----

----

**SECURITIES        AND EXCHANGE COMMISSIONWashington, D.C.        20549**

| [X] |   | QUARTERLY              REPORT              PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF              1934 |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------|
|   |   | For              the              quarterly period ended July 31, 2005 |
|--------|--------|------------------------------------------------------------------------|
| [  ] |   | TRANSITION              REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT              OF 1934 |
|----------------|--------|-------------------------------------------------------------------------------------------------------------------|
|                                                                                          |        |
|------------------------------------------------------------------------------------------|--------|
| Commonwealth              of              the Bahamas                                    |   | None |   |
| (State              or Other              Jurisdiction of Incorporation or Organization) |   | (I.R.S.              Employer              Identification No.) |   |
|                                                                                     |
| 421              Comstock              Road, Toronto, Ontario, Canada                    |   | M1L              2H5 |   |
| (Address              of              principal executive offices)                       |   | (Zip              Code) |   |
|                                                                                     |
| Common                Shares,                $.0167 Par Value |      |      |      | 3,052,296                shares                                   |
|---------------------------------------------------------------|--------------------------|--------------------------|--------------------------|-------------------------------------------------------------------|
| (Title                of                Class)                |      |      |      | (Outstanding                at                September 12, 2005) |

----

----

----

**POLYDEX        PHARMACEUTICALS LIMITEDTABLE OF        CONTENTS**

|                       |                     |                     |      |                                                                                                                                                |      | PAGE                     |
|----------------------------|--------------------------|--------------------------|--------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|--------------------------|
| **PART                I**  |      |      |      | **FINANCIAL                INFORMATION**                                                                                                            |      |      |      |      |
|                       |      |      |      |                                                                                                                                 |      |      |      |      |      |      |
| Item                1      |      |      |      | CONSOLIDATED                FINANCIAL STATEMENTS(UNAUDITED)                                                                                         |      |      |      |      |
|                       |      |      |      |                                                                                                                                 |      |      |      |      |      |      |
|                       |      |      |      | Consolidated                Balance SheetsJuly 31, 2005 and January 31, 2005                                                                        |      |      | 1 |     |
|                       |      |      |      |                                                                                                                                 |      |      |      |      |      |      |
|                       |      |      |      | Consolidated                Statements of Operationsand Comprehensive Income (Loss)Three and                Six months ended July 31, 2005 and 2004 |      |      | 3 |     |
|                       |      |      |      |                                                                                                                                 |      |      |      |      |      |      |
|                       |      |      |      | Consolidated                Statements of Shareholders’ EquitySix months ended July 31, 2005 and                2004                          |      |      | 4 |     |
|                       |      |      |      |                                                                                                                                 |      |      |      |      |      |      |
|                       |      |      |      | Consolidated                Statements of Cash Flows                                                                                                |      |      |      |      |
|                       |      |      |      | Six                months ended                July 31, 2005 and 2004                                                                               |      |      | 5 |     |
|                       |      |      |      |                                                                                                                                 |      |      |      |      |      |      |
|                       |      |      |      | Notes                to                Consolidated Financial Statements (Unaudited)                                                                |      |      | 6 |     |
|                       |      |      |      |                                                                                                                                 |      |      |      |      |      |      |
| Item                2      |      |      |      | MANAGEMENT’S                DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF                OPERATIONS                            |      |      | 14 |     |
|                       |      |      |      |                                                                                                                                 |      |      |      |      |      |      |
| Item                3      |      |      |      | QUANTITATIVE                AND                QUALITATIVE DISCLOSURESABOUT MARKET RISK                                                             |      |      | 31 |     |
|                       |      |      |      |                                                                                                                                 |      |      |      |      |      |      |
| Item                4      |      |      |      | CONTROLS                AND                PROCEDURES                                                                                               |      |      | 34 |     |
|                       |      |      |      |                                                                                                                                 |      |      |      |      |      |      |
| **PART                II** |      |      |      | **OTHER                INFORMATION**                                                                                                                |      |      |      |      |
|                       |      |      |      |                                                                                                                                 |      |      |      |      |      |      |
| Item                4      |      |      |      | SUBMISSION                OF                MATTERS TO A VOTE OF SECURITY HOLDERS                                                                   |      |      | 35 |     |
|                       |      |      |      |                                                                                                                                 |      |      |      |      |      |      |
| Item                6      |      |      |      | EXHIBITS                                                                                                                                            |      |      | 36 |     |
|                       |      |      |      |                                                                                                                                 |      |      |      |      |      |      |
|                       |      |      |      | Signatures                and                Certifications                                                                                         |      |      | 37 |     |

----

**Cautionary      Note Regarding Forward-Looking      Statements**

----

**PART      I**

**FINANCIAL      INFORMATION**

**Item      1.  Consolidated Financial Statements      (unaudited)**

**POLYDEX      PHARMACEUTICALS LIMITED**

**Consolidated      Balance Sheets (Unaudited)**

|                                                                                  |                     |                     |      | July              312005 |      | January              312005 |
|---------------------------------------------------------------------------------------|--------------------------|--------------------------|--------------------------|--------------------------|--------------------------|-----------------------------|
|                                                                                  |
| **Assets**                                                                            |      |      |      |      |                     |              |      |      |   |     |
|                                                                                  |
| Current                assets:                                                        |      |      |      |      |                     |              |      |      |   |     |
| Cash                and cash                equivalents (note 3)                      |      |      |      |   $            | 1,889,643                |                   |      |   $ | 2,401,051 |    |
| Trade                accounts                receivable                               |      |      |      |      | 726,361                  |                   |      |      | 922,267 |    |
| Interest                receivable                                                    |      |      |      |      | —                  |              |      |      | 41,511 |    |
| Inventories:                                                                          |      |      |      |      |                     |              |      |      |   |     |
| Finished                goods                                                         |      |      |      |      | 988,221                  |                   |      |      | 1,187,158 |    |
| Work                in                process                                         |      |      |      |      | 182,526                  |                   |      |      | 123,730 |    |
| Raw                materials                                                          |      |      |      |      | 189,272                  |                   |      |      | 206,005 |    |
|                                                                                  |
| Inventories                                                                           |      |      |      |      | 1,360,019                |                   |      |      | 1,516,893 |    |
| Prepaid                expenses                and other current assets               |      |      |      |      | 147,075                  |                   |      |      | 115,542 |    |
|                                                                                  |
| Total                current                assets                                    |      |      |      |      | 4,123,098                |                   |      |      | 4,997,264 |    |
|                                                                                  |
| Property,                plant                and equipment, net                      |      |      |      |      | 2,995,187                |                   |      |      | 3,124,185 |    |
| Patents                and                intangible assets, net                      |      |      |      |      | 64,941                   |                   |      |      | 68,959 |    |
| Assets                held for                sale                                    |      |      |      |      | 12,253                   |                   |      |      | 12,085 |    |
| Promissory note [net of              deferred              gain of $350,000] [note 7] |                     |                     |                     |                     | 0                        |                        |   |   | — |   |
| Investments                available for sale (note 4)                                |      |      |      |      | 2,309,641                |                   |      |      | 1,909,305 |    |
| Due                from                shareholder                                    |      |      |      |      | 605,862                  |                   |      |      | 643,867 |    |
| Deferred                tax                assets                                     |      |      |      |      | 162,332                  |                   |      |      | 56,208 |    |
|                                                                                  |
|                                                                                  |      |      |      |   $            | 10,273,314               |                   |      |   $ | 10,811,873 |    |

