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, 1999
                                       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 CORPORATION
                 (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. [ ]

The issuer's  revenues for its most recent fiscal year (year ended  December 31,
1999) were $1,514,172.

As of March 17,  2000,  the  aggregate  market  value of the voting stock of the
issuer held by non-affiliates of the issuer was approximately  $34,618,250 based
upon the closing price of such stock on that date.

As of March 17, 2000, 3,694,611 shares of Class A Common Stock of the issuer
were outstanding.  See "Market for Common Equity and Related Stockholder
Matters."

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

                       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
May 24,  2000 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.

<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

         Symbollon  Corporation  (the  "Company" or  "Symbollon")  is engaged in
development and  commercialization  of proprietary  iodine-based  pharmaceutical
agents and  antimicrobials  (collectively  referred to as  "applications").  The
Company  is a  Delaware  corporation  incorporated  in  August  1993  and is the
successor by merger to a Massachusetts corporation of the same name incorporated
in May 1991, which was the successor by merger to an Illinois corporation, which
was incorporated in July 1986.

The Company's Technology

         The  Company  has  developed  proprietary  iodine  technology  that the
Company 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. Iodine has been shown to be a rapid acting,  broad-spectrum  antimicrobial
and an  effective  therapeutic  for  certain  pharmaceutical  applications.  The
Company's  technology  accomplishes  this by controlling  the ratio of molecular
iodine  (I2),  to the other  inactive  species  of iodine  typically  present in
solution.  The Company believes that this will enable it to produce iodine-based
applications having advantages over currently available products.

         The Company believes that its iodine-based technology has potential use
in a number of diverse product  application  areas.  These  applications  can be
grouped into the following categories: women's healthcare and infection control.

         When used for infection control applications, the Company believes that
the major strengths of its 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 the
Company's  technologies are the inconvenience and cost of a multi-part  delivery
system and the potential for staining and corrosivity.


<PAGE>

         Concerning women's  healthcare,  Symbollon believes that a relationship
exists between iodine  deficiency and the increased  incidence of certain female
health   problems.   These  female  health   problems   include  some  types  of
pre-menopausal breast cancer, fibrocystic breast disease and endometriosis.  The
Company believes that the underlying  causation of these problems relates to the
monthly ovarian cycle and the proper  functioning of the gonadotropic  hormones.
Certain  supporting  medical  research  conducted over the last twenty years has
suggested that therapeutically  administered  molecular iodine may normalize the
estrogen/progesterone hormone levels.

Bovine Teat Sanitizer Product

         During 1994, the Company 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, the Company and West
Agro signed a marketing and supply agreement covering IodoZyme,  and the Company
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,  the Company  manufactures  and
supplies West Agro with IodoZyme in finished product form.

         Total product sales for 1999 and 1998 from IodoZyme are as follows:

                                             Year Ended December 31,
                                        ------------------------------------
                                          1999                         1998
                                          ----                         ----

        United States                   $283,758                     $325,935
        Rest of World                    141,451                       97,506
                                         -------                      -------

        Total Product Sales             $425,209                     $423,441
                                        ========                     ========

         The Company's  invoice terms are net 30 days. The Company had no orders
for future  delivery of IodoZyme at December 31, 1999, as compared to $33,985 of
firm orders for future delivery at December 31, 1998.

Product Development

         During 1999 the Company  concentrated  its product  development work on
proposed product applications for a treatment for fibrocystic breast disease and
the treatment of various dermatological and ophthalmic diseases.

         The Company spent  approximately  $1,245,000 and $1,643,000 on research
and development during the years ended December 31, 1998 and 1999, respectively.
Since inception,  the Company has spent approximately $6,925,000 on research and
development. Under certain collaborative relationships, the Company has received
payments which are reflected in the Company's  financial  statements as contract
and license fee revenues.

         Given the Company's 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,
the  Company's  limited  resources  will  require  substantial  support  for new
business  initiatives from corporate partners who would ultimately introduce the
products into the marketplace.


<PAGE>

         The  Company's  current  strategic   corporate  partners  and  material
developments in the Company's  ongoing programs during fiscal 1999 are described
below.

         Women's Healthcare

         The Company has developed an oral dosage form of its  technology  which
generates  molecular  iodine in situ in the stomach of the patient.  The Company
refers  to  this  tablet  as  IoGen(TM).   Based  on  the  available  scientific
literature,  the Company  believes that IoGen may be effective in the prevention
and  treatment  of  certain  female  health  problems,  including  some types of
pre-menopausal breast cancer, fibrocystic breast disease and endometriosis.

         We chose to initially  pursue  fibrocystic  breast disease based on the
published  results covering  previous  independent third party testing conducted
for  this  indication.  Collectively,  more  than  1,500  women  afflicted  with
fibrocystic breast disease have been orally administered various forms of iodine
with reported clinical improvement in breast disease occurring in 60% or greater
of  those  women.  Fibrocystic  breast  disease  is a  benign  breast  condition
affecting  approximately  thirty percent of the women of childbearing age, which
represents  in the United  States  about 24 million  women.  However,  estimates
indicate that only 3.3 million of those women have been formally  diagnosed with
the disease.  Fibrocystic  breast disease is characterized by lumpiness,  breast
pain and tenderness.

         During 1998, the Company began a  multi-center  Phase II clinical trial
evaluating IoGen in patients with moderate to severe fibrocystic breast disease.
The  randomized,  double-blind,   placebo-controlled  study  will  evaluate  the
clinical  effects and safety of IoGen at three dose levels compared with placebo
in a group of  approximately  100  patients.  In the  Phase II  trial,  patients
received  IoGen or  placebo  daily for seven  months,  followed  by a  two-month
observation  period.  Efficacy will be assessed by evaluating pain,  tenderness,
swelling, nodularity and breast thickness/density.

         In July 1999, the Company closed  enrollment in the Phase II trial. The
last  patient  will  therefore  finish  dosing in March  2000 and  complete  the
two-month  observation period in May 2000. The Company anticipates that the data
from this trial will be available in the third quarter of 2000.

         During  1999,  the Company also  conducted a Phase I clinical  trial of
IoGen to determine dose  proportionality  and  bioavailability  of the drug. The
results from this Phase I study  should be  available  in the second  quarter of
2000. If the results from these clinical  trials  warrant,  the Company plans to
continue  the clinical  development  of IoGen.  The Company may need  additional
resources  to  continue  the  clinical  development  of IoGen.  If the  clinical
development of IoGen does continue,  Symbollon  anticipates  seeking a corporate
relationship  with a  pharmaceutical  company to commercialize  IoGen.  Clinical
investigation of IoGen for use in certain of the other female health indications
may be pursued during 2000 and beyond as resources allow.

         Ophthalmology Applications

         In August 1997, the Company  signed a  collaboration  and  sale/license
agreement  with  Bausch & Lomb  Pharmaceuticals,  Inc.  ("B&L")  for  ophthalmic
products based on Symbollon's  proprietary iodine technologies.  Pursuant to the
agreement, the companies plan to develop products for the treatment of infective
diseases of the eye.  Under the terms of the agreement,  B&L obtained  exclusive
marketing  rights in the United States and Canada for ophthalmic  products based
on Symbollon's iodine technologies. The agreement also provides B&L with options
to broaden  its  exclusive  marketing  rights to include  the rest of the world.

<PAGE>

Subject to  continuation  of the agreement,  B&L will make a series of milestone
payments to Symbollon,  plus royalty  payments on product sales.  In conjunction
with the  development  collaboration,  B&L also  made an  equity  investment  in
Symbollon.   B&L  is  primarily   responsible   for  product   development   and
commercialization. Symbollon consults, for a fee, on the product development.

         During 1999,  the parties  continued to develop a suitable  formulation
and initiated certain  preclinical  testing.  The collaboration and sale/license
agreement had anticipated that an Investigational  New Drug ("IND")  application
covering use of the Company's  chemistry in ophthalmology  would have been filed
by approximately  August 1998; however, the development process has not advanced
sufficiently  to warrant  such filing.  The  continuation  of the  collaboration
between  the  companies  is subject  to B&L's  right to  termination.  Given the
continued delay to initiate  clinical trials,  the potential for B&L to exercise
its  termination  right  increases.  In 2000,  the Company plans to continue its
consulting  efforts to assist B&L in advancing the program  toward filing an IND
application to initiate clinical trials in humans.

         Dermatology Applications

         No development activity occurred under the Company's  collaboration and
license agreement with Oclassen  Pharmaceuticals,  Inc.  ("Oclassen") to develop
dermatological  products based on  Symbollon's  proprietary  iodine  technology.
Pursuant  to the  agreement,  Oclassen  exercised  its  right to  terminate  the
agreement.  Upon termination,  all rights to exploit the Company's technology in
the field of dermatology reverted back to Symbollon.

         During 2000, the Company plans to pursue  development of dermatological
products based on its technology.  Resources allowing,  the Company's goal is to
initiate human clinical trials in dermatology.

         Other Potential Applications

         The Company believes that its technology has potential  applications in
the  development  of a variety of human  healthcare  and other  products such as
topical   anti-infectives,   oral  care  and   hygiene   products,   wound  care
applications,  and as a  preventive  for  urinary  tract  infection.  Given  the
Company's limited resources, although certain preliminary research,  development
and  regulatory  activities  may be  undertaken  by the Company in some of these
potential  product  areas,  the Company's  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.

Small Business Innovation Research

         In  1989,  the  Company  entered  into  an  agreement  with  Biomedical
Development  Corporation  located in San Antonio,  Texas ("BDC") to cooperate in
applying for and performing under Small Business  Innovation  Research  ("SBIR")
grants based on the Company's  technology.  In May 1997, the Company  terminated
its agreement with BDC. To the Company's knowledge, all SBIR grants covering use
of the  Company's  technology  covered by the  agreement  have been  effectively
terminated.

Manufacturing and Supplies

         The development  and manufacture of the Company's  products are subject
to good laboratory  practices ("GLP") and current good  manufacturing  practices
("cGMP")   requirements   prescribed   by  the  United   States  Food  and  Drug
Administration (the "FDA") and to other standards  prescribed by the appropriate
regulatory agency in the country of use. The Company currently produces IodoZyme

<PAGE>

through  a  combination  of  internal  manufacturing   activities  and  external
subcontractors. See "Management's Discussion and Analysis or Plan of Operation."
The Company currently has limited in-house  manufacturing  capacity,  and if the
Company  continues  to perform  manufacturing  activities  related  to  IodoZyme
in-house,  additional  manufacturing  space and  equipment  may be  necessary if
product volumes increase.
See "Description of Property."

         The Company does not presently have FDA certified facilities capable of
producing  quantities  of human  pharmaceutical  products  required for clinical
trials or commercial production. The Company will need to rely on collaborators,
licensees or contract  manufacturers to produce such materials.  There can be no
assurance  that the  Company  will be able to obtain an  adequate  supply of its
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.

