<PAGE>
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

FOR THE PERIOD ENDED AUGUST 31, 2003

                                       OR

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

FOR THE TRANSITION PERIOD FROM _______________ TO _______________

                         COMMISSION FILE NUMBER 0-24050

                          NORTHFIELD LABORATORIES INC.
             (Exact name of registrant as specified in its charter)


         DELAWARE                                             36-3378733
(State or other jurisdiction                              (I.R.S. Employer
of incorporation or organization)                      Identification Number)


1560 SHERMAN AVENUE, SUITE 1000, EVANSTON, ILLINOIS           60201-4800
     (Address of principal executive offices)                 (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:      (847) 864-3500

FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT: NOT APPLICABLE

    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 WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS
DEFINED IN RULE 12b-2 OF THE EXCHANGE ACT).  YES X      NO
                                               ---       ---

AS OF AUGUST 31, 2003, REGISTRANT HAD 16,158,732 SHARES OF COMMON STOCK
OUTSTANDING


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

<PAGE>


           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Quarterly Report contains forward-looking statements concerning, among
other things, our prospects, clinical and regulatory developments affecting our
potential product and our business strategies. These forward-looking statements
are identified by the use of such terms as "intends," "expects," "plans,"
"estimates," "anticipates," "should," "believes" and similar terms.

These forward-looking statements involve risks and uncertainties. Actual results
may differ materially from those predicted by the forward-looking statements
because of various factors and possible events, including those discussed under
"Risk Factors" in our Annual Report on Form 10-K filed with the Securities and
Exchange Commission. Because these forward-looking statements involve risks and
uncertainties, actual results may differ significantly from those predicted in
these forward-looking statements. You should not place a lot of weight on these
statements. These statements speak only as of the date of this document or, in
the case of any document incorporated by reference, the date of that document.

All subsequent written and oral forward-looking statements attributable to
Northfield or any person acting on our behalf are qualified by the cautionary
statements in this section and in our Annual Report. We will have no obligation
to revise these forward-looking statements.

<PAGE>
                     INDEPENDENT ACCOUNTANTS' REVIEW REPORT



The Board of Directors
Northfield Laboratories Inc.:


We have reviewed the balance sheet of Northfield Laboratories Inc. (a company in
the development stage) as of August 31, 2003, and the related statements of
operations and cash flows for the three-month periods ended August 31, 2003 and
2002 and for the period from June 19, 1985 (inception) through August 31, 2003.
We have also reviewed the statements of shareholders' equity (deficit) for the
three-month period ended August 31, 2003 and for the period from June 19, 1985
(inception) through August 31, 2003. These financial statements are the
responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with accounting principles generally accepted in the United States of
America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the balance sheet of Northfield
Laboratories Inc. as of May 31, 2003, and the related statements of operations,
shareholders' equity (deficit), and cash flows for the year then ended and for
the period from June 19, 1985 (inception) through May 31, 2003 (not presented
herein); and in our report dated July 28, 2003, we expressed an unqualified
opinion on those financial statements. In our opinion, the information set forth
in the accompanying balance sheet as of May 31, 2003 and in the accompanying
statement of shareholders' equity (deficit) is fairly stated, in all material
respects, in relation to the statements from which it has been derived.

As discussed in note 4 to the financial statements, the Company adopted
Statement of Financial Accounting Standards No. 143, ACCOUNTING FOR ASSET
RETIREMENT OBLIGATIONS, as of June 1, 2003.


/s/ KPMG LLP


Chicago, Illinois
September 24, 2003



<PAGE>



                          NORTHFIELD LABORATORIES INC.
                      (a company in the development stage)

                                 Balance Sheets

                        August 31, 2003 and May 31, 2003



<TABLE>
<CAPTION>
                                                                       AUGUST 31,            MAY 31,
                                    ASSETS                                2003                2003
                                                                      -------------      --------------
<S>                                                                   <C>                <C>
Current assets:
    Cash                                                              $  12,918,913          4,897,962
    Marketable securities                                                      --            1,992,297
    Prepaid expenses                                                        617,968            688,755
                                                                      -------------      -------------

             Total current assets                                        13,536,881          7,579,014

Property, plant, and equipment, net                                       1,427,146          1,596,026
Other assets                                                                 88,235             71,399
                                                                      -------------      -------------

                                                                      $  15,052,262          9,246,439
                                                                      =============      =============

                     LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                                  $     491,218          1,462,586
    Accrued expenses                                                         29,990             61,519
    Accrued compensation and benefits                                       335,253            377,117
                                                                      -------------      -------------

             Total current liabilities                                      856,461          1,901,222

Other liabilities                                                           258,232            165,044
                                                                      -------------      -------------

             Total liabilities                                            1,114,693          2,066,266
                                                                      -------------      -------------

Shareholders' equity:
    Preferred stock, $.01 par value. Authorized 5,000,000 shares;
      none issued and outstanding                                              --                 --
    Common stock, $.01 par value. Authorized 30,000,000 shares;
      issued and outstanding 16,158,732 at August 31, 2003
      and 14,265,875 at May 31, 2003                                        161,587            142,659
    Additional paid-in capital                                          127,175,114        117,503,271
    Deficit accumulated during the development stage                   (113,399,132)      (110,465,757)
                                                                      -------------      -------------

             Total shareholders' equity                                  13,937,569          7,180,173
                                                                      -------------      -------------

                                                                      $  15,052,262          9,246,439
                                                                      =============      =============
</TABLE>



See accompanying notes to financial statements.