----

|                                                                                       |                     |                     |      | July              312005 |      | January              312005 |
|--------------------------------------------------------------------------------------------|--------------------------|--------------------------|--------------------------|--------------------------|--------------------------|-----------------------------|
| **Liabilities                and Shareholders’                Equity**               |
|                                                                                       |
| Current                liabilities:                                                        |      |      |      |      |      |         |      |      |      |      |
| Bank                indebtedness                                                           |      |      |      |   $            | 24,508                   |                   |      |   $ | 24,170 |    |
| Accounts                payable                                                            |      |      |      |      | 511,421                  |                   |      |      | 463,579 |    |
| Accrued                liabilities                                                         |      |      |      |      | 258,410                  |                   |      |      | 169,370 |    |
| Payroll                and                related taxes payable                            |      |      |      |      | 127,469                  |                   |      |      | 195,897 |    |
| Customer                deposits                                                           |      |      |      |      | 106,350                  |                   |      |      | 97,859 |    |
| Income                taxes                payable                                         |      |      |      |      | 25,722                   |                   |      |      | 129,702 |    |
| Current                portion                of long-term debt                            |      |      |      |      | 12,524                   |                   |      |      | 46,353 |    |
| Current                portion                of capital lease obligations                 |      |      |      |      | 225,378                  |                   |      |      | 157,531 |    |
| Current                portion                of due to shareholder                        |      |      |      |      | 7,967                    |                   |      |      | 21,385 |    |
|                                                                                       |
| Total                current                liabilities                                    |      |      |      |      | 1,299,749                |                   |      |      | 1,305,846 |    |
|                                                                                       |
| Long-term                debt                                                              |      |      |      |      | 3,970                    |                   |      |      | 4,368 |    |
| Capital                lease                obligations                                    |      |      |      |      | 27,941                   |                   |      |      | 169,344 |    |
| Due                to                shareholder                                           |      |      |      |      | 669,526                  |                   |      |      | 659,919 |    |
| Deferred                income                taxes                                        |      |      |      |      | 121,507                  |                   |      |      | 121,507 |    |
|                                                                                       |
|                                                                                       |      |      |      |      | 822,944                  |                   |      |      | 955,138 |    |
|                                                                                       |
| Total                liabilities                                                           |      |      |      |      | 2,122,693                |                   |      |      | 2,260,984 |    |
|                                                                                       |
| Shareholders’                equity:                                                 |
| Capital                stock                                                               |
| Authorized:                                                                                |
| 100,000                Class A                preferred shares of $0.10 each               |
| 899,400                Class B                preferred shares of $0.0167 each             |      |      |      |      |      |         |      |      |      |      |
| 10,000,000                common shares of $0.0167 each                                    |
| Issued                and                outstanding:                                      |
| 899,400                Class B                preferred shares                             |      |      |      |      | 15,010                   |                   |      |      | 15,010 |    |
| 3,052,296                common                shares (January 31, 2005 — 3,042,296) |      |      |      |      | 50,842                   |                   |      |      | 50,676 |    |
| Contributed                surplus                                                         |      |      |      |      | 23,356,052               |                   |      |      | 23,303,718 |    |
| Deficit                                                                                    |      |      |      |      | (15,708,418              | )                 |      |      | (15,144,357 | )   |
| Accumulated                other comprehensive income (loss)                               |      |      |      |      | 437,135                  |                   |      |      | 325,842 |    |
|                                                                                       |      |      |      |      | 8,150,621                |                   |      |      | 8,550,889 |    |
|                                                                                       |      |      |      |   $            | 10,273,314               |                   |      |   $ | 10,811,873 |    |

