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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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Form 10-K/A

Amendment No.1



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(Mark One)

|x | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ------------------------------------------------------------------------------------



For the Fiscal Year Ended December 31, 2004



or



| ̈ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------



For the Transition Period from              to



Commission File Number 0-30889



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Harbor Global Company Ltd.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Bermuda                                                        |  | 52-2256071                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|One Faneuil Hall Marketplace 4th Floor Boston, Massachusetts   |  | 02109                               
|(Address of principal executive offices)                       |  | (Zip Code)                          



(617) 878-1600

(Registrants telephone number, including area code)



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



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange on which registered
|N/A                 |  | N/A                                      



Securities
registered pursuant to Section 12(g) of the Act: Common Shares, $.0025 per share



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



As of June 30, 2004, the aggregate market value of the registrants voting common shares held by non-affiliates of the registrant was $31,067,973.50.
This aggregate market value is based upon the closing bid quotation for the registrants common shares on June 30, 2004 and excludes shares held by directors and executive officers and persons who own 10% or more of the registrants common
shares, on the basis that such persons may be deemed to be affiliates of the registrant. This calculation does not exclude shares held by organizations whose ownership exceeds 10% of the registrants outstanding common shares that have
represented in filings made with the United States Securities and Exchange Commission that they are (i) registered investment advisers under Section 203 of the Investment Advisors Act of 1940, (ii) investment companies registered under Section 8 of
the Investment Company Act of 1940 or (iii) banks as defined in Section 3(a)(6) of the Securities Exchange Act of 1934. The exclusion of shares for the purpose of this calculation is not necessarily a conclusive determination of affiliate status for
any other purpose.



As of August 1, 2005, the registrant had
5,667,311 common shares, par value $.0025 per share, issued and outstanding.



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Explanatory Note



This Amendment No. 1 to the Annual Report on Form 10-K of Harbor Global Company Ltd. (the Company) for the
fiscal year ended December 31, 2004 is being filed to:



(1) restate the Companys financial statements for the years ended December 31, 2004, 2003 and 2002 included in the Companys previously filed Annual Report on Form 10-K (the Form 10-K) to include in note 3 to the
consolidated financial statements a description of the Meridian Commercial Tower tenant leases, the amount of contingent rentals included within the income statements forming a part the Consolidated Financial Statements and minimum future rentals on
noncancellable leases;



(2) restate the
Companys Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002 to properly reflect securities held to maturity in Cash Flows from Investing Activities, trading securities in Cash Flows
from Operating Activities and restricted cash in Cash Flows from Investing Activities;



(3) amend and restate Item 8 and Item 15 of the Form 10-K to (a) include the reissued Report of Independent Registered Public Accounting
Firm rendered by PricewaterhouseCoopers LLP, which has been revised to make reference to the restatements described above, (b) include the reissued Report of Independent Registered Public Accounting Firm rendered by Deloitte & Touche LLP, which
has been revised to make reference to the restatements described above and (c) include the restated consolidated financial statements for the fiscal years ended December 31, 2004, 2003 and 2002 described above; and



(4) amend and restate Item 9A of the Form 10-K to amend and
restate the conclusions of the Companys management with respect to the effectiveness of the Companys disclosure controls and procedures as of December 31, 2004.



In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, the complete text of Items 8, 9A and 15, as
amended, including the complete text of the financial statements required by Item 8, is set forth herein. The remainder of the Companys Form 10-K is unchanged and is not reproduced in this Amendment No. 1 on Form 10-K/A. This report speaks as
of the original filing date of the Form 10-K and, except as indicated, has not been updated to reflect events occurring subsequent to the original filing date.



In addition, in connection with the filing of this Amendment No. 1 on Form 10-K/A and pursuant to Section 12b-15, the Company is including currently
dated certifications.



2



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HARBOR GLOBAL COMPANY LTD.

ANNUAL REPORT ON FORM 10-K/A



Amendment No. 1



TABLE OF CONTENTS



|         |  |                                             |  |     
|-------- |  | ------------------------------------------- |  | ----
|         |  |                                             |  | Page
|         |  | Part II                                     |  |     
|Item 8.  |  | Financial Statements and Supplementary Data |  | 4   
|Item 9A. |  | Controls and Procedures                     |  | 4   
|         |  |                                            
|         |  | Part III                                    |  |     
|Item 15. |  | Exhibits and Financial Statement Schedules  |  | 6   
|         |  |                                            
|         |  | Signatures                                  |  | 7   
|         |  |                                            
|         |  | Index to Financial Statements               |  | F-1 
|         |  |                                            
|         |  | Index to Exhibits                           |  |     



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PART II



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.



The Companys financial statements required by Item 8 are submitted as a separate section beginning on page F-1 at the end of this Amendment No. 1 on Form 10-K/A and are incorporated herein by reference.



ITEM 9A. CONTROLS AND PROCEDURES



Disclosure Controls and Procedures.The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in the reports filed or submitted by the Company under the Securities Exchange
Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms. The Companys disclosure controls and
procedures include components of its internal controls over financial reporting. Prior to filing the Companys Form 10-K, the Companys Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Companys
disclosure controls and procedures as of December 31, 2004 and concluded that as of December 31, 2004, the Companys disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by
the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable Securities and Exchange Commission rules and forms. However, as a result of the
errors in the Companys consolidated financial statements for the years ended December 31, 2004, 2003 and 2002, and related interim periods within those years, and the fiscal quarter ended March 31, 2005, as discussed below, the Companys
Chief Executive Officer and Chief Financial Officer have concluded that such disclosure controls and procedures were not effective as of December 31, 2004 and March 31, 2005, and the fiscal years and quarterly periods prior to such dates.



Managements assessment of the effectiveness of the
Companys disclosure controls and procedures is expressed at the level of reasonable assurance. Control systems, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control systems
objectives will be met and that all controls issues and instances of fraud, if any, will be or have been detected.



On July 15, 2005, the Company and the audit committee of the Board of Directors (the Audit Committee) determined that due to the omission of
certain lease-related disclosures from the notes to the Companys consolidated financial statements included as part of the Form 10-K, it would restate its financial statements for the years ended December 31, 2004, 2003 and 2002 to include, in
Note 3 to such financial statements, the following previously omitted lease-related disclosure required by paragraph 23 of Statement of Financial Accounting Standards No. 13, Accounting for Leases(SFAS 13):



| |  |  | The amount of contingent rentals included within the income statements forming a part of the Companys Consolidated Financial Statements included as part of the Form 10-K;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A description of leasing arrangements pertaining to the operation of the Meridian Commercial Tower; and
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | Minimum future rentals on noncancellable leases.
| | - |  | ------------------------------------------------



The Company determined to include this information in the notes to its Consolidated Financial Statements because rental income from the Meridian Commercial Tower, a
commercial office building in Moscow, Russia, is a significant source of the Companys revenues. Accordingly, the Company has restated its consolidated financial statements for the years ended December 31, 2004, 2003 and 2002 to include in Note
3 to such consolidated financial statements, which are included as part of this Amendment No. 1 on Form 10-K/A, the additional lease-related information required by paragraph 23 of SFAS 13.



In addition, during the course of preparing the Companys restated
consolidated financial statements described above, the Company identified errors in the classification of securities held to maturity, trading securities and restricted cash as presented in the Companys consolidated statements of cash flows
for the years ended December 31, 2004, 2003 and 2002, and related interim periods within those years, and the fiscal quarter ended March 31, 2005. Accordingly, on August 15, 2005, the Company and its Audit Committee determined that the
Companys Consolidated Statements of Cash Flows for the years ended December 31, 2004,



4



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2003, and 2002, and fiscal quarter ended March 31, 2005, should be restated to properly reflect purchases of and proceeds
from the sale of securities held to maturity in Cash Flows from Investing Activities rather than Cash Flows from Operating Activities and purchases of and proceeds from the sale of trading securities in Cash Flows from
Operating Activities rather than Cash Flows from Investing Activities pursuant to Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities (SFAS 115). The
Company also determined to restate the line item entitled Reclassification of Restricted Cash from Cash Flows from Financing Activities to Cash Flows from Investing Activities at this time.



The restated Consolidated Statements of Cash Flows are included as part of
this Amendment No. 1 on Form 10-K/A. The restatement of the Consolidated Statements of Cash Flows described above had no effect on the overall net cash and cash equivalent position of the Company previously reported for December 31, 2004, 2003 and
2002.



A material weakness is a control deficiency, or
combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The Companys management has concluded that, as of
December 31, 2004 and March 31, 2005, and the fiscal years and quarterly periods ended prior to such dates, the Company did not maintain effective controls over the (i) identification and determination of required lease-related disclosures in
accordance with accounting principles generally accepted in the United States and (ii) determination and verification of the reporting of trading securities and securities held to maturity in the statements of cash flows to ensure such disclosure
was accurate and in conformity with accounting principles generally accepted in the United States. These deficiencies in internal control over financial reporting resulted in the errors described above relating to the Companys consolidated
financial statements for the years ended December 31, 2004, 2003 and 2002, and related interim periods within those years, and the fiscal quarter ended March 31, 2005. Until the Company remediates the deficiencies, the deficiencies could result in
omitted lease disclosures of a material nature or the improper reporting of trading securities and securities held to maturity transactions that would result in a material misstatement of the annual or interim financial statements that would not be
prevented or detected. Accordingly, management has concluded that each of the control deficiencies described above constitutes a material weakness.



As indicated above, because the material weaknesses in the Companys internal control over financial reporting have been identified and existed as of
December 31, 2004 and March 31, 2005, the Companys Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2004 and March 31, 2005, and the fiscal years and quarterly periods ended prior to such dates, the
Companys disclosure controls and procedures were not effective.



In response to the identified material weaknesses in internal control over financial reporting, the Company is reviewing its disclosure controls and procedures relating to lease-related accounting disclosures and the proper classification
of certain securities held by the Company and its subsidiaries in its consolidated statements of cash flows, implementing additional training of the Companys accounting staff regarding lease accounting and disclosure and the proper
classification of certain securities and modifying certain disclosure and internal controls that management believes will improve the Companys ability to process and report complete and correct financial information required by applicable
rules and regulations. The Companys management believes that these additional efforts, together with pre-existing disclosure controls and procedures and other internal controls, will remediate the identified material weakness.



Internal Control Over Financial Reporting. There have not been any
significant changes in the Companys internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the 2004 fourth quarter that have materially affected, or are reasonably
likely to materially affect, the Companys internal control over financial reporting.



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PART IV



ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.



(a) The following documents are filed as part of or are included in this Annual Report on Form 10-K/A:



| | 1. | FINANCIAL STATEMENTS:
| | -- | ---------------------



The financial statements listed in the Index to Consolidated Financial Statements Filed as part of this Annual Report on Form 10-K/A.



| | 2. | FINANCIAL STATEMENT SCHEDULES:
| | -- | ------------------------------



Financial statement schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or
the Notes to Consolidated Financial Statements thereto.



| | 3. | EXHIBITS:
| | -- | ---------



The exhibits listed in the Exhibit Index filed as part of this Annual Report on Form 10-K/A.



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SIGNATURES



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



|                       |  |  |  |                            |  |                        
|---------------------- |  |  |  | -------------------------- |  | -----------------------
|                       |  |  |  | HARBOR GLOBAL COMPANY LTD.
|                       |  |  | 
|Dated: August 18, 2005 |  |  |  | BY:                        |  | /s/ DONALD H. HUNTER   
|                       |  |  |  |                            |  | DONALD H. HUNTER,      
|                       |  |  |  |                            |  | Chief Operating Officer
|                       |  |  |  |                            |  | Chief Financial Officer



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 Registrant and in the capacities and on the date indicated.



|                                     |  |                                                                                           |  |                
|------------------------------------ |  | ----------------------------------------------------------------------------------------- |  | ---------------
|Signature                            |  | Title                                                                                     |  | Date           
|/s/ STEPHEN G. KASNET                |  | Principal Executive Officer                                                               |  | August 18, 2005
|Stephen G. Kasnet                    |  |                                                                                           |  |                
|                                     |  |                                                                                          
|/s/ DONALD H. HUNTERDonald H. Hunter |  | Principal Operating Officer, Principal Financial Officer
and Principal Accounting Officer |  | August 18, 2005
|                                     |  |                                                                                          
|/s/ JOHN F. COGAN, JR.               |  | Director                                                                                  |  | August 18, 2005
|John F. Cogan, Jr.                   |  |                                                                                           |  |                
|                                     |  |                                                                                          
|/s/ JOHN D. CURTIN JR.               |  | Director                                                                                  |  | August 18, 2005
|John D. Curtin Jr.                   |  |                                                                                           |  |                
|                                     |  |                                                                                          
|/s/ W. REID SANDERS                  |  | Director                                                                                  |  | August 18, 2005
|W. Reid Sanders                      |  |                                                                                           |  |                
|                                     |  |                                                                                          
|/s/ JOHN H. VALENTINE                |  | Director                                                                                  |  | August 18, 2005
|John H. Valentine                    |  |                                                                                           |  |                



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HARBOR GLOBAL COMPANY LTD.



INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                          |  |     
|--------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                          |  | PAGE
|Report of Independent Registered Public Accounting Firm                                                   |  | F-2 
|Report of Independent Registered Public Accounting Firm                                                   |  | F-3 
|Consolidated Statements of Operations  Years Ended December 31, 2004, 2003 and 2002                      |  | F-4 
|Consolidated Balance Sheets as of December 31, 2004 and 2003                                              |  | F-5 
|Consolidated Statements of Changes in Stockholders Equity  Years Ended December 31, 2004, 2003 and 2002 |  | F-6 
|Consolidated Statements of Cash Flows  Years Ended December 31, 2004, 2003 and 2002                      |  | F-7 
|Notes to Consolidated Financial Statements                                                                |  | F-8 



F-1



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Report of Independent Registered Public Accounting Firm



To the Board of Directors and Shareholders of

Harbor Global Company Ltd.:



We have audited the accompanying consolidated balance sheets of Harbor Global Company Ltd. (the Company) and its subsidiaries as
of December 31, 2004 and 2003, and the related consolidated statements of operations, changes in stockholders equity and cash flows for each of the two years in the period ended December 31, 2004. 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. The financial statements of the Company as of December 31, 2002 and for the year then ended were audited
by other auditors whose report dated January 24, 2003 expressed an unqualified opinion on those statements.



