<PAGE>   1




                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-Q

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

                                       OR

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

              FOR THE TRANSITION PERIOD FROM _________TO _________

                         COMMISSION FILE NUMBER 1-14227

                      AMERICAN BANK NOTE HOLOGRAPHICS, INC.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                        Delaware                                13-3317668
(State or other jurisdiction of incorporation                (I.R.S. Employer
                or organization)                             Identification No.)

                            399 Executive Boulevard
                            Elmsford, New York, 10523
          (Address of principal executive offices, including zip code)

                                 (914) 592-2355
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing for the
past 90 days.

X  Yes ___ No


The aggregate number of shares of common stock, $.01 par value, outstanding on
May 7, 2001 was 17,388,720.


                                       1
<PAGE>   2
                      AMERICAN BANK NOTE HOLOGRAPHICS, INC.

                                    FORM 10-Q

                                      INDEX





<TABLE>
<CAPTION>
                                                                                                       PAGE
                                                                                                        NO.
<S>                                                                                                   <C>
     PART I - FINANCIAL INFORMATION

     Item 1. Financial Statements

             Condensed Balance Sheets as of
                March 31, 2001 (Unaudited) and December 31, 2000...............................          3

             Unaudited Condensed Statements of Operations
                For the Three Months Ended March 31, 2001 and 2000.............................          4

             Unaudited Condensed Statements of Cash Flows
                For the Three Months Ended March 31, 2001 and 2000.............................          5

             Notes to Unaudited Condensed Financial Statements.................................          6

     Item 2. Management's Discussion and Analysis of
                    Financial Condition and Results of Operations..............................          9

     Item 3. Quantitative and Qualitative Disclosures
                    About Market Risk..........................................................         11

     PART II - OTHER INFORMATION

     Item 1. Legal Proceedings.................................................................         12

     Item 6. Exhibits and Reports on Form 8-K..................................................         12
</TABLE>


                                       2
<PAGE>   3
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
CONDENSED BALANCE SHEETS
(In thousands, except share data)



<TABLE>
<CAPTION>
                                                                              March 31,    December 31,
                                                                                2001            2000
                                                                             -----------   ------------
                                                                             (Unaudited)
<S>                                                                          <C>           <C>
                                 ASSETS
Current Assets:
   Cash and cash equivalents.........................................         $   7,056      $  7,926
   Accounts receivable, net of allowance for
      doubtful accounts of $75.......................................             3,273         3,000
   Inventories, net of allowances of $721 and $678...................             3,664         3,015
   Deferred income taxes.............................................             1,205         1,191
   Prepaid expenses and other........................................               267           391
                                                                              ---------      --------
      Total current assets...........................................            15,465        15,523
Machinery, equipment and leasehold improvements,
   net of accumulated depreciation and amortization
   of $7,884 and $7,709..............................................             5,007         5,117
Deferred income taxes................................................               519           727
Other assets.........................................................                14            14
Goodwill, net of accumulated amortization
   of $2,694 and $2,608..............................................             7,667         7,753
                                                                              ---------      --------

Total Assets.........................................................         $  28,672      $ 29,134
                                                                              =========      ========

                  LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Accounts payable..................................................         $   2,121      $  2,298
   Accrued expenses..................................................             2,093         2,687
   Customer advances.................................................               180           161
                                                                              ---------      --------
      Total current liabilities......................................             4,394         5,146
                                                                              ---------      --------

Commitments and contingencies

Stockholders' Equity:
   Preferred stock, authorized 5,000,000 shares;
      no shares issued or outstanding................................               --            --
   Common stock, par value $.01 per share, authorized
      30,000,000 shares; issued and outstanding 18,483,720 shares....               185           185
   Additional paid-in-capital........................................            23,994        23,994
   Retained earnings (deficit).......................................                99          (191)
                                                                              ---------       -------
      Total Stockholders' Equity.....................................            24,278        23,988
                                                                              ---------      --------

Total Liabilities and Stockholders' Equity...........................         $  28,672      $ 29,134
                                                                              =========      ========
</TABLE>


             See Notes to Unaudited Condensed Financial Statements.


