<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

             [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended March 31, 2001

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

                         Commission File Number 0-21185

                                 AAIPHARMA INC.
             (Exact name of Registrant as specified in its charter)

              DELAWARE                                          04-2687849
  (State or other jurisdiction of                            (I.R.S. employer
   incorporation or organization)                          identification no.)

                2320 SCIENTIFIC PARK DRIVE, WILMINGTON, NC 28405
               (Address of principal executive office) (Zip code)

                                 (910) 254-7000
              (Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]

The number of shares of the Registrant's common stock outstanding, as of May 10,
2001, was 17,726,636 shares.

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                                 aaiPharma Inc.
                                Table of Contents



The terms "Company", "Registrant" or "aaiPharma" in this Form 10-Q include
aaiPharma Inc. and its subsidiaries, except where the context may indicate
otherwise. Any item which is not applicable or to which the answer is negative
has been omitted.


                                                                 Page No.
                                                                 --------
PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (unaudited)
         Consolidated Statements of Operations                          3
         Consolidated Balance Sheets                                    4
         Consolidated Statements of Cash Flows                          5
         Notes to Consolidated Financial Statements                     6

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS                           10

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
         MARKET RISK                                                   13

PART II. OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                              14

SIGNATURES                                                             15

EXHIBIT INDEX                                                          16

                                        2

<PAGE>   3

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                                 aaiPharma Inc.
                      Consolidated Statements of Operations
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                 Three Months Ended
                                                                      March 31,
                                                              ------------------------
                                                                2001             2000
                                                              -------          -------

<S>                                                           <C>              <C>
Net revenues                                                  $30,197          $25,089
                                                              -------          -------

Operating costs and expenses:
   Direct costs                                                15,449           12,355
   Selling                                                      3,482            2,878
   General and administrative                                   7,743            6,128
   Research and development                                     2,342            2,638
                                                              -------          -------

                                                               29,016           23,999
                                                              -------          -------

Income from operations                                          1,181            1,090

Other income (expense):
   Interest, net                                                 (383)            (497)
   Other                                                          276              114
                                                              -------          -------

                                                                 (107)            (383)
                                                              -------          -------
Income before income taxes and cumulative
    effect of accounting change                                 1,074              707
Provision for income taxes                                        258               --
                                                              -------          -------

Income before cumulative effect of accounting change              816              707

Cumulative effect of a change in accounting principle,
   net of a tax benefit of $495                                    --             (961)
                                                              -------          -------

Net income (loss)                                             $   816          $  (254)
                                                              =======          =======

Basic earnings (loss) per share
   Income before cumulative effect                            $  0.05          $  0.04
   Cumulative effect of accounting change                          --            (0.05)
                                                              -------          -------
Net income (loss)                                             $  0.05          $ (0.01)
                                                              =======          =======
Weighted average shares outstanding                            17,654           17,288
                                                              =======          =======

Diluted earnings (loss) per share
   Income before cumulative effect                            $  0.05          $  0.04
   Cumulative effect of accounting change                          --            (0.05)
                                                              -------          -------
Net income (loss)                                             $  0.05          $ (0.01)
                                                              =======          =======
Weighted average shares outstanding                            17,758           17,703
                                                              =======          =======
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                        3

<PAGE>   4

                                 aaiPharma Inc.
                           Consolidated Balance Sheets
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                   March 31,       December 31,
                                                                     2001              2000
                                                                   --------          --------
     ASSETS                                                       (Unaudited)
<S>                                                                <C>               <C>
Current assets:
   Cash and cash equivalents                                       $  1,655          $  1,225
   Accounts receivable, net                                          29,346            29,447
   Work-in-progress                                                  12,455            11,459
   Prepaid and other current assets                                  11,979            12,746
                                                                   --------          --------
      Total current assets                                           55,435            54,877
Property and equipment, net                                          38,438            42,161
Goodwill and other intangibles, net                                  10,585            11,266
Other assets                                                          3,907             3,847
                                                                   --------          --------
      Total assets                                                 $108,365          $112,151
                                                                   ========          ========