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



In our opinion, the consolidated financial statements referred to above present fairly, in
all material respects, the financial position of Harbor Global Company Ltd. and its subsidiaries at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2004
in conformity with accounting principles generally accepted in the United States of America.



As described in Notes 2 and 3, the Company has restated its previously issued consolidated financial statements to include additional required disclosures regarding leasing arrangements and to properly reflect certain
cash flow activities.



/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

February 28, 2005, except for Notes 3 and 2, as to
which the dates are July 15, 2005 and August 15, 2005, respectively



F-2



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Stockholders of



Harbor Global Company
Limited

Boston, Massachusetts



We have audited the accompanying consolidated statement of operations, stockholders equity, and cash flows of Harbor Global Company Limited (a Bermuda limited
duration company) (the Company) and subsidiaries for the year 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 audit.



We conducted our audit in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.



In our
opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of the Companys operations and its cash flows for the year ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America.



As
discussed in Note 2, the accompanying consolidated statement of cash flows has been restated to properly reflect certain cash flow activities. In addition, Note 3 has been restated to include required lease disclosures.



/s/ DELOITTE & TOUCHE LLP



Boston, Massachusetts

January 24, 2003

(August 15, 2005 as to the restatements discussed in Note 2)



F-3



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HARBOR GLOBAL COMPANY LTD.



CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002



|                                                                                                                            |  |                                         |         |   |      |   |         |      |  |   |         |  
|--------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                                            |  | 2004                                    |         |   | 2003 |   |         | 2002 | 
|                                                                                                                            |  | (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) |        
|Revenues:                                                                                                                   |  |                                         |         |   |      |   |         |      |  |   |         |  
|Real Estate Rental Revenue                                                                                                  |  | $                                       | 7,886   |   |      | $ | 7,451   |      |  | $ | 7,714   |  
|Other Income                                                                                                                |  |                                         | 4,433   |   |      |   | 3,250   |      |  |   | 2,057   |  
|                                                                                                                            |  |                                         |         |   |      |   |         |      |  |   |         |  
|Total Revenues                                                                                                              |  |                                         | 12,319  |   |      |   | 10,701  |      |  |   | 9,771   |  
|                                                                                                                            |  |                                         |        
|Operating Expenses:                                                                                                         |  |                                         |         |   |      |   |         |      |  |   |         |  
|Salary and Benefit Expenses                                                                                                 |  |                                         | (4,640  | ) |      |   | (4,178  | )    |  |   | (2,974  | )
|Facility Expenses                                                                                                           |  |                                         | (1,517  | ) |      |   | (1,525  | )    |  |   | (1,299  | )
|Building and Property Management Expenses                                                                                   |  |                                         | (2,051  | ) |      |   | (2,456  | )    |  |   | (2,375  | )
|Management Fee Expense                                                                                                      |  |                                         | (2,907  | ) |      |   | (3,131  | )    |  |   | (2,836  | )
|Other Expenses                                                                                                              |  |                                         | (6,251  | ) |      |   | (4,836  | )    |  |   | (6,504  | )
|                                                                                                                            |  |                                         |         |   |      |   |         |      |  |   |         |  
|Total Operating Expenses                                                                                                    |  |                                         | (17,366 | ) |      |   | (16,126 | )    |  |   | (15,988 | )
|                                                                                                                            |  |                                         |         |   |      |   |         |      |  |   |         |  
|Loss from Operations                                                                                                        |  |                                         | (5,047  | ) |      |   | (5,425  | )    |  |   | (6,217  | )
|                                                                                                                            |  |                                         |        
|Other Income (Expense):                                                                                                     |  |                                         |         |   |      |   |         |      |  |   |         |  
|Net Unrealized and Realized Gains on Equity and Fixed Income Securities                                                     |  |                                         | 2,045   |   |      |   | 24,813  |      |  |   | 12,002  |  
|Gain on Extinguishment of Note Payable                                                                                      |  |                                         |        |   |      |   | 1,250   |      |  |   |        |  
|Early Settlement of Note Receivable                                                                                         |  |                                         |        |   |      |   | (191    | )    |  |   |        |  
|Gain on Sale of Gold Option                                                                                                 |  |                                         |        |   |      |   | 875     |      |  |   |        |  
|Interest Income, net                                                                                                        |  |                                         | 2,029   |   |      |   | 2,525   |      |  |   | 3,093   |  
|                                                                                                                            |  |                                         |         |   |      |   |         |      |  |   |         |  
|Total Other Income                                                                                                          |  |                                         | 4,074   |   |      |   | 29,272  |      |  |   | 15,095  |  
|                                                                                                                            |  |                                         |        
|(Loss) Income from Continuing Operations before Provision for Income Taxes, Minority Interest And Equity Loss on Investment |  |                                         | (973    | ) |      |   | 23,847  |      |  |   | 8,878   |  
|                                                                                                                            |  |                                         |        
|Provision for Income Taxes                                                                                                  |  |                                         | (1,922  | ) |      |   | (6,470  | )    |  |   | (3,866  | )
|                                                                                                                            |  |                                         |         |   |      |   |         |      |  |   |         |  
|(Loss) Income from Continuing Operations before Minority Interest and Equity Loss on Investment                             |  |                                         | (2,895  | ) |      |   | 17,377  |      |  |   | 5,012   |  
|                                                                                                                            |  |                                         |        
|Minority Interest Expense                                                                                                   |  |                                         | (1,269  | ) |      |   | (9,386  | )    |  |   | (3,938  | )
|Equity Gain (Loss) on Venture Capital Investments                                                                           |  |                                         | 156     |   |      |   | (154    | )    |  |   | (415    | )
|                                                                                                                            |  |                                         |         |   |      |   |         |      |  |   |         |  
|Net (Loss) Income from Continuing Operations Before Discontinued Operations                                                 |  |                                         | (4,008  | ) |      |   | 7,837   |      |  |   | 659     |  
|                                                                                                                            |  |                                         |        
|Discontinued Operations:                                                                                                    |  |                                         |         |   |      |   |         |      |  |   |         |  
|Gain on Disposal                                                                                                            |  |                                         |        |   |      |   |        |      |  |   | 424     |  
|                                                                                                                            |  |                                         |         |   |      |   |         |      |  |   |         |  
|Net (Loss) Income                                                                                                           |  | $                                       | (4,008  | ) |      | $ | 7,837   |      |  | $ | 1,083   |  
|                                                                                                                            |  |                                         |         |   |      |   |         |      |  |   |         |  
|(Loss) Earnings Per Share:                                                                                                  |  |                                         |         |   |      |   |         |      |  |   |         |  
|Continuing Operations:                                                                                                      |  |                                         |         |   |      |   |         |      |  |   |         |  
|Basic and Diluted (Loss) Earnings Per Share                                                                                 |  | $                                       | (0.71   | ) |      | $ | 1.39    |      |  | $ | 0.12    |  
|Discontinued Operations:                                                                                                    |  |                                         |         |   |      |   |         |      |  |   |         |  
|Basic and Diluted Earnings Per Share                                                                                        |  |                                         |        |   |      |   |        |      |  |   | 0.08    |  
|                                                                                                                            |  |                                         |         |   |      |   |         |      |  |   |         |  
|Basic and Diluted Net (Loss) Earnings Per Share                                                                             |  | $                                       | (0.71   | ) |      | $ | 1.39    |      |  | $ | 0.20    |  
|                                                                                                                            |  |                                         |         |   |      |   |         |      |  |   |         |  
|Weighted Average Basic and Diluted Shares Outstanding                                                                       |  |                                         | 5,662   |   |      |   | 5,656   |      |  |   | 5,650   |  



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



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HARBOR GLOBAL COMPANY LTD.



CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2004 AND 2003



|                                                                                                                                                                              |  |                                        |        |   |      |   |         |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------- | ------ | - | ---- | - | ------- | -
|                                                                                                                                                                              |  | 2004                                   |        |   | 2003 |  
|                                                                                                                                                                              |  | (IN THOUSANDSEXCEPT PER SHARE AMOUNTS) |       
|ASSETS                                                                                                                                                                        |  |                                        |        |   |      |   |         |  
|Cash and Cash Equivalents                                                                                                                                                     |  | $                                      | 7,754  |   |      | $ | 23,957  |  
|Restricted Cash                                                                                                                                                               |  |                                        | 13,035 |   |      |   | 6,291   |  
|Marketable Securities                                                                                                                                                         |  |                                        | 17,456 |   |      |   | 16,217  |  
|Accounts Receivable                                                                                                                                                           |  |                                        | 986    |   |      |   | 1,233   |  
|Notes Receivable                                                                                                                                                              |  |                                        |       |   |      |   | 4,700   |  
|Prepaid Expenses                                                                                                                                                              |  |                                        | 1,880  |   |      |   | 1,569   |  
|Other Current Assets                                                                                                                                                          |  |                                        | 7      |   |      |   | 8       |  
|                                                                                                                                                                              |  |                                        |        |   |      |   |         |  
|Total Current Assets                                                                                                                                                          |  |                                        | 41,118 |   |      |   | 53,975  |  
|                                                                                                                                                                              |  |                                       
|Polish Venture Capital Investment                                                                                                                                             |  |                                        | 273    |   |      |   | 666     |  
|Marketable Securities                                                                                                                                                         |  |                                        | 19,998 |   |      |   | 19,197  |  
|Long-term Investments                                                                                                                                                         |  |                                        | 8,715  |   |      |   | 2,375   |  
|Building                                                                                                                                                                      |  |                                        | 21,726 |   |      |   | 22,035  |  
|Other Long-term Assets                                                                                                                                                        |  |                                        | 1,190  |   |      |   | 1,060   |  
|Goodwill                                                                                                                                                                      |  |                                        | 1,253  |   |      |   | 1,253   |  
|                                                                                                                                                                              |  |                                        |        |   |      |   |         |  
|Total Assets                                                                                                                                                                  |  | $                                      | 94,273 |   |      | $ | 100,561 |  
|                                                                                                                                                                              |  |                                        |        |   |      |   |         |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                          |  |                                        |        |   |      |   |         |  
|Accounts Payable                                                                                                                                                              |  | $                                      | 1,140  |   |      | $ | 1,262   |  
|Dividends Payable                                                                                                                                                             |  |                                        | 13,035 |   |      |   | 6,291   |  
|Accrued Expenses                                                                                                                                                              |  |                                        | 2,206  |   |      |   | 1,727   |  
|Accrued Fees Payable to Calypso Management                                                                                                                                    |  |                                        | 739    |   |      |   | 708     |  
|Foreign Taxes Payable                                                                                                                                                         |  |                                        | 196    |   |      |   | 1,407   |  
|Deferred Taxes                                                                                                                                                                |  |                                        | 241    |   |      |   | 376     |  
|                                                                                                                                                                              |  |                                        |        |   |      |   |         |  
|Total Current Liabilities                                                                                                                                                     |  |                                        | 17,557 |   |      |   | 11,771  |  
|                                                                                                                                                                              |  |                                       
|Deferred Taxes                                                                                                                                                                |  |                                        | 2,039  |   |      |   | 1,613   |  
|                                                                                                                                                                              |  |                                        |        |   |      |   |         |  
|Total Liabilities                                                                                                                                                             |  |                                        | 19,596 |   |      |   | 13,384  |  
|                                                                                                                                                                              |  |                                       
|Minority Interest                                                                                                                                                             |  |                                        | 27,109 |   |      |   | 32,453  |  
|                                                                                                                                                                              |  |                                       
|Commitments/Contingencies (refer to Note 13)                                                                                                                                  |  |                                        |        |   |      |   |         |  
|                                                                                                                                                                              |  |                                       
|STOCKHOLDERS EQUITY                                                                                                                                                          |  |                                        |        |   |      |   |         |  
|                                                                                                                                                                              |  |                                       
|Common shares, par value $.0025 per share; authorized 48,000,000 shares; 5,667,311 and 5,661,311 shares issued and outstanding as of December
31, 2004 and 2003, respectively |  |                                        | 14     |   |      |   | 14      |  
|Preferred shares par value $.01 per share; authorized 1,000,000 shares; none issued                                                                                           |  |                                        |       |   |      |   |        |  
|Paid-in Capital                                                                                                                                                               |  |                                        | 48,284 |   |      |   | 52,282  |  
|Accumulated Deficit                                                                                                                                                           |  |                                        | (4,541 | ) |      |   | (533    | )
|Other Comprehensive Income                                                                                                                                                    |  |                                        |        |   |      |   |         |  
|Net Unrealized Gains on Available for Sale Marketable Securities                                                                                                              |  |                                        | 3,811  |   |      |   | 2,961   |  
|                                                                                                                                                                              |  |                                        |        |   |      |   |         |  
|Total Stockholders Equity                                                                                                                                                    |  |                                        | 47,568 |   |      |   | 54,724  |  
|                                                                                                                                                                              |  |                                        |        |   |      |   |         |  
|Total Liabilities and Stockholders Equity                                                                                                                                    |  | $                                      | 94,273 |   |      | $ | 100,561 |  
|                                                                                                                                                                              |  |                                        |        |   |      |   |         |  



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



F-5



---

##### Table of Contents

HARBOR GLOBAL COMPANY LTD.



CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002



|                                                                                                                           |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   |        |  
|-------------------------------------------------------------------------------------------------------------------------- | ------------ | ----------------------------------------------- | --- | - | ------------------ |  | - | ----------------------------------- | - |  | ------------------- | ------ | - | --------------------------------- | - | ----- | - |  | - | ------ | - |  | - | ------ | -
|                                                                                                                           |              | COMMON SHARES                                   |     |   | ACCUMULATEDDEFICIT |  |   | ACCUMULATEDOTHERCOMPREHENSIVEINCOME |   |  | COMPREHENSIVEINCOME |        |   | TOTALSTOCKHOLDERSEQUITY(DEFICIT) |  
|                                                                                                                           | SHARESISSUED |                                                 | PAR |   | PAID-INCAPITAL     |  |   |                                     |   | 
|                                                                                                                           |              | (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) |    
|Balance, January 1, 2002                                                                                                   |              | 5,649,311                                       |     |   | 14                 |  |   | 62,768                              |   |  |                     | (9,453 | ) |                                   |   | 3,304 |   |  |   |        |   |  |   | 56,633 |  
|                                                                                                                           |              |                                                 |     |   |                    |  |  
|Shares Issued                                                                                                              |              | 6,000                                           |     |   |                   |  |   | 44                                  |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   | 44     |  
|Net Income                                                                                                                 |              |                                                 |     |   |                    |  |   |                                     |   |  |                     | 1,083  |   |                                   |   |       |   |  |   | 1,083  |   |  |   | 1,083  |  
|Other Comprehensive Income:                                                                                                |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   |        |  
|Net Unrealized Gains on Marketable Securities (Net of deferred taxes of $264 and minority interest of $ 558)               |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   | 629   |   |  |   | 629    |   |  |   | 629    |  
|                                                                                                                           |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   |        |  
|Comprehensive Income                                                                                                       |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  | $ | 1,712  |   |  |   |        |  
|                                                                                                                           |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   |        |  
|Acquisition of IFC Interest                                                                                                |              |                                                 |     |   |                    |  |   | 1,860                               |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   | 1,860  |  
|Distribution                                                                                                               |              |                                                 |     |   |                    |  |   | (5,090                              | ) |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   | (5,090 | )
|                                                                                                                           |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   |        |  
|Balance, December 31, 2002                                                                                                 |              | 5,655,311                                       |     | $ | 14                 |  | $ | 59,582                              |   |  | $                   | (8,370 | ) |                                   | $ | 3,933 |   |  |   |        |   |  | $ | 55,159 |  
|                                                                                                                           |              |                                                 |     |   |                    |  |  
|Shares Issued                                                                                                              |              | 6,000                                           |     |   |                   |  |   | 59                                  |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   | 59     |  
|Net Income                                                                                                                 |              |                                                 |     |   |                    |  |   |                                     |   |  |                     | 7,837  |   |                                   |   |       |   |  |   | 7,837  |   |  |   | 7,837  |  
|Other Comprehensive Income:                                                                                                |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   |        |  
|Net Unrealized Gains on Marketable Securities (Net of deferred tax credit of $738 and minority interest income of $ 1,366) |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   | (972  | ) |  |   | (972   | ) |  |   | (972   | )
|                                                                                                                           |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   |        |  
|Comprehensive Income                                                                                                       |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  | $ | 6,865  |   |  |   |        |  
|                                                                                                                           |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   |        |  
|Restricted Unit Award (See Note 14)                                                                                        |              |                                                 |     |   |                    |  |   | 541                                 |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   | 541    |  
|Distribution                                                                                                               |              |                                                 |     |   |                    |  |   | (7,900                              | ) |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   | (7,900 | )
|                                                                                                                           |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   |        |  
|Balance, December 31, 2003                                                                                                 |              | 5,661,311                                       |     | $ | 14                 |  | $ | 52,282                              |   |  | $                   | (533   | ) |                                   | $ | 2,961 |   |  |   |        |   |  | $ | 54,724 |  
|                                                                                                                           |              |                                                 |     |   |                    |  |  
|Shares Issued                                                                                                              |              | 6,000                                           |     |   |                   |  |   | 59                                  |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   | 59     |  
|Net Loss                                                                                                                   |              |                                                 |     |   |                    |  |   |                                     |   |  |                     | (4,008 | ) |                                   |   |       |   |  |   | (4,008 | ) |  |   | (4,008 | )
|Net Unrealized Gains on Marketable Securities (Net of deferred taxes of $427 and minority interest of $ 487)               |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   | 850   |   |  |   | 850    |   |  |   | 850    |  
|                                                                                                                           |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   |        |  
|Comprehensive Income                                                                                                       |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  | $ | (3,158 | ) |  |   |        |  
|                                                                                                                           |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   |        |  
|Restricted Unit Award (See Note 14)                                                                                        |              |                                                 |     |   |                    |  |   | (140                                | ) |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   | (140   | )
|Distribution                                                                                                               |              |                                                 |     |   |                    |  |   | (3,917                              | ) |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   | (3,917 | )
|                                                                                                                           |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   |        |  
|Balance, December 31, 2004                                                                                                 |              | 5,667,311                                       |     | $ | 14                 |  | $ | 48,284                              |   |  | $                   | (4,541 | ) |                                   | $ | 3,811 |   |  |   |        |   |  | $ | 47,568 |  
|                                                                                                                           |              |                                                 |     |   |                    |  |   |                                     |   |  |                     |        |   |                                   |   |       |   |  |   |        |   |  |   |        |  



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



F-6



---

##### Table of Contents

HARBOR GLOBAL COMPANY LTD.



CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002



|                                                                                                        |  |                |         |   |                |   |         |                |  |   |         |  
|------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | - | -------------- | - | ------- | -------------- |  | - | ------- | -
|                                                                                                        |  | 2004(Restated) |         |   | 2003(Restated) |   |         | 2002(Restated) | 
|                                                                                                        |  | (IN THOUSANDS) |        
|Cash Flows from Operating Activities:                                                                   |  |                |         |   |                |   |         |                |  |   |         |  
|Net (Loss) Income                                                                                       |  | $              | (4,008  | ) |                | $ | 7,837   |                |  | $ | 1,083   |  
|Net Income from Discontinued Operations                                                                 |  |                |        |   |                |   |        |                |  |   | 424     |  
|                                                                                                        |  |                |         |   |                |   |         |                |  |   |         |  
|Net (Loss) Income from Continuing Operations                                                            |  |                | (4,008  | ) |                |   | 7,837   |                |  |   | 659     |  
|                                                                                                        |  |                |        
|Adjustments to Reconcile Net (Loss) Income to Net Cash Used In Operating Activities:                    |  |                |         |   |                |   |         |                |  |   |         |  
|Non-cash Interest Income on Note Receivable                                                             |  |                |        |   |                |   | (203    | )              |  |   | (958    | )
|Restricted Unit Awards                                                                                  |  |                | 169     |   |                |   | 541     |                |  |   |        |  
|Depreciation and Amortization                                                                           |  |                | 1,042   |   |                |   | 948     |                |  |   | 994     |  
|Unrealized and Realized Gains on Venture Capital, Marketable Securities, and Long-term Investments, Net |  |                | (1,894  | ) |                |   | (24,813 | )              |  |   | (12,002 | )
|Purchase of Trading Securities                                                                          |  |                | (6,530  | ) |                |   | (9,404  | )              |  |   | (8,753  | )
|Proceeds from Sale of Trading Securities                                                                |  |                | 7,089   |   |                |   | 10,485  |                |  |   | 8,488   |  
|Translation Loss (Gain)                                                                                 |  |                | (536    | ) |                |   | (630    | )              |  |   | 346     |  
|Gain on Extinguishment of Note Payable                                                                  |  |                |        |   |                |   | (1,250  | )              |  |   |        |  
|Early Settlement of Note Receivable                                                                     |  |                |        |   |                |   | 191     |                |  |   |        |  
|Gain on Sale of Gold Option                                                                             |  |                |        |   |                |   | (875    | )              |  |   |        |  
|Non-Cash Compensation to Directors from Common Shares                                                   |  |                | 59      |   |                |   | 59      |                |  |   | 44      |  
|Minority Interest Expense                                                                               |  |                | 1,269   |   |                |   | 9,386   |                |  |   | 3,938   |  
|Equity (Gain) Loss on Venture Capital Investments                                                       |  |                | (156    | ) |                |   | 154     |                |  |   | 415     |  
|Changes in Operating Assets and Liabilities                                                            |  |                |         |   |                |   |         |                |  |   |         |  
|Other Current Assets                                                                                    |  |                | 255     |   |                |   | (1,365  | )              |  |   | (2,095  | )
|Accrued Expenses and Accounts Payable                                                                   |  |                | (359    | ) |                |   | 97      |                |  |   | (2,188  | )
|                                                                                                        |  |                |         |   |                |   |         |                |  |   |         |  
|Total Adjustments and Changes in Operating Assets and Liabilities                                       |  |                | 408     |   |                |   | (16,679 | )              |  |   | (11,771 | )
|                                                                                                        |  |                |         |   |                |   |         |                |  |   |         |  
|Net Cash Used in Continuing Operating Activities                                                        |  |                | (3,600  | ) |                |   | (8,842  | )              |  |   | (11,112 | )
|                                                                                                        |  |                |         |   |                |   |         |                |  |   |         |  
|Net Cash Used in Discontinued Operations                                                                |  |                |        |   |                |   |        |                |  |   | (100    | )
|                                                                                                        |  |                |         |   |                |   |         |                |  |   |         |  
|Cash Flows from Investing Activities:                                                                   |  |                |         |   |                |   |         |                |  |   |         |  
|Building                                                                                                |  |                | (389    | ) |                |   |        |                |  |   |        |  
|Purchase of Investments                                                                                 |  |                | (38,164 | ) |                |   | (32,550 | )              |  |   | (30,107 | )
|Other Long-term Assets                                                                                  |  |                | (313    | ) |                |   | (394    | )              |  |   | (172    | )
|Purchase of IFCs shares in Pioglobal First Russia                                                      |  |                |        |   |                |   |        |                |  |   | (450    | )
|Proceeds from Sale of Investments                                                                       |  |                | 32,939  |   |                |   | 56,617  |                |  |   | 48,664  |  
|Net Proceeds from Sale of Russian Timber Operations                                                     |  |                |        |   |                |   | 2,000   |                |  |   | 5,003   |  
|Proceeds from Payment on Note Receivable                                                                |  |                | 4,700   |   |                |   | 3,000   |                |  |   | 2,500   |  
|Proceeds from Sale of Gold Option                                                                       |  |                |        |   |                |   | 875     |                |  |   |        |  
|Proceeds from Prospect Poland Fund                                                                      |  |                | 549     |   |                |   |        |                |  |   |        |  
|Reclassification of Restricted Cash                                                                     |  |                |        |   |                |   | 5,000   |                |  |   |        |  
|Restricted Cash for Minority Dividends                                                                  |  |                | (6,744  | ) |                |   | (2,432  | )              |  |   | (1,219  | )
|                                                                                                        |  |                |         |   |                |   |         |                |  |   |         |  
|Net Cash Provided by Investing Activities                                                               |  |                | (7,422  | ) |                |   | 32,116  |                |  |   | 24,219  |  
|                                                                                                        |  |                |         |   |                |   |         |                |  |   |         |  
|Cash Flows from Financing Activities:                                                                   |  |                |         |   |                |   |         |                |  |   |         |  
|Distributions Paid                                                                                      |  |                | (3,917  | ) |                |   | (7,900  | )              |  |   | (5,090  | )
|Dividends Paid to Minority Interest                                                                     |  |                | (173    | ) |                |   | (48     | )              |  |   | (196    | )
|Purchase of Restricted Units                                                                            |  |                | (309    | ) |                |   |        |                |  |   |        |  
|Subsidiary Level Treasury Stock Repurchase                                                              |  |                | (782    | ) |                |   |        |                |  |   |        |  
|Payment on Note Payable                                                                                 |  |                |        |   |                |   | (3,750  | )              |  |   |        |  
|                                                                                                        |  |                |         |   |                |   |         |                |  |   |         |  
|Net Cash Used In Financing Activities                                                                   |  |                | (5,181  | ) |                |   | (11,698 | )              |  |   | (5,286  | )
|                                                                                                        |  |                |         |   |                |   |         |                |  |   |         |  
|Net (Decrease) Increase in Cash and Cash Equivalents                                                    |  |                | (16,203 | ) |                |   | 11,576  |                |  |   | 7,721   |  
|                                                                                                        |  |                |         |   |                |   |         |                |  |   |         |  
|Cash and Cash Equivalents, Beginning of Year                                                            |  |                | 23,957  |   |                |   | 12,381  |                |  |   | 4,660   |  
|                                                                                                        |  |                |         |   |                |   |         |                |  |   |         |  
|Cash and Cash Equivalents, End of Year                                                                  |  | $              | 7,754   |   |                | $ | 23,957  |                |  | $ | 12,381  |  
|                                                                                                        |  |                |         |   |                |   |         |                |  |   |         |  
|Income Taxes Paid                                                                                       |  | $              | 2,871   |   |                | $ | 5,559   |                |  | $ | 5,156   |  



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



F-7



---

##### Table of Contents

HARBOR GLOBAL COMPANY LTD.



NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2004



(1) BACKGROUND AND BASIS OF PRESENTATION



BACKGROUND



Harbor Global Company Ltd., a Bermuda limited duration company (Harbor Global or the Company), was formed in May 2000 as a wholly owned subsidiary of Pioneer Investment Management USA Inc.
(formerly known as The Pioneer Group, Inc.), a Delaware corporation (Pioneer), to facilitate the merger between Pioneer and UniCredito Italiano, S.p.A., an Italian financial institution (UniCredito). As a condition to closing
the merger and pursuant to a Distribution Agreement dated as of October 24, 2000 by and among the Company, Pioneer and Harbor Global II Ltd., a wholly owned subsidiary of the Company (the Distribution Agreement), Pioneer agreed to
transfer certain of its assets to Harbor Global and distribute all of the outstanding Harbor Global common shares to its stockholders. Pioneer transferred to Harbor Global all of the assets required to be transferred pursuant to the merger agreement
and the Distribution Agreement, and on October 24, 2000, Pioneer distributed all of the outstanding common shares of Harbor Global to its stockholders (the Spin-off). Pioneer stockholders received one Harbor Global common share for every
five shares of Pioneer common stock held on that date.



