million milestone payment was received in January 1996. The
Company will continue to receive additional milestone payments and a significant
percentage of sales.

(3) LONG-TERM DEBT:

Long-term debt consists of the following:

                                                          DECEMBER 31,
                                                --------------------------------
                                                    1995                 1994
                                                -----------          -----------
10% notes payable                               $   156,751          $ 6,217,649

Less - Payments
 due within one year                               (156,751)                --
                                                -----------          -----------
                                                $      --            $ 6,217,649
                                                ===========          ===========

During 1993, the Company issued $7.25 million of unsecured 10% notes payable due
on June 30, 1996 ("1993 Notes"). Pursuant to the terms of the 1993 Notes, if the
Company or any of its subsidiaries receives upfront license fees for the
marketing and distribution of the Company's prescription progesterone product,
the Company will use one-third of the net proceeds of such upfront fees to make
"pro-rata" prepayments of the notes payable. In connection with the 1993 Notes,
the Company issued warrants to purchase 1,212,500 shares of Common Stock at an
exercise price of $4.00 per share, which was less than the market value of the
Common Stock on the date of grant. The difference, aggregating $1,912,500, was
being recorded as additional interest expense over the term of the 1993 Notes.
The warrants are exercisable through June 30, 1998.

During 1994, the exercise price of certain of the warrants was reduced from
$4.00 per share to $3.50 per share, conditioned on the immediate exercise of the
warrants. As additional consideration for the immediate exercise of the
warrants, the holders were granted the right at any time to convert the
outstanding principal amount of the 1993 debt and accrued interest thereon, into
shares of Common Stock at an exchange rate equal to a 25% discount to the then
current market price, based on the average closing price of the Common Stock for
the fifteen days prior to the conversion date, but in no event at a price less
than $3.50 per share. As consideration for the repricing of the warrants, the
note holders waived their right to receive one-third of the net proceeds of any
upfront licensing fees. As a result, warrants to purchase 1,050,000 shares of
Common Stock were exercised resulting in net proceeds of $3,675,000 to the
Company.

During 1995 and 1994, the Company repaid $6,339,409 and $1,027,985,
respectively, of long-term debt and accrued interest through the issuance of
1,695,232 and 293,710 shares, respectively, of Common Stock. As a result of the
exercise of the warrants and the repayment of the debt, during 1994, debt
discount aggregating $1,738,635 was recorded as additional interest expense.

                                      F-14

<PAGE>

(4) STOCKHOLDERS' EQUITY (DEFICIT):

     PREFERRED STOCK-

In November 1989, the Company completed a private placement of 151,000 shares of
Series A Convertible Preferred Stock ("Series A Preferred Stock"). The Series A
Preferred Stock pays cumulative dividends at a rate of 8% per annum payable
quarterly and each share is convertible into 12.36 shares of Common Stock. As of
December 31, 1995 and 1994, dividends of $98,079 and $86,743, respectively, have
been earned but have not been declared and are included in other long-term
liabilities in the accompanying consolidated balance sheets.

In August 1991, the Company completed a private placement of 150,000 shares of
Series B Convertible Preferred Stock ("Series B Preferred Stock"). Each share of
Series B Preferred Stock is convertible into 20.57 shares of Common Stock.

Upon liquidation of the Company, the holders of the Series A and Series B
Preferred Stock are entitled to $100 per share. In addition, the holders of
Series A Preferred Stock are entitled to accumulated unpaid dividends. The
Series A Preferred Stock shares are redeemable for cash, at the option of the
Company, at specified redemption prices. The Series B Preferred Stock will be
automatically converted into Common Stock upon the occurrence of certain events.
Holders of the Series A and Series B Preferred Stock are entitled to one vote
for each share of Common Stock into which the preferred stock is convertible.

     WARRANTS-

As of December 31, 1995, the Company had warrants outstanding for the purchase
of 677,881 shares of Common Stock. Information on outstanding warrants is as
follows:

EXERCISE
PRICE
--------
     $4.00                                               125,000
      4.375                                              150,000
      4.81                                                50,000
      4.875                                               57,500
      5.00                                                14,000
      5.25                                                 7,000
      5.31                                               200,000
      5.46                                                60,381
      5.625                                                7,000
      5.875                                                7,000
                                                         -------
                                                         677,881
                                                         =======

All of the warrants, except 30,000 of the $4.875 warrants, were exercisable on
December 31, 1995.