    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current maturities of long-term debt and short-term debt        $ 16,040          $ 16,884
   Accounts payable                                                   6,285             8,850
   Customer advances                                                 11,090            11,920
   Accrued wages and benefits                                         4,136             2,710
   Other accrued liabilities                                          3,255             3,955
                                                                   --------          --------
      Total current liabilities                                      40,806            44,319
Long-term debt, less current portion                                    382               509
Other liabilities                                                     1,296             1,602
Stockholders' equity:
   Common stock                                                          18                18
   Paid-in capital                                                   70,399            70,361
   Accumulated deficit                                               (1,846)           (2,662)
   Accumulated other comprehensive losses                            (2,671)           (1,974)
   Stock subscriptions receivable                                       (19)              (22)
                                                                   --------          --------
      Total stockholders' equity                                     65,881            65,721
                                                                   --------          --------
      Total liabilities and stockholders' equity                   $108,365          $112,151
                                                                   ========          ========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                        4

<PAGE>   5

                                 aaiPharma Inc.
                      Consolidated Statements of Cash Flow
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                                   March 31,
                                                            -----------------------
                                                              2001            2000
                                                            -------         -------
<S>                                                         <C>             <C>
Cash flows from operating activities:
  Net income (loss)                                         $   816         $  (254)
  Adjustments to reconcile net cash
      provided by (used in) operating activities:
    Depreciation and amortization                             1,796           1,856
    Issuance of stock for services                               --             225
    Other                                                      (145)              3
    Changes in assets and liabilities:
      Trade and other receivables                              (295)          6,716
      Work-in-progress                                       (1,143)         (3,775)
      Prepaid and other assets, net                             653            (192)
      Accounts payable                                       (2,475)         (1,826)
      Customer advances                                        (725)         (1,806)
      Other accrued liabilities                                 832            (792)
                                                            -------         -------
Net cash (used in) provided by operating activities            (686)            155
                                                            -------         -------

Cash flows from investing activities:
  Purchases of property and equipment                        (1,038)           (436)
  Proceeds from sales of property and equipment               3,050             270
  Other                                                         (76)            543
                                                            -------         -------
Net cash provided by investing activities                     1,936             377
                                                            -------         -------

Cash flows from financing activities:
  Net payments on short-term debt                              (679)           (629)
  Payments on long-term borrowings                             (182)           (220)
  Issuance of common stock                                       38              83
  Other                                                           9               3
                                                            -------         -------
Net cash used in financing activities                          (814)           (763)
                                                            -------         -------

Net increase (decrease) in cash and cash equivalents            436            (231)
Effect of exchange rate changes on cash                          (6)            (15)
Cash and cash equivalents, beginning of period                1,225           1,988
                                                            -------         -------
        Cash and cash equivalents, end of period            $ 1,655         $ 1,742
                                                            =======         =======

Supplemental information, cash paid for:
  Interest                                                  $   245         $   557
  Income taxes                                                    8               5
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                        5

<PAGE>   6

                                 aaiPharma Inc.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles and applicable
Securities and Exchange Commission regulations for interim financial
information. These financial statements do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. The consolidated financial information as of December 31,
2000 has been derived from audited financial statements; certain amounts from
the first quarter of 2000 have been reclassified for consistent presentation
with current year financial statements. It is presumed that users of this
interim financial information have read or have access to the audited financial
statements for the preceding fiscal year. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for fair presentation have been included. Operating results for the interim
periods presented are not necessarily indicative of the results that may be
expected for the full year.