         The  Company  believes  that  there  are  adequate  sources  of the raw
materials required for commercial  production and testing purposes.  Pursuant to
its  agreement  with West Agro,  all sodium  iodide  used by the  Company in the
manufacture  of the bovine teat sanitizer is to be purchased from West Agro at a
price not to exceed the price which West Agro charges its largest customers. The
Company  has been and  expects 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.

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 on an exclusive basis.
The principal market for IodoZyme is dairy farms.

         The Company  intends to market and  distribute  its 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

         The Company's  research and  development  activities and the production
and  marketing of the  Company's  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 the Company's
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 the Company's 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

<PAGE>

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 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.

         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 the Company's  proposed
products  subject  to such  testing.  Furthermore,  the  Company  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 the
Company's 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 proposed products of the
Company will be subject to demanding and  time-consuming NDA or similar approval
procedures  in the  countries  where the Company  intends to market its 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 the Company's  proposed products in national,  state,
provincial or institutional formularies or cost reimbursement systems.

         In addition to  regulations  enforced by the FDA,  the Company  also is
subject  to  regulation  under the  Occupational  Safety  and  Health  Act,  the
Environmental  Protection  Act, the Toxic  Substances  Control Act, the Resource

<PAGE>

Conservation  and Recovery Act and other present and potential  future  federal,
state or local regulations.  The Company's research and development involves the
controlled  use of  hazardous  materials  and  chemicals.  Although  the Company
believes that its 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,  the Company could be held liable
for any damages that result,  and any such liability  could exceed the resources
of the Company.

         In both  domestic  and foreign  markets,  the ability of the Company to
commercialize  its 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 the Company to
establish and maintain price levels sufficient for realization of an appropriate
return on its investment in developing new therapies.  If adequate  coverage and
reimbursement  levels are not provided by government and third-party  payers for
uses of the Company's proposed  therapeutic  products,  the market acceptance of
these products would be adversely affected.

         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.  The Company  cannot predict the
effect medical  reforms may have on its business,  and no assurance can be given
that any such reforms will not have a material adverse effect on the Company.

         IodoZyme,  the bovine teat dip manufactured by the Company,  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. The Company believes
that  it  and  its  subcontractors  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 the
Company,  would have a significant  adverse  effect on the marketing of IodoZyme
and, consequently, on the Company's results of operations.

<PAGE>

Patents and Proprietary Rights

         The Company  considers patent protection of its iodine technology to be
critical to its business prospects. The Company currently holds fourteen patents
and four additional patent  applications  filed in the United States relating to
its technology. In addition, the Company holds patents and has filed a number of
patent applications relating to its technology in foreign countries.

                        Listing of United States Patents

Patent
Number          Title                                            Issue Date

4,476,108 "Bactericidal Method"                                October 9, 1984

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

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

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

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

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

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

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

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

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       March 23, 1999
           Administration of Molecular Iodine"

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


         The  Company  sold to B&L  the  United  States  patent  issued  in 1997
relating to a "Method for the  Therapeutic  Treatment  of a Mammalian  Eye." See
"Research  and  Product  Development  -  Ophthalmology   Applications."  If  B&L
terminates its collaboration and sale/license agreement with Symbollon, then the

<PAGE>

patent  rights will revert back to Symbollon for no  consideration.  The Company
continues to own the foreign  rights and any  continuations-in-part  relating to
the invention.

         Much of the know-how of importance to the Company's technology and many
of its processes are dependent upon the knowledge,  experience and skills, which
are not patentable,  of key scientific and technical  personnel.  To protect its
rights to and to maintain the  confidentiality  of trade secrets and proprietary
information, the Company requires employees,  Scientific Advisory Board members,
consultants  and   collaborators  to  execute   confidentiality   and  invention
assignment  agreements  upon  commencement  of a relationship  with the Company.
These agreements  prohibit the disclosure of confidential  information to anyone
outside  the Company and require  disclosure  and  assignment  to the Company of
ideas,  developments,   discoveries  and  inventions  made  by  such  employees,
advisors,  consultants and  collaborators.  There can be no assurance,  however,
that these  agreements  will not be breached or that the Company's 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 Company projects,  disputes may arise as to the proprietary  rights to
such information which may not be resolved in favor of the Company.  The Company
is required to pay royalties to a co-inventor on certain patents relating to the
Company's  technology  based on revenues  received by the Company  from sales of
products falling within the scope of such patents.

Competition

         The  Company's   proposed  products  and  products   incorporating  the
Company's proposed products would compete with many other applications currently
on the market.  In addition,  the Company is aware of other companies engaged in
research and  development of other novel  approaches to  applications in some or
all of the markets  identified by the Company as potential fields of application
for its products.  Many of the Company's present and potential  competitors have
substantially  greater  financial and other  resources  and larger  research and
development staffs than the Company. 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 that of the Company.

         The Company is aware of one company, Mimetix Inc., which was conducting
human clinical trials in the United States and Canada  utilizing an iodine-based
compound for the treatment of fibrocystic  breast disease.  If Mimetix  receives
marketing approval for its drug compound prior to Symbollon,  it could adversely
affect the Company's ability to receive marketing approval, or if approved,  the
Company's ability to sell its 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.  The Company  believes that IodoZyme
competes  on the basis of its  superior  convenience  and high  ratio of killing
power to total iodine. Additionally,  IodoZyme,  manufactured by the Company and
sold by West Agro,  competes directly with products currently being manufactured
and sold by West Agro.

Employees

         As of December 31, 1999,  the Company had four  employees,  all of whom
are full-time.  The Company has relationships with and from time to time engages
the services of university  professors and other qualified consultants to assist
it in  technological  research  and  development.  No employee of the Company is

<PAGE>

currently  represented  by a labor  union.  Management  considers  its  employee
relations  to be good.  The  Company  believes  that the  future  success of the
Company is  dependent to a  significant  degree on its 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.     49    Chief Executive Officer, Chief
                                          Scientific Officer, Secretary and
                                          Chairman of the Board of Directors

         Paul C. Desjourdy          38    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.  Prior to that
time, 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.

<PAGE>

Our future revenues are dependent on existence of corporate licensing
relationships

         We generate our revenues from corporate licensing arrangements.  In the
last two years, we had licensing  relationships  with West Agro, Inc.,  Bausch &
Lomb and Oclassen.  In 1999, Oclassen terminated their relationship covering the
use of our  technology  in  dermatology.  All of our 1998 and 1999 revenues came
from our remaining  relationships  with West Agro,  Inc. and Bausch & Lomb. They
can terminate  their  collaboration  with us at any time.  Since the development
program with Bausch & Lomb has not progressed as quickly as expected, they might
choose to terminate their relationship with us. If that happens,  and we are not
able to enter into new licensing relationships, our revenues for 2000 and beyond
will significantly decrease.

We have no data that IoGen will effectively treat fibrocystic breast disease

         The Phase II  clinical  trial  that we  initiated  in 1998 is the first
trial run on IoGen.  We did not conduct any animal or human  studies to evaluate
the potential  effectiveness  of IoGen before  launching the Phase II trial. Our
decision to invest in the clinical development of IoGen was based on information
we obtained from the scientific literature. That literature indicated that prior
studies utilizing iodine to treat  fibrocystic  breast disease reported clinical
improvement  in over 60% of the patients.  We expect to complete the IoGen Phase
II trial in the summer of 2000. See "Research and Product  Development - Women's
Healthcare." We do not know if the IoGen trials will be successful.

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.  In addition to IoGen,  our other active drug  development  efforts are in
dermatology  and  ophthalmology.  We have not initiated  our clinical  trials in
dermatology or ophthalmology. Under our arrangement with Bausch & Lomb, they are
financially  responsible for any clinical trials conducted in ophthalmology.  We
must pay for any future clinical trials in women's  healthcare and  dermatology.
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 relationships.  We may not be able to generate the necessary financial
resources.

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 major pharmaceutical
companies.  As part of these licensing relationships we may have to grant to the
other party control over the development and  commercialization  process.  If we
enter into these  relationships,  we incur risks beyond those related to whether
our  technology  can be  formulated  into  an  acceptable  drug  compound  under
regulatory requirements. These new risks include:

     o        the business priorities of our partner;
     o        the committed resources to the program;
     o        changes in management or ownership of our partner; and
     o        internal competition with other drug candidates of our partner.

<PAGE>

         For example, our only existing collaborative agreement is with Bausch &
Lomb. Under that collaboration, Bausch & Lomb is 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.

         Bausch & Lomb is not  obligated  to develop or  commercialize  any drug
candidates under the collaboration.  Bausch & Lomb alone controls the amount and
timing of resources dedicated by it to the program.  Accordingly,  Bausch & Lomb
controls  development  progress.  Moreover,  Bausch & Lomb may view certain drug
candidates  developed utilizing  Symbollon's  technology as competitive with its
own  drugs  or drug  candidates.  Accordingly,  Bausch & Lomb  may  develop  its
existing or alternative  technologies in preference to the drug candidates based
on our technology.  In addition, Bausch & Lomb may terminate the relationship at
any time.  If they did,  our ability to further  develop an  ophthalmic  product
would be severely hampered without greater resources than we presently have.

         West Agro markets and distributes IodoZyme under an exclusive marketing
and supply  agreement  which covers IodoZyme as well as other products which may
be  developed  for  use  in  dairy  facilities.  IodoZyme's  future  growth  and
profitability  will  depend,  in  large  part,  on the  success  of West  Agro's
personnel and others  conducting  marketing efforts on their behalf in fostering
acceptance of IodoZyme as an alternative to other  available  products.  In this
regard,  West Agro also  markets and  distributes  products  which are  directly
competitive with IodoZyme.

We have had difficulty raising additional funds

         We will require substantial additional funds to run our company.
We need funds for

     o        developing our potential products;
     o        operating the company;
     o        pursuing regulatory clearances; and
     o        protecting our intellectual property rights.

         We intend to seek additional funds 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. During
1999, we had difficulty raising funds by selling equity. We obtained shareholder
approval to sell up to 1,250,000 shares, with a like number of warrants. We were
only able to sell 836,685 shares and warrants.

         Our common stock  remains  thinly  traded.  There is very little market
support  for our  common  stock.  So  long as  these  conditions  exist,  future
financings  will  continue to be  difficult.  Ultimately,  this could impact the
terms and conditions  upon which we are able to sell securities and raise funds.
If adequate  funds were not available  when needed,  we would be forced to limit
the scope of our  development  or perhaps cease  operations.  See  "Management's
Discussion and Analysis or Plan of Operation."


<PAGE>

We have a history of operating losses that may continue in the future

         We have  incurred a cumulative  operating  loss of  $6,444,769  through
December 31, 1999. 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  significant
operating  losses over the next several  years and expect  cumulative  losses to
increase  substantially  due to expanded  development  efforts,  preclinical and
clinical trials.  In the next few years, our revenues may be limited to sales of
IodoZyme,  contract research payments and licensing milestone payments under the
Bausch & Lomb agreement (unless terminated) and any amounts received under other
research or development  collaborations that we may establish.  Ultimately,  our
long term profitability is dependent on our ability to

     o        complete the clinical  development  of our product  candidates,
     o        develop and obtain  patent  protection,
     o        obtain  regulatory  approvals  for  our  product candidates,
     o        manufacture  the  resulting  products  and
     o        commercialize  the resulting products.