<PAGE>

                          NORTHFIELD LABORATORIES INC.
                      (a company in the development stage)

                            Statements of Operations

               Three months ended August 31, 2003 and 2002 and for
                    the period from June 19, 1985 (inception)
                             through August 31, 2003




<TABLE>
<CAPTION>
                                                                                CUMULATIVE
                                               THREE MONTHS ENDED                  FROM
                                                     AUGUST 31,                 JUNE 19, 1985
                                           -------------------------------        THROUGH
                                               2003               2002         AUGUST 31, 2003
                                           -------------     -------------     ---------------
<S>                                        <C>               <C>               <C>
Revenues - license income                  $       --                --           3,000,000
 Costs and expenses:
    Research and development                  2,199,352         2,025,802        98,438,888
    General and administrative                  682,528           929,157        41,282,742
                                           ------------      ------------      ------------

                                              2,881,880         2,954,959       139,721,630

Other income and expense:
    Interest income                              23,426            77,370        23,480,653
    Interest expense                               --                --              83,234
                                           ------------      ------------      ------------

                                           $     23,426            77,370        23,397,419

Cumulative effect of change in
    accounting principle                         74,921              --              74,921
                                           ------------      ------------      ------------

             Net loss                      $ (2,933,375)       (2,877,589)     (113,399,132)
                                           ============      ============      ============

Net loss per share - basic and diluted     $      (0.20)            (0.20)           (11.41)
                                           ============      ============      ============

Shares used in calculation of
    per share data - basic and diluted       14,965,409        14,265,875         9,934,493
                                           ============      ============      ============

</TABLE>


See accompanying notes to financial statements.
<PAGE>
                          NORTHFIELD LABORATORIES INC.
                      (a company in the development stage)

                  Statements of Shareholders' Equity (Deficit)

             Three months ended August 31, 2003 and for the period
             from June 19, 1985 (inception) through August 31, 2003

<TABLE>
<CAPTION>
                                                                                                              COMMON STOCK
                                                                            --------------------------------------------------------
                                                                             NUMBER        AGGREGATE        NUMBER       AGGREGATE
                                                                            OF SHARES        AMOUNT        OF SHARES       AMOUNT
                                                                            ---------      ---------       ---------     ---------
<S>                                                                        <C>             <C>             <C>           <C>
Issuance of common stock on August 27, 1985                                     --         $    --         3,500,000     $  35,000
Issuance of Series A convertible preferred stock at $4.00 per share on
    August 27, 1985 (net of costs of issuance of $79,150)                       --              --                --            --
Net loss                                                                        --              --                --            --
                                                                             --------      ---------       ---------     ---------

Balance at May 31, 1986                                                         --              --         3,500,000        35,000
Net loss                                                                        --              --                --            --
Deferred compensation relating to grant of stock options                        --              --                --            --
Amortization of deferred compensation                                           --              --                --            --
                                                                             --------      ---------       ---------     ---------

Balance at May 31, 1987                                                         --              --         3,500,000        35,000
Issuance of Series B convertible preferred stock at $35.68 per share on
    August 14, 1987 (net of costs of issuance of $75,450)                       --              --                --            --
Net loss                                                                        --              --                --            --
Amortization of deferred compensation                                           --              --                --            --
                                                                             --------      ---------       ---------     ---------

Balance at May 31, 1988                                                         --              --         3,500,000        35,000
Issuance of common stock at $24.21 per share on June 7, 1988 (net of
    costs of issuance of $246,000)                                              --              --           413,020         4,130
Conversion of Series A convertible preferred stock to common stock on
    June 7, 1988                                                                --              --         1,250,000        12,500
Conversion of Series B convertible preferred stock to common stock on
    June 7, 1988                                                                --              --         1,003,165        10,032
Exercise of stock options at $2.00 per share                                    --              --            47,115           471
Issuance of common stock at $28.49 per share on March 6, 1989 (net of
    costs of issuance of $21,395)                                               --              --           175,525         1,755
Issuance of common stock at $28.49 per share on March 30, 1989 (net of
    costs of issuance of $10,697)                                               --              --            87,760           878
Sale of options at $28.29 per share to purchase common stock at $.20 per
    share on March 30, 1989 (net of costs of issuance of $4,162)                --              --                --            --
Net loss                                                                        --              --                --            --
Deferred compensation relating to grant of stock options                        --              --                --            --
Amortization of deferred compensation                                           --              --                --            --
                                                                             --------      ---------       ---------     ---------

Balance at May 31, 1989                                                         --              --         6,476,585        64,766
Net loss                                                                        --              --                --            --
Deferred compensation relating to grant of stock options                        --              --                --            --
Amortization of deferred compensation                                           --              --                --            --
                                                                             --------      ---------       ---------     ---------

Balance at May 31, 1990                                                         --              --         6,476,585        64,766
Net loss                                                                        --              --                --            --
Amortization of deferred compensation                                           --              --                --            --
                                                                             --------      ---------       ---------     ---------

Balance at May 31, 1991                                                         --              --         6,476,585        64,766
Exercise of stock warrants at $5.60 per share                                   --              --            90,000           900
Net loss                                                                        --              --                --            --
Amortization of deferred compensation                                           --              --                --            --
                                                                             --------      ---------       ---------     ---------

Balance at May 31, 1992                                                         --              --         6,566,585        65,666
Exercise of stock warrants at $7.14 per share                                   --              --            15,000           150
Issuance of common stock at $15.19 per share on April 19, 1993 (net of
    costs of issuance of $20,724)                                               --              --           374,370         3,744
Net loss                                                                        --              --                --            --
Amortization of deferred compensation                                           --              --                --            --
                                                                             --------      ---------       ---------     ---------

Balance at May 31, 1993                                                         --         $    --         6,955,955     $  69,560
                                                                             --------      ---------       ---------     ---------
</TABLE>


