
<PAGE>


================================================================================
                                   FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION
                                              Washington, D. C. 20549

[x]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934
                  For the fiscal year ending December 31, 2000

                           OR

[ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934
          For the transition period from

                         Commission file number 0-26323

                            ADVANCED BIOTHERAPY, INC.
             (Exact name of registrant as specified in its charter)

Delaware                                                        51-0402415
(State or other jurisdiction of                                (IRS Employer
incorporation or organization)                               Identification No.)

                         5950 La Place Court, Suite 210
                       Carlsbad, California 92008 (Address
              of principal executive offices, including zip code.)

                                 (760) 431-4282
              (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:    Common Stock

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

Check if no disclosure of delinquent filers pursuant to Item 405 of Regulation
S-B is contained herein, and no disclosure will be contained, to the best of
Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

State Issuer's revenues for its most recent fiscal year.
         December 31, 2000:  $-0-

================================================================================

<PAGE>


The aggregate market value of the voting stock held by non-affiliates computed
by reference to the average of the bid and ask price of such stock on March 28,
2001 was $7,595,270. Excludes 12,722,299 shares of Common Stock held by
directors, executive officers and shareholders whose beneficial ownership
exceeds ten percent (10%) of the shares outstanding on March 28, 2001.

Issuers involved in Bankruptcy Proceedings during the past Five Years:

         Not Applicable.

State the number of shares outstanding of each of the Issuer's classes of common
equity, as of the latest practicable date:

         March 28, 2001 - 39,848,265 shares of Common Stock

Documents Incorporated by Reference:

None.


<PAGE>


ITEM 1.  BUSINESS

GENERAL INTRODUCTION

         Advanced Biotherapy Inc. (the "Company") is a corporation organized and
existing under the laws of the State of Delaware, headquartered in Carlsbad,
California. It is a biotechnology company developing therapeutics for a range of
autoimmune diseases based on an anti-cytokine platform technology. Cytokines are
soluble components of the immune system that are largely responsible for
regulating the immune response. When over produced, as in certain autoimmune
diseases, interferons and cytokines can lead to immune system disturbance and
inflammation. This results in localized tissue damage and leads to the pathology
seen in autoimmune diseases (AD). The Company's drugs are designed to reduce the
levels of certain cytokines.

         Prior to marketing the Company's development stage products, the
Company must obtain regulatory approval from the United States Food and Drug
Administration ("FDA"). The Company is not sufficiently funded to allow it to
complete the product development process, obtain FDA approval, and market its
products. However, the Company plans to seek additional financing through the
private sale of restricted securities to investors, enter into joint ventures or
licensing or similar arrangements with large pharmaceutical companies to provide
the funding necessary for additional activities. There can be no assurance that
the Company will enter into any such arrangements, obtain the appropriate
regulatory approvals, or develop, manufacture, market, or distribute
commercially viable products.

         To date, the Company's activities have consisted primarily of research,
development and human clinical testing. Such activities have resulted in
accumulated losses at December 31, 2000. The Company anticipates that it will
incur substantial losses in the foreseeable future as a result of its continued
product development. There are no assurances that the Company will be successful
in completing its product development, receive FDA approval, implement
manufacturing operations and commercially market its development stage products.

         The Company develops drugs that may effectively treat a range of
autoimmune diseases. The technology of the Company is based upon the work of
Drs. Simon and Boris Skurkovich who first suggested that autoimmune disease may
be the result of augmented cytokine production (Nature, Vol. 241, P 551-552,
1974). The Company has conducted a number of clinical trials (conducted at major
institutes of the Medical Academy of Sciences in Russia), in which it has
evaluated the efficacy of a series of polyclonal antibodies, raised against a
variety of cytokines, in autoimmune diseases such as rheumatoid arthritis (RA),
multiple sclerosis (MS) and acquired immunodeficiency disease (AIDS).

         In four randomized, placebo-controlled, double blind trials conducted
in Russia, the Company has demonstrated efficacy of its anti-cytokine strategy
in both RA and MS. These studies have permitted the Company to determine which
cytokines are most active in the AD process, and therefore, which need to be
reduced to treat the disorder. With a five-day treatment course, statistically
significant and clinically relevant responses were obtained that persisted for
as long as one year after treatment termination in the MS studies and for one
month in the RA studies.


                                       2
<PAGE>


BUSINESS OBJECTIVE

         The business strategy of the Company is twofold in nature and involves
the engagement of a corporate partner to assist in the clinical development of
its drug treatments for autoimmune disorders. This will involve, upon the
identification of such a partner, the filing of the necessary documents with the
FDA, conducting clinical trials and obtaining the necessary regulatory
approvals, (New Drug Application (NDA) or a 510K device approval). The Company
does not intend to market its drug products if they are approved by the FDA, but
will instead seek a royalty arrangement with a corporate partner who will market
the product when and if it is approved.

         The second element of the Company's business strategy is to seek out
merger and acquisition candidates that can either expand the Company's
technology base in the area of autoimmune disease therapeutics or bring approved
products into the Company that will generate recurring revenue.

TECHNICAL BACKGROUND

         The Company's main biotechnology platform involves the use of
antibodies directed against certain carefully selected cytokines. An antibody is
a protein that is secreted by cells in the blood and is part of the body's
natural defense system against foreign invaders such as viruses or bacteria.
Antibodies seek out and selectively bind to their targets, triggering such
effects as neutralizing toxins and marshaling the immune system against
infectious microorganisms and cancer cells. The Company believes that its
development-stage antibody treatment removes or neutralizes certain interferons
and cytokines. These are soluble components of the immune system that are
largely responsible for regulating the immune response and inflammation. During
certain ADs, such as RA, MS and Type I diabetes, certain interferons (IFN) and
other cytokines are over produced by the human body which results in localized
damage to organs and tissues and constitutes the pathology of AD.

         In particular, interferon-alpha (IFN-(alpha)) or interferon-gamma
(IFN-(gamma)) is known to trigger or exacerbate ADs in animals prone to AD, and
in patients who have had underlying autoimmune conditions or a predisposition to
them. In animal models of a number of human ADs, the administration of
antibodies to IFN-(alpha) or IFN-(gamma) halted or delayed these diseases. This
includes antibodies to IFN-(gamma) given to:

         1.       New Zealand Black and White mice known to develop a severe AD
                  similar to systemic lupus erythematosus in humans.

         2.       Lewis rats afflicted with actively-induced experimental AD of
                  the peripheral nervous system.

         3.       NOD mice, an animal model of human Type I Diabetes.

         4.       BB/Wor rats, a diabetes-prone strain, and CBA/J mice, a strain
                  susceptible to experimental autoimmune thyroiditis (EAT). In
                  all cases, the anti-IFN-y antibodies suppressed or reduced the
                  disease.

         The biological basis for which the immune system launches an immune
response directed against a "self antigen" is still considered unclear. Many of
the autoimmune


                                       3
<PAGE>


diseases are, however, associated with identifiable antigens of the Human
Leukocyte Antigen (HLA) complex, specifically, the Class II proteins. The cells
which constitute the immune system are not confined to one location or organ, so
there is a need for them to communicate with each other in order for the various
components (mediator cells, phagocytic cells, T-cells and B-cells) of the system
to function in a coordinated manner. The agents, which effect this
communication, are the cytokines. Biochemically, the cytokines are small
proteins or polypeptides and include the interferons, IFN, (alpha, beta and
gamma), as well as the Interleukins (IL) and the Tumor Necrosis Factors (TNF),
that include TNF alpha (TNF-(alpha)) and TNF beta (TNF-(beta)).

         The cytokines are divisible into the pro-inflammatory (IL-1, 2 and 12,
INF-(gamma), INF-(alpha), TNF-alpha and TNF-beta) and the anti-inflammatory
cytokines (IL-4, 5, 6, 10, 13 and IFN-Beta). Transforming growth factor
(TGF)-beta is also an anti-inflammatory cytokine.

         There is substantial data in the literature documenting that upon
immune system activation, the cytokines spring into action in a coordinated
manner that can best be described as a pseudo-cascade. Each cytokine has a
specific role in the coordination of the immune response and in the inflammatory
process. Cytokine interactions with cells can result in cell proliferation,
suppression, or differentiation and may also result in the synthesis of other
cytokines by the target cell.

IFN-(GAMMA) AS A THERAPEUTIC TARGET

         The cytokine pseudo-cascade is initiated by IFN-(gamma) which is
followed by the production of other inflammatory cytokines such as TNF-(alpha)
and IFN-(alpha) that exert effects on yet other cells which result in the actual
pathology of various ADs. The relevant cascade for the production of killer
T-Cells (TH-1 Line) is as follows:

         IFN-(gamma)+IL1+antigen--Killer T cell--TNF-(alpha) + IFN-(gamma) +
         IFN-(alpha) secretion

         Simply sequestering TNF-(alpha), as do Embrel(TM) and Remicade(TM), two
products that are already on the market, may not effectively deal with the
overproduction of IFN-(alpha) and IFN-(gamma), both of which are
pro-inflammatory. Removing IFN-(gamma) would, however, remove or lower all three
inflammatory cytokines since IFN-(gamma) is upstream in location to TNF-(alpha)
in the cytokine cascade. IFN-(gamma) is responsible for the activation of killer
T-cells that produce many inflammatory cytokines. It, therefore, is upstream to
many of the other cytokines and its reduction in AD may represent an effective
therapeutic strategy. The Company's drug development strategy therefore centers
on the reduction of IFN-(gamma) levels in AD patients.

         A global effect on reducing the cytokine cascade may be possible by
removing or reducing IFN-(gamma). The Company believes that treatment by
TNF-(alpha) lowering drugs alone has little to no effect on the activation of
killer T-cells that produce many of the harmful cytokines. The Company's product
development is conceptually based on this immunological postulate.

         IFN-(gamma) also leads to the synthesis of MHC class II antigens in a
variety of cell types. Induction of these antigens is thought to be associated
with the autoimmune pathology in a number of diseases. The induction of
activated T-cells requires that these specific MHC class II antigens be
expressed, and this induction is a component of the


                                       4
<PAGE>


resulting tissue destruction and inflammation in autoimmune disorders. Reduction
of IFN-(gamma) would, therefore, be expected to inhibit activation of killer
T-cells and, therefore, reduce or avoid the autoimmune reaction.

         In addition, a recent study has shown that IFN-(gamma) levels correlate
with the disability score in MS patients (Mult. Scler, Feb. 2000, Vol. 6, P.
19-23), and another study showed that sequestering of IFN-(gamma) in mice
prevented the onset of autoimmune Diabetes Mellitus (Gene Ther., May 1999, Vol.
6, P. 771-7). Both of these observations provide further support the central
role of IFN-(gamma) in the etiology of autoimmune diseases, and further suggest
that reducing the levels of this cytokine may have therapeutic benefit.

PRODUCT DEVELOPMENT PLAN

         The process of the cytokine pseudo-cascade is extremely complex and not
fully understood, but it appears that this process results in the overproduction
of the inflammatory cytokines, IFN-(gamma) and TNF-(alpha), that can contribute
to the pathology of AD. The Company, and much of the immunology community,
agrees that the regulation of TNF-(alpha) and IFN-(gamma) presents an
opportunity for new drug development in a variety of autoimmune diseases.
Clearly the autoimmune diseases are associated with high levels of cytokines in
the blood, and there is now ample evidence that sequestration of certain
cytokines, such as TNF-(alpha) and IFN-(gamma), is associated with symptomatic
relief of autoimmune diseases such as RA, MS and Crohn's disease. The two
products that are already on the market that target the reduction of
TNF-(alpha), Embrel(TM) and Remicade(TM), are, in the Company's opinion, not
optimal for the management of AD. The therapeutic proof of principle therefore
already exists for the usefulness of cytokine mediating strategies as
therapeutic interventions in autoimmune disease.

         The Company believes that the existing cytokine mediating drugs
(TNF-(alpha) based) only represent the first approximation of the full potential
of this therapeutic strategy, and that enhanced efficacy may be obtained by
targeting other cytokines such as IFN-(gamma), which occupies a more upstream
position in the cytokine cascade than TNF-(alpha). The Company also believes
that the systemic administration of anti-cytokine biologically based drugs is
not the ideal strategy because of the development of neutralizing antibodies and
the potential for the development of hyperimmune sensitization. These issues are
becoming increasingly apparent with the biologically based products currently on
the market and constitute the rationale for the Company's anti-cytokine
extracorporeal device development program which will employ antibodies to both
IFN-(gamma) and TNF-(alpha) that are coupled to a solid phase matrix on a
filtration column. The patient's blood is passed through the column and the
antibodies coupled to the column effect a removal of the targeted cytokines.
This treatment strategy has the advantage of avoiding completely the exposure of
the patient to any drug or foreign substance and in so doing removing any
toxicity issues in the drug development process. Toxic side effects are a major
reason drugs fail to be approved by the FDA.

         ADs probably represent one of the single largest disease classes,
comparable to the cardiovascular, central nervous system, and type II diabetes
markets. The major autoimmune diseases are RA, MS, Crohn's disease, and type I
diabetes, but also include a host of other disorders, (See Table I). In addition
to the extensive list of diseases that have been demonstrated to be autoimmune
in character, there are numerous other large market indications that have been
suggested to have an autoimmune etiology. These include Alzheimer's disease,
schizophrenia and others.


