Serologicals Corp – ‘424A’ on 5/7/96

As of:  Tuesday, 5/7/96   ·   Accession #:  912057-96-8370   ·   File #:  333-04258

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Prospectus   —   Rule 424(a)
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Document/Exhibit                   Description                      Pages   Size 

 1: 424A        Prospectus                                            88    517K 

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424A
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INFORMATION   CONTAINED  HEREIN  IS  SUBJECT   TO  COMPLETION  OR  AMENDMENT.  A
REGISTRATION STATEMENT  RELATING TO  THESE SECURITIES  HAS BEEN  FILED WITH  THE
SECURITIES  AND EXCHANGE  COMMISSION. THESE SECURITIES  MAY NOT BE  SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR  TO THE TIME THE REGISTRATION STATEMENT  BECOMES
EFFECTIVE.  THIS  PROSPECTUS  SHALL  NOT  CONSTITUTE AN  OFFER  TO  SELL  OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE  SECURITIES
IN  ANY STATE IN WHICH SUCH OFFER,  SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.   

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SUBJECT TO COMPLETION, DATED MAY 6, 1996

PROSPECTUS                                                                      
2,100,000 SHARES

[LOGO]

COMMON STOCK
--------- 

    Of the 2,100,000 shares  of Common Stock offered  hereby, 900,000 are  being
sold  by Serologicals Corporation (the "Company") and 1,200,000 shares are being
sold  by  the   Selling  Stockholders   named  under   "Principal  and   Selling
Stockholders." The Company will not receive any proceeds from the sale of shares
by the Selling Stockholders.                                                    

    The  Common Stock  of the  Company is  traded on  The Nasdaq  Stock Market's
National Market under the symbol "SERO." On May 3, 1996, the last sale price  of
the Common Stock as reported by Nasdaq was $24 3/4 per share.                   

    SEE  "RISK FACTORS" BEGINNING ON PAGE 6  FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK  OFFERED
HEREBY.                                                                         
------------- 

THESE  SECURITIES HAVE NOT BEEN APPROVED  OR DISAPPROVED BY THE SECURITIES AND  
EXCHANGE COMMISSION  OR  ANY  STATE SECURITIES  COMMISSION  NOR  HAS  THE   
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION 
PASSED  UPON THE ACCURACY  OR ADEQUACY OF  THIS PROSPECTUS. ANY   
   REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

                                                                [Download Table]

                      UNDERWRITING                   PROCEEDS TO   
           PRICE TO   DISCOUNTS AND   PROCEEDS TO      SELLING     
            PUBLIC   COMMISSIONS (1)  COMPANY (2)  STOCKHOLDERS (2)
                                                                   
Per Share      $            $              $              $        
Total (3)      $            $              $              $        

  (1) The Company  and the  Selling Stockholders  have agreed  to indemnify  the
     Underwriters  against certain liabilities,  including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."               
  (2) Before deducting expenses of the offering payable by the Company estimated
at $       .                                                          

  (3) The  Company and  certain of  the Selling  Stockholders have  granted  the
     Underwriters a 30-day option to purchase up to 315,000 additional shares of
     Common Stock on the same terms as set forth above to cover over-allotments,
     if  any. If the Underwriters exercise such  option in full, the total Price
     to Public, Underwriting Discounts and Commissions, Proceeds to Company  and
     Proceeds  to Selling Stockholders will  be $       , $        , $       and
$      , respectively. See "Underwriting."                            

--------------

    The shares of  Common Stock are  being offered by  the several  Underwriters
named  herein,  subject to  prior sale,  when, as  and if  accepted by  them and
subject to certain conditions. It is  expected that certificates for the  shares
of  Common  Stock offered  hereby will  be  available for  delivery on  or about
         , 1996 at the offices of Smith  Barney Inc., 14 Wall Street, New  York,
New York 10005.                                                                 

--------------

SMITH BARNEY INC.                                                               
LEHMAN BROTHERS 

                                                          VOLPE, WELTY & COMPANY

, 1996                                                  

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    Maps   of  Serologicals  Corporation  international  headquarters,  clinical
laboratories and  donor center  locations in  the United  States and  monoclonal
production  and process  facilities and  monoclonal development  facility in the
United Kingdom.                                                                 

    IN CONNECTION WITH  THIS OFFERING,  CERTAIN UNDERWRITERS  AND SELLING  GROUP
MEMBERS  MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK OF
THE COMPANY ON THE NASDAQ STOCK MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER  THE
SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."                            