         Based on the current  status of our  development  efforts,  we will not
receive revenues or royalties from commercial sales for a significant  number of
years,  if at all.  Our  failure  to  receive  significant  revenues  or achieve
profitable  operations  would  impair our  ability to  sustain  operations.  See
"Management's Discussion and Analysis or Plan of Operation."

Patent and proprietary rights are difficult to obtain and enforce

         Obtaining and enforcing  patent and  proprietary  rights that cover our
product candidates and processes is essential to our future success.  Because of
the length of time and  considerable  expense  associated with bringing new drug
candidates  through  the  development  and  regulatory  approval  process to the
marketplace,  the pharmaceutical  industry has traditionally placed considerable
importance on obtaining  patent and trade secret  protection for significant new
technologies,  products and processes.  However, legal standards relating to the
validity of patents covering pharmaceutical and biotechnological  inventions and
the scope of claims made under such  patents are still  developing.  There is no
consistent  policy  regarding  the  breadth of claims  allowed in  biotechnology
patents.  The patent position of a biotechnology  firm is uncertain and involves
complex legal and factual questions.

         We  might  not  receive  any   additional   patents   from  the  patent
applications we have filed. Further, any rights we may have under issued patents
might not provide us with significant protection against competitive products or
otherwise be commercially  viable.  Any existing or future patents issued to, or
licensed by, us may subsequently be challenged,  infringed upon,  invalidated or
circumvented by others.  In addition,  patents may have been granted,  or may be
granted,  to others covering  products or processes that are necessary or useful
to the development of our product candidates.  Our development,  manufacture and
sale of product  candidates  could be severely  restricted or prohibited if they
are found to infringe upon the patents, or otherwise  impermissibly  utilize the
intellectual  property,  of others.  In such event, we may be required to obtain
licenses  from third  parties.  We may not be able to obtain  such  licenses  on
acceptable  terms,  or at all.  There  has been  significant  litigation  in the
industry  regarding patents and other proprietary  rights. If we become involved
in litigation  regarding our  intellectual  property rights or the  intellectual
property rights of others, we might incur substantial  litigation costs and have
to pay substantial damages.


<PAGE>

         In addition to patent protection, we rely on trade secrets, proprietary
know-how  and  technological  advances  which we seek to  protect,  in part,  by
confidentiality  agreements  with  our  collaborative  partners,  employees  and
consultants.  But these  confidentiality  agreements  might be breached,  and we
might  not have  adequate  remedies  for any such  breach.  Moreover,  our trade
secrets,  proprietary know-how and technological advances might otherwise become
known or be independently discovered by others.

The outcome of clinical drug development cannot be predicted

         Our drug  candidates  will be  subject  to  extensive  preclinical  and
clinical trials to demonstrate their safety and efficacy in humans before we can
obtain  regulatory  approvals  for the  commercial  sale of any of our potential
products.  We are dependent on our  collaborative  partners to conduct  clinical
trials for the drug candidates  covered by our collaborative  agreements and may
become dependent on other third parties to conduct future clinical trials of our
internally  developed  drug  candidates.   Our  only  experience  in  conducting
preclinical or clinical trials is with IoGen.

         We can  not  predict  the  successful  outcome  of our  preclinical  or
clinical trials for our drug candidates. Companies in the biotechnology industry
have  suffered  significant  setbacks in advanced  clinical  trials,  even after
demonstrating  promising  results in earlier  trials.  The failure to adequately
demonstrate the safety and efficacy of a drug candidate under  development could
delay or prevent  regulatory  approval  of the drug  candidate  and would have a
material  adverse  effect  on our  business,  operating  results  and  financial
condition.  Our drug candidates will be subject to the risks of failure inherent
in the development of pharmaceutical  products based on new technologies.  These
risks include the failure

     o        to satisfy applicable regulatory standards for safety and
              effectiveness;
     o        to receive necessary regulatory clearances,
     o        to manufacture the product on a large scale,
     o        to develop into commercially viable products,
     o        to obtain and enforce adequate proprietary protection for such
              product or
     o        to avoid infringement of third party proprietary rights when
              marketing such products.

The drug industry is extremely competitive

         The   biotechnology   and   pharmaceutical   industries  are  intensely
competitive  and  subject to rapid and  significant  technological  change.  Our
competitors  in the United States and elsewhere are numerous and include,  among
others, major multinational  pharmaceutical and chemical companies,  specialized
biotechnology  firms and universities and other research  institutions.  Most of
these competitors employ greater financial and other resources, including larger
research and development  staffs and more effective  marketing and manufacturing
organizations,  than we or our collaborative partners. Acquisitions of competing
companies and potential competitors by large pharmaceutical  companies or others
could  enhance  financial,  marketing  and  other  resources  available  to such
competitors.  As a result  of  academic  and  government  institutions  becoming
increasingly  aware of the  commercial  value of their research  findings,  such
institutions are more likely to enter into exclusive  licensing  agreements with
commercial  enterprises,   including  our  competitors,   to  market  commercial
products.  Our competitors may succeed in developing  technologies  and products
that are more  effective  or less costly than any which we develop or which make
our technology and future products obsolete and noncompetitive.


<PAGE>

         In  addition,  most  of our  competitors  have  greater  experience  in
conducting  clinical  trials and obtaining FDA and other  regulatory  approvals.
Accordingly,  our competitors  may succeed in obtaining FDA or other  regulatory
approvals for drug  candidates  more rapidly.  Companies that complete  clinical
trails, obtain required regulatory agency approvals and commence commercial sale
of their products before their competitors may achieve a significant competitive
advantage,  including certain patent and FDA marketing  exclusivity  rights that
would delay our ability to market certain products. We are aware of one company,
Mimetix Inc.,  that has conducted human clinical trials in the United States and
Canada  utilizing  an  iodine-based  compound for the  treatment of  fibrocystic
breast disease.  If Mimetix  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.  Products resulting
from our technology may not be able to compete  successfully  with  competitors'
existing products or products under development.

Drug development and commercialization is subject to extensive government
regulation

         The FDA and comparable agencies in foreign countries impose substantial
requirements  upon the introduction of  pharmaceutical  products through lengthy
and detailed preclinical,  laboratory and clinical testing procedures,  sampling
activities  and other costly and  time-consuming  procedures to establish  their
safety and efficacy.  All of our product  candidates  will require  governmental
approvals for commercialization, none of which we have obtained. Satisfaction of
these  requirements  typically  take a significant  number of years and can vary
substantially  based  upon the type,  complexity  and  novelty  of the  product.
Government   regulation  also  affects  the   manufacturing   and  marketing  of
pharmaceutical  products.  The effects of government regulation on our potential
products are far-reaching, and include

     o        possible delays in or denials to market them,
     o        costly procedural requirements may be imposed upon our activities,
     o        competitive  advantages may be obtained by companies with greater
              resources or experience,
     o        possible  limitations imposed on the indicated use for which they
              may  be  marketed  and
     o        continual review and periodic inspection of the manufacturing
              facilities for them.

The regulatory standards are applied stringently by the FDA and other regulatory
authorities  and failure to comply can,  among  other  things,  result in fines,
denial or  withdrawal  of  regulatory  approvals,  product  recalls or seizures,
operating restrictions and criminal prosecution.

         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 no assurance can be made
that  clearance  by the  FDA  will  not be  required  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  and,
consequently, on our results of operations.

         As with many biotechnology and pharmaceutical companies, we are subject
to numerous environmental and safety laws and regulations. Any violation of, and
the cost of compliance with, these regulations could materially adversely affect
our business, operating results and financial condition.

We are dependent on the continued employment of our executive officers

         We are highly  dependent upon the efforts of our senior  management and
scientific  team,  including  the  services  of Dr. Jack H.  Kessler,  the Chief
Executive Officer, Chief Scientific Officer, Secretary and Chairman of the Board
of Directors,  and Paul C. Desjourdy,  the President,  Chief Operating  Officer,

<PAGE>

Chief Financial Officer, General Counsel, Treasurer and a director of Symbollon.
Losing  the  services  of one or both of  these  individuals  might  impede  the
achievement  of our  development  objectives  and could have a material  adverse
effect on our  business.  Because of the  specialized  scientific  nature of our
business,  we are  highly  dependent  upon our  ability  to  attract  and retain
qualified scientific and technical personnel.  Major pharmaceutical and chemical
companies,  specialized  biotechnology firms and universities and other research
institutions  compete  intensively  for  qualified  personnel  in our  field  of
activity.  We may not be able to continue  to attract  and retain the  qualified
personnel  necessary for the  development of our business.  Loss of the services
of, or  failure  to  recruit,  key  scientific  and  technical  personnel  could
adversely affect our business, operating results and financial condition.

We have no marketing experience within our company

         We have granted  marketing  rights to our  collaborative  partners with
respect to products developed based on our technology,  and we intend to rely on
similar  arrangements  with others for the  marketing  and  distribution  of our
products currently under development,  including IoGen, if and when successfully
developed and approved by applicable regulatory agencies. This results, and will
result,  in our  not  having  control  over  some  or all of the  marketing  and
distribution of these products. We believe that we have entered into development
agreements  with parties  experienced  in the marketing of products in the areas
licensed  to them.  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,  there  can be no
assurance that we can obtain the requisite funds or attract and retain the human
resources necessary to successfully market any products.

We have limited manufacturing experience within our company

         IodoZyme  is  currently  produced  through a  combination  of  internal
manufacturing  activities and external contract  manufacturers.  We have granted
manufacturing  rights to Bausch & Lomb with respect to products  developed under
our collaboration, and we intend to rely on similar arrangements with others for
the  manufacturing  of our products  currently  under  development,  if and when
successfully  developed  and approved by  applicable  regulatory  agencies.  Our
dependence on third parties for  manufacturing  may adversely affect our ability
to develop and deliver  products on a timely and  competitive  basis.  If we are
unable to develop or contract for manufacturing on acceptable terms, our ability
to conduct  preclinical  and clinical  trials with our drug  candidates  will be
adversely  affected.  This  could  result in delays  in the  submission  of drug
candidates  for  regulatory  approvals or in the  initiation of new  development
programs, which in turn could materially impair our competitive position and the
possibility of achieving profitability.

         Except for limited experience regarding IodoZyme, we have no experience
with the manufacture of any of our products or proposed  products.  In the event
we continue to perform our current IodoZyme  manufacturing  activities in-house,
additional manufacturing space and equipment may be necessary beyond 1999 if our
product volume increases.  In addition,  if we undertake to directly manufacture
any of our  proposed  products,  we will  be  required  to  attract  and  retain
experienced  personnel to develop a manufacturing  capability and to comply with
extensive government regulations with respect to our facilities, including among
others, the FDA manufacturing  requirements.  We may not be able to successfully
establish appropriate manufacturing operations.