                                       5
<PAGE>


<TABLE>
<CAPTION>

- -------------------------------------------------------------------------------------------------------------
                                                  TABLE I
- -------------------------------------------------------------------------------------------------------------
                                         MAJOR AUTOIMMUNE DISEASES
- -------------------------------------------------------------------------------------------------------------
<S>                                                     <C>
Addison's disease
- ------------------------------------------------------- -----------------------------------------------------
Amyotrophic lateral sclerosis                           Systemic lupus erythematosus
(Lou Gehrig's disease)
- ------------------------------------------------------- -----------------------------------------------------
Autoimmune diseases of the ear                          Male infertility
- ------------------------------------------------------- -----------------------------------------------------
Autoimmune diseases of the eye                          Multiple sclerosis
- ------------------------------------------------------- -----------------------------------------------------
Autoimmune hepatitis                                    Myasthenia Gravis
- ------------------------------------------------------- -----------------------------------------------------
Crohn's disease                                         Psoriasis
- ------------------------------------------------------- -----------------------------------------------------
Diabetes (Type I)                                       Rheumatic fever
- ------------------------------------------------------- -----------------------------------------------------
Epididymitis                                            Rheumatoid arthritis
- ------------------------------------------------------- -----------------------------------------------------
Glomerulonephritis                                      Sarcoidosis
- ------------------------------------------------------- -----------------------------------------------------
Graves' disease                                         Scleroderma
- ------------------------------------------------------- -----------------------------------------------------
Guillan-Barre syndrome                                  Sjogren's syndrome
- ------------------------------------------------------- -----------------------------------------------------
Hasimoto's disease                                      Thyroiditis
- ------------------------------------------------------- -----------------------------------------------------
                                                        Vasculitis
- ------------------------------------------------------- -----------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>

- -------------------------------------------------------------------------------------------------------------
                        NEUROLOGICAL DISEASES WITH A SUSPECTED AUTOIMMUNE COMPONENT
- -------------------------------------------------------------------------------------------------------------
ALZHEIMER'S DISEASE                                     DEPRESSION
- ------------------------------------------------------- -----------------------------------------------------
<S>                                                     <C>
Autism                                                  Parkinson's disease
- ------------------------------------------------------- -----------------------------------------------------
Schizophrenia
- ------------------------------------------------------- -----------------------------------------------------

</TABLE>

         Current treatment of autoimmune diseases is inadequate and involves
rather primitive and global immunosuppression by using adrenal steroids,
cytotoxic agents, immunosuppressants, and antimitotics, all of which have
substantial toxicity associated with them due to their lack of specificity.
Recently, the cytokine strategy has emerged in the therapeutic arena in the form
of administering anti-inflammatory cytokines, such as Beta Interferon
(IFN-(beta)) and specifically Betaseron(TM) and Avonex(TM) for treating MS.
Also, the recent introduction of two anti-TNF-alpha products (Embrel(TM) and
Remicade(TM)) has further demonstrated the efficacy of the cytokine mediation
therapeutic strategy. Although each of these products is useful in treating ADs,
they clearly only represent the first wave of products based on this strategy
and were conceived and developed at a time when the knowledge of the cytokine
cascade was far less understood than it is today.

         The now appreciated pivotal position of IFN-(gamma) in the cytokine
cascade, coupled with the clinical data generated in our studies, suggests that
the Anti-IFN-(gamma) therapeutic strategy may be superior to existing therapies
for both MS and RA, with regard to both


                                       6
<PAGE>


efficacy and safety. The mission of the Company is to develop these improved
cytokine mediating therapeutic strategies and bring them to market as new drugs.

CLINICAL STUDIES / RHEUMATOID ARTHRITIS (RA)

         In an effort to demonstrate clinical proof of principle that
IFN-(gamma) antibodies show clinical efficacy, two double-blind, randomized,
placebo-controlled studies were conducted in RA patients in Russia. These
studies employed the Company's polyclonal antibodies to IFN-(gamma), which were
raised in goats. The IgG fraction was obtained by purification and used directly
via intramuscular injection. The results of both clinical studies were similar,
showing that a five-day treatment course with Anti-IFN-(gamma) given twice a day
produces a marked and statistically significant response within the first week
of treatment. In addition, the patients in the Anti-IFN-(gamma) treatment group
showed a therapeutic response at one month post-treatment, suggesting a rather
long lasting effect of the therapy.

         Being mindful of the study limitations, the data indicate that the
Anti-IFN-(gamma) group had a significant and clinically relevant response to the
drug. The rather long response experienced by the patients who received
Anti-IFN-(gamma) could be of substantial clinical significance, especially given
the fact that the treatment course was only five days. Management believes that
both studies provide supportive proof of principle in humans that sequestering
IFN-(gamma) is a viable therapeutic strategy in RA. Longer treatment periods may
further enhance the duration of Anti-IFN-(gamma) therapeutic efficacy. The
application of the extracorporeal treatment strategy may further enhance
therapeutic efficacy and the Company intends to seek out a corporate partner to
evaluate this possibility.

CLINICAL DATA / MULTIPLE SCLEROSIS (MS)

         Although smaller in size, the MS market is substantial and lucrative.
Avonex(TM) and Betaseron(TM) have made significant inroads into this market but
they still leave much to be desired from an efficacy standpoint. These two drugs
are different forms of interferon-beta, an anti-inflammatory cytokine that is
thought to act by reducing the blood levels of IFN-The Company has sponsored a
30-patient trial in secondary progressive MS patients comparing Anti-IFN-(gamma)
to placebo and employing a similar study design to that used in the two RA
studies. The Anti-IFN-(gamma) treatment group experienced statistically
significant improvements in a variety of clinical outcomes, including magnetic
resonance imaging data and degree of progression.

         As seen in the pilot RA studies, the Anti-IFN-(gamma) treatment group
experienced a protracted therapeutic effect. After 12 months post-treatment, the
Anti-IFN-(gamma) patients still showed significant improvement relative to the
placebo group on a number of endpoints, including disease progression and the
number of active MRI lesions.

         Although preliminary in nature, both the RA and MS pilot clinical trial
results provide a proof of concept that Anti-IFN-(gamma) is a potentially viable
therapeutic strategy for both of these ADs. The data suggest that the autoimmune
cascade may be more permanently blunted, (compared to reducing TNF-(alpha)
levels) by reducing IFN-(gamma) levels for a relatively short period of time.
The Company believes that longer-term treatments with Anti-IFN-(gamma) or
employing the extracorporeal treatment strategy could provide enhanced efficacy
and longer remission.


                                       7
<PAGE>


         The amount spent on research and development by the Company for the
fiscal year ending December 31, 2000 and 1999 was $39,579 and $156,280,
respectively.

MANUFACTURING

         The Company intends to out-source product manufacturing and has
identified several contract manufacturers as having suitable facilities for
manufacturing large quantities of antibodies and the requisite extracorporeal
devices.

         The raw materials are used as base components in a number of drug
products and are commercially available nationally and internationally.

         The Company has not entered into any manufacturing agreement for fully
human antibodies and there is no assurance that any agreements will be entered
into in the future.

GOVERNMENT REGULATION

         The Company's activities are subject to extensive federal, state,
county and local laws and regulations controlling the development, testing,
manufacture and distribution of medical treatments. The type of antibody-based
products described in the section entitled "Product Development Plan" above will
be subject to regulation as therapeutics or devices by the FDA, as well as
varying degrees of regulation by a number of foreign governmental agencies. To
comply with the FDA regulations regarding the manufacture and marketing of such
products, the Company would likely incur substantial costs relating to
laboratory and clinical testing of new products, and for the preparation and
filing of documents in the formats required by the FDA. There are no assurances
that the Company will receive FDA approval necessary to commercially market its
products, if any, and that if the Company is successful, it will not encounter
delays in bringing its new products to market as a result of being required by
the FDA to conduct and document additional investigations of product safety and
effectiveness.

FEDERAL DRUG ADMINISTRATION REGULATION

         The FDA approved process for conducting clinical trials in the United
States (U.S.) consists of four steps that all new drugs, antibiotics and
biologicals must follow.

They are:

         1.       Investigational new drug application (IND)
         2.       Clinical trials
         3.       New drug application (review and approval) or 510K device
                  application
         4.       Post-marketing surveys

         On January 11, 1993, the FDA approved new procedures to accelerate the
approval of certain new drugs and biological products directed at serious or
life-threatening illnesses. These new procedures will expedite the approvals for
patients suffering from terminal illness when the drugs provide a therapeutic
advantage over existing treatments. The Company believes that the products under
consideration by the Company will fall under the FDA guidelines for accelerated
approval for drugs and biological products directed at serious and life
threatening disease because the Company's products are targeted as potential
treatments for RA and MS and are expected to be non-toxic in the extracorporeal
treatment paradigm.


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<PAGE>


         The Company believes that the first step in the approval process, IND
approval, will take approximately 24 to 36 months. The Company will provide the
FDA with the results of comprehensive human clinical trials already conducted
outside the U.S.

         Upon successful completion of the IND phase, the next step typically
would be to commence large-scale clinical trials with the Company's compounds.
Clinical trials are conducted in three phases, normally involving progressively
larger numbers of patients. The Company, in conjunction with its FDA consultant
and to-be-identified corporate partner, would plan to select key physicians and
hospitals to actively conduct these studies. Phase I clinical trials will be
concerned primarily with learning more about the safety of the drug, though they
may also provide some information about the safety of the drug and information
about effectiveness. Phase I testing is normally performed on healthy volunteers
although for drugs directed at HIV/AIDS and cancer, testing on infected people
is permitted. The test subjects are paid to submit to a variety of tests to
learn what happens to a drug in the human body; how it is absorbed, metabolized
and excreted, what effect it has on various organs and tissues; and what side
effects occur as the dosages are increased. The principal objective is to
determine the drugs' toxicity. Phase I trials generally involve 20-40 people at
an estimated cost of $10,000 per patient, taking three to six months to
complete.

         Assuming the results of Phase I testing present no toxic or
unacceptable safety problems, Phase II trials may begin. In many cases, Phase II
trials may commence before all the Phase I trials are completely evaluated if
the disease is life threatening and preliminary toxicity data in Phase I shows
no toxic side effects. In the case of clinical trials on drugs to treat life
threatening disease, Phase I and Phase II trials are sometimes combined to show
initial toxicity and efficacy in a shorter period of time. The primary objective
of this stage of clinical testing is designed to show whether the drug is
effective in treating the disease or condition for which it is intended, and to
establish the optimal dose level for pivotal efficacy phase III trials. Phase II
studies may take one or more years or longer and involve a few hundred patients
in randomized, controlled trials that also attempt to disclose short-term side
effects and risks in people whose health is impaired. A number of patients with
the disease or illness will receive the treatment while a control group will
receive a placebo. The cost per patient is estimated at $10,000.

         At the conclusion of Phase II trials, the FDA and the Company will have
a clear understanding of the short-term safety and effectiveness of the drugs
and their optimal dosage levels. Phase III clinical trials will generally begin
after the results of Phase II are evaluated. The objective of Phase III is to
develop information that will allow the drug to be marketed and used safely.
Phase III trials will involve hundreds, and sometimes thousands, of people with
the objective of expanding on the research.

         Patient estimates for each phase of the clinical trial process are as
follows for both the MS and RA indications to support a 510K-device registration
for the Company's extracorporeal drug development program.

            Phase I-    30
            Phase II-  200
            Phase III- 500


                                       9
<PAGE>


         The third step that is necessary prior to marketing a new drug is the
New Drug Application (NDA) submission and approval for an injectable product
that is administered directly to a patient or a 510K-device registration for a
device such as the Company's extracorporeal device. In this step, all the
information generated by the clinical trials will be reviewed and if successful,
the drug will be approved for marketing.

         The final step is the post-marketing surveillance or surveys of
patients being treated with the drug to determine its long-term effects. This
has no effect on the marketing of the drug unless highly toxic conditions arise.
The time required to complete the above procedures averages seven years,
however, there is no assurance that the Company will ever receive FDA approval
of any of its products.

         The Company's clinical trials are at a very early stage and the Company
has not received approval from the FDA or any other governmental agency for the
manufacturing or marketing of any products under development. Consequently, the
commencement of manufacturing and marketing of any products in the U.S. is, in
all likelihood, a number of years away. The FDA may also require post-marketing
testing and surveillance to monitor the effects of approved products or place
conditions on any approvals that could restrict the commercial applications of
such products. Product approvals may be withdrawn if compliance with regulatory
standards is not maintained or if problems occur following initial marketing.
With respect to patented products or technologies, delays imposed by the
governmental approval process may materially reduce the period during which the
Company will have the exclusive right to exploit them.

          Upon contracting with a strategic partner, the Company anticipates
that it will take up to 60 months before an injectable product and 36 months
before an extracorporeal device will be available for FDA investigation and
approval.

COMPETITION

         The Company will encounter significant competition from firms currently
engaged in the biotechnology industries. The majority of these companies will be
substantially larger than the Company, and have substantially greater resources
and operating histories. The Company is aware of other competitors seeking
treatments for ADs such as MS and RA, however, the Company is not aware of any
competitors seeking to produce the same antibody-based products as the Company.

PRODUCT LIABILITY EXPOSURE

         The Company does not maintain any product liability insurance. Even if
the Company obtains product liability insurance, there is no assurance that
available amounts of coverage will be sufficient to adequately protect the
Company in the event of a successful product liability claim. Accordingly, if
litigation is initiated against the Company, the Company will have to pay all
costs associated with the litigation as well as any judgment rendered against
the Company. In the event a large judgment is entered against the Company, the
Company may not be able to pay the same and the Company could be forced to cease
operations. However, the Company believes that it would not be held liable for
injuries suffered by participants in its clinical trials because it plans to
require each participating patient to execute a waiver of claims as a result of
adverse reaction to the Company's products.


                                       10
<PAGE>


GLOSSARY OF TERMS

Antibody                                    A protein in the blood that is
                                            generated by B-lymphocytes or plasma
                                            cells in reaction to foreign
                                            proteins or antigens. Antibodies
                                            neutralize antigens and may result
                                            in immunity to the antigens.

Antigen                                     A substance (usually foreign) that
                                            induces the formation of antibodies.

Autoimmune disease                          A disease in which the body
                                            produces an immune response to some
                                            constituent of its own tissue. Such
                                            diseases include MS, RA, insulin
                                            dependent diabetes, systemic lupus
                                            erythematosis, and AIDS.

Cytokine                                    A soluble substance produced by
                                            cells of the immune system to
                                            communicate with other immune system
                                            cells. These include
                                            colony-stimulating factors,
                                            interferons, interleukins, and tumor
                                            necrosis factors. Cytokines can be
                                            either pro or anti-inflammatory in
                                            nature. Also referred to as soluble
                                            mediators.

Extracorporeal Treatment                    A treatment strategy where
                                            the blood of a patient is passed
                                            through a device that is designed to
                                            selectively remove a molecular
                                            component of the blood, for example,
                                            IFN-(gamma) and/or TNF-(alpha).

Humanized antibody                          An antibody produced by
                                            generating human antibodies with
                                            fully human protein sequences using
                                            genetically engineered strains of
                                            mice in which mouse antibody gene
                                            expression is suppressed and
                                            functionally replaced with human
                                            antibody gene expression, while
                                            leaving intact the rest of the mouse
                                            immune system.

Ig (immunoglobulin)                         (IgA, IgD, IgE, IgG, and IgM)
                                            A group of serum proteins
                                            representing antibodies. See
                                            Antibody.

Immune response                             The events that occur in humans and
                                            other vertebrate animals when
                                            the body is invaded by foreign
                                            protein. It is characterized by
                                            the production of antibodies
                                            and may be stimulated by an
                                            infectious organism or parasite
                                            (bacteria, yeast, fungi,
                                            protozoa, etc.), transplanted
                                            material, vaccine, sperm or
                                            even the host's own tissue.