See accompanying notes to financial statements.
<PAGE>

<TABLE>
<CAPTION>


  SERIES A CONVERTIBLE           SERIES B CONVERTIBLE                               DEFICIT
     PREFERRED STOCK                PREFERRED STOCK                               ACCUMULATED                           TOTAL
-------------------------    ---------------------------        ADDITIONAL         DURING THE                        SHAREHOLDERS'
 NUMBER         AGGREGATE      NUMBER          AGGREGATE         PAID-IN          DEVELOPMENT        DEFERRED            EQUITY
OF SHARES         AMOUNT      OF SHARES         AMOUNT           CAPITAL             STAGE         COMPENSATION        (DEFICIT)
---------       ---------     ---------        ----------       -----------       ------------     ------------      ------------

<S>             <C>           <C>              <C>              <C>               <C>              <C>               <C>
       --       $      --            --        $      --        $   (28,000)      $         --      $        --       $     7,000

  250,000         250,000            --               --            670,850                 --               --           920,850
       --              --            --               --                 --           (607,688)              --          (607,688)
---------       ---------     ---------        ---------        -----------       ------------      -----------       -----------

  250,000         250,000            --               --            642,850           (607,688)              --           320,162
       --              --            --               --                 --         (2,429,953)              --        (2,429,953)
       --              --            --               --          2,340,000                 --       (2,340,000)               --
       --              --            --               --                 --                 --          720,000           720,000
---------       ---------     ---------        ---------        -----------       ------------      -----------       -----------

  250,000         250,000            --               --          2,982,850         (3,037,641)      (1,620,000)       (1,389,791)

       --              --       200,633          200,633          6,882,502                 --               --         7,083,135
       --              --            --               --                 --         (3,057,254)              --        (3,057,254)
       --              --            --               --                 --                 --          566,136           566,136
---------       ---------     ---------        ---------        -----------       ------------      -----------       -----------

  250,000         250,000       200,633          200,633          9,865,352         (6,094,895)      (1,053,864)        3,202,226
       --              --            --               --          9,749,870                 --               --         9,754,000
 (250,000)       (250,000)           --               --            237,500                 --               --                --
       --              --      (200,633)        (200,633)           190,601                 --               --                --
       --              --            --               --             93,759                 --               --            94,230
       --              --            --               --          4,976,855                 --               --         4,978,610
       --              --            --               --          2,488,356                 --               --         2,489,234

       --              --            --               --          7,443,118                 --               --         7,443,118
       --              --            --               --                 --           (791,206)              --          (791,206)
       --              --            --               --            683,040                 --         (683,040)               --
       --              --            --               --                 --                 --          800,729           800,729
---------       ---------     ---------        ---------        -----------       ------------      -----------       -----------

       --              --            --               --         35,728,451         (6,886,101)        (936,175)       27,970,941
       --              --            --               --                 --         (3,490,394)              --        (3,490,394)
       --              --            --               --            699,163                 --         (699,163)               --
       --              --            --               --                 --                 --          546,278           546,278
---------       ---------     ---------        ---------        -----------       ------------      -----------       -----------

       --              --            --               --         36,427,614        (10,376,495)      (1,089,060)       25,026,825
       --              --            --               --                 --         (5,579,872)              --        (5,579,872)
       --              --            --               --                 --                 --          435,296           435,296
---------       ---------     ---------        ---------        -----------       ------------      -----------       -----------

       --              --            --               --         36,427,614        (15,956,367)        (653,764)       19,882,249
       --              --            --               --            503,100                 --               --           504,000
       --              --            --               --                 --         (7,006,495)              --        (7,006,495)
       --              --            --               --                 --                 --          254,025           254,025
---------       ---------     ---------        ---------        -----------       ------------      -----------       -----------

       --              --            --               --         36,930,714        (22,962,862)        (399,739)       13,633,779
       --              --            --               --            106,890                 --               --           107,040
       --              --            --               --          5,663,710                 --               --         5,667,454
       --              --            --               --                 --         (8,066,609)              --        (8,066,609)
       --              --            --               --                 --                 --          254,025           254,025
---------       ---------     ---------        ---------        -----------       ------------      -----------       -----------

       --       $      --            --        $      --        $42,701,314       $(31,029,471)     $  (145,714)      $11,595,689
---------       ---------     ---------        ---------        -----------       ------------      -----------       -----------

</TABLE>
<PAGE>
                          NORTHFIELD LABORATORIES INC.
                      (a company in the development stage)

                  Statements of Shareholders' Equity (Deficit)

              Three months ended August 31, 2003 and for the period
             from June 19, 1985 (inception) through August 31, 2003



<TABLE>
<CAPTION>
                                                                                 PREFERRED STOCK                 COMMON STOCK
                                                                            -------------------------------------------------------
                                                                             NUMBER        AGGREGATE        NUMBER      AGGREGATE
                                                                            OF SHARES        AMOUNT        OF SHARES      AMOUNT
                                                                            ---------      ---------       ---------   ------------
<S>                                                                         <C>            <C>             <C>         <C>
Net loss                                                                        --           $ --                --     $        --
Issuance of common stock at $6.50 per share on May 26, 1994 (net of
    costs of issuance of $2,06,149)                                             --             --         2,500,000          25,000
Cancellation of stock options                                                   --             --                --              --
Amortization of deferred compensation                                           --             --                --              --
                                                                              -------        -------    -----------     -----------

Balance at May 31, 1994                                                         --             --         9,455,955          94,560
Net loss                                                                        --             --                --              --
Issuance of common stock at $6.50 per share on June 20, 1994 (net of
    issuance costs of $172,500)                                                 --             --           375,000           3,750
Exercise of stock options at $7.14 per share                                    --             --            10,000             100
Exercise of stock options at $2.00 per share                                    --             --           187,570           1,875
Cancellation of stock options                                                   --             --                --              --
Amortization of deferred compensation                                           --             --                --              --
                                                                              -------        -------    -----------     -----------