    IN  CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT  A LEVEL ABOVE  THAT WHICH  MIGHT OTHERWISE PREVAIL  IN THE  OPEN
MARKET.  SUCH  TRANSACTIONS  MAY  BE  EFFECTED ON  THE  NASDAQ  STOCK  MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.     

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PROSPECTUS SUMMARY

    THE  FOLLOWING SUMMARY  IS QUALIFIED  IN ITS  ENTIRETY BY  THE MORE DETAILED
INFORMATION (INCLUDING THE FINANCIAL STATEMENTS AND THE NOTES THERETO) APPEARING
ELSEWHERE IN THIS PROSPECTUS.                                                   

THE COMPANY 

    The  Company   is  a   leading  worldwide   provider  of   specialty   human
antibody-based   products  and  services  to  major  healthcare  companies.  The
Company's services, including donor  recruitment, donor management and  clinical
testing  services, enable the  Company to provide  value-added products that are
used as the  active ingredients in  therapeutic products for  the treatment  and
management  of  Rh  incompatibility in  newborns,  rabies and  hepatitis  and in
diagnostic products such as blood typing  reagents and diagnostic test kits.  In
addition,  the Company collects  and produces antibodies  for the manufacture of
intravenous immune globulin ("IVIG"), a  product containing a broad spectrum  of
antibodies  for use in the  treatment of a wide  variety of medical indications.
The Company  conducts its  operations through  a national  network of  39  donor
centers  and through  laboratories located in  the United States  and the United
Kingdom. Many of  the Company's donor  centers are strategically  located on  or
near  medical  campuses, enhancing  the  Company's ability  to  source specialty
antibodies from medical community referrals.                                    

    The Company  competes primarily  in the  specialty antibody  segment of  the
plasma-based  products  and services  industry,  which encompasses  a  number of
markets, with products ranging from source  plasma (the clear liquid portion  of
the  blood  characterized  by  non-specific  concentrations  of  antibodies)  to
specialty antibodies  found  in  source  plasma  and  other  specialty  biologic
components.  Antibodies, also known as  immune globulins, are soluble components
contained in plasma which  are produced by the  immune system to fight  specific
diseases.  The specialty antibody segment of  the industry is characterized by a
growing demand  for  therapeutic antibodies  as  an alternative  to  other  more
expensive  and, for  many applications,  less effective  treatments, as  well as
constraints on the  supply of antibodies  due to more  rigorous donor  screening
procedures  required  by regulatory  authorities  and manufacturers  of antibody
products. Specialty  antibodies  range from  those  used to  treat  tetanus  and
cytomegalovirus   ("CMV"),  which  the  Company   believes  generally  sell  for
approximately $85 to  $90 per liter,  to high  end products such  as anti-D  (an
antibody used to treat Rh incompatibility in newborns), anti-hepatitis and blood
typing  reagents, which  the Company  believes generally  sell for approximately
$350 to  $700 per  liter. By  comparison, the  average industry  gross price  of
source  plasma is approximately $75 to $80  per liter. The Company's pricing for
its specialty  antibodies averaged  approximately  $413 per  liter in  1995,  an
increase of approximately 10% over the prior year.                              

    The  Company's  strategy  is  to  enhance  its  leadership  position  in the
specialty antibody segment  of the industry  and to take  advantage of  emerging
opportunities relating to the provision of other specialty biologic products and
services.  The  key elements  of this  strategy include  (i) expanding  its core
business by increasing its donor base and broadening the range of antibodies  it
sources  and  the  specialty  services  it  provides;  (ii)  pursuing  selective
acquisitions to capitalize on consolidation opportunities in its industry; (iii)
expanding customer relationships by providing additional services, allowing  the
Company  to become more  deeply involved in  its customers' product development,
regulatory compliance and quality assurance  programs; (iv) seeking to  increase
the  quality of  antibodies and production  efficiencies; and  (v) utilizing its
existing donor center  network and  expertise in  biologic product  development,
manufacturing techniques and regulatory compliance to take advantage of emerging
opportunities in the area of healthcare services.                               

