<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                  FORM 10-K/A
 [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934


       FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

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

       FOR THE TRANSITION PERIOD FROM _______ TO _______



                         COMMISSION FILE NUMBER 0-19041



                       AMERICAN BIOGENETIC SCIENCES, INC.
                       ----------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>

              DELAWARE                                11-2655906
             ---------                                ----------
       <S>                                            <C>
        (STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)             IDENTIFICATION NO.)
</TABLE>


                   1375 AKRON STREET, COPIAGUE, NEW YORK 11726

                   -------------------------------------------
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)


                                  631-789-2600
                                  ------------
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:



                              CLASS A COMMON STOCK
                              --------------------
                                (TITLE OF CLASS)

         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
                                              ---       ----

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not 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-K or any
amendment to this Form 10-K. [ X ]

         As of the close of business on March 16, 2001, there were outstanding
41,102,255 shares of the registrant's Class A Common Stock and 3,000,000 shares
of its Class B Common Stock. The approximate aggregate market value (based upon
the closing price on the Nasdaq SmallCap Market) of shares held by
non-affiliates of the registrant as of March 16, 2001 was $22,742,000.





                      DOCUMENTS INCORPORATED BY REFERENCE

                                      None

<PAGE>   2




     Explanatory Note: This Form 10-K/A is being filed in order to include
information required by Part III of the Report originally intended to be
incorporated by reference to the information to be included in the Definitive
Proxy Statement of American Biogenetic Sciences, Inc. (the "Company") for the
2001 Annual Meeting of Stockholders and to correct a typographical error in the
table relating to the Company's 1996 Stock Option Plan in Footnote 8 to the
Financial Statements.


                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     The directors and executive officers of the Company are as follows:

Name                 Position
----                 --------

Alfred J. Roach      Chairman of the Board, Chief Executive Officer and
                     Director

Josef C. Schoell     President, Chief Operating Officer and Director

Ellena M. Byrne      Executive Vice President and Director

Timothy J. Roach     Treasurer, Secretary and Director

James M. McLinden    Senior Vice President and Chief Scientific Officer

Glenna M. Crooks     Director

Joseph M. Danis      Director

Joseph C. Hogan      Director



     Alfred J. Roach, 85, has been Chairman of the Board of Directors of the
Company since its organization in September 1983 and, from September 1983 until
November 1998 and since January, 2001 has also served as the Company's Chief
Executive Officer. Mr. Roach has served as Chairman of the Board and/or
President of TII Industries, Inc. ("TII"), a corporation engaged in
manufacturing and marketing telecommunications products, and its predecessor
since its founding in 1964. Mr. Roach devotes a majority of his time to the
business of the Company.

     Josef C. Schoell, 51, has been President and Chief Operating Officer and a
member of the Board of Directors of the Company since January 2001. From July
1995 until January 2001 he was Chief Financial Officer and Vice
President-Finance of the Company. Mr. Schoell joined the Company in 1992 as
Controller. From 1988 until joining ABS, Mr. Schoell was an independent
consultant providing financial accounting and computer services. From 1978 until
1988, Mr. Schoell served in various financial and accounting positions with JP
Stevens. Mr. Schoell is a graduate of New York University Stern School of
Business, is a Certified Public Accountant in New York State and a member of the
New York State Society of Certified Public Accountants, American Institute of
Certified Public Accountants and Financial Executives International.

     Ellena M. Byrne, 50, has been Executive Vice President and a director of
the Company since March 1995. From January 1986 until December 1991, Ms. Byrne
served as Vice President-Administration of the Company and from December 1991
until March 1995, Ms. Byrne served in various capacities with the Company,
including Director of Operations for Europe and Asia.

                                           2
<PAGE>   3

     Timothy J. Roach, 54, has been Treasurer, Secretary and a director of the
Company since September 1983. He has also been affiliated with TII since 1974,
serving as its President since July 1980, Chief Operating Officer since May
1987, Vice Chairman of the Board since October 1993, Chief Executive Officer
since January 1995 and a director since January 1978. Mr. Roach devotes such
time as is necessary to the business of the Company to discharge his duties as
Treasurer, Secretary and a director. Timothy J. Roach is the son of Alfred J.
Roach.

     Glenna M. Crooks, Ph.D., 51, has been a director of the Company since March
1999. Dr. Crooks has been President of Strategic Health Policy International,
Inc., a health care consulting and planning firm that advises governments,
businesses and industry trade associations in the U.S. and overseas on the
development and application of business strategy, a company she formed in
October 1994. From January 1991 until September 1994, Dr. Crooks served as Vice
President -- Worldwide Sales and Operations for the Vaccines Division of Merck &
Co., Inc., a pharmaceutical company that develops, manufactures and markets
human and animal health products.

     Joseph M. Danis, 55, has been a director of and a business development
consultant to the Company since January 2001. Mr. Danis has been President of
Danis Associates since April 1996, a consulting firm he founded that focuses on
technology transfers, structuring ventures and all phases of due diligence for
pharmaceutical and biotechnology companies. From January 1996 to March 1996, Mr.
Danis served as Executive Director of Cultor Food Science, Inc. From 1986 to
January 1996, he served in various capacities with Pfizer, Inc., including
Director of Technical Service and Licensing and Director, Acquisitions and
Licensing.

     Joseph C. Hogan, Ph.D., 78, has been a director of the Company since
December 1983. Dr. Hogan served as Dean of the College of Engineering of the
University of Notre Dame from 1967 until 1981, following which he performed
various services for the University of Notre Dame until 1985, where he remains
Dean Emeritus. From 1985 until his retirement in 1987, Dr. Hogan was Director of
Engineering Research and Resource Development at Georgia Institute of Technology
("Georgia Tech"). Dr. Hogan is a director of TII.


     The only executive officer of the Company in addition to Alfred J. Roach,
Josef C. Schoell, Timothy J. Roach and Ellena M. Byrne is James H. McLinden,
Ph.D. Dr. McLinden, 50, has been Senior Vice President and Chief Scientific
Officer of the Company since January 2001. From November 1991 until January 2001
he served as Vice President -- Molecular Biology of the Company, and from
January 1987 to November 1991 as Director of Molecular Biology of the Company.


                                       3
<PAGE>   4

ITEM 11. EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE

     The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company during
2000, 1999 and 1998 of each person who served as the Company's chief executive
officer during 2000 and each other person who served as an executive officer of
the Company during 2000 and whose annual compensation for 2000 exceeded
$100,000:

<TABLE>
<CAPTION>
                                                                     LONG-TERM
                                                                    COMPENSATION
                                                                    ------------
                                           ANNUAL COMPENSATION       SECURITIES
           NAME AND                      -----------------------     UNDERLYING        ALL OTHER
      PRINCIPAL POSITION         YEAR    SALARY ($)    BONUS ($)    OPTIONS (#)     COMPENSATION ($)
      ------------------         ----    ----------    ---------    ------------    ----------------
<S>                              <C>     <C>           <C>          <C>             <C>
Alfred J. Roach,...............  2000      250,000           --       100,000                 --
  Chairman of the Board(1)       1999      250,000(4)        --       300,000                 --
                                 1998      250,000           --       100,000                 --

John S. North,.................  2000      235,000           --        50,000                 --
  President and Chief            1999      260,000(5)    25,000(2)    250,000            100,000(2)
  Executive Officer(2)           1998       25,000           --       300,000                 --

Josef C. Schoell,..............  2000      120,000           --        50,000                 --
  Vice President Finance and     1999      120,000(6)        --       200,000                 --
  Chief Financial Officer(3)     1998      120,000           --            --                 --
</TABLE>

---------------
(1) Mr. Roach served as the Company's Chief Executive Officer until November 16,
    1998, and was again appointed to that position in January 2001.

(2) Mr. North joined the Company as President and Chief Executive Officer on
    November 16, 1998 and resigned effective January 11, 2001. Under the terms
    of his employment agreement, he received a one-time $25,000 bonus in January
    1999 and a $100,000 interest free loan during 1999. The entire amount of the
    loan had been forgiven as of December 31, 2000.

(3) Mr. Schoell was appointed President and Chief Operating Officer of the
    Company by the Board of Directors in January 2001.

(4) Includes $115,000 which was deferred during 1999 at the election of Mr.
    Roach and paid in February 2000.

(5) Includes $110,000 which was deferred during 1999 at the election of Mr.
    North and paid in February 2000.

(6) Includes $10,000 which was deferred during 1999 at the election of Mr.
    Schoell and paid in February 2000.


                                       4

<PAGE>   5

OPTION GRANTS IN LAST FISCAL YEAR

     The following table contains information concerning options to purchase
shares of the Company's capital stock granted by the Company during the year
ended December 31, 2000 to the executive officers named in the Summary
Compensation Table. No stock appreciation rights have been granted by the
Company.

<TABLE>
<CAPTION>
                                                                                       POTENTIAL REALIZABLE
                                                                                         VALUE AT ASSUMED
                                                                                      ANNUAL RATES OF STOCK
                                                                                      PRICE APPRECIATION FOR
                                            INDIVIDUAL OPTIONS                               TERM(3)
                        ----------------------------------------------------------    ----------------------
                                       PERCENT OF
                        NUMBER OF        TOTAL
                          SHARES        OPTIONS
                        UNDERLYING     GRANTED TO
                         OPTIONS      EMPLOYEES IN    EXERCISE PRICE    EXPIRATION
         NAME           GRANTED(1)    FISCAL YEAR      PER SHARE(2)        DATE          5%           10%
         ----           ----------    ------------    --------------    ----------    ---------    ---------
<S>                     <C>           <C>             <C>               <C>           <C>          <C>
Alfred J. Roach.......   100,000          19%              $.41          1/7/2005      $11,328      $25,031
John S. North.........    50,000          10%               .38          1/7/2010       11,792       29,883
Josef C. Schoell......    50,000          10%               .38          1/7/2010       11,792       29,883
</TABLE>

---------------
(1) Exercisable as to 50% of the number of shares of Class A Common Stock
    underlying the option during each six months commencing six months after the
    date of grant, on a cumulative basis.

(2) The exercise price of the options granted to Messrs. Roach, North and
    Schoell was 110%, 100% and 100%, respectively, of the market value of the
    Class A Common Stock on the date of grant.

(3) These are hypothetical values using assumed 5% and 10% compound growth rates
    prescribed by Securities and Exchange Commission rules and are not intended
    to forecast possible future appreciation, if any, in the market price of the
    Company's Class A Common Stock.

                                       5
<PAGE>   6

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END VALUES

     The following table contains information concerning options exercised
during 2000 by the executive officers named in the Summary Compensation Table
and Class A Common Stock underlying unexercised options held at December 31,
2000 by such persons.

<TABLE>
<CAPTION>
                                                                NUMBER OF SHARES UNDERLYING    VALUE OF UNEXERCISED IN-THE-
                                                                  UNEXERCISED OPTIONS AT             MONEY OPTIONS AT
                       SHARES ACQUIRED                              FISCAL YEAR-END(#)              FISCAL YEAR-END($)
        NAME           ON EXERCISE(#)    VALUE REALIZED($)(1)   (EXERCISABLE/UNEXERCISABLE)   (EXERCISABLE/UNEXERCISABLE)(2)
        ----           ---------------   --------------------   ---------------------------   ------------------------------
<S>                    <C>               <C>                    <C>                           <C>
Alfred J. Roach......           --                   --             1,450,000/1,525,000               $86,138/20,813
John S. North........      262,500             $696,375                150,000/ 337,500                32,813/77,344
Josef C. Schoell.....      100,000              198,488                242,500/ 280,000                24,281/11,719
</TABLE>

---------------
(1) The "value realized" reflects the appreciation on the date of exercise
    (based upon the excess of the market price of the shares on that date over
    the exercise price). However, because the named executive officers may keep
    the shares acquired upon exercise or sell them at a different price, these
    amounts do not necessarily reflect cash realized upon sale of those shares.

(2) Based upon the closing price of the Company's Class A Common Stock on the
    Nasdaq SmallCap Market on December 31, 2000 ($.6875), less the exercise
    price of each option.




         BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

     The Compensation Committee of the Board of Directors, consisting of Joseph
C. Hogan and Glenna M. Crooks, two non-employee directors, is authorized to
consider and recommend to the Board of Directors salaries, bonuses and other
compensation arrangements for executive officers and to grant all options under,
and administer, the Company's employee stock option plans.

     The Compensation Committee believes that the Company, as a development
stage company, should create compensation packages to attract and retain
executives who can bring the experience and skills to the Company necessary for
the development of the Company and development and marketing of its products. To
date, this has been accomplished by utilizing salary as the base compensation
and stock options to promote long-term incentives and conserve the Company's
available cash and, in certain cases, a bonus as an inducement to an executive
to join the Company. As the Company grows, other forms of annual and long-term
compensation arrangements may be developed to provide appropriate incentives and
to reward specific accomplishments.

     In determining base salaries, the Compensation Committee examines, among
other factors, the executive's performance, degree of responsibility and
experience, as well as general employment conditions, competition and economic
factors. No specific weights are assigned to any of the factors employed by the
Compensation Committee.

                                       6

<PAGE>   7


     The Compensation Committee also makes use of stock options to provide
long-term incentive compensation to many of the Company's employees, including
executive officers, enabling them to benefit, along with all stockholders, if
the market price for Class A Common Stock rises. The Compensation Committee
believes that the use of stock options ties employee interests to those of the
Company's stockholders through stock ownership and potential stock ownership,
while also providing the Company with a means of compensating employees using a
method which enables the Company to conserve its available cash for operations,
including research and development and product development. To assure the
long-term nature of the incentive, options granted have generally not become
exercisable during the first six months to one year after grant and thereafter
have become exercisable over a period of two to four years. Decisions of the
Compensation Committee as to option grants are based, in large measure, upon a
review of such factors as the executive's level of responsibility, other
compensation, accomplishments and goals, and when the last option was granted to
such executive, as well as recommendations and evaluations of the executive's
performance and prospective contributions by the Company's Chairman of the Board
and Chief Executive Officer. Determinations have been made subjectively without
giving weight to specific factors.

     Chief Executive Officer Compensation.  Mr. John S. North joined the Company
as President and Chief Executive Officer in November 1998 and served in this
capacity until his resignation in January 2001. His base salary, bonus, stock
option grant and other benefits were negotiated in connection with Mr. North's
agreement to join the Company. Mr. Alfred J. Roach reassumed the position of
Chief Executive Officer of the Company in January 2001. The salary of Mr. Roach
has remained unchanged for the past eight years.

     Certain Tax Legislation.  Section 162(m) precludes a public company from
taking a federal income tax deduction for annual compensation in excess of
$1,000,000 paid to its chief executive officer or any of its four other most
highly compensated executive officers. Certain "performance based compensation"
is excluded from the deduction limitation. Any compensation resulting from the
exercise of stock options granted by the Company should be eligible for
exclusion since all options were either granted prior to the adoption of Section
162(m) or under a plan approved by the Company's stockholders which was designed
to conform to regulations for determining whether options are deemed
"performance based compensation." The Committee believes that the limitations on
compensation deductibility under Section 162(m) will have no effect on the
Company in the foreseeable future, and intends to take such action as may be
necessary, including obtaining stockholder approval where required, in order for
compensation not to be subject to the limitation on deductibility imposed by
Section 162(m) of the Code.

                                               Respectfully submitted,

                                               JOSEPH C. HOGAN
                                               GLENNA M. CROOKS


                                        7
<PAGE>   8

PERFORMANCE GRAPH

     The following graph compares the cumulative return to stockholders of Class
A Common Stock for the last five calendar years with the Nasdaq Market Index and
the Dow Jones Industry Group BTC -- Biotechnology Index for that period. The
comparison assumes $100 was invested on December 31, 1995 in Class A Common
Stock and in each of the comparison groups, and assumes reinvestment of all
dividends (the Company paid no dividends during the periods):

                              [Performance Graph]

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
         At December 31,               1995         1996         1997         1998         1999         2000
----------------------------------------------------------------------------------------------------------------
<S>                                <C>          <C>          <C>          <C>          <C>          <C>
 American Biogenetic Sciences,
   Inc.                              $100.00      $147.73      $ 69.32      $ 27.27      $ 18.18      $ 25.02
----------------------------------------------------------------------------------------------------------------
 Peer Group Index                    $100.00      $101.02      $103.17      $141.43      $283.95      $339.00
----------------------------------------------------------------------------------------------------------------
 NASDAQ Market Index                 $100.00      $124.27      $152.00      $214.39      $378.12      $237.66
----------------------------------------------------------------------------------------------------------------
</TABLE>

                                       8
<PAGE>   9


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.


     The following table sets forth information as at the Record Date with
respect to the beneficial ownership of the Company's Class A Common Stock and
Class B Common Stock by (i) each person known by the Company to beneficially own
more than 5% of the outstanding shares of Class A Common Stock or Class B Common
Stock, (ii) each director or nominee for director of the Company, (iii) each
executive officer named in the Summary Compensation Table under the caption
"Executive Compensation" and (iv) all executive officers and directors of the
Company as a group. Except as noted, each beneficial owner has sole voting and
investment power with respect to all shares attributable to such owner. This
information is based upon information provided by the person or upon Schedule
13D or Schedule 13G filings which they have made with the Securities and
Exchange Commission. Each share of Class A Common Stock is entitled to one vote
per share while each share of Class B Common Stock is entitled to ten votes per
share.

<TABLE>
<CAPTION>
                                              CLASS A COMMON STOCK (1)       CLASS B COMMON STOCK
                                            -----------------------------    ---------------------
                                                  NO.            PERCENT        NO.       PERCENT
            BENEFICIAL OWNERS                  OF SHARES         OF CLASS    OF SHARES    OF CLASS
            -----------------               ---------------      --------    ---------    --------
<S>                                         <C>                  <C>         <C>          <C>
Directors and Officers:
Alfred J. Roach...........................       10,947,250(2)     23.0%     3,000,000     100%
Josef C. Schoell..........................          328,000(3)(4)      *            --        0
Ellena Byrne..............................          115,000(3)(5)      *            --        0
Timothy J. Roach..........................          855,000(3)      2.0%            --        0
Glenna M. Crooks..........................           45,000(3)        *             --        0
Joseph M. Danis...........................           10,000(3)        *             --        0
Joseph C. Hogan...........................           70,000(3)        *             --        0
John S. North.............................          296,200(6)        *             --        0
All executive officers and directors as a
  group (9 persons, including the
  foregoing)..............................       12,908,950(7)     26.3%     3,000,000     100%
5% Owners:
BVF Partners, L.P.........................       12,000,000(8)     23.0%            --        0
Abbott Laboratories.......................        2,782,931(9)      7.0%            --        0
</TABLE>

---------------
(1) Asterisk indicates less than one percent. Shares of Class A Common Stock
    subject to issuance upon conversion of Class B Common Stock or of Series A
    Preferred Stock into Class A Common Stock and upon exercise of options and
    warrants that were exercisable on, or become exercisable within 60 days
    after, the Record Date are considered owned by the holder thereof and
    outstanding for purposes of computing the percentage of outstanding Class A
    Common Stock that would be owned by such person, but (except for the
    computation of beneficial ownership by all executive officers and directors
    as a group) are not considered outstanding for purposes of computing the
    percentage of outstanding Class A Common Stock owned by any other person.

(2) The address of Mr. Roach is c/o American Biogenetic Sciences, Inc..
    Beneficial ownership of Class A Common Stock includes 3,000,000 shares of
    Class A Common Stock issuable upon conversion of the same number of shares
    of Class B Common Stock on a share for share basis, 1,000,000 shares of
    Class A Common Stock issuable upon conversion of 1,000 shares of Series A
    Preferred Stock, 1,000,000 shares of Class A Common Stock subject to
    outstanding warrants and 1,475,000 shares of Class A Common Stock subject to
    outstanding options.

                                       9

<PAGE>   10

(3) Includes shares of Class A Common Stock subject to options as follows: for
    Josef C. Schoell, 255,000; for Ellena Byrne, 107,500; for Timothy J. Roach,
    845,000; for Glenna M. Crooks, 45,000; for Joseph M. Danis, 10,000; and for
    Joseph C. Hogan, 50,000.

(4) Includes 200 shares owned by his wife and 2,000 shares owned by his
    daughters. The inclusion of these amounts should not be construed as an
    admission that Mr. Schoell is the beneficial owner of these shares.

(5) Includes 7,500 shares owned, and 20,000 shares subject to options held, by
    her husband. The inclusion of these amounts should not be construed as an
    admission that Ms. Byrne is the beneficial owner of these shares.

(6) Mr. North resigned as President and Chief Executive Officer of the Company
    effective January 11, 2001 and his outstanding options were subsequently
    cancelled.

(7) Includes 3,000,000 shares of Class A Common Stock issuable upon conversion
    of the same number of shares of Class B Common Stock, 1,000,000 shares of
    Class A Common Stock issuable upon conversion of 1,000 shares of Series A
    Preferred Stock, 1,000,000 shares of Class A Common Stock subject to
    outstanding warrants, and 3,015,000 shares of Class A Common Stock subject
    to outstanding options.

(8) Beneficial ownership of Class A Common Stock consists of 6,000,000 shares
    issuable upon conversion of 6,000 shares of Series A Preferred Stock and
    6,000,000 shares of Class A Common Stock subject to outstanding warrants.
    These securities are held by certain investment partnerships for which BVF
    Partners, L.P. serves as the general partner and BVF, Inc. (of which Mark
    Lampert is sole owner) acts as investment adviser, sharing the power to vote
    and dispose the shares with such investment partnerships. The address of BVF
    Partners is 227 West Monroe Street, Suite 4800, Chicago, IL 60606.

(9) The address of Abbott Laboratories is 100 Abbott Park Road, Abbott Park, IL
    60064.

                                       10


<PAGE>   11
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Between September 3, 1999 and January 19, 2000, Alfred J. Roach loaned the
Company an aggregate of $776,000 at an interest rate of 6% per annum. On March
3, 2000, $500,000 of the principal amount of the Company's indebtedness to Mr.
Roach was exchanged for 1,000 shares of the Company's Series A Preferred Stock
which are convertible into 1,000,000 shares of the Class A Common Stock and
1,000,000 warrants to purchase the Class A Common Stock at a price of $1.00 per
share. The Company made principal payments on Mr. Roach's loans in February and
March 2000 and repaid the remaining principal amount of and accrued interest on
these loans in April 2000.

     On March 8, 1999, Mr. Roach purchased directly from the Company 440,000
shares of the Company's Class A Common Stock for $495,000 ($1.1250 per share).




                                       11
<PAGE>   12


                                   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.


     April 30, 2001                     AMERICAN BIOGENETIC SCIENCES, INC.
---------------------------
          (Date)                                  (Registrant)


                                        By:  /s/ Josef C. Schoell
                                             -----------------------------------
                                             Josef C. Schoell
                                             President, Chief Operating Officer,
                                             Chief Financial Officer
                                             (Principal Financial and
                                             Accounting Officer)




                                       12
<PAGE>   13


              AMERICAN BIOGENETIC SCIENCES, INC. AND SUBSIDIARIES

                          (a development stage company)

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                      Page
                                                                      ----
<S>                                                                   <C>
Report of Independent Public Accountants                              F-2

Consolidated Balance Sheets                                           F-3

Consolidated Statements of Operations                                 F-4

Consolidated Statements of Cash Flows                                 F-5

Consolidated Statements of Stockholders' Equity                       F-6 - F-8

Notes to Consolidated Financial Statements                            F-9 - F-28

</TABLE>


         Information required by schedules called for under Regulation S-X is
either not applicable or the information required therein is included in the
consolidated financial statements or notes thereto.


                                      F-1
<PAGE>   14


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To American Biogenetic Sciences, Inc.:

         We have audited the accompanying consolidated balance sheets of
American Biogenetic Sciences, Inc. (a Delaware corporation in the development
stage) and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 2000 and for the period
from inception (September 1, 1983) to 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 American Biogenetic
Sciences, Inc. and subsidiaries as of December 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2000 and for the period from inception to December
31, 2000 in conformity with accounting principles generally accepted in the
United States.

