<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 NOVEMBER 30, 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 [ ]

                APPLICABLE ONLY TO ISSUER INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

         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 NOVEMBER 30, 2003, REGISTRANT HAD 16,171,067 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 undue 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 November 30, 2003, and the related statements of
operations and cash flows for the three-month and six-month periods ended
November 30, 2003 and 2002, and for the period from June 19, 1985 (inception)
through November 30, 2003. We have also reviewed the statements of shareholders'
equity (deficit) for the six-month period ended November 30, 2003 and for the
period from June 19, 1985 (inception) through November 30, 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
December 29, 2003

<PAGE>

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

                                 Balance Sheets

                       November 30, 2003 and May 31, 2003

<TABLE>
<CAPTION>
                                                                   NOVEMBER 30,           MAY 31,
                                                                       2003                 2003
                                                                  ---------------      -------------
<S>                                                               <C>                  <C>
                                ASSETS

Current assets:
   Cash                                                           $     9,810,103          4,897,962
   Marketable securities                                                       --          1,992,297
   Prepaid expenses                                                       472,924            688,755
                                                                  ---------------       ------------
         Total current assets                                          10,283,027          7,579,014

Property, plant, and equipment, net                                     1,285,961          1,596,026
Other assets                                                               87,271             71,399
                                                                  ---------------       ------------
                                                                  $    11,656,259          9,246,439
                                                                  ===============       ============
                 LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                               $       466,876          1,462,586
   Accrued expenses                                                        62,775             61,519
   Accrued compensation and benefits                                      409,951            377,117
                                                                  ---------------       ------------
         Total current liabilities                                        939,602          1,901,222

Other liabilities                                                         258,698            165,044
                                                                  ---------------       ------------
         Total liabilities                                              1,198,300          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 16,171,067 at November 30, 2003
         and 14,265,875 at May 31, 2003                                   161,710            142,659
   Additional paid-in capital                                         127,249,991        117,503,271
   Deficit accumulated during the development stage                  (116,953,742)      (110,465,757)
                                                                  ---------------       ------------
         Total shareholders' equity                                    10,457,959          7,180,173
                                                                  ---------------       ------------
                                                                  $    11,656,259          9,246,439
                                                                  ===============       ============
</TABLE>

See accompanying notes to financial statements.

<PAGE>

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

                            Statements of Operations

  Three and six months ended November 30, 2003 and 2002 and for the period from
               June 19, 1985 (inception) through November 30, 2003

<TABLE>
<CAPTION>
                                                                                                            CUMULATIVE
                                                  THREE MONTHS ENDED             SIX MONTHS ENDED              FROM
                                                    NOVEMBER 30,                     NOVEMBER 30,         JUNE 19, 1985
                                            -----------------------------    -------------------------        THROUGH
                                                2003             2002           2003           2002      NOVEMBER 30, 2003
                                            --------------    -----------    -----------   -----------   -----------------
                                             (UNAUDITED)      (UNAUDITED)    (UNAUDITED)   (UNAUDITED)     (UNAUDITED)
                                            --------------    -----------    -----------   -----------   -----------------
<S>                                         <C>               <C>            <C>           <C>           <C>
Revenues - license income                   $           --            --             --            --        3,000,000
                                            --------------    ----------     ----------    ----------      -----------
Costs and expenses:
     Research and development                    2,558,012     2,243,311      4,757,364     4,269,113      100,996,900
     General and administrative                  1,021,644       960,746      1,704,172     1,889,903       42,304,386
                                            --------------    ----------     ----------    ----------      -----------
                                                 3,579,656     3,204,057      6,461,536     6,159,016      143,301,286
                                            --------------    ----------     ----------    ----------      -----------
Other income and expense:
     Interest income                                25,046        60,196         48,472       137,566       23,505,699
     Interest expense                                   --            --             --            --           83,234
                                            --------------    ----------     ----------    ----------      -----------
                                                    25,046        60,196         48,472       137,566       23,422,465
                                            --------------    ----------     ----------    ----------      -----------
Cumulative effect of change in
     accounting principle                               --            --         74,921            --           74,921
                                            --------------    ----------     ----------    ----------      -----------
         Net loss                           $   (3,554,610)   (3,143,861)    (6,487,985)   (6,021,450)    (116,953,742)
                                            ==============    ==========     ==========    ==========      ===========
Net loss per share - basic and diluted      $        (0.22)        (0.22)         (0.42)        (0.42)          (11.67)
                                            ==============    ==========     ==========    ==========      ===========
Shares used in calculation of
     per share data - basic and diluted         16,162,934    14,265,875     15,560,900    14,265,875       10,019,481
                                            ==============    ==========     ==========    ==========      ===========
</TABLE>