 STOCK OPTION PLAN-

All employees, officers, directors and consultants of the Company or any
subsidiary are eligible to participate in the Columbia Laboratories, Inc. 1988
Stock Option Plan, as amended (the "Plan"). Under the Plan, a total of 5,000,000
shares of Common Stock have been authorized for issuance upon exercise of the
options. Information on options are as follows:

                                      F-15

<PAGE>

                                            NUMBER
                                          OF SHARES     PRICE PER SHARE
                                          ---------     ---------------
Outstanding, January 1, 1994              3,340,572      $1.44 - 16.03
     Granted                              1,925,000       4.38 -  6.13
     Exercised                              (20,000)      1.44
     Canceled                            (1,995,252)      4.34 - 14.58
                                         ----------
Outstanding, December 31, 1994            3,250,320       1.44 - 16.03
     Granted                                321,500       7.25
     Exercised                             (161,000)      4.50 - 5.38
     Canceled                              (260,174)      4.88 - 13.63
                                         ----------
Outstanding, December 31, 1995            3,150,646       1.44 - 16.03
                                         ==========      =============

Options exercisable:
     December 31, 1994                    1,074,320      $1.44 - 16.03
                                         ==========      =============
     December 31, 1995                    2,618,146      $1.44 - 16.03
                                         ==========      =============

(5) COMMITMENTS AND CONTINGENCIES:

    LEASES-

The Company leases office space, apartments and office equipment under
noncancelable operating leases. Lease expense for each of the three years ended
December 31, 1995, 1994 and 1993 totaled $365,995, $461,489 and $308,625,
respectively. Future minimum lease payments as of December 31, 1995 are as
follows:

                 1996                             $  532,279
                 1997                                491,117
                 1998                                354,963
                 1999                                 95,579
                 2000                                 86,010
                 Thereafter                          432,732
                                                  ----------
                                                  $1,992,680
                                                  ==========

     ROYALTIES-

In 1989, the Company purchased the assets of Bio-Mimetics, Inc. which consisted
of the patents underlying the Company's Bioadhesive Delivery System, other
patent applications and related technology, for $2,600,000, in the form of 9%
convertible debentures which were converted into 500,000 shares of Common Stock
during 1991, and $100,000 in cash. In addition, Bio-Mimetics, Inc. receives a
royalty equal to two percent of the net sales of products based on the
Bioadhesive Delivery System to an aggregate amount of $7,500,000. In addition,
beginning in March 1995, the Company agreed to prepay a portion of the remaining
royalty obligation if certain conditions are met. The Company may not assign the
patents underlying the Bioadhesive Delivery System without the prior written
consent of Bio-Mimetics, Inc. until the aggregate royalties have been paid.

In May 1989, the Company signed an exclusive agreement to license the U.S. and
Canadian marketing rights for Diasorb\registered trademark\, a unique pediatric
antidiarrheal product formerly marketed by Schering-Plough Corporation. Under
the terms of the agreement, the Company is obligated to pay a royalty equal to
5% of the net sales of Diasorb.

     EMPLOYMENT AGREEMENTS-

The Company has employment agreements with certain employees, some of whom are
also stockholders of the Company. The terms of the employment agreements range
from one to five years. Future base compensation to be paid under these
agreements as of December 31, 1995 are as follows:

                                      F-16

<PAGE>

                     1996                             $  903,500
                     1997                                761,833
                     1998                                601,750
                     1999                                500,000
                     2000                                500,000
                                                      ----------
                                                      $3,267,083
                                                      ==========

During 1993, the Company's shareholders approved an Incentive Compensation Plan
covering all employees pursuant to which an aggregate of 5% of pretax earnings
of the Company for any year will be awarded to designated employees of the
Company. As a result of the net losses, no amounts have been awarded to date.

     MANUFACTURING EQUIPMENT-

In 1991, the Company placed orders for approximately $2,700,000 of manufacturing
equipment. As of December 31, 1995 and 1994, $945,000 of this equipment was
completed and is included in machinery and equipment in the accompanying
consolidated balance sheets. Deposits on manufacturing equipment totaling
approximately $1 million as of December 31, 1995 and 1994, are included in other
assets in the accompanying consolidated balance sheets.

     LEGAL PROCEEDINGS-

Various claims and complaints have been filed or are pending against the Company
with respect to various matters. In the opinion of management and counsel, all
such matters are adequately reserved for or covered by insurance or, if not so
covered, are without any or have little merit or involve such amounts that if
disposed of unfavorably would not have a material adverse effect on the Company.

(6) OTHER RELATED-PARTY TRANSACTION:

During 1993, the Company loaned two individuals who are officers, directors and
stockholders of the Company an aggregate of $190,350. These notes, which bear
interest at 10% per annum, are due on or before December 7, 1996. The notes and
the related accrued interest, aggregating $230,354 as of December 31, 1995, are
included in accounts receivable in the accompanying 1995 consolidated balance
sheet. As of December 31, 1994, the aggregate balance of $211,219 is included in
other assets in the accompanying 1994 consolidated balance sheet.