                                       3
<PAGE>   4
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
CONDENSED STATEMENTS OF OPERATIONS - UNAUDITED
(In thousands, except per share data)



<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                     March 31,
                                                               --------------------
                                                                 2001         2000
                                                               -------      -------
<S>                                                            <C>          <C>
Revenue:
   Sales...........................................            $ 5,032      $ 4,875
   Royalty income..................................                105          142
                                                               -------      -------
                                                                 5,137        5,017
Costs and expenses:
   Cost of goods sold..............................              2,373        1,957
   Selling and administrative......................              1,814        2,123
   Research and development........................                302          161
   Depreciation and amortization...................                261          266
                                                               -------      -------
                                                                 4,750        4,507
                                                               -------      -------

Operating income...................................                387          510

Interest income (expense)..........................                 97         (118)
                                                               -------      -------

Income before provision for income taxes...........                484          392
Provision for income taxes.........................                194          157
                                                               -------      -------

Net income.........................................            $   290      $   235
                                                               =======      =======

Net income per share:
   Basic and diluted...............................            $  0.02      $  0.02
                                                               =======      =======
</TABLE>

             See Notes to Unaudited Condensed Financial Statements.


                                       4
<PAGE>   5
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS - UNAUDITED
(In thousands)



<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                                                     March 31,
                                                                            ---------------------------
                                                                             2001                2000
                                                                            ------              -------
<S>                                                                        <C>                  <C>
Cash flows from operating activities:
   Net income ..............................................               $   290                $ 235
   Adjustments to reconcile net income to net cash (used in)
      provided by operating activities:
         Depreciation and amortization .....................                   261                  266
         Deferred income taxes .............................                   194                  157
         Deferred financing costs ..........................                  --                     12
      Changes in operating assets and liabilities:
         Accounts receivable ...............................                  (273)                 460
         Inventories .......................................                  (649)                (239)
         Prepaid expenses and other ........................                   124                   27
         Accounts payable, accrued expenses and other ......                  (771)                (634)
         Customer advances .................................                    19                 (108)
                                                                            ------                -----

Net cash (used in) provided by operating activities ........                  (805)                 176
                                                                            ------                -----

Cash flows from investing activities:
   Capital expenditures ....................................                   (65)                (123)
                                                                            ------                -----

Net cash used in investing activities ......................                   (65)                (123)
                                                                            ------                -----

Cash flows from financing activities:
   Revolving credit borrowings, net ........................                  --                     28
   Notes payable repayment .................................                  --                    (78)
   Long-term debt repayment ................................                  --                    (50)
                                                                            ------                -----

Net cash used in financing activities ......................                  --                   (100)
                                                                            ------                -----

Decrease in cash and cash equivalents ......................                  (870)                 (47)
Cash and cash equivalents, beginning of period .............                 7,926                  266
                                                                            ------                -----

Cash and cash equivalents, end of period ...................                $7,056                $ 219
                                                                            ======                =====

Supplemental cash payments:
   Taxes ...................................................                $ --                  $  20
                                                                            ======                =====

   Interest ................................................                $ --                  $ 115
                                                                            ======                =====
</TABLE>

             See Notes to Unaudited Condensed Financial Statements.


                                       5
<PAGE>   6
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE A - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

American Bank Note Holographics, Inc. (the "Company") originates, mass-produces,
and markets secure holograms. Holograms are used for security, packaging and
promotional applications. The Company operates in one reportable industry
segment.

The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principals for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information required by
generally accepted accounting principles for complete financial statements.
Reference should be made to the Company's audited financial statements included
in the Company's filings made with the Securities and Exchange Commission. The
accompanying unaudited condensed financial statements reflect all adjustments
(consisting of normal recurring accruals) which are, in the opinion of
management, necessary for a fair statement of the results of the interim period
presented but are not necessarily indicative of the results that may be expected
for a full year.

REVENUE RECOGNITION

The Company adopted Staff Accounting Bulletin ("SAB") No. 101, "Revenue
Recognition in Financial Statements", during 2000. SAB 101 expresses the view of
the SEC Staff in applying generally accepted accounting principles to certain
revenue recognition issues.

Sales are generally recognized at the latter of the time of shipment or when
title passes to customers. In some situations, the Company has shipped product
where the sale is contingent upon the customers' use of the product. In these
situations, the Company does not recognize sales upon product shipment, but
rather when the buyer of the product informs the Company that the product has
been used.

Additionally, pursuant to terms with a certain customer, completed items are
stored on behalf of the customer at the Company's on-site secured facility and,
in that instance, sales are recognized when all of the following have occurred:
the customer has ordered the goods, the manufacturing process is complete, the
goods have been transferred to the on-site secured facility and are ready for
shipment, the risk of ownership has passed to the customer and the customer has
been billed for the order. At March 31, 2001 and December 31, 2000 accounts
receivable from this customer totaled $0.7 million and $0.4 million,
respectively.

