<PAGE>   1

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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

         [X]     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                 EXCHANGE ACT OF 1934
                              For the fiscal year ended December 31, 2000

                 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
                              For the transition period from ______ to ______

                             LARK TECHNOLOGIES, INC.
        (Exact name of small business issuer as specified in its charter)

                  DELAWARE                                   73-1461841
         (State or other jurisdiction of                   (IRS Employer
         incorporation or organization)                  Identification No.)

         9441 W. SAM HOUSTON PKWY. SOUTH, SUITE 103        (713) 779-3663
         HOUSTON, TX  77099                          (Issuer's telephone number)
         (Address of principal executive offices)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: None

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the 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 there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. |X|

Revenues for the fiscal year ending December 31, 2000 were $5,625,968.

The aggregate market value of the voting stock held by non-affiliates is
$5,656,362 based on a closing price of $1.8125 on December 31, 2000.

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

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.     Yes       No

                      APPLICABLE ONLY TO CORPORATE ISSUERS

As of December 31, 2000, there were 3,520,395 shares of Common Stock, par value
$0.001 per share, outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

None
Transitional Small Business Disclosure Format (Check one): Yes       No  [X]
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                             LARK TECHNOLOGIES, INC.

                              INDEX TO FORM 10-KSB
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

<TABLE>
<CAPTION>
Part I                                                                                      Page
                                                                                            ----
<S>               <C>                                                                       <C>
     Item 1.      Description of Business...................................................   1

     Item 2.      Description of Property...................................................   6

     Item 3.      Legal Proceedings.........................................................   6

     Item 4.      Submission of Matters to a Vote of Security Holders.......................   6


Part II

     Item 5.      Market for Common Equity and Related Stockholder Matters..................   6

     Item 6.      Management's Discussion and Analysis of Financial Condition and
                  Results of Operations.....................................................   7

     Item 7.      Financial Statements......................................................   9

                           Balance Sheet ...................................................  11

                           Statements of Operations ........................................  12

                           Statements of Cash Flows ........................................  14

                           Notes to Financial Statements ...................................  16

     Item 8.      Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure.......................................  25


Part III

     Item 9.      Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section 16(a) of the Exchange Act.........................  25

     Item 10.     Executive Compensation....................................................  28

     Item 11.     Security Ownership of Certain Beneficial Owners and Management............  30

     Item 12.     Certain Relationships and Related Transactions............................  31

     Item 13.     Exhibits and Reports on Form 8-K..........................................  32

Signatures .................................................................................  33
</TABLE>



                                        i
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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

         COMPANY HISTORY. Lark Sequencing Technologies, Inc. ("Sequencing") was
incorporated as a Delaware corporation in May 1990. Sequencing's corporate
predecessor was organized in 1989 for the purposes of (i) marketing standard
gene sequencing technologies used by scientists at Baylor College of Medicine in
Houston, Texas and (ii) marketing software developed at Baylor College of
Medicine used for sequencing.

         In June of 1992, Sequencing acquired the assets of a Texas limited
partnership that was engaged in basic research into potential medical uses of
the bio-active proteins present in the venom of poisonous snakes. Sequencing
placed these assets in a wholly owned subsidiary, Summa Biologica Inc., a Texas
corporation ("Summa"). The operations of Summa were not profitable and were not
deemed sufficiently promising to management of Sequencing to continue
expenditures in this respect. In December of 1993, Sequencing sold substantially
all the assets of Summa.

         Lark Technologies, Inc. ("Lark" or the "Company") was incorporated
under the laws of the State of Delaware on November 16, 1994 for the purpose of
merging with Sequencing. Prior to the merger, Lark had no business operations or
significant capital and had no intention of engaging in any active business
until it merged with Sequencing. Prior to the merger, the sole shareholder of
Lark was SuperCorp Inc. ("SuperCorp"), an Oklahoma company. Upon approval of the
merger, SuperCorp spun off Lark by transferring its stock in Lark to its
shareholders.

         The Company is a successor in interest to Sequencing through a merger
effected in September 1995. As a result of the merger, the shareholders of
Sequencing own 90% of the capital stock of Lark, and the shareholders of
SuperCorp own 10% of the capital stock of Lark.

         BUSINESS OF LARK. Lark is a leader in providing contract molecular
biology services to the pharmaceutical, biotechnology and agbio industries.
Lark's services are used worldwide by research organizations and drug
development institutions to accelerate their efforts in bringing products to the
market. Lark's contract research service portfolio consists of over a hundred
different molecular biology services in the areas of Nucleic Acid Extraction
Services, DNA Sequencing Services, Genetic Stability Testing Services, Gene
Expression and Detection Services, and Custom Molecular Biology Services. All of
these services are performed by a highly trained and educated scientific staff
working in a facility that is compliant with the Food and Drug Administration's
(FDA) Good Laboratory Practices (GLP) (CFR Title 21, Part 58).

     o   Nucleic Acid Extraction Services. Lark is capable of receiving and
         processing a wide range of sample types to be analyzed in our
         laboratories. Lark uses a variety of extraction procedures to isolate
         DNA and/or RNA from blood, tissue, and other body fluids, as well as
         bacterial, plant and cell culture samples.

     o   DNA Sequencing Services. Lark has assembled a breadth of DNA sequencing
         services to meet the requirements of a variety of end user applications
         ranging from gene discovery to confirmatory sequencing for FDA
         submission. The Company has extensive expertise and over ten years of
         experience in DNA sequencing technologies to accommodate both high
         throughput and high complexity projects. Depending upon the nature of a
         project, Lark will develop an optimal sequencing strategy to generate
         consistent, high quality sequence data.

                  High Volume Sequencing Services. Lark's high volume sequencing
                  services utilize high throughput automated systems for the
                  analysis of thousands of gene sequences per day. Customers
                  will either supply samples in a 96-well format or Lark will
                  reformat samples into 96 wells for high throughput processing.

                  Large Scale Genomic Sequencing Services. Lark is capable of
                  sequencing DNA provided in the form of large constructs known
                  as cosmids and artificial chromosomes that contain large
                  fragments of DNA from the organism being studied. These large
                  constructs will be subdivided into smaller pieces that are
                  then sequenced. The sequences are then aligned and assembled
                  into a continuous DNA sequence. This sequence can then be
                  analyzed to locate coding regions of genes.



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<PAGE>   4

                  Fast Turnaround Sequencing Services. Lark has a fast
                  turnaround sequencing team dedicated to providing high
                  accuracy double or single strand sequence information to
                  clients in a short timeframe. Clients use this service to
                  obtain complete sequence information on specific samples or
                  regions of interest and as a way to confirm sequence
                  information. Typically this service has a two to ten day
                  turnaround time depending upon the size of the clone to be
                  sequenced.

     o   Genetic Stability Testing Services. Lark assists clients in meeting the
         regulatory requirements established for development and licensing of
         certain genetically engineered biological products. The Food and Drug
         Administration requires pharmaceutical and biotech companies to submit
         a variety of information which can be obtained through the Lark
         services listed below. Lark analyzes and provides a comprehensive
         report on the genetic integrity of cell banks used to produce
         recombinant proteins, monoclonal antibodies, vaccines, and gene therapy
         products.

                  FDA Submission Quality Sequencing. Lark's FDA quality
                  sequencing service generates 100% accurate DNA sequence
                  information for verification of genes within biological
                  products for regulatory submission. Usually, the FDA requires
                  sequence information for the recombinant genes expressed
                  within genetically engineered biological products to confirm
                  that no modifications have occurred to the sequence during the
                  cell banking and production processes.

                  Copy Number. Lark uses various copy number analysis methods to
                  monitor the number of gene expression constructs contained in
                  a cell throughout the product production process.

                  Insertion Number. Lark uses a DNA hybridization technique to
                  determine the number of insertion sites of a recombinant gene
                  within mammalian cell banks. The insertion number is used to
                  measure the stability of a eucaryotic cell bank.

                  Restriction Enzyme Analysis. Lark performs restriction enzyme
                  analysis on cell banks to determine if any unexpected genetic
                  rearrangements have occurred in or around the recombinant gene
                  of interest. The analysis supports confirmation of the
                  stability of a cell bank throughout the pre and post
                  production process.

                  Plasmid Loss Detection. Lark has developed assays to detect
                  the percentage of cells in a cell bank, which are missing
                  product producing plasmid systems. Increases in plasmid loss
                  may be indicative of instability and inefficiencies of the
                  cell bank for production of product.

                  Phage Detection. Phages are bacterial viruses, which can kill
                  or alter the bacterium's growth cycle or expression levels,
                  thus altering the ability to produce product. Lark's phage
                  detection service is designed to detect phage contamination of
                  a bacterial cell bank.

     o   Gene Expression and Detection Services. Lark offers several services to
         assist its clients in ascertaining the biological role of a gene by
         determining if, when and at what level a gene is being expressed in a
         variety of samples of interest. These services are important in
         identifying novel genes, confirming the validity of a gene as a drug
         target, and monitoring a target gene through the product development
         process. The Company believes these services are highly complementary
         to genomic research.

                  Differential Display Analysis. Lark uses differential display
                  analysis methods to determine differences in gene expression
                  between control samples and one or more test samples. Lark's
                  method utilizes specific DNA amplification procedures to
                  display variances in gene expression patterns between control
                  and test samples.

                  Quantitative Polymerase Chain Reaction (QPCR). Lark's QPCR
                  service is used for highly accurate gene sequence detection.
                  This method analyzes the distribution and expression of target
                  DNA or RNA in a high throughput format. The service has
                  applications in biotechnology product development including
                  gene therapy distribution and expression analysis, drug
                  response studies, mutation detection, and expression system
                  development.



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<PAGE>   5

     o   Custom Molecular Biology Services. Lark offers a variety of custom
         services, which may be adapted to meet specific customer requirements.

                  Polymerase Chain Reaction (PCR). Lark uses PCR techniques to
                  amplify a specific sequence of interest to a customer from
                  plasmid, viral, or genomic DNA. Lark also has the expertise to
                  provide reverse transcription PCR for amplification of an RNA
                  product. This service may be used to generate template for DNA
                  sequencing, gene cloning, or micro-array applications.

                  Subcloning. Subcloning is a procedure used to transfer a DNA
                  region of interest into a vector that is more suitable for
                  procedures such as DNA sequencing and gene expression. Lark
                  provides a strategy and services for subcloning a variety of
                  different sequence fragments, including PCR products, into
                  standard vector systems.

                  Library Screening. Lark uses gene fragments to screen a
                  customer's library of clones and isolate the full-length cDNA
                  of interest. Lark also provides services to search a library
                  to find homologous genes in related species or isolate the
                  genomic equivalent of a cDNA.