Balance at May 31, 1995                                                         --             --        10,028,525         100,285
Net loss                                                                        --             --                --              --
Issuance of common stock at $17.75 per share on August 9, 1995 (net of
    issuance costs of $3,565,125)                                               --             --         2,925,000          29,250
Issuance of common stock at $17.75 per share on September 11, 1995 (net of
    issuance costs of $423,238)                                                 --             --           438,750           4,388
Exercise of stock options at $2.00 per share                                    --             --           182,380           1,824
Exercise of stock options at $6.38 per share                                    --             --             1,500              15
Exercise of stock options at $7.14 per share                                    --             --            10,000             100
Cancellation of stock options                                                   --             --                --              --
Amortization of deferred compensation                                           --             --                --              --
                                                                              -------        -------    -----------     -----------

Balance at May 31, 1996                                                         --             --        13,586,155         135,862
Net loss                                                                        --             --                --              --
Exercise of stock options at $0.20 per share                                    --             --           263,285           2,633
Exercise of stock options at $2.00 per share                                    --             --           232,935           2,329
Exercise of stock options at $7.14 per share                                    --             --            10,000             100
Amortization of deferred compensation                                           --             --                --              --
                                                                              -------        -------    -----------     -----------

Balance at May 31, 1997                                                         --             --        14,092,375         140,924
Net loss                                                                        --             --                --              --
Exercise of stock options at $7.14 per share                                    --             --             5,000              50
Amortization of deferred compensation                                           --             --                --              --
                                                                              -------        -------    -----------     -----------

Balance at May 31, 1998                                                         --             --        14,097,375         140,974
Net loss                                                                        --             --                --              --
Non-cash compensation                                                           --             --                --              --
Exercise of stock options at $7.14 per share                                    --             --            17,500             175
Exercise of stock warrants at $8.00 per share                                   --             --           125,000           1,250
                                                                              -------        -------    -----------     -----------

Balance at May 31, 1999                                                         --             --        14,239,875         142,399
Net loss                                                                        --             --                --              --
Non-cash compensation                                                           --             --                --              --
Exercise of stock options at $13.38 per share                                   --             --             2,500              25
                                                                              -------        -------    -----------     -----------

Balance at May 31, 2000                                                         --             --        14,242,375         142,424
Net loss                                                                        --             --                --              --
Non-cash compensation                                                           --             --                --              --
Exercise of stock options at $6.38 per share                                    --             --             6,000              60
Exercise of stock options at $10.81 per share                                   --             --            17,500             175
                                                                              -------        -------    -----------     -----------

Balance at May 31, 2001                                                         --             --        14,265,875         142,659
Net loss                                                                        --             --                --              --
                                                                              -------        -------    -----------     -----------

Balance at May 31, 2002                                                         --             --        14,265,875         142,659
                                                                              -------        -------    -----------     -----------

Net loss                                                                        --             --                --              --
                                                                              -------        -------    -----------     -----------

Balance at May 31, 2003                                                         --             --        14,265,875         142,659

Issuance of common stock at $5.60 per share on July 28, 2003 (net of
    costs of issuance of $909,229)                                              --             --         1,892,857          18,928
Net loss                                                                        --             --                --              --
                                                                              -------        -------    -----------     -----------
Balance at August 31, 2003                                                      --           $ --        16,158,732        $161,587
                                                                              =======        =======    ===========     ===========

</TABLE>


See accompanying notes to financial statements.
<PAGE>

<TABLE>
<CAPTION>


  SERIES A CONVERTIBLE           SERIES B CONVERTIBLE                            DEFICIT
     PREFERRED STOCK                PREFERRED STOCK                           ACCUMULATED                             TOTAL
------------------------      -------------------------     ADDITIONAL         DURING THE                         SHAREHOLDERS'
 NUMBER       AGGREGATE        NUMBER        AGGREGATE       PAID-IN          DEVELOPMENT         DEFERRED            EQUITY
OF SHARES       AMOUNT        OF SHARES       AMOUNT         CAPITAL             STAGE          COMPENSATION        (DEFICIT)
---------     ---------       ---------      ---------     ------------       ------------      ------------      ------------
<S>           <C>             <C>            <C>           <C>                <C>               <C>               <C>
   --         $   --             --          $   --        $         --        (7,363,810)     $        --         (7,363,810)

   --             --             --              --          14,163,851                --               --         14,188,851
   --             --             --              --             (85,400)               --           85,400                 --
   --             --             --              --                  --                --              267                267
--------      --------        ---------      ----------    ------------      ------------      ------------      ------------

   --             --             --              --          56,779,765       (38,393,281)         (60,047)        18,420,997
   --             --             --              --                  --        (7,439,013)              --         (7,439,013)

   --             --             --              --           2,261,250                --               --          2,265,000
   --             --             --              --              71,300                --               --             71,400
   --             --             --              --             373,264                --               --            375,139
   --             --             --              --            (106,750)               --          106,750                 --
   --             --             --              --                  --                --          (67,892)           (67,892)
--------      --------        ---------      ----------    ------------      ------------      ------------      ------------

   --             --             --              --          59,378,829       (45,832,294)         (21,189)        13,625,631
   --             --             --              --                  --        (4,778,875)              --         (4,778,875)

   --             --             --              --          48,324,374                --               --         48,353,624

   --             --             --              --           7,360,187                --               --          7,364,575
   --             --             --              --             362,937                --               --            364,761
   --             --             --              --               9,555                --               --              9,570
   --             --             --              --              71,300                --               --             71,400
   --             --             --              --             (80,062)               --           80,062                 --
   --             --             --              --                  --                --          (62,726)           (62,726)
--------      --------        ---------      ----------    ------------      ------------      ------------      ------------