         The accompanying consolidated financial statements for the year ended
December 31, 2000 have been prepared assuming the Company will continue as a
going concern. As discussed in Note 1 to the consolidated financial statements,
the Company has incurred significant losses since inception and anticipates that
it will continue to incur significant losses in the foreseeable future. These
factors raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.


                                                       ARTHUR ANDERSEN LLP


Melville, New York
March 23, 2001


                                      F-2
<PAGE>   15
              AMERICAN BIOGENETIC SCIENCES, INC. AND SUBSIDIARIES
                          (a development stage company)

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                           December 31,
                                                              -------------------------------------
                                                                   2000                    1999
                                                              -------------            ------------
<S>                                                           <C>                      <C>
                          ASSETS
CURRENT ASSETS:
 Cash and cash equivalents                                    $  1,194,000             $     93,000
 Accounts receivable                                               146,000                  211,000
 Inventories                                                       531,000                  511,000
 Other current assets                                               74,000                   76,000
                                                              ------------             ------------
  Total current assets                                           1,945,000                  891,000
                                                              ------------             ------------
Fixed assets, net                                                  477,000                  476,000

Patent costs, net of accumulated amortization
 of $633,000 and $502,000, respectively                          1,967,000                1,895,000

Intangible assets, net                                             599,000                  657,000

Other assets                                                        98,000                   19,000
                                                              ------------             ------------
                                                              $  5,086,000             $  3,938,000
                                                              ------------             ------------
           LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
 Accounts payable and accrued expenses                        $    368,000             $  1,581,000
 Current portion of capital lease obligation                        16,000                        -
 Current portion of notes payable                                  184,000                  746,000
                                                              ------------             ------------
  Total current liabilities                                        568,000                2,327,000
                                                              ------------             ------------

Long Term Liabilities:
 Notes payable, less current portion                                 7,000                   33,000
 Capital lease obligation                                           71,000                        -
                                                              ------------             ------------
  Total liabilities                                                646,000                2,360,000
                                                              ------------             ------------

Commitments and Contingencies (Notes 1, 5, 8, 10 and 11)

STOCKHOLDERS' EQUITY:
 Series A convertible preferred stock, par value
  $.001 per share 10,000,000 shares authorized; 7,000 and
  0 shares issued and outstanding, respectively
  (liquidation preference of $3,500,000)                                 -                        -

 Class A common stock, par value $.001 per share;
  100,000,000 shares authorized; 41,027,255 and 36,918,510
  shares issued and outstanding, respectively                       41,000                   37,000

 Class B common stock, par value $.001 per share;
  3,000,000 shares authorized; 3,000,000 shares
  issued and outstanding                                             3,000                    3,000

Additional paid-in capital                                      72,935,000               63,852,000

Deficit accumulated during the development stage               (68,539,000)             (62,314,000)
                                                              ------------             ------------
Total stockholders' equity                                       4,440,000                1,578,000
                                                              ------------             ------------
                                                              $  5,086,000             $  3,938,000
                                                              ------------             ------------
</TABLE>


              The accompanying notes are an integral part of these
                          consolidated balance sheets.

                                       F-3


<PAGE>   16


              AMERICAN BIOGENETIC SCIENCES, INC. AND SUBSIDIARIES
                          (a development stage company)

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                                                           For the Period
                                                                                                           From Inception
                                                                                                            (September 1,
                                                                  Year Ended December 31,                   1983) Through
                                                  ----------------------------------------------------       December 31,
                                                      2000                1999                 1998             2000
                                                  -----------         -----------         ------------     --------------
<S>                                               <C>                 <C>                 <C>              <C>
REVENUES:
Sales                                             $ 1,629,000         $ 1,361,000          $ 1,197,000       $  4,337,000
Royalties / license fees                              502,000                  -                    -           1,502,000
Collaborative agreements                              157,000              82,000                   -             541,000
                                                  -----------         -----------         ------------     --------------
                                                    2,288,000           1,443,000            1,197,000          6,380,000
COSTS AND EXPENSES:
Cost of sales                                         617,000             598,000              465,000          1,712,000
Research and development                            1,326,000           1,725,000            2,161,000         31,857,000
Selling, general and administrative                 4,241,000           4,488,000            4,432,000         37,822,000
Facility consolidation cost                                -                   -               252,000            252,000
                                                  -----------         -----------         ------------     --------------
Loss from operations                               (3,896,000)         (5,368,000)          (6,113,000)       (65,263,000)
                                                  -----------         -----------         ------------     --------------
OTHER INCOME (EXPENSE):
Interest expense                                      (19,000)            (16,000)            (614,000)        (4,391,000)
Net gain on sale of fixed assets                           -                4,000                    -             11,000
Investment income, net                                140,000              29,000              319,000          4,694,000
                                                  -----------         -----------         ------------     --------------
Loss before extraordinary charge                   (3,775,000)         (5,351,000)          (6,408,000)       (64,949,000)
Extraordinary charge for early
retirement of debentures, net                               -                   -           (1,140,000)        (1,140,000)
                                                  -----------         -----------         ------------     --------------
NET LOSS                                          $(3,775,000)        $(5,351,000)         $(7,548,000)      $(66,089,000)
Preferred stock dividend related to warrants       (2,450,000)                  -                    -         (2,450,000)
                                                  -----------         -----------         ------------     --------------
Net loss attributable to common stockholders      $(6,225,000)        $(5,351,000)         $(7,548,000)      $(68,539,000)
                                                  ===========         ===========         ============     ==============
PER SHARE INFORMATION (NOTE 2):

Basic and Diluted net loss per share                   $(0.14)             $(0.14)              $(0.29)
                                                  ===========         ===========         ============

Common shares used in computing per share
  amounts:
Basic and Diluted                                  43,475,000          39,266,000           25,740,000
                                                  ===========         ===========         ============

</TABLE>

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

                                      F-4




<PAGE>   17


              AMERICAN BIOGENETIC SCIENCES, INC. AND SUBSIDIARIES
                          (a development stage company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                                                     For the Period
                                                                                                                     From Inception
                                                                                                                      (September 1,
                                                                            Year Ended December 31,                   1983) Through
                                                            ----------------------------------------------------       December 31,
                                                                2000                1999                 1998             2000
                                                            -----------         -----------         ------------     --------------
<S>                                                         <C>                 <C>                 <C>              <C>
Cash Flows From Operating Activities:
Net income (loss)                                           $(3,775,000)        $(5,351,000)        $ (7,548,000)     $(66,089,000)
Adjustments to reconcile net (loss) to net cash
used in operating activities:
Depreciation and amortization                                   328,000             318,000              497,000         3,368,000
Net (gain) loss on sale of fixed assets                              -               (4,000)                  -            (11,000)
Net (gain) loss on sale of marketable securities                     -                   -                    -           (217,000)
Other noncash expenses accrued primarily for
  stocks and warrants                                           325,000             502,000              306,000         2,869,000
Amortization of debt discount included in interest expense           -                   -               317,000         2,160,000
Extraordinary loss on repurchase of debt                             -                   -             1,140,000         1,140,000
Write-off of patent costs                                            -                   -                    -             93,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable                       65,000             (34,000)             (69,000)          (38,000)
(Increase) decrease in inventories                              (20,000)             34,000              (91,000)         (373,000)
(Increase) decrease in other current assets                       2,000             (36,000)               1,000           (74,000)
(Increase) decrease in other assets                             (22,000)              7,000                1,000            58,000
Increase (decrease) in accounts payable and
  accrued expenses                                           (1,064,000)            840,000              265,000           752,000
Increase in interest payable to stockholder                       8,000                 -                     -            120,000
                                                            -----------         -----------         ------------     --------------
  Net cash used in operating activities                      (4,153,000)         (3,724,000)          (5,181,000)      (56,242,000)
                                                            -----------         -----------         ------------     --------------
Cash Flows From Investing Activities:
Capital expenditures                                            (32,000)            (13,000)             (41,000)       (2,088,000)
Proceeds from sale of fixed assets                                   -                4,000                   -             22,000
Payments for patent costs and other assets                     (203,000)           (539,000)            (229,000)       (2,670,000)
Business acquisition, net of stock issued and cash acquired          -                   -              (119,000)         (119,000)
Proceeds from maturity and sale of marketable securities             -                   -                    -         67,549,000
Purchases of marketable securities                                   -                   -                    -        (67,332,000)
                                                            -----------         -----------         ------------     --------------
  Net cash provided by (used in) investing activities          (235,000)           (548,000)            (389,000)       (4,638,000)
                                                            -----------          ----------         ------------     --------------
Cash Flows From Financing Activities:
Payments to debentureholders                                         -                   -            (1,000,000)       (2,246,000)
Proceeds from issuance of common stock, net                   2,735,000             660,000            3,182,000        42,879,000
Proceeds from issuance of Series A convertible
  preferred stock                                             3,000,000                  -                    -          3,000,000
Proceeds from issuance of 5% convertible debentures, net             -                   -             3,727,000         3,727,000
Proceeds from issuance of 7% convertible debentures, net             -                   -                    -          8,565,000
Proceeds from issuance of 8% convertible debentures, net             -                   -                    -          7,790,000
Principal payments under capital lease obligation and
  notes payable                                                 (36,000)            (44,000)             (61,000)         (150,000)
Redemption of 8% convertible debentures                             -                    -              (500,000)         (500,000)
Repurchase of 5% convertible debentures                             -                    -            (3,852,000)       (3,852,000)
Capital contributions from chairman                                 -                    -                    -          1,000,000
Increase in loans payable to stockholder / affiliates            81,000             702,000                   -          3,452,000
Repayment of loans payable to stockholder / affiliates
(remainder contributed to capital by the stockholder)          (291,000)                 -                    -         (1,591,000)
                                                            -----------          ----------         ------------     --------------
  Net cash provided by (used in) financing activities         5,489,000           1,318,000            1,496,000        62,074,000
                                                            -----------          ----------         ------------     --------------
Net Increase (Decrease) in Cash and Cash Equivalents          1,101,000          (2,954,000)          (4,074,000)        1,194,000
Cash and Cash Equivalents at Beginning of Period                 93,000           3,047,000            7,121,000                 0
                                                            -----------          ----------         ------------     --------------
Cash and Cash Equivalents at End of Period                  $ 1,194,000         $    93,000         $  3,047,000     $    1,194,000
                                                            ===========         ===========         ============     ==============
Supplemental Disclosure of Non-cash Activities:
Capital expenditure made under capital lease obligation     $    87,000                  -                    -           $107,000
                                                            ===========         ===========         ============     ==============
Convertible debentures converted into 0, 0, 4,851,618,
  and 10,470,583 shares of Common Stock, respectively                -                   -          $  1,447,000      $ 14,658,000
                                                            ===========         ===========         ============     ==============
Warrants issued                                             $ 2,792,000                  -          $     63,000      $  3,380,000
                                                            -----------          ----------         ------------     --------------
Conversion of stockholder loan to preferred stock
  or paid-in capital                                        $   500,000                  -                    -       $  1,981,000
                                                            -----------          ----------         ------------     --------------
</TABLE>

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


                                       F-5

<PAGE>   18


              AMERICAN BIOGENETIC SCIENCES, INC. AND SUBSIDIARIES
                          (a development stage company)

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                                                            Deficit
                                                                                                           Accumulated
                                       Per     Class A Common Stock    Class B Common Stock   Additional   During the
                                      Share   ---------------------    --------------------    Paid-in     Development
                                      Amount    Shares     Dollars      Shares     Dollars     Capital       Stage         Total
                                     -------- ----------- ---------    ---------   --------  ------------ ------------   ----------
<S>                                  <C>      <C>         <C>          <C>         <C>       <C>           <C>           <C>
BALANCE, AT INCEPTION,
 (SEPTEMBER 1, 1983)                 $  -              -    $   -            0     $    -    $      -    $         -    $       -

Sale of common stock to chairman
  for cash                            .33          78,000       -            -          -       26,000             -        26,000
Net (loss) for the period                              -        -            -          -           -          (25,000)    (25,000)
                                              -----------  -------    ---------   --------   ---------    ------------  ----------
BALANCE, DECEMBER 31, 1983                         78,000       -            -          -       26,000         (25,000)      1,000
                                              -----------  -------    ---------   --------   ---------    ------------  ----------

