SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

(Mark One)
[ x ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2004

                                       OR

[   ] TRANSITION REPORT UNDER  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 for the transition period from __________ to __________

Commission file number 0-22872

                         SYMBOLLON PHARMACEUTICALS, INC.
                 (Name of small business issuer in its charter)

               Delaware                                36-3463683
      (State of incorporation)           (I.R.S. employer identification no.)


           37 Loring Drive
       Framingham, Massachusetts                         01702
(Address of principal executive offices)               (Zip Code)

Issuer's telephone number  (508) 620-7676

Securities registered under Section 12(b) of the Exchange Act:

                                      None
                                (Title of class)

Securities registered under Section 12(g) of the Exchange Act:


                 Class A Common Stock, $.001 par value per share
                                (Title of class)


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

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure  will be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [X]

The issuer's revenues for its most recent fiscal year (year ended December 31,
2004) were $159,510.

As of March 29, 2005, the aggregate market value of the voting stock of the
issuer held by non-affiliates of the issuer was approximately $6,521,122 based
upon the closing price of such stock on that date.

As of March 29, 2005, 6,114,761 shares of Class A Common Stock of the issuer
were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement to be delivered to
stockholders in connection with the Annual Meeting of Stockholders to be held on
June 8, 2005 are incorporated by reference into Part III hereof. With the
exception of the portions of such Proxy Statement expressly incorporated into
this Annual Report on Form 10-KSB by reference, such Proxy Statement shall not
be deemed filed as part of this Annual Report on Form 10-KSB.

    Transitional Small Business Disclosure Format (check one): Yes ___ No X





<PAGE>

Special Note Regarding Forward Looking Statements

         In addition to the historical information contained herein, this Annual
Report on Form 10-KSB contains "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995, including, but not
limited to statements concerning plans, objectives, goals, strategies,
prospects, financial needs, future performance and future costs and
expenditures. Such statements may be identified or qualified, without
limitation, by words such as "likely", "will", "suggests", "may", "would",
"could", "should", "expects", "anticipates", "estimates", "plans", "projects",
"believes", or similar expressions (and variants of such words or expressions).
Investors are cautioned that forward-looking statements are inherently
uncertain. Actual performance, achievements and results may differ materially
from those expressed, projected or suggested in the forward-looking statements
due to certain risks and uncertainties, including, but not limited to, the risks
and uncertainties described or discussed in the section "Risk Factors" in this
Annual Report on Form 10-KSB. The forward-looking statements contained herein
represent the Company's judgment as of the date of this Annual Report on Form
10-KSB, and the Company cautions readers not to place undue reliance on such
statements.

                                     PART I

Item 1.  Description of Business

General Background

         We are engaged in development and commercialization of proprietary
iodine-based pharmaceutical agents and antimicrobials (collectively referred to
as "applications"). Symbollon is a Delaware corporation incorporated in August
1993 and is the successor by merger to a Massachusetts corporation incorporated
in May 1991, which was the successor by merger to an Illinois corporation, which
was incorporated in July 1986. Following stockholder approval at the 2001 Annual
Meeting of Stockholders, we changed our name from Symbollon Corporation to our
current name.

The Company's Technology

         Iodine has been shown to be a rapid acting, broad-spectrum
antimicrobial and an effective therapeutic for certain pharmaceutical
applications. We have developed proprietary iodine technology that Symbollon
believes maximizes the "therapeutic index" of iodine. The "therapeutic index" of
a drug is the ratio of the largest safe dose to the smallest effective dose. Our
technology accomplishes this by controlling the ratio of molecular iodine (I2),
to the other inactive species of iodine typically present in solution. We
believe that this will enable us to produce iodine-based applications having
advantages over currently available products.

         Symbollon believes that our iodine-based technology has potential use
in a number of product application areas. These applications can be grouped into
women's healthcare and infection control.

         When used for infection control applications, we believe that the major
strengths of our patented technology are the minimization of staining and color
associated with traditional iodine products, broad spectrum of antimicrobial
activity, rapidity of cidal activity, safe residues, no known resistance and no
environmental disposal concerns. The primary weaknesses of our technologies are
the inconvenience and cost of a multi-part delivery system and the potential for
staining and corrosivity.

         Concerning women's healthcare, Symbollon believes that a relationship
exists between iodine deficiency and the increased incidence of certain female
health problems. These include some types of premenopausal breast cancer,
fibrocystic breast disease and endometriosis. We believe that the underlying
causation of these problems relates to the monthly ovarian cycle and the proper
functioning of the gonadotropic hormones.

                                       2
<PAGE>

Bovine Teat Sanitizer Product

         During 1994, we co-developed a bovine teat sanitizer, marketed as
"IodoZyme(R)", with West Agro, Inc. of Kansas City, MO ("West Agro"), a
subsidiary of the Tetra Laval Group and a leading manufacturer and distributor
of iodophor-based products for dairy use. In January 1995, Symbollon and West
Agro signed a marketing and supply agreement covering IodoZyme, and we began
shipping IodoZyme to West Agro in early 1995. Pursuant to this agreement, West
Agro was granted the exclusive worldwide right to market, distribute, promote
and sell IodoZyme. Under the agreement, we manufacture and supply West Agro with
IodoZyme in finished product form.

         Total product sales for 2004 and 2003 from IodoZyme were $159,510 and
$270,772, respectively. Our invoice terms are net 30 days. We had no orders for
future delivery of IodoZyme at December 31, 2004. Net product sales by market
are as follows:

              Year ended December 31,               2004                2003
              ------------------------------------------------------------------

              United States                      $  120,010            $ 221,588
              United Kingdom                         39,500               49,184
              ------------------------------------------------------------------

                                                 $  159,510            $ 270,772
              ------------------------------------------------------------------

         In March 2005, West Agro informed Symbollon that it intends to place
orders for approximately $90,000 of IodoZyme during 2005 and 2006 and that it
plans to discontinue selling the product after the disposition of such finished
goods inventory has been sold.

Product Development

         Since 2000, we have concentrated our product development work on the
proposed product application for a treatment for fibrocystic breast disease.
Symbollon spent approximately $1,470,000 and $280,000 on research and
development during the years ended December 31, 2004 and 2003, respectively.

         Given our limited financial resources, the uncertainty of the
development effort and the necessity for regulatory approval, there can be no
assurance of ultimate success with respect to any product development program or
that resulting products, if any, will be commercially successful. Additionally,
our limited resources will require substantial support for new business
initiatives from corporate partners who would ultimately introduce the products
into the marketplace.

         Recent material developments in our ongoing programs are described
below.

         Women's Healthcare

         We have developed an oral dosage form of our technology which generates
molecular iodine in situ in the stomach of the patient. We refer to this tablet
as IoGen(TM). Based on the available scientific literature, we believe that
IoGen may be effective in the prevention and treatment of certain female health
problems, including some types of premenopausal breast cancer, fibrocystic
breast disease ("FBD") and endometriosis.


                                       3
<PAGE>

         We have chosen to pursue a treatment for moderate to severe cyclic pain
and tenderness ("mastalgia") associated with FBD based on the published results
covering previous independent third party testing conducted for this indication.
Collectively, approximately 3,000 women afflicted with FBD have been orally
administered various forms of iodine. The scientific literature includes data on
over 1,500 of these women who were dosed with aqueous forms of iodine with
reported clinical improvement in their symptoms occurring in 60% or greater of
those women. FBD is a benign breast condition characterized by lumpiness, breast
pain and tenderness. FBD affects approximately thirty-five percent of the women
of childbearing age, which represents in the United States about 24 million
women. It has been estimated that moderate to severe mastalgia occurs in
approximately 11% of the women of childbearing age, or about 7.5 million women.

         In 1995, Symbollon discovered a proprietary method for generating
molecular iodine in situ in a person's stomach. IoGen is the first formulation
developed utilizing this novel technique. In 1998, we initiated human clinical
trials evaluating its effectiveness for the treatment of FBD. During 2000,
Symbollon completed Phase I and Phase II trials.

         The Phase I trial was structured as a single-center, open-labeled,
randomized crossover study. Eighteen healthy females participated. The trial was
designed to assess dose proportionality and relative bioavailability of IoGen
tablets at three concentrations, 1.5 mg, 3.0 mg and 6.0 mg. These tablets were
the same as used in the Phase II trials. In the Phase I study, IoGen was well
tolerated at all dose levels. There were no drug-related adverse events.

         The results of the Phase I trial were based on blood and urine samples,
collected over a 48-hour period following dosing. Pharmacokinetic analysis
demonstrated that IoGen is dose-proportional when evaluated by either peak or
mean iodine concentration in the blood samples. The results also indicated
relative bioavailability among the 1.5, 3.0 and 6.0 mg IoGen tablets, as
measured by the excreted iodine in urine samples and serum concentrations.

         The multi-center Phase II clinical trial treated 111 patients with
moderate to severe FBD in a placebo-controlled, double-blinded, randomized
study. Three drug concentrations, 1.5 mg, 3.0 mg and 6.0 mg, were dosed daily
for six months, followed by a two-month observation period.

         In the Phase II trial, IoGen was well tolerated by the patients. There
were also no drug-related serious adverse events. The trial results indicate
that there were no dose-related increases in incidence, severity and causality
of treatment-emergent adverse events or clinically significant changes in
laboratory parameters or vital signs. With regard to treatment-emergent
headaches, a statistically significant decrease in incidence was observed
between the placebo and the IoGen groups. Headaches were reported in 7 of 17
(41%) patients in the placebo, compared to 1 of 16 (6%) patients in the 1.5-mg
group, 10 of 38 (26%) patients in the 3.0-mg group and 5 of 40 (13%) patients in
the 6.0-mg group (p=.033).

         We evaluated IoGen's clinical success utilizing two validated
independent assessment tools. In the first tool, the physicians measured IoGen's
effectiveness by analyzing the three primary endpoints of breast nodularity,
pain and tenderness. The 6.0-mg group showed improvement in 21 of 27 (78%)
patients for pain, 19 of 26 (73%) for tenderness and 10 of 27 (37%) for
nodularity. This compares favorably to the placebo group which had observed
improvement in 6 of 10 (60%) patients for pain, 3 of 10 (30%) for tenderness and
3 of 15 (20%) for nodularity.

         In the second assessment tool the patients evaluated their pain and
tenderness by completing a validated, health-related quality of life
questionnaire. The questionnaire was developed by the Lewin Group for women with
FBD, who were treated with iodine. Its results show a correlation between
increased dosing and improved quality of life symptoms for the women in the
study.


                                       4
<PAGE>

         Since the completion of the Phase II trial, Symbollon has worked with
the United States Food and Drug Administration ("FDA") to reach an understanding
concerning the remaining information that would be necessary for Symbollon to
submit as part of its New Drug Application ("NDA") covering Symbollon's request
for marketing approval of IoGen for the treatment of cyclic breast pain and
tenderness associated with FBD. The primary remaining activities required for
the NDA include conducting two Phase III pivotal clinical trials, gathering
exposure data on approximately 1,500 patients and conducting one two-year
toxicity study in rodents.

         During 2003, we submitted a request for a special protocol assessment
covering the structure of the proposed IoGen Phase III pivotal trials. In 2004,
we finalized with FDA the structure of such pivotal trial protocol. Based on
FDA's advice, we modified the criterion for measuring the primary endpoint of
the IoGen pivotal trials to provide for daily patient assessment of their breast
pain and tenderness. The secondary endpoint is a clinically significant
reduction of the patients' nodularity as measured by the physicians' assessment.
We do not plan to initiate further clinical trials for IoGen until the resources
necessary to conduct the trials are secured.

         In 2001, we conducted a dose-ranging study in rodents for the purpose
of determining the appropriate dose at which to conduct a two-year toxicity
study in rodents. In 2002, the FDA provided its recommendation for the
appropriate dose to carryforward into the two-year study. The protocol for the
two-year rodent toxicity study has completed a special protocol assessment
review by FDA. However, we will need additional resources to continue the
development of IoGen, and until such resources are obtained, Symbollon will not
initiate the two-year rodent study.

         For the last several years we have been attempting to secure the
resources necessary to complete the clinical development of IoGen. Our primary
focus has been to identify a corporate partner that would provide the funding
required. As a result of our efforts, various medical professionals have
provided insight into the likely treatment group that would be most appropriate
for IoGen. We have been treating patients with IoGen who have moderate to severe
mastalgia. Based on the benign nature of the condition and the pregnancy
category X labeling indicated for IoGen by FDA, medical professionals have
indicated that IoGen is appropriate for only severely impacted patients.

         The pregnancy category X designation means that the risk to the neonate
involved in the use of the drug by pregnant women clearly outweighs any possible
benefits. The pregnancy category X labeling indicated for IoGen by FDA is based
on the historical medical literature. The medical literature indicates that
increased maternal iodine consumption during pregnancy can cause certain serious
adverse effects to the neonate. While these adverse effects occurred from pure
iodine intake 30 times the 6.0 mg level of iodine contained in an IoGen tablet,
the FDA has indicated that IoGen's proposed label would state that it is not
appropriate for women who are or may become pregnant. However, in the medical
literature adverse effects were observed in doses only twice IoGen's level of
iodine when taken in combination with certain other drugs. We have not conducted
any studies to ascertain whether the level of iodine contained in IoGen would
pose a risk to the neonate.

         In March 2003, we filed with the FDA an Application for Orphan Drug
Designation for the treatment of severe cyclic mastalgia associated with FBD.
Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs
intended to treat a "rare disease or condition." The Orphan Drug Act generally
defines a "rare disease or condition" as one that affects populations of fewer
than 200,000 people in the United States. We received notification from the FDA
that our request had been denied because the FDA believed the prevalence of
severe cyclic mastaglia associated with FBD exceeds the statutory 200,000
threshold.


                                       5
<PAGE>


         As we continue our efforts to create a relationship with a corporate
partner for IoGen, we are making plans to gather data to help establish a link
between IoGen and breast cancer prevention. We believe such data would indicate
if elevated levels of dietary iodine lead to the formulation of
antiproliferative iodinated arachidonic acid derivatives in the breast tissue of
fibrocystic patients. We believe that establishing this link between iodine
intake and these iodolipids could provide the first concrete human data
warranting the need for further clinical investigation of the possible use of
IoGen as a breast cancer preventive. The uncertainty regarding the ultimate size
of the market opportunity for IoGen has hampered our efforts to find a corporate
partner. We believe establishing the first potential link to breast cancer
prevention, and thereby, overall good breast health, would be an important
value-added step for the IoGen program.

         In May 2004, we acquired certain asset from Mimetix, Inc., a privately
held company, and other related parties, associated with their iodine
development efforts in women's healthcare for 550,000 shares of Symbollon's
Class A common stock. These assets include information on approximately 3,000
women with fibrocystic breast disease dosed with iodine, including the patient
data from three clinical trials utilizing molecular iodine and the intellectual
property covering their efforts, inclusive of eight issued US patents. We intend
to submit the Mimetix patient data as part of our 1,500 patient exposure
requirement for IoGen.

