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                                  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, 2002

                                       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.)

         354 Eisenhower Parkway
         Livingston, New Jersey                                     07039
(Address of principal executive offices)                          (Zip Code)

Company's telephone number, including area code: (973) 994-3999

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. [X]

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

     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 21, 2003: $106,170,383.

     Number of shares of Common Stock of Columbia Laboratories, Inc. issued and
outstanding as of March 21 , 2003: 35,453,722.

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Documents Incorporated By Reference

     Portions of the Columbia Laboratories, Inc. ("Columbia" or the "Company")
Proxy Statement for the 2003 Annual Meeting of Shareholders (the "Proxy
Statement") are incorporated by reference into Part III of this Form 10-K. We
expect to file our Proxy Statement with the Securities and Exchange and mail it
to shareholders on or before April 14, 2003.

                       Index to Annual Report on Form 10-K
                          Year Ended December 31, 2002

<TABLE>
<CAPTION>
Part I                                                                             Page
                                                                                   ----
<S>        <C>                                                                     <C>
Item I     Business                                                                 1-10
Item 2     Properties                                                                 10
Item 3     Legal Proceedings                                                          10
Item 4     Submission of Matters to a Vote of Security Holders                        11
Part II
Item 5     Market for Columbia's Common Stock and Related Stockholder Matters      13-15
Item 6     Selected Financial Data                                                    15
Item 7     Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                            16-19
Item 7A    Quantitative and Qualitative Disclosures About Market Risk                 19
Item 8     Financial Statements and Supplementary Data                                20
Item 9     Changes In and Disagreements With Accountants on Accounting
              and Financial Disclosures                                               20
Part III
Item 10    Directors and Executive Officers of the Company*                           20
Item 11    Executive Compensation*                                                    20
Item 12    Security Ownership of Certain Beneficial Owners and
              Management and Related Stockholder Matters*                             20
Item 13    Certain Relationships and Related Transactions*                            20
Item 14    Controls and Procedures                                                 20-21
Part IV
Item 15    Exhibits, Financial Statement Schedules and Reports on
              Form 8-K                                                             22-25
</TABLE>

*    Items 11,12, 13 and portions of Items 10 are incorporated by reference to
     the Proxy Statement

                                        2

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                                     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 is dedicated to research and
development and commercialization of women's health care and endocrinology
products, including those intended to treat infertility, endometriosis and
hormonal deficiencies. The Company has developed products for vaginal delivery
of hormones and other drugs and buccal delivery of hormones and peptides. The
vaginal products adhere to the vaginal epithelium and the buccal products adhere
to the mucosal membrane of the gum and cheek. Both forms provide sustained and
controlled delivery of active drug ingredients into the bloodstream. This
delivery system is particularly useful for active drug ingredients that cannot
be administered orally.

     All formulated products utilize the Bioadhesive Delivery System ("BDS")
consisting principally of a polymer, polycarbophil, and an active ingredient.
The BDS 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 BDS to be utilized in products when
extended duration of effectiveness is desirable or required.

     The Company has focused on women's health care because of the significant
number of women 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 has also found buccal delivery to be advantageous for
products for both men and women. The Company intends to continue to develop
products that improve the delivery of previously approved and marketed drugs
that cannot be delivered orally.

     The Company's principal executive offices are located at 354 Eisenhower
Parkway, Livingston, New Jersey 07039, and its telephone number is (973)
994-3999. The Company's subsidiaries, all of which are wholly-owned, are
Columbia Laboratories (Bermuda) Ltd. ("Columbia Bermuda"), Columbia Laboratories
(France) SA ("Columbia France"), which is in the process of being closed,
Columbia Laboratories (UK) Limited ("Columbia UK") and Columbia Research
Laboratories, Inc. ("Columbia Research").

     The Company's website is http://www.columbialabs.com. The Company does not
currently make its SEC filings available on its website because it is in the
process of redesigning the site. The Company will provide electronic or paper
copies of its filings free of charge upon request. Information contained on the
Company's website or any other website is not incorporated into this Annual
Report and does not constitute a part of this Annual Report.

Financial Information About Segments

     The Company is currently engaged solely in one business segment -- the
development, licensing and sale of pharmaceutical products, medical devices, and
cosmetics. See footnote 9 to the consolidated financial statements for
information on foreign operations.

Products

     Crinone(R)/Prochieve(TM). Crinone is the brand name of the Company's
progesterone gel sold by Ares Trading S.A. under a worldwide license. Prochieve
is the brand name of the same progesterone gel sold by the Company in the United
States under a June, 2002, sublicense from Ares Trading S.A pursuant to its
worldwide

                                        3

<PAGE>

license to Crinone. The product is a sustained release, vaginally delivered,
natural progesterone product. Progesterone is responsible for preparing the
uterus for pregnancy and, if pregnancy occurs, maintaining it until birth, or,
if pregnancy does not occur, inducing menstruation. The product utilizes the
Company's patented BDS which enables the progesterone to achieve a "First
Uterine Pass Effect"(C). The product is available in two strengths, an 8%
progesterone gel and a 4% progesterone gel. It is the first product designed to
deliver progesterone directly to the uterus, thereby providing a therapeutic
benefit and avoiding high blood levels of progesterone seen with
orally-delivered synthetic progestins

     Crinone/Prochieve in the 8% progesterone gel is approved in the U.S. for
use in progesterone supplementation or replacement as part of an Assisted
Reproductive Technology (ART) treatment for infertile women with progesterone
deficiency. Crinone/Prochieve in both the 8% and 4% progesterone gels are
approved in the U.S. for the treatment of secondary amenorrhea (loss of
menstrual period). Crinone was first marketed in the U.S. in 1997. Prochieve was
first marketed in the U.S. in September, 2002.

     Outside the U.S., Crinone has been approved for marketing for one or more
medical indications in more than 28 countries. The medical indications include
progesterone supplementation or replacement as part of an ART treatment for
infertile women, the treatment of secondary amenorrhea, the prevention of
hyperplasia in post-menopausal women receiving hormone replacement therapy
("HRT"), the reduction of symptoms of premenstrual syndrome ("PMS"), menstrual
irregularities, dysmenorrhea and dysfunctional uterine bleeding. Prochieve is
not marketed outside the U.S.

     In April 2001, the Company initiated a voluntary recall of batches of
Crinone that were affected by a drug application problem that could cause the
consistency of the gel to change over time. Investigations confirmed that the
problem with the affected batches posed no safety risk to patients and that the
active ingredient of the product was still effective. In connection with the
recall, the Company halted further shipments of Crinone to its distributor, Ares
Trading S.A. ("Serono"), pending the Company's revalidation of the manufacturing
process. In August 2001, Serono filed a lawsuit in the Supreme Court of the
State of New York (the "Action") naming the Company as defendant. The Action set
forth claims for an alleged breach of contract for failure to supply Crinone in
accordance with the supply agreement between the parties. In November 2001, the
Company filed counterclaims against Serono. In June 2002, the Company reached a
settlement with Serono. The companies agreed to release all claims against each
other. Under the terms of the settlement, Columbia sublicensed rights to market
a second brand of its 8% and 4% progesterone gel products under the brand name,
Prochieve, to a defined audience of obstetricians, gynecologists and primary
care physicians in the U.S. Serono agreed not to market Crinone to that audience
and the Company agreed not to market Prochieve to fertility specialists in the
U.S.

     Advantage-S(R). Advantage-S, the Company's female contraceptive gel
utilizes the BDS with the active ingredient nonoxynol-9 (the "Product") and it
has been marketed in the U.S. by the Company since July 1998 pursuant to FDA's
ongoing review of over-the-counter drug products, including nonoxynol-9
spermicidal products. Among Advantage-S benefits is that it utilizes the
Company's BDS, which enables the nonoxynol-9 to adhere to the cervix and permits
formulation of the product with the lowest dose o nonoxynol-9 of all products on
the market. The product is also sold in Canada by a licensee under the brand
name, Advantage-24.

     Replens(R). Replens replenishes vaginal moisture on a sustained basis and
relieves the discomfort associated with vaginal dryness. Replens was the first
product utilizing the BDS. In May 2000, the Company sold the U.S. rights for
Replens to Lil' Drug Store Products, Inc. for $4.5 million. Additionally, Lil'
Drug Store agreed to buy up to $500,000 of Replens inventory from the Company
and to pay future royalties of up to $2 million equal to 10% of future U.S.
Replens sales. The Company has licensed and supplies Replens to other
pharmaceutical companies in certain countries outside the U.S.

     RepHresh Vaginal Gel(TM). RepHresh Vaginal Gel(TM) is a feminine hygiene
product that can eliminate vaginal odor. RepHresh works by maintaining vaginal
pH in the normal physiologic range of 4.5 or below. RepHresh use the Company's
BDS and adheres to the epithelial cells of the vaginal lining for 3 to 5 days.
It is available in convenient pre-filled disposable applicators. RepHresh is
also sold by a licensee in Italy under the brand name Miphil.

                                        4

<PAGE>

     Other Products. The Company also marketed Advanced Formula Legatrin PM(R),
until April 2000, for the relief of occasional pain and sleeplessness associated
with minor muscle aches such as night le cramps; Legatrin(R) GCM Formula(TM),
which nutritionally supports healthy joint function; Vaporizer in a bottle(R), a
portable cough suppressant for the temporary relief of a cough due to the common
cold; and Diasorb(R), a pediatric antidiarrheal product. These products do not
utilize the Bioadhesive Delivery System. In May 2000, the Company licensed these
products to Lil' Drug Store Products, Inc. Under the terms of these agreements,
the Company receives license fees equal to 20% of the license's net sales. These
agreements each have five-year terms with provisions for renewal and contain
options that allow for the acquisition of the products by the licensee. On
December 29, 2000, Lil' Drug Store purchased Vaporizer in a Bottle for $201,800.
The production and sale of Diasorb is being discontinued during the first half
of 2003.

     Sales Force. In July 2002, the Company concluded agreements with PharmaBio
Development, Inc., and Innovex LP, both of which are affiliates of Quintiles
Transnational Corp. Under the terms of the Innovex agreement, Innovex, will
provide a dedicated team of 55 sales representatives on a three-year,
fee-for-service basis, to commercialize the Company's women's healthcare
products, i.e., Prochieve 8%, Prochieve 4%, Advantage-S, and RepHresh Vaginal
Gel in the U.S.. The sales force was recruited and trained in August and
September, and began in October, 2002, to call on a targeted list of
approximately 10,000 obstetricians and gynecologists to encourage prescriptions
and product recommendations for Prochieve 8%, Advantage-S, and RepHresh Vaginal
Gel. The sales force will begin sales efforts for Prochieve 4% in April, 2003.
In a second agreement dated July 2002, Quintiles' strategic investment group,
PharmaBio Development agreed to pay $4.5 million, to be paid in four equal
quarterly installments commencing third quarter 2002 for the right to receive a
5% royalty on the net sales of the Company's women's healthcare products in the
United States for five years beginning in the first quarter of 2003. The royalty
payments are subject to minimum ($8 million) and maximum ($12 million) amounts.

Research and Development

     The Company expended $5.4 million in 2002, $7.1 million in 2001 and $4.8
million in 2000 on research and development activities. The expenditures are
primarily the result of costs associated with contracting for, supervising and
administering the clinical studies on the development of the Company's male
testosterone product trade named Striant (described below) and the delivery of
peptides utilizing the BDS. These studies are now coordinated from the Company's
headquarters in New Jersey. The Company cannot predict whether it will be
successful in the development of the products listed below or any other
products.

     Striant(TM) (Testosterone Buccal Bioadhesive Product). Striant(TM)
(testosterone) Buccal Bioadhesive is a controlled and sustained release buccal
bioadhesive product for hypogonadism. Hypogonadism is characterized by a
deficiency or absence of endogenous testosterone production. Symptoms related to
hypogonadism include diminished interest in sex, impotence, reduced lean body
mass, decreased bone density, mood depression, fatigue and loss of energy.

     Striant(TM) is applied to gum tissue above the incisor teeth and releases
testosterone for absorption across the oral mucosa as the product gradually
hydrates. Striant(TM) allows for the slow release and absorptin of testosterone
through gum and cheek surfaces that are in contact with the product One dose
twice a day, in the morning and in the evening, maintains consistent physiologic
levels of testosterone. It is estimated that hypogonadism affects between four
and five million men in the United States, approximately one million of whom
currently receive treatment.

     The Company completed Phase III trials of Striant in 2001. A study
conducted in Europe showed treated patients to have 97% of the average blood
levels of testosterone within the physiologic range as seen in healthy men, and
to be within the physiologic range 85% of the total time. In October 2002, the
Company announced that the U.S. Food and Drug Administration ("FDA") had
accepted for review the Company's New Drug Application ("NDA") for Striant and
that June 19, 2003, had been set as the goal date for the FDA to review and act
on the NDA under the Prescription Drug User Fee Act. On December 3, 2002, the
Company announced a submission for marketing approval to the United Kingdom
Medicines Control Agency for Striant. Under current regulations, approval of
Striant in the U.K is anticipated in the second half of 2003. Initial regulatory
approval of the U.K. application will be the basis for mutual recognition
applications to be filed in the rest of Europe. In October, 2002, the Company

                                        5

<PAGE>

executed a license and supply agreement for Striant(TM) with Ardana Bioscience,
Ltd., Edinburgh, UK, for eighteen European countris (excluding Italy). Under the
terms of the agreement, Ardana will market, distribute and sell Striant(TM). In
exchange for these rights, The Company will receive total payments of $8
million, including $4 million in signature and milestone fees received in the
fourth quarter of 2002. Additional milestone payments totaling $2 million are
due upon marketing approvals in major European countries included in the
agreement. A performance payment of $2 million is also due upon achievement of a
certain level of sales. Ardana will purchase its requirements of product from
the Company during the term of the agreement.

     In March 2003, the Company concluded agreements with PharmaBio Development,
Inc., and Innovex LP, both of which are affiliates of Quintiles Transnational
Corp., to commercialize Striant(TM) in the United States. Under the terms of the
agreements, Quintiles' commercialization unit, Innovex LP, will provide a
dedicated team of as many as 75 sales representatives for a two-and-a-half year
term. Quintiles' strategic investment group, PharmaBio Development, Inc., will
invest $15 million to be paid to Columbia over a 15-month period which began
with the signing of the agreement. In return, PharmaBio will receive a 9%
royalty on net sales of Striant in the United States up to agreed levels of
annual sales revenues, and a 4.5% royalty of net sales above those levels. The
royalty term is seven years. Royalty payments will commence with the launch of
Striant and are subject to minimum ($30 million) and maximum ($55 million)
amounts. Columbia will be responsible for product distribution, regulatory and
medical affairs, marketing and manufacturing.