The
Companys primary assets by segment consist of the following:



| |  |  | Russian real estate management and investment management operations: investment advisory and management operations
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | Real estate management operations: real estate management services including property management and advisory services
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | Other:
| | - |  | ------



| |  |  | approximately $9.4 million in cash, cash equivalents and marketable securities held directly by Harbor Global
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | an approximately 8% limited partnership interest in the Prospect Poland Fund
| | - |  | ----------------------------------------------------------------------------



Harbor Global seeks to liquidate its assets in a timely fashion on economically advantageous terms and continues to operate its assets as going concern
businesses until they are liquidated. Harbor Globals memorandum of association provides that the liquidation of its assets must be completed upon the earlier of October 24, 2005, the fifth anniversary of the date of the Spin-off, or the
distribution by Harbor Global of all its assets to its shareholders. On October 18, 2004, pursuant to the Companys memorandum of association, the Harbor Global board of directors (Board of Directors) unanimously authorized the
Company to continue operating its assets for an additional one year period or through October 24, 2006, unless and until the Company has distributed all of its assets to its shareholders to the extent permitted by the Bermuda Companies Act of 1981.
If Harbor Global has not liquidated all of its assets before October 24, 2006, the Board of Directors, in its discretion, may authorize Harbor Global to continue to operate its assets for up to two additional one-year periods.



BASIS OF PRESENTATION



The consolidated financial statements included herein have been prepared using the historical cost basis of the assets and
liabilities and historical results of operations related to the Companys businesses (Consolidated Financial Statements).



Since Harbor Global is a Bermuda limited duration company, the Company expects that for United States federal income tax purposes it will be taxed as a
partnership, and as a result, virtually all United States federal income tax expenses have been and will be borne by its shareholders. However, on April 12, 2004, Pioglobal First Russia, Inc., an indirect subsidiary of the Company, through which a
portion of the Companys Russian real estate management and investment management operations are conducted, converted from a Delaware corporation into a Delaware limited liability company, Pioglobal First Russia, LLC (Pioglobal First
Russia). As a result, the Company anticipates that it will indirectly (through Pioglobal First Russia) incur a United States federal income tax liability of approximately $1,100,000, which is reported in the provision for income taxes in the
Consolidated Statement of Operations. Otherwise, the income tax provisions and deferred



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##### Table of Contents

taxes included in the accompanying Consolidated Financial Statements principally relate to the Companys corporate
subsidiaries that are located primarily in the Russian Federation (Russia).



RECLASSIFICATIONS



Certain reclassifications have
been made to the 2002 and 2003 amounts to conform to the 2004 presentation.



(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, PRINCIPLES OF CONSOLIDATION



PRINCIPLES OF CONSOLIDATION



The Consolidated
Financial Statements include the accounts of Harbor Global and its majority-owned subsidiaries. The Company maintains an approximate 8% interest in a limited partnership. Because it is a limited partner investor, the Company accounts for this
investment using the equity method of accounting. Equity gains and losses from this investment are included in equity gain or loss on venture capital investments on the accompanying Consolidated Statement of Operations. All intercompany accounts and
transactions have been eliminated from the Consolidated Financial Statements.



USE OF ESTIMATES



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



REVENUE RECOGNITION



Real estate rental revenue is recorded monthly over the terms of the leases on a straight line basis. Other income is recorded when earned except for
dividend income, which is recorded when received. Other income includes investment management, shareholder services, trust management and other fees, dividend income, and service revenue. The Company recognizes revenue when persuasive evidence of an
arrangement exists, services have been rendered, the Companys price is fixed or determinable and collectibility is reasonably assured.



MANAGEMENT FEE



The Company entered into an administration and liquidation agreement with Calypso Management LLC (Calypso Management or the Manager), under which the Manager manages the liquidation of the
Company and operates the Companys assets as going concern businesses until they are liquidated. The Company pays the expenses of the Manager incurred in connection with its provision of services and a percentage of the net proceeds realized
from the liquidation of its assets that are ultimately distributed to the Companys shareholders. The Company incurs management fees on a monthly basis related to the reimbursement of expenses and accrues management fees related to the
distribution of proceeds at the earlier of (1) the formal declaration by the Board of Directors of a distribution or (2) the time when a distributable amount is estimable following the sale or liquidation of an asset. Harbor Global will also accrue
management fees when a distribution to Calypso Management is triggered following a Deemed Sale of the Company or a change in control as defined in the amended and restated administration and liquidation agreement (See note 12).



CASH AND CASH EQUIVALENTS



All highly liquid investments purchased with a maturity of three months or less are considered to be cash equivalents. All
highly liquid investments purchased with a maturity of greater than three months are classified as marketable securities.



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PREPAID EXPENSES



Advertising expenses are expensed as incurred. Insurance premiums are expensed on a straight-line basis over 12 months.



POLISH VENTURE CAPITAL INVESTMENT



The Company reports its approximately 8% limited partnership interest in the
Prospect Poland Fund on the equity basis of accounting. No market quotes are available for the venture capital investments. These investments are valued at fair value, as determined by Prospect Poland Funds management. The Company recorded a
gain on its investment of approximately $207,000 in 2004 and wrote-down its investment by $102,000 and $325,000 in 2003 and 2002, respectively. For the years ended December 31, 2004, 2003, and 2002 the Company incurred approximately $51,000, $52,000
and $90,000, respectively of operating expenses, representing its approximately 8% share. Additionally, during 2004, the Company received a cash distribution of approximately $549,000 from the Prospect Poland Fund representing its proportionate
share of proceeds from the sale of two of its portfolio investments.



Summarized financial information for the Prospect Poland Fund is as follows:



|                                    |  |                |       |   |      |   |       |  
|----------------------------------- |  | -------------- | ----- | - | ---- | - | ----- | -
|                                    |  | 2004           |       |   | 2003 |  
|                                    |  | (In Thousands) |      
|Balance Sheet Data, at December 31, |  |                |       |   |      |   |       |  
|Current Assets                      |  | $              | 467   |   |      | $ | 893   |  
|Non-Current Assets                  |  |                | 3,000 |   |      |   | 7,447 |  
|Current Liabilities                 |  |                | (85   | ) |      |   | (62   | )
|                                    |  |                |       |   |      |   |       |  
|Partners Capital, at December 31   |  | $              | 3,382 |   |      | $ | 8,278 |  
|                                    |  |                |       |   |      |   |       |  



|                                                             |  |                |       |   |      |   |        |      |  |   |        |  
|------------------------------------------------------------ |  | -------------- | ----- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                             |  | 2004           |       |   | 2003 |   |        | 2002 | 
|                                                             |  | (In Thousands) |      
|Operating Data, for the year ended December 31               |  |                |       |   |      |   |        |      |  |   |        |  
|Net Operating Loss                                           |  | $              | (595  | ) |      | $ | (664   | )    |  | $ | (1,118 | )
|Net Realized and Unrealized Gain (Loss) from Investments     |  |                | 2,253 |   |      |   | (1,747 | )    |  |   | (3,518 | )
|                                                             |  |                |       |   |      |   |        |      |  |   |        |  
|Net Increase (Decrease) in Partners Capital from Operations |  | $              | 1,658 |   |      | $ | (2,411 | )    |  | $ | (4,636 | )
|                                                             |  |                |       |   |      |   |        |      |  |   |        |  



CURRENT MARKETABLE SECURITIES



United States Treasury securities are classified as
held-to-maturity and are recorded at cost. Russian Government and Municipal securities are classified as trading securities and are marked-to-market, with unrealized gains or losses reported in the Consolidated Statement of Operations pursuant to
Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities (SFAS No. 115). Russian federal and municipal government securities are held primarily
in the PIOGLOBAL Real Estate Investment Fund, an approximately 52% owned subsidiary of the Company. Security transactions are recorded on settlement date. Investments are valued at the weighted average daily price if they are traded on valuation
date; otherwise, the bid price is used. Set forth in the following tables are the balances of marketable securities, segregated between United States Treasury obligations and Russian obligations at December 31, 2004 and December 31, 2003. Unrealized
gains and losses recorded on Russian government securities are presented for the years ended December 31, 2004, 2003, and 2002.



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##### Table of Contents

Balances of Current Marketable Securities



|                                 |  |                   |        |                   |   |       
|-------------------------------- |  | ----------------- | ------ | ----------------- | - | ------
|                                 |  | December 31, 2004 |        | December 31, 2003
|                                 |  | (In Thousands)   
|Russia (trading)                 |  | $                 | 9,883  |                   | $ | 10,160
|United States (held to maturity) |  |                   | 7,573  |                   |   | 6,057 
|                                 |  |                   |        |                   |   |       
|Total Marketable Securities      |  | $                 | 17,456 |                   | $ | 16,217
|                                 |  |                   |        |                   |   |       



Unrealized Gains (Losses) on Russian
Federal and Municipal Government Securities



|                                 |  |                |      |   |      |   |       |      |  |   |      |  
|-------------------------------- |  | -------------- | ---- | - | ---- | - | ----- | ---- |  | - | ---- | -
|                                 |  | 2004           |      |   | 2003 |   |       | 2002 | 
|                                 |  | (In Thousands) |     
|Twelve months ended December 31, |  |                |      |   |      |   |       |      |  |   |      |  
|Gross Unrealized Gains           |  | $              | 524  |   |      | $ | 1,109 |      |  | $ | 548  |  
|Gross Unrealized Losses          |  |                | (643 | ) |      |   | (31   | )    |  |   | (154 | )
|                                 |  |                |      |   |      |   |       |      |  |   |      |  
|Net Unrealized (Losses) Gains    |  | $              | (119 | ) |      | $ | 1,078 |      |  | $ | 394  |  
|                                 |  |                |      |   |      |   |       |      |  |   |      |  



Net realized gains on investments for
the twelve months ended December 31, 2004, 2003, and 2002 were approximately $360,000, $606,000 and $390,000, respectively.



The amortized cost and estimated fair value of held to maturity investments by contractual maturities for the years ended December 31, 2004 and 2003 are as follows:



|                             |  |                   |       |                   |   |       |  |            |       |  |   |      
|---------------------------- |  | ----------------- | ----- | ----------------- | - | ----- |  | ---------- | ----- |  | - | -----
|                             |  | December 31, 2004 |       | December 31, 2003
|                             |  | Cost              |       | Fair Value        |   | Cost  |  | Fair Value
|                             |  | (In Thousands)   
|Maturing in Less than 1 Year |  | $                 | 7,573 |                   | $ | 7,545 |  | $          | 4,553 |  | $ | 4,821
|Maturing between 1-5 Years   |  |                   |      |                   |   |      |  |            | 1,504 |  |   | 1,232
|                             |  |                   |       |                   |   |       |  |            |       |  |   |      
|Total                        |  | $                 | 7,573 |                   | $ | 7,545 |  | $          | 6,057 |  | $ | 6,053
|                             |  |                   |       |                   |   |       |  |            |       |  |   |      



LONG-TERM MARKETABLE SECURITIES



Long-term Marketable Securities consist primarily of Russian
equity and fixed income securities, including Russian corporate bonds held in the portfolio of the PIOGLOBAL Real Estate Investment Fund. In addition, certain subsidiaries of the Company maintain investments in the unit funds managed by Closed
Joint-Stock Company PIOGLOBAL Asset Management (PIOGLOBAL Asset Management).



Equity securities, corporate bonds and investments in unit funds and trust management are classified as available-for-sale and recorded at fair value
pursuant to SFAS No. 115. In this regard, such securities are recorded in long-term marketable securities based on quoted prices on the Russian Trading System. The cost of securities sold is based on the weighted-average method. Dividend income
received on investments is recognized on a cash basis. Unrealized gains and unrealized losses for equity securities, corporate bonds and the unit fund investments are recorded net of deferred taxes and minority interest in other comprehensive
income.



Set forth in the following tables are the balances of
long-term marketable securities at December 31, 2004 and December 31, 2003 as well as cumulative unrealized gains and losses, before deferred taxes and minority interest, recorded in other comprehensive income at December 31, 2004 and December 31,
2003:



Balance of Long-term Marketable Securities Classified as Available for
Sale



|                            |  |                   |        |                   |   |       
|--------------------------- |  | ----------------- | ------ | ----------------- | - | ------
|                            |  | December 31, 2004 |        | December 31, 2003
|                            |  | (In Thousands)   
|Equity Securities           |  | $                 | 13,333 |                   | $ | 10,206
|Corporate Bonds             |  |                   | 5,043  |                   |   | 7,599 
|Unit Funds                  |  |                   | 1,622  |                   |   | 1,392 
|                            |  |                   |        |                   |   |       
|Total Marketable Securities |  | $                 | 19,998 |                   | $ | 19,197
|                            |  |                   |        |                   |   |       



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##### Table of Contents

Cumulative Unrealized Gain and Loss Recorded in Other Comprehensive Income



|                      |  |                   |       |   |                   |   |       |  
|--------------------- |  | ----------------- | ----- | - | ----------------- | - | ----- | -
|                      |  | December 31, 2004 |       |   | December 31, 2003 |  
|                      |  | (In Thousands)    |      
|Equity Securities     |  |                   |       |   |                   |   |       |  
|Gross Unrealized Gain |  | $                 | 7,276 |   |                   | $ | 5,543 |  
|Gross Unrealized Loss |  |                   | (115  | ) |                   |   | (9    | )
|                      |  |                   |       |   |                   |   |       |  
|Net Unrealized Gain   |  | $                 | 7,161 |   |                   | $ | 5,534 |  
|                      |  |                  
|Corporate Bonds       |  |                   |       |   |                   |   |       |  
|Gross Unrealized Gain |  | $                 | 329   |   |                   | $ | 394   |  
|Gross Unrealized Loss |  |                   |      |   |                   |   |      |  
|                      |  |                   |       |   |                   |   |       |  
|Net Unrealized Gain   |  | $                 | 329   |   |                   | $ | 394   |  
|                      |  |                  
|Unit Funds            |  |                   |       |   |                   |   |       |  
|Gross Unrealized Gain |  | $                 | 992   |   |                   | $ | 789   |  
|Gross Unrealized Loss |  |                   |      |   |                   |   |      |  
|                      |  |                   |       |   |                   |   |       |  
|Net Unrealized Gain   |  | $                 | 992   |   |                   | $ | 789   |  



The amortized cost and estimated fair
value of available for sale Russian corporate bonds by contractual maturities for the years ended December 31, 2004 and 2003 are as follows:



|                             |  |                   |       |                   |   |       |  |           |       |  |   |      
|---------------------------- |  | ----------------- | ----- | ----------------- | - | ----- |  | --------- | ----- |  | - | -----
|                             |  | December 31, 2004 |       | December 31, 2003
|                             |  | Cost              |       | FairValue         |   | Cost  |  | FairValue
|                             |  | (In Thousands)   
|Maturing in Less than 1 Year |  | $                 | 2,126 |                   | $ | 2,299 |  | $         | 4     |  | $ | 43   
|Maturing between 1-5 Years   |  |                   | 2,588 |                   |   | 2,744 |  |           | 7,200 |  |   | 7,557
|                             |  |                   |       |                   |   |       |  |           |       |  |   |      
|Total                        |  | $                 | 4,714 |                   | $ | 5,043 |  | $         | 7,204 |  | $ | 7,600
|                             |  |                   |       |                   |   |       |  |           |       |  |   |      



LONG TERM INVESTMENTS



Long term investments consist of Russian equity securities that do not have
readily determinable fair values. These investments are stated at cost with adjustments for other than temporary impairment in the accompanying Consolidated Balance Sheets.