See accompanying notes to financial statements.

<PAGE>

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

                  Statements of Shareholders' Equity (Deficit)

    Six months ended November 30, 2003 and for the period from June 19, 1985
                     (inception) through November 30, 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                       TOTAL
    PREFERRED STOCK           PREFERRED STOCK                        ACCUMULATED                     SHARE-
-----------------------   ------------------------    ADDITIONAL      DURING THE     DEFERRED       HOLDERS'
 NUMBER      AGGREGATE     NUMBER        AGGREGATE     PAID-IN       DEVELOPMENT      COMPEN-        EQUITY
OF SHARES      AMOUNT     OF SHARES       AMOUNT       CAPITAL          STAGE         SATION       (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)

              Six months ended November 30, 2003 and for the period
            from June 19, 1985 (inception) through November 30, 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 $2,061,149)                                       --              --   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
Issuance of common stock to directors at $6.08 per share on
   October 30, 2003                                                                               12,335         123
Net loss                                                                  --              --          --          --
                                                                        ----       ---------  ----------   ---------
Balance at November 30, 2003                                              --       $      --  16,171,067   $ 161,710
                                                                        ====       =========  ==========   =========
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
SERIES A CONVERTIBLE  SERIES B CONVERTIBLE                      DEFICIT                         TOTAL
  PREFERRED STOCK       PREFERRED STOCK                       ACCUMULATED                       SHARE-
--------------------  --------------------   ADDITIONAL        DURING THE     DEFERRED         HOLDERS'
 NUMBER    AGGREGATE    NUMBER   AGGREGATE    PAID-IN         DEVELOPMENT      COMPEN-          EQUITY
OF SHARES   AMOUNT    OF SHARES   AMOUNT      CAPITAL            STAGE          SATION        (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
                                                   74,877                                          75,000
   --             --      --            --             --        (6,487,985)          --       (6,487,985)
-----      ---------     ---     ---------  -------------   ---------------   ----------   --------------
   --      $      --      --     $      --  $ 127,249,991   $  (116,953,742)  $       --   $   10,457,959
=====      =========     ===     =========  =============   ===============   ==========   ==============
</TABLE>

<PAGE>

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

                            Statements of Cash Flows

                   Six months ended November 30, 2003 and 2002
                      and for the period from June 19, 1985
                      (inception) through November 30, 2003

<TABLE>
<CAPTION>
                                                                                                              CUMULATIVE
                                                                                                                 FROM
                                                                          SIX MONTHS ENDED NOVEMBER 30,     JUNE 19, 1985
                                                                          -----------------------------         THROUGH
                                                                              2003            2002        NOVEMBER 30, 2003
                                                                          -------------   -------------   -----------------
<S>                                                                       <C>             <C>             <C>
Cash flows from operating activities:
     Net loss                                                             $ (6,487,985)    (6,021,450)      (116,953,742)
     Adjustments to reconcile net loss to net
        cash used in operating activities:
           Depreciation and amortization                                       345,699        406,623         17,448,768
           Non-cash compensation                                                75,000             --          3,627,723
           Loss on sale of equipment                                                --             --             66,359
           Changes in assets and liabilities:
              Prepaid expenses                                                 215,831        100,502           (682,135)
              Other current assets                                                  --         (9,950)        (1,896,251)
              Other assets                                                     (15,872)            --             (9,021)
              Accounts payable                                                (995,710)      (753,293)           466,876
              Accrued expenses                                                   1,256        109,892             62,775
              Accrued compensation and benefits                                 32,834        (22,045)           409,951
              Other liabilities                                                 93,654         (4,969)           258,698
                                                                          ------------     ----------     --------------