                  DNA Preparation. Lark provides services to prepare plasmid DNA
                  or phage DNA on a large-scale basis for its customers.

         Previously, Lark had also undertaken a senescence gene discovery
program for its own account. In 1995, the Company obtained exclusive rights to
senescence gene technology developed at Baylor College of Medicine ("Baylor"),
subject to third party royalty rights and development obligations. Senescence is
the final stage of cellular aging when a cell ceases to divide but remains
viable. The genes that control this process regulate cell immortality. The major
disease target for this gene technology is cancer. Animal studies have
demonstrated the ability of this technology to reduce tumor growth at
statistically significant levels. Lark is currently pursuing the licensing of
this technology through the activities of Sennes Drug Innovations.

         BUSINESS STRATEGY. The Company plans to expand its leadership position
as a high quality molecular biology Contract Research Organization (CRO) on a
global basis by, 1) capitalizing on its current customer base and leveraging its
high level of repeat business, 2) growing its existing molecular biology service
business to support the high growth genomics industry, 3) establishing a broad
range of molecular biology services to meet expanding outsourcing needs of large
pharmaceutical clients, and 4) applying its molecular biology service expertise
to new and expanding market opportunities.

     o   Capitalize on the Current Customer Base and Leverage Repeat Business.
         The Company has significant relationships with a number of leading
         biotechnology companies and has served 18 of the 20 largest
         pharmaceutical companies. The Company has also attained a high level of
         repeat business. Lark believes it can further capitalize on its
         commercial relationships by enhancing its direct sales force and
         applying an account-focused approach to its selling process.

     o   Grow Existing Service Business to Support High Growth Genomics
         Industry. The Company has established four product lines, which support
         genomics-based research and development efforts 1) Nucleic Acid
         Extraction Services, 2) DNA Sequencing Services, 3) Gene Expression
         Services, and 4) Gene Detection Services. Within each of these product
         lines are specific services designed to meet specific project needs.
         Through the Company's interactions with clients and awareness of the
         industry, Lark has identified future services to add to these product
         lines in further support of its client's genomics programs.

     o   Establish Broad Range of Molecular Biology Services to Support
         Expanding Outsourcing Need. A factor, which influences Lark's new
         products program is the requests, made by Lark's clients for specific
         new services. Lark believes the number of new services it will
         introduce will be significantly impacted by the expanding outsourcing
         needs of its client-base. By assembling a portfolio of automated,
         molecular biology services the Company believes it will be able to
         decrease its client's product development timelines. Many of Lark's
         contractual arrangements are customized proposals composed of a number
         of individual services integrated into a production-oriented format.
         The Company plans to continue to introduce high throughput approaches
         to accelerate its client's abilities to efficiently analyze multiple
         samples.



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<PAGE>   6

     o   Molecular Biology Services for New and Expanding Market Opportunities.
         The Company believes that molecular biology has applications extending
         beyond the classical biopharmaceutical industry. Lark has identified
         the agricultural biotechnology markets as a new and expanding
         opportunity for its molecular biology services. Lark has developed a
         sales program to penetrate the fast-growing agbio sector of the
         biotechnology industry and has initiated several contracts for agbio
         customers.

         MARKET OVERVIEW AND COMPETITION.

         The Company was established to provide contract research services to
biotechnology researchers. With the advent of the Human Genome Project (an
initiative to map and sequence the human genome) and revolutionary advances in
the field of molecular biology, the Company has developed quality services to
capitalize upon these market opportunities. Today, the Company's services are
used worldwide by commercial, government and academic institutions. The Company
has earned a reputation as a leading provider of high quality DNA sequencing.
This reputation has allowed the Company to obtain key contracts with major
pharmaceutical and biotechnology companies throughout the world. The Company is
a fee for service contractor and typically takes no ownership position in the
intellectual property rights of the services it performs under contract.

         Several factors influence the current competitive business conditions
faced by the Company. First, the total amount of DNA sequencing is increasing
due to the Human Genome Project and related genome sequencing initiatives, and
competitive pressures in the pharmaceutical industry. Major pharmaceutical
companies have made significant financial commitments to gene therapy
approaches. These approaches are maturing and may require demonstration of
genetic stability before or during clinical trials. For example, there are
currently over 60 biotech products in the marketplace and over 260 in clinical
trials and 2,000 in preclinical development, all of, which potentially require
FDA submission sequencing in support of a demonstration of genetic stability.

         Additionally, companies in both the pharmaceutical and biotechnology
sectors are facing increasing competitive pressures to reduce fixed
expenditures. Pharmaceutical companies are increasingly outsourcing routine
procedures to maximize the innovative aspects of their internal efforts. The
biotechnology sector has accepted the virtual company model, which supports
further outsourcing of routine development efforts.

         The Company has many attributes, which have enabled it to compete in
this complex environment. The Company is recognized as a quality leader among
contract molecular biology service providers and has operated under the
direction of industry professionals for more than six years. The Company's
technical team follows standard operating procedures, which help to produce
consistent, high quality results. Because services are performed in compliance
with GLPs as specified by the FDA, Lark can undertake projects that support
applications to the FDA. Finally, the Company provides a breadth of molecular
biology services with flexible protocols to meet project specific objectives.

         The Company faces several types of competition. The first is individual
researchers capable of performing the work themselves rather than contracting it
out. A similar type of competition is that of the core lab, either in an
academic setting or within a large company, that can provide services at a
much-reduced rate due to subsidies of its overhead expenses. These first types
of competition are difficult to overcome due to the perception of significantly
lower costs. There are several smaller companies, which offer DNA sequencing
and/or related molecular biology services, that have not yet demonstrated the
longevity, breadth of services or marketing ability that the Company has.
Finally, there are several recent entrants in the genomics sequencing market.
These companies typically take an ownership position in the sequence information
they generate, whereas Lark has not taken ownership positions in any sequence
data generated for its clients.

         The Company markets its services through advertisements in biological
and pharmaceutical journals, presentations to potential clients, attendance at
trade shows and scientific conferences, and client referrals. The Company's
sales staff in the United States and in its European branch office is
compensated with base salaries and commissions based on performance.

         RAW MATERIALS. The principal suppliers of raw materials for the
Company's services are laboratory supply companies. The Company believes that
there are sufficient alternate suppliers available such that raw materials will
be available in sufficient quantities and at reasonable cost for the foreseeable
future.



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         CUSTOMERS. The Company provides services to researchers at a large
number of institutions.

         PATENTS AND PROPRIETARY TECHNOLOGY. The Company actively seeks patent
protection in the U.S. and in significant foreign countries for inventions and
technologies for which it deems such protection commercially advisable. In
connection with its senescence gene discovery program, the Company currently has
licensed rights to one (1) issued U.S. patent and one (1) U.S. patent
application and shared ownership in another patent application. The Company
believes that this patent protection is important to its senescence technology,
but not essential to the overall success of the Company. The Company can make no
assurances that these applications will be approved, that similar patents have
not been or will not be issued, or that any patent issued to the Company will
not be circumvented or infringed. In connection with its senescence gene
discovery program, the Company is subject to certain performance and royalty
arrangements as described in Note 9 of the financial statements.

         The Company relies on trade secrets and technical know-how in order to
maintain its competitive advantage and scientific expertise. It is the practice
of the Company to enter into confidentiality agreements with employees,
consultants, members of its scientific advisory board, and any third party to
whom it discloses confidential information. There can be no assurance that such
confidential information will not be disclosed or that similar trade secrets or
expertise will not be independently developed, or that access to such
information could not be gained inadvertently.

         The Company is, by nature of its work, privy to certain confidential
information of its customers. In order to attract and maintain clients the
Company enters into confidentiality agreements with its customers, as both
parties deem appropriate. There can be no assurance that such confidential
information will not be disclosed or that similar trade secrets or expertise
will not be independently developed, or that access to such information could
not be gained inadvertently.

         GOVERNMENTAL APPROVAL. The Company is not dependent upon governmental
approval of its current services. However, many of its clients will submit
applications for new drugs or devices to the FDA. A significant portion of the
projects undertaken by the Company are in support of such applications and thus
are subject to compliance with standards established by the FDA and its foreign
counterparts. The Company employs personnel and utilizes procedures, which it
deems necessary to comply with these regulatory standards. Although the Company
and its services are not themselves subject to FDA approval, the Company
complies with these regulatory standards in order to undertake this type of
project for its clients.

         By virtue of its work in support of its client's submissions to the FDA
and other regulatory bodies, the Company is subject to inspections by the FDA
and other federal, state and local agencies regarding specific FDA submission
projects it has worked on. Regulatory affairs audit teams from its
pharmaceutical and biotech clients frequently inspect the Company's facilities
and procedures to ascertain whether the Company is in sufficient compliance with
applicable regulations. The Company has not had a significant negative finding
as a result of such inspections. If significant violations were discovered
during a client or governmental inspection, the Company might be restricted from
undertaking additional submission projects until the violations were remedied.

         GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL LAWS. The Company is subject
to regulations concerning laboratory and occupational safety practices, the use
and handling of hazardous chemicals and radioisotopes, and environmental
protection. The Company believes that it is in general compliance with such
applicable federal, state and local regulations and does not estimate the costs
to comply with these regulations will not be material.

         EMPLOYEES. As of December 31, 2000, the Company had a total of 46 full
time employees of which 37 were based in the US and 9 were based in the UK. The
Company believes that its employee relations are good, but can make no
assurances that it will continue to be able to attract and retain qualified
employees. The Company also has engaged the services of consultants when
appropriate.

         FORWARD-LOOKING INFORMATION. This Annual Report contains various
forward-looking statements and information that are based on management's belief
as well as assumptions made by and information currently available to
management. When used in this document, the words "anticipate," "estimate",
"project", "expect" and similar expressions are intended to identify
forward-looking statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable; it can give no
assurance that expectations will prove to have been correct. Such statements are
subject to certain risks, uncertainties and assumptions. Should one or more of



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these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, estimated
projected or expected.

ITEM 2. DESCRIPTION OF PROPERTY

         The Company leases 15,544 square feet of office and laboratory space
for its corporate headquarters in Houston, Texas pursuant to a lease, which
expires December 31, 2009. The Company has the first right of refusal to lease
approximately 10,000 contiguous additional square feet. Company also leases
office space for its European branch office. The European branch office,
originally located in Hove, England, was moved to Saffron Walden, England in
March 1996 pursuant to a lease, which has now been renewed until August 31,
2002. Future amounts due under the terms of these leases are detailed in Note 9
- "Commitments and Contingencies - Leases" of the financial statements. The
Company carries commercial insurance, which it deems sufficient to cover loss of
lab equipment or occupancy privileges.