(7) SEGMENT INFORMATION:

The Company and its subsidiaries are engaged in one line of business, the
development and sale of pharmaceutical products and cosmetics. One customer
accounted for approximately 21%, 27% and 29% of 1995, 1994 and 1993 consolidated
net sales, respectively. Another customer accounted for approximately 16%, 14%
and 11%, respectively, of 1995, 1994 and 1993 consolidated net sales. The
following table shows selected information by geographic area:

                                      F-17

<PAGE>

<TABLE>
<CAPTION>
                                           NET                     LOSS FROM                IDENTIFIABLE
                                          SALES                   OPERATIONS                   ASSETS
                                          -----                   ----------                ------------
<S>                                   <C>                        <C>                        <C>
As of and for the year
 ended December 31, 1995-

 United States                        $  8,321,578               $ (2,451,702)              $  2,989,278
 Europe                                  1,583,055                 (6,654,339)                 4,697,392
                                      ------------               ------------               ------------
                                      $  9,904,633               $ (9,106,041)              $  7,686,670
                                      ============               ============               ============

As of and for the year
 ended December 31, 1994-

 United States                        $  7,681,985               $ (2,798,773)              $  3,153,159
 Europe                                  1,087,079                 (7,783,850)                 3,654,405
                                      ------------               ------------               ------------
                                      $  8,769,064               $(10,582,623)              $  6,807,564
                                      ============               ============               ============

As of and for the year
 ended December 31, 1993-

 United States                        $  7,009,867               $ (5,144,088)              $ 10,306,454
 Europe                                  1,140,360                 (3,375,060)                 3,563,597
                                      ------------               ------------               ------------
                                      $  8,150,227               $ (8,519,148)              $ 13,870,051
                                      ============               ============               ============

</TABLE>

(8) EVENT SUBSEQUENT TO THE DATE OF THE AUDIT REPORT:

In March 1996, the Company completed a private placement of 1,358,000 shares of
Common Stock raising net proceeds of approximately $12 million.

                                      F-18


<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                      INDEX TO FINANCIAL STATEMENT SCHEDULE

                                                                           PAGE
                                                                           ----
Report of Independent Certified Public Accountants                          S-2

Schedule VIII-Valuation and Qualifying Accounts and Reserves                S-3

                                      S-1

<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
 of Columbia Laboratories, Inc.:

We have audited in accordance with generally accepted auditing standards, the
financial statements of Columbia Laboratories, Inc. and subsidiaries included in
this Form 10-K and have issued our report thereon dated February 2, 1996. Our
audits were made for the purpose of forming an opinion on the basic financial
statements taken as a whole. Schedule VIII is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

                                                ARTHUR ANDERSEN LLP

Miami, Florida,
  February 2, 1996.

                                      S-2

<PAGE>

<TABLE>
<CAPTION>
                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS

                   FOR THE THREE YEARS ENDED DECEMBER 31, 1995

                                                       CHARGED TO
                                      BALANCE AT      (CREDITED TO)                               BALANCE
                                      BEGINNING         COSTS AND                                 AT END
        DESCRIPTION                   OF PERIOD          EXPENSES           DEDUCTIONS           OF PERIOD
        -----------                   ---------          --------           ----------           ---------
<S>                                   <C>                <C>                 <C>                  <C>
YEAR ENDED DECEMBER 31, 1995:
  Allowance for doubtful
    accounts                          $ 98,370           $  7,067            $    --              $105,437
                                      ========           ========            =========            ========

YEAR ENDED DECEMBER 31, 1994:
  Allowance for doubtful
    accounts                          $110,015           $ (3,030)           $  (8,615)           $ 98,370
                                      ========           ========            =========            ========

YEAR ENDED DECEMBER 31, 1993:
  Allowance for doubtful
    accounts                          $106,624           $  4,734            $  (1,343)           $110,015
                                      ========           ========            =========            ========
</TABLE>

                                      S-3

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                               COLUMBIA LABORATORIES, INC.

Date: MARCH 15, 1996                           By:/s/ MARGARET J. ROELL
      ------------------------                    ---------------------
                                               Margaret J. Roell, Vice President

<TABLE>
<CAPTION>
         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.

<S>                                         <C>                                         <C>
/s/ NORMAN M. MEIER                         President, Chief Executive                  March 15, 1996
---------------------------                 Officer, Director
Norman M. Meier                             (Principal Executive Officer)
                                           
/s/ WILLIAM J. BOLOGNA                      Chairman of the Board of Directors          March 21, 1996
--------------------------
William J. Bologna

/s/ NICHOLAS A. BUONICONTI                  Vice Chairman of the Board of Directors     March 20, 1996
--------------------------
Nicholas A. Buoniconti

/s/ MARGARET J. ROELL                       Vice President-Finance and                  March 15, 1996
--------------------------                  Administration, Chief Financial
Margaret J. Roell                           Officer, Treasurer and Secretary
                                            (Principal Financial and Accounting
                                            Officer)

/s/ IRWIN L. KELLNER                        Director                                    March 15, 1996
--------------------------
Irwin L. Kellner

                                            Director                                    March   , 1996
--------------------------
John E. A. Kidd

/s/ LILA E. NACHTIGALL                      Director                                    March 20, 1996
--------------------------
Lila E. Nachtigall
</TABLE>