<PAGE>

Our proposed drug candidates will be impacted by cost reimbursement and drug
pricing uncertainty

         The  successful  commercialization  of, and the  interest of  potential
collaborative partners to invest in, the development of our drug candidates will
depend substantially on reimbursement of the costs of the resulting products and
related  treatments at acceptable  levels from government  authorities,  private
health   insurers   and  other   organizations,   such  as  health   maintenance
organizations.  Reimbursement  in the  United  States  or  elsewhere  may not be
available for any products we may develop or, if available,  may be decreased in
the  future.  Limited  reimbursement  amounts  may reduce the demand for, or the
price  of,  our  products,   thereby  adversely   affecting  our  business.   If
reimbursement  is not available or is available only to limited  levels,  we may
not  be  able  to  obtain  collaborative   partners  who  will  manufacture  and
commercialize  our  products,  or we may  not be  able to  obtain  a  sufficient
financial  return on our own  manufacture  and  commercialization  of any future
products.

         Third-party payers are increasingly  challenging the prices charged for
medical products and services. Also, the trend toward managed health care in the
United States and the concurrent growth of organizations such as HMOs, which can
control or  significantly  influence  the  purchase of health care  services and
products,  as well as  legislative  proposals  to reform  health  care or reduce
government  insurance  programs,  may result in lower prices for  pharmaceutical
products.   The  cost  containment  measures  that  health  care  providers  are
instituting,  including practice protocols and guidelines and clinical pathways,
and the effect of any health care reform,  could materially adversely affect our
ability to sell any of our  products if  successfully  developed  and  approved.
Moreover, we are unable to predict what additional legislation or regulation, if
any,  relating  to  the  health  care  industry  or  third-party   coverage  and
reimbursement  may be enacted in the future or what effect such  legislation  or
regulation would have on our business.

Drug development and commercialization is subject to potential product liability

         Our business exposes us to potential  liability risks that are inherent
in the testing,  manufacturing and marketing of pharmaceutical products. The use
of our drug  candidates  in clinical  trials may expose us to product  liability
claims and possible adverse  publicity.  These risks will expand with respect to
our drug  candidates,  if any, that receive  regulatory  approval for commercial
sale.  Product liability  insurance for the biotechnology  industry is generally
expensive, if available at all. We have product liability insurance covering our
drug  candidates  in clinical  trials  which we believe is adequate to cover our
current  business  exposure.  However,  such  coverage is becoming  increasingly
expensive  and we may not be able to retain  insurance  coverage  at  acceptable
costs or in a  sufficient  amount.  A product  liability  claim could  adversely
affect our business, operating results or financial condition.

Our technology has material incompatibility issues

         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 a microbicide for dental  handpieces
and renal control units as a result of staining and corrosion caused by required
microbicide  formulations,  and we have  encountered  problems  of  staining  in
connection  with our efforts to develop a high level  disinfectant  for flexible
endoscopes. We continue to investigate the balance between the level of efficacy
and the  need  to  avoid  staining  and  corrosion.  For  any  proposed  product
applications, staining or corrosion from a product candidate could be sufficient
to limit or  forestall  regulatory  approval or, if  approved,  could  adversely

<PAGE>

affect  market  acceptance  of such  product.  We  might  not be  successful  in
overcoming any problems of materials incompatibility.

We use hazardous materials in our development and commercial efforts

         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 the
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.

Item 2.  Description of Property

         The Company leases approximately 5,400 square feet of office,  research
and  development  and  manufacturing  space in Framingham,  Massachusetts  for a
current base annual rental of approximately  $31,050 increasing $0.25 per square
foot each year  effective  September 1. The lease expires on August 31, 2002 and
may be renewed for a five-year  period at the Company's option on the same terms
and conditions  except that the rent shall continue to increase $0.25 per square
foot each year of the renewal  period.  The Company  believes that this space is
suitable and adequate for its 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

         The Company is 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, 1999.

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

(a)  Price Range of Securities

         The Company's Class A Common Stock trades on the Nasdaq SmallCap Market
under the  symbol  "SYMBA."  There can be no  assurance  that the  Company  will
continue  to meet the  criteria  for  continued  listing on the Nasdaq  SmallCap
Market.  The following  sets forth the high and low sales prices for the Class A
Common Stock for each of the quarterly  periods  during fiscal 1998 and 1999, as
reported by Nasdaq.

<PAGE>

                               Fiscal 1998                    Fiscal 1999
                       --------------------------    ---------------------------
                          High             Low          High              Low

         First quarter    1 21/32         15/16         3 7/8             1 1/2
         Second quarter   2               23/32         2 3/8             1 3/4
         Third quarter    1 1/16            1/2         2 13/16           1 3/4
         Fourth quarter   2 1/2           17/32         5                 2 1/16

         There is no established public trading market for the Company's Class B
Common Stock.

         The Company's  Class A Warrants and Class B Warrants,  which had traded
on the Nasdaq SmallCap Market,  expired on December 7, 1998.  Effective December
31,  1999,  684,950  previously  outstanding  shares of Class A Common Stock and
15,050 previously outstanding shares of Class B Common Stock were transferred to
the  Company for no  consideration  pursuant  to a stock  restriction  agreement
entered into by certain  stockholders  in  connection  with the  Company's  1993
initial public offering.

(b)  Approximate Number of Equity Security Holders

         Based upon information  supplied from the Company's transfer agent, the
Company  believes  that the  number of record  holders of the  Company's  equity
securities as of March 17, 2000 are approximately as follows:

         Title of Class                              Number of Record Holders
         --------------                              ------------------------
         Class A Common Stock                                 100
         Class B Common Stock                                   1

         Based upon information  supplied from the Company's transfer agent, the
Company believes that the number of beneficial  holders of the Company's Class A
Common Stock as of March 17, 2000 is in excess of 600.

(c)  Dividends

         The Company  has never paid a cash  dividend on any class of its common
stock and  anticipates  that for the  foreseeable  future any  earnings  will be
retained for use in its  business  and,  accordingly,  does not  anticipate  the
payment of cash dividends.

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

         The Company is a  development  stage  company.  Since  inception of the
Company's  predecessor  in 1986,  the  Company's  efforts have been  principally
devoted to research and  development,  securing patent and trademark  protection
and raising capital,  most of which efforts commenced after May 1991. Except for
revenue  earned since 1995 on sales of IodoZyme,  the Company's  sole revenue to
date has been from  licensing/option  arrangements  and  contract  research  and
development efforts with corporate partners.


<PAGE>

         The following  discussion  contains  forward-looking  statements  which
involve risks and  uncertainties.  See "Special Note Regarding  Forward  Looking
Statements" at the front of this Annual Report on Form 10-KSB.

Results of Operations

         Fiscal 1999 versus Fiscal 1998

         Symbollon's net loss in fiscal 1999 was $730,404, reflecting a decrease
of $162,346 or 18.2% from a net loss of $892,750 in fiscal 1998.  This decreased
loss resulted  primarily from  increased  contract and license fee revenues from
research and development  programs with corporate partners and decreased general
and  administration  expenses,   partially  offset  by  increased  research  and
development expenses related to the IoGen clinical trials.

         Product revenues from sales of IodoZyme increased by $1,768 or .4% from
$423,441  in fiscal 1998 to $425,209  in fiscal  1999.  The nominal  increase in
sales  reflected an increase in foreign sales of IodoZyme,  partially  offset by
decreased  domestic  sales.  Symbollon  anticipates  that  future  sales will be
consistent with current sales levels.

         Cost of goods  sold for  IodoZyme  increased  by  $75,887 or 31.2% from
$242,964 in fiscal 1998 to $318,851 in fiscal 1999.  The gross profit  margin on
product sales  decreased from 42.6% in fiscal 1998 to 25.0% in fiscal 1999. This
decrease  in the gross  profit  margin on  product  sales was  primarily  due to
increased  labor  and  component  cost  and  overhead   expenses.   The  Company
anticipates  that the gross profit  margin in 2000 will remain  consistent  with
1999.

         Contract  revenues  increased  by $234,893  or 225.7% from  $104,070 in
fiscal 1998 to $338,963  in fiscal  1999.  License  fee  revenues  increased  by
$350,000 or 87.5% from  $400,000 in fiscal 1998 to $750,000 in fiscal 1999.  The
contract  and license fee revenues  generated in fiscal 1999 and 1998  primarily
relate to the corporate  relationship with B&L. In 2000, subject to continuation
of  existing  research  and  development  contracts,   the  Company  anticipates
receiving  $800,000 in license fees (subject to possible  partial  offset).  The
level of contract  revenues for 2000 is difficult to predict since it depends on
the amount of  consulting  effort  expended  by the  Company  at the  request of
corporate partners.

         Research and development  expenses  increased by $398,247 or 32.0% from
$1,245,016 in fiscal 1998 to $1,643,263  in fiscal 1999.  The increase  resulted
from increased  development expenses related to the Company's drug candidate for
the treatment of fibrocystic breast disease, including consulting fees regarding
regulatory  matters and clinical costs associated with the Company's Phase I and
II clinical  trials.  The Company is anticipating  that research and development
expenses  will further  increase in 2000 as the Company  continues  the clinical
development of IoGen.

         General and administrative  expenses decreased by $61,324 or 14.3% from
$428,979  in fiscal  1998 to  $367,655 in fiscal  1999.  The  decrease  resulted
primarily from  decreased  employee  salaries and related  costs,  and decreased
investor and public relations  expenses and other third party fees and services.
The Company  anticipates that general and administrative  expenses will increase
over current levels for 2000 as the Company anticipates  increasing investor and
public relations expenses.

         The  Company's  interest  income  decreased  by  $11,505  or 11.9% from
$96,698 in fiscal 1998 to $85,193 in fiscal 1999. This decrease  resulted from a
decrease in available funds for investment.


<PAGE>

Liquidity and Capital Resources

         The Company has funded its activities  primarily  through proceeds from
private and public  placements of equity and debt  securities.  During 1999, the
Company 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 $1,360,000.

         During 1999, the Company  continued to incur  operating  losses and has
incurred a  cumulative  loss  through  December  31, 1999 of  $6,444,769.  As of
December 31, 1999, the Company had working  capital of  $2,535,099.  The Company
believes  that it has the necessary  liquidity and capital  resources to sustain
planned  operations  for fiscal 2000. In the event that the  Company's  internal
estimates  relating to its planned  revenues  and  expenditures  for fiscal 2000
prove  inaccurate,  the Company may be  required to  reallocate  funds among its
planned activities and curtail certain planned  expenditures.  In any event, the
Company  anticipates that it will require  additional  financing after 2000, and
therefore,  the Company will seek new  financing in fiscal 2000.  The  Company's
ability to obtain new  financing  may, in part,  be  affected  by the  Company's
ability to continue to meet the criteria for continued listing of its securities
on the Nasdaq SmallCap  Market.  Nasdaq's  current  SmallCap  continued  listing
criteria  require,  in part, that the Company maintain net tangible assets of at
least $2,000,000, a minimum bid price of $1.00 per share of common stock and two
market makers for its  securities.  There can be no assurance that in the future
the Company will be able to continue to meet the criteria for continued  listing
of its securities on Nasdaq.