ITEM 3. LEGAL PROCEEDINGS

         On June 29, 2000 Joel S. Kanter sued the Company in U.S. District Court
for the Southern District of Texas, Houston Division. The Company entered into a
letter of intent with the "Kanter Group" in 1999 providing for Mr. Kanter to
conduct, or invest in, a proposed $1,320,000 private offering of Company stock.
The transaction was not completed by the time specified in the letter of intent
(on or before November 1, 1999) and Mr. Kanter and the Company continued to work
on the offering for a time thereafter. Mr. Kanter alleges the Company did not
allow him to complete the offering and seeks damages for the breach of the
letter of intent and for reliance damages for his expenses following expiration
of the letter of intent. The Company's position is that there was no binding
agreement, that the letter of intent, by its own terms, prevents Kanter from
recovering and that Kanter imposed material conditions to the completion of the
transaction which were not set forth in the letter of intent. The litigation is
in its initial stages of discovery and the Company intends to file a motion for
summary judgment shortly. The Company intends to vigorously defend the lawsuit
and Management believes that it is without merit.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         There were no matters submitted to a vote of security holders during
the fourth quarter of the year ended December 31, 2000.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Common Stock of the Company has been eligible to be quoted on the
NASDAQ Bulletin Board system under the symbol LDNA since the fourth quarter of
1995. As reported by yahoofinancial.com historical quotes, the high and low bids
for each quarter of 1999 and 2000 are shown on the following table. These bids
reflect the price paid by the buyer, and do not include the commission withheld
by the broker(s).

STOCK PRICES

<TABLE>
<CAPTION>
                                                  1999                      2000
                                            ----------------          ----------------
                                             High       Low           High        Low
                                            -----      -----          -----      -----
<S>                                         <C>        <C>            <C>        <C>
  Quarter Ending March 31,                  $1.03      $0.69          $9.69      $1.50
  Quarter Ending June 30,                   $0.88      $0.47          $4.00      $1.66
  Quarter Ending September 30,              $1.03      $0.50          $3.56      $1.87
  Quarter Ending December 31,               $2.44      $0.53          $2.38      $1.31
</TABLE>

         As of December 31, 2000, there were approximately 2,663 holders of
record of the Common Stock.

         The Company has never paid dividends on its Common Stock, and does not
anticipate paying any cash dividends in the foreseeable future.



                                       6
<PAGE>   9

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         The following discussion and analysis should be read in conjunction
with the Financial Statements and the accompanying Notes herein, and is
qualified entirely by the foregoing and by other more detailed financial
information appearing elsewhere.

         OVERVIEW. The Company's revenues are derived through provision of DNA
sequencing and related molecular biology services to researchers in the
pharmaceutical, biotechnology, agri-technology and related industries. Quarterly
fluctuations in revenues arise primarily from variations in contract status with
customers. In addition, the majority of customer projects are individual orders
for specific projects ranging in value from $6,000 to $140,000. Engagement for
successive work is highly dependent upon the customer's satisfaction with the
services provided to date. The Company is unable to predict for more than a few
months in advance the number and size of future projects in any given period.
Thus, timing could have a significant impact on financial results in any given
period. The impact of the unpredictable project fluctuations from customers can
result in very large fluctuations in financial performance from quarter to
quarter.

         The Company believes that its expansion efforts discussed in Part I
will compensate for some of these sales fluctuations. In addition, the Company
has initiated several steps to mitigate the effects of these fluctuations where
possible.

          Since the middle of 1997, the Company has introduced three new service
lines. In late 1997 the Company introduced a new service, Quantitative PCR. Then
in the second quarter of 1998, the Company introduced its new Genetically
Modified Organisms service and, finally, at the very end of 1998, introduced its
new Genotyping service.

         In addition to the new services, the Company established a new lab
operation in its Saffron-Walden, England facility. Although the Company has
maintained a sales office in the UK for many years, this is the first lab
facility the Company has established there. This facility employs nine full time
people and utilizes equipment, which costs approximately $379,619.

RESULTS OF OPERATIONS

         Gross Revenues. Gross revenues increased 11% from $5,071,753 to
$5,625,968 for the years ended December 31, 1999 and 2000, respectively. The
growth came from increases in most product lines, with the fastest growth
occurring in areas relating to genomic DNA sequencing, testing of industrially
important cell lines and in assays relating to pre-clinical and clinical testing
of new biopharmaceuticals.

         Costs of Services. Costs of services consist primarily of labor and
laboratory supplies. Costs of services increased 23% from $2,885,134 to
$3,538,139 for the years ended December 31, 1999 and 2000, respectively. Some of
the increase in costs of services was caused by the additional variable costs
necessary to produce the additional revenues in 2000 compared to 1999. Costs of
services as a percentage of revenue were 57% and 63% for the years ended
December 31, 1999 and 2000, respectively. During 2000, the Company incurred
moving expenses to move to a new facility that totaled approximately $30,680
plus approximately $67,000 in equipment maintenance costs that were not incurred
in 1999 because the covered equipment was still under the original manufacturers
warranty.

         Sales, General and Administrative Expenses. Sales, general and
administrative expenses consist primarily of salaries and related costs,
depreciation, amortization, legal and professional costs, rent, travel, and
advertising. Sales, general and administrative expenses decreased less than 1%
from $2,015,896 to $2,006,194 for the years ended December 31, 1999 and 2000,
respectively. Although the change in these expenses from 1999 to 2000 nets to a
small decrease, it is the net effect of lower salaries offset by higher
recruiting and advertising expenses. The lower salaries resulted when the CFO
assumed the additional office of president. Additionally, the vice president and
scientific director left the Company in May 2000 and had not been replaced by
the end of the year. The higher recruiting expenses were incurred in connection
with hiring a senior vice president of corporate development, a director of DNA
sequencing and several regional sales representatives. Sales, general and
administrative expenses as a percentage of revenue were 40% and 36% for the
years ended December 31, 1999 and 2000, respectively.



                                       7
<PAGE>   10

         VARIABILITY OF FUTURE OPERATING RESULTS. The growth in annual revenues
was largely attributable to record revenues in the second and third quarters as
Lark's new business model began to perform as planned. Although the Company
expects higher and less variable revenue streams as a result of these changes,
the ultimate success of these changes can not be reasonably predicted.

         LIQUIDITY AND CAPITAL RESOURCES. Operating cash flow was $29,026 and
$1,128,409 for the years ended December 31, 1999 and 2000, respectively. The
increase in operating cash flow was due largely to the increase in customer
deposits received for large projects in 2000.

         During 2000, the Company directly invested $219,712 in fixed assets and
an additional $152,632 in lab equipment subject to a capital lease mentioned in
note 9 to the financial statements in order to support the current and expected
increase in revenues made possible by the addition of the new services and
receipt of a large contract.

         The Company's bank debt totaled approximately $331,899 at December 31,
2000, and was made up of two components. The first component, totaling
approximately $7,944, is an equipment loan made to the Company at the beginning
of 1999 and due in 2002. The second, totaling approximately $323,955, is the
Company's line of credit with its principal bank that matures December 31, 2001.
The line of credit provides for borrowing up to 80% of accounts receivable that
are less than 90 days old and requires the Company to meet certain financial
ratios. The Company was in compliance with those ratios at December 31, 2001.
Also, during 2000, the Company arranged a term loan for $75,000, which was
repaid within terms on November 18, 2000. See note 7 to the financial statements
for further details concerning debt. Other debt totaled approximately $25,407 at
December 31, 2000.

          Management anticipates that additional capital expenditures necessary
to support the Company's operating growth can be funded through a combination of
existing or proposed credit facilities and future operating results. The
Company's planned operating growth will occur through a higher degree of
automation made possible by equipment additions and upgrades.

         MATERIAL COMMITMENTS. The Company currently has no outstanding material
commitments.



                                       8
<PAGE>   11

ITEM 7. FINANCIAL STATEMENTS



                             LARK TECHNOLOGIES, INC.


                          Index to Financial Statements
                     Years ended December 31, 1999 and 2000




                                    Contents

<TABLE>
<CAPTION>
                                                                                               Page
                                                                                               ----

<S>                                                                                            <C>
Report of Independent Auditors.................................................................  10

Financial Statements

         Balance Sheet as of December 31, 2000.................................................  11

         Statements of Operations for
              Years Ended December 31, 1999 and 2000 ..........................................  12

         Statements of Stockholders' Equity for
              Years Ended December 31, 1999 and 2000 ..........................................  13

         Statements of Cash Flows for
              Years Ended December 31, 1999 and 2000 ..........................................  14

Notes to Financial Statements..................................................................  16
</TABLE>



                                       9
<PAGE>   12
                         REPORT OF INDEPENDENT AUDITORS




Lark Technologies, Inc.
Board of Directors and Stockholders

We have audited the accompanying balance sheet of Lark Technologies, Inc. (the
"Company") as of December 31, 2000, and the related statements of operations,
stockholders' equity, and cash flows for each of the two years in the period
ended December 31, 2000. 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 auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes 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 Lark Technologies,
Inc. at December 31, 2000, and the results of its operations and cash flows for
each of the two years in the period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States.



                                       ERNST & YOUNG LLP

Houston, Texas
February 16, 2001



                                       10
<PAGE>   13

                             LARK TECHNOLOGIES, INC.
                                  BALANCE SHEET
                             AS OF DECEMBER 31, 2000

<TABLE>
<S>                                                           <C>
ASSETS
Current assets:
             Cash and cash equivalents                        $    993,324
             Accounts receivable                                   826,203
             Due from related parties                                8,795
             Inventory                                             266,267
             Prepaid expenses                                       62,856
                                                              ------------
Total current assets                                             2,157,445

Property and equipment, net                                        997,663
Other assets, net                                                   30,390
                                                              ------------
Total assets                                                  $  3,185,498
                                                              ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
             Accounts payable                                 $    518,519
             Notes payable, current portion                        356,695
             Capital lease obligation, current portion              53,096
             Due to related parties                                 13,943
             Accrued expenses                                      117,016
             Customer deposits                                     998,682
                                                              ------------
Total current liabilities                                        2,057,951

Notes payable, less current portion                                    611
Capital lease obligation, less current portion                      73,190
Deferred rent expense                                               18,540
                                                              ------------
Total liabilities                                                2,150,292

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
             Preferred stock, $0.001 par value:
                  Authorized shares - 2,000,000
                  None issued and outstanding
             Common stock, $0.001 par value:
                  Authorized shares - 8,000,000
                  Issued and outstanding shares - 3,520,396          3,520
             Additional paid-in capital                          2,669,615
             Treasury stock at cost                                 (4,946)
             Accumulated deficit                                (1,630,172)
             Accumulated comprehensive loss                         (2,811)
                                                              ------------
Total stockholders' equity                                       1,035,206
                                                              ------------
Total liabilities and stockholders' equity                    $  3,185,498
                                                              ============
</TABLE>



See accompanying notes.