----

**POLYDEX      PHARMACEUTICALS LIMITED**

**Consolidated      Statements of Operations and Comprehensive Income      (Loss) (Unaudited)**

|                                                                                                                                                          |                     |                     |      | Three              MonthsEndedJuly 312005 |      | Three              MonthsEndedJuly 312004 |      | Six              MonthsEndedJuly 312005 |      | Six              MonthsEndedJuly 312004 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|--------------------------|--------------------------|-------------------------------------------|--------------------------|-------------------------------------------|--------------------------|-----------------------------------------|--------------------------|-----------------------------------------|
|                                                                                                                                                          |
| Sales                                                                                                                                                         |      |      |      |   $                             | 1,273,470                |                                 |      |   $                           | 1,338,409                |                               |      |   $ | 2,596,154 |    |      |   $ | 3,860,203 |    |
| Cost                of goods                sold                                                                                                              |      |      |      |                       | 1,147,446                |                                 |      |                     | 976,474                  |                               |      |      | 2,346,811 |    |      |      | 2,735,176 |    |
|                                                                                                                                                          |
|                                                                                                                                                          |      |      |      |                       | 126,024                  |                                 |      |                     | 361,935                  |                               |      |      | 249,343 |    |      |      | 1,125,027 |    |
|                                                                                                                                                          |
| Expenses:                                                                                                                                                     |
| General                and                administrative                                                                                                      |      |      |      |                       | 305,863                  |                                 |      |                     | 278,656                  |                               |      |      | 760,799 |    |      |      | 738,411 |    |
| Depreciation                                                                                                                                                  |      |      |      |                       | 12,030                   |                                 |      |                     | 7,390                    |                               |      |      | 23,398 |    |      |      | 14,820 |    |
| Research                and                development                                                                                                        |      |      |      |                       | 26,574                   |                                 |      |                     | 16,636                   |                               |      |      | 58,903 |    |      |      | 30,060 |    |
| Interest                expense                                                                                                                               |      |      |      |                       | 20,135                   |                                 |      |                     | 19,608                   |                               |      |      | 39,917 |    |      |      | 50,299 |    |
| Selling                and                promotion                                                                                                           |      |      |      |                       | 33,487                   |                                 |      |                     | 23,459                   |                               |      |      | 54,835 |    |      |      | 48,626 |    |
| Foreign                exchange                (gain) loss                                                                                                    |      |      |      |                       | (13,950                  | )                               |      |                     | (26,493                  | )                             |      |      | (9,790 | )   |      |      | (11,133 | )   |
| Amortization                                                                                                                                                  |                     |                     |                     |                       | —                  |                                 |      |                     | —                  |                               |      |      | — |    |      |      | 8,518 |    |
| Gain                on sale of                assets (note 7)                                                                                                 |      |      |      |                       | (3,646                   | )                               |      |                     | —                  |                          |      |      | (3,646 | )   |      |      | (1,859,471 | )   |
| Interest                and                other income                                                                                                       |      |      |      |                       | (3,508                   | )                               |      |                     | (22,028                  | )                             |      |      | (39,646 | )   |      |      | (34,515 | )   |
|                                                                                                                                                          |      |      |      |                       | 376,985                  |                                 |      |                     | 297,228                  |                               |      |      | 884,770 |    |      |      | (1,014,385 | )   |
|                                                                                                                                                          |
| Income                (loss)                before income taxes                                                                                               |      |      |      |                       | (250,961                 | )                               |      |                     | 64,707                   |                               |      |      | (635,427 | )   |      |      | 2,139,412 |    |
|                                                                                                                                                          |
| Provision                for                (recovery of) income taxes                                                                                        |      |      |      |                       | (22,529                  | )                               |      |                     | 51,948                   |                               |      |      | (71,366 | )   |      |      | 865,985 |    |
|                                                                                                                                                          |
| Net                income                (loss) for the period                                                                                                |      |      |      |                       | (228,432                 | )                               |      |                     | 12,759                   |                               |      |      | (564,061 | )   |      |      | 1,273,427 |    |
|                                                                                                                                                          |
| Unrealized                gain                (loss) on investments available for sale                                                                        |      |      |      |                       | 71,815                   |                                 |      |                     | (4,211                   | )                             |      |      | 4,254 |    |      |      | (4,211 | )   |
|                                                                                                                                                          |
| Currency                translation adjustment                                                                                                                |      |      |      |                       | 202,066                  |                                 |      |                     | 204,717                  |                               |      |      | 107,039 |    |      |      | (9,373 | )   |
|                                                                                                                                                          |
| Comprehensive                income (loss) for the period                                                                                                     |      |      |      |   $                             | 45,449                   |                                 |      |   $                           | 213,265                  |                               |      |   $ | (452,768 | )   |      |   $ | 1,259,843 |    |
|                                                                                                                                                          |
| Per                share                information:                                                                                                          |
| Earnings                (loss)                per common share:                                                                                               |
| Basic                                                                                                                                                         |      |      |      |   $                             | (0.07                    | )                               |      |   $                           | —                  |                          |      |   $ | (0.18 | )   |      |   $ | 0.42 |    |
| Diluted                                                                                                                                                       |      |      |      |   $                             | (0.07                    | )                               |      |   $                           | —                  |                          |      |   $ | (0.18 | )   |      |   $ | 0.42 |    |
|                                                                                                                                                          |
| Weighted                average                number of common shares used in computing net earnings per share                for the                period: |      |      |      |                       |                     |                            |      |                     |                     |                          |      |      |   |     |      |      |   |     |
| Basic                                                                                                                                                         |      |      |      |                       | 3,052,296                |                                 |      |                     | 3,037,463                |                               |      |      | 3,052,296 |    |      |      | 3,032,629 |    |
| Diluted                                                                                                                                                       |      |      |      |                       | 3,052,296                |                                 |      |                     | 3,071,158                |                               |      |      | 3,052,296 |    |      |      | 3,063,484 |    |

----

**POLYDEX      PHARMACEUTICALS LIMITED**

**Consolidated      Statements of Shareholders’ Equity      (Unaudited)**

|                                                                                   |                     |                     |      | Six              MonthsEndedJuly 31, 2005 |      | Six              MonthsEndedJuly 31, 2004 |
|----------------------------------------------------------------------------------------|--------------------------|--------------------------|--------------------------|-------------------------------------------|--------------------------|-------------------------------------------|
| Preferred                Shares:                                                       |
| Balance,                beginning and end of period                                    |      |      |      |   $                             | 15,010                   |                                 |      |   $ | 15,010 |    |
|                                                                                   |
| Common                Shares:                                                          |
| Balance,                beginning of period                                            |      |      |      |   $                             | 50,676                   |                                 |      |   $ | 50,434 |    |
| Common                share                options exercised                           |      |      |      |                       | 166                      |                            |      |      | — |     |
| Balance,                end of                period                                   |      |      |      |   $                             | 50,842                   |                                 |      |   $ | 50,434 |    |
|                                                                                   |
| Contributed                Surplus:                                                    |
| Balance,                beginning of period                                            |      |      |      |   $                             | 23,303,718               |                                 |      |   $ | 23,236,498 |    |
| Common                share                options exercised                           |      |      |      |                       | 52,334                   |                                 |      |      | — |     |
| Balance,                end of                period                                   |      |      |      |   $                             | 23,356,052               |                                 |      |   $ | 23,236,498 |    |
|                                                                                   |
| Deficit:                                                                               |
| Balance,                beginning of period                                            |      |      |      |   $                             | (15,144,357              | )                               |      |   $ | (16,284,268 | )   |
| Net                income                (loss) for the period                         |      |      |      |                       | (564,061                 | )                               |      |      | 1,260,668 |    |
| Balance,                end of                period                                   |      |      |      |   $                             | (15,708,418              | )                               |      |   $ | (15,023,600 | )   |
|                                                                                   |
| Accumulated                Other Comprehensive Income (Loss):                          |
| Balance,                beginning of period                                            |      |      |      |   $                             | 325,842                  |                                 |      |   $ | (110,343 | )   |
| Unrealized                gain                (loss) on investments available for sale |      |      |      |                       | 4,254                    |                                 |      |      | — |     |
| Currency                translation adjustment for the period                          |      |      |      |                       | 107,039                  |                                 |      |      | (214,046 | )   |
| Balance,                end of                period                                   |      |      |      |   $                             | 437,135                  |                                 |      |   $ | (324,389 | )   |