         During 2000, the Company is committed to pay approximately  $345,000 as
compensation to its current  executive  officers and  approximately  $32,000 for
lease payments on its  facilities.  The Company  anticipates  that the continued
clinical development of IoGen will cost approximately  $500,000 during 2000. The
Company  has no  planned  material  capital  expenditures  for fiscal  2000.  At
December 31, 1999, the Company had a net operating loss carryforward for federal
income tax purposes of approximately $6,292,000 expiring through 2019.

         The term "Year 2000"  ("Y2K") issue was a general term used to describe
the various  problems that might have  resulted from the improper  processing of
dates and date-sensitive calculations by computers and other machinery for dates
subsequent to December 31, 1999. These problems generally could have arisen from
the  fact  that  most  of  the  world's  computer  hardware  and  software  have
historically  used only two digits to identify the year in a date, often meaning
that the computer could fail to distinguish  dates in the "2000's" from dates in
the "1900's."  These problems could have arisen from other sources as well, such
as the use of special  codes and  conventions  in software  that make use of the
date field. The Y2K computer software compliance issues were anticipated to have
a possible  adverse affect on the Company and most  companies in the world.  The
failure to correct a material Y2K problem could have resulted in an interruption
in, or failure of,  certain  normal  business  activities  or  operations.  Such
failures  could  have  had  an  adverse  affect  on  the  Company's  results  of
operations, liquidity and financial conditions.

         As of December  31, 1999 the Company had  completed  all aspects of its
Y2K readiness  program and to date has not experienced any significant  problems
related to the Y2K issue. The Company will continue to monitor its operations to
insure that it is  compliant.  Through  December 31, 1999 the Company  estimates
that it has spent approximately $5,000 to be Y2K compliant.

<PAGE>

Item 7.  Financial Statements


Report of Independent Certified Public Accountants


The Board of Directors and Stockholders
Symbollon Corporation
Framingham, Massachusetts


We have audited the  accompanying  balance  sheets of Symbollon  Corporation  (a
development  stage  company) as of December  31, 1999 and 1998,  and the related
statements of operations, stockholders' equity and cash flows for the years then
ended and for the period from July 15, 1986  (inception)  to December  31, 1999.
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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of Symbollon  Corporation  (a
development stage company) at December 31, 1999 and 1998, and the results of its
operations  and its cash flows for the years then ended and for the period  from
July 15, 1986  (inception)  to December 31, 1999 in  conformity  with  generally
accepted accounting principles.


BDO Seidman, LLP


Boston, Massachusetts
January 21, 2000




<PAGE>

<TABLE>


                              Symbollon Corporation
                          (a development stage company)


                                 Balance Sheets
<CAPTION>

December 31,                                                                         1999                 1998
------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                   <C>

Assets

Current assets:
   Cash and cash equivalents                                                    $  2,771,821          $ 1,514,115
   Restricted cash (Note 3)                                                           52,615              297,554
   Accounts receivable                                                                72,015              207,172
   Inventory (Note 4)                                                                 96,354               69,382
   Prepaid expenses                                                                   54,217               83,104
------------------------------------------------------------------------------------------------------------------

       Total current assets                                                        3,047,022            2,171,327

Equipment and leasehold improvements, net of
  accumulated depreciation and amortization (Note 5)                                  89,710              125,572

Other assets:
   Patent and trademark costs, net of accumulated
     amortization (Note 6)                                                           221,483              205,226
   Deposit                                                                             2,364                2,364
------------------------------------------------------------------------------------------------------------------

                                                                                $  3,360,579          $ 2,504,489
------------------------------------------------------------------------------------------------------------------

</TABLE>

<PAGE>

<TABLE>
                              Symbollon Corporation
                          (a development stage company)

                                 Balance Sheets
                                   (Continued)
<CAPTION>

December 31,                                                                         1999                 1998
------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                  <C>

Liabilities and Stockholders' Equity

Current liabilities:
   Accounts payable                                                             $      65,903        $     87,654
   Accrued clinical studies                                                           414,862               4,403
   Other                                                                               31,158              19,149
------------------------------------------------------------------------------------------------------------------

       Total current liabilities                                                      511,923             111,206
------------------------------------------------------------------------------------------------------------------

Redeemable common stock, Class A, par value $.001 per share,  93,334 and 669,545
  shares issued, respectively, (aggregate involuntary liquidation value $175,000
  at December 31, 1999) (Note 7)                                                      175,000             850,000
------------------------------------------------------------------------------------------------------------------

Commitments (Notes 8 and 11)

Stockholders' equity (Notes 7 and 8):
   Preferred stock, par value $.001 per share, 5,000,000 shares
     authorized and unissued                                                                -                  -
   Common stock, Class A, par value $.001 per share, 18,750,000
     shares authorized, 3,557,339 and 2,919,786 shares issued and
     outstanding, respectively                                                          3,557               2,920
   Convertible common stock, Class B, par value $.001
     per share, 1,250,000 shares authorized, 688 and 15,738 shares
     issued and outstanding, respectively                                                   1                  16
   Additional paid-in capital                                                       9,114,867           7,254,712
   Deficit accumulated during the development stage                                (6,444,769)         (5,714,365)
------------------------------------------------------------------------------------------------------------------

       Total stockholders' equity                                                   2,673,656           1,543,283
------------------------------------------------------------------------------------------------------------------

                                                                                $   3,360,579        $  2,504,489
------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to financial statements.

<PAGE>
<TABLE>

                              Symbollon Corporation
                          (a development stage company)

                            Statements of Operations

<CAPTION>

                                                                                                            For the
                                                                                                          Period from
                                                                            Year Ended                   July 15, 1986
                                                                           December 31,                 (Inception) to
                                                                  ---------------------------            December 31,
                                                                   1999                  1998                1999
--------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                    <C>                   <C>

Revenue (Note 12):
   Net product sales                                        $   425,209            $  423,441            $   1,466,197
   Contract revenue                                             338,963               104,070                  983,713
   License fee revenue                                          750,000               400,000                2,940,000
--------------------------------------------------------------------------------------------------------------------------

     Total revenue                                            1,514,172               927,511                5,389,910
--------------------------------------------------------------------------------------------------------------------------

Operating expenses:
   Cost of goods sold                                           318,851               242,964                  914,052
   Research and development costs                             1,643,263             1,245,016                6,924,977
   General and administrative expenses                          367,655               428,979                4,302,921
--------------------------------------------------------------------------------------------------------------------------

     Total operating expenses                                 2,329,769             1,916,959               12,141,950
--------------------------------------------------------------------------------------------------------------------------

Loss from operations                                           (815,597)             (989,448)              (6,752,040)

Interest income                                                  85,193                96,698                  663,531

Interest expense and debt issuance costs                              -                     -                 (356,260)
--------------------------------------------------------------------------------------------------------------------------

Net loss                                                    $  (730,404)           $ (892,750)             $(6,444,769)
--------------------------------------------------------------------------------------------------------------------------

Basic and diluted net loss per share of
  common stock (Note 9)                                     $      (.24)           $    (.33)
--------------------------------------------------------------------------------------------------------------------------

Weighted average number of common shares
  outstanding - basic and diluted                             3,104,697             2,665,139
--------------------------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying notes to financial statements.

<PAGE>

<TABLE>

                              Symbollon Corporation
                          (a development stage company)

                       Statements of Stockholders' Equity
                                    (Note 7)
<CAPTION>

                                                                            Common Stock
                                                                           $.001 Par Value                       Deficit
                                                  Preferred Stock  ------------------------------              Accumulated
                                                  $.001 Par Value    Class A         Class B      Additional   During the
                                                  ---------------  -------------    -------------   Paid-in    Development
                                                  Shares Amount    Shares Amount    Shares Amount   Capital      Stage      Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>    <C>       <C>    <C>       <C>   <C>    <C>        <C>          <C>
Balance, January 1, 1992, consisting of net
 losses from July 15, 1986 (inception) through
 December 31, 1991                                     - $   -         - $    -         - $    - $        - $  (143,451) $ (143,451)
  Merger and recapitalization, May 1991:
   Issuance of new shares of Symbollon Corporation     -     -         -      -   831,316    831      9,169           -      10,000
  Contribution of shares to the Company, September     -     -         -      -   (41,565)   (42)        42           -           0
  Issuances of shares                                  -     -         -      -   425,251    426    299,574           -     300,000
  Net loss for the year                                -     -         -      -         -      -          -    (207,457)   (207,457)
------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1992                             -     -         -      - 1,215,002  1,215    308,785    (350,908)    (40,908)
  Issuance of shares, June                             -     -         -      -    34,998     35    104,965           -     105,000
  Capital contribution as of July                      -     -         -      -         -      -    100,000           -     100,000
  Warrants issued with bridge financing                -     -         -      -         -      -     25,000           -      25,000
  Public offering, December:
   Issuance of shares                                  -     - 1,000,000  1,000         -      -  5,999,000           -   6,000,000
   Costs of offering                                   -     -         -      -         -      - (1,244,133)          -  (1,244,133)
   Sale of unit purchase option                        -     -         -      -         -      -        100           -         100
  Net loss for the year                                -     -         -      -         -      -          -  (1,186,132) (1,186,132)
------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1993                             -     - 1,000,000  1,000 1,250,000  1,250  5,293,717  (1,537,040)  3,758,927
  Issuance of over-allotment units of public offering  -     -   150,000    150         -      -    899,850           -     900,000
  Additional public offering costs                     -     -         -      -         -      -    (99,369)          -     (99,369)
  Net loss for the year                                -     -         -      -         -      -          -  (1,516,913) (1,516,913)
------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1994                             -     - 1,150,000  1,150 1,250,000  1,250  6,094,198  (3,053,953)  3,042,645
  Warrant conversion, July - August                    -     -    77,920     78         -      -    629,126           -     629,204
  Conversion of Class B to Class A                     -     -    35,287     35   (35,287)   (35)         -           -           -
  Stock purchase plan sales                            -     -     2,216      2         -      -      9,415           -       9,417
  Net loss for the year                                -     -         -      -         -      -          -  (1,373,711) (1,373,711)
------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1995                             - $   - 1,265,423 $1,265 1,214,713 $1,215 $6,732,739 $(4,427,664) $2,307,555
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

<PAGE>

<TABLE>


                              Symbollon Corporation
                          (a development stage company)

                       Statements of Stockholders' Equity
                                    (Note 7)
                                   (Continued)

<CAPTION>

                                                                          Common Stock
                                                                         $.001 Par Value                      Deficit
                                                Preferred Stock  ------------------------------             Accumulated
                                                $.001 Par Value     Class A          Class B    Additional  During the
                                                ---------------  -------------    -------------   Paid-in   Development
                                                Shares Amount    Shares Amount    Shares Amount   Capital      Stage      Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>     <C>    <C>       <C>     <C>       <C>     <C>        <C>          <C>