Immunegenecity                              The study of genetic aspects of the
                                            type and formation of
                                            immunoglobulins (antibodies).

Immune System                               The cells and tissues that
                                            collectively recognize and eliminate
                                            invading foreign substances like
                                            microorganisms, parasites, and tumor
                                            cells from the body.


                   11
<PAGE>


Immunosuppressive                           Something that suppresses the immune
                                            system response.

Interferon-gamma                            A glycoprotein inflammatory cytokine
                                            induced in different cell sites and
                                            in response to a appropriate
                                            stimulus.

Lymphocyte                                  A type of white blood cell arising
                                            from tissue of the lymphoid systems.
                                            There are two types of lymphocytes:
                                            B cells and T cells. These cells are
                                            capable of being stimulated by an
                                            antigen to produce a specific
                                            antibody to that antigen and to
                                            proliferate to produce a population
                                            of such antibody-producing cells.

Lymphokine                                  Any of a number of soluble
                                            physiologically active factors
                                            produced by T lymphocytes in
                                            response to specific antigens.
                                            Important in cell-mediated immunity,
                                            lymphokines include interferon,
                                            macrophage arming factor, lymphocyte
                                            inhibition factor, macrophage
                                            inhibition factor, chemotactic
                                            factor and various cytotoxic
                                            factors.

Macrophage                                  A motile white cell type found in
                                            vertebrate tissue, including
                                            connective tissue, the spleen, lymph
                                            nodes, liver, adrenal glands and
                                            pituitary, as well as, in the
                                            endothelial lining of blood vessels
                                            and the sinusoids of bone marrow,
                                            and in the monocytes. They display
                                            phagocytic activity and process
                                            antigens for presentation to
                                            lymphocytes, which then prepare
                                            antigen-specific antibodies.

Pathogenic                                  Descriptive of a substance or
                                            organism that produces a disease.

Placebo                                     An indifferent substance in the form
                                            of a medicine given for the
                                            suggestive effect.

Polyclonal antibody                         An antibody produced in the
                                            normal immune response to an
                                            antigen consisting of a number
                                            of closely related, but not
                                            identical, proteins. The
                                            variation in Polyclonal
                                            antibodies reflects the fact
                                            that they are formed by a
                                            number of different
                                            lymphocytes, in contrast to
                                            monoclonal antibodies, which
                                            are formed by a clone of
                                            identical cells.

Protein                                     Any group of complex nitrogenous
                                            organic compounds of high molecular
                                            weight that has amino acids as their
                                            basis structural units. Proteins are
                                            found in all living matter and are
                                            required for the growth and repair
                                            of tissue.


                                       12
<PAGE>


T-Cell                                      A type of lymphocyte that matures in
                                            the thymus gland. These cells are
                                            responsible for the cellular
                                            immunity processes, such as direct
                                            cell binding to an antigen, thus
                                            destroying it. T lymphocytes also
                                            act as regulators of the immune
                                            response as helper T cells, or
                                            suppressor T cells.

Tumor Necrosis Factor (TNF)                 A substance that is capable of
                                            killing tumor cells and eliciting
                                            inflammatory responses. It is
                                            produced by host monocytes and
                                            macrophages and is also referred to
                                            as cachectin.

PATENT STATUS AND PROTECTION OF PROPRIETARY TECHNOLOGY

         The Company has been issued U.S. patent nos. 5,626,843 and 5,888,511,
and Australia patent no. 730498. It also has eleven U.S. patents pending filed
between December 22, 1997 and February 24, 2000, and two foreign applications
pending in the European Union and Canada.

         The Company's most recently issued patent gives the Company patent
protection for a new anti-cytokine approach to treating different autoimmune
diseases via both the extracorporeal and the injectable treatment route. These
include RA, MS, and insulin-dependent diabetes, among others. The patented
treatment uses various methods to neutralize or block specific combinations of
cytokines and their receptors. In management's opinion, the Company's patented
approach is broader in scope than certain other patented treatments.

DEPENDENCE UPON KEY PERSONNEL

         The Company relies greatly in its efforts on the services and expertise
of its key staff, such as the Chairman and Chief Executive Officer, Director of
Operations and internal counsel and officers and directors. The operation and
future success of the Company would be adversely affected in the event that any
of them is incapacitated or the Company otherwise loses their services.

UNCERTAINTIES ASSOCIATED WITH RESEARCH AND DEVELOPMENT ACTIVITIES

         The Company intends to continue its research and development activities
on its products and for the purpose of developing proprietary products. Research
and development activities, by their nature, preclude definitive statements as
to the time required and costs involved in reaching certain objectives. If
research and development requires more funding than anticipated, the Company may
have to reduce product development efforts or seek additional financing. There
can be no assurance that the Company would be able to secure any necessary
additional financing or that such financing would be available on favorable
terms

MARKETING

         Assuming the Company is able to obtain FDA approval of its products
currently in development, it intends to market the same through collaborative
relationships with other companies. It is the Company's intention that joint
venture partners will be selected


                                       13
<PAGE>


on the basis of experience and the degree of financial success they exhibit in
the industry. There are no assurances that the Company will obtain FDA approval
for its products, and there are no assurances that the Company will be
successful in entering into agreements with established multinational companies.

FACTORS THAT MAY AFFECT THE COMPANY

         The Company operates in a rapidly changing environment that involves a
number of risk factors, many of which are beyond the Company's control. The
following discussion highlights some of these risk factors and others are
discussed elsewhere in this Form 10-KSB.

         1. LIQUIDITY. NEED FOR ADDITIONAL FINANCING. The Company believes that
it will need to raise additional capital during the next twelve months. If the
Company is unable to raise additional capital and/or generate a positive cash
flow before its cash is depleted, it will be required to curtail operations
substantially. There is no assurance that the Company will be able to obtain
additional capital if required, or if capital is available, to obtain it on
terms favorable to the Company. The Company may suffer from a lack of liquidity
in the future that could impair its research and development efforts and
adversely affect its results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

         2. LACK OF REGULATORY CLEARANCE/APPROVAL AND LIMITED CLINICAL DATA. The
Company's products are in the development stage, have limited clinical data and
have not been cleared for marketing by the FDA or foreign regulatory
authorities, and cannot be commercially distributed in the U.S. and/or in
foreign markets unless and until such clearance is obtained. Failure to obtain
FDA clearance would delay sales of the Company's products and would materially
affect the financial condition of the Company.

         3. DEPENDENCE ON PRODUCTS. The Company expects to derive a substantial
majority of its revenues from its proprietary development stage products through
product licensing and royalty fees. The life cycle of the Company's products, if
approved for marketing, is difficult to estimate in terms of current and future
technological developments, competition, and other factors. Failure of the
Company to successfully commercialize its products or to realize significant
revenues from the products would have a material adverse effect on the financial
condition of the Company. As of the date hereof, the Company has not realized
any revenues from the sale of products.

         4. LACK OF MARKETING AND SALES EXPERIENCE. The Company's management has
limited sales and marketing experience, and therefore, if the necessary
regulatory approvals are obtained, the Company intends to market and sell its
products, through a network of qualified independent distributors, agents, and
key strategic partners, none of which are currently in place. There are no
assurances that the Company can establish the necessary relationships for
marketing and selling its products or that the network will successfully
implement an effective marketing and sales strategy.

         5. MANUFACTURING. The Company lacks the facilities to manufacture any
products and does not have an adequate supply of product to begin clinical
studies in the United States. If the Company is unable to contract for
manufacturing capabilities on acceptable terms, it would result in the delay of
sales, which in turn could materially


                                       14
<PAGE>


impair the Company's competitive position, and the possibility of the Company
achieving profitability.

         6. UNCERTAINTY RELATING TO FAVORABLE THIRD-PARTY REIMBURSEMENT. In the
United States, success in obtaining favorable third-party payment for a new
product depends greatly on the ability to present data which demonstrates
positive outcomes and reduced utilization of other products or services, as well
as cost data which shows that treatment costs using the new product are equal to
or less than what is currently covered for other products. Failure by the
Company to present such clinical data would adversely affect the Company's
ability to obtain favorable third-party reimbursement as well as the commercial
success of its products.

         7. PATENTS AND PROPRIETARY RIGHTS. The Company's success and ability to
compete effectively will depend, in part, on the strength of its patents and the
ability to obtain protection for its products in foreign markets. No assurance
can be given that any patents issued to the Company will not be challenged,
invalidated, or circumvented. Litigation, which could result in substantial cost
to the Company, may also be necessary to enforce any patents issued to the
Company and/or determine the scope and validity of other's proprietary rights.

ITEM 2.  DESCRIPTION OF PROPERTY

         The Company's administrative offices are located at 5950 La Place
Court, Suite 210, Carlsbad, California 92008. The phone number of these offices
is 760-431-4282. The Company has a three-year lease on 1,944 square feet at this
location, which provides for an annual rental of $43,200, $44,900 and $46,740,
respectively, during the term of the lease.

EMPLOYEES

         The Company is a development stage company and currently has four
employees. See "Management." Management of the Company expects to hire employees
as necessary.

ITEM 3.  LEGAL PROCEEDINGS

         The Company is not the subject of any pending legal proceedings; and to
the knowledge of management, no proceedings are presently contemplated against
the Company by any federal, state or local governmental agency.

         Further, to the knowledge of management, no director or executive
officer is party to any action in which any has an interest adverse to the
Company.


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

           No matters were submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal year ending December 31, 2000.


                                       15
<PAGE>


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

           As of February 15, 2000, the Company's Common Stock was quoted again
on the Bulletin Board operated by the National Association of Securities
Dealers, Inc. (the "Bulletin Board") under the symbol "ADVB." During 1999, the
Common Stock was quoted on the Bulletin Board for part of the year and quoted on
other electronic marketplaces for the rest of the year. The table shows the high
and low bid quotations of the Company's Common Stock during each of the four
quarters of the 1999 and 2000 fiscal years, and reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not represent actual
transactions:

<TABLE>
<CAPTION>

1999 FISCAL QUARTER ENDING:               HIGH BID           LOW BID
<S>                                       <C>                <C>
                  March 31                  $0.20             $0.10
                  June 30                   $0.08             $0.05
                  September 30              $0.10             $0.01
                  December 31               $0.35             $0.05

2000 FISCAL QUARTER ENDING:

                  March 31                  $2.63             $1.75
                  June 30                   $1.81             $0.44
                  September 30              $1.00             $0.50
                  December 31               $0.75             $0.20

</TABLE>

HOLDERS

           As of December 31, 2000, the Company had 1,562 holders of record of
its Common Stock. This number does not include those beneficial owners whose
securities are held in street name. The total number of record and beneficial
stockholders is estimated to be more than 3,500.

DIVIDENDS

           The Company has never paid a cash dividend on its Common Stock and
has no present intention to declare or pay cash dividends on the Common Stock in
the foreseeable future. The Company intends to retain any earnings that it may
realize in the future to finance its operations. Future dividends, if any, will
depend on earnings, financing requirements and other factors.

SALE OF UNREGISTERED SECURITIES

         During the quarter ended December 31, 2000, the Company sold in a
private placement to accredited investors an additional $333,750 in principal
amount of convertible subordinated debt of which $167,500 was previously
reported in the Company's Form 10-QSB for the quarter ended September 30, 2000.
Under the terms of the notes, the principal bears interest at 10% per annum
payable semi-annually in cash or in additional convertible subordinated debt and
is convertible into shares of Common Stock of the Company at a conversion price
per share equal to twenty five cents ($0.25), subject to certain anti-dilution
provisions. The Company sold the debt to the accredited investors pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the "Act"), and Rule 506
of Regulation D, promulgated under the Act. The proceeds from the


                                       16
<PAGE>


placement of the debt will be used for working capital purposes, principally
salaries, professional fees and expenses to pursue additional financings,
corporate partnerships and mergers and acquisitions. During the year ending
December 31, 2000, the Company sold a total of $1,510,500 in principal amount of
this debt.

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

         The Company anticipates that its minimum cash requirements to continue
as a going concern for the next twelve months will be approximately $800,000,
and therefore, believes that it has inadequate cash to maintain operations
during that period. In order to meet the foregoing cash requirements, the
Company will have to raise additional capital or obtain a loan. There is no
assurance, however, that the Company will be able to raise additional capital or
obtain a loan. The Company's objective is to establish collaborative
relationships with either a pharmaceutical or biotechnological company that
could result in the generation of royalty payments to the Company. As of the
date hereof, the Company has not entered into agreements with any pharmaceutical
or biotechnological companies. In the event that the Company does not raise
additional capital from any of the foregoing sources, it may have to curtail
operations. The Company is also seeking out merger and acquisition candidates
that can either expand the Company's technology base in the area of autoimmune
disease therapeutics or bring FDA-approved products into the Company that will
generate recurring revenue and cash flow.

           The Company's development goal is to produce, or have produced, a
series of antibody-based products through collaborations with other
biotechnology companies. The Company has identified several biotechnology
companies that can develop and manufacture such antibodies and extracorporeal
devices for the Company. The availability of this technology will make it
possible to produce safer and more standardized antibodies for commencement of
human clinical trials, under FDA guidelines, in the United States.

           The Company has no expected purchases or sales of significant
equipment.

           There are no expected significant changes in the number of employees
of the Company.

RESULTS OF OPERATIONS - FROM INCEPTION THROUGH DECEMBER 31, 2000.

           The Company is considered to be in the development stage as defined
in Statement of Financial Accounting Standards No. 7. There have been no
operations since incorporation.

LIQUIDITY AND CAPITAL RESOURCES.

           As of December 31, 2000, the Company has issued and outstanding
39,848,265 shares of its Common Stock. The Company is a development stage
company. The Company had $758,267 in cash as of December 31, 2000.

FISCAL 2000 COMPARED TO FISCAL 1999.

           For the year ending December 31, 2000, the Company realized a net
loss of $653,270 and a loss from operations of $827,084, compared to net income
of $1,143,892


                                       17
<PAGE>


and a loss from operations of $334,278 for the year ending December 31, 1999.
The loss from operations for the current year is principally due to a
substantial increase in outside expense relating general corporate, SEC and
patent legal costs, accounting, investment banking, investor relations,
strategic partnering and other contract services, as the Company became an SEC
reporting company, moved the listing of its Common Stock to the OTC Bulletin
Board and embarked on an investor relations program, reincorporated in Delaware,
raised additional capital, expanded its intellectual property portfolio and
began an active corporate partnering initiative. All of these activities also
caused salary, travel, entertainment, telephone and other office expenses to
increase substantially during the year. The operating loss was partially offset
by total other income of $173,814, principally as the result of an internal gain
of $157,520 on the sale of Common Stock by certain officers of the Company, as a
result of Section 16(b) of the Securities Exchange Act of 1934, which requires
insiders to disgorge "short-swing profits". Total other income also benefited
from the forgiveness of $45,396 of accounts payable, resulting from the failure
of the vendors to pursue payment from the Company within the applicable statute
of limitations.