         Other Potential Applications

         We believe that our technology has potential applications in the
development of a variety of human healthcare and other products such as
dermatology, topical anti-infectives, oral care and hygiene products, wound care
applications, and as a preventive for urinary tract infection. Given our limited
resources, although certain preliminary research, development and regulatory
activities may be undertaken by us in some of these potential product areas, our
ability to fund the development and commercialization of such applications will
depend in large part on entering into product development and commercialization
agreements with corporate partners. We are not currently pursuing any new
applications other than IoGen. Clinical investigation of IoGen for other female
health indications beyond FBD will be investigated only as resources allow.

Manufacturing and Supplies

         The development and manufacture of our products are subject to good
laboratory practices ("GLP") and current good manufacturing practices ("cGMP")
requirements prescribed by the FDA and to other standards prescribed by the
appropriate regulatory agency in the country of use. We currently produce
IodoZyme in our Framingham facility. We have limited in-house manufacturing
capacity, and if we continue to perform manufacturing activities in-house,
additional manufacturing space and equipment may be necessary if capacity needs
increase. See "Description of Property."

         We do not presently have FDA certified facilities capable of producing
quantities of human pharmaceutical products required for clinical trials or
commercial production. We will need to rely on collaborators, licensees or
contract manufacturers to produce such materials. There can be no assurance that
we will be able to obtain an adequate supply of our product from a third party
manufacturer, or that if such a supply can be obtained, that it will comply with
GLP and cGMP, as applicable.

         We believe that there are adequate sources of the raw materials
required for commercial production and testing purposes. We have been and expect
to continue to be able to obtain all materials needed for these purposes without
any significant interruption or sudden price increase, although there can be no
assurance thereof.


                                       6
<PAGE>


Marketing and Distribution

         In accordance with the marketing and supply agreement signed with West
Agro, West Agro is marketing and distributing IodoZyme, and has agreed to market
and distribute other potential cleaners, sanitizers and disinfectants covered by
the agreement to dairy farms and dairy processing plants as Symbollon's
exclusive distributor. The principal market for IodoZyme is dairy farms. West
Agro has indicated that it intends to stop selling IodoZyme after existing
finished goods inventories are sold.

         If we are able to develop any other products, we intend to market and
distribute our potential products through others having pre-established
marketing and distribution networks pursuant to contractual arrangements such as
joint venture, licensing, distribution or similar collaborative agreements. The
principal markets for the potential pharmaceutical and healthcare products
include hospitals, medical offices, dental offices, dialysis centers, outpatient
clinics and nursing homes.

Government Regulation

         Our research and development activities and the production and
marketing of our current and proposed products are subject to regulation by
numerous governmental authorities in the United States and comparable state
agencies. Foreign governments also regulate the development, production and
marketing of products in their countries. The development, manufacturing and
marketing of human pharmaceuticals are subject to regulation in the United
States for safety and efficacy by the FDA in accordance with the Federal Food,
Drug and Cosmetic Act. There can be no assurances that regulatory approvals or
clearances will be obtained for any applications of our technology once
developed, that if granted they will not be withdrawn or that other regulatory
action might not have an adverse impact on the ability to market our proposed
products.

         In the United States, human pharmaceuticals are subject to rigorous FDA
regulation including preclinical and clinical testing, The process of completing
clinical trials and obtaining FDA approvals for a new drug is likely to take a
number of years, requires the expenditure of substantial resources and is often
subject to unanticipated delays. There can be no assurance that any proposed
product will receive such approval on a timely basis, if at all.

         The steps required before new products for use in humans may be
marketed in the United States include (i) preclinical trials, (ii) submission to
the FDA of an Investigational New Drug ("IND") application, which must be
approved before human clinical trials commence, (iii) adequate and
well-controlled human clinical trials to establish the safety and efficacy of
the product, (iv) submission of a New Drug Application ("NDA") for a new drug to
the FDA and (v) FDA approval of the NDA prior to any commercial sale or shipment
of the product.

         Preclinical tests include laboratory evaluation of product formulation,
as well as animal studies (if an appropriate animal model is available) to
assess the potential safety and efficacy of the product. Formulations must be
manufactured according to cGMP and preclinical safety tests must be conducted by
laboratories that comply with FDA regulations regarding GLP. The results of the
preclinical tests are submitted to the FDA as part of an IND application and are
reviewed by the FDA prior to the commencement of human clinical trials. There
can be no assurance that submission of an IND application will result in FDA
authorization to commence clinical trials. Clinical trials involve the
administration of the investigational new drug to healthy volunteers and to
patients under the supervision of a qualified principal investigator.


                                       7
<PAGE>


         Clinical trials are typically conducted in three sequential phases,
although the phases may overlap. In Phase I, the investigational new drug
usually is administered to healthy human subjects and is tested for safety,
dosage, tolerance, absorption, distribution, metabolism, excretion and
pharmacokinetics. Phase II involves studies in a limited patient population to
(i) determine the efficacy of the investigational new drug for specific
indications, (ii) determine dosage tolerance and optimal dosage and (iii)
identify possible adverse effects and safety risks. When an investigational new
drug is found to be effective and to have an acceptable safety profile in Phase
II evaluation, Phase III trials are undertaken to further evaluate clinical
efficacy and to further test for safety within an expanded patient population at
geographically dispersed clinical study sites. There can be no assurance that
Phase I, Phase II or Phase III testing will be completed successfully within any
specified time period, if at all, with respect to any of our proposed products
subject to such testing. Furthermore, we or the FDA may suspend clinical trials
at any time if the participants are being exposed to an unacceptable health
risk. The FDA may deny an NDA if applicable regulatory criteria are not
satisfied, require additional testing or information, or require post-marketing
testing and surveillance to monitor the safety of our proposed products.

         All data obtained from development programs are submitted as an NDA to
the FDA and the corresponding agencies in other countries for review and
approval. FDA approval of the NDA is required before marketing may begin in the
United States. Although the FDA's policy is to review priority applications
within 180 days of their filing, in practice longer times may be required. The
FDA frequently requests that additional information be submitted, requiring
significant additional review time. Essentially, all our proposed products will
be subject to demanding and time-consuming NDA or similar approval procedures in
the countries where we intend to market our proposed products. These regulations
define not only the form and content of the development of safety and efficacy
data regarding the proposed product, but also impose specific requirements
regarding manufacture of the proposed product, quality assurance, packaging,
storage, documentation and record keeping, labeling and advertising and
marketing procedures. Effective commercialization also requires inclusion of our
proposed products in national, state, provincial or institutional formularies or
cost reimbursement systems.

         In addition to regulations enforced by the FDA, we also are subject to
regulation under the Occupational Safety and Health Act, the Environmental
Protection Act, the Toxic Substances Control Act, the Resource Conservation and
Recovery Act and other present and potential future federal, state or local
regulations. Our research and development involves the controlled use of
hazardous materials and chemicals. Although we believe that our safety
procedures for handling and disposing of such materials comply with the
standards prescribed by state and federal regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of such an accident, we could be held liable for any damages that
result, and any such liability could exceed our resources.

         In both domestic and foreign markets, our ability to commercialize our
proposed product candidates will depend, in part, on the availability of
reimbursement from third-party payers, such as government health administration
authorities, private health insurers and other organizations. Third-party payers
are increasingly challenging the price and cost-effectiveness of medical
products. There can be no assurance that Symbollon-developed products will be
considered cost effective. Significant uncertainty exists as to the
reimbursement status of newly-approved medical products. Government and other
third-party payers are increasingly attempting to contain medical costs by
limiting both coverage and the level of reimbursement for new therapeutic
products approved for marketing by the FDA and by refusing, in some cases, to
provide coverage for uses of approved products for disease indications for which
the FDA has not granted marketing approval. There can be no assurance that
adequate third-party insurance coverage will be available for us to establish
and maintain price levels sufficient for realization of an appropriate return on
our investment in developing new therapies. If adequate coverage and
reimbursement levels are not provided by government and third-party payers for
uses of our proposed therapeutic products, the market acceptance of these
products would be adversely affected.

                                       8
<PAGE>


         There have been a number of federal and state proposals during the last
few years to subject the pricing of pharmaceuticals to government control and to
make other changes to the medical care system of the United States. It is
uncertain what legislative proposals will be adopted or what actions federal,
state or private payers for medical goods and services may take in response to
any medical reform proposals or legislation. We cannot predict the effect
medical reforms may have on our business, and no assurance can be given that any
such reforms will not have a material adverse effect on us.

         IodoZyme, the bovine teat dip manufactured by us, is subject to
regulation by the FDA as an animal drug. Although a lengthy new animal drug
application ("NADA") approval process is generally required prior to marketing
an animal drug, under regulatory discretion afforded by the FDA, the agency does
not currently require manufacturers of bovine teat sanitizers to undergo this
process. The only current FDA requirements applicable to teat treatment
manufacturers are compliance with the FDA's labeling, establishment
registration, drug listing, and manufacturing requirements. We believe that we
are in compliance with the current FDA requirements applicable to teat treatment
manufacturers. However, in February 1993, the FDA issued draft guidelines
setting forth the types of data necessary to demonstrate that a teat treatment
is safe for the cow, effective and fulfills human food safety, manufacturing and
environmental requirements. Testing of IodoZyme was not conducted in accordance
with such guidelines. Future required compliance with these guidelines or other
FDA requirements which may be adopted, the probability or scope of which cannot
currently be ascertained by us, would have a significant adverse effect on the
marketing of IodoZyme and, if a market for IodoZyme otherwise exists, on our
results of operations. As disclosed above, West Agro has indicated that it
intends to stop selling IodoZyme after existing finished goods inventories are
sold.

Patents and Proprietary Rights

         We consider patent protection of our iodine technology to be critical
to our business prospects. We currently hold twenty-five patents in the United
States relating to our technology. In addition, we hold patents and have filed a
number of patent applications relating to our technology in foreign countries.


                                       9
<PAGE>

<TABLE>
<CAPTION>


                                          Listing of United States Patents


  Patent Number              Title                                                                   Issue Date
  -------------              -----                                                                   ----------
   <S>           <C>                                                                             <C>

   4,816,255     "Treatment of Iodine Deficiency Breast Syndrome"                                  March 28, 1989

   4,937,072     "In Situ Sporicidal Disinfectant"                                                 June 26, 1990

   4,996,146     "Rapid Sterilization Enzymatic Process with Persistence"                        February 26, 1991

   5,055,287     "Methods to Control Color During Disinfecting Peroxidase Reactions"              October 8, 1991

   5,171,582     "Treatment of Iodine Deficiency Diseases"                                       December 15, 1992

   5,227,161     "Method to Clean and  Disinfect  Pathogens  on the  Epidermis  by Applying a      July 13, 1993
                 Composition Containing Peroxidase, Iodide Compound and Surfactant"

   5,250,304     "Treatment of Iodine Deficiency Diseases"                                        October 5, 1993

   5,370,815     "Viscous Epidermal Cleaner and Disinfectant"                                     December 6, 1994

   5,389,385     "Treatment of Iodine Deficiency Diseases"                                       February 14, 1995

   5,419,902     "Method for Inactivating Pathogens"                                                May 30, 1995

   5,589,198     "Treatment of Iodine Deficiency Diseases"                                       December 31, 1996

   5,629,024     "Method of Forming an Iodine Based Germicide Composition"                          May 13, 1997

   5,639,481     "Method for the Therapeutic Treatment of a Mammalian Eye"                         June 17, 1997

   5,648,075     "Iodine Based Germicidal Composition"                                             July 15, 1997

   5,772,971     "Iodine-Based Microbial Decontamination System"                                   June 30, 1998

   5,849,291     "Ophthalmic Non-Irritating Iodine Medicament"                                   December 15, 1998

   5,885,592     "Method & Pharmaceutical  Compositions for Oral  Administration of Molecular      March 23, 1999
                 Iodine"

   5,910,318     "Treatment of Iodine Deficiency Diseases"                                          June 8, 1999

   5,955,101     "Dry Starch-Iodine Pharmaceutical Formulations"                                 September 21, 1999

   5,962,029     "Iodine Germicides that Continuously Generate Free Molecular Iodine"             November 5, 1999

   6,019,970     "Treatment of Iodine Deficiency Diseases"                                        February 1, 2000

   Re 36,605     "Reissue of 08/963,900 Method to Clean and Disinfect Pathogens"                   March 7, 2000

   6,248,335     "Stabilized Oral Pharmaceutical Composition Containing Iodide and Iodate"         June 19, 2001

   6,261,577     "Non-Staining Topical Iodine Composition"                                         July 17, 2001

   6,432,426     "Non-Staining Topical Iodine Composition and Method"                             August 13, 2002

</TABLE>

                                       10
<PAGE>

         Much of the know-how of importance to our technology and many of our
processes are dependent upon the knowledge, experience and skills, which are not
patentable, of key scientific and technical personnel. To protect our rights to
and to maintain the confidentiality of trade secrets and proprietary
information, we require employees, Scientific Advisory Board members,
consultants and collaborators to execute confidentiality and invention
assignment agreements upon commencement of a relationship with us. These
agreements prohibit the disclosure of confidential information to anyone outside
us and require disclosure and assignment to us of ideas, developments,
discoveries and inventions made by such employees, advisors, consultants and
collaborators while engaged by us. There can be no assurance, however, that
these agreements will not be breached or that our trade secrets or proprietary
information will not otherwise become known or developed independently by
others. Also, to the extent that consultants or other third parties apply
technological information independently developed by them or by others to our
projects, disputes may arise as to the proprietary rights to such information
which may not be resolved in our favor. We are required to pay royalties to a
co-inventor on certain patents relating to our technology based on revenues
received by us from sales of products falling within the scope of such patents.

Competition

         Our proposed products and products incorporating our proposed products
would compete with many other applications currently on the market. In addition,
we are aware of other companies engaged in research and development of other
novel approaches to applications in some or all of the markets identified by us
as potential fields of application for our products. Many of our present and
potential competitors have substantially greater financial and other resources
and larger research and development staffs than we have. Many of these companies
also have extensive experience in testing and applying for regulatory approvals.
In addition, colleges, universities, government agencies, and public and private
research organizations conduct research and are becoming more active in seeking
patent protection and licensing arrangements to collect royalties for the use of
technology that they have developed, some of which may be directly competitive
with our applications.

         We are aware of a few companies that are or plan to develop drugs to
treat FBD. Ascend Therapeutics, Herndon, Virginia, has completed phase II
clinical trials using a selective estrogen receptor modulator to treat breast
pain. FemmePharma, Inc., Wayne, Pennsylvania, is in preclinical testing
evaluating a treatment for FBD. One other company, Mimetix Inc., has conducted
human clinical trials in the United States and Canada utilizing an iodine-based
compound for the treatment of FBD. We have purchased all of Mimetix's assets,
including their patient data and intellectual property, related to their
iodine-based compound for the treatment of FBD. If any company receives
marketing approval for its drug compound before we do, it could adversely affect
our ability to receive marketing approval, or if approved, our ability to sell
our product.