Balance, December 31, 1995                          - $   -  1,265,423 $1,265  1,214,713 $ 1,215 $6,732,739 $(4,427,664) $2,307,555
   Issuance of preferred stock, August        444,444   444          -      -          -       -    499,555           -     499,999
   Conversion of Class B to Class A                 -     -     18,438     19    (18,438)    (19)         -           -           -
   Stock purchase plan sales                        -     -      4,392      4          -       -      7,943           -       7,947
   Reduction of warrant conversion costs            -     -          -      -          -       -     33,116           -      33,116
   Net loss for the year                            -     -          -      -          -       -          -    (905,415)   (905,415)
------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1996                    444,444   444  1,288,253  1,288  1,196,275   1,196  7,273,353  (5,333,079)  1,943,202
   Conversion of preferred stock, May        (444,444) (444)   444,444    444          -       -          -           -           -
   Conversion of Class B to Class A                 -     -  1,180,537  1,180 (1,180,537) (1,180)         -           -           -
   Stock purchase plan sales                        -     -      3,052      4           -      -      3,738           -       3,742
   Issuance costs of redeemable
     common stock, August                           -     -          -      -           -      -    (25,000)          -     (25,000)
   Net income for the year                          -     -          -      -           -      -          -     511,464     511,464
------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1997                          -     -  2,916,286  2,916      15,738     16  7,252,091  (4,821,615)  2,433,408
   Stock purchase plan sales                        -     -      3,500      4           -      -      2,621           -       2,625
   Net loss for the year                            -     -          -      -           -      -          -    (892,750)   (892,750)
------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1998                          -     -  2,919,786  2,920      15,738     16  7,254,712  (5,714,365)  1,543,283
   Stock purchase plan sales                        -     -      2,940      3           -      -      4,767           -       4,770
   Reclass of redeemable common stock, March        -     -    482,878    483           -      -    499,517           -     500,000
   Issuance of shares, October                      -     -    836,685    836           -      -  1,355,171           -   1,356,007
   Forfeiture of restricted shares, December        -     -   (684,950)  (685)    (15,050)   (15)       700           -           -
   Net loss for the year                            -     -          -      -           -      -          -    (730,404)   (730,404)
------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1999                          - $   -  3,557,339 $3,557         688 $    1 $9,114,867 $(6,444,769) $2,673,656
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying notes to financial statements.



<PAGE>

<TABLE>


                              Symbollon Corporation
                          (a development stage company)

                            Statements of Cash Flows

<CAPTION>



                                                                                                           For the
                                                                                                         Period from
                                                                                Year Ended              July 15, 1986
                                                                               December 31,             (Inception) to
                                                                        ------------------------         December 31,
                                                                         1999               1998             1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                 <C>                  <C>
Cash flows from operating activities:
   Net loss                                                       $  (730,404)        $ (892,750)          $(6,444,769)
   Adjustments to reconcile net loss to net cash used in
    operating activities:
     Depreciation and amortization                                     47,355             49,177               475,734
     Amortization of debt issuance costs                                    -                  -               130,000
     Loss on disposition of equipment and patents                      19,175             12,268                38,717
     Reduction of redeemable common stock in lieu of
       receipt of license payment                                    (175,000)                 -              (175,000)
     Changes in:
       Restricted cash                                                244,939           (297,554)              (52,615)
       Accounts receivable                                            135,157           (182,200)              (72,015)
       Inventory                                                      (26,972)             4,247               (96,354)
       Prepaid expenses                                                28,887             (7,948)              (54,217)
       Accounts payable and other current liabilities                 400,717             40,603               569,098
------------------------------------------------------------------------------------------------------------------------------------
         Net cash used in operating activities                        (56,146)        (1,274,157)           (5,681,421)
------------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
   Purchase of equipment and leasehold improvements                    (3,562)           (24,173)             (368,388)
   Patent and trademark cost additions                                (43,363)           (68,045)             (468,556)
   Proceeds from sale of equipment                                          -                  -                11,300
   Deposit                                                                  -                  -                (2,364)
------------------------------------------------------------------------------------------------------------------------------------
         Net cash used in investing activities                        (46,925)           (92,218)             (828,008)
------------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
   Warrant conversion                                                       -                  -               629,204
   Borrowings from stockholders                                             -                  -               253,623
   Repayment of borrowings from stockholders                                -                  -              (127,683)
   Sale of common stock and warrants                                1,360,777            352,625             9,419,508
   Sale of option to purchase units                                         -                  -                   100
   Public offering costs                                                    -                  -            (1,343,502)
   Issuance of preferred stock                                              -                  -               450,000
------------------------------------------------------------------------------------------------------------------------------------
         Net cash provided by financing activities                  1,360,777            352,625             9,281,250
------------------------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                1,257,706         (1,013,750)            2,771,821

Cash and cash equivalents, beginning of period                      1,514,115          2,527,865                     -
------------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                          $ 2,771,821         $1,514,115           $ 2,771,821
------------------------------------------------------------------------------------------------------------------------------------

Supplemental cash flow information:
   Cash paid for income taxes                                     $       541         $    2,803


See accompanying notes to financial statements.

</TABLE>

<PAGE>

                              Symbollon Corporation
                          (a development stage company)

                          Notes to Financial Statements




 1.    Description of                 Symbollon   Corporation   was  formed  to
       Business and                   develop  and   commercialize   proprietary
       Basis of                       iodine-based   products  for  infection
       Presentation                   control  and  treatment  in  biomedical
                                      and bioagricultural industries.  The
                                      Company is in the development stage and
                                      its efforts since inception have been
                                      principally  devoted to research and
                                      development, securing patent and trademark
                                      protection and raising capital.

                                       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.


 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 are short-term,
       Equivalents                    highly liquid investments with  maturities
                                      of less than three months when acquired.

       Concentration of               The Company has very few customers.
       Credit Risks                   Customers' financial condition is reviewed
                                      on an ongoing basis, and collateral is not
                                      required.  The Company maintains reserves
                                      for potential credit losses and such
                                      losses, in the aggregate, have not
                                      exceeded management's expectations.


<PAGE>


 2.    Summary of
       Significant
       Accounting
       Policies
       (Continued)

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

       Long-Lived Assets              The Company  follows the provisions
                                      of  Statement   of  Financial   Accounting
                                      Standards   No.  121  ("SFAS  No.   121"),
                                      "Accounting    for   the   Impairment   of
                                      Long-Lived   Assets   and   Assets  to  be
                                      Disposed of," which establishes accounting
                                      standards for the impairment of long-lived
                                      assets    and     certain     identifiable
                                      intangibles  to be held  and  used and for
                                      long-lived assets and certain identifiable
                                      intangibles to be disposed of.

                                      The Company reviews the carrying values of
                                      its long-lived and identifiable intangible
                                      assets for  possible  impairment  whenever
                                      events   or   changes   in   circumstances
                                      indicate  that the carrying  amount of the
                                      assets   may  not  be   recoverable.   Any
                                      long-lived  assets held for  disposal  are
                                      reported  at the  lower of their  carrying
                                      amounts or fair value less cost to sell.

       Depreciation and               Equipment is stated at cost and
       Amortization                   depreciated over its estimated useful life
                                      using the straight-line method.  Leasehold
                                      improvements are stated at cost  and  are
                                      being amortized by the straight-line
                                      method over the term of the  lease  which
                                      is less than their estimated useful lives.

                                      Patent  and  trademark   costs  are  being
                                      amortized  over  their  estimated   useful
                                      lives of 15-17 years by the  straight-line
                                      method.

       Income Taxes                   The Company follows the liability  method
                                      of accounting for income taxes, as set
                                      forth in Statement of Financial Accounting
                                      Standards 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.


<PAGE>


 2.    Summary of
       Significant
       Accounting
       Policies
       (Continued)

       Fair  value  of                The carrying  amounts  of  cash  and  cash
       Financial                      equivalents, restricted cash,  accounts
       Instruments                    receivable, other current assets, accounts
                                      payable, and accrued expenses  approximate
                                      fair value.

       Revenue                        The Company recognizes contract and
       Recognition                    license fee revenues when the Company
                                      fulfills all of its obligations under  its
                                      collaborative research and licensing
                                      agreements.  Product sales are recognized
                                      upon shipment.

       Research and                   Research and development costs are
       Development                    expensed as incurred.

       Stock-Based                    The Company  follows the  provisions  of
       Compensation                   Statement of  Financial  Accounting
                                      Standard No. 123 ("SFAS No. 123"),
                                      "Accounting for Stock-Based Compensation."
                                      The Company has elected to  continue  to
                                      account for stock options  at  their
                                      intrinsic  value  with disclosure  of the
                                      effects  of fair value accounting  on net
                                      loss and loss per basic and diluted share
                                      of common stock on a pro forma basis.

       Loss Per Share                 The Company  follows  Statement  of
                                      Financial  Accounting  Standards  No. 128
                                      ("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.


<PAGE>


 2.    Summary of
       Significant
       Accounting
       Policies
       (Continued)

       Recent                         In  June  1998,  the  Financial Accounting
       Accounting                     Standards  Board  issued  SFAS  No. 133,
       Standards                      "Accounting  for  Derivative   Instruments
                                      and  Hedging   Activities."  SFAS  No. 133
                                      requires  companies to recognize  all
                                      derivative contracts at their fair values,
                                      as either assets or  liabilities   on  the
                                      balance sheet.  If certain  conditions are
                                      met,  a  derivative  may  be  specifically
                                      designated  as a hedge,  the  objective of
                                      which is to match  the  timing  of gain or
                                      loss recognition on the hedging derivative
                                      with the recognition of (1) the changes in
                                      the  fair  value  of the  hedged  asset or
                                      liability  that  are  attributable  to the
                                      hedged risk, or (2) the earnings effect of
                                      the hedged forecasted  transaction.  For a
                                      derivative  not  designated  as a  hedging
                                      instrument, the gain or loss is recognized
                                      in income in the  period of  change.  SFAS
                                      No.  133 as amended  by SFAS No.  137,  is
                                      effective  for  all  fiscal   quarters  of
                                      fiscal  years  beginning  after  June  15,
                                      2000.

                                      Historically,  the Company has not entered
                                      into derivative  contracts either to hedge
                                      existing   risks   or   for    speculative
                                      purposes.  Accordingly,  the Company  does
                                      not expect adoption of the new standard to
                                      affect its financial statements.


 3.    Restricted Cash                On August  25,  1998,  the Company signed
                                      a  clinical  research  agreement  for the
                                      Company's  Phase I and Phase  II  clinical
                                      trials  for its  drug  compound  to treat
                                      fibrocystic breast disease. As part of the
                                      agreement,  $52,615 remains deposited in a
                                      bank  account   jointly   controlled   by
                                      the Company  and  the  clinical   research
                                      organization.  The  remaining funds in the
                                      account  will be used to  satisfy  future
                                      obligations of the Company under the
                                      agreement. These funds are restricted from
                                      the Company's use apart from its
                                      obligation under the clinical  research
                                      agreement.  The Company is entitled to all
                                      interest earned on the funds.