     Terbutaline Vaginal Gel. In December, 2002, the Company announced a
development and license agreement with Ardana Bioscience, Ltd., for the
Company's terbutaline vaginal gel product for development for the treatment of
infertility, dysmenorrhea and endometriosis. The Company received a payment of
$250,000 upon signing of the agreement, and will receive an additional $250,000
upon successful completion of the Phase II clinical trial. Under the terms of
the agreement, the companies will work together to progress the product through
clinical trials and applications for regulatory approvals. The Company will have
the right to market the product in North America and Ardana will have rights
focused in Europe. The parties would share equally in proceeds from licensing
and distribution of the product in the rest of the world.

     Lidocaine Vaginal Gel. Lidocaine vaginal gel utilizes our BDS and is
designed as a potential treatment for dysmenorrhea and gynecologic pain. We have
completed the development work on this product and are in the final stages of a
critical pilot trial in Europe. Results from this trial, should be available in
early 2003 and will guide the Phase III program. We believe that this product
will offer a new and novel approach to treating women who suffer from these
painful conditions.

     Testosterone Vaginal Gel. In October 2000, the Company completed a Phase I
trial of its testosterone progressive hydration vaginal tablet for women. The
study demonstrated that testosterone could be delivered vaginally over a period
of days. Vaginal gel and vaginal tablet forms have been developed, both of which
provide multiple dosing advantages. A preliminary clinical plan, with a focus on
reduction in fibroids as well as general testosterone replacement is under
review by our clinical advisors. We plan to move this project into a more active
stage in the second half of 2003.

     Peptide Delivery System. The Company has completed a program that
demonstrates that the BDS can deliver therapeutic doses of the peptide,
desmopressin, for extended periods of time. Based on these positive results, the
Company has initiated partnering discussions related to a desmopressin buccal
tablet.

Licensing and Development Agreements

     In May 1995, the Company entered into a worldwide, except for South Africa,
license and supply agreement with American Home Products Corporation, now Wyeth,
("Wyeth") for its Wyeth-Ayerst Laboratories division to market Crinone. The
Company agreed to supply Crinone at a price equal to 30% of Wyeth's net selling
price. In July, 1999, Wyeth assigned the license and supply agreement to Ares
Trading, S.A., ("Serono"). In June, 2002, the license and supply agreement was
amended and restated and a marketing sublicense was granted to the Company
permitting the Company to sell progesterone gel under a second brand name,
Prochieve, to the non-infertility specialist market in

                                        6

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the U.S. Under the marketing sublicense, the Company is obligated to pay Serono
a royalty equal to 30% of its net sales to the non-infertilty specialist market.
The Company is obligated to pay Serono an additional royalty of 40% of
Prochieve's net sales to the infertility specialist market. Conversely, Serono
is obligated to pay the Company an additional royalty of 40% of Crinone net
sales to the non-infertility specialist market in the U.S.

     In March 1999, the Company entered into a license and supply agreement with
Mipharm SpA ("Mipharm") under which Mipharm will be the exclusive marketer of
the Company's women's healthcare products in Italy, Portugal, Greece and Ireland
with a right of first refusal for Spain. Mipharm currently sells two licensed
products in Italy.

     On July 31, 2002, the Company concluded agreements with PharmaBio
Development, Inc., and Innovex LP, both of which are affiliates of Quintiles
Transnational Corp., to commercialize the Company's portfolio of women's
healthcare products in the United States. Under the terms of this agreement,
Quintiles' commercialization unit, Innovex, will provide a dedicated team of 55
sales representatives on a three-year, fee-for-service basis, to commercialize
the Company's women's healthcare products. In a second agreement dated July 31,
2002, Quintiles' strategic investment group, PharmaBio Development agreed to pay
$4.5 million, to be paid in four equal quarterly installments commencing third
quarter 2002 for the right to receive a 5% royalty on the net sales of the
Company's women's healthcare products in the United States for five years
beginning in the first quarter of 2003. The royalty payments are subject to
minimum ($8 million) and maximum ($12 million) amounts and since the minimum
amount is in excess of the amount to be received by the Company, the Company has
recorded the $2.25 million received through December 31, 2002, as a liability.
The excess of the minimum to be paid by the Company over the $4.5 million to be
received by the Company will be recorded as an expense over the five-year term
of the agreement.

     In October 2002, the Company and Ardana Bioscience, Ltd. entered into a
license and supply agreement (described above) for Striant(TM)the Company's
testosterone product in eighteen European countries (excluding Italy).

     In December 2002, The Company and Ardana Bioscience, Ltd. executed a
development and license agreement (described above) for the Company's
terbutaline vaginal gel product.

     In March 2003, the Company concluded agreements with PharmaBio Development,
Inc., and Innovex LP, to commercialize Striant(TM) in the United States. Under
the terms of the agreements, Innovex LP, will provide a dedicated team of as
many as 75 sales representatives for a two-and-a-half year term. Quintiles'
strategic investment group, PharmaBio Development, Inc., will invest $15 million
to be paid to Columbia over a 15-month period which began with the signing of
the agreement. In return, PharmaBio will receive a 9% royalty on net sales of
Striant in the United States up to agreed levels of annual sales revenues, and a
4.5% royalty of net sales above those levels. The royalty term is seven years.
Royalty payments will commence with the launch of Striant and are subject to
minimum ($30 million) and maximum ($55 million) amounts and since the minimum
amount is in excess of the amount to be received by the Company, the Company
will record the investments by PharmaBio as a liability. The excess of the
minimum to be paid by the Company over the $15 million to be received by the
Company will be recorded as an expense over the term of the agreement.

Patents, Trademarks and Protection of Proprietary Information

     The Company purchased the patents underlying the Bioadhesive Delivery
System from Bio-Mimetics, Inc. ("Bio-Mimetics"). 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. 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."

                                        7

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     During 2002, there was one United States patent granted to the Company, for
the use of certain polycarboxylic acid polymers for vaginal pH buffering to
prevent miscarriage and premature labor associated with bacterial vaginosis.

     During 2001, there were two United States patents granted to the Company.
One was for bioadhesive progressive hydration tablets and for the methods of
making and using the same and the second was for the use of progesterone for
maintaining amenorrhea.

     During 2000, there were three United States patents granted to the Company.
The first patent was for the use of the polycarboxylic acid polymers to treat
vaginal infections. The second patent was for using progesterone alone for
treating or reducing ischemia. The third patent was for a pharmaceutical
composition for treating dysmenorrhea and premature labor.

     During 1999, there were two United States patents granted to the Company.
The first patent was for a method of treating or reducing ischemia or incidence
of cardiovascular events by administering progesterone to increase the effects
of estrogen. The second patent was for the composition and method of
moisturizing mammalian membranous tissue.

     During 1996, the Company was granted United States patents covering vaginal
moisturization and the direct transport of progesterone to the uterus.

     The Company continues to develop the core Bioadhesive Delivery System and
has filed additional patent applications. Because the Company operates on a
worldwide basis, the Company seeks worldwide patent protection for its
technology and products. While patent applications do not ensure the ultimate
issuance of a patent, and having patent protection cannot ensure that no
competitors will emerge, this is a fundamental step in protecting the
technologies of the Company.

     The Company has filed "Replens", "Advantage 24", "Advantage-S",
"Advantage-LA", "Crinone", "Prochieve", "RepHresh" "RepHresh Vaginal Gel",
"Striant", and "Chronodyne" 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 marks with pending
applications 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 that
the Company considers to be proprietary. Moreover, there can be no assurance
that other companies will not independently develop know-how comparable, or
superior, to that of the Company.

Manufacturing

     Crinone, Prochieve, Advantage-S, Advantage 24, Advantage-LA, RepHresh and
Replens are manufactured and packaged by third-party manufacturers in Europe. In
May, 2002, the Company executed a non-exclusive supply agreement with Mipharm
S.p.A., Milan, Italy, for the manufacture and supply of Striant.

     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, Noveon, Inc. ("Noveon"). The Company believes
that Noveon 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 Noveon will continue to supply the
product. In the event that Noveon 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.

                                        8

<PAGE>

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

Sales of Products

     The Company currently contracts with a third party to provide the Company
with a full-time dedicated sales force of approximately 60 people. These people
call on OB/GYN's and educate the doctors and other healthcare professionals in
their offices on the benefits of Prochieve, Advantage-S and RepHresh. The
Company also utilizes approximately 20 drug manufacturers' representative firms
to make calls on the Company's trade customers on behalf of Advantage-S and
RepHresh. The manufacturers' representatives receive commissions based on sales
of those two products made within their respective territories. The Company's
direct customers are drug wholesalers and chain drug stores.

Sales

     The following table sets forth the percentage of the Company's consolidated
net sales by product, for each product accounting for 5% or more of consolidated
net sales in any of the three years ended December 31, 2002.

                                                              2002   2001   2000
                                                              ----   ----   ----
Crinone                                                        38%    29%    73%
Prochieve                                                      37%     0%     0%
Replens                                                        13%    25%    12%
Advantage-S                                                     2%    11%     3%
Legatrin PM/Legatrin GCM                                        0%     0%     7%
Other Products and Royalty Income                              10%    35%     5%
                                                              ---    ---    ---
                                                              100%   100%   100%
                                                              ===    ===    ===

Lil' Drug Stores, a customer/licensee, accounted for 14% of 2002 consolidated
net sales and 44% of 2001 consolidated net sales. Serono accounted for
approximately 41% 0f 2002 consolidated net sales, 29% of 2001 consolidated net
sales and 73% of 2000 consolidated net sales. A third customer accounted for
approximately 17% of 2002 consolidated net sales.

Competition

     The Company has both entered into strategic alliance agreements for the
marketing of its women's health care products and is marketing the products
itself, but there can be no assurance that the Company or 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, and its own efforts, that
also rely upon its contract sales force. The markets that 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.

     Crinone/Prochieve, although a natural progesterone product, competes in
markets with other progestins, both synthetic and natural, which may be
delivered orally, by injections or by suppositories. Some of the more successful
orally dosed products include Provera marketed by Pfizer, Prometrium marketed by
Solvay, Prempro and Premphase marketed by AHP. The Company also believes that
Advantage-S and RepHresh compete against numerous products in their respective
categories.

                                        9

<PAGE>

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
pre-marketing 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 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 pre-market 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, is
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 can 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 March 1, 2003, the Company had 25 employees, 7 in management, 5 in
production, 5 in marketing and sales, and 8 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 an employment agreement with one employee, who is a
stockholder of the Company. See "Executive Compensation--Employment Agreement."

Item 2. Properties

     As of March 15, 2003, the Company leases the following properties:

                                                                      Annual
   Location              Use             Square feet   Expiration      Rent
--------------   ---------------------   -----------   -----------   -------
Livingston, NJ   Corporate office           12,780     July 2007     182,000
Paris, France    Administrative office       2,100     August 2004    90,000

Item 3. Legal Proceedings

     In April 2001, the Company initiated a voluntary recall of batches of
Crinone that were affected by a drug application problem that could cause the
consistency of the gel to change over time. Investigations confirmed that the
problem with the affected batches posed no safety risk to patients and that the
active ingredient of the product

                                       10

<PAGE>

was still effective. In connection with the recall, the Company halted further
shipments of Crinone to its distributor, Ares Trading S.A. ("Serono"), pending
its revalidation of the manufacturing process. In August 2001, Serono filed a
lawsuit in the Supreme Court of the State of New York (the "Action") naming the
Company as defendant. The Action set forth claims for an alleged breach of
contract for failure to supply Crinone in accordance with the supply agreement
between the parties. In November 2001, the Company filed counterclaims against
Serono. In June 2002, the Company reached a settlement with Serono. The
companies agreed to release all claims against each other. Under the terms of
the settlement, Columbia sublicensed rights to market a second brand of its 8%
and 4% progesterone gel products under the brand name "Prochieve (TM)" to a
defined audience of obstetricians, gynecologists and primary care physicians in
the United States. As part of the settlement, Columbia gave Ares a note for
$3.96 million (fully-paid at March 15, 2003) to be paid over an eighteen-month
period to cover out of pocket costs resulting from the recall. This amount is
shown as litigation settlement expense in Operating Expenses of the Consolidated
Statements of Operations.

     Other claims and lawsuits have been filed against the Company. Although the
results of pending litigation are always uncertain, the Company does not believe
the results of any such actions, individually or in the aggregate, will have a
material adverse effect on our financial position or results of operation.
Additionally, the Company believes that it has adequate reserves or adequate
insurance coverage for any unfavorable outcome resulting from these actions.

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

None.

Executive Officers of the Registrant

     Set forth is a list of names, ages, positions held and business experience
of the persons serving as executive officers of the Company as of February 28,
2003. Officers serve at the discretion of the Board of Directors. There is no
family relationship between any of the executive officers or between any of the
executive officers and of Columbia's directors and there is no arrangement or
understanding between any executive officer and any other person pursuant to
which the executive officer was selected, except with respect to Mr. Wilkinson's
employment agreement:

James J. Apostolakis (Age 60) has been a director and Vice Chairman of the
Company's Board of Directors since January 1999 and served as President from
January 2000 until April 2001. Mr. Apostolakis has been a Managing Director at
Poseidon Capital Corporation, an investment banking firm, since February of
1998. Mr. Apostolakis has also served as President of Lexington Shipping &
Trading Corporation, a company engaged in shipping operations, since 1973. From
1989 until 1992, Mr. Apostolakis served as a director on the Board of Directors
of Grow Group, a paint and specialty chemicals company. From 1982 to 1988, he
served as a director for Macmillan, Inc., a publishing and information services
company. Mr. Apostolakis received an A.B. in Economics from the University of
Pennsylvania in 1962 and an LL.B from Harvard University Law School in 1965.

William J. Bologna (Age 60) has been a director of the Company since inception,
Chairman of the Company's Board of Directors since January 1992 and served as
Chief Executive Officer from January 2000 until April 2001. From December 1988
to January 1992, Mr. Bologna served as Vice Chairman of the Company's Board of
Directors. In addition, from 1980 to 1991, he was 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.

Meg Coogan (Age 49) joined the Company as Senior Vice President, Marketing and
Sales in August 2002. For the previous 10 years Ms. Coogan held various
positions within the Interpublic Group of Companies most recently as President
of McCann Healthcare, a pharmaceutical advertising agency. Prior to McCann
Healthcare, Ms. Coogan

                                       11

<PAGE>

was General Manager of Lowe McAdams. From 1983 to 1988 she held various sales
and marketing positions within Ortho-McNeil, a Johnson & Johnson company. Ms.
Coogan graduated from Rutgers University.

Michael McGrane (Age 53) joined the Company as Vice President, General Counsel
and Secretary in January, 2002. Prior to joining the Company, he served as Vice
President, General Counsel and Secretary to The Liposome Company, Inc., a
biotechnology company, from 1999 to 2001, and as Vice President, General Counsel
and Secretary to Novartis Consumer Health, Inc., from 1997 to 1998. Prior to
Novartis, Mr. McGrane held various positions with Sandoz Pharmaceuticals
Corporation, including Associate General Counsel. Before joining Sandoz, he was
Regulatory Counsel to the U.S. Food and Drug Administration. Mr. McGrane
received his J.D. degree from Georgetown University and his B.A. degree from
Cornell College. He is a member of the New Jersey bar.