     The  bovine  teat  sanitizer  market is  currently  dominated  by  iodophor
products,  which  generally  compete  on the  basis  of price  and the  ratio of
microbial  killing power to total iodine.  We believe that IodoZyme  competes on
the basis of its superior  convenience  and high ratio of killing power to total
iodine.  Additionally,  IodoZyme,  manufactured  by us and  sold by  West  Agro,
competes  directly with products  currently being  manufactured and sold by West
Agro.  As  disclosed  above,  West Agro has  indicated  that it  intends to stop
selling IodoZyme after existing finished goods inventories are sold.


                                       11
<PAGE>


Employees

         As of December 31, 2004, we had two employees, both of whom are
full-time. We have relationships with and from time to time engage the services
of university professors and other qualified consultants to assist us in
technological research and development. None of our employees are currently
represented by a labor union. Management considers its employee relations to be
good. We believe that our future success is dependent to a significant degree on
our being able to continue to attract and retain skilled personnel.

Executive Officers

         The Company's executive officers are:

       Name                      Age   Position with the Company

       Jack H. Kessler, Ph.D.    54    Chief Executive Officer, Chief
                                       Scientific Officer, Secretary and
                                       Chairman of the Board of Directors

       Paul C. Desjourdy         43    President, Chief Operating Officer,
                                       Chief Financial Officer, General
                                       Counsel, Treasurer and Director

         Certain biographical information regarding each executive officer of
the Company is set forth below:

         Jack H. Kessler, Ph.D., is the founder of the Company and has served as
Chief Executive Officer since December 1999, as Chief Scientific Officer,
Secretary, and a director since the Company's move to Massachusetts in May 1991,
and as Chairman of the Board of Directors since May 1996. Dr. Kessler held the
title of Executive Vice-President of the Company from May 1991 to December 1999,
and from the Company's formation in Illinois in 1986 until 1991 Dr. Kessler was
the Company's sole stockholder and served as its sole officer and director. From
January 1990 until May 1991, he served as principal systems engineer for
Kollsman Manufacturing Company, a diagnostic instrument design and manufacturing
company.

         Paul C. Desjourdy has served as President, Chief Operating Officer and
General Counsel since December 1999, as Chief Financial Officer since July 1996,
as Treasurer from May 1994, and as a director since August 1996. He held the
titles of Executive Vice President from July 1996 to December 1999, and
Vice-President - Finance and Administration of the Company from September 1993
to June 1996. From September 1989 to September 1993, Mr. Desjourdy, a certified
public accountant, was an attorney at the law firm of Choate Hall & Stewart.

         Officers are elected annually and serve at the discretion of the Board
of Directors.

Risk Factors
         The following important factors, among others, could cause our
performance, achievements and results to differ materially from those we express
or suggest in forward-looking statements in this report or in other materials
from time to time. Stockholders and prospective investors should carefully
consider these risk factors when deciding whether to invest in or hold our
common stock.


                                       12
<PAGE>


RISKS ABOUT OUR BUSINESS

Our ability to continue as a "going concern" is uncertain


         Our consolidated financial statements have been prepared on the
assumption that we will continue as a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Report of the Registered Independent Accountants included herein
contains an explanatory paragraph that raises substantial doubt about our
ability to continue as a going concern. The notes to our consolidated financial
statements addressed management's plans to address our ability to continue as a
going concern. We cannot assure you that our business plans will be successful
in addressing these issues. If we cannot successfully continue as a going
concern, our stockholders may lose their entire investment in our common stock.
Our ability to obtain additional funding will determine our ability to continue
as a going concern. Our financial statements do not include any adjustments that
might result from the outcome of this uncertainty.


We expect to incur additional losses in the future that will require us to raise
funding

         We have incurred a cumulative operating loss of $12,155,546 through
December 31, 2004. Our losses have resulted principally from costs incurred in
research and development activities related to our efforts to develop IodoZyme,
IoGen and other potential product formulations, and from the associated
administrative and patent costs. We expect to incur additional operating losses
over the next several years and expect cumulative losses to increase. In the
next few years, we do not anticipate generating material revenues.

         Based on the current status of our development efforts, we will not
receive revenues or royalties from commercial sales of our drugs under
development for a significant number of years, if at all. For at least the next
few years, we do not expect any revenues from products currently in development.
We will therefore need to raise additional funding or enter into a relationship
with a corporate partner to sustain our operations. If we fail to achieve
profitable operations, raise additional funding to cover losses, or enter into a
corporate partner relationship, we will not be able to sustain operations.

Sales from our only product will cease as our marketing partner has decided to
discontinue offering it for sale

         Our only source of revenue is from a licensing relationship with West
Agro, Inc. covering IodoZyme. They have decided to terminate their collaboration
with us. West Agro has indicated that they plan to place orders for
approximately $90,000 over 2005 and 2006 for the product and cease selling
IodoZyme after such finished goods inventory has been sold.

We could go out of business and you may lose your investment if we are unable to
commercialize a new product

         Since our inception, we have engaged in limited business activities
attempting to develop products based on our technology. To date, we have only
commercialized one product, IodoZyme. IodoZyme sales have not been significant
enough to support our operations and will be ceasing shortly. The development of
our other product opportunities will require further capital investments,
development and regulatory approvals. We may be faced with problems, delays,
expenses and difficulties, which are typically encountered by companies in an
early stage of development, many of which may be beyond our control. These
include, but are not limited to, unanticipated problems and costs related to
development, regulatory compliance, production, marketing, economic and
political factors and competition. If we are not able to commercialize a new
product, we could go out of business and you may lose your investment.


                                       13
<PAGE>



If we are not able to enter into a corporate licensing relationship covering
IoGen, it will be difficult to commercialize IoGen

         We estimate that the cost to complete the development of IoGen will be
approximately $10 million. We do not have enough resources to support further
clinical development of IoGen. Based on the present price and trading volume of
our stock, it will be difficult for us to raise the additional capital to fund
the development of IoGen. We have been seeking a corporate licensing partner for
IoGen for several years, and have not been able to finalize a relationship.
Given the large amount of resources required to complete the clinical
development of IoGen, we will need to enter into a licensing relationship to
commercialize IoGen.

We have limited data that IoGen will effectively treat fibrocystic breast
disease

         We did not conduct any animal or human studies to evaluate the
potential effectiveness of IoGen before launching the Phase II trial. The Phase
II clinical trial that we completed in 2000 generated the first data regarding
the effectiveness of IoGen. The primary purpose of the Phase II trial was to
evaluate the safety of IoGen. We believe that the Phase II data concerning the
drug's effectiveness indicate that IoGen can successfully treat cyclic pain and
tenderness associated with fibrocystic breast, but we need to establish IoGen's
effectiveness in two well-controlled phase III clinical trials. We estimate that
our investment in the IoGen development program has exceeded $5 million. We
expensed these development costs as incurred. We do not have the necessary
resources to fund further clinical trials for IoGen. If we are not able to
secure the necessary resources or enter into a relationship with a corporate
partner, our financial situation may force us to discontinue the IoGen
development program.

If we cannot raise additional funds or find a corporate partner for IoGen, then
we will have to limit or cease our future activities

         We have adequate cash resources to continue our base operations through
the end of the second quarter of 2005. However, we do not have sufficient
resources to initiate the IoGen Phase III clinical trials or any other remaining
development activities required to commercialize IoGen. We will require
substantial additional funds if we are to continue the clinical development of
IoGen or pursue the development of additional products. We currently estimate
that approximately $10 million will be required over the next three years to
complete the clinical development of IoGen.

         We intend to seek additional funds for such future product development
through public or private financing or collaborative or other arrangements with
corporate partners. We have not been able to enter into a new corporate
relationship since 1997. We believe that before we can enter into any
significant new relationships, we will have to generate clinical results on our
potential drugs. Our limited financial resources may require us to finance the
cost of generating these results. We have had difficulty raising funds. During
2004, we were attempting to raise approximately $2 million. We were only able to
raise approximately $830,000.

         Our common stock was delisted from the Nasdaq SmallCap market in
December 2002. Our common stock is currently traded on the OTC Bulletin Board,
is thinly traded, and is subject to the "penny stock rules." There is very
little market support for our common stock. So long as these conditions exist,
future financings will continue to be difficult. This could impact the terms and
conditions upon which we are able to sell securities and raise funds. In light
of the lack of support for our common stock price, any funds raised through
equity financing would likely be at below market and dilutive to our existing
stockholders. If adequate funds are not available when needed, we would be
forced to limit the scope of our development or perhaps cease operations. We
cannot assure you that we will be able to raise the necessary financing on
acceptable terms, or at all, or succeed in entering into a corporate partnering
relationship. As indicated above, our registered independent accountant's report
on our financial statements includes a "going concern" qualification.

                                       14
<PAGE>

We lack the resources to conduct the necessary clinical trials required prior to
commercial sales of our potential drugs

         Any drug candidates we develop will require significant additional
research and development efforts, including extensive preclinical (animal and in
vitro data) and clinical testing and regulatory approval, prior to commercial
sale. Our only active drug development effort is IoGen. We must pay for all
future clinical trials concerning IoGen. Our ability to conduct the necessary
clinical trials depends on our generating the resources required to pay for this
from future revenues, financings or licensing or collaboration relationships. We
may not be able to generate the necessary financial resources or enter into the
necessary relationships.

We may lose control over development and commercialization of drugs after we
license them

         A key element of our strategy has been to fund most of our product
development programs through collaborative agreements with larger pharmaceutical
companies. As part of these licensing relationships we may have to grant to the
other party control over the development and commercialization process. For
example, a potential corporate partner may be responsible for:

         o        conducting preclinical and clinical trials;
         o        obtaining required regulatory approvals of drug candidates;
         o        manufacturing any resulting products; and
         o        commercializing any resulting products.

         The potential corporate partner may not be obligated to develop or
commercialize any drug candidates under the collaboration. The potential
corporate partner alone could control the amount and timing of resources
dedicated by it to the program. Accordingly, the potential corporate partner
would control the development program. Moreover, the potential corporate partner
may view certain drug candidates developed utilizing Symbollon's technology as
competitive with its own drugs or drug candidates. Accordingly, the potential
corporate partner may develop its existing or alternative technologies in
preference to the drug candidates based on our technology. In addition, the
potential corporate partner may have the right to terminate the relationship at
any time. Without the involvement of a corporate partner, our limited resources
would severely hamper our ability to develop a product.

         IodoZyme's growth prospects depended, in large part, on West Agro's
marketing efforts in fostering acceptance of IodoZyme as an alternative to other
available products. West Agro has indicated that it intends to stop marketing
IodoZyme.

If a competitive drug is marketed to treat fibrocystic breast disease prior to
IoGen, then the potential market opportunity for IoGen will be adversely
affected

         The only drug approved by the United States Food and Drug
Administration (commonly called FDA) for the treatment of fibrocystic breast
disease is danazol, a masculinizing hormone. We are aware of a few companies
developing drugs for the treatment of fibrocystic breast disease. If any of
these competitors receive marketing approval for their drug compounds before we
do, they may achieve a significant competitive advantage by being first to
market and through certain marketing exclusivity rights, which could extend up
to seven years. This would delay our ability to receive marketing approval.


                                       15
<PAGE>


If the FDA does not allow us to use the Mimetix patient data, then the cost of
the IoGen clinical development will increase significantly

         The FDA has informed us that prior to filing for marketing approval for
IoGen, we must successfully complete two Phase III efficacy trials, one two-year
toxicity study in rodents and dose approximately 1,500 patients. We currently
estimate that approximately $10 million will be required over the next three
years to complete the clinical development of IoGen. This estimate assumes that
we will be able to submit to FDA certain patient data we obtained from Mimetix,
Inc. If FDA does not accept the Mimetix patient data, then the cost of the IoGen
clinical development will significantly increase to approximately $20 million.
This would also delay our ability to receive marketing approval.

We may be sued for product liability in the future and our liability insurance
may not be adequate to cover the situation

         We may be held liable if any product we develop in the future, or any
product which is made with the use of any of our technologies, causes injury or
is found otherwise defective during product testing, manufacturing, marketing or
sale. Although we have product liability insurance, we may not have insurance
coverage sufficient in amount and scope against potential liabilities or the
claims may be excluded from coverage under the terms of the policy. Our
liability could exceed our total assets. Further, product liability insurance is
becoming increasingly expensive. As a result, we may not be able to obtain
sufficient amounts of insurance coverage, obtain additional insurance when
needed, or obtain insurance at a reasonable cost, which could prevent or inhibit
the commercialization of our products or technology. Any claims against us,
regardless of their merit or eventual outcome, could have a serious and adverse
effect upon our business.

Teat dips could become subject to FDA marketing clearance that could affect our
ability to market IodoZyme or any other teat dip product

         Teat sanitizers, although considered animal drugs by the FDA, do not
currently require clearance by the FDA prior to marketing. The FDA, however,
issued draft guidelines in 1993 governing teat dips and it is possible that if
such guidelines are adopted that IodoZyme or any other teat dip product sold by
us in the future will require clearance by the FDA in the future. Required
compliance with these guidelines or other FDA requirements which may be adopted,
would have a significant adverse effect on the marketing of IodoZyme (assuming
we are able to continue marketing it without West Agro) or any other teat dip
product sold by us in the future.

We have no marketing experience within our company

         Although we have no present plans to do so, we may, in the future,
determine to directly market certain of our proposed products. We have no
marketing experience and significant additional capital expenditures and
management resources would be required to develop a direct sales force. In the
event we elect to engage in direct marketing activities, we might have
difficulty obtaining the requisite funds or attracting and retaining the human
resources necessary to successfully market any products.


                                       16
<PAGE>


We depend on our two employees for our future success; the loss of either of
them could adversely effect our ability to succeed

         Our success depends to a significant extent on the performance and
continued service of our two employees, our Chief Executive Officer, Jack H.
Kessler, Ph.D. and our President and Chief Operating Officer, Mr. Paul C.
Desjourdy. The loss of the services of either of our senior officers would
disrupt our operations and would adversely effect our efforts to commercialize
new products while we worked to replace those employees. We do not maintain "key
man" life insurance on any of our employees. As a result, if any of our key
employees were to die or become unable to provide services for us, our
operations would be disrupted and we would have no means of recovering any
resulting losses.

Because our iodine-based products may stain or corrode some surfaces, potential
applications for our products may
not be possible

         An important aspect of our present and future product candidates is
that they must be compatible with the surfaces with which they come into
contact. We have ceased efforts to develop products that clean germs from
certain medical and dental instruments as a result of staining and corrosion
caused by the required concentrations of iodine in the formulations. We continue
to investigate the balance between the level of efficacy and the need to avoid
staining and corrosion. For any proposed product application, staining or
corrosion from a product candidate could be sufficient to limit or forestall
regulatory approval or, if approved, could adversely affect market acceptance of
such product. We might not be successful in overcoming these staining and
corrosion problems.

Our use of hazardous materials in our development and commercial efforts exposes
us to material potential liability

         Our manufacturing and development activities involve the controlled use
and shipment of hazardous chemicals and other materials. Although we believe
that our safety procedures for handling, shipping and disposing of such
materials comply with the standards prescribed by federal, state and local
regulations, we cannot completely eliminate the risk of accidental contamination
or injury from these materials. In the event of such an accident, we could be
held liable for any damages that result and any such liability could exceed our
resources. There can be no assurance that current or future environmental or
transportation laws, rules, regulations or policies will not have a material
adverse effect on us.