BUILDING



The building represents an office building in Moscow, Russia, the Meridian Commercial Tower. The Meridian Commercial Tower is carried at cost and is being
depreciated on a straight-line basis over 40 years. Building improvements are depreciated on a straight-line basis over either five or ten years.



GOODWILL



As a result of Pioglobal Omega, L.L.C.s (Pioglobal Omega) acquisition of the International Finance Corporations (IFC) 18.35% minority interest in Pioglobal First Russia in 2002, the
Company recorded goodwill of approximately $300,000. The Company acquired its Russian real estate management and investment management operations in 1995



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##### Table of Contents

for approximately $20,000,000. At inception, the excess of the purchase price over the estimated fair value of the assets
approximated $2,858,000. The Company recorded goodwill amortization expense of approximately $1,905,000 through December 31, 2001. On January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets and no longer
amortizes goodwill, but rather tests for impairment annually at the reporting unit level.



VALUATION OF FINANCIAL INSTRUMENTS



Financial instruments consist primarily of cash and cash equivalents, marketable securities, and accounts payable. The Company considers available market quotations when estimating fair value of financial instruments. Except for
investments, the carrying values of the Companys financial instruments approximate fair value.



Marketable securities, which are recorded pursuant to SFAS No. 115, primarily consist of Russian equity securities and Russian corporate bonds
characterized as available-for-sale and recorded at fair value, foreign government bonds characterized as trading and recorded at fair value, and United States treasury bills characterized as held-to-maturity and recorded at cost.



At December 31, 2004 and 2003, the carrying value of the United States
treasury bills, which are recorded in cash and cash equivalents and short-term marketable securities was approximately $8,292,000 and $7,161,000, respectively. Based on available market quotations, the carrying value of the United States treasury
bills at December 31, 2004, exceeded their fair value by approximately $30,000, which is comprised of gross unrecognized holding losses of approximately $30,000. Based on available market quotations, the fair value of the United States treasury
bills at December 31, 2003 exceeded their carrying value by approximately $23,000, which is comprised of gross unrecognized holding gains of approximately $30,000 and gross unrecognized holding losses of approximately $7,000.



FOREIGN CURRENCY TRANSLATION



Although the Companys operations are conducted in Russia, the Company transacts the majority of its business in Russia
in United States dollars, and as a result, the functional currency used for the Companys Russian subsidiaries is currently the United States dollar. For those entities, the translation gains and losses that result from remeasuring into the
United States dollar for reporting purposes are included in the accompanying Consolidated Statements of Operations. For the year ended December 31, 2004 and 2003, net foreign currency gains in the Consolidated Statement of Operations were
approximately $918,000 and $639,000, respectively. Net foreign currency losses in the Statement of Operations were approximately $371,000 in 2002.



CONCENTRATION OF RISK



The Companys operations are generally concentrated in Russia. The Company does not maintain political risk insurance for any of its businesses.



RESTATEMENTS



On July 15, 2005, the Company determined that it will restate its consolidated financial statements for the years ended December 31, 2004,
2003, and 2002 to include in Note 3 to such financial statements certain previously omitted lease-related disclosures required by SFAS 13. In addition, on August 15, 2005, the Company determined that it will restate its Consolidated Statement of
Cash Flows for the years ended December 31, 2004, 2003, and 2002 to properly reflect held to maturity securities (cash flow decreases of $1,512,000 and $929,000 in 2004 and 2003, respectively, and an increase of $6,700,000 in 2002) in Cash Flows
from Investing Activities rather than Cash Flows from Operating Activities and trading securities (cash flow increases of $559,000, $1,081,000 in 2004, 2003, respectively and a decrease of $265,000 in 2002) in Cash Flows from Operating Activities
rather than Cash Flows from Investing Activities pursuant to SFAS 115. In addition, the classification of restricted cash has also been revised to properly reflect changes therein as Cash Flows from Investing Activities rather than Cash Flows from
Financing Activities.



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##### Table of Contents

The net effect of the foregoing restatements on Cash Flows from Operating Activities, Cash Flows from Investing
Activities and Cash Flows from Financing Activities for 2004, 2003, and 2002 from the results for such periods previously reported is set forth in the following table:



|                                                   |  |                |         |   |      |   |         |      |  |   |         |  
|-------------------------------------------------- |  | -------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                   |  | 2004           |         |   | 2003 |   |         | 2002 | 
|                                                   |  | (in Thousands) |        
|Cash Flow from Operating Activities as reported    |  | $              | (5,671  | ) |      | $ | (10,852 | )    |  | $ | (4.147  | )
|Cash Flow from Operating Activities as restated    |  |                | (3,600  | ) |      |   | (8,842  | )    |  |   | (11,112 | )
|                                                   |  |                |         |   |      |   |         |      |  |   |         |  
|Net Change in Cash Flows from Operating Activities |  | $              | 2,071   |   |      | $ | 2,010   |      |  | $ | (6,965  | )
|                                                   |  |                |        
|Cash Flow from Investing Activities as reported    |  | $              | 1,393   |   |      | $ | 31,558  |      |  | $ | 18,473  |  
|Cash Flow from Investing Activities as restated    |  |                | (7,422  | ) |      |   | 32,116  |      |  |   | 24,219  |  
|                                                   |  |                |         |   |      |   |         |      |  |   |         |  
|Net Change in Cash Flows from Investing Activities |  | $              | (8,815  | ) |      | $ | 558     |      |  | $ | 5,746   |  
|                                                   |  |                |        
|Cash Flow from Financing Activities as reported    |  | $              | (11,925 | ) |      | $ | (9,130  | )    |  | $ | (6,505  | )
|Cash Flow from Financing Activities as restated    |  |                | (5,181  | ) |      |   | (11,698 | )    |  |   | (5,286  | )
|                                                   |  |                |         |   |      |   |         |      |  |   |         |  
|Net Change in Cash Flows from Financing Activities |  | $              | 6,744   |   |      | $ | (2,568  | )    |  | $ | 1,219   |  
|                                                   |  |                |        
|Net Change in Cash and Cash Equivalents            |  | $              |        |   |      | $ |        |      |  | $ |        |  



(3) CONCENTRATION OF REVENUES AND
LEASING ARRANGEMENTS (RESTATED)



A significant portion of the
Companys revenues are concentrated in the PIOGLOBAL Real Estate Investment Fund and consist of rental revenues earned from its principal asset, Meridian Commercial Tower. Rental revenues were approximately 64%, 70% and 79% of total revenues in
fiscal 2004, 2003, and 2002, respectively.



The Meridian
Commercial Tower is an 18 story, 20,707 square meter office building in Moscow, Russia. The Meridian Commercial Tower is managed by PREA, L.L.C. and occupied primarily by United States and European corporate tenants or their Russian subsidiaries.
PREA, L.L.C. leases the building from the PIOGLOBAL Real Estate Investment Fund under a master lease agreement and in turn, subleases the premises to tenants. Generally, the tenant subleases have terms ranging from approximately eleven months to
approximately five years nine months and annual base rent ranging from approximately $167 to approximately $600 per square meter. In addition to base rent, each tenant pays a pro rata share of the operating expenses relating to the building,
including utilities, maintenance expenses, management expenses (including fees payable to PREA, L.L.C. for management of the building pursuant to the master lease agreement with PIOGLOBAL Real Estate Investment Fund), license fees, insurance
premiums and taxes, other than income taxes relating to PREA, L.L.C. In addition, a small number of subtenants also pay additional contingent rent based on gross revenues and other financial measures. Rent and operating expenses are typically
payable quarterly at the beginning of the applicable calendar quarter.



The following is a schedule by year of minimum future rental income on noncancellable operating subleases as of December 31, 2004:





|                                   |  |   |           
|---------------------------------- |  | - | ----------
|Year Ending December 31,           |  |   |           
|2005                               |  | $ | 5,835,588 
|2006                               |  |   | 4,048,386 
|2007                               |  |   | 3,154,448 
|2008                               |  |   | 2,074,450 
|2009                               |  |   | 829,653   
|Beyond                             |  |   | 60,900    
|                                   |  |   |           
|Total minimum future rental income |  | $ | 16,003,425
|                                   |  |   |           



Total minimum future rental income
does not include contingent rental income based on a percentage of gross revenues which may be received under a sublease for the rental of cafeteria space or contingent rental income based on a percentage of billed fees for telephone services and a
fixed amount per installed phone line which may be received under a sublease for the rental of roof space for an aerial tower.



Contingent rental income for the twelve months ended December 31, 2004, 2003, and 2002 was approximately $173,000, $176,000 and $170,000, respectively.



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(4) EARNINGS (LOSS) PER SHARE



Basic earnings (loss) per share (EPS) is computed by dividing reported earnings by weighted average shares outstanding. There are currently
no potentially dilutive securities.



(5) BUILDING



The cost and the accumulated depreciation for the building are as follows:



|                         |  |                |        |   |      |   |        |  
|------------------------ |  | -------------- | ------ | - | ---- | - | ------ | -
|                         |  | 2004           |        |   | 2003 |  
|                         |  | (IN THOUSANDS) |       
|Building Cost            |  | $              | 26,709 |   |      | $ | 26,709 |  
|Building Improvements    |  |                | 389    |   |      |   |       |  
|Accumulated Depreciation |  |                | (5,372 | ) |      |   | (4,674 | )
|                         |  |                |        |   |      |   |        |  
|                         |  | $              | 21,726 |   |      | $ | 22,035 |  
|                         |  |                |        |   |      |   |        |  



(6) Fixed Assets



Furniture and fixtures are classified as other long term assets. The cost
and accumulated depreciation for furniture and fixtures are as follows:



|                         |  |                |       |   |      |   |       |  
|------------------------ |  | -------------- | ----- | - | ---- | - | ----- | -
|                         |  | 2004           |       |   | 2003 |  
|                         |  | (IN THOUSANDS) |      
|Furniture and Fixtures   |  | $              | 1,670 |   |      | $ | 1,358 |  
|Accumulated Depreciation |  |                | (755  | ) |      |   | (594  | )
|                         |  |                |       |   |      |   |       |  
|                         |  | $              | 915   |   |      | $ | 764   |  
|                         |  |                |       |   |      |   |       |  



Furniture and fixtures are depreciated
on a straight-line basis over five years. Depreciation expense was approximately $173,000, $168,000, and $92,000 for the years ended December 31, 2004, 2003 and 2002, respectively.



(7) NOTE RECEIVABLE AND NOTE PAYABLE



In May 2000, Goldfields II sold its gold mining operations in Ghana to Ashanti Goldfields Teberebie Limited (Ashanti) for an $18,800,000 base
purchase price plus additional payments of up to $5,000,000, contingent upon the market price of gold and productivity of the Ghanaian gold mine (the Purchase Agreement). On June 19, 2000, $5,000,000 of the base purchase price was paid
to Goldfields II in cash and $13,800,000 of the base purchase price was paid in the form of a non-interest bearing promissory note.



Effective March 19, 2003, Goldfields II and Ashanti executed an amendment to the Purchase Agreement. Pursuant to the amendment, Ashanti agreed to release
Goldfields II from its obligation to indemnify Ashanti for breach of representations and warranties relating to tax and environmental matters contained in the Purchase Agreement in exchange for a $1,100,000 reduction in the amount remaining due from
Ashanti to Goldfields II under the Purchase Agreement and related promissory note. Accordingly, under the amended Purchase Agreement and related promissory note, Ashanti made a final payment to the Company in the amount of $4,700,000 during the
first quarter of 2004 and has paid the Company $12,700,000 due under the promissory note. The Company adjusted the carrying value of the note receivable during the first quarter of 2003 by approximately $191,000 as a result of the amendment. The
Company recorded the adjustment in other income (expense) in the Consolidated Statement of Operations.