Sale of common stock to chairman
  for cash                            .33         193,500       -            -          -       65,000             -        65,000
Net (loss) for the period                              -        -            -          -           -         (242,000)   (242,000)
                                              -----------  -------    ---------   --------   ---------    ------------  ----------
BALANCE, DECEMBER 31, 1984                        271,500       -            -          -       91,000        (267,000)   (176,000)
                                              -----------  -------    ---------   --------   ---------    ------------  ----------

Sale of common stock to chairman
 for cash                             .33         276,700    1,000           -          -       92,000              -       93,000
Net (loss) for the period                                       -            -          -           -         (305,000)   (305,000)
                                              -----------  -------    ---------   --------   ---------    ------------  ----------
BALANCE, DECEMBER 31, 1985                        548,200    1,000           -          -      183,000        (572,000)   (388,000)
                                              -----------  -------    ---------   --------   ---------    ------------  ----------

Sale of common stock to chairman
  for cash                            .33         404,820       -            -          -      134,000              -      134,000
Net (loss) for the period                              -        -            -          -           -         (433,000)   (433,000)
                                              -----------  -------    ---------   --------   ---------    ------------  ----------
BALANCE, DECEMBER 31, 1986                        953,020    1,000           -          -      317,000      (1,005,000)   (687,000)
                                              -----------  -------    ---------   --------   ---------    ------------  ----------

Sale of common stock to chairman
  for cash                            .33          48,048       -            -          -       16,000             -        16,000
Net (loss) for the period                              -        -            -          -           -         (730,000)   (730,000)
                                              -----------  -------    ---------   --------   ---------    ------------  ----------
BALANCE, DECEMBER 31, 1987                      1,001,068    1,000           -          -      333,000      (1,735,000) (1,401,000)
                                              -----------  -------    ---------   --------   ---------    ------------  ----------

Exchange of common stock for
  Class B stock                                (1,001,068)  (1,000)   1,001,068      1,000           -             -             0
Sale of Class B stock to chairman
  for cash                            .33              -        -     1,998,932      2,000      664,000            -       666,000
Net (loss) for the period                              -        -            -          -            -      (1,031,000) (1,031,000)
                                              -----------  -------    ---------   --------   ---------    ------------  ----------
BALANCE, DECEMBER 31, 1988                             -        -     3,000,000      3,000      997,000     (2,766,000) (1,766,000)
                                              -----------  -------    ---------   --------   ---------    ------------  ----------

Net (loss) for the period                              -        -            -          -            -      (1,522,000) (1,522,000)
                                              -----------  -------    ---------   --------   ---------    ------------  ----------
BALANCE, DECEMBER 31, 1989                             -        -     3,000,000      3,000      997,000     (4,288,000) (3,288,000)
                                              -----------  -------    ---------   --------   ---------    ------------  ----------

Conversion of loans payable to
  stockholder into additional
  paid-in capital                                      -        -            -           -     1,481,000             -   1,481,000
Sale of 1,150,000 Units to public
  consisting of 3,450,000 shares of
  Class A common stock and warrants
  (net of $1,198,000 underwriting
  expenses)                          2.00       3,450,000    3,000           -           -    5,699,000              -   5,702,000
Conversion of Class B stock into
Class A stock                                     668,500    1,000     (668,500)     (1,000)         -               -           0
Net (loss) for the period                              -        -            -           -           -      (2,100,000) (2,100,000)
                                              -----------  -------    ---------   --------   ---------    ------------  ----------
BALANCE, DECEMBER 31, 1990                      4,118,500  $ 4,000     2,331,500   $  2,000  $8,177,000   $ (6,388,000) $1,795,000
                                              -----------  -------    ---------   --------   ---------    ------------  ----------

</TABLE>



                                      F-6



<PAGE>   19
              AMERICAN BIOGENETIC SCIENCES, INC. AND SUBSIDIARIES
                          (a development stage company)

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>

                                                                                                            Deficit
                                                                                                           Accumulated
                                       Per     Class A Common Stock    Class B Common Stock   Additional   During the
                                      Share   ---------------------    --------------------    Paid-in     Development
                                      Amount    Shares     Dollars      Shares     Dollars     Capital       Stage         Total
                                     -------- ----------- ----------   ---------   --------  ------------ ------------  -----------
<S>                                   <C>      <C>          <C>        <C>         <C>        <C>         <C>           <C>
BALANCE, DECEMBER 31, 1990            $         4,118,500     $4,000   2,331,500    $ 2,000   $ 8,177,000 $ (6,388,000) $ 1,795,000

Exercise of Class A Warrants
  (net of $203,000
in underwriting expenses) for cash     3.00     3,449,955      3,000          -          -     10,143,000           -    10,146,000
Exercise of Class B Warrants for cash  4.50        79,071         -           -          -        356,000           -       356,000
Conversion of Class B stock
into Class A stock                                850,000      1,000    (850,000)    (1,000)           -            -            -
Exercise of stock options              2.00       417,750      1,000          -          -        835,000           -       836,000
Fair Value for warrants issued                                    -                      -        900,000           -       900,000
Net (loss) for the period                                         -                      -             -    (4,605,000)  (4,605,000)
                                              ----------- ----------   ---------   --------  ------------ ------------  -----------
BALANCE, DECEMBER 31, 1991                      8,915,276      9,000   1,481,500      1,000    20,411,000  (10,993,000)   9,428,000
                                              ----------- ----------   ---------   --------  ------------ ------------  -----------

Exercise of Class B Warrants
  (net of $701,000 in underwriting
  expenses) for cash                   4.50      3,370,88      3,000          -          -     14,465,000           -    14,468,000
Conversion of Class B stock
into Class A stock                                106,000         -     (106,000)        -             -            -            -
Exercise of stock options              2.49       348,300      1,000          -          -        865,000           -       866,000
Net (loss) for the period                              -          -           -          -             -    (4,016,000)  (4,016,000)
                                              ----------- ----------   ---------   --------  ------------ ------------  -----------
BALANCE, DECEMBER 31, 1992                     12,740,460     13,000   1,375,500      1,000    35,741,000  (15,009,000)  20,746,000
                                              ----------- ----------   ---------   --------  ------------ ------------  -----------

Sale of common stock to Medeva PLC.    7.50       200,000         -           -          -      1,500,000           -     1,500,000
Exercise of stock options              2.00        32,700         -           -          -         65,000           -        65,000
Net (loss) for the period                              -          -           -          -             -    (6,521,000)  (6,521,000)
                                              ----------- ----------   ---------   --------  ------------ ------------  -----------
BALANCE, DECEMBER 31, 1993                     12,973,160     13,000   1,375,500      1,000    37,306,000  (21,530,000)  15,790,000
                                              ----------- ----------   ---------   --------  ------------ ------------  -----------

Exercise of stock options              2.16        91,250         -           -          -        197,000           -       197,000
Net (loss) for the period                                         -           -          -             -    (7,431,000)  (7,431,000)
                                              ----------- ----------   ---------   --------  ------------ ------------  -----------
BALANCE, DECEMBER 31, 1994                     13,064,410     13,000   1,375,500      1,000    37,503,000  (28,961,000)   8,556,000
                                              ----------- ----------   ---------   --------  ------------ ------------  -----------


Conversion of 8% convertible
  debentures into
  Class A Common Stock                 1.85       354,204         -           -          -        571,000           -       571,000
Exercise of stock options              1.82        12,750         -           -          -         23,000           -        23,000
Fair Value for warrants/options
  issued                                               -          -           -          -        602,000           -       602,000
Net (loss) for the period                              -          -           -          -             -    (5,607,000)  (5,607,000)
                                              ----------- ----------   ---------   --------  ------------ ------------  -----------
BALANCE, DECEMBER 31, 1995                     13,431,364    $13,000   1,375,500    $ 1,000  $ 38,699,000 $(34,568,000) $ 4,145,000
                                              ----------- ----------   ---------   --------  ------------ ------------  -----------
</TABLE>

                                      F-7


<PAGE>   20
              AMERICAN BIOGENETIC SCIENCES, INC. AND SUBSIDIARIES
                          (a development stage company)

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                            Deficit
                                                                                                           Accumulated
                                       Per    Class A Common Stock    Class B Common Stock   Additional   During the
                                      Share   ---------------------   ---------------------    Paid-in     Development
                                      Amount    Shares     Dollars      Shares     Dollars     Capital       Stage         Total
                                     -------- ----------- ----------  ----------   --------  ------------ ------------  -----------
<S>                                   <C>             <C>                      <C>          <C>      <C>      <C>             <C>
Conversion of 8% convertible
  debentures into Class A
  Common Stock                        2.74      2,269,755   $ 2,000           -     $    -   $  5,483,000     $     -   $ 5,485,000
Exercise of stock options             2.53        569,875     1,000           -          -      1,438,000           -     1,439,000
Fair Value for warrants/options
  issued                                               -          -           -          -        330,000           -       330,000
Discount on 7% convertible
  debentures                                           -          -           -          -      1,843,000           -     1,843,000
Net (loss) for the period                              -          -           -          -             -    (7,700,000)  (7,700,000)
                                              ----------- ----------  ----------   --------  ------------ ------------  -----------
BALANCE, DECEMBER 31, 1996                     16,270,994     16,000   1,375,500      1,000    47,793,000  (42,268,000)   5,542,000
                                              ----------- ----------  ----------   --------  ------------ ------------  -----------


Conversion of 7% and 8% convertible
  debentures into Class A
  Common Stock                        2.93      2,995,006      3,000          -          -      7,152,000           -     7,155,000
Sale of Class B Common Stock to
  Chairman for cash                   2.23             -          -      350,000      1,000       778,000           -       779,000
Exercise of stock options             2.00         27,500         -           -          -         55,000           -        55,000
Fair Value for warrants issued                         -          -           -          -        149,000           -       149,000
Class A Common Stock issued           3.12         48,117         -           -          -        150,000           -       150,000
Net (loss) for the period                              -          -           -          -             -    (7,147,000)  (7,147,000)
                                              ----------- ----------  ----------   --------  ------------ ------------  -----------
BALANCE, DECEMBER 31, 1997                     19,341,617     19,000   1,725,500      2,000     56,077,00  (49,415,000    6,683,000
                                              ----------- ----------  ----------   --------  ------------ ------------  -----------


Conversion of 5%, 7% and 8%
  convertible debentures
  into Class A Common Stock           0.32      4,851,618      5,000          -          -      1,442,000           -     1,447,000
Sale of Class B Common Stock to
  Chairman for cash                   0.37             -          -    1,274,500      1,000       465,000           -       466,000
Exercise of stock options             1.75          4,000         -           -          -          7,000           -         7,000
Fair Value for warrants issued                         -          -           -          -        205,000           -       205,000
Class A Common Stock issued           1.06        163,915         -           -          -        174,000           -       174,000
Class A Common Stock issued for
  Stellar                             1.76        398,406      1,000                              699,000           -       700,000
Class A Common Stock issued for
  Private Placement                   0.25     10,800,000     11,000          -          -      2,689,000           -     2,700,000
Discount on 5% convertible
  debentures                                           -          -           -          -        762,000           -       762,000
Net (loss) for the period                              -          -           -          -             -    (7,548,000)  (7,548,000)
                                              ----------- ----------  ----------   --------  ------------ ------------  -----------
BALANCE, DECEMBER 31, 1998                     35,559,556     36,000   3,000,000      3,000    62,520,000  (56,963,000)   5,596,000
                                              ----------- ----------  ----------   --------  ------------ ------------  -----------

Sale of Class A Common Stock to
  Chairman for cash                   1.13        440,000         -           -          -        495,000           -       495,000
Exercise of stock options             0.61          5,250         -           -          -          3,000           -         3,000
Fair Value for warrants issued                         -          -           -          -        376,000           -       376,000
Class A Common Stock issued           0.50        913,704      1,000          -          -        458,000           -       459,000
Net (loss) for the period                              -          -           -          -             -    (5,351,000)  (5,351,000)
                                              ----------- ----------  ----------   --------  ------------ ------------  -----------
BALANCE, DECEMBER 31, 1999                     36,918,510     37,000   3,000,000      3,000    63,852,000  (62,314,000)   1,578,000
                                              ----------- ----------  ----------   --------  ------------ ------------  -----------