At March 31, 2001 and December 31, 2000, customer advances approximating $0.2
million and $0.2 million, respectively, represent payments received from
customers for products which have not yet been shipped. These customer advances
are classified as current liabilities on the accompanying balance sheets.

Effective October 1, 2000, the Company adopted Emerging Issues Task Force,
("EITF") 00-10. Shipping and handling amounts billed to customers amounted to
$99,000 and $106,000 for the three months ended March 31, 2001 and 2000,
respectively, and are included in sales. Shipping and handling costs are
included in selling and administrative expenses. The adoption of EITF has had no
impact on the determination of net income.

BASIC AND DILUTED NET INCOME PER SHARE

Basic net income per share is computed based on the weighted average number of
outstanding shares of common stock. The basic weighted average number of shares
outstanding were 18,483,720 and 13,636,000 in the three months ended March 31,
2001 and 2000, respectively. Diluted net income per share is computed by
dividing net income by the weighted average number of shares of common stock
outstanding and dilutive potential shares of common stock. For the three months
ended March 31, 2001, the diluted number of weighted average shares outstanding
was the same as the basic number of weighted average shares outstanding because
the exercise price of the outstanding stock options was greater than the average
market value of the underlying common stock for the period, making them
antidilutive. For the three months ended March 31, 2000, the diluted number of
weighted average shares outstanding was 13,697,388.


                                       6
<PAGE>   7
BUSINESS INFORMATION

Sales to MasterCard were approximately 33% and 32% of sales for the three months
ended March 31, 2001 and 2000, respectively. The Company is the exclusive
supplier of holograms to MasterCard pursuant to an agreement, as amended, that
extends until February 2003. The agreement provides for automatic two-year
renewal periods if not terminated by either party. The loss of all or a
substantial portion of the sales to MasterCard, however, would have a material
adverse effect on the financial position, results of operations and cash flows
of the Company.

Sales to manufacturers of VISA credit cards were approximately 21% and 18% of
sales for the three months ended March 31, 2001 and 2000, respectively. The loss
of a substantial portion of the sales to these customers would have a material
adverse effect on the financial position, results of operations and cash flows
of the Company. Accounts receivable from these customers approximated $0.8
million and $0.6 million at March 31, 2001 and December 31, 2000, respectively.

The Company has historically purchased certain key materials used in the
manufacture of its holograms from single suppliers, with which it does not have
supply contracts. Any problems that occur with respect to the delivery, quality
or cost of any such materials could have a material adverse effect on the
financial position, results of operations and cash flows of the Company.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133, as amended by SFAS No. 137 and SFAS No. 138, establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities, and is effective for all quarters of
all fiscal years beginning after June 15, 2000. The adoption of SFAS No. 133 did
not have a material impact on the Company's results of operations.

In March 2000, the FASB issued Interpretation (FIN) No. 44, "Accounting for
Certain Transactions Involving Stock Compensation - An Interpretation of APB
Opinion No. 25." FIN 44 clarifies the definition of employees, the criteria for
determining whether a plan qualifies as a non-compensatory plan, the accounting
consequences of various modifications to the terms of a previously fixed stock
option or award and the accounting for an exchange of stock compensation awards
in a business combination. FIN 44 is effective July 1, 2000 but certain
conclusions in the Interpretation cover specific events that occurred after
either December 15, 1998 or January 12, 2000. The Company adopted FIN 44 during
July 2000. The adoption of this interpretation did not have a material impact on
the Company's current or historical financial position, results of operations,
or cash flows.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to current year
presentation.

NOTE B - INVENTORIES

Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                              March 31,              December 31,
                                                                2001                     2000
                                                             -----------             ------------
                                                             (Unaudited)
<S>                                                          <C>                     <C>
     Finished goods .................................           $ 1,809                $ 1,744
     Finished goods on consignment with customers ...               421                    435
     Work in process ................................             1,276                    955
     Raw materials ..................................               879                    559
                                                                -------                -------
                                                                  4,385                  3,693
     Less:  Reserve for obsolescence ................              (721)                  (678)
                                                                -------                -------
                                                                $ 3,664                $ 3,015
                                                                =======                =======
</TABLE>