                    Net cash used in operating activities                   (6,735,293)    (6,194,690)       (97,199,999)
                                                                          ------------     ----------     --------------

Cash flows from investing activities:
     Purchase of property, plant, equipment, and
        capitalized engineering costs                                          (43,337)      (146,766)       (18,715,027)
     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                                              --     (1,953,138)      (418,632,147)
                                                                          ------------     ----------     --------------

                    Net cash provided by (used in) investing activities      1,956,663     (2,099,904)       (16,805,143)
                                                                          ------------     ----------     --------------

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                          4,912,141     (8,294,594)         9,810,103

Cash at beginning of period                                                  4,897,962     17,668,687                 --
                                                                          ------------     ----------     --------------
Cash at end of period                                                     $  9,810,103      9,374,093          9,810,103
                                                                          ============     ==========     ==============
</TABLE>

See accompanying notes to financial statements.

<PAGE>

                          NORTHFIELD LABORATORIES INC.

                      (A COMPANY IN THE DEVELOPMENT STAGE)

                          NOTES TO FINANCIAL STATEMENTS

                                NOVEMBER 30, 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
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, 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(R) blood substitute product and could result
in the cessation of the Company's business. The financial

<PAGE>
statements do not include any adjustments that might result from the outcome of
this uncertainty.

(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 obligations are included in other liabilities.
The balances and changes thereto are summarized below:

<TABLE>
<CAPTION>
                                                 Quarter Ended November 30, 2003
--------------------------------------------------------------------------------
<S>                                              <C>
Obligation at June 1, 2003                                  $192,721
Accretion                                                      8,672
                                                            --------
Obligation at November 30, 2003                             $201,393
                                                            --------
--------------------------------------------------------------------------------
</TABLE>

If the change in accounting had been applied retroactively, the Company's pro
forma net loss for the six months ended November 30, 2002 and for the period
from June 19, 1985 (inception) through November 30, 2002 would have been
$6,086,990 and $104,302,602. The Company's pro forma liability at November 30,
2003 would have been $184,764.

(5)      STOCK OPTIONS

The Company accounts for its fixed plan stock options under the intrinsic value
method of accounting prescribed by Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations in
accounting for options granted to directors, officers, and key employees under
the plans. As such, compensation expense is recorded on the date of grant and
amortized over the period of service only if the current market value of the
underlying stock exceeded the exercise price. No stock-based employee
compensation cost is reflected in net loss, as each option granted under these
plans had an exercise price equal to the market value of the underlying common
stock on the date of grant.

The following table illustrates the effect on net loss if the Company had
applied the fair value recognition provisions of Statement of Financial
Accounting Standards (SFAS) 123, Accounting for Stock Based Compensation, to the
measurement of stock-based employee compensation, including a straight-line
recognition of compensation costs over the related vesting periods for fixed
awards:



<TABLE>
<CAPTION>

                                                          THREE MONTHS ENDED                       SIX MONTHS ENDED

                                                    NOV 30               NOV 30               NOV 30              NOV 30
                                                     2003                 2002                 2003                2002
                                                  ------------        -------------        -------------      --------------
                                                  (unaudited)          (unaudited)          (unaudited)         (unaudited)


<S>                                               <C>                 <C>                  <C>                <C>
Net loss as reported                              $ (3,554,610)          (3,143,861)          (6,487,985)         (6,021,450)

Deduct: Total stock based compensation
   expense determined under the fair value
   method for all awards, net of related
   tax effects                                        (200,962)            (169,808)            (330,974)           (339,615)
                                                  ------------        -------------        -------------      --------------

Pro forma net loss                                  (3,755,572)          (3,313,669)          (6,818,959)         (6,361,065)
                                                  ============        =============        =============      ==============

Basic and diluted loss per share:
     As reported                                         (0.22)               (0.22)               (0.42)              (0.42)

     Pro forma                                           (0.23)               (0.23)               (0.44)              (0.45)
                                                  ============        =============        =============      ==============
</Table>
<PAGE>