   --             --             --              --         115,427,120       (50,611,169)          (3,853)        64,947,960
   --             --             --              --                  --        (4,245,693)              --         (4,245,693)
   --             --             --              --              50,025                --               --             52,658
   --             --             --              --             463,540                --               --            465,869
   --             --             --              --              71,300                --               --             71,400
   --             --             --              --                  --                --            2,569              2,569
--------      --------        ---------      ----------    ------------      ------------      ------------      ------------

   --             --             --              --         116,011,985       (54,856,862)          (1,284)        61,294,763
   --             --             --              --                  --        (5,883,378)              --         (5,883,378)
   --             --             --              --              35,650                --               --             35,700
   --             --             --              --                  --                --            1,284              1,284
--------      --------        ---------      ----------    ------------      ------------      ------------      ------------

   --             --             --              --         116,047,635       (60,740,240)              --         55,448,369
   --             --             --              --                  --        (7,416,333)              --         (7,416,333)
   --             --             --              --              14,354                --                              14,354
   --             --             --              --             124,775                --               --            124,950
   --             --             --              --             998,750                --               --          1,000,000
--------      --------        ---------      ----------    ------------      ------------      ------------      ------------

   --             --             --              --         117,185,514       (68,156,573)              --         49,171,340
   --             --             --              --                  --        (9,167,070)              --         (9,167,070)
   --             --             --              --              57,112                --               --             57,112
   --             --             --              --              33,425                --               --             33,450
--------      --------        ---------      ----------    ------------      ------------      ------------      ------------

   --             --             --              --         117,276,051       (77,323,643)              --         40,094,832
   --             --             --              --                  --       (10,174,609)              --        (10,174,609)
   --             --             --              --                  --                --               --                 --
   --             --             --              --              38,220                --               --             38,280
   --             --             --              --             189,000                --               --            189,175
--------      --------        ---------      ----------    ------------      ------------      ------------      ------------

   --             --             --              --         117,503,271       (87,498,252)              --         30,147,678
   --             --             --              --                  --       (10,717,360)              --        (10,717,360)
--------      --------        ---------      ----------    ------------      ------------      ------------      ------------

   --             --             --              --         117,503,271       (98,215,612)              --         19,430,318
--------      --------        ---------      ----------    ------------      ------------      ------------      ------------

   --             --             --              --                  --       (12,250,145)              --        (12,250,145)
--------      --------        ---------      ----------    ------------      ------------      ------------      ------------

   --             --             --              --        $117,503,271      (110,465,757               --          7,180,173


   --             --             --              --           9,671,843                --               --          9,690,771
   --             --             --              --                  --        (2,933,375)              --         (2,933,375)
--------      --------        ---------      ----------    ------------      ------------      ------------      ------------
   --         $   --             --          $   --        $127,175,114      (113,399,132)     $        --       $ 13,937,569
========      ========        =========      ==========    ============      ============      ============      ============
</Table>


<PAGE>
                          NORTHFIELD LABORATORIES INC.
                      (a company in the development stage)

                            Statements of Cash Flows

                       Three months ended August 31, 2003
                        and 2002 and for the period from
                                  June 19, 1985
                       (inception) through August 31, 2003


<TABLE>
<CAPTION>
                                                                                                               CUMULATIVE
                                                                                                                  FROM
                                                                          THREE MONTHS ENDED AUGUST 31,       JUNE 19, 1985
                                                                         ------------------------------          THROUGH
                                                                             2003              2002          AUGUST 31, 2003
                                                                         ------------      ------------     -----------------
<S>                                                                      <C>               <C>              <C>
Cash flows from operating activities:
   Net loss                                                              $ (2,933,375)       (2,877,589)     (113,399,132)
   Adjustments to reconcile net loss to net
     cash used in operating activities:
       Depreciation and amortization                                          169,962           211,303        17,273,032
       Non-cash compensation                                                     --                --           3,552,723
       Loss on sale of equipment                                                 --                --              66,359
       Changes in assets and liabilities:
         Prepaid expenses                                                      70,787            52,622          (827,179)
         Other current assets                                                    --              (5,002)       (1,896,251)
         Other assets                                                         (17,800)             --             (10,950)
         Accounts payable                                                    (971,368)         (505,844)          491,218
         Accrued expenses                                                     (31,529)           90,490            29,990
         Accrued compensation and benefits                                    (41,864)          (87,882)          335,253
         Other liabilities                                                     93,188            (1,098)          258,232
                                                                         ------------      ------------      ------------

             Net cash used in operating activities                         (3,661,999)       (3,123,000)      (94,126,705)
                                                                         ------------      ------------      ------------

Cash flows from investing activities:
   Purchase of property, plant, equipment, and
     capitalized engineering costs                                             (7,821)          (52,875)      (18,679,511)
   Proceeds from sale of land and equipment                                      --                --           1,863,023
   Proceeds from matured marketable securities                              2,000,000              --         411,537,352
   Proceeds from sale of marketable securities                                   --                --           7,141,656
   Purchase of marketable securities                                             --          (1,957,250)     (418,632,147)
                                                                         ------------      ------------      ------------

             Net cash provided by (used in) investing activities            1,992,179        (2,010,125)      (16,769,627)
                                                                         ------------      ------------      ------------

Cash flows from financing activities:
   Proceeds from issuance of common stock                                  10,600,000              --         114,349,383
   Payment of common stock issuance costs                                    (909,229)             --          (5,981,241)
   Proceeds from issuance of preferred stock                                     --                --           6,644,953
   Proceeds from sale of stock options to
     purchase common shares                                                      --                --           7,443,118
   Proceeds from issuance of notes payable                                       --                --           1,500,000
   Repayment of notes payable                                                    --                --            (140,968)
                                                                         ------------      ------------      ------------

             Net cash provided by financing activities                      9,690,771              --         123,815,245
                                                                         ------------      ------------      ------------

             Net (decrease) increase in cash                                8,020,951        (5,133,125)       12,918,913

Cash at beginning of period                                                 4,897,962        17,668,687              --
                                                                         ------------      ------------      ------------

Cash at end of period                                                    $ 12,918,913        12,535,562        12,918,913
                                                                         ============      ============      ============
</TABLE>



See accompanying notes to financial statements.