                                       7
<PAGE>   8
NOTE C - COMMITMENTS AND CONTINGENCIES

SEC INVESTIGATION

On February 9, 1999, the Division of Enforcement of the SEC issued a Formal
Order Directing Private Investigation in connection with matters giving rise to
the need to restate the Company's previously issued financial statements for the
years ended December 31, 1997 and 1996 and the first three quarters of 1998 that
were filed by former management. The SEC has concluded its investigation of the
Company and has accepted the Company's offer of settlement. On March 16, 2001,
the Commissioners of the SEC approved an order making findings and imposing a
cease and desist order on any future violations of Section 17(a) of the
Securities Act, Sections 10(b), 13(a), 13(b)(2)(A) and (B), and 30A of the
Exchange Act, and Exchange Act Rules 10b-5, 12b-20, and 13a-13. Without
admitting or denying any liability the Company has agreed to pay a $75,000 fine
because former senior officers of the Company allegedly violated provisions of
the Foreign Corrupt Practices Act. The Company recorded the fine as a charge to
its statement of operations in the fourth quarter of 2000. It is anticipated
that the order will be approved and filed by the Secretary of the SEC in the
near future.

OTHER

A consolidated class action complaint against the Company, certain of its former
officers and directors, American Banknote Corporation (the "Former Parent"), the
four co-lead underwriters of the Offering and its previous auditors, had been
filed in the United States District Court for the Southern District of New York
(the "Court"). The complaint alleges violations of the federal securities laws
and seeks to recover damages on behalf of all purchasers of the Company's Common
Stock during the class period (July 15, 1998 through February 1, 1999). The
complaint seeks rescission of the purchase of shares of the Company's Common
Stock or alternatively, unspecified compensatory damages, along with costs and
expenses including attorney's fees.

In October 2000, the Company, all other defendants and the plaintiffs entered
into a definitive agreement to settle all of the claims that are the subject of
the class action, as well as claims asserted against the Former Parent and other
defendants in a separate class action. The settlement agreement received the
final approval of the Court on December 15, 2000. The approval of the Bankruptcy
Court for the Southern District of New York in which the Chapter 11 proceeding
of the Former Parent is pending has already been given. Under the settlement,
the insurance carrier for the Company and the Former Parent will pay
$12,500,000, the previous auditors will pay $2,350,000 and the Company has
issued and will distribute 1,460,000 shares of its common stock as well as
warrants to purchase 863,647 shares of the Company's common stock, at an
exercise price of $6.00 per share. The shares, which will be distributed in 2001
(365,000 have been distributed through May 7, 2001), have been included in
shares outstanding in the accompanying financial statements. The warrants are
exercisable for a 30 month period commencing on December 11, 2000.

On December 8, 1999, the Former Parent filed a petition and plan of
reorganization under Chapter 11 of the federal Bankruptcy Code. During 2000, the
Company submitted a substantial claim against the Former Parent in the
bankruptcy proceedings. In connection with negotiations on the Chapter 11 plan,
the Company reached an agreement with the Former Parent to exchange mutual,
general releases for any obligations each may have to the other pursuant to the
separation agreement between the Company and the Former Parent, dated July 20,
1998, and all sums allegedly owing by each of the Company and the Former Parent,
and its affiliates, to each other. The agreement is subject to consummation of
the Chapter 11 plan and also provides that (i) the Company will receive 25,000
shares of stock of the reorganized Former Parent, (ii) the Former Parent will be
responsible for and shall pay all asserted and unasserted income, franchise or
similar tax liabilities of the Company for the period January 1, 1990 through
July 20, 1998 and will indemnify the Company with respect to any such
liabilities and (iii) the Company will withdraw its claim against the Former
Parent in the Chapter 11 case. The above described settlement between the
Company and the Former Parent was made a part of the Chapter 11 plan which the
bankruptcy court approved on November 3, 2000.

On June 30, 2000, the Company entered into a Stock Purchase Agreement (the
"Agreement") with Crane & Co., Inc. ("Crane"). Under the Agreement, the Company
sold 3,387,720 shares of the Company's common stock to Crane for an aggregate
purchase price of $9,316,230. The Agreement also provides Crane with the right
to purchase its proportionate share of any new issuance of the Company's
securities, other than securities issued in connection with


                                       8
<PAGE>   9
an acquisition, securities issued in connection with any stock option plan or
agreement, securities issued in replacement of any outstanding securities,
securities issued to all holders of shares of common stock on a pro rata basis
or any securities issued in connection with a strategic investment. Also, in the
event that the Company issues shares of common stock and or securities
convertible into or exercisable for shares of common stock in connection with
the settlement of any litigation that was outstanding as of June 29, 2000, Crane
will be allowed to purchase its proportionate share of the Company's common
stock at a price of $3.35 per share. As of May 7, 2001, no proportionate
purchase has been made.