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

         As of November 30, 2003, Northfield Laboratories Inc. ("Northfield")
had available cash balances of $9,810,000. We forecast that this level of cash
will be sufficient to fund current operations from November 30, 2003 and the
ramp-up of our phase III pre-hospital trauma trials for approximately 6 months.
We forecast a need to raise approximately $25 to 30 million in total to fund
operations through the completion of our phase III pre-hospital trauma 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 which allows us to issue up to $50,000,000 in securities.
We may issue additional equity or 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 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 raises significant doubt about our
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 PolyHeme(R). We have incurred operating losses during each year of
our operations since inception and expect to incur substantial additional
operating losses for the next several years. From Northfield's inception through
November 30, 2003, we have incurred operating losses totaling $116,954,000.

<PAGE>

         We will be required to complete our planned phase III pre-hospital
trauma trials to obtain FDA regulatory approval before PolyHeme(R) 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 the commercial sale of PolyHeme(R).

         Our success will depend on several factors, including our ability to
obtain FDA regulatory approval of PolyHeme(R) and our manufacturing facilities,
our ability to obtain sufficient quantities of blood to manufacture PolyHeme(R)
in commercial quantities, our ability to manufacture and distribute PolyHeme(R)
in a cost-effective manner, our ability to enforce our patent positions and the
availability of sufficient capital to fund these activities. We have experienced
significant delays in the development and clinical testing of PolyHeme(R). 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.

RESULTS OF OPERATIONS

         We reported no revenues for any of the three and six-month periods
ended November 30, 2003 or 2002. From Northfield's inception through November
30, 2003, we have reported total revenues of $3,000,000, all of which were
derived from licensing fees.


<PAGE>
OPERATING EXPENSES

         Operating expenses for our second fiscal quarter ended November 30,
2003 totaled $3,580,000, an increase of $376,000, or 11.7%, from the $3,204,000
reported in the second quarter of fiscal 2003. The difference was primarily due
to increased costs associated with launching our phase III pre-hospital trauma
trial.

         Research and development expenses for the second quarter of fiscal 2004
totaled $2,558,000, an increase of $315,000, or 14.0%, from the $2,243,000
reported in the second quarter of fiscal 2003. Higher expenses were recognized
during the second quarter of fiscal 2004 related to start-up costs for our phase
III pre-hospital trauma trial. These costs included site qualification visits,
costs incurred for community consultation and public disclosure as required for
a waiver of consent protocol, site training for logistics and data recording,
and training for analyzing patient blood samples.

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

         General and administrative expenses in the second quarter of fiscal
2004 totaled $1,022,000 compared to expenses of $961,000 in the second quarter
of 2003, representing an increase of $61,000, or 6.3%. This increase was due to
higher compensation costs from year

<PAGE>

over year hiring, insurance costs and filing fees related to our common stock
offering, which occurred in the first quarter of this fiscal year.

         We anticipate modest increases in general and administrative expenses,
specifically in market research, over the balance of the fiscal year. Our focus
is centered on successfully executing our phase III pre-hospital trauma trial.
An effort, however, will be initiated to enhance our assessment of the market
and begin to develop plans for the commercial launch of PolyHeme(R).

         For the six-month period ended November 30, 2003, operating expenses of
$6,462,000 exceeded the operating expenses of $6,159,000 incurred in the
six-month period ended November 30, 2002. The dollar increase was $303,000 and
the percentage increase equaled 4.9%. The increases can primarily be attributed
to the required preparation work for our phase III pre-hospital trauma trial.

         Research and development expenses for the six-month period ended
November 30, 2003 totaled $4,757,000, which represents a $488,000, or 11.4%,
increase from the comparable expenses incurred in the six-month period ended
November 30, 2002. During the current fiscal year, the most important activities
were obtaining the required regulatory approvals for our phase III pre-hospital
trauma trial, preparing site required documentation for both community
consultation and institutional review board approval, and formalizing,
communicating and conducting site training for logistical and data issues. These
efforts are the sources of the increased expenses.