In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements". SAB 101 specifically addresses revenue recognition issues related
to certain upfront payments or fees. Under SAB 101, certain upfront fees and
payments recognized as income in prior periods are required to be deferred and
are being amortized into revenue over the terms of the relevant agreements or as
the on-going services are performed. Although the Company implemented SAB 101 in
the fourth quarter of 2000, the cumulative effect of a change in accounting
principle has been retroactively adopted as of the beginning of the first
quarter of 2000. For the year 2000, the Company recorded a charge of $1,456,000
($961,000 after tax) for the cumulative effect of this change in accounting
principle. In the first quarter of 2001 and 2000, the Company recognized
$228,000 and $183,000 of revenue related to the amortization of these deferred
amounts, respectively.

                                        6

<PAGE>   7

2. EARNINGS (LOSS) PER SHARE
The following table sets forth the computation of basic and fully diluted
earnings per share (in thousands, except per share amounts):

                                                          Three Months Ended
                                                              March 31,
                                                       ----------------------
                                                         2001           2000
                                                       -------        -------
Numerator:
   Net income (loss) (1)                               $   816        $  (254)
                                                       =======        =======
Denominator:
   Denominator for basic earnings per share -
     weighted average shares                            17,654         17,288
   Effect of dilutive securities:
     Employee stock options                                104            415
                                                       -------        -------
Denominator for fully diluted earnings per share -
     weighted average shares                            17,758         17,703
                                                       =======        =======

Basic earnings per share                               $  0.05        $ (0.01)
Diluted earnings per share                             $  0.05        $ (0.01)

(1) Numerator for both basic and diluted earnings per share.

3. COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) is defined as the change in equity during a period
from transactions and other events and circumstances from non-owner sources. The
following table presents the components of the Company's comprehensive income
(loss) (in thousands):

                                           Three Months Ended March 31,
                                      --------------------------------------
                                            2001                 2000
                                      -----------------     ----------------

Net income (loss)                              $   816             $   (254)
Currency translation adjustments                  (766)                (360)
Unrealized gain on investments                      69                   --
                                      -----------------     ----------------

    Comprehensive income (loss)                $   119             $   (614)
                                      =================     ================

                                        7

<PAGE>   8

4. FINANCIAL INFORMATION BY BUSINESS SEGMENT AND GEOGRAPHIC AREA (IN THOUSANDS):

                                         Three Months Ended
                                              March 31,
                                      ------------------------
                                        2001             2000
                                      -------          -------

NET REVENUES:
Research revenues:
   Non-clinical                       $13,891          $13,387
   Clinical                             8,762            6,991
                                      -------          -------
                                       22,653           20,378
Product sales                           3,813            2,549
Product development                     3,731            2,162
                                      -------          -------
                                      $30,197          $25,089
                                      =======          =======

United States                         $26,864          $20,248
Non-U.S                                 4,072            5,653
Less inter-geographic                    (739)            (812)
                                      -------          -------
                                      $30,197          $25,089
                                      =======          =======

INCOME (LOSS) FROM OPERATIONS:
Research revenues:
  Non-clinical                        $ 2,519          $ 3,768
  Clinical                                235              223
                                      -------          -------
                                        2,754            3,991
Product sales                             247              (23)
Product development                     1,452             (828)
Corporate                              (3,272)          (2,050)
                                      -------          -------
                                      $ 1,181          $ 1,090
                                      =======          =======

United States                         $   963          $(1,158)
Non-U.S                                   218            2,248
                                      -------          -------
                                      $ 1,181          $ 1,090
                                      =======          =======

                                        8

<PAGE>   9

8. TRANSACTIONS WITH RELATED PARTIES
The Company has work-in-progress and receivables due from Aesgen, Inc.
("Aesgen") and Endeavor Pharmaceuticals, Inc. ("Endeavor"). Both Endeavor and
Aesgen were organized by aaiPharma and its principal shareholders, and continue
to be related parties. The total amount of work-in-progress and receivables at
March 31, 2001 related to Aesgen was approximately $625,000 and the amount
related to Endeavor was approximately $230,000. Revenues recognized from Aesgen
and Endeavor totaled $122,000 and $281,000 for the three months ended March 31,
2001 and 2000, respectively.