         The net income for the year ending December 31, 1999 was the result of
recognizing an extraordinary item related to an agreement by three key employees
to forgive the Company of the cumulative accrued salaries owed to them through
December 31, 1999 in the aggregate amount of $1,472,247 for salaries and $9,962
for interest. The Company also issued 842,953 non-qualified stock options to
these employees, exercisable immediately and expiring on December 31, 2005 at an
exercise price of $0.05 per share of Common Stock.

         Except for the historical information contained herein, the matters
discussed herein are by their nature forward-looking. Investors are cautioned
that forward-looking statements or projections made by the Company, including
those made in this document, are subject to risks and uncertainties that may
cause actual results to differ materially from those projected. Reference is
made in particular to forward-looking statements regarding product development,
capital sources, plan of operations and expenses. The Company operates in a
rapidly changing environment that involves a number of risks, some of which are
beyond the Company's control. Future operating results and the Company's stock
price may be affected by a number of factors, including, without limitation: (i)
availability of capital for research and development; (ii) availability of
capital for clinical trials; (iii) opportunities for joint ventures and
corporate partnering; (iv) opportunities for mergers and acquisitions to expand
the Company's biotechnology base or acquire revenue generating products; (v) the
results of preclinical and clinical trials; (vi) regulatory approvals of product
candidates, new indications and manufacturing facilities; (vii) health care
guidelines and policies relating to prospective Company products; (viii)
intellectual property matters (patents) and (ix) competition.

ITEM 7.  FINANCIAL STATEMENTS

            The financial statements are included herewith and incorporated
herein by reference beginning with the Table of Contents on Page F- 1.

                                       18
<PAGE>


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

           There have been no disagreements on accounting and financial
disclosures from the inception of the Company through the date of this Form
10-KSB for the year ending December 31, 2000.

                                    PART III

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

IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

         The following table sets forth the names and nature of all positions
and offices held by all directors and executive officers of the Company for the
calendar year ending December 31, 2000, and to the date hereof, and the period
or periods during which each such director or executive officer served in his or
her respective positions.

<TABLE>
<CAPTION>

         ---------------------------------- ------- ------------------------------------- ---------------
                       Name                  Age               Position Held                 Date of
                                                                                             Election
         ---------------------------------- ------- ------------------------------------- ---------------
         <S>                                <C>     <C>                                   <C>
         Paul J. Marangos                   53      Chairman of the Board of  Directors,  09/01/00
                                                    President and Chief Executive
                                                    Officer (2)(3)
         ---------------------------------- ------- ------------------------------------- ---------------
         John M. Bendheim                   47      Member of the Board of Directors      06/19/00
                                                    (1)(2)
         ---------------------------------- ------- ------------------------------------- ---------------
         Edmond Buccellato                  56      Member of the Board of Directors (1)  11/16/95
         ---------------------------------- ------- ------------------------------------- ---------------
         Alexander L. Cappello              45      Member of the Board of Directors (1)  04/21/00
         ---------------------------------- ------- ------------------------------------- ---------------
         Lawrence Loomis                    58      Member of the Board of Directors (2)  12/06/86
         ---------------------------------- ------- ------------------------------------- ---------------
         Leonard Millstein                  59      Member of the Board of Directors      12/06/86
         ---------------------------------- ------- ------------------------------------- ---------------
         Boris Skurkovich, M.D.             46      Member of the Board of Directors (2)  12/06/86
         ---------------------------------- ------- ------------------------------------- ---------------
         Simon Skurkovich, M.D.             80      Member of the Board of Directors      11/06/85
         ---------------------------------- ------- ------------------------------------- ---------------
         Margo Dockendorf, J.D.             45      Treasurer and Secretary               12/12/00
         ---------------------------------- ------- ------------------------------------- ---------------

</TABLE>

- -------------
(1)      Member of the Audit Committee of the Board of Directors.
(2)      Member of the Compensation Committee of the Board of Directors.
(3)      Dr. Marangos was elected to the Board of Directors of the Company in
         April 2000.

TERM OF OFFICE

         Each director serves for a term of one year or until his successor is
duly elected once qualified. The Company's officers are appointed by the Board
of Directors and hold office at the discretion of the Board.


                                       19
<PAGE>


BIOGRAPHICAL DESCRIPTIONS OF OFFICERS AND DIRECTORS

         Paul J. Marangos - Since April 2000, Dr. Marangos has served as a
member of the Board of Directors. In September 2000, he was elected as the
Chairman of the Board of the Company and hired as its Chief Executive Officer,
and in December 2000, he was elected President. Previously, Dr. Marangos was
founder, Chairman of the Board of Directors, President and Chief Executive
Officer of Cypros Pharmaceutical Corporation from 1991 to November 1999, when it
was merged with Ribogene, Inc. to form Questcor Pharmaceuticals, Inc. Cypros was
an American Stock Exchange listed company with three drug products on the market
and two compounds in late stage clinical trials to treat diseases caused by
ischemia. Dr. Marangos is also a principal in BioMedica Partners, LLC, ("BMP") a
strategic consulting and executive staffing company. His role in BMP does not
require a substantial time commitment, and thus, does not conflict with his role
in the Company. Dr. Marangos received his B.A. degree (magna cum laude) and his
Ph.D. from the University of Rhode Island in biochemistry in 1973, and completed
his postdoctoral fellowship at the Roche Institute of Molecular Biology in 1975.

         John M. Bendheim - Since June 2000, Mr. Bendheim has served as a member
of the Board of Directors. Mr. Bendheim is Chairman of the Cedars-Sinai Medical
Center Board of Governors in Los Angeles, California and President of Bendheim
Enterprises, Inc., a real estate investment holding company. He received his
B.S. degree in Business Administration in 1975 and his M.B.A. in 1976 from the
University of Southern California.

         Edmond Buccellato - Mr. Buccellato served as President and Chief
Operating Officer of the Company from September 1, 2000 to December 12, 2000.
Mr. Buccellato served as Chief Executive Officer and a member of the Board of
Directors from 1995 to August 31, 2000. He was co-founder, member of the Board
of Directors and Vice President of Finance of Phase Medical, Inc., an infusion
therapy company sold to Becton Dickinson in 1994. He was also co-founder, member
of the Board of Directors and Vice President of Finance of Synergistic Systems,
Inc., a company that became the largest medical billing company in the western
United States. He is also co-founder and member of the Board of Directors of
Polymer Safety, LLC, a manufacturer of synthetic medical and industrial
examination gloves. He is also co-founder and member of the Board of Directors
of Physicians' choice LLC, a medical billing company. Mr. Buccellato received
his undergraduate degree From California State University at San Diego, and his
graduate degree from the University of Southern California.

         Alexander L. Cappello - Since May 2000, Mr. Cappello has served as a
member of the Board of Directors. Mr. Cappello is Chairman and C.E.O. of
Cappello Group, Inc. and has been an investment and merchant banker,
facilitating project financing and equity capital to biotechnology companies and
companies in other industries since 1975. Currently, he is a Member of the Board
of Directors of the following: Chairman and Chief Executive Officer of Cappello
Group, Inc., RAND Corporation (Center for Middle East Public Policy), CytRx
Corporation (NASDAQ), (ICSC) Independent Colleges of Southern California, USC
Entrepreneur Advisory Council, USC Advancement Council, USC Marshall School of
Business, Chairman of Catholic Big Brothers of Los Angeles, and President of YPO
International (Young Presidents' Organization) for 2003-2004. He received his
B.S. Degree in finance (awarded the prestigious Order of the Palm) from the
University of Southern California in 1977.


                                       20
<PAGE>


         Formerly, he was a Member of the Board of Directors of the following;
Koo Koo Roo, Inc. (NASDAQ), Geothermal Resources International (AMEX), Arcus
Data Security, Inc. (NASDAQ), Maritime Bank of California (OTC), Summa Medical
Corp. (AMEX), Swiss American Financial, Euro American Financial Corporation,
Coffees of Hawaii, Inc., Executive Publications, Inc. (Chairman), and The
Joffrey Foundation.

         Lawrence Loomis - Since 1986, Mr. Loomis has served as a member of
the Board of Directors. Mr. Loomis is President and majority shareholder of
New Horizons Diagnostics, Inc., a company that develops bacteriological
screening methods, monoclonal antibodies for detection of various infectious
disease agents, and rapid bacterial and viral assay kits. Prior to founding
New Horizons Diagnostics, Inc. in 1980, Mr. Loomis was in charge of the
Immunology Department for BBL, a division of Becton Dickinson. Mr. Loomis
received his undergraduate degree in Chemistry from New York University and
his graduate degree in Chemistry from City University.

         Leonard Millstein - Since 1986, Mr. Millstein has served as a member of
the Board of Directors. Mr. Millstein received his MSCE and Ph.D. in Civil
Engineering from Moscow State Construction University in 1964 and 1974,
respectively. After immigrating to the United States in 1978, he held teaching
positions at Howard University in Washington D.C. and Johns Hopkins University
in Baltimore, Maryland. He has over 200 publications and is a member of the
American Concrete Institute and American Society of Civil Engineers. From 1981
to the present, he has been a CEO of Radcon Products, a company involved in
manufacturing of proprietary concrete sealants. From 1990 until the present, he
has been a Chairman of the Board of TTLTIC, a private consulting company.

         Boris Skurkovich, M.D. - Since 1986, Mr. Skurkovich has served as a
member of the Board of Directors, and from that same date until December 2000,
he was a Vice President of the Company. He completed a clinical and research
fellowship at the Maxwell Finland Laboratory for Infectious Diseases, Boston
City Hospital, Boston, Massachusetts, and presently is a professor at Brown
University Medical School. He has collaborated with his father, Simon, on the
development of the Company's treatment of autoimmune diseases. Dr. Skurkovich
received his M.D. from the Moscow State Medical Institute.

         Simon Skurkovich, M.D. - From 1985 until September 2000, Dr. Skurkovich
served as Chairman of the Board. He has previously been granted five patents in
Russia, and eight in the U.S. He is the creator of immune preparations from
human blood against antibiotic resistant bacteria that saved thousands of lives
in the Soviet Union and Eastern Europe. In Russia, he was professor and Chief of
the Immunology Laboratory of the Institute of Hematology and Blood Transfusion
and was awarded gold and silver medals for his scientific discoveries. His
laboratory was also awarded the nation's highest honor, the Lenin Prize, for his
patented work. Dr. Skurkovich received an M.D., Ph.D. and a Doctorate in Medical
Sciences (D.Sc.) from Pirogov State Medical Institute in Moscow. He has written
more than 200 articles for scientific publications.

         Margo J. Dockendorf, Esq. - Ms. Dockendorf became the Treasurer and
Secretary of the Company in December 2000. Ms. Dockendorf is a member of the
California Bar Association and has been a practicing attorney at law for 18
years. She has built successful law practices in Southern California, and has
extensive experience as a litigation attorney, as well as in business
operations, contracts and corporate matters. With the inception of her
responsibilities at the Company, Ms. Dockendorf now limits


                                       21
<PAGE>


her law practice to selective matters on a part-time basis. Ms Dockendorf is
also a principal in BioMedica Partners, LLC, ("BMP") a strategic consulting and
executive staffing company. Her role in BMP does not require a substantial time
commitment, and thus, does not conflict with her role in the Company.

FAMILY RELATIONSHIPS

         The only known relationship between any directors is Simon Skurkovich,
father to Boris Skurkovich, and father-in-law to Leonard Millstein.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

         During the past five years, no present director or executive officer
of the Company has been the subject matter of any legal proceedings,
including bankruptcy, criminal proceedings, or civil proceedings. Further, no
legal proceedings are known to be contemplated by governmental authorities
against any director or executive officer.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

         A Form 3 was required to be filed by each of Dr. Marangos, Mr.
Bendheim, Ellen Millstein and Ms. Dockendorf and has not been filed yet. A
Form 5 was required to be filed by each of Dr. Marangos and Mr. Bendheim
related to the receipt of stock options for Board service and has not been
filed yet. A Form 5 was required to be filed by Dr. Simon Skurkovich relating
to his gift of 4,000,000 bonus shares to various individuals and has not been
filed yet. Form 5s were required to be filed by Ellen Millstein, Leonard
Millstein and Dr. Boris Skurkovich relating to their receipt of gifts of
shares of Common Stock from Simon Skurkovich. A Form 5 was required to be
filed by Mr. Bendheim relating to his purchase of notes convertible into
Common Stock of the Company and has not been filed yet. A Form 5 was filed by
Mr. Alexander Cappello subsequent to December 31, 2000, relating to his
receipt of stock options in 2000 for Board service.

ITEM 10.  EXECUTIVE COMPENSATION.

         The following table sets forth the compensation paid by the Company
since January 1, 1998 through December 31, 2000, for the Chief Executive Officer
of the Company and each other executive officer of the Company who was paid more
than $100,000 during the year (the "Named Executive Officers"):

<TABLE>
<CAPTION>

                                         SUMMARY COMPENSATION TABLE

              ------------------------------------ ------- ----------------- -------------------
                       Name and Position            Year        Salary             Bonus
              ------------------------------------ ------- ----------------- -------------------
              <S>                                  <C>     <C>               <C>
              Paul J. Marangos                     2000    $40,000           $25,000
              Chief Executive Officer (1)
              ------------------------------------ ------- ----------------- -------------------
              Edmond Buccellato                    2000    $72,500           $0
              Chief Executive Officer (2)          1999    $75,000           $0
                                                   1998    $50,000           $0
              ------------------------------------ ------- ----------------- -------------------
              Simon Skurkovich                     2000    $30,000           $0
              Chairman of the Board (3)            1999   $100,000           $0
                                                   1998   $100,000           $0
              ------------------------------------ ------- ----------------- -------------------

</TABLE>

(1)      Dr. Marangos joined the Company in August 2000 at an annual salary of
         $120,000. In addition, he was paid a signing bonus of $25,000.
(2)      Mr. Buccellato was the Chief Executive Officer of the Company prior to
         the hiring of Dr. Marangos.
(3)      Dr. Skurkovich was the Chairman of the Board prior to the hiring of
         Dr. Marangos.

                                       22
<PAGE>


         During 2000, Mr. Loomis refused a $40,000 salary offer from the
Company.