Robert S. Mills (Age 50) joined the company as Senior Vice President,
Operations, in May, 2001. Prior to joining the company, he served as Senior Vice
President, Manufacturing Operations at Watson Pharmaceuticals, from 1996-2001,
and as Vice President, Operations at Alpharma, Inc. from 1993-1996. Prior to
Alpharma, Mr. Mills held various positions with Aventis, SA, including
Director-Plant Operations. Mr. Mills holds a B.S.Degree from Grove City College.

David L. Weinberg (Age 57) has been Vice President--Finance and Administration,
Chief Financial Officer and Treasurer of the Company from September 1997 to the
present. From September 1997 until January 2002, he also served as Secretary and
previously from the inception of the Company until June 1991, he served as Vice
President--Finance and Administration, Chief Financial Officer, Treasurer and
Secretary. From October 1991 until September 1997, Mr. Weinberg was employed by
Transmedia Network Inc., a company specializing in consumer savings programs,
where he served in various capacities including Vice President and Chief
Financial Officer. From February 1981 until August 1986, Mr. Weinberg worked for
Key Pharmaceuticals, Inc., a company engaged in the development, manufacturing,
marketing and sales of pharmaceuticals until its sale to Schering-Plough
Corporation. Mr. Weinberg served in various capacities including Vice President
- Finance, Treasurer and Secretary. Mr. Weinberg received a B.B.A. in Accounting
from Hofstra University in 1968.

G. Frederick Wilkinson (Age 47) has been a director of the Company since 2001
and its President and Chief Executive Officer since April 15, 2001. Prior to
joining the Company, he served as Chief Operating Officer and Senior Vice
President, Sales and Marketing of Watson Pharmaceuticals, Inc. from June 1999.
Previously, Mr. Wilkinson was Vice President of Watson Pharmaceuticals, Inc.
from July 1997, and Executive Vice President - Sales and Marketing of Watson
Laboratories, Inc. from July 1996. Prior to his employment at Watson, Mr.
Wilkinson was the President and General Manager of Creighton Pharmaceuticals, a
wholly owned subsidiary of Sandoz Pharmaceuticals, Inc. from 1994 to 1996. Prior
to that, he held various marketing management positions at Sandoz from 1980. Mr.
Wilkinson received his M.B.A. from Capital University in 1984 and his B.S. in
Pharmacy from Ohio Northern University in 1979.

                                       12

<PAGE>

                                     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, 2001

   First Quarter                                                  $6.50   $4.50
   Second Quarter                                                  8.09    5.16
   Third Quarter                                                   8.15    3.25
   Fourth Quarter                                                  4.85    2.67

Fiscal Year Ended December 31, 2002

   First Quarter                                                  $5.18   $3.10
   Second Quarter                                                  6.00    4.07
   Third Quarter                                                   5.60    4.06
   Fourth Quarter                                                  4.59    2.90

     At March 1, 2003, there were 400 shareholders of record of the Company's
Common Stock, although the Company estimates that there are approximately 9,500
beneficial owners, 2 shareholders of record of the Company's Series B
Convertible Preferred Stock ("Series B Preferred Stock") and 12 shareholders of
record of the Company's Series C Convertible Preferred Stock ("Series C
Preferred Stock").

     Effective as of February 6, 2001, the Company entered into the Amended and
Restated Common Stock Purchase Agreement with Acqua Wellington to sell up to
$16.5 million of the Common Stock, under the Registration Statement, the
Prospectus, and the related Prospectus Supplement dated February 6, 2001 and
amended on April 13, 2001. Pursuant to the Purchase Agreement, the Company may,
from time to time over the term of the Purchase Agreement and at its sole
discretion, issue and sell to Acqua Wellington up to $16.5 million of the Common
Stock, subject to certain conditions, at a price per share based on the daily
volume weighted average price of the Common Stock over a certain period of time
less a discount ranging from 5% to 7%. In addition, during the period in which
the Company elects to issue and sell shares of the Common Stock to Acqua
Wellington, the Company may also, at its sole discretion, grant Acqua Wellington
a call option at the same discount for the applicable period to purchase
additional shares of the Common Stock up to the applicable amount being sold by
the Company in such period, subject to the overall limit of $16.5 million
described above. The Company and Acqua Wellington have agreed to extend the term
of the Agreement until February 6, 2005. All other terms remain the same. At
March 1, 2003, $9 million may be sold under the Agreement, subject to the
registration statement relating to the amendment becoming effective.

     During 2002, the Company issued 2,691,012 shares of its common stock to
several institutional investors, which resulted in the Company receiving
$11,962,067 after expenses. $6,500,000 of the gross proceeds was received
pursuant to the Purchase Agreement described in the preceding paragraph.

     During the year 2001, the Company issued 2,146,459 shares of its common
stock, which resulted in the Company receiving $8,962,936 after expenses. $1
million of the gross proceeds were received from Acqua Wellington pursuant to
the Purchase Agreement described in the second preceding paragraph.

                                       13

<PAGE>

     On March 12, 2002, the Company adopted a Stockholder Rights Plan ("Rights
Plan") designed to protect company stockholders in the event of takeover
activity that would deny them the full value of their investment. The Rights
Plan was not adopted in response to any specific takeover threat. In adopting
the Rights Plan, the Board declared a dividend distribution of one preferred
stock purchase right for each outstanding share of common stock of the Company,
payable to stockholders of record at the close of business on March 22, 2002.
The rights will become exercisable only in the event, with certain exceptions, a
person or group of affiliated or associated persons acquires 15% or more of the
Company's voting stock, or a person or group of affiliated or associated persons
commences a tender or exchange offer, which if successfully consummated, would
result in such person or group owning 15% or more of the Company's voting stock.
The rights will expire on March 12, 2012. Each right, once exercisable, will
entitle the holder (other than rights owned by an acquiring person or group) to
buy one one-thousandth of a share of a series of the Company's Series D Junior
Participating Preferred Stock at a price of $30 per one-thousandth of a share,
subject to adjustments. In addition, upon the occurrence of certain events,
holders of the rights (other than rights owned by an acquiring person or group)
would be entitled to purchase either the Company's preferred stock or shares in
an "acquiring entity" at approximately half of market value. Further, at any
time after a person or group acquires 15% or more (but less than 50%) of the
Company's outstanding voting stock, subject to certain exceptions, the Board of
Directors may, at its option, exchange part or all of the rights (other than
rights held by an acquiring person or group) for shares of the Company's common
stock having a fair market value on the date of such acquisition equal to the
excess of (i) the fair market value of preferred stock issuable upon exercise of
the rights over (ii) the exercise price of the rights. The Company generally
will be entitled to redeem the rights at $0.01 per right at any time prior to
the close of business on the tenth day after there has been a public
announcement of the beneficial ownership by any person or group of 15% or more
of the Company's voting stock, subject to certain exceptions.

     On March 12, 2001, the Company granted to James Apostolakis warrants to
purchase up to an aggregate of 100,000 shares of Common Stock at an exercise
price of $5.85 per share. On March 12, 2001, the Company granted to Fred
Wilkinson, pursuant to an employment agreement, warrants to purchase up to an
aggregate of 350,000 shares of Common Stock at an exercise price of $8.35 per
share.

     In May 2000, the Company granted to Ryan Beck & Co. Inc. and certain
employees, as part of a services agreement, warrants to purchase up to an
aggregate of 12,500 shares of common stock at an exercise price of $7.0625 per
share.

     Between January 7, 1999 and February 1, 1999 the Company sold (i) 6,660
shares of Series C Convertible Preferred Stock, convertible into shares of the
Company's Common Stock, par value $.01 (the "Series C Convertible Preferred
Stock"), and (ii) warrants to purchase up to an aggregate of 233,100 shares of
Common Stock at an exercise price of $3.50 per share (the "Series C Warrants")
for an aggregate purchase price of $6,660,000. The Series C Preferred Stock may
be converted into Common Shares at a conversion price equal to the lesser of (i)
$3.50 and (ii) 100% of the average of the closing prices of the Common Shares as
reported on the AMEX for the three Trading Days immediately preceding the date
of conversion. The deliveryoffer, sale, and delivery of the Series C Preferred
Stock was made pursuant to Rule 501 of Regulation D under the Securities Act of
1933.

     On January 28, 1999 the Company granted to Shephard Lane and Anthony
Campbell, in exchange for services performed, warrants to purchase up to an
aggregate of 125,000 shares of Common Stock at an exercise price of $4.8125 per
share.

     On January 28, 1999 and September 23, 1999, the Company granted to James
Apostolakis warrants to purchase up to an aggregate of 100,000 and 75,000
shares, respectively, of common stock at an exercise price of $4.8125 and $7.50,
respectively, per share.

     On October 25, 1999, the Company granted to Ryan Beck & Co., Inc. and
certain employees, as part of a services agreement, warrants to purchase up to
an aggregate of 12,500 shares of common stock at an exercise price of $7.0625
per share.

                                       14

<PAGE>

     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.

Item 6. Selected Financial Data

     The following selected financial data (not covered by the auditor's report)
have been summarized from the Company's consolidated financial statements and
are qualified in their entirety by reference to, and should be read in
conjunction with such consolidated financial statements and Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" of this Report.

<TABLE>
<CAPTION>
                                             2002       2001      2000      1999       1998
                                           --------   --------   -------   -------   --------
<S>                                        <C>        <C>        <C>       <C>       <C>
Statement of Operations Data:
(000's except per share data)

Net sales                                  $  9,419   $  2,154   $13,173   $18,921   $ 10,018
Net loss (1)                                (16,850)   (15,846)   (2,603)   (2,210)   (13,860)
Loss per common share                         (0.50)     (0.51)    (0.09)    (0.09)     (0.48)
Weighted average number
   of common shares outstanding-diluted      34,392     31,243    30,235    28,853     28,679

Balance Sheet Data: (000's)

Working capital (deficiency)               $  4,717   $  4,622   $10,936   $ 3,441    ($1,401)
Total assets                                 12,766      8,560    15,519    12,988     11,880
Long-term debt                               10,000     10,000    10,000    10,000     10,000
Stockholders' equity (deficiency)            (8,395)    (3,421)    3,494      (274)    (4,333)
</TABLE>

(1)  1999 and 1998 net loss includes approximately $463,000 and $73,000,
     respectively, of license fee income.

                                       15

<PAGE>

Item 7. Management's Discussion and Analysis of Financial Conditions and Results
        of Operations

Forward-Looking Information

     The Company and its representatives from time to time make written or
verbal forward looking statements, including statements contained in this and
other filings with the Securities and Exchange Commission and in the Company's
reports to stockholders, which are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Such statements
include, without limitation, the Company's expectations regarding sales,
earnings or other future financial performance and liquidity, product
introductions, entry into new geographic regions and general optimism about
future operations or operating results. Some of these statements can be
identified by the use of forward-looking terminology such as "prospects,"
"outlook," "believes," "estimates," "intends," "may," "will," "should,"
"anticipates," "expects" or "plans," or the negative or other variation of these
or similar words, or by discussion of trends and conditions, strategy or risks
and uncertainties. Although the Company believes that its expectations are based
on reasonable assumptions within the bounds of its knowledge of its business and
operations, there can be no assurance that actual results will not differ
materially from its expectations. Factors that could cause actual results to
differ from expectations include, without limitation: (i) the successful
marketing of products by the Company and its licensees; (ii) increased
competitive activity from companies in the pharmaceutical industry, some of
which have greater resources than the Company; (iii) social, political and
economic risks to the Company's foreign operations, including changes in foreign
investment and trade policies and regulations of the host countries and of the
United States; (iv) changes in the laws, regulations and policies, including
changes in accounting standards, that affect, or will affect, the Company in the
United States and abroad; (v) foreign currency fluctuations affecting the
relative prices at which the Company and foreign competitors sell their products
in the same market; (vi) failure to develop the Company's products or delay in
development of the Company's products and (vii) the timely completion of studies
and approvals by the FDA and other regulatory agencies. All subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on behalf of the Company are expressly qualified in their entirety by the
Cautionary Statements in this Annual Report. Readers are advised to consult any
further disclosures the Company may make on related subjects in subsequent 10-Q,
8-K, and 10-K reports to the Securities and Exchange Commission.

Critical Accounting Policies and Estimates

     The Company has identified the policies below as critical to its business
operations and the understanding of its results of operations. For a detailed
discussion on the application of these and other accounting policies, see Note 1
of the consolidated financial statements included in Item 14 of this Annual
Report on Form 10-K, beginning on page F-11. Note that the preparation of this
Annual Report on Form 10-K requires the Company to make estimates and
assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. There can be no assurance that actual results will not differ
from those estimates.

     Revenue recognition. The Company's revenue recognition is significant
because revenue is a key component of the Company's results of operations. In
addition, revenue recognition determines the timing of certain expenses, such as
commissions and royalties. Revenue results are difficult to predict, and any
shortfall in revenue or delay in recognizing revenue could cause operating
results to vary significantly from quarter to quarter. Revenues from the sale of
products are recorded at the time goods are shipped to customers. Provisions for
returns, rebates and other allowances are estimated based on a percentage of
sales and are recorded in the same period the related sales are recognized.
Royalties and additional monies owed to the Company based on the strategic
alliance partners sales are recorded as revenue as sales are made by the
strategic alliance partners. License fees are recognized in net sales over the
term of the license.

                                       16

<PAGE>

     Impairment of intangible assets. The Company periodically evaluates its
intangible assets for potential impairment indicators. Judgments regarding the
existence of impairment indicators are based on legal factors, market condition
and operational performance. Future events could cause the Company to conclude
that impairment factors exist and that certain intangible assets are impaired.
Any resulting impairment loss could have a material adverse impact on results of
operations.

     Accounting For PharmaBio Agreements. In July 2002 and March 2003, the
Company entered into agreements with PharmaBio Development, Inc. under which the
Company received upfront money paid in quarterly installments in exchange for
royalty payments on certain of the Company's products to be paid to PharmaBio
for a fixed period of time. The royalty payments are subject to minimum and
maximum amounts and because the minimum amounts are in excess of the amount to
be received by the Company, the Company is recording the money received as a
liability. The excess of the minimum to be paid by the Company over the amount
received by the Company will be recorded as an expense over the terms of the
agreements.

Liquidity and Capital Resources

     Cash and cash equivalents increased from approximately $4,061,000 at
December 31, 2001 to approximately $5,018,000 at December 31, 2002. The Company
received approximately $11,962,000, net of expenses, from the sale of 2,691,012
shares of its common stock. The Company issued a note for $3,960,000 in June
2002 to settle litigation and paid down approximately $3,373,000 of the note by
December 31, 2002 The Company used approximately $10,694,000 of cash for
operating activities, approximately $188,000 for dividends and approximately
$808,000 for fixed asset additions. The effect of exchange rate changes
increased cash by approximately $98,000.