6. DEBT
The following table presents the components of current maturities of long-term
and short-term debt (in thousands):

                                                         March 31,  December 31,
                                                            2001       2000
                                                          -------     -------

U.S. revolving credit facility                            $12,003     $ 9,403
U.S. bank debt                                              1,750       5,250
German revolving credit facility                            1,827       1,716
Current maturities of long-term debt                          460         515
                                                          -------     -------
Current maturities of long-term debt and short-term debt  $16,040     $16,884
                                                          =======     =======


                                                         March 31,  December 31,
                                                            2001       2000
                                                          -------     -------

U.S. bank term loans                                      $   842     $ 1,024
Less current maturities of long-term debt                    (460)       (515)
                                                          -------     -------
Total long-term debt due after one year                   $   382     $   509
                                                          =======     =======

In 1996, the Company entered into a revolving credit agreement with a U.S. bank,
as amended, which expires in June 2001. The agreement provides for borrowings of
up to $25 million, based upon a borrowing base consisting of portions of fixed
assets and accounts receivable, a term loan of $5.3 million and a German
revolving credit facility of up to 5 million Deutsche marks. The credit
agreement provides for variable interest rates based on the 30-day LIBOR and is
secured by a security interest on substantially all assets of the Company. At
the end of the revolving credit period, any outstanding balances under this
facility must be repaid. The agreement requires the payment of certain
commitment fees based on the unused portion of the line of credit. At March 31,
2001, the Company qualified for the entire $25 million borrowing base of the
facility; actual borrowings totaled $12.0 million.

Under the terms of the revolving credit facility and the stand-by letter of
credit agreement, the Company is required to comply with various covenants
including, but not limited to, those pertaining to maintenance of certain
financial ratios, and incurring additional indebtedness. The Company was in
compliance with the financial covenants at March 31, 2001.

                                        9

<PAGE>   10

7. CONTINGENCIES
The Company currently leases a facility adjacent to the Company's laboratories
from two banks. The facility was built in 1999 in Wilmington, North Carolina.
The Company's operating lease for this facility covers an initial period of
three years with two one-year renewal periods. At the end of the initial term,
the Company may elect to purchase the facility at fair market value, extend the
lease or the property may be sold.

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

The Company's quarterly results have been, and are expected to continue to be,
subject to fluctuations. Quarterly results can fluctuate as a result of a number
of factors, including without limitation, the commencement, completion or
cancellation of large contracts, progress of ongoing contracts, achieving
expected levels of licensing and royalty revenues, the timing of start-up
expenses for new facilities, timing and level of research and development
expenditures and changes in the mix of services. Since a large percentage of the
Company's operating costs are relatively fixed, variations in the timing and
progress of large contracts or the recognition of licensing and royalty revenues
(on projects for which associated expense may have been recognized in prior
periods) can materially affect quarterly results. Accordingly, the Company
believes that comparisons of its quarterly financial results may not be
meaningful.

RESULTS OF OPERATIONS:

FIRST QUARTER 2001 COMPARED TO FIRST QUARTER 2000
Overall net revenues for the first quarter of 2001 grew 20% to $30.2 million,
compared to $25.1 million in the first quarter of 2000. Research revenues
(non-clinical and clinical) were $22.7 million, an increase of 11% over the
$20.4 million recorded in the first quarter of 2000. Non-clinical research
revenues were up 4% to $13.9 million in the first quarter of 2001, from $13.4
million in the same period of 2000. Clinical research revenues were up 25% to
$8.8 million in the first quarter of 2001, from $7.0 million in the same period
of 2000. Clinical research revenues were higher primarily related to revenue
generated from significant new contracts entered into in the last half of 2000.

Product development revenues (royalties & fees) were $3.7 million in the first
quarter of 2001 compared to $2.2 million in the prior year period. This positive
change reflects an increase in royalties earned, as well as milestones achieved.
The Company anticipates that product development revenues will increase in
future quarters as additional agreements are signed, but expects that revenues
from these contract signings will be intermittent until royalty streams exceed
the development fees earned. However, there can be no assurance that the Company
will be successful in executing additional product development agreements and
increase its future revenue or that the products developed will be commercially
successful.