         There are no retirement, pension, or profit sharing plans for the
benefit of the Company's officers and directors. The Company has previously
granted non-qualified stock options and warrants for the benefit of officers and
directors, and in December 2000, the Board of Directors of the Company approved
the 2000 Omnibus Equity Incentive Plan (the "OEI Plan") and reserved 4,000,000
shares of Common Stock to be issued thereunder, subject to annual increases
equal to the lesser of 2.5% of outstanding shares or 250,000 shares. No shares
have been issued under the OEI Plan to date.

OPTION/SAR GRANTS.

         None of the named executive officers received any grants of stock
options, whether or not in tandem with stock appreciation rights ("SARs") and
freestanding SARs during the fiscal year ending December 31, 2000 in their
capacity as officers. During that period though, Dr. Marangos received a
5-year warrant exercisable into 100,000 shares of Common Stock at $0.25 per
share for Board service.

         None of the Named Executive Officers exercised any options/SARs during
the year. Set forth below are the fiscal year end Option/SAR values:

<TABLE>
<CAPTION>

         ---------------------------- ----------------------- -------------------- ---------------------
                    Name              Number of unexercised   Exercise Price       Value of
                                      options/SARs at         Per Share            unexercised
                                      FY-end(#)                                    in-the-money
                                      exercisable/                                 options/SARs at
                                      unexercisable                                FY-end ($)
                                                                                   exercisable/
                                                                                   unexercisable(1)
         ---------------------------- ----------------------- -------------------- ---------------------
         <S>                          <C>                     <C>                  <C>
         Paul J. Marangos             100,000/0               $0.25                       $0/$0
         ---------------------------- ----------------------- -------------------- ---------------------
         Edmond Buccellato            50,000/0                $0.20                     $1,500/$0
                                      50,000/0                $0.10                     $6,500/$0
                                      105,453/0               $0.05                     $18,998/$0
         ---------------------------- ----------------------- -------------------- ---------------------
         Simon Skurkovich             300,000/0               $0.10                     $39,000/$0
                                      623,000/0               $0.65                    $112,140/$0
</TABLE>

- ----------
(1) The dollar amounts calculated in this table use the closing bid on the
Common Stock of the Company on the last trading day in December 2000, which was
$0.23 per share.

LONG-TERM INCENTIVE PLAN AWARDS

THE STOCK BONUS PLAN

         The Board of Directors of the Company adopted the Stock Bonus Plan in
January 2000 as an incentive for performance by eligible employees (the "Plan").

         The Plan's purpose is to keep personnel of experience and ability in
the employ of the Company and to compensate them for their contributions to the
growth of the Company, thereby inducing them to continue to make such
contributions in the future.

         During the fiscal year ending December 31, 2000, as previously
disclosed in the Company's Form 10-KSB for the fiscal year ended December 31,
1999, the following directors were awarded 8.0 million shares of the Company's
Common Stock under the Plan at a price of $0.05 per share:


                                       23
<PAGE>


<TABLE>
<CAPTION>

         ----------------------------------------- -------------------------------------------
                        Individual                           Number of Bonus Shares
         ----------------------------------------- -------------------------------------------
         <S>                                       <C>
         Edmond Buccellato                                         1,500,000
         ----------------------------------------- -------------------------------------------
         Larry Loomis                                              1,000,000
         ----------------------------------------- -------------------------------------------
         Boris Skurkovich                                          1,500,000
         ----------------------------------------- -------------------------------------------
         Simon Skurkovich (1)                                      4,000,000
         ----------------------------------------- -------------------------------------------

</TABLE>

 ----------
(1)       Dr. Skurkovich subsequently gifted all of these shares to various
          individuals, including 1,935,000 to Boris Skurkovich and 1,735,000 to
          Leonard Millstein and three members of his family.

         Such stock bonuses were issued at the weighted average price at which
the Company has been selling shares of stock out of authorized but yet unissued
common stock to third parties during the six months immediately preceding the
issuance of the bonus shares, or $0.05 per share.

         Consideration for the purchase of such shares was in the form of a note
in favor of the Company by each individual to whom the stock was awarded, except
for Dr. Simon Skurkovich, whose $200,000 purchase obligation was set off against
an obligation of the Company to him for accrued but unpaid salary. The notes for
Messrs. Buccellato and Loomis and Dr. Boris Skurkovich have a maturity of two
(2) years and bear interest at 6.5% per annum.

THE OEI PLAN

         The Board of Directors of the Company adopted the OEI Plan in December
2000. The purpose of the OEI Plan is to promote the long-term success of the
Company and the creation of stockholder value by (a) encouraging employees,
outside directors and consultants to focus on critical long-term objectives, (b)
encouraging the attraction and retention of employees, outside directors and
consultants with exceptional qualifications and (c) linking employees, outside
directors and consultants directly to stockholder interests through increased
stock ownership. The OEI Plan seeks to achieve this purpose by providing for
awards in the form of restricted shares, stock units, incentive and nonstatutory
stock options and stock appreciation rights. The OEI Plan will be administered
by the Board of Directors unless and until the Board delegates administration to
a committee.

         The Board reserved 4,000,000 shares of Common Stock to be issued under
the OEI Plan, subject to annual increases equal to the lesser of 2.5% of
outstanding shares or 250,000 shares. No shares have been issued under the OEI
Plan to date.

COMPENSATION OF DIRECTORS

         Directors did not receive any cash compensation for serving as members
of the Board of Directors for the year ending December 31, 2000, but several
Board members received stock grants under the Plan as described above under
"Stock Bonus Plan" and Board members are eligible for awards under the OEI Plan.
In addition, during the fiscal year ended December 31, 2000, each of Dr.
Marangos and Messrs. Cappello and Bendheim received one-time grants of warrants
exercisable into 100,000 shares of Common Stock of the Company at $0.25 per
share. There are no other contractual arrangements with any member of the Board
of Directors.


                                       24
<PAGE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following table sets forth the Common Stock ownership, including
options to purchase stock, of each person known by the Company to be the
beneficial owner of five percent (5%) or more of the Company's Common Stock,
each director individually and all officers and directors of the Company as a
group as of December 31, 2000. Each person has sole voting and investment power
with respect to the shares of Common Stock shown, unless otherwise noted, and
all ownership is of record and beneficial. As of December 31, 2000, the Company
had 39,848,265 shares of Common Stock outstanding.

<TABLE>
<CAPTION>

     -------------------------------------- ------------------------------ ------------------------------
     Name and Address of Owner              Number of Shares               Percentage of Total
                                            Beneficially Owned
     -------------------------------------- ------------------------------ ------------------------------
     <S>                                    <C>                            <C>
     Boris V. Skurkovich, M.D.              5,177,270(1)                              12.9%
     18 Blaisdell Ave.
     Pawtucket, RI 01860

     -------------------------------------- ------------------------------ ------------------------------
     Leonard and Ellen Millstein            3,403,459(2)                               8.5%
     1677 Calle Alta
     La Jolla, CA 92037

     -------------------------------------- ------------------------------ ------------------------------
     Gerard K. Cappello                     2,161,460(3)                               5.1%
     1299 Ocean Avenue
     Suite 306
     Santa Monica, CA 90401

     -------------------------------------- ------------------------------ ------------------------------
     Edmond Buccellato                      2,143,343(4)                               5.3%
     6355 Topanga Canyon Boulevard
     Suite 510
     Woodland Hills, CA 91367

     -------------------------------------- ------------------------------ ------------------------------
     Simon Skurkovich, M.D.                 2,126,770(5)                               5.2%
     802 Rollins Avenue
     Rockville, MD 20852

     -------------------------------------- ------------------------------ ------------------------------
     Lawrence Loomis                        1,610,000(6)                               4.0%
     9110 Red Branch Road
     Columbia, MD 21045

     -------------------------------------- ------------------------------ ------------------------------
     Alexander L. Cappello                  1,315,061(7)                               3.2%
     1299 Ocean Avenue
     Suite 306
     Santa Monica, CA 90401

     -------------------------------------- ------------------------------ ------------------------------
     John M. Bendheim                         200,000(8)                                 *
     2001 S. Barrington Street
     Suite 100
     Los Angeles, CA 90025

     -------------------------------------- ------------------------------ ------------------------------
     Paul J. Marangos                         100,000(9)                                 *
     7402 Cadencia Street
     Carlsbad, CA 92009
     -------------------------------------- ------------------------------ ------------------------------
     Margo Dockendorf, J.D.                         0                                    *
     4090 Rosenda Court #200
     San Diego, CA 92122
     -------------------------------------- ------------------------------ ------------------------------
     All officers and directors as a        18,237,363(10)                            40.2%
     group (9)
     -------------------------------------- ------------------------------ ------------------------------
</TABLE>
                                       25
<PAGE>


- -----------
(1)           Shares held in the name of Boris Skurkovich (2,505,270 shares),
              Carol Marjorie Dorros (550,000), Samuel Skurkovich (701,000
              shares), and Samuel Aaron Skurkovich (1,121,000 shares). Includes
              options to purchase up to 100,000 shares of common stock at an
              exercise price of $0.01 per share; options to purchase up to
              150,000 shares of common stock at an exercise price of $0.02 per
              share, and options to purchase 50,000 shares of common stock at an
              exercise price of $0.10 per share.
(2)           Leonard and Ellen Millstein are husband and wife. Shares held in
              their names comprise shares held in his name (565,100), shares
              held in her name (2,713,359) and options in his name to purchase
              up to 125,000 shares of common stock at an exercise price of
              $0.20 per share. The Millsteins disclaim beneficial ownership of
              the shares in the other's name and disclaim that they are part
              of any "group" for SEC purposes.
(3)           Shares held in the name of Gerard Cappello include warrants held
              in his name to purchase 655,919 shares at an exercise price of
              $0.15 per share of Common Stock and warrants to purchase 1,405,541
              shares at an exercise price of $0.15 per share of Common Stock
              held in the name of Cappello Capital Corporation, a company
              wholly-owned by Mr. Cappello. Shares held also include the right
              to acquire 100,000 shares of Common Stock upon conversion of
              convertible demand notes at a conversion price of $0.25 per share.
(4)           Shares held in the names of the Edmond Buccellato (1,754,000),
              Edmond and Leana Buccellato Family Trust (153,000 shares), Edmond
              Buccellato and Leana Buccellato FBO the Buccellato Living Trust
              (20,000 shares), Amy Buccellato (8,400 shares), and Matthew
              Buccellato (10,490 shares). Includes options to purchase up to
              50,000 shares of common stock at an exercise price of $0.10 per
              share and options to purchase up to 50,000 shares of common stock
              at an exercise price of $0.20 per share. Includes options to
              purchase up to 105,543 shares of common stock at an exercise price
              of $0.10 per share.
(5)           Shares held in the name of Simon Skurkovich include the right
              to acquire 100,000 shares of Common Stock upon conversion of
              convertible demand notes at a conversion price of $0.25 per share.
              Includes options to purchase up to 300,000 shares of common stock
              at an exercise price of $0.10 per share, and options to purchase
              up to 623,000 shares of common stock at an exercise price of
              $0.10 per share. Simon Skurkovich is the father of Boris
              Skurkovich and Ellen Millstein but disclaims beneficial ownership
              of the shares attributed to both of them and disclaims that the
              three of them are part of a "group" for SEC purposes.
(6)           Shares held in the names of Larry Loomis (1,325,000 shares) and
              New Horizons Diagnostics, Inc. (200,000 shares). Includes options
              to purchase up to 75,000 shares of common stock at an exercise
              price of $0.20 per share and options to purchase up to 10,000
              shares of common stock at an exercise price of $0.10 per share.
(7)           Shares held in the name of Alexander Cappello include warrants
              held in his name to purchase 100,000 shares at an exercise price
              of $0.25 per share of Common Stock and warrants to purchase
              1,115,061 shares at an exercise price of $0.15 per share of Common
              Stock. Also includes the right to acquire 100,000 shares of Common
              Stock upon conversion of convertible demand notes at a conversion
              price of $0.25 per share. Alexander Cappello is the brother of
              Gerard Cappello.
(8)           Shares held in the name of John Bendheim comprise warrants to
              purchase 100,000 shares of Common Stock at an exercise price of
              $0.25 per share and the right to acquire 100,000 shares of
              Common Stock upon conversion of convertible demand notes at a
              conversion price of $0.25 per share.


                                       26
<PAGE>


(9)           Warrants held in the name of Paul J. Marangos to purchase 100,000
              shares of Common Stock at an exercise price of $0.25 per share.
(10)          Includes 3,476,521 shares of Common Stock underlying warrants,
              1,638,543 shares of Common Stock underlying options and 400,000
              shares of Common Stock underlying convertible subordinated notes.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         In connection with issuance of bonus shares under the Plan to various
individuals, the Company financed the $0.05 per share purchase price for the
shares for Messrs. Buccellato, Loomis and Boris Skurkovich in
the amounts of $75,000, $50,000 and $75,000, respectively. The notes
for these amounts mature in two years and bear interest at 6.5% per annum.
The Company also set off the $200,000 purchase obligation of Simon Skurkovich
against an obligation of the Company to him for accrued but unpaid salary.

         Alexander L. Cappello is the brother of Gerard K. Cappello, the owner,
President and Chief Executive Officer of Cappello Capital Corporation. Cappello
Capital Corporation raised $1,510,500 in convertible subordinated debt for the
Company and was paid $124,981 in fees and expenses related thereto and it and
certain related parties were issued warrants to purchase 4,685,135 shares of
Common Stock at $0.15 per share.

                                     PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

EXHIBITS

Exhibit No.       Description

2.1               Agreement of Merger dated as of July 14, 2000, between the
                  Registrant, a Delaware corporation, and Advanced Biotherapy
                  Concepts, Inc., a Nevada corporation (1)

3.1               Certificate of Incorporation of Registrant. (2)

3.2               Bylaws of Registrant. (2)

4.1               Form of Registrant's Common Stock Certificate. (3)

10.1              Form of Stock Bonus Plan. (4)

10.2              Form of Common Stock Purchase Warrant in favor of Cappello
                  Capital Corporation. (5)

10.3              Form of 2000 Omnibus Equity Incentive Plan.

10.4              Form of Option Agreement.

10.5              Form of 10% Convertible Subordinated Debt Instrument. (6)

10.6              Form of Convertible Subordinated Debt Purchase Agreement.

10.7              Form of Investor Rights Agreement.


                                       27
<PAGE>


23.1              Consent of Williams & Webster PS, Certified Public
                  Accountants.

- --------------------------------------------------------------------------------
(1)    Filed as Appendix A to Registrant's Proxy Statement dated July 14, 2000,
       and incorporated herein by reference.