We may never receive a benefit from our net operating losses

         We have not recognized any benefit from the future use of existing NOL
carryforwards. We have not recognized any such benefit because our evaluation of
all the available evidence does not indicate that it is more likely than not
that we will generate sufficient future taxable income to realize such benefit.
We had consolidated federal income tax NOL carryforwards of approximately $11.9
million at December 31, 2004. Our NOL carryforwards will begin to terminate in
2008 to the extent they have not been used to reduce taxable income prior to
such time. Our ability to use our NOL carryforwards to reduce taxable income is
dependent upon, among other things, our not experiencing an "ownership change"
of more than 50 percent during any three-year testing period as defined in the
Internal Revenue Code. While we have not made the necessary determination, we
likely have experienced an ownership change in the past, and, if not, could
very likely experience an ownership change from future sales of our securities.
If we have, or if we do, experience an ownership change of more than 50 percent
as defined in the Internal Revenue Code, it could substantially limit the
availability of our NOL carryforwards.


                                       17
<PAGE>


RISKS RELATED TO OUR STOCK

"Penny Stock" rules may make buying or selling our securities difficult

         Trading in our securities is subject to the SEC's "penny stock" rules
and it is anticipated that trading in our securities will continue to be subject
to the penny stock rules for the foreseeable future. The SEC has adopted
regulations that generally define a penny stock to be any equity security that
has a market price of less than $5.00 per share, subject to certain exceptions.
These rules require that any broker-dealer who recommends our securities to
persons other than prior customers and accredited investors must, prior to the
sale, make a special written suitability determination for the purchaser and
receive the purchaser's written agreement to execute the transaction. Unless an
exception is available, the regulations require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule explaining the
penny stock market and the risks associated with trading in the penny stock
market. In addition, broker-dealers must disclose commissions payable to both
the broker-dealer and the registered representative and current quotations for
the securities they offer. The additional burdens imposed upon broker-dealers by
such requirements may discourage broker-dealers from recommending transactions
in our securities, which could severely limit the liquidity of our securities
and consequently adversely affect the market price for our securities.

Our securities have been thinly traded on the over-the-counter bulletin board,
which may not provide liquidity for our investors

         Our securities are quoted on the Over-the-Counter Bulletin Board. The
Over-the-Counter Bulletin Board is an inter-dealer, over-the-counter market that
provides significantly less liquidity than the NASDAQ Stock Market or national
or regional exchanges. Securities traded on the Over-the-Counter Bulletin Board
are usually thinly traded, highly volatile, have fewer market makers and are not
followed by analysts. The Securities and Exchange Commission's order handling
rules, which apply to NASDAQ-listed securities, do not apply to securities
quoted on the Over-the-Counter Bulletin Board. Quotes for stocks included on the
Over-the-Counter Bulletin Board are not listed in newspapers. Therefore, prices
for securities traded solely on the Over-the-Counter Bulletin Board may be
difficult to obtain and holders of our securities may be unable to resell their
securities at or near their original acquisition price, or at any price.

Investors must contact a broker-dealer to trade over-the-counter bulletin board
securities. As a result, you may not be able to buy or sell our securities at
the times that you may wish

         Even though our securities are quoted on the Over-the-Counter Bulletin
Board, the Over-the-Counter Bulletin Board may not permit our investors to sell
securities when and in the manner that they wish. Because there are no automated
systems for negotiating trades on the Over-the-Counter Bulletin Board, they are
conducted via telephone. In times of heavy market volume, the limitations of
this process may result in a significant increase in the time it takes to
execute investor orders. Therefore, when investors place market orders (an order
to buy or sell a specific number of shares at the current market price) it is
possible for the price of a stock to go up or down significantly during the
lapse of time between placing a market order and its execution.


                                       18
<PAGE>


We do not intend to pay dividends in the foreseeable future, therefore, you may
never see a return on your
investment

         We do not anticipate the payment of cash dividends on our common stock
in the foreseeable future. We anticipate that any profits from our operations
will be devoted to our future operations. Any decision to pay dividends will
depend upon our profitability at the time, cash available and other factors.
Therefore, our stockholders may never see a return on their investment.

We may sell additional shares in the future, which could cause the price of our
securities to decline

         We currently have 18,750,000 shares of Class A Common Stock, 1,250,000
shares of Class B Common Stock and 5,000,000 shares of preferred stock
authorized. Our board of directors has recently approved an amendment to our
Certificate of Incorporation, which if approved by our shareholders at our 2005
annual meeting, would increase the authorized number of shares of Class A Common
Stock to 93,750,000. As a result, we have substantial amounts of authorized but
unissued capital stock. Our Certificate of Incorporation, as amended, and
applicable provisions of Delaware law provide that we may issue authorized
capital stock at the approval of our Board of Directors, and no stockholder vote
or other form of stockholder approval is required for us to issue such capital
stock. Consequently, we could issue shares of either class of our common stock
or our preferred stock in connection with future financings or acquisitions or
in conjunction with equity compensation arrangements. The offering prices in
connection with those future issuances could be less than the current sales
prices of our securities. Any future issuances of any of our securities could
cause the trading price of our securities to decline.

We may sell additional shares in the future, which may cause existing
stockholders  significant dilution

         The sale of shares to fund future operations and continued clinical
development of our proposed products will have a dilutive impact on our
stockholders. As a result, our net income per share, if any, could decrease in
future periods, and the market price of our common stock could decline. In
addition, the lower our stock price at the time we sell additional shares, the
more shares we will have to issue. If our stock price decreases, then our
existing stockholders would experience greater dilution.

Resales of our shares could adversely affect the market price for our stock

         Although the substantial number of shares issued in our 2004 private
placement and the Mimetix transaction are currently subject to securities laws
restrictions on resale in the open market, we are obligated to file a resale
registration statement for these shareholders. This would allow them to sell
their shares without having to comply with Rule 144 (under which, in the case of
Symbollon, generally a person who has beneficially owned for at least one year
shares acquired in a non-public transaction, or a person who may be deemed to be
an affiliate of Symbollon, is entitled to sell within any 3-month period a
number of shares that does not exceed 1% of the then outstanding shares of
common stock; and after two years non-affiliates can freely re-sell). If we are
able to sell additional shares to meet our pressing need for financing, these
purchasers would likely also receive registration rights. A resale registration
statement might also include substantial numbers of shares held by our
affiliates, including our executive officers. Resales of substantial numbers of
shares (including shares purchased at less than current market prices) pursuant
to any such resale registration statement or even under Rule 144 could adversely
affect the market price for our common stock.


                                       19
<PAGE>


Item 2.  Description of Property

         We lease approximately 5,400 square feet of office, research and
development and manufacturing space in Framingham, Massachusetts for a current
base annual rental of approximately $38,000 increasing $0.25 per square foot
each year effective September 1. The lease expires on August 31, 2007. As of
December 31, 2004, future minimum payments under our non-cancellable operating
lease total $105,000. We believe that this space is suitable and adequate for
our current needs; however, because the existing space has limited in-house
manufacturing capacity, additional manufacturing space may be necessary if
product volumes increase.

Item 3.  Legal Proceedings

         We are not a party to any legal proceedings.

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

         No matters were submitted to a vote of security holders during the
quarter ended December 31, 2004.


                                     PART II

Item 5.  Market for Common Equity, Related Stockholder Matters and Small
Business Issuer Purchases of Equity Securities

(a)  Price Range of Securities

         Our Class A Common Stock has traded on the OTC Bulletin Board under the
symbol "SYMBA." There can be no assurance that we will continue to be traded on
the OTC Bulletin Board. The following sets forth the high and low sales prices
for the Class A Common Stock for each of the quarterly periods during fiscal
2004 and 2003, as reported by the OTC Bulletin Board.

                                         Fiscal 2004               Fiscal 2003
                                         -----------               -----------
                                      High         Low           High       Low

           First quarter          $   5.00     $  0.17       $   0.51    $  0.05
           Second quarter             2.25        1.10           0.44       0.13
           Third quarter              2.45        1.01           0.45       0.22
           Fourth quarter             2.00        1.10           0.30       0.18


         There are no outstanding shares of our Class B Common Stock.

 (b)  Approximate Number of Equity Security Holders

         Based upon information supplied by our transfer agent, we believe that
there were over 100 record holders of our Class A Common Stock as of March 30,
2005. Based upon information supplied by our transfer agent, we believe that the
number of beneficial holders of the Company's Class A Common Stock as of March
30, 2005 is in excess of 900.


                                       20
<PAGE>


(c)  Dividends

         We have never paid a cash dividend on any class of our common stock and
anticipate that for the foreseeable future any earnings will be retained for use
in our business and, accordingly, do not anticipate the payment of cash
dividends.

(d)  Recent Sales of Unregistered Securities

         On December 1, 2004, we entered into a services agreement with Dr.
Bernard A. Eskin. In accordance with the service agreement, and as consideration
for the services provided by Dr. Eskin, we agreed to issue 5,000 shares of Class
A common stock upon execution, and on each of the first and second anniversaries
of the agreement. The shares were issued pursuant to the exemption afforded by
Section 4(2) of the Securities Act of 1933.

         On December 16, 2004, we entered into a services agreement with
CEOcast, Inc. In accordance with the service agreement, and as partial
consideration for the services provided by CEOcast, Inc., we agreed to issue
45,000 shares of Class A common stock upon execution. The shares were issued
pursuant to the exemption afforded by Section 4(2) of the Securities Act of
1933.

         On January 5, 2004, we entered into a services agreement with Barry
Kaplan Associates. In accordance with the service agreement, and as partial
consideration for the services provided by Barry Kaplan Associates, we issued
stock options to purchase 50,000 shares of our common stock at an exercise price
of $0.25 per share. The options vest 25,000 on June 30, 2004 and 25,000 on
December 31, 2004 and expire on March 31, 2005. On June 30, 2004 and December
31, 2004, these options were exercised for no cost to the consultant because our
average common stock closing prices for the three months ended June 30, 2004 and
December 31, 2004 were greater than $0.50 and $0.75 per share, respectively. The
shares were issued pursuant to exemptions afforded by Section 4(2) of the
Securities Act of 1933.

Item 6.  Management's Discussion and Analysis or Plan of Operation

         The following discussion contains forward-looking statements which
involve risks and uncertainties. See "Special Note Regarding Forward Looking
Statements" and "Risk Factors" above in this Annual Report on Form 10-KSB.

Overview

         We are a specialty pharmaceutical company. We have a formulation
iodine-based proprietary technology that has potential product applications in
the areas of infection control and women's healthcare. In 1995, we launched our
first commercial product, IodoZyme. Through December 31, 2004, it has generated
approximately $2.8 million in sales. IodoZyme is being discontinued by our
marketing partner.

         Since 2000, we have concentrated our product development efforts on the
proposed product application for the treatment of fibrocystic breast disease. We
believe we have adequate cash reserves to continue base operations through the
second quarter of 2005. In order for us to continue the clinical development of
IoGen, we must raise additional resources. If we cannot secure additional
resources before existing resources are exhausted, we will have to curtail, or
perhaps cease, operations.


                                       21
<PAGE>


Going Concern

         The accompanying consolidated financial statements have been prepared
in conformity with accounting principles generally accepted in the United States
of America, which contemplate continuation of our company as a going concern. We
had net losses of $2,647,108 and $628,123 and negative cash flows from
operations of $805,108 and $539,498 for the years ended December 31, 2004 and
2003, respectively. At December 31, 2004, we had an accumulated deficit of
$12,165,778 and working capital of $521,900. These factors raise substantial
doubt as to our ability to continue as a going concern.

         The application of the going concern concept is dependent upon our
ability to receive continued financial support from our creditors, stockholders
and external investors and securing a partner to help complete the development
and commercialization of IoGen. These consolidated financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts, or amounts and classification of liabilities that might
be necessary should we be unable to continue as a going concern and, therefore,
be required to realize our assets and discharge our liabilities in other than
the normal course of operations. Management plans to obtain equity and debt
financing from external investors and to actively pursue a partner to help
complete the development and commercialization of IoGen.

         Management believes the plan described above will be sufficient to meet
our liabilities and commitments as they become payable over the next twelve
months. There can be no assurance that management's plan will be successful.
Failure to obtain the support of additional external investors to finance
our operations will cause us to curtail operations and impair our ability to
continue as a going concern.

Critical Accounting Policies and Estimates

         The following is a discussion of the more significant accounting
policies and methods we use.

         Estimates - The financial statements are prepared in accordance with
accounting principles generally accepted in the U.S., which require us to make
estimates and assumptions. On an on-going basis, we evaluate our estimates
related to the useful lives of fixed and intangible assets. Management bases its
estimates and judgments on historical experience and on various other factors
that are believed to be reasonable under the circumstances. Actual results may
differ from these estimates under different assumptions or conditions.

         Revenue recognition - The Company recognizes revenue from its product
sales in accordance with SEC Staff Accounting Bulletin No. 104, "Revenue
Recognition." Under these guidelines, revenue is recognized when persuasive
evidence of an arrangement exists, delivery has occurred or services rendered,
the price is fixed or determinable and payment is reasonably assured.

         Research and Development Expenses - Research and development expenses
are expensed as incurred.

         Long-lived assets - Long-lived assets, such as intangible assets and
property and equipment are evaluated for impairment when events or changes in
circumstances indicate that the carrying amount of the assets may not be
recoverable through the estimated undiscounted future cash flows from the use of
these assets. When any such impairment exists, the related assets are written
down to fair value.


                                       22
<PAGE>


Results of Operations

         Fiscal 2004 versus Fiscal 2003

         Symbollon's net loss in fiscal 2004 was $2,647,108, reflecting an
increase of $2,018,985 or 321.4% from a net loss of $628,123 in fiscal 2003.
This increased loss resulted primarily from increased clinical development
expenses related to the expensing of certain intangible assets acquired from
Mimetix Inc. and manufacturing costs associated with the production of clinical
trial materials of IoGen, variable accounting for certain stock options, and
increased investor relations expenses related to our effort to raise public
awareness of Symbollon, partially offset by decreased insurance expenses due to
cost reduction efforts.

         Product revenues from sales of IodoZyme (our bovine teat sanitizer)
decreased by $111,262 or 41.1% from $270,772 in fiscal 2003 to $159,510 in
fiscal 2004. The decreased revenues resulted primarily from significantly
decreased demand for IodoZyme. In March 2005, West Agro informed Symbollon that
it intends to place orders for approximately $90,000 of IodoZyme during 2005 and
2006 and that it plans to discontinue selling the product after the disposition
of such finished goods inventory has been sold.

         Cost of goods sold for IodoZyme decreased by $95,373 or 40.2% from
$237,483 in fiscal 2003 to $142,110 in fiscal 2004. The gross profit margin on
product sales decreased from 12.3% in fiscal 2003 to 10.9% in fiscal 2004. The
decreased profit margin resulted primarily from decreased manufacturing capacity
utilization.