Sales of manufactured products were $3.8 million compared to $2.5 million in the
first quarter of 2000. This increase reflected significant increases in
production for clinical trial programs, along with increases in on-going
commercial manufacturing projects.

Gross margin dollars were $14.7 million compared to $12.7 million the first
quarter of 2000. Gross margin as a percentage of revenues was approximately 49%
for the first quarter of 2001, compared to

                                       10

<PAGE>   11

51% for the same period of 2000. The lower gross margin percentage reflects the
mix of revenues, with lower margin product sales and clinical revenues up
significantly, and higher margin Product Life Cycle Management revenues lower.

Selling, general and administrative costs as a percentage of net revenues were
approximately 37% in 2001, compared to 36% for the same quarter in 2000.
Selling, general and administrative expenses, in dollars, increased by
approximately 25%, reflecting additional reserves taken on customer balances,
costs associated with the continued build-out of the Company's direct
pharmaceutical sales effort and increases in employee benefit costs. The Company
expects SG&A costs to remain generally unchanged as a percentage of revenues
over the remainder of the year.

Research and development expenses were approximately 8% of net revenues in the
first quarter of 2001, compared with approximately 11% of revenues for the same
period in 2000. The Company believes R&D expense for the remainder of 2001 will
increase to more traditional levels of approximately 10% of revenues.

The Company recorded a tax provision of $0.3 million first quarter of 2001. The
effective tax rate of 23% resulted from utilization of tax loss-carryforwards to
shelter the European portion of income.

In the first quarter of 2000, the Company recorded $1.0 million in expense (net
of tax) for the cumulative effect adjustment due to the change in accounting
principle related to the implementation of Staff Accounting Bulletin No. 101
("SAB 101"), "Revenue Recognition in Financial Statements". SAB 101 required
certain revenues to be deferred and amortized into revenue in future periods.

Based on the above factors, the net income for the first quarter of 2001 was
$0.8 million, or $0.05 per diluted share, compared with a net loss of $0.3
million, or ($0.01) per diluted share after the cumulative effect of a change in
accounting principle (SAB 101).

LIQUIDITY AND CAPITAL RESOURCES
The Company has historically funded its business through operating cash flows
and proceeds from borrowings. Cash used in operations in the first quarter of
2001 was $0.7 million, compared to cash provided by operating activities of $0.2
million in the first quarter of 2000. The change primarily resulted from a
decrease in accounts payable and customer advances, which are both strongly
influenced by the timing of transactions. Cash payments on borrowings during the
first three months of 2001 were approximately $0.9 million.

In March 2001, the Company concluded a sale/leaseback transaction on certain
manufacturing assets, which provided cash of $3.1 million. Capital expenditures
were $1.0 million during the first three months of 2001 compared to $0.4 million
during the same period last year. The Company anticipates total capital
expenditures for 2001 to be less than depreciation expense for the year.

In 1996, the Company entered into a revolving credit agreement with a U.S. bank,
as amended, which expires in June 2001. The agreement provides for borrowings of
up to $25 million, based upon a borrowing base consisting of portions of fixed
assets and accounts receivable, a term loan of $5.3 million and a German
revolving credit facility of up to 5 million Deutsche marks. The credit
agreement provides for variable interest rates based on the 30-day LIBOR and is
secured by a security interest on

                                       11

<PAGE>   12

substantially all assets of the Company. At the end of the revolving credit
period, any outstanding balances under this facility must be repaid. The
agreement requires the payment of certain commitment fees based on the unused
portion of the line of credit. At March 31, 2001, the Company qualified for the
entire $25 million borrowing base of the facility; actual borrowings totaled
$12.0 million.