    The  Company  has captured  what it  believes  are major  shares in  its key
specialty markets, based on  1994 industry data, which  the Company believes  is
the  most recent  information available  on worldwide  markets. The  Company has
established long standing customer relationships with major healthcare companies
such as Bayer Corporation (formerly Miles, Inc.), Centeon (Behringwerke/Armour),
Ortho Diagnostics Systems (Johnson & Johnson) and Abbott Laboratories, Inc.  The
Company's  net sales increased at  a compounded annual growth  rate of 39%, from
$14.2 million in  1991 to $52.1  million in  1995. During the  same period,  the
Company's  net income before extraordinary items  has increased from $327,000 in
1991 to $4.5  million in 1995.  The Company  has increased the  number of  donor
centers it operates from six at the end of 1991 to 39 as of March 31, 1996.     

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THE OFFERING

                                                        [Enlarge/Download Table]
                                                                                           
Common Stock offered by:                                                                   
  The Company................................... 900,000 shares (1)                        
  The Selling Stockholders...................... 1,200,000 shares (2)                      
Common Stock to be outstanding after the                                                   
 offering....................................... 9,386,302 shares (1) (3)                  
Use of proceeds................................. Repayment of indebtedness, working capital
                                                 and other general corporate purposes.     
Nasdaq National Market symbol................... SERO                                      

--------------                                                                  
(1) Does  not include up to  150,000 shares of Common Stock  that may be sold by
    the  Company  pursuant  to  the  Underwriters'  over-allotment  option.  See
"Underwriting."                                                         

(2) Does  not include up to  165,000 shares of Common Stock  that may be sold by
    certain Selling Stockholders  pursuant to  the Underwriters'  over-allotment
option. See "Underwriting."                                             

(3) Based  upon the number of shares of Common Stock outstanding as of March 31,
    1996. Includes 65,000  shares being  sold by  Selling Stockholders  issuable
    upon  exercise of outstanding options held by  them, but does not include an
    aggregate of  1,566,101 shares  of Common  Stock issuable  upon exercise  of
    outstanding   options  and   warrants  and  conversion   of  an  outstanding
    convertible subordinated promissory note.  See "Capitalization" and Notes  5
and 6 of Notes to Consolidated Financial Statements of the Company.     
--------------

    PROSPECTIVE  INVESTORS ARE CAUTIONED THAT  THE STATEMENTS IN THIS PROSPECTUS
THAT ARE NOT DESCRIPTIONS OF HISTORICAL FACTS MAY BE FORWARD-LOOKING STATEMENTS,
INCLUDING, BUT NOT LIMITED TO, STATEMENTS CONTAINED IN "MANAGEMENT'S  DISCUSSION
AND  ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS." SUCH STATEMENTS
REFLECT MANAGEMENT'S  CURRENT  VIEWS, ARE  BASED  ON MANY  ASSUMPTIONS  AND  ARE
SUBJECT  TO RISKS AND UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE CURRENTLY  ANTICIPATED  DUE  TO  A  NUMBER  OF  FACTORS,  INCLUDING  THOSE
IDENTIFIED UNDER "RISK FACTORS."                                                

--------------

    UNLESS  THE CONTEXT OTHERWISE REQUIRES, REFERENCES IN THIS PROSPECTUS TO THE
"COMPANY" SUBSEQUENT TO THE COMPANY'S  REORGANIZATION IN NOVEMBER 1994 REFER  TO
SEROLOGICALS CORPORATION AND ITS SUBSIDIARIES. REFERENCES TO THE "COMPANY" PRIOR
TO  THE COMPANY'S REORGANIZATION IN NOVEMBER 1994 REFER TO SEROLOGICALS, INC., A
GEORGIA  CORPORATION  ("SEROLOGICALS"),  AND  ITS  SUBSIDIARIES.  THE  COMPANY'S
PRINCIPAL  EXECUTIVE OFFICES ARE LOCATED AT 780 PARK NORTH BOULEVARD, SUITE 110,
CLARKSTON, GEORGIA 30021 AND ITS TELEPHONE NUMBER IS (404) 296-5595.            