         Research and development expenses increased by $1,190,363 or 425.6%
from $279,683 in fiscal 2003 to $1,470,046 in fiscal 2004. The increase resulted
primarily from increased clinical development expenses related to the expensing
of $935,000 for clinical trial data acquired from Mimetix and manufacturing cost
of approximately $161,000 associated with the production of clinical trial
materials for the IoGen program. The manufacturing company that supplies the
IoGen clinical trial materials has agreed to offset $100,000 of manufacturing
cost for equivalent value in our private placement, $72,000 of which has been
incurred through December 31, 2004. If we can secure adequate financial
resources, we plan to initiate a Phase III pivotal trial for IoGen during 2005,
and such activities will increase research and development expenses once
initiated.

         General and administrative expenses increased by $215,903 or 55.4% from
$389,506 in fiscal 2003 to $605,409 in fiscal 2004. The increase resulted
primarily from increased investor relations expenses related to our effort to
raise public awareness of Symbollon, partially offset by decreased insurance
expenses due to cost reduction efforts and decreased cost relating to certain
consulting services. We anticipate that general and administrative expenses in
2005 will remain consistent with 2004.

         As a result of our repricing of stock options in November 2003, some of
our outstanding stock options are subject to variable plan accounting which
requires us to measure the intrinsic value of the repriced options through the
earlier of the date of exercise, cancellation or expiration at each reporting
date. In January 2001, certain officers of the Company entered into Promissory
Notes with the Company pursuant to an executive loan program totaling $834,560
in exchange for 462,895 shares of Class A common stock acquired through the
exercise of vested stock options. The shares acquired through this loan program
are subject to variable plan accounting. Operating results for fiscal 2004
include expenses of $593,749 as a result of changes in the intrinsic value of
the repriced stock options, compared to none during fiscal 2003. We expect that
compensation charges and credits may occur in the future based upon changes in
the intrinsic value of our repriced stock options and shares acquired through
the loan program.


                                       23
<PAGE>

         The Company's interest income decreased by $3,081 or 39.6% from $7,777
in fiscal 2003 to $4,696 in fiscal 2004. This decrease resulted from a decrease
in available funds for investment throughout 2004.

Financial Condition, Liquidity and Capital Resources

         We have funded our activities primarily through proceeds from private
and public placements of equity securities. During 1999, we sold 836,685 shares
of common stock, together with warrants for a like number of shares, in a
private placement, realizing net proceeds of approximately $1,356,000. During
2000, we received net proceeds of approximately $1,761,000 from the exercise of
586,910 warrants issued as part of the 1999 private placement. During 2004, we
sold 1,261,692 shares of common stock, together with 630,846 warrants, in a
private placement, for net proceeds of approximately $634,000 in cash and
approximately $186,000 in prepaid services for manufacturing, consulting and
clinical trial expenses.

         During 2004, we continued to incur operating losses and have incurred a
cumulative loss through December 31, 2004 of $12,165,778. As of December 31,
2004, we had working capital of $521,900. We believe that we have the necessary
liquidity and capital resources to sustain planned operations through the second
quarter of 2005. Our planned operations for 2005 include manufacturing IodoZyme,
manufacturing the first registration batch of clinical drug for use in the next
IoGen studies and securing additional resources to sustain our operations and to
complete the clinical development of IoGen. We estimate that it will cost
approximately $10 million to complete the clinical development of IoGen. Until
we secure additional financial resources, we will not be able to conduct any
further significant clinical development of IoGen, including necessary clinical
trials or animal toxicity studies that are required to submit IoGen for FDA
marketing approval, on which our future is likely dependent. If we cannot secure
additional resources before existing resources are exhausted, which is estimated
to occur before the end of the second quarter of 2005, we will have to curtail,
or perhaps cease, operations.

         The report of our registered independent accountants on our
consolidated financial statements for the years ended December 31, 2004 and 2003
contains an explanatory paragraph, which indicates that we have incurred
recurring losses and have an accumulated deficit that raises substantial doubt
about our ability to continue as a going concern. This report is not viewed
favorably by analysts or investors and may make it more difficult for us to
raise additional debt or equity financing needed to continue our operations.

         During 2005, we are committed to pay approximately $440,000 as
compensation to our current executive officers and approximately $38,000 for
lease payments on our facilities. We have no other material capital expenditures
planned during fiscal 2005. At December 31, 2004, we had a net operating loss
carryforward for federal income tax purposes of approximately $11,946,000
expiring at various dates through 2024 (from which, however, we may never
receive a benefit).



                                       24
<PAGE>


Item 7.  Financial Statements

Report of Registered Independent Accountants

To the Board of Directors and Stockholders of
Symbollon Pharmaceuticals, Inc.

We have audited the accompanying balance sheets of Symbollon Pharmaceuticals,
Inc., as of December 31, 2004 and 2003, and the related statements of
operations, stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Symbollon Pharmaceuticals, Inc.
at December 31, 2004 and 2003, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
and has an accumulated deficit that raise substantial doubt about the entity's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.



VITALE, CATURANO & COMPANY, LTD.

Boston, Massachusetts
March 28, 2005






                                       25

<PAGE>

<TABLE>
<CAPTION>


                                          Symbollon Pharmaceuticals, Inc.

                                                  Balance Sheets





                                                                                                    Year Ended
                                                                                                    December 31,
                                                                                      ---------------------------------
                                                                                            2004                 2003
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                   <C>

Assets

Current assets:
   Cash and cash equivalents                                                         $    427,124          $   617,897
   Accounts receivable                                                                          -              100,189
   Inventory                                                                               72,783               23,896
   Prepaid expenses                                                                       188,469               27,594
-----------------------------------------------------------------------------------------------------------------------

       Total current assets                                                               688,376              769,576

Equipment and leasehold improvements, net of
  accumulated depreciation and amortization                                                38,352               56,486

Other assets:
   Patent and trademark costs, net of accumulated
     amortization                                                                         385,726              391,428
   Deposit                                                                                  2,364                2,364
----------------------------------------------------------------------------------------------------------------------

                                                                                     $  1,114,818          $ 1,219,854
----------------------------------------------------------------------------------------------------------------------

</TABLE>


                                       26
<PAGE>

<TABLE>
<CAPTION>


                                          Symbollon Pharmaceuticals, Inc.

                                                  Balance Sheets
                                                    (Continued)




                                                                                                  Year Ended
                                                                                                 December 31,
                                                                                    ----------------------------------
                                                                                            2004                2003
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                   <C>

Liabilities and Stockholders' Equity

Current liabilities:
   Accounts payable                                                                 $      21,326         $     33,832
   Accrued clinical development expenses                                                  125,327               80,507
   Other current liabilities                                                               19,823               19,356
----------------------------------------------------------------------------------------------------------------------

       Total current liabilities                                                          166,476              133,695
----------------------------------------------------------------------------------------------------------------------

Commitments (Notes 6, 7 and 10)

Stockholders' equity:
   Common stock, Class A, par value $.001 per share, 18,750,000 shares
     authorized, 6,114,761 and 4,196,204 shares issued and outstanding
     as of December 31, 2004 and 2003, respectively                                         6,115                4,196
   Convertible common stock, Class B, par value $.001
     per share, 1,250,000 shares authorized and unissued                                        -                    -
   Preferred stock, par value $.001 per share, 5,000,000 shares
     authorized and unissued                                                                    -                    -
   Additional paid-in capital                                                          13,942,565           11,435,193
   Accumulated deficit                                                                (12,165,778)          (9,518,670)
----------------------------------------------------------------------------------------------------------------------

                                                                                        1,782,902            1,920,719
   Common stock subscriptions receivable                                                 (834,560)            (834,560)
----------------------------------------------------------------------------------------------------------------------

       Total stockholders' equity                                                         948,342            1,086,159
----------------------------------------------------------------------------------------------------------------------

                                                                                    $   1,114,818         $  1,219,854
----------------------------------------------------------------------------------------------------------------------

                                                                    See accompanying notes to financial statements.

</TABLE>

                                       27
<PAGE>

<TABLE>
<CAPTION>


                                          Symbollon Pharmaceuticals, Inc.

                                             Statements of Operations





                                                                                                Year Ended
                                                                                                December 31,
                                                                                --------------------------------------
                                                                                        2004                    2003
----------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                       <C>

Revenue:
   Net product sales                                                            $     159,510             $    270,772

Operating expenses:
   Cost of goods sold                                                                 142,110                  237,483
   Research and development costs                                                   1,470,046                  279,683
   General and administrative expenses                                                605,409                  389,506
   Stock-based compensation (1)                                                       593,749                        -
----------------------------------------------------------------------------------------------------------------------

     Total operating expenses                                                       2,811,314                  906,672
----------------------------------------------------------------------------------------------------------------------

Loss from operations                                                               (2,651,804)                (635,900)

Interest income                                                                         4,696                    7,777
----------------------------------------------------------------------------------------------------------------------

Net loss                                                                          $(2,647,108)          $     (628,123)
----------------------------------------------------------------------------------------------------------------------

Basic and diluted net loss per share of
  common stock                                                                     $    (.53)            $        (.15)
----------------------------------------------------------------------------------------------------------------------

Weighted average number of common shares
  outstanding - basic and diluted                                                   4,963,470                4,196,204
----------------------------------------------------------------------------------------------------------------------

(1) The following summarizes the allocation of
     stock-based compensation:
     Cost of goods sold                                                            $  220,285                        -
     Research and development costs                                                $  138,603                        -
     General and administrative expenses                                           $  234,861                        -
----------------------------------------------------------------------------------------------------------------------

     Total                                                                        $   593,749                        -
----------------------------------------------------------------------------------------------------------------------

                                                                    See accompanying notes to financial statements.

</TABLE>

                                       28
<PAGE>

<TABLE>
<CAPTION>


                                          Symbollon Pharmaceuticals, Inc.

                                        Statements of Stockholders' Equity







                                                  Common Stock
                                                $.001 Par Value                                           Common
                                                    Class A            Additional                          Stock
                                            ---------------------        Paid-in        Accumulated    Subscriptions
                                               Shares     Amount         Capital          Deficit        Receivable         Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>           <C>         <C>               <C>             <C>            <C>

Balance, December 31, 2002                  4,196,204     $4,196      $ 11,435,193      $(8,890,547)    $ (834,560)    $  1,714,282
   Net loss for the year                            -          -                 -         (628,123)             -         (628,123)
------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2003                  4,196,204      4,196        11,435,193       (9,518,670)      (834,560)       1,086,159
   Issuance of Shares - Acquired Research     550,000        550           934,450                -              -          935,000
   Issuance of Shares - Equity Line             6,865          7             9,918                -              -            9,925
   Issuance of Shares - Private Placement   1,261,692      1,262           820,355                -              -          821,617
   Issuance of Shares - Consultants           100,000        100           148,900                -              -          149,000
   Stock Based Compensation                                                593,749                -              -          593,749
   Net loss for the year                            -          -                 -       (2,647,108)             -       (2,647,108)
------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2004                  6,114,761     $6,115      $ 13,942,565     $(12,165,778)    $ (834,560)    $    948,342
------------------------------------------------------------------------------------------------------------------------------------

                                                                    See accompanying notes to financial statements.

</TABLE>

                                       29
<PAGE>

<TABLE>
<CAPTION>

                                          Symbollon Pharmaceuticals, Inc.

                                             Statements of Cash Flows






                                                                                                  Year Ended
                                                                                                 December 31,
                                                                                    -----------------------------------
                                                                                          2004                  2003
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                   <C>

Cash flows from operating activities:

   Net loss                                                                          $(2,647,108)          $  (628,123)
   Adjustments to reconcile net loss to net cash used in
     operating activities:
     Stock-based compensation                                                            593,749                     -
     Issuance of common stock and options for services rendered                          336,317                     -
     Issuance of common stock for acquired research and development                      935,000                     -
     Depreciation and amortization                                                        53,726                46,534
     Changes in operating assets and liabilities:
       Accounts receivable                                                               100,189                   810
       Inventory                                                                         (48,887)               10,746
       Prepaid expenses                                                                 (160,875)               31,809
       Accounts payable and other current liabilities                                     32,781                (1,274)
-----------------------------------------------------------------------------------------------------------------------
         Net cash used in operating activities                                          (805,108)             (539,498)
-----------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:

   Purchase of equipment and leasehold improvements                                       (1,442)                    -
   Patent and trademark cost additions                                                   (28,448)              (87,211)
-----------------------------------------------------------------------------------------------------------------------
         Net cash used in investing activities                                           (29,890)              (87,211)
-----------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:

   Issuance of common stock and warrants                                                 644,225                     -
-----------------------------------------------------------------------------------------------------------------------
         Net cash provided by (used in) financing activities                             644,225                     -
-----------------------------------------------------------------------------------------------------------------------

Net decrease in cash and cash equivalents                                               (190,773)             (626,709)

Cash and cash equivalents, beginning of period                                           617,897             1,244,606
-----------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                             $   427,124           $   617,897
-----------------------------------------------------------------------------------------------------------------------

Supplemental information:
   There were no payments made for interest or income taxes during 2004 or 2003.

                                                                    See accompanying notes to financial statements.
</TABLE>

                                       30
<PAGE>


                         Symbollon Pharmaceuticals, Inc.

                          Notes to Financial Statements



1.  Description of       Symbollon   Pharmaceuticals,    Inc.
    Business and         (formerly Symbollon Corporation) was formed to
    Basis of             develop and commercialize  proprietary iodine-based
    Presentation         products for  infection  control and  treatment
                         in   biomedical   and    bioagricultural    industries.
                         The  success  of  future   operations  is
                         subject to a number of risks  similar to those of other
                         companies in the same stage of  development.  Principal
                         among   these  risks  are  the   Company's   cumulative
                         operating  losses,  no assurance of  profitable  future
                         operations,   early   state  of   market   development,
                         competition   from   substitute   products   or  larger
                         companies,   dependence   on  key   personnel  and  the
                         uncertainty of additional future financing as needed.

                         The accompanying consolidated financial statements have
                         been prepared in conformity with accounting  principles
                         generally  accepted  in the United  States of  America,
                         which  contemplate  continuation  of our  company  as a
                         going  concern.  We had net  losses of  $2,647,108  and
                         $628,123 and  negative  cash flows from  operations  of
                         $805,108 and $539,498 for the years ended  December 31,
                         2004 and 2003,  respectively.  At December 31, 2004, we
                         had an accumulated  deficit of $12,165,778  and working
                         capital of $521,900.  These factors  raise  substantial
                         doubt as to our ability to continue as a going concern.

                       The application of the going concern concept is dependent
                         upon our ability to receive continued financial support
                         from our creditors, stockholders and external investors
                         and securing a partner to help complete the development
                         and  commercialization  of  IoGen.  These  consolidated
                         financial  statements  do not include  any  adjustments
                         relating to the  recoverability  and  classification of
                         recorded asset amounts,  or amounts and  classification
                         of  liabilities  that might be  necessary  should we be
                         unable to continue as a going  concern and,  therefore,
                         be  required to realize  our assets and  discharge  our
                         liabilities   in  other  than  the  normal   course  of
                         operations.  Management plans to obtain equity and debt
                         financing  from  external  investors  and  to  actively
                         pursue a partner to help complete the  development  and
                         commercialization of IoGen.