Under the terms of the revolving credit facility and the stand-by letter of
credit agreement, the Company is required to comply with various financial
covenants including, but not limited to, those pertaining to maintenance of
certain financial ratios, and incurring additional indebtedness. The Company was
in compliance with the financial covenants at March 31, 2001.

aaiPharma expects that near term growth can be accommodated utilizing existing
facilities. The Company is currently in discussions to provide a long-term
financing solution and is reducing capital expenditures and operating costs in
order to increase cash flow available to reduce reliance on bank facilities and
lower borrowing costs. The Company may seek to supplement cash flow from
operations with the issuance of equity securities and additional borrowings. At
some point in the future there may be opportunities that require additional
external financing, and the Company may from time-to-time seek to obtain funds
through the public or private issuance of equity or debt securities. While the
Company remains confident that it can secure additional financing if necessary,
there can be no assurances that such financing will be available or that the
terms will be acceptable to the Company.

FORWARD LOOKING STATEMENTS, RISK FACTORS AND "SAFE HARBOR" LANGUAGE

This quarterly report contains certain forward-looking statements, within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, including the statements
pertaining to future product applications of the licensed technology, the
publication and issuance of valuable and enforceable patents, and anticipated
future revenues and commercial success of aaiPharma. These statements involve
risks and uncertainties that could cause actual results to differ materially,
including, without limitation, risks and uncertainties pertaining to aaiPharma's
ability to successfully apply its new technologies to new products; obtain,
enforce and license valid and commercially valuable patents; obtain additional
profitable contracts with respect to major pharmaceutical products; and achieve
commercial success of the contemplated products.

These forward-looking statements include, among others:

o    all statements discussing liquidity; future, planned or targeted
     operational or financial expectations, goals or objectives; future, planned
     or targeted cost reductions and capital expenditures; and continued access
     to financing; and

o    all statements using the words "expect", "may", "believe", "anticipate",
     "estimate", "project", "intend", "will", "plan", "target", "objective",
     "goal", "should" and similar expressions are intended to identify
     forward-looking statements.

Although the Company believes that the expectations reflected in any such
forward-looking statements are reasonable, there can be no assurance that such
expectations will prove to be correct. Any such statements are subject to
certain risks and uncertainties. Should one or more of these risks or

                                       12

<PAGE>   13

uncertainties materialize, or should underlying assumptions or projections prove
incorrect, actual results, performance or financial condition may vary
materially from those anticipated, estimated or expected.

The Company assumes no obligation to update its forward-looking statements, or
other statements, contained herein. Additional factors that may cause the actual
results to differ materially are discussed in Exhibit 99.1 attached hereto and
incorporated herein by reference, and in the Company's recent filings with the
SEC, including, but not limited to, the Company's registration statement, as
amended, its Annual Report on Form 10-K filed with the SEC on April 2, 2001,
including the exhibits thereof, its Form 8-K's, and its other periodic filings.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company, as a result of global operating activities, is exposed to risks
associated with changes in foreign exchange rates. As foreign exchange rates
change, the U. S. dollar equivalent of revenues and expenses denominated in
foreign currencies change and can have an adverse impact on the Company's
operating results. To seek to minimize its risk from foreign exchange movement,
the Company uses local debt to fund its foreign operations. If foreign exchange
rates were to increase by 10%, year to date operating results in the first
quarter of 2001 would have been lower by $18,000 due to the reduction in
reported results from European operations.

The Company is also exposed to fluctuations in interest rates on its variable
rate debt instruments and leases tied to LIBOR. If interest rates were to
increase by 1%, annual interest expense on variable rate debt and leases tied to
interest rates would increase by approximately $169,000, or $42,000 per quarter.

                                       13

<PAGE>   14

PART II. OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

EXHIBITS:
A list of the exhibits required to be filed as part of this Report on Form 10-Q
is set forth in the "Exhibit Index", which immediately precedes such exhibits,
and is incorporated herein by reference.