                                       11
<PAGE>   14

                             LARK TECHNOLOGIES, INC
                            STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                     Years ended December 31,
                                                   ----------------------------
                                                       1999            2000
                                                   ------------    ------------
<S>                                                <C>             <C>
Revenue:
               Laboratory Services                 $  5,071,753    $  5,625,968

Costs and expenses:
               Costs of services                      2,885,134       3,538,139
               Sales, general and administrative      2,015,896       2,006,193
                                                   ------------    ------------
Total costs and expenses                              4,901,030       5,544,332
                                                   ------------    ------------
Operating income                                        170,723          81,636

Other income and (expense):
               Interest expense                        (130,025)        (70,687)
               Interest income                            6,890          28,347
                                                   ------------    ------------
Total other income (expense)                           (123,135)        (42,340)
                                                   ------------    ------------
Income before income taxes                               47,588          39,296

Provision for income taxes - current                     12,028          13,746
                                                   ------------    ------------
Net income                                         $     35,560          25,550
                                                   ============    ============



Basic and diluted earnings per common share        $       0.01    $       0.01
                                                   ============    ============
</TABLE>



See accompanying notes.



                                       12
<PAGE>   15

                             LARK TECHNOLOGIES, INC.
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 2000


<TABLE>
<CAPTION>
                                                  Common Stock                   Treasury Stock
                                               -------------------  Additional   ---------------     Amounts      Accumulated
                                                 Shares     At Par    Paid-in                        due from    Comprehensive
                                               Outstanding  Value     Capital    Shares  At Cost   Stockholders   Gain/(Loss)
                                               -----------  ------  ----------   ------  -------   ------------  -------------
<S>                                            <C>          <C>     <C>          <C>     <C>       <C>           <C>
BALANCE AT DECEMBER 31, 1998                     3,324,046  $3,324  $2,450,754    4,500  $(4,946)  $    (15,045)

     Warrants issued--deferred loan costs                                4,317
     Additional interest expense for warrants                           58,200
     Net Income

                                               -----------  ------  ----------   ------  -------   ------------  -------------
BALANCE AT DECEMBER 31, 1999                     3,324,046   3,324   2,513,271    4,500   (4,946)       (15,045)            --

     Warrants exercised                             50,000      50      12,450
     Options exercised                             146,349     146     175,144
     Warrants redeemed                                                 (31,250)
     Shareholder loan repaid                                                                             15,045

     Currency translation loss                                                                                          (2,811)
     Net Income

     Comprehensive income

                                               -----------  ------  ----------   ------  -------   ------------  -------------
BALANCE AT DECEMBER 31, 2000                     3,520,395  $3,520  $2,669,615    4,500  $(4,946)            --  $      (2,811)
                                               ===========  ======  ==========   ======  =======   ============  =============
</TABLE>

<TABLE>
<CAPTION>
                                                 Accumulated
                                                   Deficit       Total
                                                 -----------   --------
<S>                                              <C>           <C>
BALANCE AT DECEMBER 31, 1998                     $(1,691,282)  $742,805

     Warrants issued--deferred loan costs                         4,317
     Additional interest expense for warrants                    58,200
     Net Income                                       35,560     35,560

                                                 -----------   --------
BALANCE AT DECEMBER 31, 1999                      (1,655,722)   840,882

     Warrants exercised                                          12,500
     Options exercised                                          175,290
     Warrants redeemed                                          (31,250)
     Shareholder loan repaid                                     15,045

     Currency translation loss                                   (2,811)
     Net Income                                       25,550     25,550
                                                                --------
     Comprehensive income                                        22,739

                                                 -----------   --------
BALANCE AT DECEMBER 31, 2000                     $(1,630,172)  1,035,206
                                                 ===========   ========
</TABLE>



See accompanying notes.



                                       13
<PAGE>   16

                             LARK TECHNOLOGIES, INC.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                 Years ended December 31,
                                                               ----------------------------
                                                                   1999            2000
                                                               ------------    ------------
<S>                                                            <C>             <C>
OPERATING ACTIVITIES
Net income                                                     $     35,560    $     25,550
Adjustments to reconcile net income
   to net cash provided by operating activities
               Depreciation and amortization                        308,750         359,208
               Non-cash loan costs from issuance of warrants         62,517              --
               Provision for losses on accounts receivables              --          55,000
               Changes in operating assets and liabilities:
                    Accounts receivable                            (326,113)         34,842
                    Inventory                                       (89,949)        (36,539)
                    Prepaid expenses                                 90,416          81,166
                    Other assets                                    (14,000)            360
                    Due from related parties                         33,126          (5,422)
                    Accounts payable                                (45,948)        (65,319)
                    Accrued expenses                                 31,954         (45,731)
                    Deferred rent                                        --          18,540
                    Deposits                                        (57,287)        777,091
                                                               ------------    ------------
Net cash provided by operating activities                            29,026       1,198,746

INVESTING ACTIVITIES
Purchases of property and equipment                                (126,408)       (290,052)
                                                               ------------    ------------
Net cash used in investing activities                              (126,408)       (290,052)

FINANCING ACTIVITIES
Principal payments on notes payable                                (301,292)       (251,062)
Proceeds from notes payable                                         452,000          75,000
Repayment on capital lease obligations                             (248,002)       (178,912)
Receipt of amount due from shareholder                                   --          15,045
Proceeds from exercised options                                          --         175,290
Proceeds from exercised warrants                                         --          12,500
Redemption of warrants                                                   --         (31,250)
                                                               ------------    ------------
Net cash used in financing activities                               (97,294)       (183,389)
                                                               ------------    ------------
Effect of currency translation on cash                                   --          (2,811)
Net increase (decrease) in cash and cash equivalents               (194,676)        722,494
Cash and cash equivalents at beginning of year                      465,506         270,830
                                                               ------------    ------------
Cash and cash equivalents at end of year                       $    270,830    $    993,324
                                                               ============    ============
</TABLE>



See accompanying notes



                                       14
<PAGE>   17

                             LARK TECHNOLOGIES, INC.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                   Years ended December 31,
                                                                                  ---------------------------
                                                                                      1999           2000
                                                                                  ------------   ------------
<S>                                                                               <C>            <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
               Interest                                                           $     67,508   $     70,687
               Income taxes                                                                 --   $     13,240
Noncash activities:
               Capital lease to acquire property and equipment                    $     19,039   $    152,633
               Note payable for prepaid insurance                                 $     70,805   $     83,715
</TABLE>



See accompanying notes.



                                       15
<PAGE>   18

                             LARK TECHNOLOGIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


1. ORGANIZATION

         Lark Technologies, Inc., a Delaware corporation (the "Company" or
"Lark"), was formed on November 16, 1994, as a wholly-owned subsidiary of
SuperCorp Inc. ("SuperCorp"), for the purpose of merging with Lark Sequencing
Technologies, Inc., a Delaware corporation ("Sequencing"), as outlined in a
merger agreement ("Merger Agreement") entered into by SuperCorp and Sequencing
on October 28, 1994. SuperCorp approved the Merger Agreement on September 5,
1995 and by the stockholders of Sequencing on September 12, 1995. As a
consequence of the merger, all of the shares of common and preferred stock of
Sequencing were exchanged for 1,800,000 shares of Common Stock of the Company
with a par value of $0.001 per share, and the 200,000 shares of Common Stock of
the Company held by SuperCorp were distributed to the shareholders of SuperCorp.
The Company has succeeded to all of the business previously undertaken by
Sequencing. Lark provides specialized laboratory services for DNA sequencing to
biotechnology researchers.

2. ACCOUNTING POLICIES

Inventory

         Finished goods inventory consists of the direct and indirect costs to
produce quantitative polymerase chain reaction (QPCR) assays held for resale. At
December 31, 2000 finished goods inventory was $149,656.

         Work in process inventory includes the direct and indirect costs
associated with projects that had been started but not yet completed at December
31, 2000. Direct costs include such items as the cost of labor, reagents and
supplies directly associated with each project. Indirect costs include such
items as general supplies, laboratory management, depreciation, and costs to
operate the lab. These costs are applied to each project on the basis of direct
labor hours incurred for the project up to the point of measurement such as the
end of an accounting period. At December 31, 2000, work in process inventory was
$116,611.

Revenue Recognition

         The Company recognizes revenue and related profit upon the completion
and shipment of laboratory service projects. For laboratory service projects
under long term contracts, revenue and related profit is recognized as specific
projects are completed. Revenues include shipping costs billed to customers and
the related costs are recorded as cost of sales. Costs incurred on partially
completed projects are recorded as work-in-process.

Cash and Cash Equivalents

         The Company considers all highly liquid debt instruments purchased with
an original maturity of three months or less to be cash equivalents.

Property and Equipment

         Property and equipment are recorded at cost. Depreciation and
amortization expense is recorded over the estimated useful lives of the assets
on a straight-line basis. The cost of repairs and maintenance is expensed as
incurred. The estimated useful lives of assets are as follows:

<TABLE>
<S>                                                    <C>
                  Laboratory equipment                 5 years
                  Furniture and fixtures               5 years
                  Computer equipment                   30 months to 5 years
                  Leasehold improvements               10 years
</TABLE>

Stock Options

         The Company follows Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its employee stock options. The proforma disclosures required



                                       16
<PAGE>   19

                             LARK TECHNOLOGIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


by FASB Statement No. 123, Accounting for Stock-Based Compensation, which
established a fair value based method of accounting for stock-based compensation
are set forth in Note 9.

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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Advertising costs

         The Company expenses all advertising costs as incurred. Total
advertising expense for 1999 and 2000 was $83,415 and $132,605, respectively.

Income tax

         The Company follows the liability method of accounting for income
taxes. Under this method, deferred income tax assets and liabilities are
determined based on differences between the financial statements and income tax
bases of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse.