----

**POLYDEX      PHARMACEUTICALS LIMITED**

**Consolidated      Statements of Cash Flows      (Unaudited)**

|                                                                                                |                     |                     |      | Six              MonthsEndedJuly 31, 2005 |      | Six              MonthsEndedJuly 31, 2004 |
|-----------------------------------------------------------------------------------------------------|--------------------------|--------------------------|--------------------------|-------------------------------------------|--------------------------|-------------------------------------------|
| Cash                provided by                (used in):                                           |
|                                                                                                |
| Operating                activities:                                                                |      |      |      |                       |      |                       |      |      |      |      |      |      |      |      |
| Net                income                (loss) for the period                                      |      |      |      |   $                             | (564,061                 | )                               |      |   $ | 1,273,427 |    |
| Add                (deduct)                items not affecting cash:                                |
| Depreciation                and                amortization                                         |      |      |      |                       | 262,760                  |                                 |      |      | 247,336 |    |
| Imputed                interest                on long-term debt                                    |      |      |      |                       | 1,274                    |                                 |      |      | 11,853 |    |
| Deferred                income                taxes                                                 |      |      |      |                       | (104,366                 | )                               |      |      | 589,352 |    |
| Gain                on disposal                of equipment                                         |      |      |      |                       | (3,646                   | )                               |      |      | — |     |
| Gain                on sale of                veterinary products business                          |      |      |      |                       | —                  |                            |      |      | (1,859,471 | )   |
| Net                change in                non-cash working capital balances related to operations |      |      |      |                       | 313,790                  |                                 |      |      | (298,196 | )   |
|                                                                                                |
|                                                                                                |      |      |      |                       | (94,249                  | )                               |      |      | (35,699 | )   |
|                                                                                                |
| Investing                activities:                                                                |
| Additions                to                property, plant and equipment and patents                |      |      |      |                       | (87,542                  | )                               |      |      | (56,611 | )   |
| Decrease                in due                from shareholder                                      |      |      |      |                       | 38,005                   |                                 |      |      | 37,460 |    |
| Unrealized                loss                on commercial paper available for sale                |      |      |      |                       | (534                     | )                               |      |      | (1,184 | )   |
| Acquisition                of                investments available for sale                         |      |      |      |                       | (365,767                 | )                               |      |      | (1,116,255 | )   |
| Proceeds                from                sale of equipment                                       |      |      |      |                       | 3,645                    |                                 |      |      | — |     |
| Proceeds                from                sale of veterinary products business                    |      |      |      |                       | —                  |                            |      |      | 4,599,218 |    |
|                                                                                                |
|                                                                                                |      |      |      |                       | (412,193                 | )                               |      |      | 3,462,628 |    |
| Financing                activities:                                                                |
| Repayment                of                long-term debt                                           |      |      |      |                       | (35,570                  | )                               |      |      | (260,503 | )   |
| Repayment                of                capital lease obligations                                |      |      |      |                       | (64,623                  | )                               |      |      | (79,306 | )   |
| Increase                (decrease) in due to shareholder                                            |      |      |      |                       | (3,811                   | )                               |      |      | (223 | )   |
| Increase                (decrease) in bank indebtedness                                             |      |      |      |                       | —                  |                            |      |      | (30,189 | )   |
| Exercise                of                common share options                                      |      |      |      |                       | 52,500                   |                                 |      |      | — |     |
|                                                                                                |
|                                                                                                |      |      |      |                       | (51,504                  | )                               |      |      | (370,221 | )   |
| Effect                of                exchange rate changes on cash                               |      |      |      |                       | 46,538                   |                                 |      |      | 158,602 |    |
|                                                                                                |
| Increase                in cash                and cash equivalents                                 |      |      |      |                       | (511,408                 | )                               |      |      | 3,215,310 |    |
|                                                                                                |
| Cash                and cash                equivalents, beginning of period                        |      |      |      |                       | 2,401,051                |                                 |      |      | 371,528 |    |
| Cash                and cash                equivalents, end of period                              |      |      |      |   $                             | 1,889,643                |                                 |      |   $ | 3,586,838 |    |
|                                                                                                |
| Cash                and cash                equivalents is comprised of the following:              |
| Cash                                                                                                |      |      |      |   $                             | 207,747                  |                                 |      |   $ | 326,682 |    |
| Cash                equivalents                                                                     |      |      |      |                       | 1,681,896                |                                 |      |      | 3,260,156 |    |
|                                                                                                |
|                                                                                                |      |      |      |   $                             | 1,889,643                |                                 |      |   $ | 3,586,838 |    |

----

**1.      Basis of Presentation:**

**2.      Significant Accounting Policies:**

----

|                                                       |        |
|-------------------------------------------------------|--------|
| Buildings                                             |   | 15              years |   |
| Machinery                and                equipment |   | 3              to 10 years |   |

----

**3.      Cash and Cash Equivalents:**

|                               |                     |                     |      | July              312005 |      |      | January              312005 |      |
|------------------------------------|--------------------------|--------------------------|--------------------------|--------------------------|--------------------------|--------------------------|-----------------------------|--------------------------|
| Cash                               |      |      |      |   $            | 207,747                  |                |         |   $            | 129,818 |    |
| Short-term                deposits |      |      |      |      | 1,681,896                |                |         |      | 2,271,233 |    |
|                               |      |      |      |   $            | 1,889,643                |                |         |   $            | 2,401,051 |    |

**4.      Investments Available For Sale:**

----

|                                                                      |                     |                     |      | July              312005 |      |      | January              312005 |      |
|---------------------------------------------------------------------------|--------------------------|--------------------------|--------------------------|--------------------------|--------------------------|--------------------------|-----------------------------|--------------------------|
| Canadian                medium-term fixed income instruments              |      |      |      |   $            | 1,784,254                |                |         |   $            | 1,909,305 |    |
| Canadian                income                trust and mutual fund units |      |      |      |      | 525,387                  |                |         |      | — |     |
|                                                                      |      |      |      |   $            | 2,309,641                |                |         |   $            | 1,909,305 |    |