Sale of Series A Convertible Preferred
Stock (7,000 shares)                                   -          -           -          -      3,500,000           -     3,500,000
Warrants issued with the Convertible
  Preferred Stock                                      -          -           -          -      2,450,000           -     2,450,000
Preferred stock dividend related
  to warrants                                          -          -           -          -             -    (2,450,000)  (2,450,000)
Exercise of stock options and
  warrants                            0.97      1,278,675      1,000          -          -      1,234,000           -     1,235,000
Fair Value for warrants issued                         -          -           -          -        342,000           -       342,000
Class A Common Stock issued           0.55      2,830,070      3,000          -          -      1,557,000           -     1,560,000
Net (loss) for the period                              -          -           -          -             -    (3,775,000)  (3,775,000)
                                              ----------- ----------  ----------   --------  ------------ ------------  -----------
BALANCE, DECEMBER 31, 2000                     41,027,255    $41,000   3,000,000    $ 3,000  $ 72,935,000 $(68,539,000) $ 4,440,000
                                              ----------- ----------  ----------   --------  ------------ ------------  -----------

</TABLE>

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


                                       F-8




<PAGE>   21

               AMERICAN BIOGENETIC SCIENCES, INC. AND SUBSIDIARIES

                          (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       BUSINESS AND DEVELOPMENT STAGE RISKS:

         American Biogenetic Sciences, Inc. (together with its subsidiaries
(Note 2), the "Company" or "ABS") was incorporated in Delaware on September 1,
1983. The Company was formed to engage in the research, development and
production of bio-pharmaceutical products. As a development stage company, the
Company has not materially commenced its principal operations. Most of its
efforts have been devoted to research and development, acquiring equipment,
recruiting and training personnel, and financial planning. The Company's
research efforts have been focused on the development of products to diagnose,
prevent and treat diseases in humans.

         The Company has had limited product sales to date and has had limited
revenues from collaborative and licensing agreements (Note 10). Since its
inception, the Company has been dependent upon the receipt of capital investment
or other financing to fund its continuing research and commercialization
activities. The Company expects to incur substantial expenditures in research
and product development of ABS205 and MH1 and the Food and Drug Administration
approval process relating to 510(K) applications for its TpP and other
diagnostic tests. Currently product development plans of the Company include
entering into additional collaborative, licensing and co-marketing arrangements
with pharmaceutical and or biotechnology companies to provide additional funding
and clinical expertise to perform tests necessary to obtain regulatory
approvals, provide manufacturing expertise and market the Company's products.
Without such collaborative, licensing or co-marketing arrangements, additional
sources of funding will be required to finance the Company. In addition to the
normal risks associated with a business engaged in research and development of
new products, there can be no assurance that the Company's research and
development will be successfully completed, that any products developed will
obtain the necessary U.S. regulatory approvals (principally from the FDA), that
any approved product will be a commercial success, that adequate product
liability insurance can be obtained or that sufficient capital will be available
when required to permit the Company to realize its plans. In addition, the
Company operates in an environment of rapid changes in technology and in an
industry, which has many competitors who have far more resources available to
them than does the Company. Further, the Company is dependent upon the services
of several key employees and advisors.

         As of December 31, 2000, ABS, had working capital of $1,377,000,
compared to a negative working capital of $1,436,000 at December 31, 1999.
Additionally, the Company had cash and cash equivalents of $1,194,000 at
December 31, 2000. As of March 16, 2001 the Company's cash and cash equivalents
had decreased to approximately $506,000. As a result of the Company's continuing
to incur cash expenses in excess of cash receipts, the Company will require the
receipt of additional licensing fees and milestone payments, additional
financing or the disposition of assets. If this does not occur, the Company will
be required to carry out a significant cash conservation program to carry it
beyond the next few months. Due to the uncertainties involved in the receipt of
milestone payments and additional licensing fees

                                       F-9
<PAGE>   22

or receipt of additional financing, many of which are outside the control of the
Company, the Company's independent public accountants have qualified their audit
opinion with regard to the Company's ability to continue as a going concern.

         In order to address the need for additional capital, ABS is actively
seeking to license certain of its products and is aggressively working on
those matters within its control with respect to achievement of contractual
milestones for milestone payments. The Company's current products which it is
aggressively seeking to license include TpP, MH1, and the ABS-205 neurobiology
compound. If it is successful in licensing some of these products, the licensees
might provide additional funding or might perform additional testing necessary
to obtain regulatory approvals or provide clinical, manufacturing and marketing
expertise which will indirectly lead to revenue for the Company. The Company is
also discussing collaborations and contract services involving its patented
Antigen-Free technology. The Company cannot guaranty that it will be successful
in generating funding from these sources.

         In addition the Company has entered into preliminary discussions with a
number of potential investors and private placement agents concerning additional
financing. However, in the current economic environment, financing has become
more difficult to obtain, including within the biotechnology industry, and there
is no guaranty that the Company will be able to obtain additional financing on
reasonable terms, or that it will be able to obtain financing at all. The
Company's failure to raise sufficient additional funds, either through
licensing, milestone payments or co-marketing activities or additional
financing, will have a material adverse effect on its financial condition and
ability to continue as a going concern.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION

         During 1989, the Company formed a subsidiary, American Biogenetic
Sciences (Ireland), Ltd., which is 99% owned by the Company and, to fulfill
legal requirements, 1% owned by an officer of the Company. On April 23, 1998,
the Company acquired all of the capital stock of Stellar Bio Systems, Inc.
("Stellar") (Note 5). The financial statements reflect the accounts of the
Company and these subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.

CASH EQUIVALENTS

         Cash equivalents include highly liquid investments, which have an
original maturity of less than three months from date of purchase.

CONCENTRATION OF CREDIT RISK

         As of December 31, 2000, the Company had one customer whose balances
exceeded 10% of the accounts receivable balance. This customer accounted for 50%
of the accounts receivable balance. As of December 31, 1999, the Company had two
customers whose balances exceeded 10% of the accounts receivable balance. These
customers accounted for 35% and 24% of the accounts receivable balance,
respectively.

                                      F-10
<PAGE>   23


         During fiscal year 2000, one customer accounted for 44% of the
Company's sales, and a second customer accounted for 17% of the Company's sales.
During fiscal year 1999, one customer accounted for 30% of the Company's sales,
another customer accounted for 20% while a third customer accounted for 11% of
the Company's sales. During fiscal year 1998, one customer accounted for 34% of
the Company's sales, another customer accounted for 17% while a third customer
accounted for 10% of the Company's sales.

INVENTORY

         Inventory is valued at the lower of cost (first-in, first-out) or
market.

LONG-LIVED ASSETS

         In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," ABS periodically reviews long-lived assets and
certain identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to the fair value of the asset
measured by the future net cash flows (on an undiscounted basis) expected to be
generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized would be measured by the amount by which the
carrying amount of the assets exceeds the underlying fair value of the assets.
ABS has performed a review of its long-lived assets and has determined that no
impairment of the respective carrying values has occurred as of December 31,
2000.

FIXED ASSETS

         Fixed assets are carried at cost less accumulated depreciation and
amortization. Depreciation and amortization is generally provided for by the
straight-line method over the estimated useful lives of the assets. Laboratory
equipment, office equipment and furniture are depreciated over five years.
Leasehold improvements are amortized over the life of the lease, usually five
years.

PATENT COSTS

         Costs of certain patent applications are capitalized. Upon issuance of
a patent, such costs are charged to operations utilizing the straight-line
method over the lesser of the estimated useful life or 17 years. Costs of
unsuccessful patent applications or discontinued projects are charged to
expense.

INTANGIBLE ASSETS

         Intangible assets include goodwill and intellectual know-how relating
to the acquisition of Stellar. Intangible assets are being amortized over a
10-year period.

FAIR VALUE OF FINANCIAL INSTRUMENTS

                                      F-11
<PAGE>   24


         The Company accounts for the fair value of its financial instruments in
accordance with SFAS No. 107, "Disclosures about Fair Value of Financial
Instruments." The carrying value of all financial instruments reflected in the
accompanying balance sheets approximated fair value at December 31, 2000 and
December 31, 1999, respectively.

REVENUE RECOGNITION

         Revenue on product sales is recognized at the time the products are
shipped, the customer accepts delivery and when collectibility is reasonably
assured. Revenue from royalties and license fees are recognized
when earned, provided that no significant performance obligations remain.

RESEARCH AND DEVELOPMENT INCOME AND EXPENSES

         Revenues from collaborative agreements are recognized as the Company
performs research activities under the terms of each agreement, provided that no
further performance obligations remain. Research and development costs are
charged to expense in the year incurred.

STOCK-BASED COMPENSATION

         The Company follows the provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation." This statement establishes financial accounting and
reporting standards for stock-based employee compensation plans. SFAS No. 123
encourages entities to adopt a fair value based method of accounting for stock
compensation plans. However, SFAS No. 123 also permits the Company to continue
to measure compensation costs under pre-existing accounting pronouncements. If
the fair value based method of accounting is not adopted, SFAS No. 123 requires
pro forma disclosures of net loss and net loss per common share in the notes to
consolidated financial statements. The Company has elected to provide the
necessary pro forma disclosures (Note 8).

NET LOSS PER COMMON SHARE

         The Company follows the provisions of SFAS No. 128, "Earnings Per
Share." Basic net loss per common share ("Basic EPS") is computed by dividing
net loss by the weighted average number of common shares outstanding. Diluted
net loss per common share ("Diluted EPS") is computed by dividing net loss by
the weighted average number of common shares and dilutive potential common
shares then outstanding. SFAS No. 128 requires the presentation of both Basic
EPS and Diluted EPS on the face of the consolidated statements of operations.
The impact of the adoption of this statement was not material to all previously
reported EPS amounts. Diluted EPS for 2000, 1999 and 1998 is the same as Basic
EPS because the inclusion of stock options, warrants and convertible debentures
then outstanding would be anti-dilutive. For the purposes of the calculation of
both basic and diluted EPS, Class A and Class B Common Stock have been treated
as one class. The following equity instruments were not included in the diluted
net loss per share calculation as their effect would be anti-dilutive:

<TABLE>
<CAPTION>

                                                                      December 31,
                                                ------------------------------------------------------
                                                    2000                  1999                 1998
                                                ------------          -----------          -----------
<S>                                             <C>                   <C>                  <C>
Stock Options                                      5,179,619            5,905,252            4,398,250
</TABLE>
                                      F-12

<PAGE>   25

<TABLE>
  <S>                                           <C>                   <C>                  <C>
  Conversion of Preferred Series A Stock          7,000,000                   --                   --

  Warrants                                        8,187,814            1,039,295              709,445
                                                ------------          -----------          -----------
                                                 20,367,433            6,944,547            5,107,695
                                                ============          ===========          ===========
</TABLE>

INCOME TAXES

         The Company recognizes deferred tax assets and liabilities for the
estimated future tax effects of events that have been recognized in the
Company's financial statements or tax returns. Under this method, deferred tax
assets and liabilities are determined based on the difference between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect in the years in which the differences are expected to reverse.

USE OF ESTIMATES

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

COMPREHENSIVE INCOME

         In fiscal 1999 the Company adopted SFAS No. 130 "Reporting
Comprehensive Income," which establishes new rules for the reporting of
comprehensive income (loss) and its components. The adoption of this statement
had no impact on the Company's net income (loss) or shareholders' equity. For
the fiscal years ended 2000, 1999 and 1998, the Company's operations did not
give rise to items includable in comprehensive income (loss) which were not
already included in net income (loss). Therefore, the Company's comprehensive
income is the same as its net income (loss) for all periods presented.