<PAGE>


<TABLE>
<CAPTION>


 4.    Inventory                      Inventory consists of:

                                      December 31,                                                 1999               1998
                                      --------------------------------------------------------------------------------------
                                      <S>                                                     <C>                <C>
                                      Raw materials                                           $  95,198          $  47,379
                                      Finished goods                                              1,156             22,003
                                      --------------------------------------------------------------------------------------

                                                                                              $  96,354          $  69,382
                                      --------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>


 5.    Equipment and                  Equipment and leasehold improvements are stated at cost and consist of the following:
       Leasehold
       Improvements                   December 31,                                                 1999               1998
                                      --------------------------------------------------------------------------------------
                                      <S>                                                    <C>               <C>
                                      Equipment and fixtures                                 $  191,503        $   221,359

                                      Leasehold improvements                                     61,811             61,811
                                      --------------------------------------------------------------------------------------

                                                                                                253,314            283,170

                                      Less accumulated depreciation
                                        and amortization                                        163,604            157,598
                                      --------------------------------------------------------------------------------------

                                      Equipment and leasehold
                                        improvements, net                                    $   89,710        $   125,572
                                      --------------------------------------------------------------------------------------


</TABLE>


<PAGE>

<TABLE>
<CAPTION>



 6.    Patent and                     December 31,                                                 1999               1998
       Trademark                      --------------------------------------------------------------------------------------
       Costs                          <S>                                                    <C>               <C>
                                      Patent costs                                           $  235,243        $   401,638
                                      Trademark costs                                             2,444              2,444
                                      --------------------------------------------------------------------------------------

                                                                                                237,687            404,082

                                      Less accumulated amortization                              16,204            198,856
                                      --------------------------------------------------------------------------------------

                                      Patent and trademark costs, net                        $  221,483        $   205,226
                                      --------------------------------------------------------------------------------------
</TABLE>


 7.    Stockholders'
       Equity

       Class A and                    The Company has issued both Class A and
       Class B                        Class B common stock.  The Class A and
       Common Stock                   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.  The Class B
                                      shares are automatically  convertible into
                                      an equal number of Class A shares upon the
                                      sale or  transfer of Class B shares by the
                                      original  holders   thereof,   subject  to
                                      certain exceptions.

       Redeemable                     On August 4, 1997, the Company entered
       Common Stock                   into a Stock Purchase Agreement (the
                                      "Agreement") with a pharmaceutical company
                                      whereby the Company sold 266,667 shares of
                                      Class A  common  stock  for  $500,000.  On
                                      August 4, 1998, pursuant to the Agreement,
                                      the  pharmaceutical  company  purchased an
                                      additional   402,878  shares  of  Class  A
                                      common  stock for  $350,000.  Pursuant  to
                                      certain   restrictions,   the   stock   is
                                      redeemable at the per share price that was
                                      originally  paid,  as  an  offset  against
                                      future  milestone  payments  due  from the
                                      pharmaceutical company. On August 4, 1999,
                                      the pharmaceutical company returned 93,333
                                      of these  shares  in  consideration  for a
                                      milestone payment due on that date. During
                                      1999,   482,878  of  these   shares   were
                                      reclassified  from redeemable common stock
                                      to Class A common  stock since such shares
                                      no  longer   have   mandatory   redemption
                                      conditions.



<PAGE>




 7.    Stockholders'
       Equity
       (Continued)

       Redeemable                     If the collaboration and license agreement
       Common Stock                   (see Note 12) is terminated by the
       (Continued)                    pharmaceutical  company  before August 4,
                                      2001, then, for the calendar years ended
                                      December 31, 2001, 2002 and 2003 the
                                      pharmaceutical company has the right to
                                      require the Company to purchase, at the
                                      per share price that it originally  paid,
                                      the number of shares which equals 25% of
                                      the Company's positive cash   flows   from
                                      operating   activities,   not  to   exceed
                                      $175,000 in total.

       Restricted                     In connection with the Company's 1993
       Common Stock                   public offering, certain stockholders
                                      agreed to restrictions on 700,000 shares
                                      of the then 1,250,000 Class B common
                                      shares outstanding prior to the  offering.
                                      The Agreement with the stockholders
                                      provided that the restricted shares  would
                                      be transferred to the   Company   for  no
                                      consideration   if  certain  earnings  and
                                      stock  price  criteria  were not  achieved
                                      prior to December  31,  1999.  On December
                                      31, 1999,  the 700,000  restricted  shares
                                      were   retired   since   the   established
                                      thresholds were not achieved.

       Common Stock                   In fiscal 1999,  the Company  raised net
       Purchase Warrants              proceeds of $1,356,007 in connection  with
                                      a private placement equity offering.  The
                                      offering consisted of the sale of up to
                                      1,250,000  units, at a price of $1.75 with
                                      each unit  consisting  of one share of the
                                      Company's  Class A  common  stock  and one
                                      redeemable   common  stock   warrant.   In
                                      addition,   the  Company   issued  to  the
                                      placement  agent  60,940  warrants  having
                                      terms  similar to the common stock warrant
                                      issued  with  each  unit.   The   offering
                                      resulted in the sale of 836,685 units.



<PAGE>




 7.    Stockholders'
       Equity
       (Continued)

       Common Stock                   Each warrant is exercisable for a four
       Purchase  Warrants             year period beginning on the date of the
       (Continued)                    initial closing of the Offering to
                                      purchase one share of Class A common stock
                                      at  exercise prices per share of $3.00
                                      during the first year, $4.00 during the
                                      second year, $5.00 during the third year
                                      and $6.00 thereafter. Warrants may be
                                      redeemed by the Company at $0.01 per
                                      warrant in the event that the  average
                                      closing bid price as  quoted  by Nasdaq
                                      (the  average  last reported sales price
                                      if then listed on any national  securities
                                      exchange) of Class A common   stock  over
                                      twenty successive trading days is equal to
                                      or greater than $5.00 during the first
                                      year,  $6.00 during the second  year,
                                      $7.00  during the third year and $8.00
                                      thereafter,  subject to the holder's right
                                      to exercise.  The following is a summary
                                      of shares  issuable  upon the exercise of
                                      warrants  issued in connection with the
                                      1999  private  placement all of which  are
                                      exercisable  at  December  31, 1999.

<TABLE>
<CAPTION>

                                                      Exercise            Shares          Expiration
                                                    Price Range          Issuable            Date
----------------------------------------------------------------------------------------------------------------------------
       <S>                                          <C>                  <C>                <C>
       Warrants issued in connection with
         Class A common stock issuance              $3.00 - $6.00        836,685            2003

       Placement agent warrants issued in
         connection with Class A common
         stock issuance                             $3.00 - $6.00         60,990            2003

</TABLE>

                                       During fiscal 1998,  the  Company's  then
                                      outstanding  redeemable  Class A warrants,
                                      redeemable   Class  B  warrants  and  unit
                                      purchase options expired.




<PAGE>




 8.    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. At December 31, 1999
                                      the Company has reserved  1,600,000 shares
                                      for issuance under this plan.

                                       The employee stock purchase plan provides
                                      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.  At
                                      December   31,   1999,   the  Company  has
                                      reserved 200,000 shares for purchase under
                                      this plan. During the years ended December
                                      31,  1999 and  1998,  the  Company  issued
                                      2,940 and 3,500 shares,  respectively,  to
                                      satisfy its obligation under the plan.

                                       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 760,342  shares are
                                      available for future grant or purchase.




<PAGE>




8.     Stock Plans                     The Company had the following option
       (Continued)                     activity in 1999 and 1998:

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

                                      Balance, December 31, 1997                          528,895               $ 2.21
                                         Granted                                          235,500                 1.73
                                         Cancelled                                        (21,250)                3.38
                                      --------------------------------------------------------------------------------------

                                      Balance, December 31, 1998                          743,145                 2.10
                                         Granted                                          397,500                 6.87
                                         Cancelled                                        (20,000)                1.44
                                      --------------------------------------------------------------------------------------

                                      Balance, December 31, 1999                        1,120,645               $ 3.80
                                      --------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>


                                       All options  outstanding  at December 31,
                                      1999  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
                                      --------------------------------------------------------------------------------------
                                           <S>                              <C>                <C>                <C>
                                           $ 1.02   to  $ 4.00              $ 1.84             6.2                  702,895
                                           $ 4.00   to  $ 9.06              $ 6.96             4.5                  417,750
                                                                                                                  ---------
                                                                                                                  1,120,645
                                                                                                                  =========

</TABLE>

<PAGE>




8.     Stock Plans                    All options exercisable at December 31,
       (Continued)                    1999 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>

                                           $ 1.02   to  $ 4.00              $ 1.80             5.5                  524,624
                                           $ 4.00   to  $ 9.06              $ 5.17             1.5                   57,750
                                                                                                                    -------
                                                                                                                    582,374
                                                                                                                    =======
</TABLE>

       Stock Based                    The Company  accounts for its stock-based
       Compensation                   compensation plan using the intrinsic
                                      value method. Accordingly,  there was no
                                      compensation expense recognized in 1999 or
                                      1998.  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,  net loss per share  would
                                      have been changed to the pro forma amounts
                                      indicated below:
<TABLE>
<CAPTION>

                                      Year ended December 31,                                     1999                1998
                                      --------------------------------------------------------------------------------------
                                      <S>                            <C>                  <C>               <C>
                                      Net loss                       As reported          $   (730,404)     $     (892,750)
                                                                     Pro forma            $   (821,494)     $   (1,004,059)

                                      Basic and diluted net          As reported          $       (.24)     $        (.33)
                                       loss per share of             Pro forma            $       (.26)     $        (.38)
                                        common stock


</TABLE>

<PAGE>




8.     Stock Plans
       (Continued)

       Stock Based                    The fair value of the Company's stock
       Compensation                   options used to compute pro forma net loss
       (Continued)                    and net loss per share disclosures is the
                                      estimated present value at grant date
                                      using the Black-Scholes option-pricing
                                      model with the following weighted-average
                                      assumptions for 1999 and 1998,
                                      respectively:  dividend
                                      yield  of  0%  for  both  years;  expected
                                      volatility  of  46%  for  both  years;   a
                                      risk-free  interest  rate of between 5.85%
                                      and  6.30% and  4.60%  and  5.25%;  and an
                                      expected  holding  period  of 2 to 9 years
                                      and 7 to 10 years.

                                       The   weighted-average   fair   value  of
                                      options  granted  during  the years  ended
                                      December  31,  1999 and 1998 was $1.06 and
                                      $.85 per share, respectively.


9.     Loss Per  Share                The  Company's  basic and
                                      diluted net loss per share of common stock
                                      for the years ended  December 31, 1999 and
                                      1998 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,
                                      1999  and  1998  but not  included  in the
                                      calculation  of diluted net loss per share
                                      because such shares are antidilutive:
<TABLE>
<CAPTION>

                                      December 31,                                                1999                1998
                                      --------------------------------------------------------------------------------------
                                      <S>                                                    <C>                   <C>
                                      Stock options                                          1,120,645             743,145
                                      Stock warrants                                           897,675                   -


</TABLE>


<PAGE>




10.    Income Taxes                   Deferred income taxes reflect
                                      the  impact  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,                                                1999                1998
                                      --------------------------------------------------------------------------------------
                                      <S>                                               <C>                 <C>
                                      Accumulated amortization                          $            -      $       46,000
                                      Tax credits                                              277,000             205,000
                                      Net operating loss carryforwards                       2,517,000           2,181,000
                                      --------------------------------------------------------------------------------------

                                      Gross deferred tax asset                               2,794,000           2,432,000

                                      Deferred tax assets valuation
                                        allowance                                           (2,794,000)         (2,432,000)
                                      --------------------------------------------------------------------------------------

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

                                       As of  December  31,  1999 and 1998,  the
                                      deferred tax assets have been fully offset
                                      by   valuation   allowances,   since   the
                                      realization of such amounts is uncertain.