The Company currently and from time to time is involved in litigation (as both
plaintiff and defendant) incidental to the conduct of its business; however,
other than the shareholder litigation described above, the Company is not a
party to any lawsuit or proceeding which, in the opinion of management of the
Company, is likely to have a material impact on the Company's financial
position, results of operations or cash flows.


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

The following discussion and analysis should be read in conjunction with the
Company's unaudited financial statements, including the notes thereto, appearing
elsewhere in this report.

OVERVIEW

The Company originates, mass-produces and markets holograms. The Company's
holograms are used primarily for security applications such as counterfeiting
protection for credit and other transaction cards, identification cards and
documents of value, as well as for tamper resistance and authentication of
high-value consumer and industrial products. The Company's ability to control
the diffraction of light ("origination") using proprietary processes in a
secure, controlled manufacturing environment has enabled the Company to become a
market leader in security holography. The Company's products are used by over
150 companies worldwide. The Company also produces non-secure holograms for
packaging and promotional applications.

Concerns regarding counterfeiting, piracy and other infractions that can result
in lost sales, lost goodwill and product liability claims drive the use of
product authentication holograms. Companies in various industries have utilized
holograms as authentication devices to reduce potential losses. Also, concerns
over counterfeiting and copying have led to an increased use of holograms on
documents of value, including currency, passports, business cheques, gift
certificates, vouchers, certificates of deposit, stamps (postage and revenue),
tickets and other financial instruments.

A significant portion of the Company's business is derived from orders placed by
certain credit card companies, including MasterCard and manufacturers of VISA
brand credit cards, and variations in the timing of such orders can cause
significant fluctuations in the Company's sales. Sales to MasterCard were
approximately 33% and 32% of sales for the three months ended March 31, 2001 and
2000, respectively. The Company is the exclusive supplier of holograms to
MasterCard pursuant to an agreement, as amended, that extends until February
2003. The agreement provides for automatic two-year renewal periods if not
terminated by either party. Sales to manufacturers of VISA credit cards were
approximately 21% and 18% of sales for the three months ended March 31, 2001 and
2000, respectively. The Company does not have long-term purchase contracts with
VISA and supplies holograms to approximately 50 VISA authorized card
manufacturers pursuant to purchase orders. Currently the Company is one of two
companies authorized to manufacture and sell VISA brand holograms to
manufacturers of VISA brand credit cards. If either MasterCard or VISA were to
terminate its respective relationship with the Company or substantially reduce
their orders, there would be a material adverse effect on the Company's
business, financial condition, results of operations and cash flows.

Holograms are sold under purchase orders and contracts with customers. Sales and
the related cost of goods sold are generally recognized at the latter of the
time of shipment or when title passes to customers. In some situations, the
Company has shipped product where the sale is contingent upon the customers' use
of the product. In these


                                       9
<PAGE>   10
situations, the Company does not recognize sales upon product shipment, but
rather when the buyer of the product informs the Company that the product has
been used. Additionally, pursuant to terms with a certain customer, completed
items are stored on behalf of the customer at the Company's on-site secured
facility and, in that instance, sales are recognized when all of the following
have occurred: the customer has ordered the goods, the manufacturing process is
complete, the goods have been transferred to the on-site secured facility and
are ready for shipment, the risk of ownership has passed to the customer and the
customer has been billed for the order. At March 31, 2001 and December 31, 2000,
accounts receivable from this customer totaled $0.7 million and $0.4 million,
respectively.

The Company has historically purchased certain key materials used in the
manufacture of its holograms from single suppliers, with which it does not have
supply contracts. Any problems that occur with respect to the delivery, quality
or cost of any such materials could have a material adverse effect on the
Company's financial position, results of operations and cash flows.

Sales may fluctuate from quarter to quarter due to changes in customers'
ordering patterns. Customers do not typically provide the Company with precise
forecasts of future order quantities. Quarterly demand for holograms may be
materially influenced by customers' promotions, inventory replenishment, card
expiration patterns, delivery schedules and other factors which may be difficult
for the Company to anticipate.