     Effective as of February 6, 2001, the Company entered into the Amended and
Restated Common Stock Purchase Agreement with Acqua Wellington to sell up to
$16.5 million of the Common Stock, under the Registration Statement, the
Prospectus, and the related Prospectus Supplement dated February 6, 2001 and
amended on April 13, 2001. Pursuant to the Purchase Agreement, the Company may,
from time to time over the term of the Purchase Agreement and at its sole
discretion, issue and sell to Acqua Wellington up to $16.5 million of the Common
Stock, subject to certain conditions, at a price per share based on the daily
volume weighted average price of the Common Stock over a certain period of time
less a discount ranging from 5% to 7%. In addition, during the period in which
the Company elects to issue and sell shares of the Common Stock to Acqua
Wellington, the Company may also, at its sole discretion, grant Acqua Wellington
a call option at the same discount for the applicable period to purchase
additional shares of the Common Stock up to the applicable amount being sold by
the Company in such period, subject to the overall limit of $16.5 million
described above. The Company issued and sold $6.5 million and $1.0 million of
its Common Stock to Acqua Wellington in 2002 and 2001, respectively. The Company
and Acqua Wellington have agreed to extend the term of the Agreement until
February 6, 2005. All other terms remain the same. At March 1, 2003, $9 million
may be sold under the Agreement subject to the registration statement relating
to the amendment becoming effective.

     For the fiscal year ended December 31, 2002, the Company had a net loss of
$16.8 million, which was primarily the result of a lack of Crinone sales in the
first four months of 2002, costly research and development activities and the
start-up of the company's commercialization activities in the fourth quarter of
2002. The Company expects to report a loss for the fiscal year ended December
31, 2003. In 2002, the major sources of cash were from the sale of the Company's
common stock to investors, $4.0 million dollars received from Ardana Bioscience
Limited as part of the License and Supply agreement for Striant and from the
receipt of $2.25 million from PharmaBio Development in exchange for a five-year
5% royalty on the net sales of the Company's women's healthcare products
beginning January 1, 2003. The minimum payment under this agreement is $8
million and the maximum payment is $12 million. Under that agreement, the
Company is to receive an additional $1.125 million in each of the first two
quarters in 2003.

                                       17

<PAGE>

     On March 6, 2003, the Company and PharmaBio entered into an additional
agreement under which PharmaBio will pay the Company $3.0 million in each of the
four quarters in 2003 and in the first quarter of 2004. In return, PharmaBio
will receive a 9% royalty on the net sales of Striant in the United States, for
seven years beginning in July 2003 up to agreed levels of annual sales revenues,
and a 4.5% royalty of net sales above those levels. The minimum payment under
this agreement is $30 million and the maximum payment is $55 million.

     In addition to the receipts from product sales and cash received from
PharmaBio, the Company may need to raise additional funds from the sale of
securities or otherwise. The Company cannot give assurance that additional
financing will be available to the Company on acceptable terms, if at all.

     In January 1999, the Company raised approximately $6.4 million, net of
expenses, from the issuance and sale of Series C Convertible Preferred Stock.
("Preferred Stock"). The Preferred Stock, sold to twenty-four accredited
investors, has a stated value of $1,000 per share. The Preferred Stock is
convertible into common stock at the lower of: (i) $3.50 per common share, and
(ii) 100% of the average of the closing prices during the three trading days
immediately preceding the conversion notice. If conversion is based on the $3.50
conversion price, conversion may take place after the underlying common stock is
registered. If conversion is based on the alternative calculation, conversion
cannot take place for fifteen months. The Preferred Stock pays a 5% dividend,
payable quarterly in arrears on the last day of the quarter.

     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. Through December 31, 2002, the Company has paid approximately $
2,155,000 in royalty payments.

     As of December 31, 2002, the Company has outstanding exercisable options
and warrants that, if exercised, would result in approximately $ 53.5 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 property and equipment. The Company anticipates it will spend
approximately $1.0 million on property and equipment in 2003.

     As of December 31, 2002, the Company had available net operating loss
carryforwards of approximately $64 million to offset its potential future U.S.
taxable income.

     In accordance with Statement of Financial Accounting Standards No. 109, as
of December 31, 2002 and 2001, other assets in the accompanying consolidated
balance sheet include deferred tax assets of approximately $23 million and $21
million, respectively, (comprised primarily of a net operating loss
carryforward) for which a valuation allowance has been recorded since the
realizability of the deferred tax assets are not determinable.

Results of Operations

     Net sales increased by approximately 337% in 2002 to approximately $9.4
million as compared to $2.2 million in 2001 and $13.2 million in 2000. Sales of
Crinone accounted for approximately $3.6 million in 2002 as compared to
approximately $528,000 in 2001 and approximately $9.6 million in 2000. In April
2001, the Company requested its licensee Serono to voluntarily recall a number
of batches of Crinone. The Company resumed sales of Crinone to Serono in May
2002. In the 2002 third quarter, the Company began selling Prochieve 8% and 2002
revenues from this product approximated $3.5 million. Sales of the product
Replens were approximately $1.2 million in 2002 as compared to $0.6 million and
$1.6 million in 2001 and 2000, respectively.

     Gross profit as a percentage of sales increased in 2002 to 44% as compared
to negative 23% in 2001 and 65% in 2000. The 44% gross profit percentage in 2002
was the result of the reintroduction of Crinone sales and the launch of

                                       18

<PAGE>

Prochieve 8% cost of goods sold for Prochieve includes a 30% royalty on net
sales. The negative 23% gross profit percentage in 2001 resulted from the
reduced sales caused by the Crinone recall and the inability to reduce fixed
manufacturing costs.

     Selling and distribution expenses were approximately $6.1 million, $1.1
million and $2.1 million in 2002, 2001 and 2000, respectively. Selling and
distribution expenses increased by approximately 474% in 2002 compared to 2001.
The commencement of commercialization efforts by the Company in September 2002
accounted for the increase. The 50% decrease in 2001 compared to 2000 resulted
from the sale by the Company of all but one of the Company's over-the-counter
products in May 2000.

     General and administrative expenses increased approximately $881,000 or 21%
to approximately $5.1 million in 2002 from approximately $4.3 million in 2001.
The increase resulted from higher legal fees ($368,000), higher insurance costs
($112,000), and the hiring of additional administrative personnel ($413,000).
General and administrative expenses increased approximately $272,000 or 7% to
approximately $4.3 million in 2001 from approximately $4.0 million in 2000. The
increase was principally the result of the hiring of additional management
personnel.

     Research and development expenses decreased in 2002 to $5.4 million from
$7.1 million in 2001. The completion in 2002 of many of studies on Striant begun
in 2000 and 2001 was the reason for the decrease. Research and development
expenses increased in 2001 to approximately $7.1 million as compared to
approximately $4.8 million in 2000. The cost of Phase III studies for the
Company's buccal testosterone product was the primary reason for the increase.

     Litigation settlement expense of $3,960,000 in 2002 represents the amount
the Company agreed to pay Ares Trading S.A. to settle the litigation that
followed the recall of Crinone in April 2001.

     Product recall costs in 2001 in the amount of $1,500,000 represented an
estimate of the Company's direct out-of-pocket costs related to the voluntary
recall of Crinone. In 2002, the remaining unused accrual amounting to 449,000
was reversed.

     Corporate restructuring expense in 2001, of $1,000,000, represents the
costs of closing the Paris office. These costs included employee severance
payments and other costs. Restructuring expense in 2000, of $285,000, related to
costs associated with the Company's closing of its corporate and accounting
operations in Florida.

     Interest income was approximately $52,000, $247,000 and $367,000 in 2002,
2001 and 2000, respectively.

     Interest expense amounted to approximately $853,000, $755,000 and $755,000
in 2002, 2001 and 2000, respectively. Interest expense is primarily from
interest on the $10 million note issued in March 1998 which bears an interest
rate of 7.125%. The increase in the 2002 interest expense resulted from the
interest on the $3,960,000 note given to settle the litigation resulting from
the Crinone recall in 2001.

     As a result, the net loss for 2002 was $16,849,789 or $0.50 per share as
compared to a net loss of $15,845,627 or $0.51 per share in 2001 and a net loss
of $2,602,931 or $0.09 per share in 2000.

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 7A. Quantitative and Qualitative Disclosures About Market Risks

     The Company does not believe that it has material exposure to market rate
risk. The Company has only a fixed rate debt obligation that comes due in 2005.
The Company may, however, require additional financing to fund

                                       19

<PAGE>

future obligations and no assurance can be given that the terms of future
sources of financing will not expose the Company to material market risk.

Item 8. Financial Statements and Supplementary Data


     The financial statements and supplementary data required by this item are
set forth at the pages indicated in Item 14(a) below.

Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure

     None

                                    PART III

Item 10. Directors and Executive Officers of the Company

The information concerning directors required by Item 10 is incorporated by
reference to Columbia's Proxy Statement for its 2003 Annual Meeting of
Shareholders. The information concerning executive officers required by item 10
is contained in the discussion entitled Executive Officers of the Registrant in
Part I hereof.

Item 11. Executive Compensation

     The information required by Item 11 is incorporated by reference to
Columbia's Proxy Statement for its 2003 Annual Meeting of Shareholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management

     The information required by Item 12 is incorporated by reference to
Columbia's Proxy Statement for its 2003 Annual Meeting of Shareholders.

Item 13. Certain Relationships and Related Transactions

     The information required by Item 13 is incorporated by reference to
Columbia's Proxy Statement for its 2003 Annual Meeting of Shareholders.

Item 14. Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's filings under
the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the periods specified in the rules and forms of the Securities
and Exchange Commission. Such information is accumulated and communicated to the
Company's management, including its principal executive officer and principal
financial officer, as appropriate, to allow timely decisions regarding

                                       20

<PAGE>

required disclosure. The Company's management, including the principal executive
officer and the principal financial officer, recognizes that any set of controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives.

     Within the 90 days prior to the filing date of this report, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's chief executive officer and
principal financial officer, of the effectiveness of the design and operation of
the Company's disclosure controls and procedures pursuant to Rule 13a-14 under
the Securities Exchange Act of 1934. Based upon that evaluation, the chief
executive officer and principal financial officer concluded that the Company's
disclosure controls and procedures are effective .

Subsequent to the date the Company carried out its evaluation, there have been
no significant changes in the Company's internal controls or in other factors
that could significantly affect these internal controls.

                                       21

<PAGE>

                                     PART IV

Item 15. Exhibits, Financial Statements and Financial Statement Schedules, and
         Reports on Form 8-K

(a)(1)(2) Financial Statements and Financial Statement Schedules

          Indexes to financial statements and financial statement schedules
appear on F-1 and F-24, respectively.

(a)(3) Executive Compensatory Plans and Arrangements

          Employment Agreement dated as of January 1, 1996, between the Company
          and Norman M. Meier
          Employment Agreement dated as of January 1, 1996, between the Company
          and William J. Bologna
          Employment Agreement dated as of April 15, 1997, between the Company
          and Nicholas A. Buoniconti
          Addendum to Employment Agreement dated as of September 1, 1997,
          between the Company and Norman M. Meier
          Addendum to Employment Agreement dated as of September 1, 1997,
          between the Company and William J. Bologna
          Addendum to Employment Agreement dated as of September 1, 1997,
          between the Company and Nicholas A. Buoniconti
          Addendum to Employment Agreement dated as of October 8, 1998, between
          the Company and Nicholas A. Buoniconti
          Addendum to Employment Agreement dated as of January 1, 2000 between
          the Company and Norman M. Meier
          Addendum to Employment Agreement dated as of January 1, 2000 between
          the Company and William J. Bologna
          Employment Agreement dated as of January 1, 2000 between the Company
          and James J. Apostolakis
          Employment Agreement dated December 30, 1999 between the Company and
          Dominique de Ziegler
          Employment Agreement dated March 16, 2001 between the Company and G.
          Frederick Wilkinson

(b) Reports on Form 8-K

          On March 12, 2003, the Company filed a form 8-K in which it had
          attached a copy of a Company press release dated March 11, 2003 titled
          "Columbia Laboratories Reports Year-Ended And Fourth Quarter 2002
          Financial Results"

(c) Exhibits

3.1      --   Restated Certificate of Incorporation of the Company, as
              amended/1/
3.2      --   Amended and Restated By-laws of Company/10/
4.1      --   Certificate of Designations, Preferences and Rights of Series C
              Convertible Preferred Stock of the Company, dated as of January 7,
              1999/10/
4.2      --   Securities Purchase Agreement, dated as of January 7, 1999,
              between the Company and each of the purchasers named on the
              signature pages thereto/10/
4.3      --   Securities Purchase Agreement, dated as of January 19, 1999, among
              the Company, David M. Knott and Knott Partners, L.P./10/

                                       22

<PAGE>

4.4      --   Securities Purchase Agreement, dated as of February 1, 1999,
              between the Company and Windsor Partners, L.P./10/
4.5      --   Registration Rights Agreement, dated as of January 7, 1999,
              between the Company and each of the purchasers named on the
              signature pages thereto/10/
4.6      --   Form of Warrant to Purchase Common Stock/10/
4.7      --   Warrant to Purchase Common Stock granted to James J. Apostolakis
              on September 23, 1999
10.1     --   Employment Agreement dated as of January 1, 1996, between the
              Company and Norman M. Meier/6/
10.2     --   Employment Agreement dated as of January 1, 1996, between the
              Company and William J. Bologna/6/
10.3     --   1988 Stock Option Plan, as amended, of the Company/4/
10.4     --   1996 Long-term Performance Plan, as amended, of the Company/7/
10.5     --   License and Supply Agreement between Warner-Lambert Company and
              the Company dated December 5, 1991/3/
10.6     --   Asset Purchase, License and Option Agreement, dated November 22,
              1989/1/
10.7     --   Employment Agreement dated as of April 15, 1997, between the
              Company and Nicholas A. Buoniconti/8/
10.8     --   License and Supply Agreement for Crinone between Columbia
              Laboratories, Inc. (Bermuda) Ltd. and American Home Products dated
              as of May 21, 1995/5/
10.9     --   Addendum to Employment Agreement dated as of September 1, 1997,
              between the Company and Norman M. Meier/8/
10.10    --   Addendum to Employment Agreement dated as of September 1, 1997,
              between the Company and William J. Bologna/8/
10.11    --   Addendum to Employment Agreement dated as of September 1, 1997,
              between the Company and Nicholas A. Buoniconti/8/
10.12    --   Convertible Note Purchase Agreement, 7 1/8% Convertible
              Subordinated Note due March 15, 2005 and Registration Rights
              Agreement all dated as of March 16, 1998 between the Company and
              SBC Warburg Dillon Read Inc./9/
10.13    --   Termination Agreement dated as of April 1, 1998 between the
              Company and the Warner-Lambert Company/9/
10.14    --   Addendum to Employment Agreement dated as of October 8, 1998,
              between the Company and Nicholas A. Buoniconti./10/
10.15    --   Agreement dated as of December 14, 1998, by and among Columbia
              Laboratories, Inc., William J. Bologna, Norman M. Meier, James J.
              Apostolakis, David Ray, Bernard Marden, Anthony R. Campbell, David
              M. Knott and Knott Partners, L.P./10/
10.16A   --   License and Supply Agreement by an between the Company and MiPharm
              SpA dated March 5, 1999/11/
10.16B   --   License and Supply Agreement for Crinone between Columbia
              Laboratories (Bermuda) Limited and Ares Trading S.A. dated as of
              May 20, 1999/12/
10.17    --   Addendum to Employment Agreement dated as of January 1, 2000
              between the Company and Norman M. Meier/12/
10.18    --   Addendum to Employment Agreement dated as of January 1, 2000
              between the Company and William J. Bologna/12/
10.19    --   Employment Agreement dated as of January 1, 2000 between the
              Company and James J. Apostolakis/12/
10.20    --   Employment Agreement dated December 30, 1999 between the Company
              and Dominique de Ziegler/12/
10.21    --   Settlement Agreement and Release dated as of March 16, 2000
              between Columbia Laboratories (Bermuda) Ltd. and Lake Consumer
              Products, Inc./12/
10.22    --   Replens Purchase and License Agreement dated April 18, 2000,
              between the Company and Lil' Drug Store Products, Inc./13/
10.23    --   License Agreement dated April 18, 2000, between the Company and
              Lil' Drug Store Products, Inc./13/