                         Management believes the plan described above will be
                         sufficient to meet our  liabilities  and commitments as
                         they become payable over the next twelve months.  There
                         can be no  assurance  that  management's  plan  will be
                         successful. Failure to obtain the support of additional
                         external  investors to finance our operations  will
                         cause us to curtail  operations  and impair our ability
                         to continue as a going concern.


                                       31
<PAGE>



2.    Summary of
       Significant
       Accounting Policies

       Use of Estimates  The preparation of financial statements in conformity
                         with generally accepted accounting principles  requires
                         management  to  make  estimates  and  assumptions  that
                         affect the reported  amounts of assets and  liabilities
                         and disclosure of contingent  assets and liabilities at
                         the date of the financial  statements  and the reported
                         amounts of revenues and expenses  during the  reporting
                         period.   Actual   results   could  differ  from  those
                         estimates.

       Cash and Cash     Cash and cash equivalents include short-term, highly
       Equivalents       liquid investments with  maturities of less than three
                         months when acquired.

       Concentration of  The Company has one customer. The Customer's financial
       Credit Risks      condition is reviewed on an  ongoing basis, and
                         collateral is not required. The Company believes a
                         reserve for potential credit losses is not necessary as
                         of December 31, 2004 and 2003.

     Account Receivable  Accounts receivable are customer obligations due under
     and Allowance for   normal trade terms. The  Company performs continuing
     Doubtful Accounts   credit evaluations of its customer's financial
                         condition  and generally does not require collateral.
                         Senior management reviews accounts  receivable on a
                         periodic basis to determine if any   receivables   will
                         potentially be uncollectible.  The Company includes any
                         accounts  receivable balances that are determined to be
                         uncollectible,  if any,  in its overall  allowance  for
                         doubtful  accounts.  After all  attempts  to  collect a
                         receivable  have failed,  the receivable is written off
                         against  the  allowance.   Based  on  the   information
                         available to the Company,  it believes an allowance for
                         doubtful  accounts is not  necessary as of December 31,
                         2004 and 2003. However,  actual write-offs might exceed
                         the Company's estimates.

       Inventory         Inventory is stated at the lower of cost (determined on
                         a first-in,  first-out basis) or market.

       Long-Lived        Long-lived  assets,  such  as  intangible  assets  and
       Assets            property and equipment are evaluated for  impairment
                         when events or changes in  circumstances  indicate that
                        the carrying amount of the assets may not be recoverable
                         through the  estimated  undiscounted  future cash flows
                         from the use of these assets.  When any such impairment
                         exists,  the related  assets are  written  down to fair
                         value.  The Company  does not  believe  that any of its
                         long-lived  assets are impaired at December 31, 2004 or
                         2003.


                                       32
<PAGE>



 2.    Summary of
       Significant
       Accounting Policies
       (Continued)

       Depreciation and  Equipment  is  stated  at cost and is  depreciated over
       Amortization      its  estimated  useful  life (ranging from 5-7 years)
                         using the straight-line method.  Leasehold improvements
                         are  stated at cost and are being amortized by
                         the straight-line method over the 10 year
                         term of the lease which is less than their
                         estimated useful lives.

       Intangible        Intangible assets subject to amortization consist
       Assets            of patents and  trademarks  that  have  estimated
                         useful  lives  ranging  from 13-17 years and a weighted
                         average  useful  life of 11.3 years.  Costs  related to
                         patent applications are capitalized as incurred and are
                         amortized  once the patent  application  is accepted or
                         are  expensed if the  application  is rejected or there
                         are other circumstances that indicate that the asset is
                         impaired (as described above).

       Income Taxes      The  Company  follows the  liability  method of
                         accounting  for income taxes,  as set forth in SFAS No.
                         109,  "Accounting For Income Taxes." Under this method,
                         deferred tax  liabilities and assets are recognized for
                         the  expected  future  tax  consequences  of  temporary
                         differences  between  the  carrying  amount and the tax
                         basis of assets and liabilities.  The Company records a
                         valuation  allowance against deferred tax assets unless
                         it is more  likely  than not that  such  asset  will be
                         realized in future periods.

       Fair value of     The  carrying   amounts  of  cash  and  cash
       Financial         equivalents,   accounts  receivable,   other
       Instruments       current assets and accounts  payable  approximate  fair
                         value based on their short-term  maturities.

       Revenue           The  Company  recognizes  revenue  from its  product
       Recognition       sales  in   accordance   with  SEC  Staff
                         Accounting  Bulletin  No. 104,  "Revenue  Recognition."
                         Under  these  guidelines,  revenue is  recognized  when
                         persuasive evidence of an arrangement exists,  delivery
                         has occurred or services  rendered,  the price is fixed
                         or determinable and payment is reasonably assured.




       Research and      Research and development  costs are expensed as
       Development       incurred.  On May 28,  2004,  the    Company
                         completed the  acquisition of certain assets of Mimetix
                         Inc.,  a  privately  held  company,  and other  related
                         parties  associated with their iodine drug  development
                         efforts in women's  healthcare  for  550,000  shares of
                         Symbollon's  Class A common stock. The assets primarily
                         consisted of clinical  trials  results and data with no
                         future alternative use to the Company. Accordingly, the
                         cost  of  $935,000   is   included   as  research   and
                         development  costs  in the  accompanying  statement  of
                         operations.


                                       33
<PAGE>



 2.    Summary of
       Significant
       Accounting Policies
       (Continued)

       Stock-Based       The  Company   accounts  for  its   stock-based
       Compensation      compensation    plan   using   the   intrinsic    value
                         method.  The Company  provides  pro forma
                         disclosures  for  compensation  expense  under the fair
                         value   method  of  SFAS  No.  123,   "Accounting   for
                         Stock-Based    Compensation,"   and   SFAS   No.   148,
                         "Accounting for Stock-Based Compensation-Transition and
                         Disclosure."  If the Company  had elected to  recognize
                         compensation cost for the plans based on the fair value
                         at the grant date for awards  granted  under the plans,
                         consistent with the method  prescribed by SFAS No. 123,
                         the  effect on net loss and  earnings  per share  would
                         have been as follows:

<TABLE>
<CAPTION>

                         December 31,                                                2004                2003
                         --------------------------------------------------------------------------------------
                         <S>                                                   <C>             <C>

                         Net loss                                               $(2,647,108)    $    (628,123)

                         Add: Stock-based employee compensation
                           expense included in reported net income,
                           net of related tax effects                               593,749                 -

                         Deduct: Total stock-based employee
                           compensation determined under fair
                           value method of all awards, net of
                           related tax effects                                      (79,379)           (53,412)
                         --------------------------------------------------------------------------------------

                         Basic and diluted loss per share                      $ (2,132,738)     $    (681,535)
                         --------------------------------------------------------------------------------------

                         Basic and diluted loss per share:
                           As reported                                          $     (.53)      $        (.15)
                           Pro forma                                            $     (.43)      $        (.16)
</TABLE>

                         The fair value of the Company's stock  options  used to
                         compute  the pro  forma net loss and net loss per share
                         disclosures is the estimated  value at grant date using
                         the   Black-Scholes   option-pricing   model  with  the
                         following  weighted-average  assumptions  for  2004 and
                         2003,  respectively:  dividend  yield  of 0%  for  both
                         years; expected volatility of between 260% and 270% and
                         270%, respectively;  a risk-free interest rate of 4.00%
                         and  between 2% and 5%,  respectively,  and an expected
                         holding  period  of 8  to 9  years  and  3 to 9  years,
                         respectively.

                                       34
<PAGE>


 2.    Summary of
       Significant
       Accounting Policies
       (Continued)




       Loss Per Share    The Company  follows SFAS No. 128,  "Earnings
                         per Share."  Under SFAS No.  128,  basic  earnings  per
                         share  excludes  the  effect of any  dilutive  options,
                         warrants or  convertible  securities and is computed by
                         dividing the net loss available to common  shareholders
                         by  the  weighted   average  number  of  common  shares
                         outstanding for the period.  Diluted earnings per share
                         is  computed  by  dividing  the net loss  available  to
                         common  shareholders by the sum of the weighted average
                         number of common  shares and common  share  equivalents
                         computed  using the average market price for the period
                         under the treasury stock method.

       Recent            In January 2003, the Financial  Accounting  Standards
       Accounting        Board issued Interpretation No.  46 (FIN 46),
       Standards         "Consolidation  of  Variable  Interest   Entities,   an
                         interpretation  of ARB    No. 51." In December
                         2003, the Financial  Accounting Standards Board revised
                         FIN 46 by  issuing  Interpretation  No.  46R.  FIN  46R
                         clarifies the requirements for consolidation of certain
                         entities  in  which  equity  investors  do not have the
                         characteristics of a controlling  financial interest or
                         do not have sufficient equity at risk for the entity to
                         finance its activities without additional  subordinated
                         financial  support from other parties.  FIN 46R applies
                         immediately to variable interest entities created after
                         December 31, 2003.  It applies in the first fiscal year
                         beginning  after  December  15,  2004,  to all variable
                         interest    entities   that   are   subject   to   this
                         Interpretation.  The adoption of FIN 46R did not have a
                         material  effect on the Company's  financial  position,
                         results of operations or cash flows.

                       In December 2004, the FASB issued SFAS NO. 123(R), "Share
                         Based  Payment."  This  statement is a revision of SFAS
                         No. 123, "Accounting for Stock-Based  Compensation" and
                         supercedes  APB Opinion No. 25,  "Accounting  for Stock
                         Issued to Employees" and related interpretations.  This
                         statement  establishes standards for the accounting for
                         transactions  in which an entity  exchanges  its equity
                         instruments   for  goods  and   services  or  incurs  a
                         liability in exchange  for goods and services  that are
                         based  on  the  fair  value  of  the  entity's   equity
                         instruments  or that may be settled by the  issuance of
                         those  equity  instruments.  It  requires  an entity to
                         measure  the costs of  employee  services  received  in
                         exchange  for an award of equity  instruments  based on
                         the  grant-date  fair value of the award and  recognize
                         that cost over the service  period.  This  statement is
                         effective  for  small  business  issuers  in the  first
                         interim or annual period  beginning  after December 15,
                         2005.   Accordingly,   the   Company   will  adopt  its
                         provisions  effective  January 1, 2006. The Company has
                         not yet  determined  the impact  that  adoption of this
                         statement  will  have  on  its  consolidated  financial
                         position or results of operations.

                                       35
<PAGE>

3. Inventory             Inventory consists of the following:

<TABLE>
<CAPTION>

                                      December 31,                                                 2004               2003
                                      --------------------------------------------------------------------------------------
                                      <S>                                                      <C>

                                      Raw materials                                            $ 72,092           $ 23,896
                                      Finished goods                                                691                  -
                                      --------------------------------------------------------------------------------------

                                                                                               $ 72,783           $ 23,896
                                      --------------------------------------------------------------------------------------


4.    Equipment and      Equipment and leasehold improvements are stated at cost and consist of the following:
       Leasehold
       Improvements                   December 31,                                                 2004               2003
                                      --------------------------------------------------------------------------------------

                                      Equipment and fixtures                                  $ 191,460         $  190,018
                                      Leasehold improvements                                     63,146             63,146
                                      --------------------------------------------------------------------------------------

                                                                                                254,606            253,164
                                      Less accumulated depreciation and
                                        amortization                                            216,254            196,678
                                      --------------------------------------------------------------------------------------

                                      Equipment and leasehold improvements, net               $  38,352         $   56,486
                                      --------------------------------------------------------------------------------------
</TABLE>

                         Depreciation  expense for the years ended  December
                         31, 2004 and 2003 totaled $19,576 and $19,984,
                         respectively.


5. Patent and            Patent and trademark costs consist of the following:
   Trademark
   Costs

<TABLE>
<CAPTION>


                                      December 31,                                                 2004               2003
                                      --------------------------------------------------------------------------------------
                                      <S>                                                     <C>               <C>

                                      Patent costs                                            $ 513,521         $  485,074
                                      Trademark costs                                             2,444              2,444
                                      --------------------------------------------------------------------------------------

                                                                                                515,965            487,518

                                      Less accumulated amortization                             130,239             96,089
                                      --------------------------------------------------------------------------------------

                                      Patent and trademark costs, net                         $ 385,726         $  391,429
                                      --------------------------------------------------------------------------------------
</TABLE>

                         Amortization  expense  related to these assets is
                         estimated to be approximately  $35,100 per year in
                         fiscal years 2005 through 2009.  Amortization expense
                         for the years ended December 31, 2004 and 2003 totaled
                         $34,150 and $26,550, respectively.


                                       36
<PAGE>



6.    Stockholders'
      Equity

      Capital Stock      The Company has authorized  18,750,000  shares
                         of Class A common  stock,  1,250,000  shares of Class B
                         common stock and 5,000,000  shares of preferred  stock.
                         The Class A and Class B common stock are  substantially
                         identical  except that  holders of Class A common stock
                         have the right to cast one vote for each share held and
                         the  Class B  shareholders  have the right to cast five
                         votes for each share held.  As of December 31, 2004 and
                         2003,  there  were no  shares  of Class B common  stock
                         issued  and  outstanding.  The  preferred  stock may be
                         issued in series,  and shares of each  series will have
                         such  rights  and  preferences  as  are  fixed  by  the
                         Company's  Board of Directors.  As of December 31, 2004
                         and  2003,  there  were no shares  of  preferred  stock
                         issued and outstanding.

      Issuance of        On September 1, 2004, the Company sold in
      Common Stock and   a private  placement to accredited  investors
      Common Stock       1,261,692  shares  of Class A common  stock and
      Purchase           630,846 redeemable warrants for $634,300
      Warrants           in  cash  and   $185,800   in  prepaid   services   for
                         manufacturing,  consulting and clinical   trial
                         expenses.   Officers  and   directors  of  the  Company
                         invested  $127,000  of the cash  raised  as part of the
                         private  placement on the same terms and  conditions as
                         the third party investors.

                         The redeemable warrants entitle the holder thereof  to
                         purchase at any time up to February 28, 2006 a share of
                         Class A common  stock at a price  of  sixty-five  cents
                         ($0.65)  per  share.  The  redeemable  warrants  may be
                         redeemed by  Symbollon at its sole option for $0.01 per
                         warrant in the event that the  closing bid price of the
                         Class A common  stock over  twenty  successive  trading
                         days is equal to or greater than $3.50,  subject to the
                         holder's right to exercise.

                     The Company accounts for certain of the shares and warrants
                         issued for prepaid  services  under Emerging Task Force
                         Issue 96-18 "Accounting for Equity Instruments That Are
                         Issued to Other Than  Employees  for  Acquiring,  or in
                         Conjunction  with  Selling,  Goods or  Services"  (EITF
                         96-18).   Accordingly,   the  Company  has   recognized
                         approximately $48,250 and $72,000 of expense related to
                         these shares and  warrants for the year ended  December
                         31,  2004   included  in  general  and   administrative
                         expenses  and  research   and   development   expenses,
                         respectively,   in  the   accompanying   statement   of
                         operations.