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##### Table of Contents

In connection with the release of Goldfields II from its indemnification obligations to Ashanti, Pioneer
and the Company entered into an amendment to the Distribution Agreement. Under the Distribution Agreement, the Company was previously obligated to return to Pioneer, in 2005, the lesser of $5,000,000 or the actual proceeds received by Goldfields II
from Ashanti under the Purchase Agreement less any indemnification claims paid under the Purchase Agreement. Pursuant to the amendment, Pioneer agreed to accept $3,750,000 in satisfaction of the foregoing obligation, if the amount was paid on or
before March 31, 2003. The Company paid $3,750,000 to Pioneer on March 20, 2003. As a result of the foregoing reduction in, and satisfaction of, the note payable to Pioneer, the Company recorded a gain of $1,250,000 during the first quarter of 2003,
which is reflected in the Consolidated Statement of Operations as a component of other income (expense).



Pursuant to the Purchase Agreement, Ashanti agreed to pay Goldfields II additional supplemental payments of $250,000 per calendar quarter from April 1,
2001 through March 31, 2006, contingent on the market price of gold and productivity of the Ghanaian gold mine. The Company earned its first supplemental payment of $250,000 for the quarter ending March 31, 2003. On April 25, 2003, Goldfields II
agreed to sell its right to receive the remaining twelve (12) additional supplemental payments from Ashanti to HSBC Bank in exchange for one cash payment of $875,000. The transaction was consummated on April 30, 2003 and, as a result, the Company
recorded a gain of $875,000 in the second quarter of 2003, which is reflected in the Consolidated Statement of Operations as a component of other income (expense).



(8) DIVIDEND PAYABLE



The dividend payable of approximately $13,035,000 and approximately $6,291,000 at December 31, 2004 and December 31, 2003, respectively, represents a
payable to minority shareholders of PIOGLOBAL Real Estate Investment Fund. Approximately $13,035,000 and approximately $6,291,000 has been set aside by PIOGLOBAL Real Estate Investment Fund as of December 31, 2004 and December 31, 2003,
respectively, to satisfy this liability and is classified as restricted cash.



(9) OTHER EXPENSES



Other expenses consist of the
following:



|                                                                                        |  |                |       |   |      |   |       |      |  |   |      
|--------------------------------------------------------------------------------------- |  | -------------- | ----- | - | ---- | - | ----- | ---- |  | - | -----
|                                                                                        |  | DECEMBER 31,  
|                                                                                        |  | 2004           |       |   | 2003 |   |       | 2002
|                                                                                        |  | (IN THOUSANDS)
|Insurance                                                                               |  | $              | 630   |   |      | $ | 591   |      |  | $ | 517  
|Other Taxes                                                                             |  |                | 2,389 |   |      |   | 1,571 |      |  |   | 1,535
|Professional Services                                                                   |  |                | 930   |   |      |   | 920   |      |  |   | 1,349
|Advertising Expense                                                                     |  |                | 1,595 |   |      |   | 965   |      |  |   | 973  
|Selling Expense                                                                         |  |                | 789   |   |      |   | 668   |      |  |   | 762  
|Realized (Gains) Losses on Foreign Currency Transactions and Translation (Gains) Losses |  |                | (918  | ) |      |   | (639  | )    |  |   | 371  
|Telephone and Data Processing                                                           |  |                | 214   |   |      |   | 224   |      |  |   | 182  
|Directors Fees                                                                          |  |                | 174   |   |      |   | 199   |      |  |   | 144  
|Travel, Subscriptions, and Dues                                                         |  |                | 142   |   |      |   | 109   |      |  |   | 133  
|Other                                                                                   |  |                | 306   |   |      |   | 228   |      |  |   | 538  
|                                                                                        |  |                |       |   |      |   |       |      |  |   |      
|Total Other Expenses                                                                    |  | $              | 6,251 |   |      | $ | 4,836 |      |  | $ | 6,504
|                                                                                        |  |                |       |   |      |   |       |      |  |   |      



(10) INCOME TAXES



The results of operations of certain subsidiaries of the Company prior to
the Spin-off were included in the United States federal consolidated tax returns of Pioneer. In the Companys Consolidated Financial Statements, the provision for income taxes includes a provision for its subsidiary operations calculated on the
separate-return basis in accordance with the requirements of SFAS No. 109, Accounting for Income Taxes. The separate return method allocates current and deferred taxes to members of a group by applying the provisions of SFAS No. 109 to
each member as if it were a separate taxpayer.



F-16



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##### Table of Contents

The following is a summary of the components of income (loss) from continuing operations before provision
for income taxes and minority interest for financial reporting purposes:



|         |  |                |        |   |      |   |        |      |  |   |       |  
|-------- |  | -------------- | ------ | - | ---- | - | ------ | ---- |  | - | ----- | -
|         |  | 2004           |        |   | 2003 |   |        | 2002 | 
|         |  | (IN THOUSANDS) |       
|Domestic |  | $              | (1,548 | ) |      | $ | (1,202 | )    |  | $ | (847  | )
|Foreign  |  |                | 575    |   |      |   | 25,049 |      |  |   | 9,725 |  
|         |  |                |        |   |      |   |        |      |  |   |       |  
|         |  | $              | (973   | ) |      | $ | 23,847 |      |  | $ | 8,878 |  
|         |  |                |        |   |      |   |        |      |  |   |       |  



The Company is a Bermuda limited
duration company and is not subject to taxation in Bermuda. The components of the provision for income taxes on continuing operations consist of:



|                 |  |                |       |      |   |       |  |   |      
|---------------- |  | -------------- | ----- | ---- | - | ----- |  | - | -----
|                 |  | 2004           |       | 2003 |   | 2002 
|                 |  | (IN THOUSANDS)
|Current Foreign  |  | $              | 632   |      | $ | 6,034 |  | $ | 3,542
|Deferred Foreign |  |                | 241   |      |   | 376   |  |   | 324  
|Current Domestic |  |                | 1,049 |      |   | 60    |  |   |     
|                 |  |                |       |      |   |       |  |   |      
|                 |  | $              | 1,922 |      | $ | 6,470 |  | $ | 3,866
|                 |  |                |       |      |   |       |  |   |      



Because of its
classification as a partnership for United States federal income tax purposes, Harbor Global itself is not subject to United States federal income tax and hence the effective tax rate is zero. However, on April 12, 2004 Pioglobal First Russia
converted from a Delaware corporation into a Delaware limited liability company. As a result, the Company anticipates that it will indirectly incur a United Stated federal income tax liability of approximately $1,049,000, which is reported in the
provision for income taxes in the Consolidated Statement of Operations. Otherwise, the income tax provisions and the deferred taxes included in the accompanying Consolidated Financial Statements relate primarily to the Companys corporate
subsidiaries that are located in Russia. The Companys venture capital investments held in Poland are primarily conducted through partnerships that are not taxable.



The tax effects of significant temporary differences are as follows:



|                                                                                              |  |                |       |   |      |   |       |  
|--------------------------------------------------------------------------------------------- |  | -------------- | ----- | - | ---- | - | ----- | -
|                                                                                              |  | 2004           |       |   | 2003 |  
|                                                                                              |  | (IN THOUSANDS) |      
|Non-Current Deferred Tax Asset                                                                |  | $              | 347   |   |      | $ | 337   |  
|Less Valuation Allowance                                                                      |  |                | (347  | ) |      |   | (337  | )
|                                                                                              |  |                |       |   |      |   |       |  
|Net Non-Current Deferred Tax Asset                                                            |  |                |      |   |      |   |      |  
|                                                                                              |  |               
|Current Deferred Tax Liability on Net Unrealized Gains on Short Term Marketable Securities    |  | $              | 241   |   |      |   | 376   |  
|Non-Current Deferred Tax Liability on Net Unrealized Gains on Long term Marketable Securities |  |                | 2,039 |   |      |   | 1,613 |  
|                                                                                              |  |                |       |   |      |   |       |  
|Net Deferred Tax Liability                                                                    |  | $              | 2,280 |   |      | $ | 1,989 |  
|                                                                                              |  |                |       |   |      |   |       |  



The non-current
deferred tax asset arises primarily from the difference between book and tax depreciation of the Meridian Commercial Tower. Due to market uncertainties inherent in operating in Russia, a valuation allowance has been established equal to the value of
the non-current deferred tax asset.



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##### Table of Contents

(11) MINORITY INTEREST



The Companys minority interest liability includes the interests of the other equity holders of PIOGLOBAL Real Estate Investment Fund, an approximate
52% owned subsidiary of the Company. The liability is recorded based on the net book value at the balance sheet date. As of December 31, 2004 and 2003, the Companys minority interest liability in PIOGLOBAL Real Estate Investment Fund was
approximately $27,109,000 and $32,453,000, respectively.



(12) RELATED PARTY
TRANSACTIONS



On July 10, 2003, the Company entered into an
amended and restated administration and liquidation agreement with Calypso Management, pursuant to which Calypso Management manages the liquidation of the Company and operates the Companys assets pending their liquidation. Calypso Management
is owned and operated by Stephen G. Kasnet, the Companys Chief Executive Officer and Donald H. Hunter, the Companys Chief Financial Officer. Mr. Kasnet is Calypso Managements President and Chief Executive Officer and Mr. Hunter is
Calypso Managements Chief Operating Officer and Chief Financial Officer. Calypso Management performs its services pursuant to operating plans and budgets approved by the Harbor Global Board of Directors in accordance with the amended and
restated administration and liquidation agreement.



The amended
and restated administration and liquidation agreement provides that the Company pays the operating expenses of Calypso Management incurred in connection with the provision of services to the Company.



In addition, as compensation for its provision of services to the Company,
Calypso Management receives a portion of the total net proceeds distributed from the liquidation of the Companys assets, generally according to the following schedule:



| |  | with respect to the first $36 million in net proceeds to be distributed, Calypso Management shall receive a payment equal to 10% of such net proceeds;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | with respect to the next $72 million in net proceeds to be distributed, Calypso Management shall receive a payment equal to 7.5% of such net proceeds; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | with respect to any additional net proceeds to be distributed, Calypso Management shall receive a payment equal to 10% of such net proceeds.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------



Net proceeds do not include any unexpended portion of the approximate
$19,100,000 contributed by Pioneer to Harbor Global at the time of the Spin-off. However, because Harbor Global entered into a transaction in which it was released from its indirect obligation to fulfill its existing capital commitment of
approximately $5.4 million to the Polish Real Estate Fund, $5.4 million of the amount contributed by Pioneer is included in the calculation of net proceeds. In addition, the proceeds received by Goldfields II in connection with the sale of its
Ghanaian gold mine to Ashanti are not subject to the preceding fee schedule. Instead, Calypso Management will receive only 5% of the Ashanti proceeds that are distributed to shareholders.



In addition, if an individual, entity or group acquires at least 80% of the Companys outstanding common shares or
Harbor Global is a party to a merger, reorganization or similar business combination and the shareholders immediately prior to such transaction cease to own at least 50% of the outstanding common shares and voting power entitled to vote generally in
the election of directors of the resulting entity (a Deemed Sale), Calypso Management is entitled to receive a portion of the consideration, in accordance with the compensation schedule described above, as would be received by all
shareholders if all of the outstanding common shares were sold at the valuation of Harbor Global based on the per share consideration received by each shareholder who sold, exchanged or otherwise disposed of shares in the transaction. Also, in the
event of a change in control (as defined in the agreement) coupled with a material change in the engagement status of Calypso Management or the employment status of its principal officers, Calypso Management will be paid a cash amount equal to a
portion of the value of the underlying assets, in accordance with the compensation schedule described above, with such value determined pursuant to a predetermined valuation schedule.



F-18



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##### Table of Contents

With respect to ongoing asset sales, Harbor Global accrues management fees at the earlier of (1) the
formal declaration by the Board of Directors of a distribution and (2) the time when a distributable amount is estimable following the sale or liquidation of an asset. Harbor Global will also accrue management fees when a distribution to Calypso
Management is triggered following a Deemed Sale of the Company or a change in control as defined in the amended and restated administration and liquidation agreement.



The Company incurred management fee expenses of approximately $2,573,000, $2,548,000 and $2,796,000 during 2004, 2003 and
2002, respectively related to the reimbursement of expenses. Of this management fee, approximately $739,000 and $708,000 was outstanding at December 31, 2004 and 2003, respectively.



During 2004, the Company incurred additional management fee expense of approximately $334,000 in connection with the
distribution paid to shareholders on November 15, 2004. During 2003, the Company incurred additional management fee expense of approximately $583,000 in connection with the distribution paid to shareholders on June 27, 2003.



On October 24, 2004, 2003, and 2002, the Company issued 1,500 shares of its
common stock to each of its directors pursuant to, and in accordance with, the Companys Amended and Restated Non-Employee Director Share Plan. As a result the Company recorded a compensation charge to the Consolidated Statement of Operations
of approximately $59,000, $59,000 and $44,000 for the years ended December 31, 2004, 2003 and 2002, respectively. Pursuant to the plan, on each anniversary of October 24, 2000, the Spin-Off date, each director of the Company who is not an employee
will be granted and issued 1,500 fully vested common shares in consideration of each non-employee directors future service as a director.



Calypso Management pays the rent on behalf of the Company for its offices at One Faneuil Hall Marketplace, Boston, Massachusetts and is reimbursed by the
Company pursuant to the administration and liquidation agreement.



PREA leases the Meridian Commercial Tower from PIOGLOBAL Real Estate Investment Fund under a master lease agreement and in turn, subleases the premises to tenants. PREA pays PIOGLOBAL Real Estate Investment Fund an amount equal to gross
revenues less building operating expenses, the PREA property management fee and any value added taxes or similar taxes. The master lease agreement between PIOGLOBAL Real Estate Investment Fund and PREA expires in 2021.



Under a management agreement between PIOGLOBAL Asset Management and PIOGLOBAL
Real Estate Investment Fund, PIOGLOBAL Asset Management provides portfolio management services to PIOGLOBAL Real Estate Investment Fund for an annual fee of 5% of assets net of any value added taxes or similar taxes.