(2)    Filed as an exhibit to Registrant's Form 10-QSB for the quarter ending
       September 30, 2000, and incorporated herein by reference.

(3)    Filed as an exhibit to Registrant's Form 10-SB filed on June 10, 1999,
       and incorporated herein by reference.

(4)    Filed as an exhibit to Registrant's Form 10-KSB for the fiscal year
       ending December 31, 1999.

(5)    Filed as an exhibit to Registrant's Form 10-QSB for the quarter ending
       March 31, 2000, and incorporated herein by reference.

(6)    Filed as an exhibit to Registrant's Form 10-QSB for the quarter ending
       June 30, 2000, and incorporated herein by reference.

The financial statements are incorporated herein by reference from Exhibit 99.1,
which begins with the Table of Contents on Page F- 1.

REPORTS ON FORM 8-K

         No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.


                                       28
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on this 28th
day of March, 2001.

                              Advanced Biotherapy, Inc.
                                    (Registrant)

                              By:      /s/ Paul J. Marangos
                                       -----------------------------------------
                                       Paul J. Marangos, Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person on behalf of the
Registrant and in the capacities and on this 28th day of March, 2001.

<TABLE>
<CAPTION>

                     SIGNATURE                            TITLE                         DATE
                     ---------                            -----                         ----
         <S>                                 <C>                                       <C>
                                             Chairman, President and Chief          March 28, 2001
         /s/ Paul J. Marangos, Ph.D.         Executive Officer
         ----------------------------        (Chief  Executive Officer and
         Paul J. Marangos, Ph.D.             Principal Financial and
                                             Accounting Officer)


         /s/ Margo J. Dockendorf, Esq.       Treasurer and Secretary                March 28, 2001
         ----------------------------
         Margo J. Dockendorf, Esq.


         /s/ John Bendheim                   Director                               March 28, 2001
         ----------------------------
         John Bendheim


         /s/ Edmond Buccellato               Director                               March 28, 2001
         ----------------------------
         Edmond Buccellato


         /s/ Alexander L. Cappello           Director                               March 28, 2001
         ----------------------------
         Alexander L. Cappello


         /s/ Lawrence Loomis                 Director                               March 28, 2001
         ----------------------------
         Lawrence Loomis


         /s/ Leonard Millstein               Director                               March 28, 2001
         ----------------------------
         Leonard Millstein


         /s/ Boris Skurkovich, M.D.          Director                               March 28, 2001
         ----------------------------
         Boris Skurkovich, M.D.


         /s/ Simon Skurkovich, M.D.          Director                               March 28, 2001
         ----------------------------
         Simon Skurkovich, M.D.

</TABLE>


                                       29
<PAGE>


                            ADVANCED BIOTHERAPY, INC.
                  (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)

                                DECEMBER 31, 2000



                                    CONTENTS



Independent Auditor's Report                                               F-2

Financial Statements:

         Balance Sheets                                                    F-3

         Statements of Operations                                          F-4

         Statement of Stockholders' Equity (Deficit)                       F-5

         Statements of Cash Flows                                          F-6

Notes to Financial Statements                                              F-7


                                      F-1
<PAGE>


Board of Directors
Advanced Biotherapy, Inc.
Carlsbad, CA


                          INDEPENDENT AUDITOR'S REPORT


We have audited the accompanying balance sheets of Advanced Biotherapy, Inc., a
development stage enterprise (formerly Advanced Biotherapy Concepts, Inc.) (a
Delaware corporation) as of December 31, 2000 and 1999, and the related
statements of operations, stockholders' equity (deficit) and cash flows for the
years then ended. 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 of America. Those standards require that we plan and
perform the audits 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 estimated 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 Advanced Biotherapy, Inc. as of
December 31, 2000 and 1999, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has generated little revenue in the past
years, and has suffered recurring losses from operations resulting in an
accumulated deficit of $4,048,125 at December 31, 2000. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans regarding this issue are also discussed in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.



Williams & Webster, P.S.
CERTIFIED PUBLIC ACCOUNTANTS
Spokane, Washington
March 6, 2001


                                      F-2
<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                 (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                                 BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>

                                                                               December 31,           December 31,
                                                                                   2000                   1999
                                                                              ---------------        ----------------
<S>                                                                           <C>                    <C>
CURRENT ASSETS
Cash                                                                          $      758,267         $        34,958
Prepaid expenses                                                                      32,692                       -
                                                                              ---------------        ----------------
          Total Current Assets                                                       790,959                  34,958
                                                                              ---------------        ----------------

PROPERTY AND EQUIPMENT, net of depreciation                                           10,287                       -
                                                                              ---------------        ----------------

OTHER ASSETS
   Notes receivable - related party                                                  246,619                       -
   Interest receivable                                                                15,548                       -
   Deferred loan origination fees, net of
      accumulated amortization                                                       102,503                       -
   Patents and patents pending, net of
      accumulated amortization                                                       173,509                 113,319
                                                                              ---------------        ----------------
          Total Other Assets                                                         538,179                 113,319
                                                                              ---------------        ----------------

TOTAL ASSETS                                                                  $    1,339,425         $       148,277
                                                                              ===============        ================


                      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable and accrued liabilities                                      $       46,609         $        93,934
Loan payable to related party                                                              -                 257,076
                                                                              ---------------        ----------------
          Total Current Liabilities                                                   46,609                 351,010
                                                                              ---------------        ----------------

LONG-TERM DEBT
Convertible notes payable                                                          1,560,169                       -
Notes payable to related parties                                                     127,631                 213,381
                                                                              ---------------        ----------------
          Total Long-Term Debt                                                     1,687,800                 213,381
                                                                              ---------------        ----------------

          Total Liabilities                                                        1,734,409                 564,391
                                                                              ---------------        ----------------

COMMITMENTS AND CONTINGENCIES                                                              -                       -
                                                                              ---------------        ----------------

STOCKHOLDERS' EQUITY (DEFICIT)
   Common stock, par value $0.001 per share;
      100,000,000 shares authorized; 39,848,265 and
      30,198,265 shares issued and outstanding                                        39,848                  30,198
   Additional paid-in capital                                                      3,233,890               2,770,305
   Subscriptions receivable                                                                -                 (32,500)
   Stock options and warrants                                                        379,403                 210,738
   Deficit accumulated during development stage                                   (4,048,125)             (3,394,855)
                                                                              ---------------        ----------------
               Total Stockholders' Equity (Deficit)                                 (394,984)               (416,114)
                                                                              ---------------        ----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                          $    1,339,425         $       148,277
                                                                              ===============        ================

</TABLE>

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

                                      F-3

<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                 (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                                                                 From Inception
                                                                                                               (December 2, 1985)
                                                                 Years Ended December 31,                           Through
                                                             2000                      1999                    December 31, 2000
                                                      -------------------       -------------------      --------------------------
<S>                                                   <C>                       <C>                      <C>
REVENUES                                              $                -        $                -       $                  89,947
                                                      -------------------       -------------------      --------------------------

OPERATING EXPENSES
       Research and development                                   39,579                   156,280                       2,144,625
       Promotional fees                                            7,558                         -                           7,558
       Professional fees                                         430,608                    35,308                       1,552,359
       Depreciation and amortization                              24,222                     9,134                         432,004
       Salaries and benefits                                     174,613                   120,000                         926,114
       Insurance                                                  10,898                         -                          10,898
       Shareholder relations and transfer fees                    19,613                     7,600                         147,759
       Rent                                                       11,100                     1,800                         122,154
       Travel and entertainment                                   60,816                       544                          61,360
       Telephone and communications                               12,238                     2,378                          14,616
       Office                                                     27,222                       690                          27,912
       General and administrative                                  8,617                       544                         567,998
                                                      -------------------       -------------------      --------------------------
            Total Operating Expenses                             827,084                   334,278                       6,015,357
                                                      -------------------       -------------------      --------------------------

Loss from operations                                            (827,084)                 (334,278)                     (5,925,410)

Other income (expense)
       Miscellaneous income                                            -                    22,000                          22,000
       Interest income                                            29,995                       259                          31,091
       Internal gain on sale of securities                       157,520                         -                         157,520
       Accounts payable forgiveness                               45,396                         -                          45,396
       Interest expense                                          (59,097)                  (26,298)                       (426,159)
                                                      -------------------       -------------------      --------------------------
            Total Other Income (Expense)                         173,814                    (4,039)                       (170,152)
                                                      -------------------       -------------------      --------------------------

Loss before extraordinary  item                                 (653,270)                 (338,317)                     (6,095,562)

Extraordinary item, forgiveness of debt                                -                 1,482,209                       2,047,437
                                                      -------------------       -------------------      --------------------------

NET INCOME (LOSS)                                     $         (653,270)       $        1,143,892       $              (4,048,125)
                                                      ===================       ===================      ==========================

BASIC NET INCOME (LOSS)
  PER COMMON SHARE                                    $            (0.02)       $             0.04       $                   (0.18)
                                                      ===================       ===================      ==========================

DILUTED NET INCOME (LOSS)
  PER COMMON SHARE                                    $            (0.02)       $             0.04       $                   (0.18)
                                                      ===================       ===================      ==========================

WEIGHTED AVERAGE NUMBER OF
BASIC COMMON STOCK
SHARES OUTSTANDING                                            39,278,866                28,946,467                      22,170,415
                                                      ===================       ===================      ==========================

WEIGHTED AVERAGE NUMBER OF
DILUTED COMMON STOCK
SHARES OUTSTANDING                                            39,278,866                30,981,467                      22,170,415
                                                      ===================       ===================      ==========================

</TABLE>

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

                                      F-4
<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                 (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>


                                                            COMMON STOCK
                                               --------------------------------------        ADDITIONAL
                                                                                              PAID-IN                  STOCK
                                                    SHARES               AMOUNT               CAPITAL              SUBSCRIPTIONS
                                               ------------------   -----------------   ---------------------   --------------------
<S>                                            <C>                  <C>                 <C>                     <C>
Balance, December 31, 1998                            27,141,075    $         27,141    $          2,552,654    $                 -

Common stock issued at
approximately $0.05 per share                          3,158,000               3,158                 151,993                      -

Cancellation of escrowed shares                         (850,000)               (850)                    850                      -

Common stock issued for services
at approximately $0.05 per share                          99,190                  99                   4,860                      -

Contribution of capital by
shareholders in form of
foregone interest and rent                                     -                   -                  28,098                      -

Stock subscriptions issued                               650,000                 650                  31,850                (32,500)

Stock options issued in exchange
for forgiveness of accrued wages                               -                   -                       -                      -

Net income for the year ended
December 31, 1999                                              -                   -                       -                      -
                                               ------------------   -----------------   ---------------------   --------------------

Balance, December 31, 1999                            30,198,265              30,198               2,770,305                (32,500)

Contribution of capital by
shareholders in form of
foregone interest and rent                                     -                   -                   9,735                      -

Stock subscriptions paid                                       -                   -                       -                 32,500

Stock issued as part of stock
   bonus plan in exchange for loan
   payable and notes receivable
   at $0.05 per share                                  9,200,000               9,200                 450,800                      -

Stock warrants issued in exchange
  for services                                                 -                   -                       -                      -

Stock issued for cash at $0.01 from
  the exercise of options                                350,000                 350                   3,150                      -

Stock adjustment                                         100,000                 100                    (100)                     -

Net loss for the year ended
   December 31, 2000                                           -                   -                       -                      -
                                               ------------------   -----------------   ---------------------   --------------------


Balance, December 31, 2000                            39,848,265    $         39,848    $          3,233,890    $                 -
                                               ==================   =================   =====================   ====================

</TABLE>

<TABLE>
<CAPTION>

                                                                             DEFICIT
                                                                           ACCUMULATED
                                                      STOCK                   DURING
                                                   OPTIONS AND             DEVELOPMENT
                                                     WARRANTS                  STAGE
                                               --------------------    ---------------------
<S>                                            <C>                     <C>
Balance, December 31, 1998                     $                 -     $         (4,538,747)

Common stock issued at
approximately $0.05 per share                                    -                        -

Cancellation of escrowed shares                                  -                        -

Common stock issued for services
at approximately $0.05 per share                                 -                        -

Contribution of capital by
shareholders in form of
foregone interest and rent                                       -                        -

Stock subscriptions issued                                       -                        -

Stock options issued in exchange
for forgiveness of accrued wages                           210,738                        -

Net income for the year ended
December 31, 1999                                                -                1,143,892
                                                   ----------------    ---------------------

Balance, December 31, 1999                                 210,738               (3,394,855)

Contribution of capital by
shareholders in form of
foregone interest and rent                                       -                        -

Stock subscriptions paid                                         -                        -

Stock issued as part of stock
   bonus plan in exchange for loan
   payable and notes receivable
   at $0.05 per share                                            -                        -

Stock warrants issued in exchange
  for services                                             168,665                        -

Stock issued for cash at $0.01 from
  the exercise of options                                        -                        -

Stock adjustment                                                 -                        -

Net loss for the year ended
   December 31, 2000                                             -                 (653,270)
                                               --------------------    ---------------------


Balance, December 31, 2000                     $           379,403     $         (4,048,125)
                                               ====================    =====================

</TABLE>

Summary of required information regarding stock issuances can be found in Note
8.