                                       23

<PAGE>

10.24    --   Distribution Agreement dated April 18, 2000, between the Company
              and Lil' Drug Store Products, Inc./13/
10.25    --   Stock Purchase Agreement, dated January 31, 2001, between the
              Company and Ridgeway Investment Limited /14/
10.26    --   Amended and Restated Common Stock Purchase Agreement by and
              between the Company and Acqua Wellington North American Equities
              Fund, Ltd., effective as of February 6, 2001./15/
10.27    --   Employment Agreement dated March 16, 2001 between the Company and
              G. Frederick Wilkinson/16/
10.28    --   Stock Purchase Agreement, dated May 10, 2001, between the Company
              and Ridgeway Investment Limited/17/
10.29    --   Stock Purchase Agreement, dated July 23, 2001, between the Company
              and Ridgeway Investment Limited/18/
10.30    --   Rights Agreement dated as of March 13, 2002, by and between
              Columbia Laboratories, Inc. and First Union National Bank, as
              Rights Agent/19/
10.31    --   Semi-Exclusive Supply Agreement dated May 7, 2002 between the
              Company and Mipharm S.p.A./20/
10.32    --   Amended and Restated Licence and Supply Agreement dated June 4,
              2002 between the Company and Ares Trading S.A./20/
10.33    --   Marketing License Agreement dated June 4, 2002 between the Company
              and Ares Trading S.A. and Serono, Inc./20/
10.34    --   Master Services Agreement dated July 31, 2002 between the Company
              and Innovex LP/20/
10.35    --   Stock Purchase Agreement dated July 31, 2002 By and Between
              Columbia Laboratories, Inc. and PharmaBio Development Inc./20/
10.36    --   Investment and Royalty Agreement dated July 31, 2002 between the
              Company and PharmaBio Development Inc./20/
10.37    --   License and Supply Agreement dated October 16, 2002 between the
              Company and Ardana Bioscience Limited/21/
10.38    --   Development and License Agreement dated December 26, 2002 between
              the Company and Ardana Bioscience Limited/21/
10.39    --   Amendment No. 1 to the Amended and Restated Common Stock Purchase
              Agreement by and between the Company and Acqua Wellington North
              American Equities Fund, Ltd., effective as of January 31,
              2003/21/
10.40    --   Investment and Royalty Agreement dated March 5, 2003 between the
              Company and PharmaBio Development Inc./21/
10.41    --   Sales Force Work Order #8872 pursuant to the Master Services
              Agreement having an Effective Date of July 31, 2002, between the
              Company and Innovex LP/21/
21       --   Subsidiaries of the Company/21/
99.1     --   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
              Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
              herewith./21/
99.2     --   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
              Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
              herewith./21/

/1/           Incorporated by reference to the Registrant's Registration
              Statement on Form S-1 (File No. 33-31962) declared effective on
              May 14, 1990.

/2/           Incorporated by reference to the Registrant's Annual Report on
              Form 10-K for the year ended December 31, 1990.

/3/           Incorporated by reference to the Registrant's Current Report on
              Form 8-K, filed on January 2, 1992.

/4/           Incorporated by reference to the Registrant's Annual Report on
              Form 10-K for the year ended December 31, 1993.

                                       24

<PAGE>

/5/           Incorporated by reference to the Registrant's Registration
              Statement on Form S-1 (File No. 33-60123) declared effective
              August 28, 1995.

/6/           Incorporated by reference to the Registrant's Annual Report on
              Form 10-K for the year ended December 31, 1995.

/7/           Incorporated by reference to the Registrant's Proxy Statement
              dated May 10, 2000.

/8/           Incorporated by reference to the Registrant's Annual Report on
              Form 10-K for the year ended December 31, 1997.

/9/           Incorporated by reference to the Registrant's Quarterly Report on
              Form 10-Q for the quarter ended March 31, 1998.

/10/          Incorporated by reference to the Registrant's Annual Report on
              Form 10-K for the year ended December 31, 1998.

/11/          Incorporated by reference to the Registrant's Quarterly Report on
              Form 10-Q for the quarter ended March 31, 1999.

/12/          Incorporated by reference to the Registrant's Annual Report on
              Form 10-K for the year ended December 31, 1999

/13/          Incorporated by reference to the Registrant's Quarterly Report on
              Form 10-Q for the quarter ended June 30, 2000.

/14/          Incorporated by reference to the Registrant's Current Report on
              Form 8-K, dated January 31, 2001.

/15/          Incorporated by reference to the Registrant's Registration
              Statement on Form S-3 (File No. 333-38230) declared effective May
              7, 2001.

/16/          Incorporated by reference to the Registrant's Current Report on
              Form 8-K, dated March 16, 2001.

/17/          Incorporated by reference to the Registrant's Current Report on
              Form 8-K, dated May 10, 2001.

/18/          Incorporated by reference to the Registrant's Current Report on
              Form 8-K, dated July 23, 2001.

/19/          Incorporated by reference to the Registrant's Current Report on
              Form 8-K, dated March 12, 2002.

/20/          Incorporated by reference to the registrant's Quarterly Report on
              Form 10-Q dated August 14, 2002.

/21/          Filed herewith.

                                       25

<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 26, 2003                          By: /s/ David L. Weinberg
                                                   -----------------------------
                                               David L. Weinberg, Vice President

     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/ William J. Bologna      Chairman of the Board of Directors   March 31, 2003
--------------------------
William J. Bologna


 /s/ James J. Apostolakis    Vice Chairman of the Board of        March 26, 2003
--------------------------   Directors
James J. Apostolakis


 /s/ Fred Wilkinson          President and Chief Executive        March 28, 2003
--------------------------   Officer
Fred Wilkinson


 /s/ David L. Weinberg       Vice President-Finance and           March 26, 2003
--------------------------   Administration, Chief Financial
David L. Weinberg            Officer and Treasurer (Principal
                             Financial and Accounting Officer)


 /s/ Jean Carvais            Director                             March 27, 2003
--------------------------
Jean Carvais


 /s/ Max Link                Director                             March 31, 2003
--------------------------
Max Link


 /s/ Denis M. O'Donnell      Director                             March 28, 2003
--------------------------
Denis M. O'Donnell


 /s/ Selwyn P. Oskowitz      Director                             March 31, 2003
--------------------------
Selwyn P. Oskowitz


 /s/ Robert C. Strauss       Director                             March 28, 2003
--------------------------
Robert C. Strauss

                                       26

<PAGE>

CEO CERTIFICATION

I, Fred Wilkinson, Chief Executive Officer of the Company, certify that:

1. I have reviewed this annual report on Form 10-K of Columbia Laboratories,
Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors:

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 28, 2003


                                                   /s/ Fred Wilkinson
                                                   -----------------------------
                                                   Fred Wilkinson
                                                   Chief Executive Officer

                                       27

<PAGE>

CFO CERTIFICATION

I, David L. Weinberg, Chief Financial Officer of the Company, certify that:

1. I have reviewed this annual report on Form 10-K of Columbia Laboratories,
Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors:

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 28, 2003


                                                   /s/ David L. Weinberg
                                                   -----------------------------
                                                   David L. Weinberg
                                                   Chief Financial Officer

                                       28

<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, 2002 and 2001                                        F-3

Consolidated Statements of Operations
   for the Three Years Ended December 31, 2002                             F-5

Consolidated Statements of Comprehensive Operations
   for the Three Years Ended December 31, 2002                             F-6

Consolidated Statements of Stockholders' Equity (Deficiency)
   for the Three Years Ended December 31, 2002                             F-7

Consolidated Statements of Cash Flows
   for the Three Years Ended December 31, 2002                             F-9

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,
2002 and 2001, and the related consolidated statements of operations,
comprehensive operations, stockholders' equity (deficiency) and cash flows for
each of the three years in the period ended December 31, 2002. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, 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, 2002 and 2001, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2002 in conformity with accounting principles generally accepted in
the United States of America.

GOLDSTEIN GOLUB KESSLER LLP
New York, New York
February 14, 2003, except for
Note 11 as to which
the date is March 5, 2003

                                       F-2

<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                        AS OF DECEMBER 31, 2002 AND 2001


                                     ASSETS

<TABLE>
<CAPTION>
                                                            2002           2001
                                                         -----------   -----------
<S>                                                      <C>           <C>
CURRENT ASSETS:
   Cash and cash equivalents, of which $3,152,745 is
      interest-bearing as of December 31, 2002           $ 5,018,365   $ 4,060,836
   Accounts receivable, net of allowance
      for doubtful accounts of  $30,000
      and $40,000 in 2002 and 2001, respectively           2,198,181       811,648
   Inventories                                             2,325,210       992,453
   Prepaid expenses                                          825,833       538,262
   Loans receivable, related parties                         211,122       200,087
                                                         -----------   -----------
      Total current assets                                10,578,711     6,603,286
                                                         -----------   -----------

PROPERTY AND EQUIPMENT:
   Machinery and equipment                                 2,268,502     2,237,332
   Computer software                                         401,356        25,084
   Office equipment and furniture and fixtures               535,359       173,547
                                                         -----------   -----------
                                                           3,205,217     2,435,963
      Less - accumulated depreciation and amortization    (2,332,782)   (2,079,329)
                                                         -----------   -----------
                                                             872,435       356,634
                                                         -----------   -----------

INTANGIBLE ASSETS, net                                     1,163,341     1,453,281
                                                         -----------   -----------

OTHER ASSETS                                                 151,820       146,823
                                                         -----------   -----------
TOTAL ASSETS                                             $12,766,307   $ 8,560,024
                                                         ===========   ===========
</TABLE>

                                   (Continued)

                                       F-3

<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                        AS OF DECEMBER 31, 2002 AND 2001

                                   (Continued)

<TABLE>
<CAPTION>
                                                                                  2002             2001
                                                                              -------------   -------------
<S>                                                                           <C>             <C>
CURRENT LIABILITIES:
   Notes payable - short-term                                                 $     586,667   $          --
   Accounts payable                                                               3,489,118         630,468
   Accrued expenses                                                               1,785,606       1,350,735
                                                                              -------------   -------------
      Total current liabilities                                                   5,861,391       1,981,203

NOTES PAYABLE - long-term                                                        10,000,000      10,000,000
DEFERRED REVENUE                                                                  3,949,859              --
OTHER LONG-TERM LIABILITIES - Royalties payable                                   1,350,000              --
                                                                              -------------   -------------
TOTAL LIABILITIES                                                                21,161,250      11,981,203
                                                                              -------------   -------------

COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS' EQUITY (DEFICIENCY):
   Preferred stock, $.01 par value; 1,000,000 shares authorized:
      Series B Convertible Preferred Stock, 1,130 and
         1,630 shares issued and outstanding in 2002 and 2001, respectively
         (liquidation preference of $113,000 at  December 31, 2002)                      11              16
      Series C Convertible Preferred Stock, 3,750 shares
         issued and outstanding in 2002 and 2001, respectively                           38              38
         (liquidation preference of $3,750,000 at December 31, 2002)
   Common stock, $.01 par value; 100,000,000 shares
         authorized; 35,453,722 and 32,752,425 shares issued and
         outstanding in 2002 and 2001, respectively                                 354,537         327,524
   Capital in excess of par value                                               126,664,805     114,917,247
   Accumulated deficit                                                         (135,497,195)   (118,647,406)
   Accumulated other comprehensive income (loss)                                     82,861         (18,598)
                                                                              -------------   -------------
      Total stockholders' equity (deficiency)                                    (8,394,943)     (3,421,179)
                                                                              -------------   -------------
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)                    $  12,766,307   $   8,560,024
                                                                              =============   =============
</TABLE>

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

                                       F-4

<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                   FOR THE THREE YEARS ENDED DECEMBER 31, 2002

                                         2002           2001           2000
                                     ------------   ------------   ------------
NET SALES                            $  9,418,549   $  2,153,854   $ 13,173,129

COST OF GOODS SOLD                      5,228,519      2,658,690      4,547,164
                                     ------------   ------------   ------------
      Gross profit                      4,190,030       (504,836)     8,625,965
                                     ------------   ------------   ------------

OPERATING EXPENSES:
   Selling and distribution             6,053,732      1,054,472      2,120,551
   General and administrative           5,135,121      4,254,143      3,981,696
   Research and development             5,350,156      7,132,720      4,767,135
   Litigation settlement expense        3,960,000             --             --
   Product recall costs                  (449,489)     1,500,000             --
   Corporate restructuring expense             --      1,000,000        285,000
                                     ------------   ------------   ------------
      Total operating expenses         20,049,520     14,941,335     11,154,382
                                     ------------   ------------   ------------

OTHER INCOME (EXPENSE):
   Interest income                         51,844        246,937        367,294
   Interest expense                      (852,864)      (755,398)      (755,427)
   Other, net                            (189,279)       109,005        313,619
                                     ------------   ------------   ------------
                                         (990,299)      (399,456)       (74,514)
                                     ------------   ------------   ------------

      Net loss                       $(16,849,789)  $(15,845,627)  $ (2,602,931)
                                     ============   ============   ============

LOSS PER COMMON
   SHARE - BASIC AND DILUTED         $      (0.50)  $      (0.51)  $      (0.09)
                                     ============   ============   ============

WEIGHTED-AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
   BASIC AND DILUTED                   34,392,060     31,243,307     30,235,000
                                     ============   ============   ============

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

                                       F-5

<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS

                   FOR THE THREE YEARS ENDED DECEMBER 31, 2002

                                          2002           2001           2000
                                      ------------   ------------   -----------
NET LOSS                              $(16,849,789)  $(15,845,627)  $(2,602,931)

Other comprehensive income:
   Foreign curency translation,
      net of tax                           101,459         18,054        58,051
                                      ------------   ------------   -----------