**5.      Commitments and Contingencies:**

**6.      Stock-based Employee Compensation:**

**7.      Vet Labs — Sparhawk Joint Venture:**

----

**8.      Segmented Information:**

| Dextran  — |   | manufactures              and              sells bulk quantities of dextran and several of its derivatives to              large              pharmaceutical companies throughout the              world. |
|----------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Chemdex  — |   | manufactures              and              sells veterinary pharmaceutical products and specialty chemicals in              the              United States. The primary customers are distributors and private              labelers, who in turn sell to the end user of the              products. |
|----------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                    |                     |                     |      | Three              MonthsEndedJuly 31, 2005 |      | Three              MonthsEndedJuly 31, 2004 |      | Six              MonthsEndedJuly 21, 2005 |      | Six              MonthsEndedJuly 21, 2004 |
|-------------------------------------------------------------------------|--------------------------|--------------------------|--------------------------|---------------------------------------------|--------------------------|---------------------------------------------|--------------------------|-------------------------------------------|--------------------------|-------------------------------------------|
| **Sales:**                                                              |
| Dextran                                                                 |      |      |      |   $                               | 1,265,504                |                                   |      |   $                             | 1,333,866                |                                 |      |   $ | 2,582,830 |    |      |   $ | 2,863,690 |    |
| Less:                intercompany sales elimination                     |      |      |      |                         | 151,377                  |                                   |      |                       | 101,735                  |                                 |      |      | 253,170 |    |      |      | 201,666 |    |
|                                                                    |      |      |      |                         | 1,114,127                |                                   |      |                       | 1,232,131                |                                 |      |      | 2,329,660 |    |      |      | 2,662,024 |    |
| Chemdex                                                                 |      |      |      |                         | 159,343                  |                                   |      |                       | 106,278                  |                                 |      |      | 266,494 |    |      |      | 1,198,179 |    |
| Total                consolidated sales                                 |      |      |      |   $                               | 1,273,470                |                                   |      |   $                             | 1,338,409                |                                 |      |   $ | 2,596,154 |    |      |   $ | 3,860,203 |    |
|                                                                    |
| **Income                (loss) before income taxes:**                   |
| Dextran                                                                 |      |      |      |   $                               | (112,897                 | )                                 |      |   $                             | 145,832                  |                                 |      |   $ | (308,156 | )   |      |   $ | 415,111 |    |
| Chemdex                                                                 |      |      |      |                         | 44,304                   |                                   |      |                       | 9,890                    |                                 |      |      | 84,654 |    |      |      | 1,990,281 |    |
| Total                pre-tax                income (loss) from segments |      |      |      |                         | (68,593                  | )                                 |      |                       | 155,722                  |                                 |      |      | (223,502 | )   |      |      | 2,405,392 |    |
| Less:                Unallocated corporate expenses                     |      |      |      |                         | 182,368                  |                                   |      |                       | 91,015                   |                                 |      |      | 411,925 |    |      |      | 265,980 |    |
| Total                consolidated pre-tax income (loss)                 |      |      |      |   $                               | (250,961                 | )                                 |      |   $                             | 64,707                   |                                 |      |   $ | (635,427 | )   |      |   $ | 2,139,412 |    |
|                                                                    |
| **Total                revenue by significant customer:**               |
| Customer                A                                               |      |      |      |   $                               | 293,488                  |                                   |      |   $                             | 285,254                  |                                 |      |   $ | 475,258 |    |      |   $ | 531,937 |    |
| Customer                B                                               |      |      |      |   $                               | 189,980                  |                                   |      |   $                             | 85,760                   |                                 |      |   $ | 297,500 |    |      |   $ | 85,760 |    |
| Customer                C                                               |      |      |      |   $                               | 159,344                  |                                   |      |   $                             | 106,278                  |                                 |      |   $ | 266,494 |    |      |   $ | 234,917 |    |
| Customer                D                                               |      |      |      |   $                               | 86,400                   |                                   |      |   $                             | 117,000                  |                                 |      |   $ | 259,400 |    |      |   $ | 289,000 |    |
|                                                                    |
| **Sales                revenue by product group:**                      |
| Bulk                dextran and                derivatives              |      |      |      |   $                               | 1,273,470                |                                   |      |   $                             | 1,338,409                |                                 |      |   $ | 2,596,154 |    |      |   $ | 2,768,302 |    |
| Sterile                injectible veterinary products                   |      |      |      |                         | —                  |                              |      |                       | —                  |                            |      |      | — |     |      |      | 663,629 |    |
| Oral                and topical                veterinary products      |      |      |      |                         | —                  |                              |      |                       | —                  |                            |      |      | — |     |      |      | 428,272 |    |
| Total                consolidated sales                                 |      |      |      |   $                               | 1,273,470                |                                   |      |   $                             | 1,338,409                |                                 |      |   $ | 2,596,154 |    |      |   $ | 3,860,203 |    |
|                                                                    |      |      |      |                         |      |                         |      |                       |      |                       |      |      |      |      |      |      |      |      |

----

|                                                     |                     |                     |      | July              31,              2005 |      | January              31,              2005 |
|----------------------------------------------------------|--------------------------|--------------------------|--------------------------|-----------------------------------------|--------------------------|--------------------------------------------|
| **Assets:**                                              |
| Dextran                                                  |      |      |      |   $                           | 9,255,234                |                                  |      |   $ | 9,933,254 |    |
| Chemdex                                                  |      |      |      |                     | 281,682                  |                                  |      |      | 233,539 |    |
| Total                assets                from segments |      |      |      |                     | 9,536,916                |                                  |      |      | 10,166,793 |    |
| Corporate                assets                          |      |      |      |                     | 736,398                  |                                  |      |      | 645,080 |    |
| Total                consolidated assets                 |      |      |      |   $                           | 10,273,314               |                                  |      |   $ | 10,811,873 |    |

**9.      Recent Accounting Pronouncements:**

----

----

**Item      2.  Management’s Discussion and Analysis of Financial Condition and      Results of Operations**

**Overview**

***Dextran      Products Business***

----

***Chemdex,      Vet Labs and the Joint Venture Business***

----

**Results      of Operations**

***Three      months ended July 31, 2005 compared to three months      ended July 31, 2004***

|                                                    |                     |                     |      | Three              MonthsEndedJuly 31,2005 |      | Three              MonthsEndedJuly 31,2004 |
|---------------------------------------------------------|--------------------------|--------------------------|--------------------------|--------------------------------------------|--------------------------|--------------------------------------------|
|                                                    |
| Net                income                (loss)         |      |      |      |   $                              | (228,432                 | )                                |      |   $ | 12,759 |    |
|                                                    |
| Earnings                (loss)                per share |      |      |      |   $                              | (0.07                    | )                                |      |   $ | 0.00 |    |

| Income              (loss)              before income taxes |                     |                     |      | Three              Months              EndedJuly 31, 2005 |      | Three              Months              EndedJuly 31, 2004 |      | Variance                 |
|-------------------------------------------------------------|--------------------------|--------------------------|--------------------------|-----------------------------------------------------------|--------------------------|-----------------------------------------------------------|--------------------------|--------------------------|
|                                                        |
| Consolidated                                                |      |      |      |   $                                             | (250,961                 | )                                               |      |   $            | 64,707 |    |      |      | (488 | )%   |
| Dextran                Products                             |      |      |      |                                       | (112,897                 | )                                               |      |      | 145,832 |    |      |      | (177 | )%   |
| Chemdex                                                     |      |      |      |                                       | 44,304                   |                                                 |      |      | 9,890 |    |      |      | 348 | %   |

----

| Sales                                                     |                     |                     |      | Three              MonthsEndedJuly 31, 2005 |      | Three              MonthsEndedJuly 31, 2004 |      | Variance                 |
|-----------------------------------------------------------|--------------------------|--------------------------|--------------------------|---------------------------------------------|--------------------------|---------------------------------------------|--------------------------|--------------------------|
| Consolidated                                              |      |      |      |   $                               | 1,273,470                |                                   |      |   $            | 1,338,409 |    |      |      | (5 | )%   |
| Dextran                Products                           |      |      |      |   $                               | 1,114,127                |                                   |      |   $            | 1,232,131 |    |      |      | (10 | )%   |
| Percentage                of                Company sales |      |      |      |                         | 87                       | %                                 |      |      | 92 | %   |      |      |      |      |
| Chemdex                                                   |      |      |      |   $                               | 159,343                  |                                   |      |   $            | 106,278 |    |      |      | 50 | %   |
| Percentage                of                Company sales |      |      |      |                         | 13                       | %                                 |      |      | 8 | %   |      |      |      |      |