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


                                      F-5
<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                 (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                            STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                                               From Inception
                                                                                                             (December 2, 1985)
                                                                     Years Ended December 31,                      through
                                                                   2000                    1999              December 31, 2000
                                                             -----------------       -----------------      ---------------------
<S>                                                          <C>                     <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)                                            $       (653,270)       $      1,143,892       $         (4,048,125)
     Extraordinary gain                                                     -              (1,482,209)                (1,684,068)
Adjustments to reconcile net loss to cash used in
     operating activities:
     Depreciation and amortization                                     24,222                   9,134                    432,004
     Investment income                                               (157,520)                      -                   (157,520)
     Expenses paid through issuance
       of common stock                                                      -                   4,959                    231,340
     Expenses paid through issuance
       of common stock warrants                                       168,665                       -                    168,665
     Interest expense accrued to convertible debt                      49,669                       -                     49,669
     Expenses paid through contribution
       of additional paid in capital                                    9,735                  28,098                     37,833
     Organization costs                                                     -                       -                     (9,220)
     Decrease (increase) in:
         Prepaid expenses                                             (32,692)                      -                    (32,692)
         Interest receivable                                          (15,548)                      -                    (15,548)
         Deferred loan origination cost                              (113,288)                      -                   (113,288)
     Increase (decrease) in:
         Accounts payable                                             (47,325)                 39,052                     46,609
         Accounts and notes payable, related parties                 (129,445)                      -                    127,631
         Payroll and payroll taxes payable                                  -                 181,624                  1,682,984
         Accrued interest                                                   -                       -                      9,962
                                                             -----------------       -----------------      ---------------------

Net cash used in operating activities                                (896,797)                (75,450)                (3,273,764)

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of fixed assets                                         (11,030)                      -                    (48,003)
     Internal gain on sale of securities                              157,520                       -                    157,520
     Acquisition of patents                                           (72,884)                (45,925)                  (251,121)
                                                             -----------------       -----------------      ---------------------

Net cash used in investing activities                                  73,606                 (45,925)                  (141,604)

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from issuance of common stock                            36,000                 155,151                  2,449,754
     Proceeds from convertible note                                 1,510,500                       -                  1,510,500
     Proceeds from notes payable                                      100,000                       -                    388,508
     Payments on notes payable                                       (100,000)                      -                   (175,127)
                                                             -----------------       -----------------      ---------------------
Net cash provided by financing activities                           1,546,500                 155,151                  4,173,635
                                                             -----------------       -----------------      ---------------------

Net increase (decrease) in cash                                       723,309                  33,776                    758,267

Cash, beginning                                                        34,958                   1,182                          -
                                                             -----------------       -----------------      ---------------------

Cash, ending                                                 $        758,267        $         34,958       $            758,267
                                                             =================       =================      =====================

Supplemental cash flow disclosures:

     Interest expense paid                                   $            984        $              -       $            339,927
                                                             =================       =================      =====================
     Income taxes paid                                       $              -        $              -       $                  -
                                                             =================       =================      =====================

NON-CASH FINANCING AND INVESTING ACTIVITIES:

     Common stock issued in exchange for
         professional fees and expenses                      $              -        $          4,959       $            340,869
     Contributed expenses                                    $          9,735        $         28,098       $             37,833
     Common stock subscribed                                 $              -        $         32,500       $             32,500
     Common stock issued for a loan payable                  $        213,381        $              -       $            213,381
     Common stock issued for notes receivable                $        246,619        $              -       $            246,619
     Warrants issued for services                            $        168,665        $              -       $            168,665
     Accrued interest paid by convertible debt               $         49,669        $              -       $             49,669

</TABLE>

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

                                      F-6
<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                  (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Advanced Biotherapy, Inc. (formerly Advanced Biotherapy Concepts, Inc.) was
originally incorporated December 2, 1985 under the laws of the State of Nevada.
The Company is involved in the research and development of the treatment of
autoimmune diseases in humans, most notably, multiple sclerosis and rheumatoid
arthritis. During 2000, the Company conducted research in Maryland. The
Company's fiscal year-end is December 31. The Company is a development stage
enterprise.

On July 14, 2000, the Company incorporated a wholly owned subsidiary, Advanced
Biotherapy, Inc. in the state of Delaware. On September 1, 2000, the Company
merged with its wholly owned subsidiary, effectively changing its name to
Advanced Biotherapy, Inc. (hereinafter "the Company") and its domicile to
Delaware.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Advanced Biotherapy, Inc. is
presented to assist in understanding the Company's financial statements. The
financial statements and notes are representations of the Company's management,
which is responsible for their integrity and objectivity. These accounting
policies conform to accounting principles generally accepted in the United
States of America, and have been consistently applied in the preparation of the
financial statements.

DEVELOPMENT STAGE ACTIVITIES

The Company has been in the development stage since its formation in 1985 and
has not realized any significant revenues from its planned operations. It is
primarily engaged in the research and development of the treatment of autoimmune
diseases in humans, most notably, multiple sclerosis and rheumatoid arthritis.

GOING CONCERN

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.

As shown in the accompanying financial statements, the Company incurred a net
loss of $653,270 for the year ended December 31, 2000. At December 31, 2000, the
Company has an accumulated deficit during the development stage of $4,048,125.
The future of the Company is dependent upon future profitable operations from
the commercial success of its medical research and development of products to
combat diseases of the human immune system and products for treatment of viral
and bacterial diseases of animals. Management has established plans designed to
increase the capitalization of the Company and is actively seeking additional
capital that will provide funds needed to fund the research and development and
therefore the internal growth of the Company in order to fully implement its
business plans. For the twelve-month period subsequent to December 31, 2000, the
Company anticipates that its minimum cash requirements to continue as a going
concern will be less than $800,000. The anticipated source of funds will be the
issuance for cash of additional debt and/or equity instruments. (See Note 12.)
In addition, management is actively seeking a collaborative relationship with
either a pharmaceutical or biotechnology company. If successful, cash
requirements may be met through royalty or licensing fees. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded assets, or the amounts and classification of
liabilities that might be necessary in the event the Company cannot continue in
existence.


                                      F-7
<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                  (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ACCOUNTING METHOD

The Company's financial statements are prepared using the accrual method of
accounting.

CASH AND CASH EQUIVALENTS

For purposes of the Statement of Cash Flows, the Company considers all bank
accounts, certificates of deposit, money market accounts and short-term debt
securities purchased with a maturity of three months or less to be cash
equivalents.

PROVISION FOR TAXES

At December 31, 2000, the Company had net operating loss carryforwards of
approximately $4,000,000 which may be offset against future taxable income
through 2020. No tax benefit has been reported in the financial statements, as
the Company believes there is a 50% or greater chance that the net operating
loss carryforwards will expire unused. Accordingly, the potential tax benefits
of the net operating loss carryforwards are offset by a valuation allowance of
the same amount.

USE OF ESTIMATES

The process of preparing financial statements in conformity with accounting
principles generally accepted in the United States of America, requires the use
of estimates and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements. Accordingly,
upon settlement, actual results may differ from estimated amounts.

IMPAIRED ASSET POLICY

In March 1995, the Financial Accounting Standards Board issued a statement
titled "Accounting for Impairment of Long-lived Assets." In complying with this
standard, the Company reviews its long-lived assets quarterly to determine if
any events or changes in circumstances have transpired which indicate that the
carrying value of its assets may not be recoverable. The Company determines
impairment by comparing the undiscounted future cash flows estimated to be
generated by its assets to their respective carrying amounts. The Company does
not believe any adjustments are needed to the carrying value of its assets at
December 31, 2000.

RECLASSIFICATIONS

Certain amounts from prior periods have been reclassified to conform with the
current period presentation. This reclassification has resulted in no changes to
the Company's accumulated deficit or net losses presented.

PROMOTIONAL FEES

Promotional fees are charged to operations in the year incurred. Promotional
fees amounted to $7,558 for the year ended December 31, 2000. No promotional
fees were paid in 1999.


                                      F-8
<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                  (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 RESEARCH AND DEVELOPMENT COSTS

Costs of research and development are expensed as incurred.

COMPENSATED ABSENCES

Employees of the Company are entitled to paid vacation, paid sick days and
personal days off, depending on job classification, length of service, and other
factors. It is impracticable to estimate the amount of compensation for future
absences, and, accordingly, no liability has been recorded in the accompanying
financial statements. The Company's policy is to recognize the costs of
compensated absences when actually paid to employees.

REVENUE RECOGNITION

Upon entering into license agreements with other companies, revenue will be
recognized when fees are received. Prior to 1994, revenues were recognized when
fees for services related to research activities were received.

DERIVATIVE INSTRUMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This standard establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value.

At December 31, 2000, the Company has not engaged in any transactions that would
be considered derivative instruments or hedging activities.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts for cash, prepaid expenses, receivables, accounts payable,
loans and notes payable, accrued liabilities, and convertible debt approximate
their fair value.

DEFERRED LOAN ORIGINATION FEES

During the year ended December 31, 2000, the Company entered into convertible
subordinated debt which required the payment of loan origination fees. See Note
13. These loan origination fees, which totaled $113,288 at December 31, 2000,
are amortized over the life of the related debt. During the year ended December
31, 2000, the Company recorded amortization expense in the amount of $10,785
related to these fees.


                                      F-9
<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                  (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets. The
following is a summary of property, equipment and accumulated depreciation at
December 31, 2000:

<TABLE>
<CAPTION>

                                                   Cost                Accumulated Depreciation
                                                   ----                ------------------------
          <S>                                <C>                           <C>
          Lab equipment                      $     27,582                  $      27,582
          Office equipment                         15,869                          5,582
          Furniture and fixtures                    1,302                          1,302
                                             ------------                  -------------
                                             $     44,753                  $      34,466
                                             ============                  =============

</TABLE>

Depreciation expense for the year ended December 31, 2000 was $743. There was no
depreciation taken in 1999.

NOTE 4 - INTANGIBLE ASSETS

PATENTS AND PATENTS PENDING

Costs relating to the development and approval of patents, other than research
and development costs which are expensed, are capitalized and amortized using
the straight-line method over seventeen years. The Company's patents relate to
the treatment of autoimmune diseases.

The following is a summary of the costs of patents and patents pending at
December 31, 2000:

<TABLE>
<CAPTION>

                                                                     Accumulated
                                                        Cost         amortization             Net amount
                                                 ---------------    --------------         ---------------
      <S>                                        <C>                <C>                    <C>
      Balance, at December 31, 1998              $       132,311    $      (55,784)        $        76,527
      1999 Activity                                       45,925            (9,133)                 36,792
                                                 ---------------     -------------          --------------
      Balance, December 31, 1999                         178,236           (64,917)                113,319
      2000 Activity                                       72,884           (12,694)                 60,190
                                                 ---------------     -------------          --------------
      Balance, December 31, 2000                 $       251,120     $     (77,611)         $      173,509
                                                 ===============     =============          ==============

</TABLE>

NOTE 5 - RELATED PARTY TRANSACTIONS

TRANSACTIONS IN 2000

The Company has notes receivable in the amount of $246,619 from shareholders of
the Company in connection with an payment plan for the purchase of Company
stock. The notes accrue interest at a rate of 6.5% per annum and are payable on
December 31, 2002.

Notes payable to related parties consist of notes payable to the former chairman
and principal shareholder. During 2000, $85,750 of the notes was used to offset
a bonus stock sale. The note has no specific due date, is currently
uncollateralized, and is non-interest bearing, however, interest is calculated
at the applicable federal rate each quarter. This interest was recorded as
interest expense and contributed capital in the accompanying financial
statements.


                                      F-10
<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                  (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 5 - RELATED PARTY TRANSACTIONS (CONTINUED)

TRANSACTIONS IN 1999

The Company's former chairman and principal shareholder has advanced funds to
pay a significant portion of the Company's expenses since 1989. At December 31,
1999, the cumulative amounts owed to the him for expenses amount to $257,076.
Even though the he was not charging interest to the Company, interest was
calculated at the applicable federal rate of 5.59% at December 31, 1999. This
interest was recorded as interest expense and contributed capital in the
accompanying financial statements. During 2000, the Company paid part of this
note and the balance was used to offset a bonus stock sale to the chairman. At
December 31, 1998, the amounts owing for accrued salary was $1,146,000. During
1999, additional salary was accrued in the amount of $100,000. At December 31,
1999, in accordance with an agreement with other employee/shareholders of the
Company, he received options to purchase 623,000 shares of common stock at $0.10
per share. The value of these options, in the amount of $155,750, was used to
reduce his accrued salary. See Note 10. In 1999, he forgave the balance of
accrued salary of $1,090,250 along with accrued interest of $9,962. This is
recorded in the financial statements as a component of extraordinary income in
1999.

At December 31, 1999, the Company owed its then secretary/treasurer $13,381 for
expenses paid in previous years and recorded in notes payable. During 2000, this
note was used as partial payment for a bonus stock purchase by the
secretary/treasurer. At December 31, 1998 the Company also owed this employee
$184,000 in unpaid salary recorded as salary payable. During 1999, additional
salary in the amount of $45,000 was accrued for this employee. At December 31,
1999, in accordance with an agreement with other employee/shareholders of the
Company, the she received options to purchase 114,500 shares of common stock at
$0.10 per share. The value of these options, in the amount of $28,625, was used
to reduce the accrued salary of this employee/shareholder. See Note 10. In 1999,
the secretary/treasurer forgave the balance of accrued salary in the amount of
$200,375. This is recorded in the financial statements as a component of
extraordinary income in 1999.

At December 31, 1998, the then president of the Company was owed $171,360 in
accrued salary. During 1999, a portion of this liability was paid. Also during
1999, additional salary in the amount of $75,000 was accrued. At December 31,
1999, in accordance with an agreement with other employee/shareholders of the
Company, he received options to purchase 105,453 shares of common stock at $0.10
per share. The value of these options in the amount of $26,363 was used to
reduce the accrued salary of the president. See Note 10. In 1999, he forgave the
balance of accrued salary in the amount of $181,622. This is recorded in the
financial statements as a component of extraordinary income in 1999.

TRANSACTIONS INVOLVING LEASED SPACE

During 2000 and 1999, the Company received the use of approximately 3,500 square
feet of commercial building space on a rent-free basis from a firm owned by one
of the Company's directors. The utilization of the facility in this manner is
mutually beneficial to the Company and the owner of this otherwise empty
facility. No formal agreement memorializes this month-to-month arrangement. The
value of the use of the facility is approximately $150 per month, and is
recorded in the financial statements as rent expense and contributed capital.


                                      F-11
<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                  (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 5 - RELATED PARTY TRANSACTIONS (CONTINUED)

During 2000 the Company leased office space from a company owned in part by a
shareholder. The minimum base lease payment is $4,800 annually. See Note 14.

NOTE 6 - INTERNAL GAIN ON SALE OF SECURITIES

During the year ending December 31, 2000, officers of the Company sold stock at
a gain shortly after purchasing stock through a stock bonus plan. In compliance
with the Securities and Exchange Rule 16b, the stockholder remitted the gain to
the Company. The gain amounted to $157,520 and is reflected in the income
statement as internal gain on sale of securities.

NOTE 7 - CONCENTRATIONS

The Company maintains cash accounts at a California investment institution. The
funds on deposit are insured by the SIPC up to $100,000 with balance insured by
an independent insurer.