Recently issued accounting standards

         In June 1998, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 133, Accounting for Derivative
Financial Instruments and Hedging Activities ("SFAS No. 133"). SFAS No. 133
requires that all derivatives be recognized as assets and liabilities and
measured at fair value. The accounting for changes in the fair value of a
derivative depends on the intended use of the derivative and the resulting
designation. SFAS No. 133, as amended, is effective for fiscal years beginning
after June 15, 2000 and early adoption is permitted. Because of the Company's
minimal use of derivatives, management does not anticipate that the adoption of
SFAS No. 133 will have a significant effect on net income or the financial
position of the Company.

         In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin 101, Revenue Recognition in Financial Statements ("SAB
101"), which the Company was required to adopt in the fourth quarter of 2000.
The adoption of SAB 101 had no impact on the Company's revenue recognition
policies.

Reclassifications

         Certain amounts in the prior year have been reclassified to conform to
the 2000 presentation.

3. CONCENTRATION OF RISK

         The Company provides laboratory services primarily to major researchers
in the United States and Europe. The Company generally requires a deposit of
approximately 50% of total anticipated billings prior to commencing work on
laboratory service projects. The Company performs ongoing credit evaluations of
its customers and generally does not require additional collateral on its
laboratory services.

         The Company primarily invests its excess cash in deposits with local
banks and, at times, these deposits may exceed federally insured limits. The
Company selects depository institutions based upon management's review of the
financial stability of the institutions.

4. ACCOUNTS RECEIVABLE

         Accounts receivable at December 31, 2000 is presented net of an
allowance for doubtful accounts of approximately $24,000.



                                       17
<PAGE>   20

                             LARK TECHNOLOGIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


5. PROPERTY AND EQUIPMENT

         Property and equipment consisted of the following at December 31, 2000:

<TABLE>
<S>                                              <C>
Laboratory equipment                             $  2,110,465
Furniture and fixtures                                106,801
Computer equipment                                    465,590
Leasehold improvements                                 15,120
                                                 ------------
                                                    2,697,976
Less accumulated depreciation and amortization     (1,700,313)
                                                 ------------
Property and equipment, net                      $    997,663
                                                 ============
</TABLE>

6. ACCRUED EXPENSES

         Accrued expenses consisted of the following at December 31, 2000:

<TABLE>
<S>                                                   <C>
Accrued payments under sponsored research agreement   $ 10,000
Accrued audit and tax preparation fees                  40,850
Accrued salary costs, payroll taxes and insurance       43,902
Accrued UK VAT tax payable                               8,678
Accrued State Income Taxes                              13,586
                                                      --------
                                                      $117,016
                                                      ========
</TABLE>

7. NOTES PAYABLE

         At December 31, 1999, the Company had a revolving line of credit with a
bank that provided for maximum borrowings of $450,000. Under the terms of the
line, borrowings were to bear interest at the bank's prime rate (8.5% at
December 31, 1999) plus 2%. That line of credit expired December 31, 1999 and
was renewed that day through September 30, 2000 with the same terms as the
expiring line of credit. On February 18, 2000, this credit line was renewed
through December 31, 2000 and modified to provide for maximum borrowings of
$600,000. All other terms of the line were unchanged. On December 7, 2000, this
credit line was renewed through December 31, 2001. The terms and conditions were
changed to require a minimum tangible net worth of $900,000. All other terms and
conditions remained unchanged. The line of credit is secured by qualified
accounts receivable of the Company. At December 31, 2000, the Company had
$323,956 outstanding under this line of credit. The borrowing base for this line
of credit is equal to 80% of certain accounts receivable that are no more than
90 days old. On December 31, 2000, the Company had an unused line of credit of
$72,453. Under the terms of the revolving line of credit agreement, the Company
is required to maintain certain financial ratios and a specific level of net
worth. The Company was in compliance with all required covenants at December 31,
2000. The weighted-average interest rate on short-term borrowings outstanding
was 11.2% for the year ended December 31, 2000.

         On March 13, 1998, the Company arranged an advised discretionary credit
line for the financing of equipment with the same bank used for the revolving
credit line. Under the terms of this discretionary credit, the Company was able
to borrow up to $600,000 secured by the equipment purchased with the proceeds of
the borrowings. This discretionary credit line provided for borrowings of up to
75% of the purchase price of equipment at the bank's prime plus 1.5%. This
credit line provided for repayment terms up to 36 months and matured on May 31,
1999. Although this credit facility was not renewed, the Company used a portion
of this line prior to its expiration to finance certain pieces of lab equipment
over a period of 36 months at the bank's prime rate plus 2%. At December 31,
2000 the Company had $7,944 outstanding under this loan.

         On July 13, 1999, the Company arranged a $200,000 term loan from the
same bank that extended the revolving credit facility. Under the terms of the
loan, the Company was to make substantially equal payments over a



                                       18
<PAGE>   21

                             LARK TECHNOLOGIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


six-month period ending with the last payment on January 15, 2000. Interest on
this loan was at the bank's prime rate (8.5% at December 31, 1999). As
additional security for this loan, certain stockholders of the Company agreed to
provide guarantees that totaled $250,000 in exchange for warrants to purchase
the Company's common stock. (See note 9.) On January 12, 2000, this note was
completely repaid to the lending bank, which then released all guarantees being
used as the additional security for the loan.

         On February 18, 2000, the Company arranged a $75,000 term loan from the
same bank that extended the revolving credit facility. Under the terms of the
loan, the Company was to make substantially equal payments over a nine-month
period ending with the last payment on November 18, 2000. This term loan was
subject to the same credit agreement as the revolving credit facility and was
completely repaid within terms.

         Other debt totaled $25,406 at December 31, 2000 and is primarily to
finance commercial insurance policies for less than one year at various rates of
interest.

8. FEDERAL INCOME TAX

         At December 31, 2000, the Company had net operating loss carryforwards
of $1,762,930 for income tax purposes that expire in 2005 through 2019. These
net operating loss carryforwards may be limited as a result of ownership changes
resulting from issuance of common stock. The Company used approximately $1,950
of net operating loss carryforwards during the year ended December 31, 2000.

         Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. A valuation
allowance has been recorded against the Company's net deferred tax assets
because of the Company's cumulative loss position.

         Significant components of the Company's deferred tax liability and
assets are as follows at December 31, 2000:

<TABLE>
<S>                                   <C>
Deferred tax liabilities:
    Accumulated Depreciation          $ (44,925)
                                      ---------
Total deferred tax liabilities          (44,925)
Deferred tax assets:
    Deferred rent expense                 6,304
    Bad debt expense                      8,099
    Net Operating loss carryforward     599,396
                                      ---------
Total deferred tax assets               613,799
Valuation allowance                    (568,874)
                                      ---------
Net deferred tax assets               $       0
                                      =========
</TABLE>

         The reconciliation of income tax computed at the U.S. federal statutory
tax rates to income tax expense is:

<TABLE>
<CAPTION>
                                        1999                      2000
                                ---------------------     ---------------------
                                 Amount       Percent      Amount       Percent
                                --------     --------     --------     --------
<S>                             <C>          <C>          <C>          <C>
Tax at U.S. statutory rates     $ 16,180           34%    $ 13,361           34%
State income taxes                12,028           25%      13,746           35%
Change in valuation allowance     (6,180)         (13)%    (30,204)         (77)%
Other                            (10,000)         (21)%     16,843           43%
                                --------     --------     --------     --------
                                $ 12,028           25%    $ 13,746           35%
                                ========     ========     ========     ========
</TABLE>



                                       19
<PAGE>   22

                             LARK TECHNOLOGIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


9. COMMITMENTS AND CONTINGENCIES

Stock Option and Warrants

         On May 10, 2000, the Company's incentive stock option plan expired and
was replaced with a new plan on that day. All of the options authorized by the
old plan that had not been granted expired with that plan. The new incentive
stock option plan (the "Plan") was created for directors, certain key employees,
and others as determined by the directors. The Company has reserved a total of
1,103,807 common stock for issuance under the stock option plan. The price at
which shares may be purchased under the option plan shall not be less than the
greater of (a) 100% of the fair market value of the shares on the date the
option is granted or (b) the aggregate par value of such shares on the date the
option is granted. Common stock options granted are generally exercisable
immediately by non-employee directors and subject to a five-year vesting
schedule for employees.

         The Company applies APB 25 in accounting for the Plan. Because the
exercise price of the options was equal to the market value of the stock at the
date of grant, no compensation cost has been recognized for its fixed stock
option plan. Pro forma information regarding net income and net income per
common share is required by FASB Statement No. 123 as if the Company had
accounted for its incentive stock options under the fair value method of that
statement. The fair value of these options was estimated at the date of grant
using the Black-Scholes option pricing ("Black-Scholes") model for the 1999 and
2000 options granted with the following weighted average assumptions: (i)
risk-free interest rates ranging from 6.12% to 6.50%, (ii) a dividend yield of
0% for both years, (iii) volatility factors of the expected market price of the
company's common stock of 1.07% and 1.59%, respectively, and (iv) a weighted
average expected life of two years and five years respectively.

         The Black-Scholes model was developed for use in estimating the fair
value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected volatility. Because the Company's
employee stock options have characteristics significantly different from those
of traded options and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of
its employees stock options.

         For purposes of pro forma disclosure, the estimated fair value of the
options is amortized to expense over the options' vesting period. Had
compensation for the Company's stock-based compensation plan been determined
based on the fair value at the grant dates for awards under the Plan consistent
with the method of FASB Statement No. 123, the Company's net income and net
income per common share would have been adjusted to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
                                                   Year Ended December 31,
                                      --------------------------------------------------
                                               1999                        2000
                                      --------------------------------------------------
                                                       As                         As
                                       Reported    Pro Forma      Reported     Pro Forma
                                      ----------   ----------    ----------   ----------
<S>                                   <C>          <C>           <C>          <C>
Net income (loss)                     $   35,560   $  (92,321)   $   25,550   $ (224,939)

Basic and diluted net income (loss)
  per common share                    $      .01   $    (0.03)   $     0.01   $    (0.06)
</TABLE>

         During 1999 and 2000, the Company issued incentive stock options under
the Plan, which had exercise prices equal to the fair market value of the common
stock at the date of grant. A summary of the Company's stock options activity
and related information follows:



                                       20
<PAGE>   23

                             LARK TECHNOLOGIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


<TABLE>
<CAPTION>
                                                Year Ended December 31,
                         -----------------------------------------------------------------
                                               1999                              2000
                                             Weighted                          Weighted
                                              Average                           Average
                             Options      Exercise Price       Options      Exercise Price
                         --------------   --------------   --------------   --------------
<S>                      <C>              <C>              <C>              <C>
Outstanding -
   beginning of year            260,706   $         1.80          309,107   $         1.38
     Granted                    216,606   $         0.73          303,500   $         1.86
     Exercised                       --               --          146,349   $         1.20
     Forfeited                  168,205   $         1.73           58,951   $         1.19
                         --------------   --------------   --------------   --------------

Outstanding - end of            309,107   $         1.38          407,307   $         1.60
   year

Options exercisable at
   year-end                     154,827                           271,307

Weighted average fair
    value of options
    granted during the
    year                 $         0.64                    $         1.47
</TABLE>

         The following summarizes information related to stock options
outstanding at December 31, 2000:

<TABLE>
<CAPTION>
                                        Options outstanding                        Options exercisable
                           -----------------------------------------------    -------------------------------
                                                              Weighted
                                             Weighted          Average                            Weighted
       Range of                              Average          Remaining                           Average
       Exercise                              Exercise        Contractual                          Exercise
        Prices               Options          Price             Life            Options            Price
-----------------------    -----------    -------------    ---------------    ------------    ---------------
                                      (in thousands, except per share amounts)
<S>                        <C>            <C>              <C>                <C>             <C>
$0.15 - $0.75                  92,207        $0.69            8.3 yrs.             92,207         $0.69
$1.42 - $1.89                 315,100        $1.87            9.8 yrs             179,100         $1.85
                           -----------                                        ------------
                              407,307        $1.60            9.5 yrs.            271,307         $1.46
                           ===========                                        ============
</TABLE>

At December 31, 2000, there are 696,500 options available for future grants
under the Plan.