| Gross              profit                         |                     |                     |      | Three              MonthsEndedJuly 31, 2005 |      | Three              MonthsEndedJuly 31, 2004 |      | Variance                 |
|---------------------------------------------------|--------------------------|--------------------------|--------------------------|---------------------------------------------|--------------------------|---------------------------------------------|--------------------------|--------------------------|
| Consolidated                                      |      |      |      |   $                               | 126,024                  |                                   |      |   $            | 361,935 |    |      |      | (65 | )%   |
| Percentage                of                sales |      |      |      |                         | 10                       | %                                 |      |      | 27 | %   |      |      |      |      |
| Dextran                Products                   |      |      |      |   $                               | 77,024                   |                                   |      |   $            | 336,228 |    |      |      | (77 | )%   |
| Percentage                of                sales |      |      |      |                         | 7                        | %                                 |      |      | 27 | %   |      |      |      |      |
| Chemdex                                           |      |      |      |   $                               | 5,704                    |                                   |      |   $            | 9,873 |    |      |      | (42 | )%   |
| Percentage                of                sales |      |      |      |                         | 4                        | %                                 |      |      | 9 | %   |      |      |      |      |

----

|                                                                       |                     |                     |      | Three              MonthsEndedJuly 31, 2005 |      | Three              MonthsEndedJuly 31, 2004 |      | Variance      |
|----------------------------------------------------------------------------|--------------------------|--------------------------|--------------------------|---------------------------------------------|--------------------------|---------------------------------------------|--------------------------|---------------|
| **Selling,                promotion, general and administrative expenses** |      |      |      |   $                               | 339,350                  |                                   |      |   $ | 301,840 |    |      |      | 12 | %   |

| Research              and              development                  |                     |                     |      | Three              MonthsEndedJuly 31, 2005 |      | Three              MonthsEndedJuly 31, 2004 |      | Variance      |
|---------------------------------------------------------------------|--------------------------|--------------------------|--------------------------|---------------------------------------------|--------------------------|---------------------------------------------|--------------------------|---------------|
| Research                and                development expenditures |      |      |      |   $                               | 26,574                   |                                   |      |   $ | 16,636 |    |      |      | 60 | %   |

----

|                                                                    |                     |                     |      | Three              MonthsEndedJuly 31, 2005 |      | Three              MonthsEndedJuly 31, 2004 |      | Variance      |
|-------------------------------------------------------------------------|--------------------------|--------------------------|--------------------------|---------------------------------------------|--------------------------|---------------------------------------------|--------------------------|---------------|
| **Depreciation                and amortization                expense** |      |      |      |   $                               | 129,939                  |                                   |      |   $ | 117,307 |    |      |      | 11 | %   |

|                                |                     |                     |      | Three              MonthsEndedJuly 31, 2005 |      | Three              MonthsEndedJuly 31, 2004 |      | Variance      |
|-------------------------------------|--------------------------|--------------------------|--------------------------|---------------------------------------------|--------------------------|---------------------------------------------|--------------------------|---------------|
| **Interest                expense** |      |      |      |   $                               | 20,135                   |                                   |      |   $ | 19,608 |    |      |      | 3 | %   |

|                                     |                     |                     |      | Three              MonthsEndedJuly 31, 2005 |      | Three              MonthsEndedJuly 31, 2004 |      | Variance      |
|------------------------------------------|--------------------------|--------------------------|--------------------------|---------------------------------------------|--------------------------|---------------------------------------------|--------------------------|---------------|
| **Foreign                exchange gain** |      |      |      |   $                               | 13,950                   |                                   |      |   $ | 26,493 |    |      |      | (47 | )%   |

|                                      |                     |                     |      | Three              MonthsEndedJuly 31, 2005 |      | Three              MonthsEndedJuly 31, 2004 |      | Variance      |
|-------------------------------------------|--------------------------|--------------------------|--------------------------|---------------------------------------------|--------------------------|---------------------------------------------|--------------------------|---------------|
| **Other                income (expense)** |      |      |      |   $                               | 7,154                    |                                   |      |   $ | 21,753 |    |      |      | (67 | )%   |

----

| Provision              for              (recovery of) income taxes |                     |                     |      | Three              MonthsEndedJuly 31, 2005 |      | Three              MonthsEndedJuly 31, 2004 |      | Variance                 |
|--------------------------------------------------------------------|--------------------------|--------------------------|--------------------------|---------------------------------------------|--------------------------|---------------------------------------------|--------------------------|--------------------------|
| Consolidated                                                       |      |      |      |   $                               | (22,529                  | )                                 |      |   $            | 51,948 |    |      |      | (143 | )%   |
| Dextran                Products                                    |      |      |      |                         | (39,529                  | )                                 |      |      | 47,448 |    |      |      | (183 | )%   |
| Chemdex                                                            |      |      |      |                         | 17,000                   |                                   |      |      | 4,500 |    |      |      | 278 | %   |

**Liquidity      and Capital Resources**

----

----

**Related      Party Transactions**

----

**Off-Balance      Sheet Arrangements**

**Tabular      Disclosure of Contractual      Obligations**

| **Payment              due by period**                        |                     |
|---------------------------------------------------------------|--------------------------|
||
| Long-term                debt                obligations (1)  |      |      |      |   $ | 711,909 |    |      |   $ | 90,670 |    |      |   $ | 122,741 |    |      |   $ | 121,028 |    |      |   $ | 377,470 |    |
| Capital                lease                obligations (2)   |      |      |      |      | 257,985 |    |      |      | 232,208 |    |      |      | 22,832 |    |      |      | 2,945 |    |      |      | — |     |
| Operating                Lease                obligations (3) |      |      |      |      | 528 |     |      |      | 528 |     |      |      | — |     |      |      | — |     |      |      | — |     |
| Purchase                obligations (4)                       |      |      |      |      | 196,668 |    |      |      | 196,668 |    |      |      | — |     |      |      | — |     |      |      | — |     |
| Revolving                loans                (5)             |      |      |      |      | 24,508 |    |      |      | 24,508 |    |      |      | — |     |      |      | — |     |      |      | — |     |
| Total                                                         |      |      |      |   $ | 1,191,598 |    |      |   $ | 544,582 |    |      |   $ | 145,573 |    |      |   $ | 123,973 |    |      |   $ | 377,470 |    |