REPORTS ON FORM 8-K:
During the first quarter of 2001, the Company filed the following Form 8-K's:

    o    Dated January 16, 2001, to file a press release concerning the
         execution of a licensing agreement between the Company and Aventis
         Pharmaceuticals.
    o    Dated February 8, 2001, to issue two press releases. The first press
         release reported the Company's results of operations for the quarter
         and fiscal year ended December 31, 2000. The second press release
         contained an announcement of the Company's participation in the UBS
         Warburg Healthcare Services Conference held on February 6, 2001.
    o    Dated March 30, 2001, to file a press release concerning a patent,
         entitled "Flutamide Compositions and Preparations" which was issued to
         the Company on February 13, 2001.

                                       14

<PAGE>   15

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

                                       AAIPHARMA INC.

Date:    May 14, 2001                  By: /s/ FREDERICK D. SANCILIO
     -----------------------              ---------------------------
                                       Frederick D. Sancilio, Ph.D.
                                       Chairman of the Board and Chief Executive
                                       Officer (Principal Executive Officer)

Date:    May 14, 2001                  By: /s/ WILLIAM L. GINNA, JR.
     -----------------------               ---------------------------
                                       William L. Ginna, Jr.
                                       Executive Vice President and
                                       Chief Financial Officer
                                       (Principal Financial Officer)

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                                 aaiPharma inc.
                                  EXHIBIT INDEX

EXHIBIT
NO.                                DESCRIPTION

3.1      Amended and Restated Certificate of Incorporation of the Company
         (incorporated by reference to Exhibit 3.1 to the Company's Quarterly
         Report on Form 10-Q for the quarter ended September 30, 1996)

3.2      Certificate of Incorporation, including amendments dated May 24, 2000
         and November 15, 2000

3.3      Amended By-laws of the Company (incorporated by reference to Exhibit
         3.3 to the Company's Quarterly Report on Form 10-Q for the quarter
         ended June 30, 2000)

4.1      Articles Fourth, Seventh, Eleventh and Twelfth of the form of Amended
         and Restated Certificate of Incorporation of the Company (included in
         Exhibit 3.1)

4.2      Article II of the form of Restated By-laws of the Company (included in
         Exhibit 3.2)

4.3      Specimen Certificate for shares of Common Stock, $.001 par value, of
         the Company (incorporated by reference to Exhibit 4.3 to the Company's
         Registration Statement on Form S-1 (Registration No. 333-5535))

10.1     Employment Agreement dated November 17, 1995 between the Company and
         Frederick D. Sancilio (incorporated by reference to Exhibit 10.1 to the
         Company's Registration Statement on Form S-1 (Registration No.
         333-5535))

10.2     Applied Analytical Industries, Inc. 1995 Stock Option Plan
         (incorporated by reference to Exhibit 10.3 to the Company's
         Registration Statement on Form S-1 (Registration No. 333-5535))

10.3     Applied Analytical Industries, Inc. 1997 Stock Option Plan, as amended
         on May 8, 1998, (incorporated by reference to Exhibit 10.4 to the
         Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
         1998)

10.4     Stockholder Agreement dated as of November 17, 1995 among the Company,
         GS Capital Partners II, L.P., GS Capital Partners II Offshore, L.P.,
         Goldman, Sachs & Co. Verwaltungs GmbH, Stone Street Fund 1995, L.P.,
         Bridge Street Fund 1995, L.P., Noro-Moseley Partners III, L.P.,
         Wakefield Group Limited Partnership, James L. Waters, Frederick D.
         Sancilio and the parties listed on Schedule 1 thereto (incorporated by
         reference to Exhibit 10.5 to the Company's Registration Statement on
         Form S-1 (Registration No. 333-5535))

10.5     Development Agreement dated as of April 25, 1994 between the Company
         and Endeavor Pharmaceuticals Inc. (formerly, GenerEst, Inc.)
         (incorporated by reference to Exhibit 10.12 to the Company's
         Registration Statement on Form S-1 (Registration No. 333-5535))