<PAGE>
                          NORTHFIELD LABORATORIES INC.

                      (A COMPANY IN THE DEVELOPMENT STAGE)

                          NOTES TO FINANCIAL STATEMENTS

                                 AUGUST 31, 2003



(1) BASIS OF PRESENTATION

    The interim financial statements presented are unaudited but, in the opinion
    of management, have been prepared in conformity with accounting principles
    generally accepted in the United States of America applied on a basis
    consistent with those of the annual financial statements. Such interim
    financial statements reflect all adjustments (consisting of normal recurring
    accruals) necessary for a fair presentation of the financial position and
    the results of operations for the interim periods presented. The results of
    operations for the interim periods presented are not necessarily indicative
    of the results to be expected for the year ending May 31, 2004. The interim
    financial statements should be read in connection with the audited financial
    statements for the year ended May 31, 2003.

(2) COMPUTATION OF NET LOSS PER SHARE

    Basic earnings per share is based on the weighted average number of shares
    outstanding and excludes the dilutive effect of unexercised common stock
    equivalents. Diluted earnings per share is based on the weighted average
    number of shares outstanding and includes the dilutive effect of unexercised
    common stock equivalents. Because the Company reported a net loss for all
    periods presented, basic and diluted per share amounts are the same.

(3) GOING CONCERN UNCERTAINTY

    The financial statements of the Company have been presented based on the
    assumption that the Company will continue as a going concern. The Company,
    however, may not be able to continue as going concern because it expects to
    experience significant future losses and currently has insufficient capital
    resources to fund its continuing operations. The Company believes its
    existing capital resources will be adequate to satisfy its operating capital
    requirements and maintain its existing manufacturing plant and office
    facilities for 6-9 months. In addition, the Company expects its existing
    capital resources will be sufficient to support expenditures incurred in
    connection with the Company's planned Phase III clinical trials during this
    period. Thereafter, the Company will require substantial additional funding
    to continue its operations and complete its planned clinical trials.

    The Company raised $10,600,000 in gross proceeds through an offering of its
    common stock in July 2003. The Company may issue additional equity or debt
    securities or enter into collaborative arrangements with strategic partners,
    which could provide the Company with additional funding or absorb expenses
    the Company would otherwise be required to pay. The Company is also pursuing
    potential sources of government funding. Any one or a combination of these
    sources may be utilized to raise additional capital. We believe our ability
    to raise additional capital will depend primarily on the progress we make
    toward the commercialization of our potential product, PolyHeme(R) as well
    as general conditions in the business and financial markets. There can be no
    assurance that the Company will be successful in raising additional capital.
    The Company's inability to raise sufficient levels of capital could
    materially delay or prevent the commercialization of its PolyHeme blood
    substitute product and could result in the cessation of the Company's
    business. The financial statements do not include any adjustments that might
    result from the outcome of this uncertainty business. The financial
    statements do not include any adjustments that might result from the outcome
    of this uncertainty.



<PAGE>



(4) ASSET RETIREMENT OBLIGATIONS

    The Company adopted Statement of Financial Accounting Standards SFAS No. 143
    - ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS as of June 1, 2003. The
    cumulative effect of the change in accounting principle upon implementation
    was to recognize a net asset of $17,800, an increase in liabilities of
    $92,721, and an increase in net loss of $74,921, or $0.01 per share.

The obligation relates to the restoration of a leased manufacturing facility to
its original condition. A liability of $100,000 had been recorded in a prior
period.

The Company's asset retirement obligation is included in other liabilities.
The balance and changes thereto are summarized below:


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------

                                                   Quarter Ended August 31, 2003
--------------------------------------------------------------------------------
<S>                                                <C>
Obligation at May 31, 2003                                        $     192,721
Accretion                                                                 4,336
Obligation at August 31, 2003                                     $     197,057
--------------------------------------------------------------------------------
</TABLE>


If the change in accounting had been applied retroactively, the Company's pro
forma net loss for the three months ended August 31, 2002 and for the period
from June 19, 1985 (inception) through August 31, 2002 would have been
$2,938,439 and $101,154,051. The Company's pro forma liability at August 31,
2002 would have been $180,780.



<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

         As of August 31, 2003, Northfield Laboratories Inc. ("Northfield") had
available cash balances of $12,919,000. We forecast that this level of cash will
be sufficient to fund current operations from August 31, 2003 and for the
ramp-up of our phase III clinical trials for 6-9 months. To fund planned
operations from August 31, 2003 for the next 12 months would require Northfield
to raise approximately an additional $6,000,000. We forecast a need to raise
approximately $25,000,000 in total to fund operations through the completion of
our Phase III clinical trials.

         During the first quarter of the current fiscal year we raised
$10,600,000 in gross proceeds through the sale of common shares from a shelf
registration statement allowing the Company to issue up to $50,000,000 in
securities. We may issue additional equity, debt securities, or utilize other
financing vehicles to provide additional capital. We believe our ability to
raise additional capital will depend primarily on the progress we make toward
the commercialization of our potential product, PolyHeme(R), as well as general
conditions in the business and financial markets. Our inability to raise
sufficient levels of capital would severely impair our current operations and
raise significant doubt about Northfield's ability to continue as a going
concern.