(13) COMMITMENTS AND CONTINGENCIES



Operating lease expenses were approximately $748,000, $823,000, and $610,000
for the years ended December 31, 2004, 2003, and 2002, respectively. The table below provides information about future operating lease commitments having initial or remaining non cancelable terms in excess of one year.





|                         |  |   |          
|------------------------ |  | - | ---------
|Year Ending December 31, |  |   |          
|2005                     |  | $ | 639,771  
|2006                     |  |   | 429,949  
|2007                     |  |   | 113,000  
|2008                     |  |   | 49,610   
|2009                     |  |   | 49,610   
|Beyond                   |  |   | 49,610   
|                         |  |   |          
|                         |  | $ | 1,331,550
|                         |  |   |          



F-19



---

##### Table of Contents

The Company and its subsidiaries conduct their principal operations from leased premises with approximately 3,497 square
feet at One Faneuil Hall Marketplace, Boston, Massachusetts. The lease commenced on November 15, 2000 at a rate of $160,862 per year and will expire on October 24, 2005. The Company has the right to renew its lease for three one year periods at an
annual rental rate for such renewal terms of no less than $160,862 per year, subject to increase to a maximum of the then current market rental rate for such premises, plus the Companys pro rata share of any increase in operating expenses and
real estate taxes for the premises.



(14) RESTRICTED UNIT AWARD



Effective September 24, 2003, Pioglobal First Russia awarded restricted
units in an aggregate amount equivalent to ten percent of the issued and outstanding shares of Pioglobal First Russia to two officers of Pioglobal First Russias wholly owned subsidiary, Closed Joint-Stock Company PIOGLOBAL Asset
Management (PIOGLOBAL Asset Management). Each officer was fully vested with respect to the award. For the year ended December 31, 2003, Pioglobal First Russia recorded compensation expense of $541,000 in connection with the
restricted stock awards. On of April 15, 2004, Pioglobal First Russia repurchased all of the membership interest of one of the officers who resigned from PIOGLOBAL Asset Management for $308,500. These amounts are included in salary and benefit
expenses on the Consolidated Statement of Operations.



Effective May 19, 2004, Pioglobal First Russia granted restricted units in Pioglobal First Russia to three officers of PIOGLOBAL Asset Management. Under the unit agreements, Pioglobal First Russia awarded, at no cost to the officers, an
aggregate number of units equivalent to approximately 4% of the issued and outstanding units of Pioglobal First Russia, on a fully diluted basis. Upon the full vesting of these awards, the Company will continue to own approximately 91% of the
outstanding units in Pioglobal First Russia. Such units are required to be issued over a period of three years beginning on May 19, 2004 and ending on December 31, 2006, according to the schedules set forth in the respective unit agreements, if the
respective officer continues to be employed by PIOGLOBAL Asset Management as a full-time employee. As of December 31, 2004, 3% of such restricted units had fully vested. The fair value of the units issued during 2003 and 2004 were calculated using
the valuation services of an independent third party as of December 31, 2004. Accordingly, Pioglobal First Russia recorded compensation expense of approximately $169,000 in connection with the valuation of the restricted unit awards. This amount is
included in salary and benefit expense in the Consolidated Statement of Operations.



(15) DISCONTINUED OPERATIONS



On February 5, 2002,
the Companys Board of Directors approved the disposition of the Russian timber operation. Accordingly, the Russian timber operation was separated from the results of continuing operations and was reported as a discontinued operation commencing
in 2001. Pursuant to Accounting Principles Board Opinion No. 30, Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions (APB No. 30), the Company recorded the disposal effective December 31, 2001. The Company adopted SFAS No. 144 Accounting for the Impairment or Disposal of Long Lived Assets (SFAS No. 144),
effective January 1, 2002, which supersedes APB No. 30. The adoption of SFAS No. 144 did not have material impact on the Companys financial statements. Prior to 2001, the Company reported its Russian timber operations as a separate segment.



On April 22, 2002, Harbor Globals wholly owned
subsidiary, Pioneer Forest, Inc. (Pioneer Forest), entered into an agreement for the sale of its Russian timber business conducted through Closed Joint-Stock Company Forest-Starma (Forest-Starma). On May 28, 2002,
Pioneer Forest sold its entire interest in Pioglobal Forest, L.L.C. (Pioglobal Forest), the sole shareholder of Forest-Starma, to a British Virgin Islands company for an aggregate purchase price of $7,550,000, of which $5,550,000 was
paid in cash at the closing and $2,000,000 was paid in the form of a one-year promissory note. The remaining $2,000,000 was received, and the promissory note paid in full, on June 3, 2003.



For the year ended December 31, 2002, the Company recorded a gain of
approximately $424,000 on the disposal of the Russian timber operations.



F-20



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##### Table of Contents

(16) INDEMNIFICATION CONTRACTS



Under the Distribution Agreement, Harbor Global agreed to indemnify Pioneer for liabilities, other than tax liabilities, incurred by Pioneer relating
to the businesses or operations of the Harbor Global assets. Additionally, under a tax separation agreement between Harbor Global and Pioneer, generally, Harbor Global agreed to indemnify Pioneer for tax liabilities relating to the Harbor Global
businesses. Currently, there are no suits pending that would require payment by Harbor Global to Pioneer under the indemnification provisions of the Distribution Agreement or tax separation agreement.



(17) FINANCIAL INFORMATION BY BUSINESS SEGMENT



In accordance with SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, the Company presents its segment information for continuing operations using the management approach. The management approach is based on the way that management organizes the segments within a company for
making operating decisions and assessing performance. The Companys operating segments are organized around services and products provided, as well as geographic regions.



Previously the Company reported its Russian timber operations as a separate segment. Due to the sale of the Russian timber
operations segment, these results have been segregated from continuing operations. The segment disclosures previously reported have been restated to reflect the Companys continuing segments.



The Company derives its revenues from the following products and services by
segment:



| |  | Russian Real Estate Management and Investment Management Operations: investment advisory and management services
| | - | ----------------------------------------------------------------------------------------------------------------



| |  | Real Estate Management Operations: real estate management services including property management and advisory services
| | - | ----------------------------------------------------------------------------------------------------------------------



| |  | Other
| | - | -----



SEGMENT DISCLOSURES



|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |        |   |  |   |        |  
|----------------------------------------------------------------------------------- |  | ------------------------------------------------------------------- | ------ | - | --------------------------------- | - | ----- | ----- |  | - | ------ | - |  | - | ------ | -
|IN THOUSANDS AS OF AND FOR THE YEAR
ENDED DECEMBER 31, 2004                         |  | Russian Real Estate Management and Investment Management Operations |        |   | Real Estate Management Operations |   |       | Other |  |   | Total  |  
|Net Revenues and Sales                                                              |  | $                                                                   | 11,255 |   |                                   | $ | 1,064 |       |  | $ |       |   |  | $ | 12,319 |  
|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |        |   |  |   |        |  
|(Loss) Income before Income Taxes, Minority Interest and Equity Loss on Investments |  |                                                                     | (406   | ) |                                   |   | (765  | )     |  |   | 198    |   |  |   | (973   | )
|Income Taxes                                                                        |  |                                                                     | (1,923 | ) |                                   |   | 11    |       |  |   | (10    | ) |  |   | (1,922 | )
|Minority Interest Expense                                                           |  |                                                                     | (1,269 | ) |                                   |   |      |       |  |   |       |   |  |   | (1,269 | )
|Equity Gain on Investment                                                           |  |                                                                     |       |   |                                   |   |      |       |  |   | 156    |   |  |   | 156    |  
|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |        |   |  |   |        |  
|Net (Loss) Income                                                                   |  | $                                                                   | (3,598 | ) |                                   | $ | (754  | )     |  | $ | 344    |   |  | $ | (4,008 | )
|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |        |   |  |   |        |  
|Depreciation and Amortization                                                       |  | $                                                                   | (1,018 | ) |                                   | $ | (24   | )     |  | $ |       |   |  | $ | (1,042 | )
|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |        |   |  |   |        |  
|Total Assets                                                                        |  | $                                                                   | 82,623 |   |                                   | $ | 1,411 |       |  | $ | 10,239 |   |  | $ | 94,273 |  
|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |        |   |  |   |        |  



ENTERPRISE-WIDE
DISCLOSURES

(IN THOUSANDS)



|                                   |  |   |       
|---------------------------------- |  | - | ------
|2004                               |  |  
|Revenues from External Customers  |  |   |       
|Russia                             |  | $ | 12,319
|Other                              |  |   |      
|                                   |  |   |       
|Total                              |  | $ | 12,319
|                                   |  |   |       
|Long-lived Assets                  |  |   |       
|Russia                             |  | $ | 22,868
|Other                              |  |   | 273   
|                                   |  |   |       
|Total                              |  | $ | 23,141
|                                   |  |   |       



F-21



---

##### Table of Contents

SEGMENT DISCLOSURES



|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |       |   |  |   |         |  
|----------------------------------------------------------------------------------- |  | ------------------------------------------------------------------- | ------ | - | --------------------------------- | - | ----- | ----- |  | - | ----- | - |  | - | ------- | -
|IN THOUSANDS AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 2003                         |  | Russian Real Estate Management and Investment Management Operations |        |   | Real Estate Management Operations |   |       | Other |  |   | Total |  
|Net Revenues and Sales                                                              |  | $                                                                   | 9,151  |   |                                   | $ | 1,300 |       |  | $ | 250   |   |  | $ | 10,701  |  
|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |       |   |  |   |         |  
|Income (Loss) before Income Taxes, Minority Interest and Equity Loss on Investments |  |                                                                     | 21,748 |   |                                   |   | (412  | )     |  |   | 2,511 |   |  |   | 23,847  |  
|Income Taxes                                                                        |  |                                                                     | (6,410 | ) |                                   |   | (60   | )     |  |   |      |   |  |   | (6,470  | )
|Minority Interest Expense                                                           |  |                                                                     | (9,386 | ) |                                   |   |      |       |  |   |      |   |  |   | (9,386  | )
|Equity Loss on Investment                                                           |  |                                                                     |       |   |                                   |   |      |       |  |   | (154  | ) |  |   | (154    | )
|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |       |   |  |   |         |  
|Net Income (Loss)                                                                   |  | $                                                                   | 5,952  |   |                                   | $ | (472  | )     |  | $ | 2,357 |   |  | $ | 7,837   |  
|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |       |   |  |   |         |  
|Depreciation and Amortization                                                       |  | $                                                                   | (922   | ) |                                   | $ | (26   | )     |  | $ |      |   |  | $ | (948    | )
|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |       |   |  |   |         |  
|Total Assets                                                                        |  | $                                                                   | 91,188 |   |                                   | $ | 1,481 |       |  | $ | 7,892 |   |  | $ | 100,561 |  
|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |       |   |  |   |         |  



ENTERPRISE-WIDE
DISCLOSURES

(IN THOUSANDS)



|                                   |  |   |       
|---------------------------------- |  | - | ------
|2003                               |  |  
|Revenues from External Customers  |  |   |       
|Russia                             |  | $ | 10,451
|Other                              |  |   | 250   
|                                   |  |   |       
|Total                              |  | $ | 10,701
|                                   |  |   |       
|Long-lived Assets                  |  |   |       
|Russia                             |  | $ | 23,348
|Other                              |  |   | 666   
|                                   |  |   |       
|Total                              |  | $ | 24,014
|                                   |  |   |       



SEGMENT DISCLOSURES



|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |        |   |  |   |        |  
|----------------------------------------------------------------------------------- |  | ------------------------------------------------------------------- | ------ | - | --------------------------------- | - | ----- | ----- |  | - | ------ | - |  | - | ------ | -
|IN THOUSANDS AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 2002                         |  | Russian Real Estate Management and Investment Management Operations |        |   | Real Estate Management Operations |   |       | Other |  |   | Total  |  
|Net Revenues and Sales                                                              |  | $                                                                   | 8,606  |   |                                   | $ | 1,165 |       |  | $ |       |   |  | $ | 9,771  |  
|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |        |   |  |   |        |  
|Income (Loss) before Income Taxes, Minority Interest and Equity Loss on Investments |  |                                                                     | 7,656  |   |                                   |   | (695  | )     |  |   | 1,917  |   |  |   | 8,878  |  
|Income Taxes                                                                        |  |                                                                     | (3,861 | ) |                                   |   | (5    | )     |  |   |       |   |  |   | (3,866 | )
|Minority Interest Expense                                                           |  |                                                                     | (3,938 | ) |                                   |   |      |       |  |   |       |   |  |   | (3,938 | )
|Equity Loss on Investment                                                           |  |                                                                     |       |   |                                   |   |      |       |  |   | (415   | ) |  |   | (415   | )
|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |        |   |  |   |        |  
|Net (Loss) Income from Continuing Operations.                                       |  | $                                                                   | (143   | ) |                                   | $ | (700  | )     |  | $ | 1,502  |   |  | $ | 659    |  
|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |        |   |  |   |        |  
|Depreciation and Amortization                                                       |  | $                                                                   | (959   | ) |                                   | $ | (35   | )     |  | $ |       |   |  | $ | (994   | )
|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |        |   |  |   |        |  
|Total Assets                                                                        |  | $                                                                   | 74,023 |   |                                   | $ | 649   |       |  | $ | 23,993 |   |  | $ | 98,665 |  
|                                                                                    |  |                                                                     |        |   |                                   |   |       |       |  |   |        |   |  |   |        |  



F-22



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##### Table of Contents

ENTERPRISE-WIDE DISCLOSURES

(IN THOUSANDS)



|                                   |  |   |       
|---------------------------------- |  | - | ------
|2002                               |  |  
|Revenues from External Customers  |  |   |       
|Russia                             |  | $ | 9,771 
|Other                              |  |   |      
|                                   |  |   |       
|Total                              |  | $ | 9,771 
|                                   |  |   |       
|Long-lived Assets                  |  |   |       
|Russia                             |  | $ | 24,838
|Other                              |  |   | 820   
|                                   |  |   |       
|Total                              |  | $ | 25,658
|                                   |  |   |       



(18) SELECTED QUARTERLY FINANCIAL DATA
(unaudited)



Summarized quarterly financial data is presented
below.