Cost of goods sold includes raw materials such as nickel, foils, films and
adhesives; labor costs; manufacturing overhead; and hologram origination costs
(which represent costs of a unique master hologram that is made to customer
specifications and is an integral part of the production process). As a result,
costs of goods sold are affected by product mix, manufacturing yields, costs of
hologram originations and changes in the cost of raw materials and labor.

Selling and administrative expenses primarily consist of salaries, benefits and
commissions for the Company's corporate, sales, marketing and administrative
personnel and marketing and advertising expenses for the Company's services and
products.

COMPARISON OF THREE MONTHS ENDED MARCH 31, 2001 TO THREE MONTHS ENDED
MARCH 31, 2000

Sales. Sales increased by $0.1 million, or 3.2%, from $4.9 million for the three
months ended March 31, 2000 to $5.0 million for the three months ended March 31,
2001. The increase in sales was due to increases in sales of security holograms
for credit cards and non credit card security holograms.

Royalty Income. Royalty income decreased from $142,000 for the three months
ended March 31, 2000 to $105,000 for the three months ended March 31, 2001 as a
result of lower sales reported by a licensee.

Cost of Goods Sold. Cost of goods sold increased by $0.4 million, from $2.0
million for the three months ended March 31, 2000 to $2.4 million for the three
months ended March 31, 2001. As a percentage of sales, cost of goods sold
increased from 40.1% in the three months ended March 31, 2000 to 47.2% for the
same period in 2001. The increase is primarily due to the increase in sales (1%)
and changes in the Company's product mix (6%).

Selling and Administrative. Selling and administrative expenses decreased by
$0.3 million, from $2.1 million for the three months ended March 31, 2000 to
$1.8 million for the three months ended March 31, 2001. The decrease was
primarily due to a decrease in professional fees of $0.4 million offset
partially by increases in selling and administrative salaries and benefits of
$0.1 million.

Depreciation and Amortization. Depreciation and amortization remained relatively
unchanged.

Interest Income (Expense). Interest income (expense) increased by $0.2 million
for the three months ended March 31, 2001 primarily as a result of higher cash
balances for investment and the reduction of debt.


                                       10
<PAGE>   11
LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2001, the Company had $7.1 million in cash and cash equivalents and
working capital of $11.0 million. The cash balance includes the proceeds
generated by the equity investment in the Company by Crane on June 30, 2000, net
of the repayment of the Foothill Capital Corporation loan.

The Company's operating activities used cash of $0.8 million for the three
months ended March 31, 2001, compared to provided cash of $0.2 million for the
three months ended March 31, 2000. Cash flows provided by net income and
adjustments to reconcile net income to net cash used in operating activities
increased $0.1 million in the three months ended March 31, 2001 from the
comparable period in 2000. Cash flows resulting from changes in operating assets
and liabilities decreased by $1.1 million in the three months ended March 31,
2001 from the three months ended March 31, 2000 due to increases in cash used
for accounts receivable, inventories and accounts payable of $1.3 million offset
partially by increases in cash provided by prepaid expenses and customer
advances of $0.2 million.

Investing activities for the three months ended March 31, 2001 and 2000 used
cash of $65,000 and $123,000, respectively, for capital expenditures.

There were no financing activities for the three months ended March 31, 2001.
The activity in 2000 was comprised of the repayment of the debt aggregating $0.1
million.

SPECIAL NOTE REGARDING FORWARD - LOOKING STATEMENTS

Certain statements in this Form 10-Q and in certain documents incorporated by
reference herein constitute "forward-looking" statements within the meaning of
the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such
"forward-looking" statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future
results, performance, or achievements expressed or implied by such
"forward-looking" statements. Such factors are more fully described in the
Company's filings with the Securities and Exchange Commission, which should be
considered in connection with a review of this report.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not engage in significant activity with respect to market risk
sensitive instruments. Accordingly, our risk with respect to market risk
sensitive instruments is immaterial.


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<PAGE>   12
PART II  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Reference is made to the discussion under the caption "Commitments and
Contingencies" in Note F to Notes to Unaudited Condensed Financial Statements in
this quarterly report on Form 10-Q.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

None.

                                    SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                           AMERICAN BANK NOTE
                                           HOLOGRAPHICS, INC.

                                           By: s/ Kenneth H. Traub
                                           ---------------
                                           Kenneth H. Traub
                                           President and Chief Executive Officer

                                           By: s/ Alan Goldstein
                                           ---------------
                                           Alan Goldstein
                                           Vice President,
                                           Chief Financial Officer and
                                           Chief Accounting Officer

Date:  May 8, 2001


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