         During July of 1999, the Company issued warrants to certain
stockholders who provided $250,000 in personal guarantees as collateral for a
$200,000 term loan. These warrants provided the holders with the options to
purchase a total of 250,000 shares of the Company's common stock at $0.25 per
share. Under the terms of the warrants, the Company redeemed 125,000 warrant
shares on January 13, 2000, after the guaranteed loan was repaid within the
terms of the loan at a redemption price of $0.25 per share. The exercise period
of these warrants is from January 15, 2000 until June 30, 2002.



                                       21
<PAGE>   24

                             LARK TECHNOLOGIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Leases

         The Company leases certain real estate for its corporate office in
Houston, Texas and branch office in the United Kingdom, as well as certain
equipment under noncancelable lease agreements, which expire at various dates.
In late January 2000, the Company moved into its new corporate headquarters and
lab facility. This new facility provides the Company with approximately 15,000
square feet on one level for a period of 10 years. Total rent expense for all
operating leases for 1999 and 2000 was $365,546 and $287,178 respectively.

         Future minimum payments under these operating leases are as follows:

         For the year ending December 31,

<TABLE>
<S>                                            <C>
               2001                            $  138,993
               2002                               138,993
               2003                               148,281
               2004                               148,281
               2005                               155,769
               Thereafter                         623,076
                                               ----------
                                               $1,353,393
</TABLE>


         The gross amount of assets recorded under capital leases at December
31, 2000 was $718,588. The related accumulated amortization was $295,684 at
December 31, 2000. Under the terms of the capital leases, the Company is
obligated to make payments as set forth in the table below and, subject to
certain conditions, may purchase the equipment at the end of the lease for a
nominal amount.

         Future minimum payments under these capital leases are as follows:

<TABLE>
<S>                                                           <C>
               2001                                           $  66,650
               2002                                              64,577
               2003                                              15,108
               ----                                           ---------
                                                                146,335

         Less interest portion of payments                       20,049
                                                              ---------

         Net present value of lease payments                    126,286

         Less current portion                                    53,096
                                                              ---------

         Capital lease obligation less current portion        $  73,190
                                                              =========
</TABLE>

Amortization of capital lease asset is included in depreciation expense.

Patent License Agreement

         Effective June 15, 1995, the Company entered into an exclusive patent
sub-license agreement with another biotech company. The agreement grants to the
Company an exclusive license to certain "Licensed Patent Rights" of this third
party and requires the Company to perform research and development efforts as
defined in the agreement. The Company is required to pay the third party a
royalty of 25% to 50% of all consideration the Company receives as a result of
sales of licensed products and licensed processes or a sub-license or assignment
of the Company's rights under the agreement. If the Company does not meet the
research and development milestones as defined in the agreement, or is unable to
successfully commercialize the results of the research and development efforts,
the agreement will terminate. Otherwise, the agreement will terminate upon the
dissolution of the Company or the expiration of the "Licensed Patent Rights".
The Company may also terminate the agreement with 60 days written notice to the
third party.



                                       22
<PAGE>   25

                             LARK TECHNOLOGIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Other Commitments

         In September 1995, the Company entered into a two-year employment
agreement with the new President and CEO of the Company providing for a base
salary and bonus arrangement. At that time, the President and CEO entered into a
Restricted Stock Purchase Agreement whereby the President and CEO purchased
101,452 shares of restricted Common Stock at $.1479 per share, subject to the
right of the Company to repurchase a declining portion of such shares should the
President and CEO terminate his employment with the Company prior to the
expiration of 48 months. In connection with the purchase of the restricted
Common stock, the Company received a note from the President and CEO in the
amount of $15,045. The note was secured by the restricted stock, due October 24,
1999, bearing simple interest at a variable rate equal to the minimum variable
rate permissible to avoid imputed interest and was reflected as a reduction of
stockholders' equity until paid. In November 1999, the subject CEO left the
Company for another position. As a part of the separation agreement, the board
agreed to extend the note to become due in November 2000. In November of 2000,
the former president paid the note with all interest due thereon.

10. 401(k) PLAN

                  Effective January 1992, the Company adopted an employee 401(k)
retirement plan. Qualified employees may contribute up to 15% of their gross pay
to the plan. Employee contributions are limited to amounts established by law.
The Company may make matching contributions to the plan as determined by the
Board of Directors subject to the limitations under the Internal Revenue Code.
The Company made no contributions to the plan in either 1999 or 2000.

11. RELATED PARTY TRANSACTIONS

         The Company appointed TaKaRa Shuzo Co. Ltd. (TaKaRa), a major
stockholder of the Company, as the Company's exclusive representative in Japan,
South Korea, Taiwan, Oceania and Singapore for a ten-year period commencing June
25, 1990. On June 25, 2000, the appointment expired and was not renewed. During
the term of their appointment as representative, TaKaRa periodically advanced
the Company funds to be applied against future laboratory services purchased by
TaKaRa. During December 2000, TaKaRa requested and received from the Company
payment of the $85,565 unearned balance of its original deposit.

         The Company has also provided laboratory services, at rates normally
charged to third parties, to affiliates of stockholders of the Company totaling
approximately $12,976 and $647 in 1999 and 2000, respectively.

         The Company purchased approximately $39,698 and $87,664 of laboratory
supplies and other services from affiliates of stockholders of the Company in
1999 and 2000, respectively.

         The due to related parties at December 31, 2000 is comprised primarily
of amounts due to affiliates of stockholders of the Company for laboratory
supplies purchased by the Company.

12. MAJOR CUSTOMERS

         During 1999 and 2000, no single customer provided greater than 10% of
the Company's revenue.



                                       23
<PAGE>   26

                             LARK TECHNOLOGIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


13. SEGMENT INFORMATION

         The proportion of the Company's sales to customers in foreign countries
is as follows:

<TABLE>
<CAPTION>
                                                            1999         2000
                                                         ----------   ----------
<S>                                                      <C>          <C>
Sales - US                                               $4,108,120   $4,601,092
        UK                                                  963,633    1,024,876
                                                         ----------   ----------
                Total                                    $5,071,753   $5,625,968
Identifiable assets (primarily property and equipment)
        US                                               $1,965,168   $2,318,357
        UK                                                  360,460      379,619
                                                         ----------   ----------
                 Total                                   $2,325,628   $2,697,976
</TABLE>

14. FAIR VALUE OF FINANCIAL INSTRUMENTS

         The Company has determined, based on available market information and
appropriate valuation methodologies, that the value of its financial instruments
approximates carrying value. The carrying amounts of cash and cash equivalents,
accounts receivable and accounts payable approximate fair value due to the
short-term maturity of the instruments. The carrying amounts of debt
approximates fair value because the interest rates under the credit agreement
are variable, based on current market. The carrying amount of the capital lease
obligation approximates fair value based on rates currently available to the
Company.

15. EARNINGS PER SHARE

         The following table sets forth the weighted average shares outstanding
for the computation of basic and diluted earnings per share:

<TABLE>
<CAPTION>
                                             For the year ending December 31,
                                             --------------------------------
                                                  1999             2000
                                             --------------   ---------------
<S>                                          <C>              <C>
Weighted average common shares outstanding        3,319,546      3,470,443
Dilutive securities - employee stock options         94,933        212,813
                                             --------------   ---------------
Weighted average common shares outstanding
   assuming full dilution                         3,414,479      3,683,256
                                             ==============   ===============
</TABLE>

         In 1999 and 2000, options representing 100,250 and 194,494 shares,
respectively were excluded from the determination of diluted earnings per share
because their effect was not dilutive.



                                       24
<PAGE>   27

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

         None.
                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT

         DIRECTORS AND EXECUTIVE OFFICERS

         Set forth below are the names, ages, and terms of office of each of the
directors and executive officers of the Company and a description of the
business experience of each.

<TABLE>
<CAPTION>
                                                                         Office Held
Person                              Office                                  Since
------                              ------                               -----------
<S>                                 <C>                                  <C>
George M. Britton, 53               Director                               1989(1)
                                    Co-Chairman of the Board               2000(2)

David A. Lawson, 53                 Director                               1989(1)
                                    Co-Chairman of the Board               2000(2)

Douglas B. Wheeler, 55              Director                               1996(1)
                                    President & COO                        2000
                                    Vice President, CFO                    1996
                                    Secretary and Treasurer                1996(2)

E.J. (Jere) Pederson, 53            Director                               2000(1)

Carl W. Balezentis, Ph.D., 43       Sr. Vice President                     2000
                                    Corporate Development

Gail Morton, 53                     Vice President - Sales                 2000
</TABLE>


(1) The directors shall be elected at the annual meeting of stockholders, and
each director elected shall hold office until his successor shall be elected and
shall qualify.

(2) The officers shall be elected annually by the Board of Directors at its
first regular meeting held after the annual meeting of stockholders or as soon
thereafter as conveniently possible. Each officer shall hold office until his
successor shall have been chosen and shall have qualified.

         George M. Britton is a director of Britton Capital Services; a closely
held investment and financial consulting firm. Since 1989 approximately 80
percent of his activities have been related to real estate acquisitions,
syndication's, development, leasing and management, primarily in commercial
properties in the Houston, Texas area. And approximately 20 percent of his
activities have been related to assisting start up and early-stage companies in
their business plans and in contacting venture capitalists. Mr. Britton holds an
MBA degree from the University of Texas and a BA degree from Vanderbilt
University.