         Since Northfield's incorporation in 1985, we have devoted substantially
all of our efforts and resources to the research, development and clinical
testing of our potential product, PolyHeme. We have incurred operating losses
during each year of our operations since inception and expect to incur
substantial additional operating losses for




<PAGE>

the next several years. From Northfield's inception through August 31, 2003, we
have incurred operating losses totaling $113,399,000.

         We will be required to complete our planned Phase III clinical trials
to obtain FDA regulatory approval before PolyHeme can be sold commercially. The
FDA regulatory process is subject to significant risks and uncertainties,
including those described under "Risk Factors" found in our Annual Form 10-K
filing. We therefore cannot at this time reasonably estimate the timing of any
future revenues from commercial sale of PolyHeme.

         Our success will depend on several factors, including our ability to
obtain FDA regulatory approval of PolyHeme and our manufacturing facilities, our
ability to obtain sufficient quantities of blood to manufacture PolyHeme in
commercial quantities, our ability to manufacture and distribute PolyHeme in a
cost-effective manner, our ability to enforce our patent positions and raise
sufficient capital to fund these activities. We have experienced significant
delays in the development and clinical testing of PolyHeme. We cannot ensure
that we will be able to achieve these goals or that we will be able to realize
product revenues or profitability on a sustained basis or at all.



<PAGE>

RESULTS OF OPERATIONS

         We reported no revenues for either of the three-month periods ended
August 31, 2003 or 2002. From Northfield's inception through August 31, 2003, we
have reported total revenues of $3,000,000, all of which were derived from
licensing fees.

OPERATING EXPENSES

         Operating expenses for our first fiscal quarter ended August 31, 2003
totaled $2,882,000, a decrease of $73,000 from the $2,955,000 reported in the
first quarter of fiscal 2003. Measured on a percentage basis, operating expenses
in the first quarter of fiscal 2003 decreased by 2.5%. The difference was due to
lower costs for professional services, which are recorded as a general and
administrative expense, and were offset by increased costs associated with our
current clinical trials.

         Research and development expenses for the first quarter of fiscal 2004
totaled $2,199,000, a increase of $173,000, or 8.5%, from the $2,026,000
reported in the first quarter of fiscal 2003. Higher expenses were recognized
during the first quarter of fiscal 2004 related to start-up costs for our phase
III pre-hospital trauma clinical trial.

         We anticipate that research and development expenses will increase
significantly during the remainder of our fiscal year. From current levels,
additional costs are being planned for community disclosure, multi-center site
participation, clinical monitoring,



<PAGE>

database preparation, biostatistical analysis, independent safety appraisal and
project management.


         General and administrative expenses in the first quarter of fiscal 2004
totaled $683,000 compared to expenses of $929,000 in the first quarter of 2003,
representing a decrease of $246,000, or 26.5%. This decrease was due to lower
professional service fees.

INTEREST INCOME

         Interest income in the first quarter of fiscal 2004 totaled $23,000, or
a $54,000 decrease from the $77,000 in interest income reported in the first
quarter of fiscal 2003. Lower investment balances accounted for the decrease in
interest income. In the absence of a significant cash infusion, interest income
will continue to be below prior year levels.

NET LOSS

         The net loss for the first quarter ended August 31, 2003 was
$2,933,000, or $0.20 per share, compared to a net loss of $2,878,000, or $0.20
per share, for the first quarter ended August 31, 2002. The $55,000 increased
net loss in the current quarter compared to the first quarter of the prior year
was mitigated by the additional shares outstanding in the current year and
resulted in the net loss for both quarters to be $0.20 per share.

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

         From Northfield's inception through August 31, 2003, we have used cash
for operating activities and for the purchase of property, plant, equipment and
engineering services in the amount of $112,806,000. For the three-month periods
ended August 31, 2003 and 2002, these cash expenditures totaled $3,670,000 and $
3,176,000, respectively. The increased cash outlay for the first quarter of
fiscal 2004 compared to the comparable prior year period, in spite of similar
losses, is the result of a higher level of accounts payable pay down in the
current year.

         We have financed our research and development and other activities to
date through the public and private sale of equity securities and, to a more
limited extent, through the license of product rights. In July 2003, we sold
1,892,857 shares of our common stock in an offering transaction that generated
gross proceeds before expenses of $10,600,000. Net proceeds from this offering
were approximately $9.7 million. As of August 31, 2003, we had cash and
marketable securities totaling $12,919,000.

         We believe our existing capital resources will be adequate to satisfy
our operating capital requirements and maintain our existing manufacturing plant
and office facilities for the next 6-9 months. In addition, our existing capital
resources are expected to be sufficient to support expenditures incurred in
connection with our planned Phase III clinical trials during this period.
Thereafter, we will require substantial additional funding to continue our
operations and complete our planned clinical trials.


<PAGE>


         We may issue additional equity or debt securities or enter into
collaborative arrangements with strategic partners, which could provide us with
additional funding or absorb expenses we would otherwise be required to pay. We
are also pursuing potential sources of government funding. Any one or a
combination of these sources may be utilized to raise additional capital. We
believe our ability to raise additional capital will depend primarily on the
progress we make toward the commercialization of our potential product,
PolyHeme(R), as well as general conditions in the business and financial
markets. Our inability to raise sufficient levels of capital could materially
delay or prevent the commercialization of PolyHeme, even if it is approved by
FDA. We cannot ensure that we will be able to achieve product revenues or
profitability on a sustained basis or at all.