NOTE 8 - COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL

Information regarding the number of shares issued and consideration received is
as follows:

<TABLE>
<CAPTION>

                                                                     Common Stock
                                                     ----------------------------------------------
                                                        Average         Shares            Amount         Additional
                                                       price per                                       Paid-in Capital
                                                         share
                                                     ------------    --------------     -----------    ----------------
<S>                                                  <C>             <C>                <C>            <C>
Common stock issued for cash:
1985                                                 $      .50            100,000      $      100     $        49,900
1986                                                       1.00            639,500             640             678,861
1987                                                       1.00            850,500             850             759,650
1988                                                       1.00             25,000              25              24,975
1993                                                        .25          2,402,000           2,402             475,900
1995                                                        .05          1,000,000           1,000              49,000
1996                                                        .05            520,000             520              25,480
1997                                                        .09          1,800,500           1,801             153,749
1998                                                        .10            305,000             305              30,195
1999                                                        .05          3,158,000           3,158             151,993
                                                                     --------------     -----------    ----------------
                                                                        10,800,500          10,801           2,399,703
                                                                     --------------     -----------    ----------------

</TABLE>


                                      F-12
<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                  (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 8 - COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL (CONTINUED)

<TABLE>
<CAPTION>

                                                                     Common Stock
                                                     ----------------------------------------------
                                                        Average         Shares            Amount         Additional
                                                       price per                                       Paid-in Capital
                                                         share
                                                     ------------    --------------     -----------    ----------------
<S>                                                  <C>             <C>                <C>            <C>
Common stock issued for patents assigned:
1984                                                 $      .01            550,000      $    5,500     $             -
1985, adjustment to reflect change in number and
par value of shares outstanding                               -          2,750,000          (2,200)              2,200
                                                                     --------------     -----------    ----------------
                                                                         3,300,000           3,300               2,200
                                                                     --------------     -----------    ----------------

Common stock issued for acquisitions:
1985                                                        .01         13,333,500          13,334             (41,112)
                                                                     --------------     -----------    ----------------

Common stock issued for note receivable:
1986                                                       1.00             10,000              10               9,990
2000                                                        .05          4,932,380           4,932             241,687
                                                                     --------------     -----------    ----------------
                                                                         4,942,380           4,942             251,677
                                                                     --------------     -----------    ----------------

Contribution of additional paid-in capital:
1991                                                          -                  -               -              35,825
1999                                                          -                  -               -              28,098
2000                                                          -                  -               -               9,735
                                                                     --------------     -----------    ----------------
                                                                                 -               -              73,658
                                                                     --------------     -----------    ----------------

Stock subscriptions:
1999                                                        .05            650,000             650              31,850
                                                                     --------------     -----------    ----------------

Cancellation of escrowed shares:
1999                                                        .001          (850,000)           (850)                850
                                                                     --------------     -----------    ----------------

Common stock issued for services (1):
1988                                                        .50             25,000              25              12,475
1989                                                        .38             25,000              25               9,475
1990                                                        .66             37,375              37              24,635
1991                                                        .51            159,500             160              81,010
1992                                                        .75             62,500              62              46,563
1993                                                        .25            120,000             120              29,880
1996                                                        .05            308,500             308              13,832
1997                                                        .05            155,500             155               7,619
1999                                                        .05             99,190              99               4,860
                                                                     --------------     -----------    ----------------
                                                                           992,565             991             230,349
                                                                     --------------     -----------    ----------------

</TABLE>


                                      F-13
<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                  (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 8 - COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL (CONTINUED)

<TABLE>
<CAPTION>

                                                                     Common Stock
                                                     ----------------------------------------------
                                                        Average         Shares            Amount         Additional
                                                       price per                                       Paid-in Capital
                                                         share
                                                     ------------    --------------     -----------    ----------------
<S>                                                  <C>             <C>                <C>            <C>
Common stock issued to replace unrecorded certificates:
1988                                                      $  .001            1,200      $        1     $            (1)
1992                                                         .001              500               1                  (1)
2000                                                         .001          100,000             100                (100)
                                                                     --------------     -----------    ----------------
                                                                           101,700             102                (102)
                                                                     --------------     -----------    ----------------

Common stock issued for forgiveness of accounts payable (1):
1990                                                        .50             25,000              25              12,475
1996                                                        .05            150,000             150               7,350
                                                                     --------------     -----------    ----------------
                                                                           175,000             175              19,825
                                                                     --------------     -----------    ----------------

Common stock issued in payment of notes payable (1):
1993                                                        .25            200,000             200              49,800
2000                                                        .05          1,714,995           1,715              84,035
                                                                     --------------     -----------    ----------------
                                                                         1,914,995           1,915             133,835
                                                                     --------------     -----------    ----------------

Common stock issued in payment of loans payable (1):
2000                                                        .05          2,552,625           2,553             125,078
                                                                     --------------     -----------    ----------------

Common stock issued for commissions (1):
1993                                                        .001         1,260,000           1,260                   -
                                                                     --------------     -----------    ----------------

Stock options exercised:
1997                                                        .01            325,000             325               2,929
2000                                                        .01            350,000             350               3,150
                                                                     --------------     -----------    ----------------
                                                                           675,000             675               6,079
                                                                     --------------     -----------    ----------------
Total                                                                   39,848,265      $   39,848     $     3,233,890
                                                                     ==============     ===========    ================

</TABLE>

(1)      Per share amounts determined by information deemed most reliable based
         on circumstances of each case: trading price at time of issuance or
         value of services received.

Effective with the merger of Advanced Biotherapy Concepts, Inc. into its wholly
owned subsidiary, each issued and outstanding share of Advanced Biotherapy
Concepts, Inc. common stock has been converted automatically into one share of
$0.001 par value common stock of Advanced Biotherapy, Inc.


                                      F-14
<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                  (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 8 - COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL (CONTINUED)

STOCK BONUS PLAN

On January 11, 2000, the Company issued 9,200,000 shares of common stock to
certain key officers and directors under a stock bonus plan, subject to various
restrictions. The plan's purpose is to keep personnel of experience and ability
in the employ of the Company and to compensate them for their contributions to
the growth of the Company, thereby inducing them to continue to make such
contributions in the future. Such stock bonuses were issued at the weighted
average price at which the Company had been selling shares of stock out of
authorized but yet unissued common stock to third parties during the six months
immediately preceding the issuance of the bonus shares, or $0.05.

OMNIBUS EQUITY INCENTIVE PLAN

During December 2000, the Board of Directors of the Company approved an Equity
Incentive Plan. A maximum of 4,000,000 shares of common stock will be available
for the incentive plan with annual increases equal to the lesser of 2.5% of
outstanding shares or 250,000 shares.

NOTE 9 - PREFERRED STOCK

With the merger into its Delaware subsidiary, the Company has authorized
20,000,000 shares of $0.001 par value preferred stock authorized. As of December
31, 2000 and as of the date of these financial statements, the Company has not
issued any of its preferred stock.

NOTE 10 - STOCK OPTIONS AND ISSUANCE COMMITMENTS

On February 25, 1991, the Corporation granted non-statutory options to purchase
stock to members of its board of directors, officers, and outside consultants.
These remaining options offer a total of 860,000 shares at a price of $0.20 per
share with an exercise period of February 25, 1991, to February 25, 2001.
Additional options were issued effective February 1, 1993, for a total of
250,000 shares at a price of $0.01 per share, with an exercise period of
February 1, 1993, to February 1, 2003. During 1995, options for 50,000 shares
were granted at $0.20 per share which expire in 2005. Also in 1995, options for
350,000 shares were granted at $0.01 per share expiring in 2005. During 1996,
options for 525,000 shares were granted at $0.10 per share which expire in 2006.
The shares purchased will be restricted and, therefore, may not be transferred
without registration under applicable Federal and State securities laws.

Stock options granted to a director of the Company for 325,000 shares at a price
of $.01 were exercised in 1997. On December 31, 1999, three officers of the
Company received 842,953 stock options in partial payment of accrued salaries in
the amount of $210,738. In addition the same three officers forgave the balance
of their accrued salaries and interest in the amount of $1,482,209 (See Note 5).
In accordance with Statement of Financial Accounting Standard No. 123, the fair
value of the options was estimated using the Black Scholes Option Price
Calculation. The following assumptions were made to value the stock options:
strike price at $0.10, risk free interest rate of 5%, expected life of 5 years,
and expected volatility of 30%. At December 31, 1999, the Company recorded
$210,738 ($0.25 per options) to reduce accrued wages for the value of these
options based upon these Black Scholes assumptions. These stock options are
exercisable immediately, and expire on December 31, 2005 (See Note 5). During
the year ended December 31, 2000, 350,000 options were exercised at $0.01 per
share, and for the year ending December 31, 1999 no options were exercised.


                                      F-15
<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                  (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 10 - STOCK OPTIONS AND ISSUANCE COMMITMENTS (CONTINUED)

Following is a summary of the status of the options during the years ended
December 31, 2000 and 1999:

<TABLE>
<CAPTION>

                                                                                                  Weighted Average
                                                                    Number of Shares               Exercise Price
                                                                  ----------------------        ---------------------
<S>                                                               <C>                           <C>
Outstanding at January 1, 1999                                             2,035,000                  $      .12
Granted                                                                      842,953                         .05
Exercised                                                                          -                           -
Forfeited                                                                          -                           -
                                                                  ----------------------        ---------------------
Outstanding at December 31, 1999                                           2,877,953                  $      .10
                                                                  ======================        =====================
Options exercisable at December 31, 1999                                   2,877,953                  $      .10
                                                                  ======================        =====================

Outstanding at January 1, 2000                                             2,877,953                  $      .10
Granted                                                                            -                           -
Exercised                                                                   (350,000)                        .01
Forfeited                                                                          -                           -
                                                                  ----------------------        ---------------------
Outstanding at December 31, 2000                                           2,527,953                  $      .11
                                                                  ======================        =====================
Options exercisable at December 31, 2000                                   2,527,953                  $      .11
                                                                  ======================        =====================

</TABLE>

During January 2001, the Company enacted an Equity Incentive Plan for the
issuance of stock options to employees, outside directors and consultants. See
Note 15.

NOTE 11 - INCOME (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing the net income (loss) by
the weighted average number of shares outstanding during the period. The
weighted average number of shares is calculated by taking the number of shares
outstanding and weighting them by the amount of time that they were outstanding.
Diluted earnings (loss) per share is computed by dividing the net income (loss)
adjusted for interest expense on convertible debt by the weighted average number
of basic shares outstanding increased by the number of shares that would be
outstanding assuming conversion of the stock options, warrants, and convertible
debt. Diluted net loss per share is the same as basic net loss per share as
inclusion of the common stock equivalents would be antidilutive. All effective
dilutions are reflected in the accompanying statements of operations.

Required earnings per share information related to extraordinary income is as
follows:

<TABLE>
<CAPTION>

                                                                                                    From Inception
                                                                                                  (December 2, 1985)
                                                                                                        through
                                                                2000               1999            December 31, 2000
                                                            ------------     ---------------    ------------------------
<S>                                                         <C>              <C>                <C>
Earnings per share
         Extraordinary gains                                    $  -             $ 0.05                 $ 0.09
                                                            ============     ===============    ========================

Earnings per share - assuming dilution
         Extraordinary gains                                    $  -             $ 0.05                 $ 0.09
                                                            ============     ===============    ========================

</TABLE>


                                      F-16
<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                  (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 12 - NON-CASH COMMITMENT AND WARRANTS

On January 19, 2000, the Company engaged an investment banking firm and, as
partial compensation for its services, issued warrants to purchase up to
4,685,135 shares of the Company's common stock with an exercise price of
$0.15 per share. The warrants are exercisable for ten years. In accordance
with Statement of Financial Accounting Standards No. 123, the fair value of
the warrants was estimated using the Black Scholes Option Price Calculation.
The following assumptions were made to value the warrants: strike price at
$0.09, risk free interest rate of 6.2%, expected life of 10 years, and
expected volatility of 30%. During the year ended December 31, 2000, the
Company recorded $168,665 as consulting fees for the aforementioned
investment banking firm services. A cash-less exercise may be used for all
warrant transactions. No fees are payable to the investment advisor in
connection with the exercise of the warrants, which contain full,
unconditional piggy-back registration rights without any hold back
obligations. Should the investment firm elect to cancel its agreement with
the Company within the first twelve months, the Company would be entitled to
cancel a pro rata share of the warrants based upon the number of days
remaining in the one year period from the date of notice of cancellation.

At December 31, 2000, the exercisable warrants are 4,685,135. The average
exercise price of the warrants at December 31, 2000 is $0.15 per share.

NOTE 13 - CONVERTIBLE DEBT

During the year ended December 31, 2000, the Company sold in a private placement
to accredited investors $1,510,500 of convertible subordinated debt due and
payable September 30, 2004. The debt bears interest at the rate of 10% per annum
and is payable semi-annually in cash or additional convertible subordinated
debt. The unpaid accrued interest at December 31, 2000 of $49,669 was
re-characterized as additional convertible debt. This debt is convertible into
shares of Company common stock at a conversion price equal to $0.25 per share,
subject to certain anti-dilution provisions. The Company offered the convertible
subordinated debt pursuant to Section 4(2) of the Securities Act of 1933, as
amended, and Rule 506 of Regulation D, promulgated under the Securities Act. In
connection with the placement of the debt, the Company paid a loan origination
fee of $113,288 to its financial advisor, in additional to the granting of an
option to purchase an equivalent principal amount of convertible subordinated
debt at the face amount thereof over a period of ten years. The aforementioned
fee is currently included in other assets and is being amortized over the term
of the debt. Amortization for the year ended December 31, 2000 was $10,785.

NOTE 14 - COMMITMENTS AND CONTINGENCIES

OFFICE LEASE

The Company leased office space from a related party during 2000 at a minimum
annual rate of $4,800. This lease was terminated effective December 31, 2000.

CONSULTING CONTRACT

During July 2000, the Company signed a contract with a consultant to provide
information on possible partnering companies to divest or license certain rights
to its technologies or products. The contract calls for the payment of a $5,000
monthly retainer. This contract can be cancelled with a 60 day written notice.
On January 24, 2001, the contract was modified to waive the termination notice.
The contract was terminated effective February 1, 2001.


                                      F-17
<PAGE>


                           ADVANCED BIOTHERAPY, INC.
                  (FORMERLY ADVANCED BIOTHERAPY CONCEPTS, INC.)
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 15 - SUBSEQUENT EVENTS

OFFICE LEASE

During January 2001, the Company signed an office lease agreement for three
years beginning March 1, 2001. The lease calls for monthly rental payments of
$3,600 plus its portion of operating expenses with an annual escalation clause
of 4%. The lease required a $15,580 deposit.

FINANCIAL SERVICES AGREEMENT

During January 2001, the Company signed a contract with a financial advisor to
provide information on possible candidates for acquisition, merger or
combination. The contract term is for two months and continues thereafter on a
month-to-month basis. A monthly retainer of $3,000 is payable and is credited
toward the fee if a successful candidate is found.


                                      F-18