                         In January, 2004 the Company issued options to purchase
                         50,000  shares of common  stock at $0.25 per share to a
                         consultant  hired by the  Company.  The options  vested
                         25,000  on June 30,  2004 and  25,000 on  December  31,
                         2004. Pursuant to the consulting  agreement,  the first
                         traunche  of  25,000  shares  was  issued  for no  cash
                         consideration,  as the $6,250 exercise price was earned
                         as a bonus for services rendered, because the Company's
                         average  closing  price for the three months ended June
                         30, 2004 was greater  than $0.50 per share.  The second


                                       37
<PAGE>

                         traunche  of 25,000  shares was also  exercised  for no
                         cash  consideration  as the $6,250  exercise  price was
                         earned as a bonus for  services  rendered,  because the
                         Company's  average  common stock  closing price for the
                         three months  ended  December 31, 2004 was greater than
                         $0.75 per share. The Company accounts for these options
                         under Emerging Task Force Issue 96-18  "Accounting  for
                         Equity  Instruments  That  Are  Issued  to  Other  Than
                         Employees  for  Acquiring,   or  in  Conjunction   with
                         Selling, Goods or Services" (EITF 96-18).  Accordingly,
                         the Company  has  recognized  approximately  $78,750 of
                         expense  related  to these  options  for the year ended
                         December   31,   2004,    included   in   general   and
                         administrative  expenses in the accompanying  statement
                         of operations.

                       On December 1, 2004, we entered into a services agreement
                         with  a  doctor.   In   accordance   with  the  service
                         agreement,  and as consideration for the services to be
                         provided by the doctor, we agreed to issue 5,000 shares
                         of Class A common stock upon execution,  and on each of
                         the first and second  anniversaries  of the  agreement.
                         The Company  accounts for these  shares under  Emerging
                         Task  Force   Issue   96-18   "Accounting   for  Equity
                         Instruments That Are Issued to Other Than Employees for
                         Acquiring,  or in  Conjunction  with Selling,  Goods or
                         Services"  (EITF 96-18).  Accordingly,  the Company has
                         recognized  approximately  $7,250 of expense related to
                         these  shares for the year  ended  December  31,  2004,
                         included in research  and  development  expenses in the
                         accompanying statement of operations.

                      On December 16, 2004, we entered into a services agreement
                         with  CEOcast,  Inc.  In  accordance  with the  service
                         agreement,   and  as  partial   consideration  for  the
                         services provided by CEOcast,  Inc., we agreed to issue
                         45,000  shares of Class A common stock upon  execution.
                         The Company  accounts for these  shares under  Emerging
                         Task  Force   Issue   96-18   "Accounting   for  Equity
                         Instruments That Are Issued to Other Than Employees for
                         Acquiring,  or in  Conjunction  with Selling,  Goods or
                         Services"  (EITF 96-18).  Accordingly,  the Company has
                         recognized  approximately  $5,250 of expense related to
                         these  shares for the year  ended  December  31,  2004,
                         included in general and administrative  expenses in the
                         accompanying statement of operations.


                                       38
<PAGE>



6.  Stockholders'
    Equity
    (Continued)

    Common  Stock        In  January  2001,  certain  officers  of the
    Subscriptions        Company entered into Promissory Notes and
    Receivable           Pledge   Agreements  (the  "Notes")  with  the  Company
                         totaling  $834,560 in exchange for    462,895
                         shares of Class A common  stock  acquired  through  the
                         exercise  of  vested  stock  options.  The  Notes  bear
                         interest  at a fixed  rate of 5.61% and are due in full
                         on December 31, 2005. The Notes are  collateralized  by
                         the  462,895  shares  of Class A common  stock  and the
                         Company has full  recourse to pursue  collection in the
                         event of default. The Company's recourse may be limited
                         to the  pledged  stock in the event that the officer is
                         no longer  employed  with the  Company  and if the then
                         market  value of the  pledged  stock  is less  than the
                         outstanding  principal and accrued but unpaid  interest
                         on the  officer's  Note.  The Company  accounts for the
                         Notes under FIN 44 "Accounting for Certain Transactions
                         Involving Stock  Compensation (an interpretation of APB
                         Opinion  No.  25)" (FIN 44) and  Emerging  Issues  Task
                         Force Issue No. 00-23 "Issues Related to the Accounting
                         of Stock Compensation Under APB Opinion No. 25 and FASB
                         Interpretation 44" as variable  arrangements.  Pursuant
                         to  these  pronouncements,  no  compensation  cost  was
                         recognized in 2004 or 2003.

    Investment           On October 1, 2003, the Company entered
    Agreement            into an  Investment  Agreement  with  Dutchess  Private
                         Equities  Fund,  L.P.   (Dutchess).   Pursuant  to  the
                         Investment   Agreement,   the   Company   may,  at  its
                         discretion,  periodically put to Dutchess shares of its
                         Class A  common  stock  at a price  equal to 95% of the
                         average of the three  lowest  closing bid prices on the
                         Over-the-Counter  Bulletin  Board  for  the  five  days
                         immediately  following  the date that the Company gives
                         its notice to  Dutchess  of its  intention  to put such
                         stock.

                      Subject to a $1 million per put cap, the maximum amount of
                         each  put  exercise  is  equal  to,  at  the  Company's
                         election  (i) 200% of the average  daily  volume of the
                         Class A common  stock for the 20 trading  days prior to
                         the applicable put notice  multiplied by the average of
                         the  three  daily   closing   bid  prices   immediately
                         preceding the date of the put, or (ii) $10,000.

                        The Company may continue to put shares to Dutchess until
                         October 17,  2006 or  Dutchess  has paid a total of $10
                         million,  whichever occurs first.  During June 2004 the
                         Company put 6,865  shares to Dutchess  for  proceeds of
                         $9,925.

7.  Stock Plans          The Company has adopted  three stock plans:
                         a stock option plan,  an employee  stock  purchase plan
                         and a nonemployee directors' stock option plan.

                       The stock option plan provides for the grant of incentive
                         stock  options,  nonqualified  stock  options and stock
                         appreciation rights. The Company has reserved 1,600,000
                         shares for issuance under this plan.

                                       39
<PAGE>



7.  Stock Plans          The employee  stock  purchase plan provides
    (Continued)          for the purchase of Class A common stock  at
                         85 percent of the fair market value at specific  dates,
                         to encourage stock ownership by all eligible employees.
                         During the years ended  December 31, 2004 and 2003, the
                         Company  did not  issue  any  shares  under  the  stock
                         purchase  plan. The stock purchase plan expired on June
                         30, 2004.

                         On May 17, 1995 the Company adopted  a   nonemployee
                         directors'  stock  option  plan that  provides  for the
                         grant of nonstatutory  stock options  automatically  on
                         January 1 of each calendar  year  commencing on January
                         1, 1996.  The Company has reserved  100,000  shares for
                         issuance under the plan. Each outside director shall be
                         granted an option to purchase  2,500  shares of Class A
                         common stock at fair market value,  vesting 50% on each
                         of the first two anniversaries of the grant.

                         Under the above plans 521,355 shares are available for
                         future grant or purchase.

                         The Company had the following option activity under the
                         stock option plan and the nonemployee  directors' stock
                         option plan in 2004 and 2003:

<TABLE>
<CAPTION>

                                                                                                         Weighted-Average
                                                                                                          Exercise Price
                                                                                          Shares             Per Share
                                      --------------------------------------------------------------------------------------
                                      <S>                                                <C>                     <C>

                                      Balance, December 31, 2002                          747,500                $4.50
                                         Granted                                          607,500                 0.28
                                         Exercised                                              -                    -
                                         Cancelled                                       (690,000)                4.71
                                      --------------------------------------------------------------------------------------

                                      Balance, December 31, 2003                          665,000                 0.44
                                         Granted                                           82,500                 1.65
                                         Exercised                                              -                    -
                                         Cancelled                                              -                    -
                                      --------------------------------------------------------------------------------------

                                      Balance, December 31, 2004                          747,500                $0.56
                                      --------------------------------------------------------------------------------------

</TABLE>


                                       40
<PAGE>



7.  Stock Plans          All  options  outstanding  at December  31,
    (Continued)          2004   are   categorized   by  the   following   ranges
                         in the table below:

<TABLE>
<CAPTION>

                                                                                            Weighted-
                                                                        Weighted -           Average
                                                                          Average           Remaining
                                                     Share               Exercise          Contractual          Number of
                                                  Price Range              Price          Life (years)           Shares
                                      --------------------------------------------------------------------------------------
                                           <S>                               <C>              <C>                   <C>

                                           $ 0.28   to   $1.00               $0.27             4.0                  615,000
                                           $ 1.00   to   $5.00               $1.85             7.2                  132,500
                                                                                                                    --------
                                                                                                                    747,500
                                                                                                                    --------

                         All options exercisable at December   31,   2004  are
                         categorized by the following ranges in the table below:

                                                                                            Weighted-
                                                                        Weighted -           Average
                                                                          Average           Remaining
                                                     Share               Exercise          Contractual          Number of
                                                  Price Range              Price          Life (years)           Shares
                                      --------------------------------------------------------------------------------------

                                           $ 0.28   to   $1.00               $0.28             3.9                  403,750
                                           $ 1.00   to   $5.00               $2.11             4.3                   57,500
                                                                                                                    -------
                                                                                                                    461,250
                                                                                                                    -------

                         All options exercisable at  December   31,   2003  are
                         categorized by the following ranges in the table below:

                                                                                            Weighted-
                                                                        Weighted -           Average
                                                                          Average           Remaining
                                                     Share               Exercise          Contractual          Number of
                                                  Price Range              Price          Life (years)           Shares
                                      --------------------------------------------------------------------------------------

                                           $ 0.28   to    $1.00              $0.28             4.9                  200,000
                                           $ 1.00   to    $5.00              $2.12             5.1                   53,750
                                                                                                                    -------
                                                                                                                    253,750
                                                                                                                    -------

</TABLE>

                                       41
<PAGE>



7.  Stock Plans          The weighted-average  fair value of options
    (Continued)          granted during the years ended  December 31,
                         2004  and  2003  was  $1.52   and   $0.25  per   share,
                         respectively.

                         In November 2003, the Company's Board  of  Directors
                         authorized the repricing of employee options, canceling
                         690,000 options with exercise prices ranging from $1.94
                         to $9.06 and issuing options to purchase 600,000 shares
                         of common stock at $0.28 per share, which was above the
                         market  value  on  the  date  of the  repricing.  These
                         options  are subject to variable  plan  accounting,  as
                         defined  by FIN 44.  The  repriced  options  have  been
                         reflected  as  grants  and  cancellations  in the stock
                         option  activity for the year ended  December 31, 2003.
                         As prescribed  by the  provisions of FIN 44 the Company
                         will  remeasure  the  intrinsic  value of the  repriced
                         options,  through the earlier of the date of  exercise,
                         cancellation or expiration,  at each reporting date. As
                         of  December  31,  2004,  the  Company  has  recognized
                         compensation   expense  of  $593,749   related  to  the
                         repriced options.

8.  Loss Per Share       The Company's basic and diluted net loss
                         per share of common stock for the years ended  December
                         31, 2004 and 2003 is computed by dividing  the net loss
                         by  the  weighted   average  number  of  common  shares
                         outstanding during the period.

                         The following table summarizes securities  that  were
                         outstanding  as of  December  31, 2004 and 2003 but not
                         included  in the  calculation  of diluted  net loss per
                         share because such shares are antidilutive:

<TABLE>
<CAPTION>

                                      December 31,                                                2004                2003
                                      --------------------------------------------------------------------------------------
                                      <S>                                                      <C>                 <C>

                                      Stock options                                            747,500             665,000
                                      Stock warrants                                           630,846                   -
</TABLE>

9.   Income  Taxes       The  following   table   summarizes  the
                         significant  differences between the benefit that would
                         be recognized under the United States federal statutory
                         tax  rate  and the  Company's  effective  tax  rate for
                         financial statement purposes:

<TABLE>
<CAPTION>

                                      December 31,                                                2004                2003
                                      --------------------------------------------------------------------------------------
                                      <S>                                                         <C>                  <C>

                                      United States statutory tax rate                             34%                 34%
                                      State taxes, net of United States
                                         federal tax benefit                                        6%                  6%

                                      Valuation allowance provided against net
                                         operating loss carry forwards and tax credits            (40%)               (40%)
                                      --------------------------------------------------------------------------------------

                                      Effective tax rate                                          -  %                -  %
                                      --------------------------------------------------------------------------------------

</TABLE>

                                       42
<PAGE>



9.  Income Taxes         Deferred  income taxes reflect the impact
    (Continued)          of  "temporary  differences"  between  the
                         amount  of  assets  and   liabilities   for   financial
                         reporting  purposes and such amounts as measured by tax
                         laws and regulations. Deferred tax assets are comprised
                         of the following:

<TABLE>
<CAPTION>

                                      December 31,                                                2004                2003
                                      --------------------------------------------------------------------------------------
                                      <S>                                                 <C>                <C>

                                      Tax credit carryforwards                            $    458,000       $     393,000
                                      Net operating loss carryforwards                       4,783,000           3,716,000
                                      --------------------------------------------------------------------------------------

                                      Gross deferred tax asset                               5,241,000           4,109,000

                                      Deferred tax assets valuation
                                        allowance                                           (5,241,000)         (4,109,000)
                                      --------------------------------------------------------------------------------------

                                      Net deferred tax assets                             $          -       $           -
                                      --------------------------------------------------------------------------------------
</TABLE>

                       As of December 31, 2004 and 2003, the deferred tax assets
                         have been fully offset by valuation  allowances,  since
                         the  realization  of such  amounts  is  uncertain.  The
                         change in the valuation  allowance during 2004 and 2003
                         was $1,132,000 and $268,000, respectively.

                         As of December 31, 2004, the Company has net operating
                         loss carryforwards totaling approximately  $11,956,000.
                         The  amount  of the net  operating  loss  carryforwards
                         which  may be  utilized  in any  future  period  may be
                         subject to certain  limitations,  based upon changes in
                         the ownership of the Company's common stock.

                         The following is a breakdown of the net operating loss
                         expiration period:

<TABLE>
<CAPTION>

                                                                                                             Amount of
                                      Expiration Date                                                      Remaining NOL
                                      --------------------------------------------------------------------------------------
                                      <S>                                                                  <C>

                                      2008                                                                    $    743,000
                                      2009                                                                       1,514,000
                                      2010                                                                       1,374,000
                                      2011                                                                         921,000
                                      2018                                                                         897,000
                                      2019                                                                         739,000
                                      2020                                                                         476,000
                                      2021                                                                       1,387,000
                                      2022                                                                         612,000
                                      2023                                                                         638,000
                                      2024                                                                       2,655,000
                                      ---------------------------------------------------------------------------------------

                                                                                                            $   11,956,000
                                      ---------------------------------------------------------------------------------------

</TABLE>

                                       43
<PAGE>



9.  Income Taxes         In addition, the Company has available tax
    (Continued)          credit  carryforwards  (adjusted to reflect
                         provisions   of  the  Tax   Reform   Act  of  1986)  of
                         approximately  $458,000,  which are available to offset
                         future taxable income and income tax liabilities,  when
                         earned or  incurred.  These  amounts  expire in various
                         years through 2024.