|                                             |  |                              |       |   |          |   |        |          |  |   |          |   |  |   |      
|-------------------------------------------- |  | ---------------------------- | ----- | - | -------- | - | ------ | -------- |  | - | -------- | - |  | - | -----
|                                             |  | YEAR ENDED DECEMBER 31, 2004
|(IN THOUSANDS EXCEPT PER SHARE DATA)         |  | 1ST QTR.                     |       |   | 2ND QTR. |   |        | 3RD QTR. |  |   | 4TH QTR.
|Net Revenues and Sales                       |  | $                            | 3,294 |   |          | $ | 2,838  |          |  | $ | 2,653    |   |  | $ | 3,534
|Net (Loss) Income                            |  |                              | (609  | ) |          |   | (2,782 | )        |  |   | (1,233   | ) |  |   | 616  
|Basic and Diluted (Loss) Earnings per Share: |  |                              |       |   |          |   |        |          |  |   |          |   |  |   |      
|(Loss) Earnings per Share                    |  | $                            | (0.11 | ) |          | $ | (0.49  | )        |  | $ | (0.22    | ) |  | $ | 0.11 
|                                             | 
|                                             |  | YEAR ENDED DECEMBER 31, 2003
|(IN THOUSANDS EXCEPT PER SHARE DATA)         |  | 1ST QTR.                     |       |   | 2ND QTR. |   |        | 3RD QTR. |  |   | 4TH QTR.
|Net Revenues and Sales                       |  | $                            | 2,510 |   |          | $ | 2,391  |          |  | $ | 2,624    |   |  | $ | 3,176
|Net Income (Loss)                            |  |                              | 1,795 |   |          |   | 2,727  |          |  |   | (560     | ) |  |   | 3,875
|Basic and Diluted Earnings (Loss) per Share: |  |                              |       |   |          |   |        |          |  |   |          |   |  |   |      
|Earnings (Loss) per Share                    |  | $                            | 0.32  |   |          | $ | 0.48   |          |  | $ | (0.10    | ) |  | $ | 0.69 





F-23



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##### Table of Contents

INDEX TO EXHIBITS



|              |  |                                                                                                                                                                                                                                                                                                                                                               
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                   
|2.1b          |  | Form of Distribution Agreement by and among Pioneer Investment Management USA Inc., Harbor Global Company Ltd. and Harbor Global II Ltd.                                                                                                                                                                                                                      
|              | 
|2.2f          |  | Amendment No. 1 to the Distribution Agreement between Pioneer Investment Management USA Inc., Harbor Global Company Ltd. and Harbor Global II Ltd. dated March 19, 2003                                                                                                                                                                                       
|              | 
|3.1a          |  | Memorandum of Association of Harbor Global Company Ltd.                                                                                                                                                                                                                                                                                                       
|              | 
|3.2a          |  | Bye-Laws of Harbor Global Company Ltd.                                                                                                                                                                                                                                                                                                                        
|              | 
|4.1c          |  | Specimen Common Share Certificate                                                                                                                                                                                                                                                                                                                             
|              | 
|10.1a         |  | Form of Tax Separation Agreement by and among Pioneer Investment Management USA Inc., Harbor Global Company Ltd. and Harbor Global II Ltd.                                                                                                                                                                                                                    
|              | 
|10.2a         |  | Purchase Agreement dated as of May 11, 2000 by and among Ashanti Goldfields Company Limited, Pioneer Investment Management USA Inc., Pioneer Goldfields II Limited and Ashanti Goldfields
(Teberebie) Limited                                                                                                                                                 
|              | 
|10.3a         |  | Form of Promissory Note from Ashanti Goldfields Teberebie Limited to Pioneer Goldfields II Limited                                                                                                                                                                                                                                                            
|              | 
|10.4f         |  | Agreement dated March 19, 2003 between Pioneer Goldfields II Limited, Pioneer Investment Management USA Inc. and Ashanti Goldfields Company Limited.                                                                                                                                                                                                          
|              | 
|10.5g         |  | Purchase Agreement dated April 25, 2003 between Harbor Global Company Ltd., PIOGLOBAL Goldfields II Limited and HSBC Bank USA.                                                                                                                                                                                                                                
|              | 
|10.6g         |  | Assignment Agreement dated April 30, 2003 by PIOGLOBAL Goldfields II Limited in favor of HSBC Bank USA.                                                                                                                                                                                                                                                       
|              | 
|10.7g         |  | Collateral Agreement dated April 30, 2003 between PIOGLOBAL Goldfields II Limited and HSBC Bank USA.                                                                                                                                                                                                                                                          
|              | 
|10.8g         |  | Consent given as of April 24, 2003 by Ashanti Goldfields Company Limited and Ashanti Goldfields Teberebie Limited.                                                                                                                                                                                                                                            
|              | 
|10.9a         |  | Amended and Restated Limited Partnership Agreement of Pioneer Poland U.S., L.P. dated as of January 20, 1995 by and between Pioglobal Poland U.S. (Jersey) Limited (formerly Pioneer Poland
U.S. (Jersey) Limited) and Pioneer Poland U.K. (Jersey) Limited, as amended July 18, 1995, September 15, 1995, October 18, 1995 and August 3, 1999                
|              | 
|10.10a        |  | Limited Partnership Agreement of Pioneer Poland UK, L.P. dated as of January 20, 1995 by and among Pioneer Poland UK Limited, Pioneer Poland U.K. (Jersey) Limited and the Limited Partners, as
amended July 18, 1995, September 15, 1995, October 18, 1995 and August 3, 1999                                                                                
|              | 
|10.11d        |  | Massachusetts Full-Service Office Lease Faneuil Hall Marketplace, dated as of October 26, 2000, between Faneuil Hall Marketplace, Inc. and Harbor Global Company Ltd., as amended by First
Amendment to Lease dated as of December 13, 2000                                                                                                                   
|              | 
|10.12n        |  | Master Lease Agreement dated as of July 1, 1996 by and between Open Joint Stock Company Real Estate Investment Fund PIOGLOBAL (formerly OAO Investment Fund PIOGLOBAL,
OAO Pioneer First Investment Fund, OAO First Investment Voucher Fund) and PREA, L.L.C. (formerly Pioneer Real Estate Advisors, Inc.), as amended and restated as of May 5, 2004
|              | 
|10.13n        |  | Management Agreement No. B 322 dated as of July 24, 2002 by and between Closed Joint-Stock Company PIOGLOBAL Asset Management and Open Joint-Stock Company PIOGLOBAL
Investment Fund                                                                                                                                                                      
|              | 
|10.14a        |  | Land Lease Agreement No. M-09-000979 dated as of September 6, 1994 by and between the Moscow Government and Open Joint-Stock Company PIOGLOBAL Investment Fund (formerly Open
Joint-Stock Company First Investment Voucher Fund), as amended February 14, 2000 by Supplemental Agreement No. 7                                                            
|              | 
|10.15a        |  | Land Sublease Agreement dated as of April 18, 2000 by and between Open Joint-Stock Company PIOGLOBAL Investment Fund (formerly Open Joint-Stock Company First Investment
Voucher Fund) and PREA, LLC (formerly Pioneer Real Estate Advisors, Inc.)                                                                                                        
|              | 
|10.16b*       |  | Form of Employment Agreement by and between Calypso Management LLC and Stephen G. Kasnet                                                                                                                                                                                                                                                                      
|              | 
|10.17b*       |  | Form of Employment Agreement by and between Calypso Management LLC and Donald H. Hunter                                                                                                                                                                                                                                                                       



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##### Table of Contents

|        |  |                                                                                                                                                                                                               
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.18e* |  | Letter dated October 22, 2002 from the Board of Directors of Harbor Global Company Ltd. To Calypso Management LLC.                                                                                            
|        | 
|10.19i* |  | Amendment to Employment Agreement dated March 4, 2004 by and between Calypso Management LLC and Stephen G. Kasnet.                                                                                            
|        | 
|10.20i* |  | Amendment to Employment Agreement dated March 4, 2004 by and between Calypso Management LLC and Donald H. Hunter.                                                                                             
|        | 
|10.21n* |  | Amendment to Employment Agreement dated December 8, 2004 by and between Calypso Management LLC and Stephen G. Kasnet.                                                                                         
|        | 
|10.22m* |  | Amendment to Employment Agreement effective December 8, 2004 by and between Calypso Management LLC and Donald H. Hunter.                                                                                      
|        | 
|10.23g* |  | Amended and Restated Administration and Liquidation Agreement between Calypso Management LLC and Harbor Global Company Ltd dated July 10, 2003.                                                               
|        | 
|10.24n* |  | Extension of term of the Amended and Restated Administration and Liquidation Agreement between Calypso Management LLC and Harbor Global Company Ltd dated December 8, 2004.                                   
|        | 
|10.25m* |  | Amendment to the Amended and Restated Administration and Liquidation Agreement, effective as of December 8, 2004, by and between Calypso Management LLC and Harbor Global Company
Ltd.                        
|        | 
|10.26h  |  | Stock Agreement dated September 24, 2003 between PIOGLOBAL First Russia, Inc., PIOGLOBAL Omega LLC and Maria Churaeva.                                                                                        
|        | 
|10.27h  |  | Stock Agreement dated September 24, 2003 between PIOGLOBAL First Russia, Inc., PIOGLOBAL Omega LLC and Andrei Uspensky.                                                                                       
|        | 
|10.28j  |  | Operating Agreement of PIOGLOBAL First Russia, LLC dated April 12, 2004                                                                                                                                       
|        | 
|10.29j  |  | Amendment to Stock Agreement dated September 24, 2003 between PIOGLOBAL First Russia, Inc., PIOGLOBAL Omega LLC and Maria Churaeva.                                                                           
|        | 
|10.30j  |  | Amendment to Stock Agreement dated September 24, 2003 between PIOGLOBAL First Russia, Inc., PIOGLOBAL Omega LLC and Andrei Uspensky.                                                                          
|        | 
|10.31k  |  | Unit Agreement dated May 19, 2004 between PIOGLOBAL First Russia, LLC and Alexander Chernyshev.                                                                                                               
|        | 
|10.32k  |  | Joinder Agreement to Operating Agreement dated as of April 12, 2004 by and among Pioglobal First Russia, LLC, its Board of Directors and any unit holders entered into by Alexander Chernyshev
on May 19, 2004
|        | 
|10.33k  |  | Unit Agreement dated May 19, 2004 between PIOGLOBAL First Russia, LLC and Dmitry Larin                                                                                                                        
|        | 
|10.34k  |  | Joinder Agreement to Operating Agreement dated as of April 12, 2004 by and among Pioglobal First Russia, LLC, its Board of Directors and any unit holders entered into by Dmitry Larin on May
19, 2004        
|        | 
|10.35k  |  | Unit Agreement dated May 19, 2004 between PIOGLOBAL First Russia, LLC and Alexey Oschepkov                                                                                                                    
|        | 
|10.36k  |  | Joinder Agreement to Operating Agreement dated as of April 12, 2004 by and among Pioglobal First Russia, LLC, its Board of Directors and any unit holders entered into by Alexey Oschepkov on
May 19, 2004    
|        | 
|10.37n* |  | Amended and Restated Harbor Global Company Ltd. Non-Employee Director Share Plan.                                                                                                                             
|        | 
|14.1l   |  | Harbor Global Company Ltd. Code of Ethics and Conduct, as amended on August 11, 2004.                                                                                                                         
|        | 
|21.1n   |  | List of Subsidiaries of Harbor Global Company Ltd.                                                                                                                                                            
|        | 
|31.1o   |  | Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                 
|        | 
|31.2o   |  | Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                 
|        | 
|32.1o   |  | Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                 
|        | 
|32.2o   |  | Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                 

---

|o | Filed herewith.
|- | ---------------

|n | Incorporated by reference to Harbor Globals Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 23, 2005.
|- | --------------------------------------------------------------------------------------------------------------------------------------------

|m | Incorporated by reference to Harbor Globals Report on Form 8-K filed with the Securities and Exchange Commission on December 10, 2004.
|- | ---------------------------------------------------------------------------------------------------------------------------------------

|l | Incorporated by reference to Harbor Global Company Ltd.s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2004 and filed with the Securities and
Exchange Commission on November 8, 2004.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|k | Incorporated by reference to Harbor Global Company Ltd.s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004 and filed with the Securities and Exchange
Commission on August 11, 2004.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|j | Incorporated by reference to Harbor Global Company Ltd.s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004 and filed with the Securities and Exchange
Commission on April 28, 2004.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|i | Incorporated by reference to Harbor Global Company Ltd.s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and filed with the Securities and Exchange
Commission on March 26, 2004.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|h | Incorporated by reference to Harbor Global Company Ltd.s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003 and filed with the Securities and
Exchange Commission on November 6, 2003.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|g | Incorporated by reference to Harbor Global Company Ltd.s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003 and filed with the Securities and Exchange
Commission on August 6, 2003.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|f | Incorporated by reference to Harbor Global Company Ltd.s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003 and filed with the Securities and Exchange
Commission filed on May 6, 2003.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|e | Incorporated by reference to Harbor Global Company Ltd.s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2002 and filed with the Securities and
Exchange Commission on November 12, 2002.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|d | Incorporated by reference to Harbor Global Company Ltd.s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 and filed with the Securities and Exchange
Commission on March 26, 2002.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|c | Incorporated by reference to Harbor Global Company Ltd.s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2004 and filed with the Securities and
Exchange Commission on November 13, 2000.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b | Incorporated by reference to Amendment No. 1 to Harbor Global Company Ltd.s Registration Statement on Form 10 (file number 0-30889) filed on August 8, 2000.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|a | Incorporated by reference to Harbor Global Company Ltd.s Registration Statement on Form 10 (file number 0-30889) filed on June 26, 2000.
|- | -----------------------------------------------------------------------------------------------------------------------------------------

|* | Denotes a management contract or compensatory plan or arrangement.
|- | ------------------------------------------------------------------