----

| 1. |   | Consists              of: |
|----|--------|---------------------------|

|    | (a)   |   | Note              payable in              monthly payments of $5,860 maturing September 19,              2005; |
|--------------|-----------------|--------|----------------------------------------------------------------------------------------------------------------|

|    | (b)   |   | Note              payable in              quarterly payments of Cdn. $419 (US $342), bearing interest at 10.43%              and              maturing December 2009; and |
|--------------|-----------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    | (c)   |   | Amounts              due to              shareholder which bear interest at the U.S. bank prime lending rate              plus              1.5%, with required minimum monthly payments, including interest, of              $5,000. |
|--------------|-----------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. |   | Consists              of              capital lease obligations for: |
|----|--------|----------------------------------------------------------------------|

|    | (a)   |   | Production              equipment of Cdn. $236,455 (US $193,166) repayable in monthly              installments, bearing interest at 9% and maturing November              2006; |
|--------------|-----------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    | (b)   |   | Production              equipment of Cdn. $54,107 (US $44,201) repayable in monthly installments,              bearing interest at 7.59% and maturing November 2006;              and |
|--------------|-----------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|    | (c)   |   | Office              equipment              of Cdn. $25,237 (US $20,617) repayable in quarterly installments, bearing              interest at 10.43% and maturing December              2009. |
|--------------|-----------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. |   | Consists              of              operating lease obligations for office equipment requiring quarterly              payments of Cdn. $161 (US $132) terminating June              2006. |
|----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. |   | Consists              of: |
|----|--------|---------------------------|

|    | (a)   |   | Purchase              obligations of $64,668 for research and development services payable              as              specified milestones are achieved. |
|--------------|-----------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    | (b)   |   | Purchase              obligation of GBP 75,000 (US $132,000) for production equipment, half              payable in September 2005, and the remainder upon              shipment. |
|--------------|-----------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5. |   | Consists              of              Canadian operating line of credit bearing interest at the Canadian              banks’              prime lending rate plus 0.75%, repayable upon              demand. |
|----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Risk      Factors**

***The      Company’s product development efforts may be reduced or discontinued due to      difficulties or delays in clinical trials.***

| •   |   | that              the Company              will not be able to maintain its current research and development              schedules; |
|---------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

| •   |   | that              the Company              will not be able to enter into human clinical trials because of              scientific, governmental or financial reasons, or that it will encounter              problems in clinical trials that will cause a delay or suspension of              the              development of the product candidate; |
|---------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   |   | that              the              developmental product will be found to be ineffective or              unsafe; |
|---------------------|--------|------------------------------------------------------------------------------------------------------------------|

| •   |   | that              government              regulations will delay or prevent the product’s marketing for a              considerable period of time and impose costly procedures upon the              Company’s activities; |
|---------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| •   |   | that              the FDA or              other regulatory agencies will not approve the product or the process              by              which the product is manufactured, or will not do so on a timely basis;              and/or |
|---------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   |   | that              the FDA’s              policies may change and additional government regulations and policies              may              be instituted, which could prevent or delay regulatory approval of              the              product. |
|---------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***The      Company’s developmental product commercialization efforts may not be      successful.***

| •   |   | the              product is              uneconomical or if the market for the product does not develop or              diminishes; |
|---------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------|

| •   |   | the              Company is              not able to enter into arrangements or collaborations to commercialize              and/or market the product; |
|---------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   |   | the              product is              not eligible for third-party reimbursement from government or private              insurers; |
|---------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

| •   |   | others              hold              proprietary rights that preclude the Company from commercializing the              product; |
|---------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

| •   |   | others              have              brought to market similar or superior              products; |
|---------------------|--------|----------------------------------------------------------------------------------------------------|

| •   |   | others              have              superior resources to market similar products or              technologies; |
|---------------------|--------|-------------------------------------------------------------------------------------------------------------------|

| •   |   | government              regulation imposes limitations on the indicated uses of the product,              or              later discovery of previously unknown problems with the product results              in              added restrictions on the product or results in the product being              withdrawn from the market; and/or |
|---------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   |   | the              product has              undesirable or unintended side effects that prevent or limit its              commercial use. |
|---------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

***The      Company      depends on partnerships with third parties for the development and      commercialization of its products.***

----

***The      Company      does not currently have agreements with third parties to market its      developmental products.***

***The      Company      may be unable to commercialize its products if it is unable to protect its      proprietary rights, and may be liable for significant costs and damages if      it      faces a claim of intellectual property infringement by a third      party.***

----

**Critical      Accounting Policies**

***Revenue      Recognition***

***Allowance      for Doubtful Accounts***

----

***Long-Lived      Assets***

***Deferred      Tax Assets***

***The      Joint      Venture***

----

**Changes      in Accounting Policies**

**Recent      Accounting Pronouncements**

----

----

**Item      3.  Quantitative and Qualitative Disclosures About      Market Risk**

**Exchange      Rate Sensitivity**

----

|                                                |   |   |   | Expected              Maturity Date |      |          |   |   |    |
|-----------------------------------------------------|--------|--------|--------|-------------------------------------|-----------|---------------|--------|--------|---------|
||
||
| **Assets:**                                         |
| Short-term                investments:              |   |   |   |                                |      |          |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed                rate                ($Cdn)     |   |   |   |                                | 1,680,226 |     |   |   | — |     |   |   | — |     |   |   | — |     |   |   | — |     |   |   | — |     |   |   | 1,680,226 |    |   |   | 1,681,895 |    |
| Average                interest                rate |   |   |   |                                | 2.40      | %   |   |   | — |     |   |   | — |     |   |   | — |     |   |   | — |     |   |   | — |     |   |   | 2.40 | %   |   |   |   |     |
| Marketable                securities:               |   |   |   |                                |      |          |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed                rate                ($Cdn)     |   |   |   |                                | 604,518   |     |   |   | 599,751 |    |   |   | 661,256 |    |   |   | — |     |   |   | — |     |   |   | — |     |   |   | 1,865,525 |    |   |   | 1,764,657 |    |
| Average                interest                rate |   |   |   |                                | 2.66      | %   |   |   | 2.85    | %   |   |   | 2.86 | %   |   |   | — |     |   |   | — |     |   |   | — |     |   |   | 2.79 | %   |   |   |   |     |
| **Liabilities:**                                    |
| Long-term                debt:                      |
| Fixed                rate                ($Cdn)     |   |   |   |                                | 160,580   |     |   |   | 157,661 |    |   |   | 5,531 |    |   |   | 6,137 |    |   |   | 6,807 |    |   |   | — |     |   |   | 336,716 |    |   |   | 327,513 |    |
| Average                interest                rate |   |   |   |                                | 8.78      | %   |   |   | 8.81    | %   |   |   | 10.43 | %   |   |   | 10.43 | %   |   |   | 10.43 | %   |   |   | — |     |   |   | 8.88 | %   |   |   |   |   |