DERIVATIVE INSTRUMENTS

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133, as amended by SFAS No. 137,
is effective for all fiscal years beginning after June 15, 2000 and will not
require retroactive restatement of prior period financial statements. This
statement requires the recognition of all derivative instruments as either
assets or liabilities in the balance sheet measured at fair value. Derivative
instruments will be recognized as gains or losses in the period of change. If
certain conditions are met where the derivative instrument has been designated
as a fair value hedge, the hedge items may also be marked to market through
earnings, thus creating an offset. If the derivative is designed and qualifies
as a cash flow hedge, the changes in fair value of the derivative instrument may
be recorded in comprehensive income. The Company does not presently make use of
derivative instruments. The adoption of SFAS No. 133 on January 1, 2001 was not
material.

                                      F-13
<PAGE>   26


3.     INVENTORIES

       INVENTORIES CONSIST OF THE FOLLOWING:
<TABLE>
<CAPTION>

                                                               December 31,
                                                      ------------------------------
                                                          2000               1999
                                                      -----------         ----------
       <S>                                            <C>                 <C>
       Raw Materials                                     $328,000           $334,000
       Work in Progress                                   132,000             71,000
       Finished Goods                                      71,000            106,000
                                                      -----------         ----------
                                                         $531,000           $511,000
                                                      ===========         -=========
</TABLE>

4.     FIXED ASSETS
       FIXED ASSETS CONSISTS OF THE FOLLOWING:
<TABLE>
<CAPTION>

                                                                December 31,
                                                      ------------------------------
                                                          2000               1999
                                                      -----------        -----------
       <S>                                            <C>                <C>
       Laboratory equipment                            $1,301,000         $1,279,000
       Office equipment and furniture                     523,000            523,000
       Leasehold improvements                             514,000            514,000
       Equipment under capital lease                       87,000                  -
                                                      -----------        -----------
                                                        2,435,000          2,316,000
       Accumulated depreciation and amortization       (1,958,000)        (1,840,000)
                                                      -----------        -----------
                                                         $477,000          $ 476,000
                                                      ===========        ===========
</TABLE>

         Depreciation and amortization of fixed assets was $118,000, $122,000
and $237,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

5.       ACQUISITION

         On April 23, 1998, the Company acquired Stellar Bio Systems, Inc.
("Stellar"), a manufacturer and distributor of in vitro diagnostic products and
research reagents. Reagents are individual components of diagnostic products,
such as antibodies, calibrators and serum used in the biotechnology industry.
The purchase price was $120,000 in cash and $700,000 in Class A Common Stock at
the market value on the acquisition date (398,406 shares), plus future
contingent payments of $650,000 in Class A Common Stock to be paid over three
years based upon future sales levels of Stellar, with the Class A Common Stock
to be valued at its market value on the acquisition agreement anniversary dates.
On April 23, 1999, the Company made the first contingent payment of $150,000 in
Class A Common Stock (131,118 shares). On April 24, 2000, the Company made the
second contingent payment of $20,000 in Class A Common Stock (10,811 shares).
The Acquisition was accounted for by the purchase method. Results of operations
of Stellar have been included in the Company's consolidated financial statements
since the date of acquisition. The excess of the aggregate purchase price over
the fair value of net assets acquired of $791,000 has been allocated to
intangible assets (intellectual know-how of $100,000 and goodwill of $691,000)
and is being amortized over a 10-year period. Any additional future payments
required under the contingent earnout provisions of the purchase agreement will
be accounted for as additional goodwill and will be amortized over the remaining
life of the goodwill. Accumulated amortization of

                                      F-14
<PAGE>   27
intangible assets was approximately $192,000, $114,000 and $41,000 as of
December 31, 2000, 1999 and 1998, respectively.

6.       ACCOUNTS PAYABLE AND ACCRUED EXPENSES

         Accounts payable and accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                          December 31,
                                               ---------------------------------
                                                 2000                  1999
                                               -----------          ------------
         <S>                                   <C>                  <C>
         Accounts Payable                         $220,000            $1,117,000
         Professional Fees                          77,000                98,000
         Payroll and Related Expenses               71,000               366,000
                                               -----------          ------------
                                                  $368,000            $1,581,000
                                               ===========          ============
</TABLE>

7.       LONG TERM DEBT:

         On May 20, 1998, the Company completed a private placement to three
accredited investors of an aggregate of $4,000,000 of 5% Convertible Debentures
due May 20, 2001, and three series of Warrants to purchase up to an aggregate of
261,288 shares of the Company's Class A Common Stock. Interest on the Debentures
was payable only on maturity, conversion, redemption or when other payment was
made on the Debentures in cash or, if registered for resale under the Securities
Act of 1933, as amended, in shares of the Company's Class A Common Stock valued
at the applicable Debenture conversion price. These debentures were repurchased
on November 11, 1998 (see below).

         The Company also issued to the investors warrants in series entitling
the investors to purchase, at an exercise price of $1.9141 per share, an
aggregate of 261,228 shares of the Company's Class A Common Stock at any time to
and including May 19, 2002. These warrants were cancelled on November 11, 1998
(see below).

         In conjunction with the private placement, the Company incurred both
cash and noncash issuance costs totaling $525,000. These issuance costs were
amortized on a straight-line basis, which is not materially different than the
effective interest rate method, as a component of interest expense through
November 11, 1998. Upon conversion of the Debentures, the related unamortized
deferred financing costs were charged to paid-in capital. The fair value of the
warrants as determined using an option-pricing model of $252,000, was recorded
as additional paid-in capital and included in the $525,000 total issuance costs
related to these Debentures. In addition, the Company recorded additional
paid-in capital and debt discount of $762,000 to reflect the intrinsic value of
the maximum market price conversion discount (16%) related to these Debentures.
The debt discount was amortized and charged to interest expense from May 20,
1998 through November 11, 1998. The unamortized issuance costs and debt discount
were included in the extraordinary charge for early extinguishment discussed
below.

         On November 11, 1998, the Company repurchased the then outstanding
Debentures for a total of $3,852,000 (principal amount of $3,248,000 plus
accrued interest of $79,000 and a $525,000 premium). As a result of the
repurchase the Company has recorded a one-time extraordinary charge to earnings
of $1,140,000 which represents the loss on early extinguishment.

                                      F-15
<PAGE>   28


         For each of the aforementioned debt instruments and warrants, the fair
value of each was estimated on the date of the agreement using an option-pricing
model with the following assumptions: dividend yield of 0%; expected volatility
of 135% in 1998; risk-free interest rate of range 5.7% to 6.5% and expected
lives of 2 to 5 years dependent on the life of the instrument.

NOTES PAYABLE

         Notes payable at December 31, 2000 primarily represents the remaining
balance of an obligation arising from services rendered. Notes payable at
December 31, 1999 primarily represents demand notes payable to the Company's
Chairman.

CAPITAL LEASE OBLIGATION

         During fiscal 2000, the Company entered into lease obligations of
$87,000 for the acquisition of computer equipment, which contains a bargain
purchase option. As a result, the present value of the remaining future minimum
lease payments, with imputed interest rates ranging from approximately 11.7% to
14.6%, are recorded as a capitalized lease asset and related capitalized lease
obligation. Future minimum payments at December 31, 2000 are as follows:

    2001                                                           $ 24,000
    2002                                                             28,500
    2003                                                             28,500
    2004                                                             24,100
    2005                                                              4,100
                                                                   --------
    Total minimum lease payments                                    109,200
    Less amounts representing interest                              (22,200)
                                                                   --------
    Present value of net minimum capital lease payments            $ 87,000
                                                                   ========


8.        STOCKHOLDERS' EQUITY:

DESCRIPTION OF CLASS A AND CLASS B COMMON STOCK

         Holders of Class A Common Stock and Class B Common Stock have equal
rights to receive dividends, equal rights upon liquidation, vote as one class on
all matters requiring stockholder approval, have no preemptive rights, are not
redeemable and do not have cumulative voting rights; however, holders of Class A
Common Stock have one vote for each share held while holders of the Class B
Common Stock have ten votes for each share held on all matters to be voted on by
the stockholders. All Class B Common Stock is owned by the Chairman of the Board
and may be converted into Class A Common Stock on a share-for-share basis at
the option of the holder and generally is automatically converted in the event
of sale or, with certain exceptions, transfer.

PRIVATE PLACEMENT

         On October 27, 1998, the Company entered into an agreement to issue an
aggregate of 10,800,000 shares of its Class A Common Stock to a group of
accredited investors at a price of $.25 per share, a price above the market
price of the Company's Class A Common Stock at the time. Of such shares,
4,000,000 shares were purchased by Alfred J. Roach, the Company's Chairman
of the

                                      F-16
<PAGE>   29

Board of Directors and Chief Executive Officer, for an aggregate price of
$1,000,000. The Company has registered the shares issued in the private
placement under the Securities Act of 1933, as amended. The proceeds from this
private placement were used to repurchase the 5% Convertible Debentures (see
Note 7).

         On January 27, 2000, the Company entered into an Exclusive License
Agreement with Abbott Laboratories under which the Company granted to Abbott an
exclusive worldwide license to its ABS-103 compound, related technology and
patent rights. The Exclusive License Agreement gives Abbott the exclusive right
to develop and market the compound, which presently is in the pre-clinical
stage. In consideration for the license grant and in addition to customary
royalties on sales, Abbott paid the Company an initial non-refundable license
fee of $500,000 and agreed to pay additional milestone payments aggregating up
to $17 million depending upon successfully reaching development milestones,
generally by indication. The Company has no obligation to provide any additional
services under this agreement. In connection with the entering into of the
Exclusive License Agreement, the Company and Abbott also entered into a Stock
Purchase Agreement dated January 27, 2000 pursuant to which Abbott purchased
2,782,931 shares (the "Abbott Shares") of the Company's Class A Common Stock for
$1,500,000.

         The Company also entered into a Registration Rights Agreement with
Abbott pursuant to which, among other things, the Company agreed to register the
Abbott Shares under the Securities Act of 1933, as amended upon Abbott's request
at any time after the first anniversary of the sale and to include the Abbott
Shares in any other registration of the Company's securities under the
Securities Act after that date. All expenses of registration of the Abbott
Shares, other than underwriting discounts, selling commissions and fees and
disbursements of counsel for Abbott, are to be borne by the Company.

PREFERRED STOCK

         On December 31, 1999 the Company and Biotechnology Value Fund, L.P.
("BVF") signed a letter agreement, subject to negotiation of definitive
agreements, authorization of preferred stock and certain other matters, for BVF
to invest between $2 and $3 million for the purchase of between 4,000 and 6,000
shares of Series A Convertible Preferred Stock (the "Preferred Stock") and
related Warrants.

         When the Company and BVF began negotiating the definitive agreements
for the sale transaction in January 2000, in order to induce BVF to purchase the
full $3 million, at the suggestion of BVF, the Company's Chairman Mr. Roach
agreed that rather than demand repayment of his demand notes, he would convert
$500,000 of the approximately $776,000 plus accrued interest owed to him into an
additional investment in the Company on terms identical to the terms previously
negotiated with BVF and that the balance of the amount owed him (approximately
$276,000 of principal) could be repaid at the rate of $100,000 of principal and
interest per month until repaid in full. Accordingly, $500,000 of the amount
owed Mr. Roach was converted into 1,000 shares of Preferred Stock and 1,000,000
Warrants.

         The Company entered into a Securities Purchase Agreement dated as of
February 3, 2000 with BVF and Mr. Roach relating to the issuance of the 7,000
shares of Preferred Stock and Warrants for 7,000,000 shares of Class A Common
Stock. On February 7, 2000, BVF loaned $3,000,000 to the Company, equaling the
purchase price for 6,000 shares of Preferred Stock and

                                      F-17
<PAGE>   30

6,000,000 Warrants. On March 3, 2000, after receiving stockholder consent to
the proposed sale, the Company repaid BVF's loan and $500,000 of the Company's
indebtedness to Mr. Roach by issuing 6,000 shares of Preferred Stock and
6,000,000 Warrants to BVF and 1,000 shares of Preferred Stock and 1,000,000
Warrants to Mr. Roach.

         Preferred stock dividend related to warrants of $2,450,000 represents
the noncash fair value of the warrants issued to BVF and Mr. Roach, determined
by using an option-pricing model, in the private placement. The following
assumptions were used for this fair value computation: dividend yield of 0%,
volatility of 106%, risk-free interest rate of 5.01% and expected lives of 5
years.