<PAGE>

         General and administrative expenses for the six-month period ended
November 30, 2003 totaled $1,704,000, which represents a $186,000, and 9.8%,
decrease from the expense incurred in the comparable prior year period. The
decrease is the result of a significant reduction in the use of outside
professional services.

INTEREST INCOME

         Interest income in the second quarter of fiscal 2004 totaled $25,000,
or a $35,000 decrease from the $60,000 in interest income reported in the second
quarter of fiscal 2003. Lower investment balances combined with a reduction in
available short-term interest rates accounted for the decrease in interest
income. In the absence of a significant cash infusion, interest income will
continue to be significantly below prior year levels.

         On a fiscal year to date basis, interest income of $48,000 was $90,000
lower than in the comparable prior year period. Lower available investment
balances and lower yielding investment options combined to cause the significant
decrease in interest income.

NET LOSS

<PAGE>

         The net loss for the second quarter ended November 30, 2003 was
$3,555,000, or $0.22 per share, compared to a net loss of $3,144,000, or $0.22
per share, for the second quarter ended November 30, 2002. The $411,000
increased net loss in the current quarter compared to the second quarter of the
prior year was primarily the result of increased research and development
spending. On a per share basis, the increased net loss was mitigated by the
additional shares outstanding in the current quarter and resulted in the loss
per share equaling $0.22 for both the second quarter of fiscal 2004 and 2003.

         On a fiscal year to date basis, we reported a loss of $6,488,000 and
$0.42 per share compared to a prior year 6-month loss of $6,021,000 or $0.42 per
share. The increased net loss of $467,000 in the first six-months of the current
fiscal year compared to the same period in the prior year is mitigated by the
increased number of shares outstanding in the current fiscal year.

LIQUIDITY AND CAPITAL RESOURCES

         From Northfield's inception through November 30, 2003, we have used
cash for operating activities and for the purchase of property, plant, equipment
and engineering services in the amount of $115,915,000. For the six-month
periods ended November 30, 2003 and 2002, these cash expenditures totaled
$6,779,000 and $ 6,341,000, respectively. The increased cash outlay for the
first six-month period of fiscal 2004 compared to the same period in the prior
year is the result of a higher level of research and development expenses
related to our phase III pre-hospital trauma trial in the current year.

<PAGE>

         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 November 30, 2003, we had cash and
marketable securities totaling $9,810,000.

         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 approximately 6 months. In addition, our existing
capital resources are expected to be sufficient to support expenditures incurred
in connection with our planned phase III pre-hospital trauma trials during this
period. Thereafter, we will require substantial additional funding to continue
our operations and complete our planned trauma trials. Our inability to raise
sufficient levels of capital would severely impair our current operations and
raises significant doubt about our ability to continue as a going concern.

         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 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(R), 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.

<PAGE>

         Our capital requirements may vary materially from those now anticipated
because of the timing and results of our clinical testing of PolyHeme(R), the
establishment of relationships with strategic partners, changes in the scale,
timing or cost of our planned 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 financial statements.

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

<PAGE>

November 30, 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 November 30, 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) ...........................        $3,375,050         860,929        1,462,277       1,051,844

Other Obligations (2) ...........................         1,527,589         888,544          639,045              --
                                                         ----------       ---------        ---------       ---------

Total Contractual Cash Obligations ..............        $4,902,639       1,749,473        2,101,322       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.
The employment agreements provide for a minimum of one-year severance and
additional payments under certain circumstances.

<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 Statement of Financial Accounting
Standards 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 $9.8
million would decrease interest income by $98,000 on an annual basis.

ITEM 4. CONTROLS AND PROCEDURES.

         Based on their evaluation as of the end of the period covered by this
report, our Chief Executive Officer and Senior Vice President and Chief
Financial Officer have concluded that Northfield's disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, are effective to ensure that information required to be
disclosed by us in the reports that we file or submit under the Securities
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
There were no changes in our internal control over financial reporting that
occurred during our most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.

<PAGE>

                           PART II. OTHER INFORMATION

Item 6. Exhibits

         a)       Exhibit 15      -   Acknowledgement 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 January 13, 2004.

         SIGNATURE                                              TITLE

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

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