Comprehensive loss                    $(16,748,330)  $(15,827,573)  $(2,544,880)
                                      ============   ============   ===========

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

                                       F-6

<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

                  FOR THE THREE YEARS ENDED DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                Series A Convertible   Series B Convertible   Series C Convertible
                                   Preferred Stock       Preferred Stock         Preferred Stock         Common Stock
                                --------------------   --------------------   --------------------   ---------------------
                                 Number of              Number of              Number of             Number of
                                  Shares     Amount      Shares     Amount      Shares     Amount      Shares       Amount
                                 ---------   ------     ---------   ------     ---------   ------    ----------   --------
<S>                                <C>        <C>         <C>         <C>       <C>         <C>      <C>          <C>
Balance, January 1, 2000            923       $ 9         1,630       $16        5,260      $ 53     29,124,686   $291,246
Options exercised                    --        --            --        --           --        --        793,107      7,931
Warrants exercised                   --        --            --        --           --        --        166,488      1,665
Dividends on preferred stock         --        --            --        --           --        --             --         --
Fair market value of warrants
   granted to non-employees          --                      --        --           --        --             --         --
Fair market value of options
   granted to non-employees          --        --            --        --           --        --             --         --
Shares issued for product
   acquisition                                                                                           53,933        540
Translation adjustment               --        --            --        --           --        --             --         --
Conversion of preferred stock      (890)       (9)           --        --       (1,210)      (12)       356,710      3,567
Net loss                             --        --            --        --           --        --             --         --
                                   ----       ---         -----       ---       ------      ----     ----------   --------
Balance, December 31, 2000           33        --         1,630        16        4,050        41     30,494,924    304,949
Issuance of common stock                                                                              2,146,459     21,465
Options exercised                    --        --            --        --           --        --          7,500         75
Warrants exercised                   --        --            --        --           --        --          8,557         85
Dividends on preferred stock         --        --            --        --           --        --             --         --
Fair market value of options
   granted to non-employees          --        --            --        --           --        --             --         --
Translation adjustment               --        --            --        --           --        --             --         --
Conversion of preferred stock       (33)       --            --        --         (300)       (3)        94,985        950
Net loss                             --        --            --        --           --        --             --         --
                                   ----       ---         -----       ---       ------      ----     ----------   --------
Balance, December 31, 2001           --       $--         1,630       $16        3,750      $ 38     32,752,425   $327,524
                                   ----       ---         -----       ---       ------      ----     ----------   --------

<CAPTION>
                                 Capital in                    Accumulated Other
                                  Excess of     Accumulated      Comprehensive
                                  Par Value       Deficit        Income (Loss)        Total
                                ------------   -------------   -----------------   ------------
<S>                             <C>            <C>                 <C>             <C>
Balance, January 1, 2000        $ 99,575,803   $(100,198,848)      $ 57,507        $   (274,214)
Options exercised                  5,045,604              --             --           5,053,535
Warrants exercised                   836,298              --             --             837,963
Dividends on preferred stock        (217,940)             --             --            (217,940)
Fair market value of warrants
   granted to non-employees           60,009              --             --              60,009
Fair market value of options
   granted to non-employees           95,506              --             --              95,506
Shares issued for product
   acquisition                       599,460                                            600,000
Translation adjustment                    --              --        (58,051)            (58,051)
Conversion of preferred stock         (3,546)             --             --                  --
Net loss                                  --      (2,602,931)            --          (2,602,931)
                                ------------   -------------       --------        ------------
Balance, December 31, 2000       105,991,194    (102,801,779)          (544)          3,493,877
Issuance of common stock           8,962,936                                          8,984,401
Options exercised                     41,175              --             --              41,250
Warrants exercised                    12,165              --             --              12,250
Dividends on preferred stock        (201,663)             --             --            (201,663)
Fair market value of options
   granted to non-employees          112,387              --             --             112,387
Translation adjustment                    --              --        (18,054)            (18,054)
Conversion of preferred stock           (947)             --             --                  --
Net loss                                  --     (15,845,627)            --         (15,845,627)
                                ------------   -------------       --------        ------------
Balance, December 31, 2001      $114,917,247   $(118,647,406)      $(18,598)       $ (3,421,179)
                                ------------   -------------       --------        ------------
</TABLE>

                                   (Continue)

                                       F-7

<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

                   FOR THE THREE YEARS ENDED DECEMBER 31, 2002

                                   (Continued)

<TABLE>
<CAPTION>
                                Series A Convertible   Series B Convertible   Series C Convertible
                                  Preferred Stock         Preferred Stock       Preferred Stock           Common Stock
                                --------------------   --------------------   --------------------   ---------------------
                                 Number of              Number of              Number of              Number of
                                  Shares     Amount      Shares     Amount       Shares    Amount      Shares      Amount
                                 ---------   ------     ---------   ------     ---------   ------    ----------   --------
<S>                                  <C>       <C>        <C>        <C>         <C>         <C>     <C>          <C>
Balance, December 31, 2001           --        $--        1,630      $16         3,750       $38     32,752,425   $327,524
Issuance of common stock                                                                              2,691,012     26,910
Dividends on preferred stock         --         --           --       --            --        --             --         --
Translation adjustment               --         --           --       --            --        --             --         --
Conversion of preferred stock        --         --         (500)      (5)           --        --         10,285        103
Net loss                             --         --           --       --            --        --             --         --
                                    ---        ---        -----      ---         -----       ---     ----------   --------
Balance, December 31, 2002           --        $--        1,130      $11         3,750       $38     35,453,722   $354,537
                                    ===        ===        =====      ===         =====       ===     ==========   ========

<CAPTION>
                                 Capital in                    Accumulated Other
                                  Excess of     Accumulated      Comprehensive
                                  Par Value       Deficit        Income (Loss)         Total
                                ------------   -------------   -----------------   ------------
<S>                             <C>            <C>                 <C>             <C>
Balance, December 31, 2001      $114,917,247   $(118,647,406)      $(18,598)       $ (3,421,179)
Issuance of common stock          11,935,156                                         11,962,066
Dividends on preferred stock        (187,500)             --             --            (187,500)
Translation adjustment                    --              --        101,459             101,459
Conversion of preferred stock            (98)             --             --                  --
Net loss                                  --     (16,849,789)            --         (16,849,789)
                                ------------   -------------       --------        ------------
Balance, December 31, 2002      $126,664,805   $(135,497,195)      $ 82,861        $ (8,394,943)
                                ============   =============       ========        ============
</TABLE>

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

                                       F-8

<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                   FOR THE THREE YEARS ENDED DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                         2002           2001          2000
                                                     ------------   ------------   -----------
<S>                                                  <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                             $(16,849,789)  $(15,845,627)  $(2,602,931)
Adjustments to reconcile net loss to net
cash used in operating activities -
   Depreciation and amortization                          579,412        688,198       753,588
   Provision for doubtful accounts                         (1,191)        17,000        (6,523)
   Provision for returns and allowances                   310,183        368,273       164,816
   Write-down of inventories                              453,797        166,905       197,626
   Loss on disposal of fixed assets                         6,384         27,961        47,817
   Gain on sale of assets                                      --             --      (158,629)
   Issuance of warrants and options for consulting
   services                                                    --        112,387       155,515

Changes in assets and liabilities -
   (Increase) decrease in:
   Accounts receivable                                 (1,695,525)     2,105,880    (1,626,008)
   Inventories                                         (1,786,554)      (179,620)      671,452
   Prepaid expenses                                      (287,571)       220,341      (289,655)
   Other assets                                           (16,032)       195,141       441,861

Increase (decrease) in:
   Accounts payable                                     2,858,650       (165,040)   (1,293,752)
   Accrued expenses                                     1,784,871        220,889       (42,721)
   Deferred revenue                                     3,949,859       (100,000)           --
                                                     ------------   ------------   -----------
      Net cash used in operating activities           (10,693,506)   (12,167,312)   (3,587,544)
                                                     ------------   ------------   -----------
</TABLE>

                                  (Continued)

                                       F-9

<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                   FOR THE THREE YEARS ENDED DECEMBER 31, 2002

                                   (Continued)

<TABLE>
<CAPTION>
                                                               2002           2001         2000
                                                            -----------   -----------   ----------
<S>                                                         <C>           <C>           <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from sale of assets                             $        --   $        --   $4,119,729
   Purchase of property and equipment                          (808,104)     (188,602)     (16,168)
   Acquisition of intangibles                                        --            --     (525,000)
                                                            -----------   -----------   ----------
      Net cash provided by (used in) investing activities      (808,104)     (188,602)   3,578,561
                                                            -----------   -----------   ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from issuance of common stock                11,962,067     8,984,401           --
   Issuance of note payable                                   3,960,000            --           --
   Payment of note payable                                   (3,373,333)           --           --
   Dividends paid                                              (187,500)     (201,663)    (217,940)
   Proceeds from exercise of options and warrants                    --        53,500    5,891,498
                                                            -----------   -----------   ----------
      Net cash provided by financing activities              12,361,234     8,836,238    5,673,558
                                                            -----------   -----------   ----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                          97,905       (14,195)     (51,953)
                                                            -----------   -----------   ----------

NET INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS                                             957,529    (3,533,871)   5,612,622

CASH AND CASH EQUIVALENTS,
   Beginning of year                                          4,060,836     7,594,707    1,982,085
                                                            -----------   -----------   ----------

CASH AND CASH EQUIVALENTS,
   End of year                                              $ 5,018,365   $ 4,060,836   $7,594,707
                                                            ===========   ===========   ==========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
   INFORMATION
   Interest paid                                            $   807,595   $   712,500   $  712,500
                                                            ===========   ===========   ==========

   Taxes paid                                               $    93,900   $    58,300   $   19,700
                                                            ===========   ===========   ==========

NON-CASH INVESTING AND FINANCING
   ACTIVITIES
   Common stock issued for trademark                        $        --   $        --   $  600,000
                                                            ===========   ===========   ==========
</TABLE>

           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 is dedicated to research and
development of women's healthcare and endocrinology products, including those
intended to treat infertility, endometriosis and hormonal deficiencies. The
Company is also developing hormonal products for men and a buccal delivery
system for peptides. The Company's products primarily utilize its patented
Bioadhesive Delivery System 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 statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

   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.

   Accounts Receivable-

Accounts receivable are reported at their outstanding unpaid principal balances
reduced by an allowance for doubtful accounts, The Company estimates doubtful
accounts based on historical bad debts, factors related to specific customers'
ability to pay and current economic trends. The Company writes off accounts
receivable against the allowance when a balance is determined to be
uncollectible.

   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,
                                                          ---------------------
                                                             2002        2001
                                                          ----------   --------
Finished goods                                            $1,564,136   $426,206
Raw materials                                                761,074    566,247
                                                          ----------   --------
                                                          $2,325,210   $992,453
                                                          ==========   ========

Shipping costs are included in selling and distribution expenses.

                                      F-11

<PAGE>

   Property and Equipment-

Property and equipment is stated at cost less accumulated depreciation.
Leasehold improvements are amortized over the life of the respective leases.
Depreciation is computed on the straight-line basis 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 that do not extend the term 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 operations.

   Concentration of Credit Risk-

The Company sells its products to customers worldwide. The Company performs
ongoing credit evaluations of its customers and generally does not require
collateral. Management believes that the Company is not subject to any
significant concentrations of credit risk.

   Intangible Assets-

Intangible assets consist of the following:

                                                              December 31,
                                                      -------------------------
                                                          2002          2001
                                                      -----------   -----------
Patents                                               $ 2,600,000   $ 2,600,000
Trademarks                                              1,566,000     1,581,644
Licensing rights                                          100,000       100,000
                                                      -----------   -----------
                                                        4,266,000     4,281,644
Less accumulated amortization                          (3,102,659)   (2,828,363)
                                                      -----------   -----------
                                                      $ 1,163,341   $ 1,453,281
                                                      ===========   ===========

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 to fifteen years. Licensing rights are being amortized over a period of
five years.

In April 1998, the Company and the Warner-Lambert Company signed an agreement
terminating their December 1991 license and supply agreement under which the
Warner-Lambert Company had distributed Replens, a vaginal moisturizer which had
been developed by the Company. Under the terms of the termination agreement, the
Company agreed to pay $4.6 million for the right to reacquire the product
Replens, effective on April 9, 1998. The $4.6 million cost was capitalized and
was being amortized over a 15-year period. Effective May 5, 2000, the Company
sold various tangible and intangible assets related to the U.S. rights for
Replens for a total of $4.5 million cash. The gain of approximately $159,000 was
included in Other Income, net in the accompanying consolidated statements of
operations.

On March 16, 2000, the Company acquired the U.S. rights for the product
Advantage-S. The cost of the acquisition was $1,225,000 (in cash and Company
common stock) which is being amortized over a 15-year period.

Aggregate amortization expense for the year ended December 31, 2002 was
$289,941.

                                      F-12

<PAGE>

Future estimated amortization expense is as follows:

2003              $242,924
2004                83,334
2005                81,667
2006                81,667
2007                81,667

   Long-lived Assets-

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

   Accrued Expenses-

Accrued expenses consist of the following:

                                                               December 31,
                                                         -----------------------
                                                            2002         2001
                                                         ----------   ----------
Royalties                                                $1,105,696   $   35,694
Professional fees                                           108,629      305,602
Interest                                                    210,273      267,813
Other                                                       361,008      184,566
Product recall costs                                             --      404,060
Corporate restructuring expense                                  --      153,000
                                                         ----------   ----------
                                                         $1,785,606   $1,350,735
                                                         ==========   ==========
   Income Taxes-

The reconciliation of the effective income tax rate to the Federal statutory
rate is as follows:

                                                          2002    2001    2000
                                                         -----   -----   -----
Federal income tax rate                                  (34.0)% (34.0)% (34.0)%
Increase in valuation allowance                           34.0    34.0    34.0
                                                         -----   -----   -----
Effective income tax rate                                  0.0%    0.0%    0.0%
                                                         =====   =====   =====

As of December 31, 2002, the Company has U.S. tax net operating loss
carryforwards of approximately $64 million which expire through 2022. The
Company also has unused tax credits of approximately $949,000 which expire at
various dates through 2012. Utilization of net operating loss carryforwards may
be limited in any year due to limitations in the Internal Revenue Code. As of
December 31, 2002 and 2001, other assets in the accompanying consolidated
balance sheets include deferred tax assets of approximately $23 million and $21
million, respectively

                                      F-13

<PAGE>

(comprised primarily of a net operating loss carryforward), for which a 100%
valuation allowance has been recorded since the realizability of the deferred
tax assets are not determinable.

   Revenue Recognition-

Revenues from the sale of products are recorded at the time goods are shipped to
customers. Provisions for returns, rebates and other allowances are estimated
based on a percentage of sales and are recorded in the same period the related
sales are recognized. Royalties and additional monies owed to the Company based
on the strategic alliance partners sales are recorded as revenue as sales are
made by the strategic alliance partners.