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10.6     Development Agreement dated as of April 4, 1995 between the Company and
         Aesgen, Inc. (incorporated by reference to Exhibit 10.13 to the
         Company's Registration Statement on Form S-1 (Registration No.
         333-5535))

10.7     Underwriting Agreement dated September 19, 1996 between the Company and
         Goldman Sachs & Co., Cowen & Company and Lehman Brothers, Inc., as
         representatives of the underwriters listed on Schedule 1 thereto
         (incorporated by reference to Exhibit 10.17 to the Company's Quarterly
         Report on Form 10-Q for the quarter ended September 30, 1996)

10.8     Partnership Agreement dated as of October 2, 1998 between the Company,
         First Security Bank, N. A. and the Various Banks and Other Lending
         Institutions Which are Parties Hereto from time to time, as the Holders
         and as the Lenders and NationsBank, N. A. (incorporated by reference to
         Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year
         ended December 31, 1998)

10.9     Security Agreement dated as of October 2, 1998 between First Security
         Bank, N. A., and NationsBank, N. A. (incorporated by reference to
         Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year
         ended December 31, 1998)

10.10    Amendment No. 1 to the Employment Agreement dated November 17, 1995
         between the Company and Frederick D. Sancilio (incorporated by
         reference to Exhibit 10.14 to the Company's Quarterly Report on Form
         10-Q for the quarter ended June 30, 1999)

10.11    Amendment and Forbearance Agreement dated August 26, 1999 between the
         Company and the Bank of America, N.A. (incorporated by reference to
         Exhibit 10.15 to the Company's Quarterly Report on Form 10-Q for the
         quarter ended September 30, 1999)

10.12    Pledge Agreement dated August 26, 1999 between the Company and the Bank
         of America, N.A. (incorporated by reference to Exhibit 10.16 to the
         Company's Quarterly Report on Form 10-Q for the quarter ended September
         30, 1999)

10.13    Security Agreement dated August 26, 1999 between the Company and the
         Bank of America, N.A. (incorporated by reference to Exhibit 10.17 to
         the Company's Quarterly Report on Form 10-Q for the quarter ended
         September 30, 1999)

10.14    Applied Analytical Industries, Inc. 1996 Stock Option Plan, as amended
         on March 27, 2000 (incorporated by reference to exhibit to the
         Company's Annual Report on Form 10-K filed for the year ended December
         31, 1999)

10.15    Amended and Restated Loan Agreement dated as of November 30, 1999
         between the Company, AAI Applied Analytical Industries Deutschland GmbH
         & Co. KG, certain subsidiaries of the Company and Bank of America, N.A.
         (incorporated by reference to exhibit to the Company's Annual Report on
         Form 10-K filed for the year ended December 31, 1999)

10.16    First Amendment, dated May 31, 2000, to the Amended and Restated Loan
         Agreement dated as of November 30, 1999 between the Company, AAI
         Applied Analytical Industries Deutschland GmbH & Co. KG, certain
         subsidiaries of the Company and Bank of America, N.A. (incorporated by
         reference to Exhibit 10.16 to the Company's Quarterly Report on Form
         10-Q for the quarter ended June 30, 2000)

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10.17    Second Amendment, dated August 31, 2000, to the Amended and Restated
         Loan Agreement dated as of November 30, 1999 between the Company, AAI
         Applied Analytical Industries Deutschland GmbH & Co. KG, certain
         subsidiaries of the Company and Bank of America, N.A. (incorporated by
         reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K
         for the year ended December 31, 2000)

10.18    Third Amendment, dated November 30, 2000, to the Amended and Restated
         Loan Agreement dated as of November 30, 1999 between the Company, AAI
         Applied Analytical Industries Deutschland GmbH & Co. KG, certain
         subsidiaries of the Company and Bank of America, N.A. (incorporated by
         reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K
         for the year ended December 31, 2000)

99.1     Risk Factors

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