         David A. Lawson is an independent real estate investor, consultant and
broker in Houston Texas; as well, he has been involved with Lark since its
inception as an investor and advisor. In Mr. Lawson's real estate capacity, he
has been involved in the acquisition, syndication, ownership and management of
medical office buildings and other income producing real estate in the Houston
area. To a lesser extent he has been involved in other various entrepreneurial
enterprises. Mr. Lawson received a Bachelor of Science degree from Trinity
University in San Antonio, Texas in 1970 and later attended University of Texas
Graduate School of Business in Austin from 1970 to 1972.



                                       25
<PAGE>   28

         Douglas B. Wheeler joined Lark in November 1996 as Vice President,
Finance and served as Interim President starting November 1999. On April 6, 2000
Mr. Wheeler was appointed as President and Chief Operating Officer in addition
to his responsibilities as CFO. Prior to joining Lark, Mr. Wheeler served as
Chief Financial Officer and Director for Minga Oilfield Group NV from 1983 until
1995. From 1980 until joining Minga, Mr. Wheeler held financial management
positions in Baker International and Enserch Corporation where he assisted in
several startup operations and assisted in numerous acquisitions. He received a
BBA degree in Accounting from Texas Tech University in 1969 and is a CPA.

         E.J. (Jere) Pederson has served as Executive Vice President of The
University of Texas Medical Branch at Galveston since 1989 and in other
executive positions with the University since 1984. Prior to joining The
University of Texas, Mr. Pederson was vice president of business affairs for the
University of Texas at Dallas. He received his Bachelor of Science degree from
Trinity University; San Antonio, Texas in 1969 and later attended the University
of Texas at Austin for graduate studies in Public Administration.

         Carl W. Balezentis, Ph.D., received his Doctor of Philosophy degree in
Genetics from The University of Arizona, and conducted a postdoctoral fellowship
at M.D. Anderson Cancer Center. He joins Lark from his previous positions with
Sigma-Aldrich Corporation, a multi-national company that develops, manufactures
and distributes a broad range of biochemicals, organic chemicals, chromatography
products and diagnostic reagents. He served as the vice president of sales and
marketing for the Sigma-Genosys subsidiary where he was responsible for
developing strategic marketing programs which helped stimulate strong revenue
growth. More recently he served as director of business development for the
Sigma-Aldrich Life Sciences Division. Prior to that time Dr. Balezentis held key
management positions at Perceptive Scientific Instruments, Applied Biosystems
Division of Perkin Elmer, and Promega Corporation.

         Gail Morton joined Lark in 1989 and has held a variety of positions in
the Company in administration, quality assurance as well as sales and marketing.
Prior to joining Lark, she worked in the biologics and medical devices industry.
This included 13 years at Gamma Biologicals, which manufactured and sold FDA
licensed products to blood banks. Ms. Morton received a Bachelor of Science
degree from Texas Tech University in Medical Technology and an MBA from Houston
Baptist University.

         SIGNIFICANT EMPLOYEES

         Set forth below are the names, ages, and dates of service of each of
the significant employees of the Company and a description of the business
experience of each.

<TABLE>
<CAPTION>
                                                                              Employee
Person                                    Office                                Since
------                                    ------                              --------
<S>                                       <C>                                 <C>
David Alan Wall, Ph.D., 38                Director, Quality Control
                                          and Compliance(1)                     1994

Heidi B. Nelson, Ph.D., 37                Manager,
                                          Gene Quantitation(1)                  1997

George (Guo-Wei) Xu, Ph.D., 50            Director, Advanced Molecular
                                          Biology Services (AMBS)(1)            1998

Li Li, Ph.D., 41                          Senior Scientist, Manager of
                                          Genotyping Service(1)                 1998

David Buck, Ph.D., 40                     Managing Director. UK(1)              1998

Heath C. Knight, Ph.D., 33                Director
                                          DNA Sequencing Services(1)            2000
</TABLE>

(1) This person is not a corporate officer or a corporate director of Lark but
rather is a significant employee whose position carries a title.



                                       26
<PAGE>   29

         David A. Wall, Ph.D., has served as Director, Quality Control and
Compliance since January 2000. Previously, Dr. Wall was Associate Director of
GenTest Laboratories in New Orleans, Louisiana, in charge of the Paternity
Testing Laboratories. He was also Director of Research and Genetic Testing at
ImmGen, Inc., College Station, Texas. Dr. Wall received his Bachelor of Science
degree in animal science and his Ph.D. in genetics from Texas A&M University in
College Station, Texas.

         Heidi Nelson, Ph.D., has served as Manager of Gene Quantitation since
November 1998. Prior to joining Lark she worked as a Scientist at Zonagen
Pharmaceuticals, Inc. in the Molecular Biology Division. Between 1985 and 1986
Dr. Nelson worked as a technician in an immunology lab at Tufts University. Dr.
Nelson graduated with Bachelor of Science degrees in Biology and Russian from
Duke University in May of 1985 and obtained her Ph.D. in Cellular and Molecular
Biology from the University of Wisconsin-Madison in 1993.

         George Xu, Ph.D., has served as Director of Advanced Molecular Biology
Services since June 1998. Prior to joining Lark he worked as Research Scientist
at Energy Biosystems in The Woodlands, Texas. Between 1988 to 1993, Dr. Xu
worked as a Postdoctoral Research Associate in the Microbiology lab and the
Plant Genetics lab at Texas A&M University. Dr. Xu arrived in the United States
in 1981 and is a graduate from Washington State University with a M.S. and a
Ph.D. in Microbiology.

         Li Li, Ph.D., has recently joined Lark as the Senior Scientist and
Manager of Genoytping Service. Prior to joining Lark, Dr. Li worked as a
Post-Doctor fellow and senior research associate in the Human Genetics Center,
University of Texas, in charge of various throughput genotyping, sequencing,
Single Nucleotide Polymorphism (SNP) discovery and large scale DNA extraction
between 1992-1998. Previously, she also worked as a research scientist with the
United States Department of Agriculture (USDA) for three years. Dr. Li received
her Bachelor of Science degree in plant biology from South China University of
Tropcalcrops and her Ph.D. in Zoology from Reading University, England.

         David Buck, Ph.D., joined Lark in 1998 to head up the new lab in the UK
and, in 1999 was promoted to Managing Director of the UK operation. Prior to
joining Lark, Dr. Buck was Group Leader at the world renowned Sanger Centre
where he was responsible for establishing the institution's first human genome
sequencing team. Dr. Buck coordinated the Chromosome 22 and 20 sequencing
projects and completed over 11 megabases of finished human sequencing during his
tenure at the Sanger Centre. He was promoted to vice president in early 2001.

         Heath C. Knight, Ph.D., joined Lark from her previous position as
Scientist with Commonwealth Biotechnologies, Inc. where she served as the
Director of the DNA Sequencing and Services Laboratory. She holds a Bachelor of
Science degree in Chemistry from North Carolina State University and received
her Doctor of Philosophy degree in Human Genetics from the Medical College of
Virginia/VA Commonwealth. She conducted a postdoctoral fellowship at Baylor
College of Medicine in the Department of Molecular and Human Genetics, and was a
research associate at the Mayo Clinic, Jacksonville, Florida, in the transgenic
mouse laboratory. Dr. Knight has authored numerous peer-reviewed manuscripts in
her area of expertise, molecular genetics, and is the recipient of a number of
honors and awards for achievement in science.



                                       27
<PAGE>   30

ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                                              Annual Compensation               Long Term Compensation
                                       -------------------------------   ------------------------------------
                                                                                 Awards               Payouts
                                                                         -------------------------    -------
                                                                         Restricted   Securities
        Name and                                          Other annual     stock      Underlying       LTIP       All other
        principal                      Salary     Bonus   compensation     award(s)   Options/SARs    Payouts    compensation
        position                Year     ($)       ($)         ($)           ($)          (#)           ($)          ($)
        ---------               ----   -------    -----   ------------   ----------   ------------    -------    ------------
<S>                             <C>    <C>        <C>     <C>            <C>          <C>             <C>        <C>
   Douglas B. Wheeler
   President & COO              2000   125,734                                        36,000
   Vice President--CFO          1999   109,336                                        30,000
                                1998   101,042    1,740                                   --

   Carl Balezentis, PhD.        2000    71,769                                        45,000
   Sr. VP--Corp. Development    1999        --
                                1998        --

   Gail Morton                  2000   105,924                                        10,000
   Vice President Sales         1999
                                1998

   Raymond Vonder Haar, PhD.    2000    43,782
   Vice President, Science      1999    90,916                                        20,000
                                1998    85,938    1,679                                   --

                                2000        --
   Vincent P. Kazmer(1)         1999   125,581
   President & CEO              1998   143,000    2,767                                   --

                                2000        --
   Alan B. Carter(2)            1999   105,985
   VP, Sales & Marketing        1998    75,729    2,255                                   --

                                2000        --
   Bethany J. Pimentel(3)       1999        --
   Vice President               1998    52,564   19,264                                   --
</TABLE>


(1)      Mr. Kazmer resigned as President, CEO and a director in November 1999.

(2)      Mr. Carter resigned as VP, Sales and Marketing in September 1999.

(3)      Ms. Pimentel resigned as VP, Sales and Business Development in August
         1999.