----

**Interest      Rate Sensitivity**

|                                                |   |   |   | Expected              Maturity Date |      |          |   |   |    |
|-----------------------------------------------------|--------|--------|--------|-------------------------------------|-----------|---------------|--------|--------|---------|
||
||
| **Assets:**                                         |
| Short-term                investments:              |
| Fixed                rate                ($Cdn)     |   |   |   |                                | 1,680,226 |     |   |   | — |     |   |   | — |     |   |   | — |     |   |   | — |     |   |   | — |     |   |   | 1,680,226 |    |   |   | 1,681,895 |    |
| Average                interest                rate |   |   |   |                                | 2.40      | %   |   |   | — |     |   |   | — |     |   |   | — |     |   |   | — |     |   |   | — |     |   |   | 2.40 | %   |   |   |   |   |
| Marketable                securities:               |
| Fixed                rate                ($Cdn)     |   |   |   |                                | 604,518   |     |   |   | 599,751 |    |   |   | 661,256 |    |   |   | — |     |   |   | — |     |   |   | — |     |   |   | 1,865,525 |    |   |   | 1,764,657 |    |
| Average                interest                rate |   |   |   |                                | 2.66      | %   |   |   | 2.85    | %   |   |   | 2.86 | %   |   |   | — |     |   |   | — |     |   |   | — |     |   |   | 2.79 | %   |   |   |   |   |
| Notes                receivable:                    |   |   |   |                                |      |          |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable                rate                ($US)   |   |   |   |                                | 84,737    |     |   |   | 60,045  |    |   |   | 64,548 |    |   |   | 69,389 |    |   |   | 74,594 |    |   |   | 20,060 |    |   |   | 373,373 |    |   |   | 373,373 |    |
| Average                interest                rate |   |   |   |                                | 7.50      | %   |   |   | 7.50    | %   |   |   | 7.50 | %   |   |   | 7.50 | %   |   |   | 7.50 | %   |   |   | 7.50 | %   |   |   | 7.50 | %   |   |   |   |   |
| **Liabilities:**                                    |
| Long-term                debt:                      |
| Fixed                rate                ($Cdn)     |   |   |   |                                | 160,580   |     |   |   | 157,661 |    |   |   | 5,531 |    |   |   | 6,137 |    |   |   | 6,807 |    |   |   | — |     |   |   | 336,716 |    |   |   | 321,329 |    |
| Average                interest                rate |   |   |   |                                | 8.78      | %   |   |   | 8.81    | %   |   |   | 10.43 | %   |   |   | 10.43 | %   |   |   | 10.43 | %   |   |   | — |     |   |   | 8.88 | %   |   |   |   |   |
| Variable                rate                ($US)   |   |   |   |                                | 7,404     |     |   |   | 9,459   |    |   |   | 10,169 |    |   |   | 10,931 |    |   |   | 11,751 |    |   |   | 631,568 |    |   |   | 681,283 |    |   |   | 681,283 |    |
| Average                interest                rate |   |   |   |                                | 7.50      | %   |   |   | 7.50    | %   |   |   | 7.50 | %   |   |   | 7.50 | %   |   |   | 7.50 | %   |   |   | 7.50 | %   |   |   | 7.50 | %   |   |   |   |   |

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**Item      4.  Controls and Procedures.**

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**PART      IIOTHER INFORMATION**

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

| (a)   |   | The              2005 Annual              General Meeting of the Members was held on July 8,              2005. |
|-----------------|--------|-----------------------------------------------------------------------------------------------------------------|

| (c)   |   | No              matters were              voted upon at the 2005 Annual Meeting of the Members other than (i)              the              election of Mr. Derek John Michael Lederer as a director of the Company              to              hold office for a three-year term expiring at the Annual General Meeting              of the Members held in 2008 or until successors are duly elected and              qualified, and (ii) the ratification of the appointment of Sloan Partners              LLP as the independent registered accounting firm of the Company. The              tabulation of votes in person or by proxy at the Annual Meeting with              respect to such matters are as              follows: |
|-----------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Class                                                  |                     |                     |      | Votes              For   |      | Votes              Against |      | Abstentions              andNon-Votes |
|--------------------------------------------------------|--------------------------|--------------------------|--------------------------|--------------------------|--------------------------|----------------------------|--------------------------|---------------------------------------|
| Common                Shares                           |      |      |      |      | 2,329,521                |                  |      |                   | 5,845 |    |      |      | — |     |
| Class                B                Preferred Shares |      |      |      |      | 1,798,800                | (1)              |      |                   | — |     |      |      | — |     |

| (1)   |   | Class              B              Preferred Shares are entitled to two (2) votes per              share. |
|-----------------|--------|----------------------------------------------------------------------------------------------------------|

| Class                                                  |                     |                     |      | Votes              For   |      | Votes              Against |      | Abstentions              andNon-Votes |
|--------------------------------------------------------|--------------------------|--------------------------|--------------------------|--------------------------|--------------------------|----------------------------|--------------------------|---------------------------------------|
| Common                Shares                           |      |      |      |      | 2,331,121                |                  |      |                   | 3,415 |    |      |      | 830 |     |
| Class                B                Preferred Shares |      |      |      |      | 1,798,800                | (1)              |      |                   | — |     |      |      | — |     |

| (1)   |   | Class              B              Preferred Shares are entitled to two (2) votes per              share. |
|-----------------|--------|----------------------------------------------------------------------------------------------------------|

| (d)   |   | Not              applicable. |
|-----------------|--------|------------------------------|

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**Item      6.  Exhibits.**

|  3.1   |   | Memorandum              of              Association of Polydex Pharmaceuticals Limited, as amended to date              (filed              as Exhibit 3.1 to the Annual Report on Form 10-K filed April 30, 1997,              and              incorporated herein by reference) |
|-----------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  3.2   |   | Articles              of              Association of Polydex Pharmaceuticals Limited, as amended to date              (filed              as Exhibit 3.2 to the Quarterly Report on Form 10-Q filed September              13,              1999, and incorporated herein by              reference) |
|-----------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.1   |   | Certification              of              Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities              Exchange Act of 1934 |
|------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2   |   | Certification              of              Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities              Exchange Act of 1934 |
|------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1   |   | Certification              of              Chief Executive Officer pursuant to 19 U.S.C. Section 1350, as adopted              pursuant to Section 906 of the Sarbanes-Oxley Act of              2002 |
|------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.2   |   | Certification              of              Chief Financial Officer pursuant to 19 U.S.C. Section 1350, as adopted              pursuant to Section 906 of the Sarbanes-Oxley Act of              2002 |
|------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**SIGNATURES**

| By   |   | /s/              George G.              UsherGeorge G. Usher, Chairman, President andChief Executive              Officer(Principal Executive              Officer) |
|----------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| By   |   | /s/              Sharon L.              WardlawSharon L. Wardlaw, Treasurer, Secretary andChief              Financial and Accounting Officer(Principal Financial              Officer) |
|----------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Exhibit      Index**

| 31.1   |   | Certification              of              Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities              Exchange Act of 1934 |
|------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2   |   | Certification              of              Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities              Exchange Act of 1934 |
|------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1   |   | Certification              of              Chief Executive Officer pursuant to 19 U.S.C. Section 1350, as adopted              pursuant to Section 906 of the Sarbanes-Oxley Act of              2002 |
|------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.2   |   | Certification              of              Chief Financial Officer pursuant to 19 U.S.C. Section 1350, as adopted              pursuant to Section 906 of the Sarbanes-Oxley Act of              2002 |
|------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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