         The Shares of Preferred Stock: (i) have the right to participate with
dividends declared on the Common Stock, if, as and when declared, on an
as-converted basis; (ii) contain customary anti-dilution adjustments for
mechanical adjustments in the event of stock splits and similar transactions;
(iii) contain restrictions on subsequent issuances of other preferred stock
ranking equal to or superior to the Preferred Stock without the consent of the
holders of a majority of such Preferred Stock; (iv) have a liquidation
preference equal to the original issue price of the Preferred Stock, plus any
accrued and unpaid dividends; (v) will not be entitled to vote except as a
separate class when its rights are affected; and (vi) will be convertible at any
time after the original issue date at the option of the holder. Each share of
Preferred Stock initially will be convertible into 1,000 shares of Class A
Common Stock, or a conversion price of $.50 per share of Class A Common Stock.

         Under the terms of the Registration Agreement the Company has filed a
Form S-3 Registration Statement covering Class A Common Stock issuable upon
conversion of the Preferred Stock and the exercise of the warrants, which went
effective June 2000.

STOCK OPTION PLANS

         The Company's 1986 Stock Option Plan (the "1986 Plan") provided for the
grant of incentive stock options and/or non-qualified options until July 1997 to
purchase up to an aggregate of 4,450,000 shares of Class A Common Stock. Options
were granted at exercise prices not less than the fair market value at the date
of grant and for a term not to exceed ten years from the date of grant; except
that an incentive stock option granted under the 1986 Plan to a stockholder
owning more than 10% of the outstanding Common Stock of the Company could not
have a term which exceeded five years nor have an exercise price of less than
110% of the fair market value of the Class A Common Stock on the date of the
grant. The outstanding options have a vesting period ranging two years to four
years ratably from the date of grant.

         Changes in outstanding options and options available for grant under
the 1986 Plan, expressed in number of shares, are as follows:

                                      F-18
<PAGE>   31

<TABLE>
<CAPTION>
                                                         For the Years Ended
                                 -------------------------------------------------------------------
                                      December 31, 2000                     December 31, 1999
                                 ----------------------------        -------------------------------
                                  Shares        Weighted Avg.          Shares          Weighted Avg.
                                  Under             Option             Under               Option
                                  Option            Price              Option              Price
                                 --------       -------------        -----------       -------------
<S>                               <C>            <C>                 <C>               <C>
Options outstanding,
beginning of year                2,476,250          $4.20             2,790,500            $4.11
Exercised                         (147,250)         $1.87                    --              --
Cancelled                          (11,000)         $2.32              (272,250)           $3.65
Expired                           (135,000)         $1.93               (42,000)           $2.00
Options outstanding,
end of year                      2,183,000          $4.50             2,476,250            $4.20
Options exercisable,
end of year                      2,183,000          $4.50             2,453,250            $4.21
Options available
for grant, end of year                  --                                   --
</TABLE>


                                      F-19
<PAGE>   32


         The Company's 1993 Non-Employee Director Stock Option Plan (the "1993
Plan") provides for the issuance of stock options for up to 500,000 shares of
Class A Common Stock to outside directors of the Company. Options to purchase
10,000 shares of Class A Common Stock are automatically granted immediately
following each Annual Meeting of the Company to each outside director elected at
the Annual Meeting. The option exercise price is 100% of the fair market value
of the Class A Common Stock on the date of grant and the option may be exercised
during a period of five years from the date of grant at the rate of 25% each
year on a cumulative basis, commencing one year from the date of grant.

              Changes in outstanding options and options available for grant
under the 1993 Plan, expressed in number of shares, are as follows:

<TABLE>
<CAPTION>
                                                         For the Years Ended
                                 -------------------------------------------------------------------
                                      December 31, 2000                     December 31, 1999
                                 ----------------------------        -------------------------------
                                  Shares        Weighted Avg.          Shares          Weighted Avg.
                                  Under             Option             Under               Option
                                  Option            Price              Option              Price
                                 --------       -------------        -----------       -------------
<S>                               <C>            <C>                 <C>               <C>
Options outstanding,
  beginning of year               140,000            $2.63              120,000            $3.27
Granted                            30,000            $1.53               40,000            $1.09
Exercised                         (15,000)           $1.88                   --               --
Cancelled                          (7,500)           $4.58                   --               --
Expired                                --               --              (20,000)           $3.38
Options outstanding,
  end of year                     147,500            $2.39              140,000            $2.63
Options exercisable,
end of year                        97,500            $2.94               57,500            $3.76
Options available
  for grant, end of year          325,000                               347,500

</TABLE>

                                      F-20
<PAGE>   33

         The Company's 1996 Stock Option Plan, as amended (the "1996 Plan"),
which replaced the 1986 plan, provides for the grant of incentive stock options
and/or non-qualified options to employees, officers and consultants of the
Company to purchase up to an aggregate of 4,000,000 shares of Class A Common
Stock. Options may be granted at exercise prices not less than the fair market
value at the date of grant and may be exercisable for a period not to exceed ten
years from the date of grant; except that the term of an incentive stock option
granted under the 1996 Plan to a stockholder owning more than 10% of the
outstanding Common Stock of the Company must not exceed five years nor have an
exercise price of less than 110% of the fair market value of the Class A Common
Stock on the date of the grant. The majority of options outstanding are
exercisable 25% each year on a cumulative basis, commencing one year from the
date of grant.

         Changes in outstanding options and options available for grant under
the 1996 Plan, expressed in number of shares, are as follows:

<TABLE>
<CAPTION>
                                                            For the Years Ended
                                         -------------------------------------------------------
                                             December 31, 2000             December 31, 1999
                                         -------------------------     -------------------------
                                          Shares     Weighted Avg.      Shares     Weighted Avg.
                                          Under          Option         Under          Option
                                          Option         Price          Option         Price
                                         ---------   -------------     ---------   -------------
<S>                                      <C>              <C>          <C>             <C>
Options outstanding,
beginning of year                        3,289,002        $1.05        1,487,750       $1.99
Granted                                    792,500        $0.47        2,255,000       $0.70

Exercised                               (1,062,594)       $0.77           (5,250)      $0.61


Cancelled                                 (169,789)       $0.92         (448,498)      $2.40
Options outstanding,
end of year                              2,849,119        $1.00        3,289,002       $1.05
Options exercisable,
end of year                              1,991,744        $1.17        1,250,382       $1.75
Options available
for grant, end of year                      83,037                       705,748
</TABLE>


         The Company's 2000 Stock Option Plan, (the "2000 Plan"), which is in
addition to the 1996 plan, provides for the grant of incentive stock options
and/or non-qualified options to employees, officers and consultants of the
Company to purchase up to an aggregate of 3,000,000 shares of Class A Common
Stock. Options may be granted at exercise prices not less than the fair market
value at the date of grant and may be exercisable for a period not to exceed ten
years from the date of grant; except that the term of an incentive stock option
granted under the 2000 Plan to a stockholder owning more than 10% of the
outstanding Common Stock of the Company must not exceed five years nor have an
exercise price of less than 110% of the fair market value of the Class A Common

                                      F-21
<PAGE>   34

Stock on the date of the grant. There were no options granted under this plan in
fiscal year 2000.

         The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Accordingly, no compensation cost has
been recognized for the stock option plans. Had compensation cost for the
Company's stock option plans been determined based on the fair value at the
grant date for options granted in 2000, 1999 and 1998 in accordance with the
provisions of SFAS No. 123, the Company's net loss and loss per share would have
been increased to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                      2000              1999              1998
                                                   -----------       -----------       -----------
<S>                                                <C>               <C>               <C>
  Net loss -- as reported                          ($6,225,000)      ($5,351,000)      ($7,548,000)

  Net loss -- pro forma                            ($6,881,000)      ($6,130,000)      ($8,243,000)

  Basic and diluted loss per share -- as
  reported                                           ($.14)            ($.14)            ($.29)

  Basic and diluted loss per share -- pro
  forma                                              ($.16)            ($.16)            ($.32)
                                                   -----------       -----------       -----------

</TABLE>
         The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 2000, 1999 and 1998: dividend yield of 0%;
expected volatility of 170% in 2000, 106% in 1999 and 135% in 1998; risk-free
interest rate of range 4.4% to 6.8% and expected lives of seven years.

         The weighted average fair value of all three option plans for options
granted were $.49, $.59 and $.50 in 2000, 1999 and 1998, respectively. The
following table sets forth additional SFAS No. 123 disclosure information as to
options outstanding for all three plans at December 31, 2000:
<TABLE>
<CAPTION>
                                                                       Weighted Average
   Shares      Exercisable         Exercise        Weighted Average       Remaining
Outstanding      Shares          Price Range       Exercise Price      Contractual Life
-----------    -----------    ----------------    ----------------    ----------------
<S>            <C>            <C>        <C>           <C>                  <C>
  1,433,750      809,375      $0.25      $0.38         $0.30                8.7
    196,125      116,125      $0.40      $0.66         $0.53                5.9
    807,994      694,244      $1.00      $1.50         $1.05                7.1
    442,550      370,050      $1.52      $2.25         $1.83                4.9
    361,450      355,950      $2.38      $3.50         $3.37                6.0
  1,864,250    1,853,000      $3.66      $5.50         $4.90                1.4
     72,500       72,500      $5.75      $7.75         $6.32                2.9
      1,000        1,000           $10.00             $10.00                1.2
  ---------    ---------
  5,179,619    4,272,244


</TABLE>


                                      F-22
<PAGE>   35

OTHER OPTIONS GRANTED

         The Company entered into a consulting agreement with an unaffiliated
third party to assist in the strategic planning and implementation of the
Company's licensing, collaborative and co-marketing plans, which expired
February 29, 1996. Pursuant to the agreement, the Company granted an option to
purchase 50,000 shares of Class A Common Stock on or before February 28, 2000 at
$2.25 per share. The Company also granted performance options to purchase 50,000
shares of Class A Common Stock at $2.25 for licensing or collaborative
agreements entered into which met certain criteria. These options are
exercisable for five years from the date of grant. During 2000, the consultant
exercised their option to purchase 50,000 shares of Class A Common Stock at
$2.25 and the balance of 50,000 shares expired.

         The Company has granted an investor relations consultant a warrant to
purchase 50,000 shares of Class A Common Stock on or before November 14, 2000 at
$3.50 per share pursuant to an agreement dated November 27, 1995. This warrant
expired on November 14, 2000.

         The Company entered into an agreement with an unaffiliated third party
dated October 6, 1995 to assist with the marketing of the Company's products and
intellectual property, which agreement has expired. Pursuant to this agreement,
the Company granted performance options to purchase 25,000 shares of Class A
Common Stock and issued 5,000 shares for services rendered under the agreement.
Options were granted for 12,500 shares at $3.00 per share and 12,500 shares at
$5.50 per share. These options are exercisable for five years from the date of
grant. These options expired on February 28, 2001.

         The Company entered into an agreement with an unaffiliated third party
to render financial consulting advice, dated August 13, 1998 and amended on
October 1, 1998. Pursuant to this agreement, the Company granted performance
options to purchase up to 400,000 shares of Class A Common Stock. Options were
granted for 150,000 shares at $.75 per share, 150,000 shares at $1.00 per share
and 100,000 shares at $1.50 per share. The options are exercisable for four
years from the agreement date. The fair value of these options as determined
using an option-pricing model was $124,000, which is being recorded as a noncash
charge over the vesting/service period of the options. The following assumptions
were used for this fair value computation: dividend yield of 0%, volatility of
135%, risk-free interest rate of 4.26% and expected lives of 4 years. The charge
was $81,000 in 1999 and $43,000 in 1998.

         The Company has granted an investor relations consultant a warrant to
purchase up to 300,000 shares of Class A Common Stock on or before January 19,
2004 at $1.00 per share pursuant to an agreement dated January 20, 1999. The
warrant may be exercised in increments of 50,000 share amounts only if certain
milestones are met during the period ending June 30, 2000. The consultant has
earned 250,000 shares under this agreement and the balance of 50,000 shares were
cancelled. The fair value of these warrants as determined using an
option-pricing model was $264,000 which was recorded as a noncash charge over
the one year service period (fiscal year 1999). The following assumptions were
used for this fair value computation: dividend yield of 0%, volatility of 149%,
risk-free interest rate of 4.6% and expected lives of 4 years.