                                       28
<PAGE>   31

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                Number of    Percent of total
                                Securities    options/SARs
                                Underlying     granted to        Exercise or
                               Options/SARs   employees in       base price     Expiration
         Name                    granted       fiscal year       ($/Share)         date
         ----                  ------------  ----------------    -----------    ----------
<S>                            <C>           <C>                 <C>            <C>
   George Britton                 50,000          16.75%            $1.89        10/30/10
   David Lawson                   50,000          16.75%            $1.89        10/30/10
   Doug Wheeler                   36,000          12.06%            $1.89        10/30/10
   Carl Balezentis                35,000          11.73%            $1.89        10/30/10
   Jere Pederson                  15,000           5.03%            $1.89        10/30/10
   George Britton                 15,000           5.03%            $1.89        10/30/10
   David Lawson                   15,000           5.03%            $1.89        10/30/10
   Li Li                          10,000           3.35%            $1.89        10/30/10
   Heidi Nelson                   10,000           3.35%            $1.89        10/30/10
   George Xu                      10,000           3.35%            $1.89        10/30/10
   Gail Morton                    10,000           3.35%            $1.89        10/30/10
   David Wall                     10,000           3.35%            $1.89        10/30/10
   Carl Balezentis                10,000           3.35%            $1.89        10/30/10
   Tim McGrath                     7,500           2.51%            $1.89        10/30/10
   Heath Knight                   15,000           5.03%            $1.86        11/20/10
</TABLE>


AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>                                                                                          Value of Unexercised
                                                              Number of Unexercised Options        in-the-money Options
                                Shares                            at December 31, 2000             at December 31, 2000
                             acquired on   Value realized  -----------------------------------  ----------------------------
           Name              exercise (#)       ($)        (#) Exercisable   (#) Unexercisable  Exercisable    Unexercisable
           ----              ------------  --------------  ---------------   -----------------  -----------    -------------
<S>                          <C>           <C>             <C>               <C>                <C>            <C>
   Douglas B. Wheeler             47,612      $241,288           19,668           36,000          $21,347           --
   Raymond Vonder Haar, PhD.      42,382      $ 55,103               --               --               --           --
   Carl Balezentis                    --            --           10,000           35,000               --           --
   Gail Morton                        --            --           22,500           10,000          $22,701           --
</TABLE>

LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR:
  None



                                       29
<PAGE>   32

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table describes Security Ownership of Beneficial Owners of more
than 5% of the Common Stock of the Company:

<TABLE>
<CAPTION>
                         Name and address                              Amount and nature         Percent of
Title of Class           of beneficial owner                           of beneficial owner         class
--------------           -------------------                           -------------------       ----------
<S>                      <C>                                           <C>                       <C>
Common                   TaKaRa Shuzo Co., Ltd.                             222,902                  6.3
                         Biotechnology Research Laboratories
                         SETA 3-4-1 Otsu
                         Shiga, 520-21, Japan

Common                   David Lawson                                      342,074(1)(2)             9.7
                         2039 Dryden
                         Houston, Texas 77024

Common                   George Britton                                    287,347(3)                8.1
                         3272 Westheimer, Suite 3
                         Houston, Texas 77098

Common                   Baylor College of Medicine                        255,540                   7.3
                         One Baylor Plaza
                         Houston, Texas 77030
</TABLE>

(1)      This includes 95,517 shares held by D.C. Lawson trust and 95,517 held
         by S.R. Lawson trust.

(2)      This includes 68,500 options and 25,000 warrants.

(3)      This includes 68,500 options.

The following table describes the Security Ownership of Directors, CEO, and
Directors and Executive Officers as a Group:

<TABLE>
<CAPTION>
                         Name and address                              Amount and nature         Percent of
Title of Class           of beneficial owner                           of beneficial owner         class
--------------           -------------------                           -------------------       ----------
<S>                      <C>                                           <C>                       <C>
Common                   George Britton                                    287,347(1)                8.1
                         3272 Westheimer, Suite 3
                         Houston, Texas 77098

Common                   David Lawson                                      342,074(2)                9.7
                         2039 Dryden
                         Houston, Texas 77030

Common                   Douglas B. Wheeler                                 59,580(3)                1.7
                         9441 W. Sam Houston Pkwy. South, Suite 103
                         Houston, Texas 77099

Common                   Gail Morton                                        32,527(4)                1.0
                         5419 Edith
                         Houston, Texas 77096

Common                   E. J. Pederson                                     15,000(5)                  *
                         9441 W. Sam Houston Pkwy. South, Suite 103
                         Houston, Texas 77099
</TABLE>



                                       30
<PAGE>   33

<TABLE>
<S>                      <C>                                           <C>                       <C>
Common                   Carl W. Balezentis, Ph.D.                          10,000(6)                  *
                         9441 W. Sam Houston Pkwy. South, Suite 103
                         Houston, Texas 77099

Common                   Directors and Executive Officers as a Group       746,528(7)               21.2
                         9441 W. Sam Houston Pkwy. South, Suite 103
                         Houston, Texas 77099
</TABLE>



(1)      This includes 68,500 options.

(2)      This includes 95,517 shares held by D.C. Lawson trust and 95,517 held
         by S.R. Lawson trust plus 68,500 options and 25,000 warrants.

(3)      This includes 19,668 options.

(4)      This includes 22,500 options.

(5)      This represents 15,000 options.

(6)      This represents 10,000 options.

(7)      The Directors and Executive Officers as a group total 6 persons and a
         total of 229,168 common stock equivalents.

* Indicates less that 1% ownership.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         As described in Note 11 to the Financial Statements, the Company
purchases laboratory reagents from an affiliate at rates normally charged to a
third party.



                                       31
<PAGE>   34

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

No reports on Form 8-K were filed during the year ending December 31, 2000.

  Index of Exhibits

         *2.1     The Agreement of Merger of November 18, 1994, between Lark
                  Technologies, Inc. and Lark Sequencing Technologies, Inc.
                  providing for the merger of Lark Sequencing Technologies, Inc.
                  into the Company.

         *3.1     Bylaws of Lark Technologies, Inc., as amended.

         *3.2     The Certificate of Incorporation of Lark Technologies, Inc.,
                  as amended.

         *4.1     Lark Technologies, Inc. 2000 Stock Option Plan adopted by the
                  Company.

         *10.1    1990 Stock Option Plan adopted by the Company.

         *10.2    Agreement between Lark Sequencing Technologies, Inc. and
                  MedProbe, A.S.

         *10.3    Agreement of 12-28-94 between Lark Sequencing Technologies,
                  Inc. and SmithKline Beecham PLC.

         *10.4    Patent License Agreement between Sennes Drug Innovations, Inc.
                  and Lark Sequencing Technologies, Inc.

         **10.5   Form of Warrant Agreement entered into by and between the
                  Company and each of George Britton, David Lawson, Peter
                  Boatright, Homer Peterson, and Larry Peterson.

         **10.6   Lease Agreement and Extensions and Modification of Lease
                  Agreement by and between Lark Sequencing Technologies, Inc.
                  and Lacy Petroleum, Inc.

         ***10.7  Employment Agreement entered into by and between the Company
                  and Vincent Kazmer.

         ***10.8  Restricted Stock Purchase Agreement entered into by and
                  between the Company and Vincent Kazmer.

         ***10.9  Promissory Note entered into by and between the Company and
                  Vincent Kazmer.

         ***10.10 Lease Agreement between Lark Technologies, Inc. and Oakley
                  Commercial (UK).

         ***10.11 Sponsored Research Contract entered by and between the Company
                  and Baylor College of Medicine.

         ***10.12 Consulting Agreement entered into by and between the Company
                  and Olivia Pereira-Smith.

         ****23.1 Consent of independent auditors.

* Incorporated by reference from the Company's Registration Statement on Form
S-4 dated August 14, 1995, Commission File No. 33-90424. The exhibit numbering
system used in Form S-4 differed from that used in this Form 10-QSB (8a, 2d, 2c,
6b, 6c, 6d-1, and 6f, respectively).

** Incorporated by reference from the Company's Form 10-QSB for the quarterly
period ended June 30, 1995.

*** Incorporated by reference from the Company's Form 10-QSB for the quarterly
period ended September 30, 1995.

**** Incorporated by reference from the Company's Registration Statement on Form
S-8 dated September 21, 2000, Commission File No. 333-46280.



                                       32
<PAGE>   35

                                   SIGNATURES


In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



                                               Lark Technologies, Inc.
                                               (Registrant)



Date March 29, 2001                             /s/ George M. Britton
    ---------------                            ---------------------------------
                                               George M. Britton, Director
                                               Co-Chairman of the Board


Date March 29, 2001                            /s/ David Lawson
    ---------------                            ---------------------------------
                                               David Lawson, Director
                                               Co-Chairman of the Board


Date March 29, 2001                            /s/ Douglas B. Wheeler
    ---------------                            ---------------------------------
                                               Douglas B. Wheeler
                                               President, COO & CFO



                                       33
<PAGE>   36

                                INDEX OF EXHIBITS

<TABLE>
<CAPTION>
        EXHIBIT
        NUMBER                          DESCRIPTION
        -------                         -----------
<S>               <C>
         *2.1     The Agreement of Merger of November 18, 1994, between Lark
                  Technologies, Inc. and Lark Sequencing Technologies, Inc.
                  providing for the merger of Lark Sequencing Technologies, Inc.
                  into the Company.

         *3.1     Bylaws of Lark Technologies, Inc., as amended.

         *3.2     The Certificate of Incorporation of Lark Technologies, Inc.,
                  as amended.

         *4.1     Lark Technologies, Inc. 2000 Stock Option Plan adopted by the
                  Company.

         *10.1    1990 Stock Option Plan adopted by the Company.

         *10.2    Agreement between Lark Sequencing Technologies, Inc. and
                  MedProbe, A.S.

         *10.3    Agreement of 12-28-94 between Lark Sequencing Technologies,
                  Inc. and SmithKline Beecham PLC.

         *10.4    Patent License Agreement between Sennes Drug Innovations, Inc.
                  and Lark Sequencing Technologies, Inc.

         **10.5   Form of Warrant Agreement entered into by and between the
                  Company and each of George Britton, David Lawson, Peter
                  Boatright, Homer Peterson, and Larry Peterson.

         **10.6   Lease Agreement and Extensions and Modification of Lease
                  Agreement by and between Lark Sequencing Technologies, Inc.
                  and Lacy Petroleum, Inc.

         ***10.7  Employment Agreement entered into by and between the Company
                  and Vincent Kazmer.

         ***10.8  Restricted Stock Purchase Agreement entered into by and
                  between the Company and Vincent Kazmer.

         ***10.9  Promissory Note entered into by and between the Company and
                  Vincent Kazmer.

         ***10.10 Lease Agreement between Lark Technologies, Inc. and Oakley
                  Commercial (UK).

         ***10.11 Sponsored Research Contract entered by and between the Company
                  and Baylor College of Medicine.

         ***10.12 Consulting Agreement entered into by and between the Company
                  and Olivia Pereira-Smith.

         ****23.1 Consent of independent auditors.
</TABLE>

* Incorporated by reference from the Company's Registration Statement on Form
S-4 dated August 14, 1995, Commission File No. 33-90424. The exhibit numbering
system used in Form S-4 differed from that used in this Form 10-QSB (8a, 2d, 2c,
6b, 6c, 6d-1, and 6f, respectively).

** Incorporated by reference from the Company's Form 10-QSB for the quarterly
period ended June 30, 1995.

*** Incorporated by reference from the Company's Form 10-QSB for the quarterly
period ended September 30, 1995.

**** Incorporated by reference from the Company's Registration Statement on Form
S-8 dated September 21, 2000, Commission File No. 333-46280.