                                       As of December 31, 1999,  the Company has
                                      net operating loss carryforwards  totaling
                                      approximately  $6,292,000.  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.




<PAGE>




10.    Income Taxes                   The following is a breakdown of the net
       (Continued)                    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                                                                         900,000
                                      2019                                                                         840,000
</TABLE>

                                       In  addition,  the Company has  available
                                      tax  credit  carryforwards   (adjusted  to
                                      reflect  provisions  of the Tax Reform Act
                                      of 1986) of approximately $277,000,  which
                                      are  available  to offset  future  taxable
                                      income and income  tax  liabilities,  when
                                      earned or incurred.  These amounts  expire
                                      in various years through 2019.


11.    Commitments

       Facilities Lease               The  Company  leases  its  research
                                      facilities  under an operating  lease that
                                      expires  August 31, 2002 with an option to
                                      extend  for  five  additional  years.  The
                                      lease  requires  payment  of  real  estate
                                      taxes and other  common  area  maintenance
                                      expenses. Rent expense for the years ended
                                      December 31, 1999 and 1998 was $30,000 and
                                      $26,000, respectively.

                                      Future minimum rental  payments due are as
                                      follows:
<TABLE>
<CAPTION>

                                      Year ending December 31,                                                       Total
                                      --------------------------------------------------------------------------------------
                                      <S>                                                                        <C>

                                      2000                                                                       $  32,000
                                      2001                                                                          33,000
                                      2002                                                                          23,000
                                      ---------------------------------------------------------------------------------------

                                                                                                                 $  88,000
                                      ---------------------------------------------------------------------------------------

</TABLE>


<PAGE>




11.    Commitments
       (Continued)

       Employment                     The Company has  employment  agreements
       Agreements                     with its  principal  officers  providing
                                      for minimum base  compensation and
                                      severance pay which expire December 31,
                                      2005. For theyears ended December 31, 1999
                                      and 1998, the aggregate amount paid  under
                                      these agreements was $305,000 in each
                                      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
                                      in fiscal 2000 total approximately
                                      $345,000.

       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,
                                      1999 no royalties have been earned under
                                      this agreement.

       Consulting                     The Company has entered into various
       Agreements                     scientific  advisory and consulting
                                      agreements to  support  its  development
                                      activities.  These  agreements  generally
                                      expire overseveral future years.  Amounts
                                      charged to operations   in   connection
                                      with these agreements for the years  ended
                                      December 31, 1999 and 1998 amounted    to
                                      approximately    $40,900   and   $236,700,
                                      respectively. The Company expects to incur
                                      similar  or  higher   expenses  in  future
                                      years.

       Finder's Fees                  The  Company  has  entered  into  an
                                      agreement   to  pay  a  finder's  fee  for
                                      agreements   entered   into  with  certain
                                      companies   for   investment   or  revenue
                                      purposes.  The  finder's fee is based on a
                                      percentage of the investment or revenue up
                                      to a maximum of $150,000 with increases if
                                      more than one  product  is  commercialized
                                      under the agreements.



<PAGE>




11.    Commitments
       (Continued)

       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's
                                      contribution   to  the  plan  amounted  to
                                      approximately  $4,400  for the year  ended
                                      December 31, 1999.


12.    Major Customers                Through December 31, 1999,
                                      the Company has generated its revenue from
                                      a   small   number   of   customers    and
                                      collaborative  agreements.  Revenues  from
                                      major customers were generated as follows:
<TABLE>
<CAPTION>

                                                                                      Net                        License
                                                                                    Product      Contract          Fee
                                      Year ended December 31, 1999                   Sales        Revenue        Revenue
                                      --------------------------------------------------------------------------------------
                                      <S>                                       <C>            <C>              <C>

                                      Customer A                                $   425,209    $         -     $         -
                                      Customer B                                          -        338,963         750,000
                                      --------------------------------------------------------------------------------------

                                                                                $   425,209    $   338,963     $   750,000
                                      --------------------------------------------------------------------------------------


                                                                                      Net                        License
                                                                                    Product      Contract          Fee
                                      Year ended December 31, 1998                   Sales        Revenue        Revenue
                                      --------------------------------------------------------------------------------------
                                      Customer A                                $   423,441      $       -     $         -
                                      Customer B                                          -         99,570         400,000
                                      --------------------------------------------------------------------------------------

                                                                                $   423,441      $  99,570     $   400,000
                                      --------------------------------------------------------------------------------------

</TABLE>


<PAGE>




12.    Major Customers                At December 31, 1999, the Company has an
       (Continued)                    ongoing  collaborative product development
                                      agreement  with  Customer  B  related  to
                                      an  ophthalmology  product.  The agreement
                                      provides for the collaborative  partner to
                                      fund certain  research  activities  of the
                                      Company  and  to  make  certain  milestone
                                      payments  dependent on the continuation of
                                      the agreement. The next milestone payment,
                                      amounting  to  $800,000  is due in August,
                                      2000. This payment is subject to an offset
                                      of up to  $175,000 of  redeemable  Class A
                                      common  stock.  The  Company  may  receive
                                      additional  milestone payments beyond 2000
                                      if the agreement is continued.

                                      Net  product   sales  based  on  customer
                                      location are as follows:
<TABLE>
<CAPTION>

                                      Year ended December 31,                                     1999                1998
                                      --------------------------------------------------------------------------------------
                                      <S>                                                   <C>                <C>

                                      United States                                         $  283,758         $   325,935
                                      United Kingdom and New Zealand                           141,451              97,506
                                      --------------------------------------------------------------------------------------

                                                                                            $  425,209         $   423,441
                                      --------------------------------------------------------------------------------------
</TABLE>


13.    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 hisfirm, totalled  approximately
                                      $63,000 and $79,000 for the years ended
                                      December 31, 1999 and 1998, respectively.





<PAGE>



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

         Effective  April 1,  1998,  the Boston  office of  Richard A.  Eisner &
Company,  LLP  ("RAE")  was merged into the Boston  office of BDO  Seidman,  LLP
("BDO").  This merger  resulted in RAE no longer  having an office in the Boston
area,  and the Company  concluded  that it would be  appropriate to select a new
accounting  firm.  At a May 20,  1998  meeting,  the Board of  Directors  of the
Company  voted to retain  BDO to serve as the  Company's  independent  auditors,
effective  immediately.  RAE's report on the Company's financial  statements for
the two years ended  December  31,  1997 did not  contain an adverse  opinion or
disclaimer of opinion,  and was not modified as to  uncertainty,  audit scope or
accounting  principles.  During the two years  ended  December  31, 1997 and any
subsequent interim period,  there were no disagreements  between the Company and
RAE on any matter of accounting  principles or  practices,  financial  statement
disclosure,  or  auditing  scope or  procedure  which,  if not  resolved  to the
satisfaction  of RAE,  would have  caused it to make  reference  to the  subject
matter  of the  disagreement  in  connection  with  its  report  on the  audited
financial statements.


                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons,
         Compliance with Section 16(a) of the Exchange Act

         The Company incorporates herein by reference the information  appearing
under the  caption  "Board  of  Directors"  in the  Company's  definitive  Proxy
Statement to be filed with the Securities and Exchange  Commission in connection
with the Company's 2000 Annual Meeting of Stockholders.

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

Item 10.  Executive Compensation

         The Company incorporates herein by reference the information  appearing
under the caption  "Executive  Compensation"  in the Company's  definitive Proxy
Statement to be filed with the Securities and Exchange  Commission in connection
with the Company's 2000 Annual Meeting of Stockholders.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

         The Company incorporates herein by reference the information  appearing
under the caption  "Principal  Stockholders"  in the Company's  definitive Proxy
Statement to be filed with the Securities and Exchange  Commission in connection
with the Company's 2000 Annual Meeting of Stockholders.

Item 12.  Certain Relationships and Related Transactions

         The Company incorporates herein by reference the information  appearing
under the caption  "Certain  Transactions"  in the  Company's  definitive  Proxy
Statement to be filed with the Securities and Exchange  Commission in connection
with the Company's 2000 Annual Meeting of Stockholders.



<PAGE>


Item 13.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

         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.

         (b)  Reports on Form 8-K

         The Company  filed a report on Form 8-K on October  13, 1999  reporting
information  under item 5  concerning  the  Company's  continued  listing on the
Nasdaq SmallCap Market.  The Form 8-K contained a condensed  balance sheet dated
August 31, 1999 including pro forma adjustments for subsequent financing.


<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 CORPORATION

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

Date: March 27, 2000

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 27, 2000
---------------------        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 27, 2000
----------------------       Treasurer, General Counsel, Chief
  Paul C. Desjourdy          Financial Officer, and Director (Principal
                             Financial and Accounting Officer)


/s/ James C. Richards        Director                            March 27, 2000
----------------------
  James C. Richards

/s/ Richard F. Maradie       Director                            March 27, 2000
----------------------
  Richard F. Maradie

/s/ Eugene Lieberstein       Director                            March 27, 2000
----------------------
  Eugene Lieberstein



<PAGE>


                              Symbollon Corporation
                                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, 1999 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.)
4.2      Form of Stock  Restriction  Agreement among the Company,  the Class B
         Stockholders and the Underwriter.  (previously  filed as
         exhibit number 4.4 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.
10.3     Employment Agreement, dated December 14, 1999, between the Company and
         Dr. Jack H. Kessler.
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    Collaboration and Sale/License Agreement, dated August 4, 1997, between
         the Company and Bausch & Lomb  Pharmaceuticals,  Inc. (previously filed
         as exhibit  number 10.19 to Form 10-QSB for the quarter  ended June 30,
         1997 and incorporated by reference.) *
10.12    Stock Purchase Agreement, dated August 4, 1997, between the Company and
         Bausch & Lomb Pharmaceuticals, Inc. (previously filed as exhibit number
         10.20  to  Form  10-QSB  for  the  quarter  ended  June  30,  1997  and
         incorporated by reference.)
10.13    Form of Subscription  Agreement,  dated as of August 10, 1999,  between
         the Company and the  purchasers of Units  (previously  filed as exhibit
         number 10.14 to Form 10-QSB for the quarter  ended  September  30, 1999
         and incorporated by reference.)
10.14    Form of Redeemable Warrant for the purchase of shares of Class A Common
         Stock,  dated as of August  10,  1999,  issued to  purchasers  of Units
         (previously  filed  as  exhibit  number  10.15 to Form  10-QSB  for the
         quarter ended September 30, 1999 and incorporated by reference.)
23.1     Consent of BDO Seidman, LLP
27.1     Financial Data Schedule
--------------------------------------
* 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.