10. Commitments

    Facilities Lease     The Company leases its research  facilities
                         under an  operating  lease  that  expires on August 31,
                         2007. The lease  requires  payment of real estate taxes
                         and  other  common  area  maintenance  expenses.   Rent
                         expense for the years ended  December 31, 2004 and 2003
                         was approximately $37,000 and $36,000, respectively.

                         Future minimum rental payments due are as follows:

                         Year ending December 31,                         Total
                         -------------------------------------------------------

                         2005                                          $  38,000
                         2006                                             40,000
                         2007                                             27,000
                         -------------------------------------------------------

                                                                       $ 105,000
                         -------------------------------------------------------

    Employment           The Company has  employment  agreements  with its
    Agreements           principal  officers  providing for    minimum
                         base   compensation  and  severance  pay  which  expire
                         December  31,  2005.  For the years ended  December 31,
                         2004 and 2003,  the  aggregate  amount paid under these
                         agreements   was  $440,000  per  year.  The  employment
                         agreements provide for inflationary adjustments and are
                         subject  to  other  increases  based  on the  Board  of
                         Directors'  approval.  Minimum amounts to be paid under
                         these agreements total approximately $440,000 per year.

    Royalty Agreement    A  royalty  agreement  with  one  of the
                         inventors  who assigned  certain  patent  rights to the
                         Company provides for royalties based on a percentage of
                         the  licensing  revenues  received by the Company  from
                         products falling within the scope of the patent rights.
                         The percentage  varies from 1.5% to 5% depending on the
                         gross revenues received,  with maximum royalty payments
                         under the agreement not to exceed  $2,884,000.  Through
                         December 31, 2004 no  royalties  have been earned under
                         this agreement.


                                       44
<PAGE>



10. Commitments
    (Continued)

    Consulting           The Company has entered into  various  scientific
    Agreements           advisory  and  consulting   agreements     to
                         support its development  activities.  These  agreements
                         generally  expire over several  future  years.  Amounts
                         charged  to  operations   in   connection   with  these
                         agreements  for the years ended  December  31, 2004 and
                         2003  amounted to  approximately  $90,000 and  $48,000,
                         respectively.

    Finder's Fees        The Company has entered into agreements to pay
                         finders' fees for agreements  entered into with certain
                         companies  for  investment  or  revenue  purposes.  The
                         finders'   fees  are  based  on  a  percentage  of  the
                         investment or revenue.  No amounts were paid or accrued
                         pursuant  to any of  these  agreements  during  2003 or
                         2004.

    Employee Benefit     Effective  January 1, 1999,  the  Company
    Plan                 established  a Savings  Incentive  Match  Plan  for
                         Employees of Small Employers (SIMPLE) IRA plan covering
                         substantially  all of its employees.  The Company makes
                         contributions  to the  plan  at the  discretion  of the
                         Board of Directors  based upon a percentage of employee
                         compensation  as provided by the terms of the plan. The
                         Company did not make any  contributions to the plan for
                         the year  ended  December  31,  2004 and  approximately
                         $13,200 for the year ended December 31, 2003.

11. Major Customers      For the years ended  December 31, 2004
                         and 2003,  the Company has  generated  its revenue from
                         one customer,  its exclusive  marketing partner for its
                         bovine teat sanitizer.  Net product sales by geographic
                         area are as follows:

<TABLE>
<CAPTION>

                                      Year ended December 31,                                 2004                2003
                                      --------------------------------------------------------------------------------------
                                      <S>                                                  <C>

                                      United States                                        $  120,010             $ 221,588
                                      United Kingdom                                           39,500                49,184
                                      --------------------------------------------------------------------------------------

                                                                                           $  159,510             $ 270,772
                                      --------------------------------------------------------------------------------------
</TABLE>

12. Related Party        A  member  of the  Board  of  Directors
    Transactions         provides  legal   services  to  the  Company.   Amounts
                         paid for legal  services  rendered by the
                         director,  either  individually  or  through  his firm,
                         totaled  approximately $2,000 and $99,000 for the years
                         ended December 31, 2004 and 2003, respectively.

                         The Company exchanges office space for  services with a
                         company  owned by the  spouse  and in-law of one of the
                         Company's  officers  and  directors.  The  officer  and
                         director is also a director in the other  company.  The
                         estimated  annual  value  for  2004  and  2003  of  the
                         relationship is $9,600 for each year.


                                       45
<PAGE>



Item 8.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

         In a Current Report on Form 8-K filed and dated December 16, 2003 we
previously reported that we had changed our independent auditor.

Item 8A.  Controls and Procedures

         The Company's management carried out an evaluation, with the
participation of its Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the Company's disclosure controls and procedures as of December
31, 2004. Based upon that evaluation, the Company's Chief Executive Officer and
Chief Financial Officer concluded that the Company's disclosure controls and
procedures were effective to ensure that information required to be disclosed by
the Company in reports that the Company files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported, within the
time periods specified in the rules and forms of the Securities and Exchange
Commission.

         There has not been any change in the Company's internal control over
financial reporting in connection with the evaluation required by Rule 13a-15(d)
under the Exchange Act that occurred during the quarter ended December 31, 2004
that has materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.

Item 8B.  Other Information

         No information required to be disclose in a report on Form 8-K during
the fourth quarter of the fiscal 2004 occurred. In March 2005, West Agro
informed us that it plans to discontinue selling IodoZyme under our Marketing
and Supply Agreement with them after West Agro places orders with us for
approximately $90,000 of product and disposes of such finished goods inventory
thereof.

                                    PART III

Item 9.  Directors and Executive Officers of the Registrant

         We incorporate herein by reference the information appearing under the
captions "Board of Directors" and "Section 16(a) Beneficial Ownership Reporting
Compliance" in our definitive Proxy Statement to be filed with the Securities
and Exchange Commission in connection with our 2005 Annual Meeting of
Stockholders.

         Information concerning our executive officers is contained in Part I of
this report under the caption "Executive Officers."

Item 10.  Executive Compensation

         We incorporate herein by reference the information appearing under the
caption "Executive Compensation" in our definitive Proxy Statement to be filed
with the Securities and Exchange Commission in connection with our 2005 Annual
Meeting of Stockholders.

Item 11.  Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters

         We incorporate herein by reference the information appearing under the
captions "Principal Stockholders" and "Equity Compensation Plan Information" in
our definitive Proxy Statement to be filed with the Securities and Exchange
Commission in connection with our 2005 Annual Meeting of Stockholders.

                                       46
<PAGE>

Item 12.  Certain Relationships and Related Transactions

         We incorporate herein by reference the information appearing under the
caption "Certain Transactions" in our definitive Proxy Statement to be filed
with the Securities and Exchange Commission in connection with our 2005 Annual
Meeting of Stockholders.

Item 13.  Exhibits and Reports on Form 8-K

         See Index to Exhibits on Page E-1.  Compensatory plans and arrangements
required to be filed as exhibits are as follows:

         1        1993 Stock Option Plan, as amended.

         2        Form of Stock Option Agreement to be entered into between the
                  Company and each option holder.

         3        1994 Employee Stock Purchase Plan.

         4        1995 Non-Employee Directors' Stock Option Plan.

         5        Employment Agreement, dated December 14, 1999, between the
                  Company and Dr. Jack H. Kessler.

         6        Employment Agreement, dated December 14, 1999, between the
                  Company and Paul C. Desjourdy.

Item 14.  Principal Accountant Fees and Services

         We incorporate herein by reference the information appearing under the
caption "Ratification of Appointment of Independent Auditors" in our definitive
Proxy Statement to be filed with the Securities and Exchange Commission in
connection with our 2005 Annual Meeting of Stockholders.


                                       47
<PAGE>



                                                    SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                         SYMBOLLON PHARMACEUTICALS, INC.

                         By:   /s/ Paul C. Desjourdy
                             ------------------------
                             Paul C. Desjourdy
                             President

Date: March 31, 2005

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.

      Signature                   Title                                 Date

   /s/ Jack H. Kessler        Chief Executive Officer,            March 31, 2005
-------------------------     Chief Scientific Officer,
     Jack H. Kessler          Secretary and Chairman
                              of the Board of Directors
                              (Principal Executive Officer)


 /s/ Paul C. Desjourdy        President, Chief Operating Officer, March 31, 2005
------------------------      Treasurer, General Counsel, Chief
    Paul C. Desjourdy         Financial Officer, and Director (Principal
                              Financial and Accounting Officer)


 /s/ James C. Richards         Director                           March 31, 2005
------------------------
   James C. Richards

 /s/ Richard F. Maradie        Director                           March 31, 2005
------------------------
  Richard F. Maradie

 /s/ Eugene Lieberstein        Director                           March 31, 2005
------------------------
  Eugene Lieberstein



                                       48
<PAGE>


                         Symbollon Pharmaceuticals, Inc.
                                Index to Exhibits

3.1      Amended Certificate of Incorporation of the Company;  including
         Certificate of Designations,  Preferences and Rights of Series A
         Preferred  Stock of the  Company.  (previously  filed as exhibit 3.1 to
         Form 10-QSB for the quarter ended June 30, 2001 and incorporated by
         reference)
3.2      Amended  By-Laws of the  Company.  (previously  filed as exhibit 3.2 to
         Form 10-QSB for the quarter  ended June 30, 1999 and incorporated by
         reference)
3.3      Agreement of Merger, dated as of August 4, 1993, between the Company
         and Symbollon Corporation, a Massachusetts corporation (including
         Certificate of Merger and other state filings). (previously filed as
         exhibit number 3.3 of the Registration Statement (the "Registration
         Statement") on Form SB-2 (Registration No. 33-68828) filed on November
         24, 1993 and declared effective on December 7, 1993, and incorporated
         by reference)
4.1      Form of  Specimen Class A Common Stock Certificate.  (previously  filed
         as exhibit number 4.2 of the Registration Statement and incorporated by
         reference)
10.1     1993 Stock Option Plan of the Company,  as amended.  (previously  filed
         as exhibit 10.1 to Form 10-QSB for the quarter ended June 30, 1999 and
         incorporated by reference)
10.2     Employment  Agreement,  dated December 14, 1999,  between the Company
         and Paul C.  Desjourdy.  (previously filed as exhibit  number 10.2 to
         Form 10-KSB for the year ended December 31,  1999 and  incorporated  by
         reference)
10.3     Employment  Agreement, dated December 14, 1999, between the Company and
         Dr. Jack H. Kessler.  (previously filed as exhibit  number 10.3 to Form
         10-KSB for the year ended  December  31,  1999 and  incorporated  by
         reference)
10.4     Commercial  Lease,  dated June 5, 1997,  between Pine Street  Realty
         Trust and the  Company.  (previously filed as exhibit  number  10.18 to
         Form 10-QSB for the quarter  ended June 30,  1997 and  incorporated  by
         reference)
10.5     Form of Indemnification Agreement between the Company and each  officer
         and  director of the  Company. (previously filed as exhibit number
         10.6 of the Registration Statement and incorporated by reference)
10.6     Marketing and Supply Agreement, dated January 11, 1995, between the
         Company and West Agro. (previously filed as exhibit number 10.1 to Form
         8-K of the Registrant dated January 11, 1995 and incorporated by
         reference) *
10.7     Agreement,  dated  August 31,  1992,  among the Company,  Dr. Jack H.
         Kessler and Dr.  Robert  Rosenbaum. (previously filed as exhibit number
         10.8 of the Registration Statement and incorporated by reference)
10.8     Form of  Stock  Option  Agreement  to be  entered  into  between  the
         Company  and  each  option  holder. (previously filed as exhibit number
         10.10 to Form  10-KSB  for the year ended  December  31,  1993 and
         incorporated by reference)
10.9     1994  Employee  Stock  Purchase  Plan of the  Company.  (incorporated
         by  reference  to  Exhibit B to the Company's 1994 Annual  Stockholders
         Meeting Proxy  Statement  filed under cover of Schedule 14A dated May
         4, 1994)
10.10    1995  Non-Employee  Directors' Stock Option Plan of the Company.
         (previously filed as exhibit number 10.1 to Form 10-QSB for the quarter
         ended June 30, 1995 and incorporated by reference)
10.11    Promissory Note, dated January 11, 2001, between the Company and Dr.
         Jack H. Kessler, together with the Pledge Agreement and Letter
         Agreement related thereto. (previously filed as exhibit number 10.13 to
         Form 10-KSB for the year ended December 31, 2000 (the `2000 Form
         10-KSB") and incorporated by reference)
10.12    Promissory Note, dated January 11, 2001, between the Company and Paul
         C. Desjourdy, together with the Pledge Agreement and Letter Agreement
         related thereto. (previously filed as exhibit number 10.14 to the 2000
         Form 10-KSB and incorporated by reference)
10.13    Investment Agreement, dated October 1, 2003, between the Company and
         Dutchess Private Equities Fund, L.P. (previously filed as exhibit 10.14
         to the Registration Statement on Form SB-2 (Registration No.
         333-109772), filed on October 17, 2003 and declared effective on
         November 7, 2003 (the "2003 Registration Statement"))
10.14    Registration Rights Agreement, dated October 1, 2003, between the
         Company and Dutchess Private Equities Fund, L.P (previously filed as
         exhibit 10.15 to the 2003 Registration Statement)
10.15    Asset Purchase Agreement, dated as of April 6, 2004, by and among the
         Company, Mimetix Pharmaceuticals, Inc. and Mimetix Inc. (previously
         filed as exhibit number 10.1 to Form 10-QSB for the quarter ended June
         30, 2004 and incorporated by reference)
10.16    Form of Subscription Agreement, dated as of September 1, 2004, between
         the Company and certain purchasers of the Company's securities.
         (previously filed as exhibit number 10.1 to Form 8-K on November 8,
         2005 and incorporated by reference)
10.17    Form of Redeemable Warrant for the purchase of shares of Class A Common
         Stock, dated as of September 1, 2004, issued to certain purchasers of
         the Company's securities. (previously filed as exhibit number 10.2 to
         Form 8-K on November 8, 2005 and incorporated by reference)
23.1     Consent of Vitale, Caturano & Company Ltd. relating to Forms S-8 and
         SB-2.
31.1     Certification of the Chief Executive Officer required by Securities
         Exchange Act Rule 13a-14(a) as adopted pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.
31.2     Certification of the Chief Financial Officer required by Securities
         Exchange Act Rule 13a-14(a) as adopted pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.
32.1     Certification of the Chief Executive Officer required by Securities
         Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2     Certification of the Chief Financial Officer required by Securities
         Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
-----------------------------------------------------------------------------
* Indicates that material has been omitted and confidential treatment has been
granted or requested therefor. All such omitted material has been filed
separately with the Commission pursuant to Rule 24b-2.

                                       49