   License Fees-

License fees are recognized in net sales over the term of the license.

   Advertising Expense-

All costs associated with advertising and promoting products are expensed in the
year incurred. Advertising and promotion expense was approximately $1,317,000 in
2002, $55,000 in 2001 and $503,000 in 2000.

   Research and Development Costs-

Company-sponsored research and development costs related to future products are
expensed as incurred.

   Loss per Share-

Basic 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 diluted 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 an original maturity of three months or less to be
cash equivalents.

                                      F-14

<PAGE>

Stock-based Compensation-

The Company applies APB No. 25 and related interpretations in accounting for its
plans. Accordingly, no compensation cost has been recognized for the stock
option plans and warrants issued to employees. Had compensation cost been
determined based on the fair value at the grant dates for those awards
consistent with the method of SFAS 123, the Company's net loss per share would
have been increased to the pro forma amounts indicated below.

                                          2002           2001          2000
                                      ------------   ------------   -----------
Net loss, as reported                 $(16,849,789)  $(15,845,627)  $(2,602,931)
Deduct: Total stock-based
   employee compensation expense
   determined under-fair-value
   based methods for all awards         (1,826,347)    (4,427,817)   (1,584,554)
                                      ------------   ------------   -----------
Pro forma net loss                    $(18,676,136)  $(20,273,444)  $(4,187,485)
                                      ============   ============   ===========

Loss per share: As reported           $      (0.50)  $      (0.51)  $     (0.09)
                                      ============   ============   ===========
      Pro forma                       $      (0.54)  $       0.65   $      0.15
                                      ============   ============   ===========

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 equal to the fair market value of the underlying stock on the dates of
grant, (ii) an option term of three years, (iii) a risk-free rate of 5% in 2002
and 2001(6% in 2000) 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 57.8% for 2002, 86.4% for 2001 and 87.2% for 2000 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.

The weighted-average fair value of options and warrants granted to employees
during 2002 and 2001 was $1.81 and $3.66, respectively.

   Product Recall Costs-

Product recall costs represent the direct out-of-pocket costs related to the
recall of the product Crinone that took place in April 2001. In 2002, the unused
portion of the accrual was reversed.

   Corporate Restructuring Expense-

During the second quarter of 2001, the Company's management decided to close the
France office. The Company recorded a restructuring charge for the anticipated
costs associated with closing the office consisting of employee severance
payments and other costs.

   Recent Accounting Pronouncements-

The Company does not believe that any recently issued, but not yet effective,
accounting standards will have a material effect on the Company's consolidated
financial position, results of operations or cash flows.

   Reclassification of Prior-year Amounts-

Prior-year financial statements have been reclassified to conform to the 2002
presentation.

(2) STRATEGIC ALLIANCE AGREEMENTS:

In May 1995, the Company entered into a worldwide license and supply agreement,
except for South Africa, with American Home Products Corporation ("AHP") under
which the Wyeth-Ayerst Laboratories division of AHP

                                      F-15

<PAGE>

marketed Crinone. The Company supplied Crinone to AHP at a price equal to 30% of
AHP's net selling price. On July 2, 1999, AHP assigned the license and supply
agreement to Ares-Serono, a Swiss pharmaceutical company. The Company supplies
Crinone to Ares Trading S.A. ("Serono") under the same terms as in the agreement
with AHP. In June 2002, as part of the settlement of litigation between the two
companies, the Company acquired the right to market a second brand of its 8% and
4% progesterone gel products under the trade name "Prochieve (TM)" to a defined
audience of obstetricians, gynecologists and primary care physicians in the
United States. Under this agreement the Company is required to pay a 30% royalty
to Serono based on net sales of the products. The Company paid approximately
$985,000 to Serono in accordance with this agreement for the year ended December
31, 2002.

In March 1999, the Company entered into a license and supply agreement with
Mipharm SpA under which Mipharm SpA will be the exclusive marketer of the
Company's previously unlicensed women's healthcare products in Italy, Portugal,
Greece and Ireland with a right of first refusal for Spain. Under the terms of
the agreement, the Company has received $540,000, net of expenses, and expects
to receive future milestone payments as products are made available by the
Company.

Effective May 5, 2000, the Company sold various tangible and intangible assets,
related to the U.S. rights for Replens, to Lil' Drug Store Products, Inc. for a
total of $4.5 million cash. Additionally, the purchaser agreed to buy up to
$500,000 of Replens inventory from the Company and to pay future royalties of up
to $2 million equal to 10% of future U.S. sales of Replens. Additionally,
effective May 5, 2000, the Company licensed its Legatrin PM, Legatrin GCM,
Vaporizer in a Bottle and Diasorb brands to the same purchaser mentioned above.
Under the terms of these agreements, the Company will receive license fees equal
to 20% of the licensee's net sales of these brands. These agreements each have
five-year terms with provisions for renewal and contain options that allow the
licensee to acquire these brands from the Company. On December 29, 2000, Lil'
Drug Store Products, Inc. acquired the Vaporizer in a Bottle brand for $201,800.

On July 31, 2002, the Company and Quintiles Transnational Corp. ("Quintiles")
entered into an agreement to commercialize the Company's portfolio of women's
healthcare products in the United States. Under the terms of this agreement,
Quintiles' commercialization unit, Innovex, will provide a dedicated team of 55
sales representatives on a three-year, fee-for-service basis, to commercialize
the Company's women's healthcare products. In a second agreement dated July 31,
2002, Quintiles' strategic investment group, PharmaBio Development, agreed to
pay $4.5 million, to be paid in four equal quarterly installments commencing
third quarter 2002 for the right to receive a 5% royalty on the net sales of the
Company's women's healthcare products in the United States for five years
beginning in the first quarter of 2003. The royalty payments are subject to
minimum ($8 million) and maximum ($12 million) amounts and since the minimum
amount is in excess of the amount to be received by the Company, the Company has
recorded the $2.25 million received through December 31, 2002 as a liability.
The excess of the minimum to be paid by the Company over the $4.5 million to be
received by the Company will be recorded as an expense over the five-year term
of the agreement.

On October 16, 2002, the Company and Ardana Bioscience, Ltd. ("Ardana") entered
into a license and supply agreement for the Company's Striant(TM) testosterone
buccal bioadhesive product in 18 European countries (excluding Italy). Under the
terms of the agreement, Ardana will market, distribute and sell Striant(TM). In
exchange for these rights, the Company will receive total payments of $8
million, including $4 million in signature and milestone fees received in the
fourth quarter of 2002. Initial regulatory approval of the U.K. application will
be the basis for mutual recognition applications to be filed in the rest of
Europe. Additional milestone payments totaling $2 million are due upon marketing
approvals in major European countries included in the agreement. A performance
payment of $2 million is also due upon achievement of a certain level of sales.
Ardana will purchase its requirements of product from the Company during the
term of the agreement. The agreement shall continue for a period of the later of
10 years from the first commercial sale of the finished product by Ardana or the
date of expiration or lapse of the last to expire or lapse Company's patent
rights in the territory, determined on a country by country basis. The Company
will recognize revenue on this agreement over a 10-year period and accordingly
has recognized revenue of $50,141 in the accompanying consolidated statements of
operations. The remaining $3,949,854 is shown as deferred revenue in the
accompanying consolidated balance sheets.

The Company has also entered into strategic alliance agreements with various
pharmaceutical companies for the foreign marketing and distribution of Replens,
RepHresh and Advantage-S.

                                      F-16

<PAGE>

(3) PRODUCT RECALL:

On April 5, 2001, the Company announced that it had requested its licensee,
Serono, to voluntarily recall a number of batches of Crinone, a progesterone
vaginal gel used in the treatment of infertile women. The recall was initiated
due to an application problem of the gel in the recalled batches. The Company
estimated that the direct out-of-pocket costs related to the recall would cost
approximately $1.5 million, which was recorded in the first quarter of 2001. The
Company's original estimate of the expenses necessary to complete the product
recall exceeded the actual expense by approximately $449,000. This amount is
shown as a reduction in 2002 operating expenses in the consolidated statements
of operations.

(4) NOTES PAYABLE:

Notes payable consist of the following:

                                                             December 31,
                                                      -------------------------
                                                         2002          2001
                                                      -----------   -----------
7.125% convertible subordinated
   note payable - due March 2005                      $10,000,000   $10,000,000
9.00% note payable - payable
   in monthly installments                                586,667            --
                                                      -----------   -----------
                                                       10,586,667    10,000,000
Less: current portion                                    (586,667)           --
                                                      -----------   -----------

                                                      $10,000,000   $10,000,000
                                                      ===========   ===========

On March 16, 1998, the Company issued to an institutional investor a $10 million
convertible subordinated note due March 15, 2005. The note is subordinate to
other senior securities of the Company and bears interest at 7.125% which is
payable semiannually on March 15 and September 15. The note is convertible into
662,032 shares of Common Stock at a price equal to $15.105 per share.

As part of the settlement with Serono in June 2002, the Company issued to Serono
a promissory note payable in the original amount of $3,960,000 with interest on
the unpaid balance at the fixed rate of 9.00% per annum. Principal and interest
are paid in equal monthly installments of $220,000 of principal plus accrued
interest. Pursuant to the note, the Company is obligated to pay down the note by
an amount equal to one-third of the proceeds from the sale by the Company of its
equity securities. The Company paid $1,833,333 (one-third of the $5,500,000
raised by the Company through the sale of its Common Stock in July 2002). The
payment was applied in reverse order of payments due. At December 31, 2002, the
Company is required to make monthly payments of $220,000 through February 2003
and a final payment of $146,667 in March 2003.

The carrying amount of the Company's notes payable approximate fair value using
the Company's estimated incremental borrowing rate.

(5) STOCKHOLDERS' EQUITY (DEFICIENCY):

   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 paid cumulative dividends at a rate of 8% per annum

                                      F-17

<PAGE>

payable quarterly and each share was convertible into 12.36 shares of Common
Stock. At December 31, 2002, all of the Series A Preferred Stock has been
converted.

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 B Preferred Stock are
entitled to $100 per share. The Series B Preferred Stock will be automatically
converted into Common Stock upon the occurrence of certain events. Holders of
the Series B Preferred Stock are entitled to one vote for each share of Common
Stock into which the preferred stock is convertible.

In April 2002, 500 shares of the Series B Preferred Stock were converted into
10,285 shares of the Common Stock.

In January 1999, the Company raised approximately $6.4 million, net of expenses
from the issuance and sale of Series C Convertible Preferred Stock ("Series C
Preferred Stock"). The Series C Preferred Stock, sold to 24 accredited
investors, has a stated value of $1,000 per share. The Series C Preferred Stock
is convertible into common stock at the lower of: (i) $3.50 per common share or
(ii) 100% of the average of the closing prices during the three trading days
immediately preceding the conversion notice. The Series C Preferred Stock pays a
5% dividend, payable quarterly in arrears on the last day of the quarter.

On March 12, 2002, the Company adopted a Stockholder Rights Plan ("Rights Plan")
designed to protect company stockholders in the event of takeover activity that
would deny them the full value of their investment. The Rights Plan was not
adopted in response to any specific takeover threat. In adopting the Rights
Plan, the Board declared a dividend distribution of one preferred stock purchase
right for each outstanding share of Common Stock of the Company, payable to
stockholders of record at the close of business on March 22, 2002. The rights
will become exercisable only in the event, with certain exceptions, a person or
group of affiliated or associated persons acquires 15% or more of the Company's
voting stock, or a person or group of affiliated or associated persons commences
a tender or exchange offer, which if successfully consummated, would result in
such person or group owning 15% or more of the Company's voting stock. The
rights will expire on March 12, 2012. Each right, once exercisable, will entitle
the holder (other than rights owned by an acquiring person or group) to buy one
one-thousandth of a share of a series of the Company's Series D Junior
Participating Preferred Stock at a price of $30 per one-thousandth of a share,
subject to adjustments. In addition, upon the occurrence of certain events,
holders of the rights (other than rights owned by an acquiring person or group)
would be entitled to purchase either the Company's preferred stock or shares in
an "acquiring entity" at approximately half of market value. Further, at any
time after a person or group acquires 15% or more (but less than 50%) of the
Company's outstanding voting stock, subject to certain exceptions, the Board of
Directors may, at its option, exchange part or all of the rights (other than
rights held by an acquiring person or group) for shares of the Company's common
stock having a fair market value on the date of such acquisition equal to the
excess of (i) the fair market value of preferred stock issuable upon exercise of
the rights over (ii) the exercise price of the rights. The Company generally
will be entitled to redeem the rights at $0.01 per right at any time prior to
the close of business on the tenth day after there has been a public
announcement of the beneficial ownership by any person or group of 15% or more
of the Company's voting stock, subject to certain exceptions. These rights are
deemed to have no value and accordingly have not been recorded in the
accompanying financial statements.

   Common Stock-

Effective as of February 6, 2001, the Company entered into the Amended and
Restated Common Stock Purchase Agreement with an institutional investor to sell
up to $16.5 million of the Common Stock, under the Registration Statement, the
Prospectus and the related Prospectus Supplement dated February 6, 2001 and
amended on April 13, 2001. Pursuant to the Purchase Agreement, the Company may,
from time to time over the two-year term of the Purchase Agreement and at its
sole discretion, issue and sell to the institutional investor up to $16.5
million of the Common Stock, subject to certain conditions, at a price per share
based on the daily volume weighted average price of the Common Stock over a
certain period of time less a discount ranging from 5% to 7%. In addition,
during the period in which the Company elects to issue and sell shares of the
Common Stock to the institutional investor, the Company may also, at its sole
discretion, grant the institutional investor a call option at the same discount
for the applicable

                                      F-18

<PAGE>

period to purchase additional shares of the Common Stock up to the applicable
amount being sold by the Company in such period, subject to the overall limit of
$16.5 million described above. The Company and the institutional investor have
agreed to extend the term of the Agreement until February 6, 2005. All other
terms remain the same. At December 31, 2002, $9 million may be sold under the
Agreement subject to the filing of a registration relating to the amendment
becoming effective.

During 2002, the Company issued 2,691,012 shares of its common stock to several
institutional investors, which resulted in the Company receiving $11,962,067
after expenses. $6,500,000 of the gross proceeds was received pursuant to the
Purchase Agreement described in the preceding paragraph.

   Warrants-

As of December 31, 2002, the Company had warrants outstanding for the purchase
of 921,475 shares of Common Stock. Information on outstanding warrants is as
follows:

Exercise
 Price
--------
  $3.50            146,475
   4.81            225,000
   5.85            100,000
   7.06             25,000
   7.50             75,000
   8.35            350,000
                   -------
                   921,475
                   =======

During 2001, a warrant to purchase 350,000 shares of Common Stock at an exercise
price of $8.35 was issued pursuant to an employment agreement with the Company's
new President and Chief Executive Officer. A warrant to purchase 100,000 shares
of Common Stock at an exercise price of $5.85 per share was issued to an officer
and director of the Company. As of December 31, 2002, 658,975 warrants were
exercisable.