         Our capital requirements may vary materially from those now anticipated
because of the timing and results of our clinical testing of PolyHeme, the
establishment of relationships with strategic partners, changes in the scale,
timing or cost of our commercial manufacturing facility, competitive and
technological advances, the FDA regulatory process, changes in our marketing and
distribution strategy and other factors.

                          CRITICAL ACCOUNTING POLICIES

         The preparation of financial statements requires management to make
estimates and assumptions that affect amounts reported therein. We believe the
following critical accounting policy reflects our more significant judgments and
estimates used in the preparation of our consolidated financial statements.

<PAGE>

                        NET DEFERRED TAX ASSETS VALUATION

         We record our net deferred tax assets in the amount that we expect to
realize based on projected future taxable income. In assessing the
appropriateness of our valuation, assumptions and estimates are required, such
as Northfield's ability to generate future taxable income. In the event we were
to determine that it was more likely than not we would be able to realize our
deferred tax assets in the future in excess of their carrying value, an
adjustment to recognize the deferred tax assets would increase income in the
period such determination was made. As of August 31, 2003, we have recorded a
100% percent valuation allowance against our net deferred tax assets.




                             CONTRACTUAL OBLIGATIONS

    The following table reflects a summary of our contractual cash obligations
as of August 31, 2003:


<TABLE>
<CAPTION>
                                                             LESS THAN                        4-5
      CONTRACTUAL CASH OBLIGATIONS              TOTAL         ONE YEAR      1-3 YEARS        YEARS
----------------------------------------     ----------      ---------      ---------      ---------
<S>                                          <C>               <C>          <C>            <C>
Lease Obligations(1) ...................     $3,458,374        859,564      1,546,966      1,051,844
Other Obligations (2) ..................      1,184,725        888,544        296,181             --
                                             ----------      ---------      ---------      ---------
Total Contractual Cash Obligations .....     $4,643,099      1,748,108      1,843,147      1,051,844
                                             ==========      =========      =========      =========
</TABLE>

    (1)  The lease for our Evanston headquarters is cancelable with six months
         notice combined with a termination payment equal to six months base
         rent and six months of additional rental payments. If the lease were
         terminated today, the termination payment would be $315,530. The Mt.
         Prospect lease has been renewed through August 2009.

    (2)  Includes payments required under employment agreements for Steven A.
         Gould, M.D. and Jack J. Kogut and obligations under a consulting
         agreement.


<PAGE>


                        RECENT ACCOUNTING PRONOUNCEMENTS

         In August 2001, the Financial Accounting Standards Board (FASB) issued
FASB Statement No. 143, ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS, which
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and for the associated asset retirement
costs. FASB Statement No. 143 requires an enterprise to record the fair value of
an asset retirement obligation as a liability in the period in which it incurs a
legal obligation associated with the retirement of tangible long-lived assets
that result from the acquisition, construction, development and/or normal use of
the assets. The enterprise also is to record a corresponding increase to the
carrying amount of the related long-lived asset (i.e., the associated asset
retirement costs) and to depreciate that cost over the life of the asset. The
liability is changed at the end of each period to reflect the passage of time
and changes in the estimated future cash flows underlying the initial fair value
measurement. The Company adopted this standard as of June 1, 2003. Upon
adoption, the cumulative effect of the change in accounting principle was to
recognize a net asset of $17,800, an increase in liabilities of $92,721 and an
increase in net loss of $74,921, or $.01 per share.

         On May 15, 2003 the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity (SFAS
150). The provisions of the Statement change the classification of certain
freestanding financial instruments that are now classified as equity. Generally,
the Statement is effective for financial instrument arrangements entered into or
modified after May 31, 2003. The adoption of SFAS 150 did not have a material
effect on the financial position, results of operations, or cash flows of the
Company.




<PAGE>

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

         The Company currently does not have any foreign currency exchange risk.
The Company invests its cash and cash equivalents in government securities,
certificates of deposit and money market funds. These investments are subject to
interest rate risk. However, due to the nature of the Company's short-term
investments, it believes that the financial market risk exposure is not
material. A one percentage point decrease on an investment balance of $12.9
million would decrease interest income by $129,000 on an annual basis.


<PAGE>


                           PART II. OTHER INFORMATION

Item 6. Exhibits

    a)
        Exhibit 10.18 -  Fourth Amendment to Lease dated September 22, 2003
                         between the Registrant and First Industrial, LP

        Exhibit 15    -  Acknowledgment of Independent Certified Public
                         Accountants

        Exhibit 31.1  -  Certification of Steven A. Gould, M.D., pursuant to
                         Section 302 of the Sarbanes-Oxley Act of 2002

        Exhibit 31.2  -  Certification of Jack J. Kogut, pursuant to Section 302
                         of the Sarbanes-Oxley Act of 2002

        Exhibit 32.1  -  Certification of Steven A. Gould, M.D., pursuant to
                         18 U.S.C. Section 1350, as adopted pursuant to
                         Section 906 of the Sarbanes-Oxley Act of 2002

        Exhibit 32.2  -  Certification of Jack J. Kogut, pursuant to
                         18 U.S.C. Section 1350, as adopted pursuant to
                         Section 906 of the Sarbanes-Oxley Act of 2002


    b) On July 23, 2003 the Registrant filed Form 8-K relating to a registered
       direct offering registered on Form S-3.




<PAGE>





                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company in the capacities indicated on October 14, 2003.

             SIGNATURE                            TITLE

    /s/ Steven A. Gould, M.D.             Chairman of the Board and Chief
----------------------------------        Executive Officer (Principal Executive
        Steven A. Gould, M.D.             Officer)


    /s/ Jack J. Kogut                     Sr. Vice President and Chief
----------------------------------        Financial Officer
        Jack J. Kogut