                                      F-23
<PAGE>   36

         The Company has granted an investor relations consultant a warrant to
purchase up to 300,000 shares of Class A Common Stock on or before March 14,
2002 at $3.00 per share pursuant to an agreement dated March 15, 2000. The
warrant may be exercised in increments of 50,000 share amounts only if certain
milestones are met during the period ending September 14, 2001. As of December
31, 2000, the consultant has earned 50,000 shares. The fair value of these
warrants as determined using an option-pricing model was $342,000 which was
recorded as a noncash charge over the one year service period (March 2000 to
February 2001). The following assumptions were used for this fair value
computation: dividend yield of 0%, volatility of 105%, risk-free interest rate
of 6.5% and expected lives of 2 years.

9.       FEDERAL INCOME TAXES:

         At December 31, 2000, the Company had net operating loss carryforwards
of approximately $63,000,000 for income tax purposes. The net operating loss
carryforwards will expire in varying amounts through 2020. In addition, the
Company has approximately $1,300,000 of available research and development tax
credits to offset future taxes. These credits expire through 2020. In accordance
with SFAS No. 109 "Accounting for Income Taxes," the Company has recorded a
valuation allowance of $64,300,000 to fully reserve for the deferred tax benefit
attributable to its net operating loss and tax credit carryforwards due to the
uncertainty as to their ultimate realizability.

         In accordance with certain provisions of the Tax Reform Act of 1986, a
change in ownership of a corporation of greater than 50 percentage points within
a three-year period places an annual limitation on the corporation's ability to
utilize its existing net operating loss carryforwards, investment tax and
research and development credit carryforwards (collectively "tax attributes").
Such a change in ownership was deemed to have occurred in connection with the
Company's 1990 initial public offering, at which time the Company's tax
attributes amounted to approximately $4.9 million. The annual limitation of the
utilization of such tax attributes is approximately $560,000. To the extent the
annual limitation is not utilized, it may be carried forward for utilization in
future years. At December 31, 2000, $4,900,000 of net operating losses is no
longer subject to this limitation.

10.      VARIOUS AGREEMENTS

AGREEMENTS WITH BOSTON UNIVERSITY

         On December 1, 1996, the Company entered into a Sublease Agreement and,
effective January 1, 1997, an Agreement for Services with Boston University.
These two agreements provided for the Company's use of approximately 7,700
square feet of space for laboratories and for its antigen-free technology at a
total annual payment of $275,000. The agreements had an initial term of three
years. In connection with this lease agreement, the Company may, at its option,
pay a portion of the annual lease obligation with Class A Common Stock plus a
warrant to purchase shares of Class A Common Stock. The number of shares are
computed using the average market price of the Company's Class A Common Stock
during the ten days prior to issuance. The warrant shares


                                      F-24
<PAGE>   37

are to be exercisable at a price equal to the closing price of the underlying
Class A Common Stock on the date the warrant is issued and for a period of four
years from the date of issuance. During 1997, the Company issued 48,117 shares
of Class A Common Stock and warrants to purchase 48,117 shares of Class A Common
Stock with the exercise price ranging from $2.13 to $4.75. During 1998, the
Company issued 129,847 shares of Class A Common Stock and warrants to purchase
129,847 shares of Class A Common Stock with the exercise price ranging from $.63
to $2.19. During 1999, the Company issued 29,850 shares of Class A Common Stock
and warrants to purchase 29,850 shares of Class A Common Stock with the exercise
price of $1.28. The fair values of the warrants were calculated using an
option-pricing model at the date of issue and recorded a charge to operations of
$32,000 in 1999, $99,000 in 1998 and $93,000 in 1997. In the fourth quarter of
1998, the Company implemented a consolidation of its research and development
facilities. In 1998, the Company recorded a $252,000 reserve for consolidating
facilities which included severance costs, lease termination, and the write-down
of leasehold improvements. The Boston facilities were closed in June 1999 and
consolidated at the Stellar facilities in Columbia, Maryland.

UNIVERSITY OF NOTRE DAME AGREEMENT

         On December 1, 1983, the Company entered into a lease agreement with
the University of Notre Dame ("Notre Dame Agreement") which was amended and
extended until November 30, 1993, at which time it was terminated. On December
1, 1993, the Company entered into a lease with Notre Dame ("Notre Dame Lease")
for substantially the same premises occupied by the Company under the Notre Dame
Agreement for a term ending August 31, 1995. Notre Dame extended the rental of a
portion of the space through August 31, 1996. In February 1996, the Company
entered into a lease in South Bend, Indiana for approximately 5,200 square feet
with an annual base rent of $52,200. This lease commenced on April 1, 1996 for
an initial five-year term with three one-year renewal options. In September
1996, the Company entered into a second lease for a three year term in South
Bend, Indiana for approximately 3,000 square feet with an annual base rent of
$30,400. In 1997, the Company moved its research and development activities from
South Bend, Indiana to Boston, Massachusetts. The Company closed both facilities
and has terminated both leases.

         Under the Notre Dame Agreement, the Company was required to pay Notre
Dame for the direct and indirect payroll cost of substantially all of the
Company's research and development personnel, purchases of laboratory supplies,
items of equipment or other costs associated with the research projects.

         Notre Dame has granted the Company all rights, title and interest in
and to any inventions, patents and patent applications for research projects
funded by the Company. Inventors of any processes or technology which receive
Company support have assigned his or her interest in the product, patent or
patent applications to the Company. The Company did not incur costs under the
Notre Dame Agreement during the three years ended December 31, 2000, and
incurred $6,150,000 for the period from inception (September 1, 1983) through
December 31, 1996.

         The Company has agreed to pay Notre Dame a royalty of 5% of the net
income the Company achieves from sales of products resulting from
Company-sponsored research activities at Notre Dame. Royalty payments shall
continue for a ten-year period from the date of the first commercial sale of a
product, regardless of the continuation of the Notre Dame Agreement.

                                      F-25
<PAGE>   38

EMPLOYMENT AGREEMENTS

         The Executive Vice-President is a party to an employment agreement with
the Company ending September 30, 2001. The aggregate annual minimum compensation
under this agreement as of December 31, 2000 was approximately $90,000. This
officer also is party to a confidentiality agreement with the Company requiring
them to maintain certain information in confidence during and subsequent to the
employment with the Company.

SCIENTIFIC ADVISORY COMMITTEE AGREEMENTS

         The Company has entered into advisory board agreements with certain
research scientists with respect to specific projects in which the Company has
an interest. The payments to the advisors for informal meetings and other
consultations as a group were approximately $37,000, $65,000 and $115,000 for
the three years ended December 31, 2000, 1999 and 1998, respectively. Generally,
members of the Company's Scientific Advisory Committee are employed by or have
consulting agreements with third parties, the businesses of which may conflict
or compete with the Company and any inventions discovered by such individuals
will not become the property of the Company.

         As part of its development stage activities, the Company enters into
various agreements that provide for the expenditure of funds for research and
development activities and typically provide for the payment of royalties
(between 2% to 8% of net sales) by the Company if any products are successfully
developed and marketed as a result of the work being performed under the
agreement. The following is a summary of significant agreements the Company has
entered into:

LICENSE AGREEMENTS

         On January 24, 1992, the Company entered into an exclusive, 15 year
license agreement with Yamanouchi Pharmaceutical Co., Ltd. ("Yamanouchi"), a
Japanese pharmaceutical company. Under this agreement, Yamanouchi may
manufacture, use or market diagnostic assays that contain the Company's
monoclonal antibody, 45-J, in Japan and Taiwan. Yamanouchi paid a
non-refundable, initial sign-up payment to the Company of $900,000 (net of
Japanese taxes). The agreement provides that Yamanouchi is to pay the Company a
fixed percentage over the Company's manufacturing costs of the 45-J antibody
supplied to Yamanouchi. On an ongoing basis, Yamanouchi is to pay the Company
royalties at the rate of 10% of all net sales of diagnostic assays sold by
Yamanouchi or its affiliates during each calendar year of the agreement term.
Additionally, Yamanouchi is to pay the Company 50% of any initial fees,
royalties or other consideration received with respect to any sublicense granted
by Yamanouchi. To date, Yamanouchi has not made any sales.

         On December 10, 1992, the Company entered into an agreement (as
amended) with University College Dublin, Ireland granting the Company an
exclusive license for drugs/compounds to halt the onset and/or progression of
neurodegenerative diseases, in general, and Alzheimer's disease, in particular.
The agreement's term is the duration of any patents that may be granted to the
university with a minimum of 10 years. Pursuant to the agreement, the Company is
to pay the university a royalty of 5% of net income relating to product sales.
The Company expensed $82,000



                                      F-26
<PAGE>   39

in 2000, $18,000 in 1999 and $5,000 in 1998 for certain research expenses,
supplies and equipment under this agreement.

         On August 10, 1993, the Company entered into a five-year collaboration
agreement with the Free University of Berlin to develop therapeutic compounds.
The Company also acquired a series of anticonvulsant compounds. Pursuant to the
agreement, the Company is to pay a royalty of 5% of the net product sales. The
agreement lasts the life of the patent or a minimum of 10 years. The Company
expensed $72,000 in 2000, $75,000 in 1999 and $103,000 in 1998 for research
expenses and supplies under this agreement.

         In October 1995, ABS entered into a license and collaboration agreement
with F. Hoffmann-La Roche, Ltd. ("Hoffmann-La Roche") for the co-development and
marketing of the Company's TpP test for the detection of active thrombosis
(blood clot formation). The agreement grants Hoffmann-La Roche a worldwide
license to market the TpP test in a latex based particle agglutination format.
Under the agreement, the Company received a $60,000 non-refundable development
payment, to adapt the TpP test in the latex based particle agglutination format
to Hoffmann-La Roche's automated diagnostic systems. The Company is also to
receive milestone payments upon achievement of certain commercialization goals.
The TpP test is to be manufactured by the Company for use on Hoffmann-La Roche's
instruments. ABS is to receive a percentage of Hoffmann-La Roche's net selling
price for the Company's manufacturing of the TpP test plus a 5% royalty on net
sales made by Hoffmann-La Roche. Under the agreement, the TpP test is also to be
sold by ABS and Hoffmann-La Roche to other diagnostic companies using similar
particle agglutination technology. On these sales, gross profit is to be shared
equally between the Company and Hoffmann-La Roche. To date, ABS has not received
any milestone or royalty payments.

         In December 1995, ABS entered into a license agreement with Abbott
Laboratories ("Abbott") for the marketing of the Company's TpP assay. The
license agreement grants Abbott a worldwide license to market the TpP test for
Abbott's immunoassay formats. The Company received a $100,000 non-refundable
up-front payment and is to receive milestone payments upon achievement of
certain development and commercialization goals. The Company is to receive a 5%
royalty on net sales made by Abbott. In addition, the reagent for the TpP test
is to be manufactured by the Company for use by Abbott. To date, ABS has not
received any milestone or royalty payments.

         On January 27, 2000, the Company entered into an Exclusive License
Agreement with Abbott under which the Company granted to Abbott an exclusive
worldwide license to its ABS-103 compound, related technology and patent rights.
The Company also entered into a Registration Rights Agreement with Abbott. (See
Note 8 for details regarding this agreement.)


                                      F-27
<PAGE>   40
11.      COMMITMENTS AND CONTINGENCIES

LEASES

         ABS leases 6,000 square feet of office space in New York under a lease
expiring July 2001 (with an annual base rent of $41,000), which it intends to
renew. ABS' subsidiary, Stellar, has a lease covering 16,000 square feet in
Maryland, with an annual base rent of $184,000 and a term ending March 31, 2006.

LITIGATION

         From time to time we are a party to certain claims and legal
proceedings in the ordinary course of business, none of which, in our opinion,
would have a material adverse effect on our financial position or results of
operations.



                                      F-28