   Stock Option Plans-

All employees, officers, directors and consultants of the Company or any
subsidiary were 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 were authorized for issuance upon exercise of the
options. As of October 1996, no further options were granted pursuant to this
Plan.

In October 1996, the Company adopted the 1996 Long-term Performance Plan
("Performance Plan") which provides for the grant of stock options, stock
appreciation rights and restricted stock to certain designated employees of the
Company, non-employee directors of the Company and certain other persons
performing significant services for the Company as designated by the
Compensation/Stock Option Committee of the Board of Directors. Pursuant to the
Performance Plan, an aggregate of 6,000,000 shares of Common Stock have been
reserved for issuance.

                                      F-19

<PAGE>

A summary of the status of the Company's two stock option plans as of December
31, 2002, 2001 and 2000 and changes during the years ending on those dates is
presented below:

<TABLE>
<CAPTION>
                                            2002                  2001                   2000
                                   --------------------   --------------------   --------------------
                                               Weighted               Weighted               Weighted
                                                Average                Average                Average
                                               Exercise               Exercise               Exercise
                                     Shares     Price       Shares      Price      Shares     Price
                                   ---------   --------   ---------   --------   ---------   --------
<S>                                <C>           <C>      <C>           <C>      <C>          <C>
Outstanding at beginning of year   6,218,643     $8.69    5,550,143     $9.06    5,671,438    $ 8.83
Granted                              692,500      4.18      761,000      5.94      687,000      8.21
Exercised                                 --        --       (7,500)     5.50     (793,107)     6.40
Forfeited                           (127,000)     8.67      (85,000)     8.99      (15,188)    13.25
                                   ---------              ---------              ---------
Outstanding at end of year         6,784,143      8.23    6,218,643      8.69    5,550,143      9.06
                                   =========              =========              =========

Options exercisable at year end    5,566,943              5,420,043              4,803,143
                                   =========              =========              =========
</TABLE>

The following table summarizes information about stock options outstanding at
December 31, 2002:

<TABLE>
<CAPTION>
                                Options Outstanding                      Options Exercisable
                  ----------------------------------------------   -------------------------------
                                          Weighted
                                           Average      Weighted                          Weighted
   Range of              Number           Remaining      Average         Number            Average
   Exercise           Outstanding        Contractual    Exercise        Exercisable       Exercise
    Prices        at December 31, 2002   Life (Years)     Price    at December 31, 2002    Price
---------------   --------------------   ------------   --------   --------------------   --------
<S>                    <C>                   <C>         <C>              <C>              <C>
$3.19 - $4.00            482,500             8.43        $ 3.53             110,000        $ 3.26
$4.06 - $7.90          3,312,143             4.80          5.20           2,476,443          5.11
$8.06 - $12.13         1,830,500             5.10         10.60           1,821,500         10.61
$12.25 - $18.63        1,159,000             4.15         15.09           1,159,000         15.09
                       ---------                                          ---------
$3.19 - $18.63         6,784,143             5.03          8.23           5,566,943          8.95
                       =========                                          =========
</TABLE>

                                      F-20

<PAGE>

(6) LOSS PER COMMON AND POTENTIAL COMMON SHARE:

The calculation of basic and diluted loss per common and potential common share
is as follows:

                                          2002           2001          2000
                                      ------------   ------------   -----------
Net loss                              $(16,849,789)  $(15,845,627)  $(2,602,931)
Less: Preferred stock dividends           (187,500)      (201,663)     (217,940)
                                      ------------   ------------   -----------
Net loss applicable to
   common stock                       $(17,037,289)  $(16,047,290)  $(2,820,871)
                                      ============   ============   ===========

Basic and diluted:
   Weighted average number of
      common shares outstanding         34,392,060     31,243,307    30,235,000
                                      ============   ============   ===========

Basic and diluted net loss per
   common share                       $      (0.50)  $      (0.51)  $     (0.09)
                                      ============   ============   ===========

(7) COMMITMENTS AND CONTINGENCIES:

Cash and cash equivalents-

The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company believes that there is no credit
risk with respect to these accounts.

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, 2002, 2001 and 2000 totaled $323,977, $450,550 and $548,914,
respectively. Future minimum lease payments as of December 31, 2001 are as
follows:

2003          $323,512
2004           274,841
2005           209,172
2006           201,097
2007           125,216

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 2% of the net sales of products based on the Bioadhesive
Delivery System up 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(R), a unique pediatric antidiarrheal
product formerly marketed by Schering-Plough Corporation. Under the

                                      F-21

<PAGE>

terms of the agreement, the Company is obligated to pay a royalty equal to 5% on
United States net sales of Diasorb. In November 2002, the Company was informed
by the licensor that the license will not be renewed after May 19, 2003. U. S.
Diasorb sales in 2002 were $148,555 on which the Company received $29,000 in
royalty income.

In June 2002, as part of the settlement of litigation between Serono and the
Company, the Company acquired the right to market a second brand of its 8% and
4% progesterone gel products under the trade name "Prochieve (TM)" to a defined
audience of obstetricians, gynecologists and primary care physicians in the
United States. Under this agreement the Company is required to pay a 30% royalty
to Serono based on net sales of the products.

On July 31, 2002, Quintiles' strategic investment group, PharmaBio Development
agreed to pay $4.5 million, to be paid in four equal quarterly installments
commencing third quarter 2002 for the right to receive a 5% royalty on the net
sales of the Company's women's healthcare products in the United States for five
years beginning in the first quarter of 2003. The royalty payments are subject
to minimum and maximum amounts.

Geographic Area of Operations-

Included in the Company's Consolidated Balance sheet at December 31, 2002 are
the net assets of the Company's subsidiaries located in Bermuda, France and the
United Kingdom that total approximately $7.5 million.

Employment Agreements-

In March 2001, the Company entered into a three-year employment agreement with
an individual to serve as President and Chief Executive Officer of the Company.
Pursuant to his employment agreement, the employee is entitled to a base salary
of $450,000 per year plus a minimum 10% bonus. Additionally, the employee was
granted options to purchase 500,000 shares of the Company's Common Stock at an
exercise price of $5.85 per share and a warrant to purchase 350,000 shares of
the Company's Common Stock at an exercise price of $8.35 per share. The options
and warrants vest ratably over a four-year period.

During 1993, the Company's stockholders 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. No provision was required in 2002, 2001 and 2000. In November 2002, the
Incentive Compensation Plan was terminated by the Board of Directors.

Legal Proceedings-

In August 2001, Ares Trading S.A. ("Serono") filed a lawsuit in the Supreme
Court of the State of New York (the "Action") naming the Company as defendant.
The Action set forth claims for an alleged breach of contract for failure to
supply Crinone(R) in accordance with the supply agreement between the parties.
In November 2001, the Company filed counterclaims against Serono. In June 2002,
the Company reached a settlement with Serono. The companies agreed to release
all claims against each other in Serono's suit against the Company and the
Company's counterclaims against Serono. Under the terms of the settlement,
Columbia has rights to market a second brand of its 8% and 4% progesterone gel
products under the trade name "Prochieve (TM)" to a defined audience of
obstetricians, gynecologists and primary care physicians in the United States.
Following the settlement, Columbia shipped additional Crinone product to Ares
for the U.S. and European markets. Columbia had previously shipped three batches
of Crinone(R) 8% which were used to support the March 8th re-launch by Serono in
the U.S. This product was shipped at no charge to replace recalled product. As
part of the settlement, Columbia gave Ares a note for $3.96 million (currently
$586,667) to be paid over an eighteen-month period to cover out of pocket costs
resulting from the recall. This amount is shown as litigation settlement expense
in Operating Expenses of the Consolidated Statements of Operations.

Other claims and lawsuits have been filed against the Company. Although the
results of pending litigation are always uncertain, the Company does not believe
the results of any such actions, individually or in the aggregate, will have a
material adverse effect on our financial position or results of operation.
Additionally, the Company believes that it has adequate reserves or adequate
insurance coverage for any unfavorable outcome resulting from these actions.

                                      F-22

<PAGE>

(8) RELATED-PARTY TRANSACTIONS:

During 1993, the Company loaned two individuals, who at the time were employees,
directors and stockholders of the Company, an aggregate of $190,350. These notes
that bore interest at 10% per annum and which were due on or before December 7,
1997, were subsequently extended through December 7, 1999. One of the loans was
paid in full, including interest, in 2001. At December 31, 2002, a balance of
$211,122 remains outstanding, from a current officer, director and shareholder,
and is included in "loans receivable, related party" in the accompanying 2002
Consolidated Balance Sheet at its face value plus interest which approximates
fair value.

(9) SEGMENT INFORMATION:

The Company and its subsidiaries are engaged in one line of business, the
development, licensing and sale of pharmaceutical products. One
customer/licensee accounted for approximately 14% of 2002 and 44% of 2001
consolidated net sales. A second customer accounted for 41% of 2002 consolidated
net sales, 29% of 2001 consolidated net sales and 73% of 2000 consolidated net
sales. A third customer accounted for approximately 17% of 2002 consolidated net
sales. The following table shows selected information by geographic area:


                                         Net         Loss from     Identifiable
                                        Sales        Operations       Assets
                                     ------------   ------------   ------------
As of and for  the year
   ended  December 31, 2002-

   United States                     $  6,458,323   $ (8,190,386)  $  5,301,288
   Europe                               2,960,226     (7,669,104)     7,465,019
                                     ------------   ------------   ------------
                                     $  9,418,549   $(15,859,490)  $ 12,766,307
                                     ============   ============   ============

As of and for  the year
   ended  December 31, 2001-

   United States                     $  1,019,187   $ (8,748,062)  $  5,809,982
   Europe                               1,134,667     (6,698,109)     2,750,042
                                     ------------   ------------   ------------
                                     $  2,153,854   $(15,446,171)  $  8,560,024
                                     ============   ============   ============

As of and for the year
   ended December 31, 2000-

   United States                     $ 10,346,482   $   (137,527)  $  7,361,419
   Europe                               2,826,647     (2,390,890)     8,157,812
                                     ------------   ------------   ------------
                                     $ 13,173,129   $ (2,528,417)  $ 15,519,231
                                     ============   ============   ============

                                      F-23

<PAGE>

(10) QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

The following table summarizes selected quarterly data for the years ended
December 31, 2002 and 2001:

<TABLE>
<CAPTION>
                            First        Second         Third        Fourth           Full
                           Quarter       Quarter       Quarter       Quarter          Year
                         -----------   -----------   -----------   ------------   ------------
<S>                      <C>           <C>           <C>           <C>            <C>
   2002

Net sales                $   576,811   $ 2,455,149   $ 4,040,534   $  2,346,055   $  9,418,549
Gross profit                (374,470)    1,553,401     2,124,162        886,937      4,190,030
Loss from operations      (3,163,815)   (4,597,202)   (1,632,507)    (6,465,966)   (15,859,490)
Net loss                  (3,380,942)   (4,855,498)   (1,879,189)    (6,734,160)   (16,849,789)
Basic and diluted loss
   per common share            (0.10)        (0.14)        (0.05)         (0.19)         (0.50)

   2001

Net sales                $   926,975   $   654,747   $   411,354   $    160,778   $  2,153,854
Gross profit                 322,349       (57,577)     (263,667)      (505,941)      (504,836)
Loss from operations      (3,754,147)   (4,300,713)   (3,085,986)    (4,305,325)   (15,446,171)
Net loss                  (3,818,929)   (4,430,124)   (3,240,507)    (4,356,067)   (15,845,627)
Basic and diluted loss
   per common share            (0.13)        (0.14)        (0.10)         (0.14)         (0.51)
</TABLE>

(11) SUBSEQUENT EVENT:

On March 5, 2003, Columbia Laboratories, Inc. and Quintiles Transnational Corp.
announced an agreement to commercialize Columbia's Striant(TM) testosterone
buccal bioadhesive product in the United States. Striant is currently under
review by the U.S. Food and Drug Administration (FDA) for treatment of
hypogonadism in men with a PDUFA date of June 19, 2003. Under the terms of the
agreement, Quintiles' commercialization unit, Innovex, will provide a dedicated
team of approximately 75 sales representatives for two-and-a-half years.
Quintiles' strategic investment group, PharmaBio Development, will invest $15
million to be paid to Columbia over a 15-month period commencing with the
signing of this agreement. In return, Quintiles will receive a 9% royalty on net
sales of Striant in the United States up to agreed annual sales revenues, and a
4.5% royalty of net sales above those levels. The royalty term is seven years.
Royalty payments will commence with the launch of Striant and are subject to
minimum ($30 million) and maximum ($55 million) amounts. Columbia will be
responsible for product distribution, regulatory and medical affairs, marketing
and manufacturing.

                                      F-24

<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                      INDEX TO FINANCIAL STATEMENT SCHEDULE

                                                                           Page
                                                                           ----

Report of Independent Certified Public Accountants                         F-26

Schedule II-Valuation and Qualifying Accounts and Reserves                 F-27

                                      F-25

<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 for each of
the three years in the period ended December 31, 2001 included in this Form 10-K
and have issued our report thereon dated February 14, 2003, except for Note 11
as to which the date is March 5, 2003. Our audits were made for the purpose of
forming an opinion on the basic financial statements taken as a whole. Schedule
II 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 audits 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.

GOLDSTEIN GOLUB KESSLER LLP

New York, New York
February 14, 2003, except for Note 11
as to which the date is March 5, 2003

                                      F-26

<PAGE>

                  COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                   FOR THE THREE YEARS ENDED DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                   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, 2002:
   Allowance for doubtful accounts    $ 40,000       $(1,191)       $ 8,809     $ 30,000
                                      ========       =======        =======     ========

YEAR ENDED DECEMBER 31, 2001:
   Allowance for doubtful accounts    $ 23,000       $17,000        $    --     $ 40,000
                                      ========       =======        =======     ========

YEAR ENDED DECEMBER 31, 2000:
   Allowance for doubtful accounts    $119,289       $(6,523)       $90,306     $ 23,000
                                      ========       =======        =======     ========
</TABLE>

                                      F-27

<PAGE>

                                 EXHIBIT INDEX

Exhibit Numbers

10.37  --   License and Supply Agreement dated October 16, 2002 between the
            Company and Ardana Bioscience Limited

10.38  --   Development and License Agreement dated December 26, 2002 between
            the Company and Ardana Bioscience Limited

10.39  --   Amendment No. 1 to the Amended and Restated Common Stock Purchase
            Agreement by and between the Company and Acqua Wellington North
            American Equities Fund, Ltd., effective as of January 31, 2003

10.40  --   Investment and Royalty Agreement dated March 5, 2003 between the
            Company and PharmaBio Development Inc.

10.41  --   Sales Force Work Order #8872 pursuant to the Master Services
            Agreement having an Effective Date of July 31, 2002, between the
            Company and Innovex LP

21     --   Subsidiaries of the Company

99.1   --   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
            Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
            filed herewith.

99.2   --   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
            Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
            filed herewith.