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SUMMARY CONSOLIDATED AND PRO FORMA FINANCIAL AND OPERATING INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA AND AVERAGE PRICE PER LITER) 

                                                        [Enlarge/Download Table]

                                            YEAR ENDED DECEMBER 31,                                               
                                    ----------------------------------------                                      
                                     1993     1994                                                                
                                    -------  -------                                                              
                                                                                       THREE MONTHS ENDED         
                                                                              ------------------------------------
                                                               1995                            MARCH 31, 1996     
                                                      ----------------------  APRIL 2,    ------------------------
                                                      ACTUAL   PRO FORMA (1)    1995       ACTUAL    PRO FORMA (1)
                                                      -------  -------------  ---------   --------   -------------
                                                                                                                  
STATEMENT OF INCOME DATA:                                                                                         
Net sales.......................... $22,938  $30,100  $52,124     $56,872      $11,968    $14,779       $15,795   
Gross profit.......................   8,451   13,304   20,599      21,173        4,667      6,114         6,238   
Income available to common                                                                                        
 stockholders before extraordinary                                                                                
 loss and cumulative effect of                                                                                    
 accounting change.................     899    3,353    4,421       5,127          607      1,628         1,567   
Net income available for common                                                                                   
 stockholders......................   1,200    3,250    2,598       5,127          607      1,628         1,567   
Income available to common                                                                                        
 stockholders before extraordinary                                                                                
 loss and cumulative effect of                                                                                    
 accounting change per common                                                                                     
 share:                                                                                                           
  Primary.......................... $  0.14  $  0.54  $  0.58     $  0.58      $  0.10    $  0.18       $  0.17   
  Fully diluted (2)................    0.14     0.54     0.58        0.58         0.10       0.18          0.17   
Net income available to common                                                                                    
 stockholders per common share:                                                                                   
  Primary.......................... $  0.19  $  0.52  $  0.34     $  0.58      $  0.10    $  0.18       $  0.17   
  Fully diluted (2)................    0.19     0.52     0.34        0.58         0.10       0.18          0.17   
Weighted average common and common                                                                                
 equivalent shares outstanding:                                                                                   
  Primary..........................   6,187    6,250    7,646       8,797        6,253      8,971         8,971   
  Fully diluted (2)................   6,482    6,250    7,646       8,797        6,253      8,971         8,971   
OPERATING DATA:                                                                                                   
Number of specialty liters                                                                                        
 shipped...........................    61.3     77.6     86.3        86.3         21.1       24.0          24.0   
Average specialty antibody price                                                                                  
 per liter......................... $   351  $   375  $   413     $   413      $   410    $   423       $   423   

                                                                [Download Table]

                                       AS OF MARCH 31, 1996  
                                     ------------------------
                                     ACTUAL   AS ADJUSTED (3)
                                     -------  ---------------
                                                             
BALANCE SHEET DATA:                                          
Working capital....................  $ 5,629      $20,066    
Total assets.......................   57,606       70,712    
Long-term debt and capital lease                             
 obligations, less current                                   
 maturities........................   10,559        3,557    
Stockholders' equity...............   38,242       59,682    

----------------                                                                
(1) Gives effect to the sale of the 2,400,000 shares of Common Stock issued June
    14, 1995 and the application of  the net proceeds therefrom (the "IPO")  and
    to  the Southeastern Acquisition (as defined herein) as if such transactions
had occurred on January 1, 1995. See "Pro Forma Financial Information." 

(2) The effect of the convertible securities  and the accretion of common  stock
    put warrants on net income per common share for the years ended December 31,
    1994  and 1995, the  three month periods  ended April 2,  1995 and March 31,
    1996, and on pro forma net income per share for the year ended December  31,
1995 and the three months ended March 31, 1996 was antidilutive.        

(3) Gives  effect to the sale  of the 900,000 shares  of Common Stock offered by
    the Company  hereby (at  an  assumed public  offering  price of  $24.75  per
    share),  $223,600 received from  the exercise of  options to purchase Common
    Stock being sold in this offering  and $485,868 in related tax benefit,  and
    the  application of  the net proceeds  therefrom as described  under "Use of
Proceeds."                                                              

--------------

    UNLESS OTHERWISE  INDICATED,  INFORMATION  IN  THIS  PROSPECTUS  ASSUMES  NO
EXERCISE  OF THE UNDERWRITERS'  OPTION TO PURCHASE FROM  THE COMPANY AND CERTAIN
SELLING STOCKHOLDERS UP TO  315,000 ADDITIONAL SHARES OF  COMMON STOCK TO  COVER
OVER-ALLOTMENTS, IF ANY. SEE "UNDERWRITING."                                    

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RISK FACTORS

    In  addition to the other information in this Prospectus, the following risk
factors should  be  considered  carefully  in evaluating  the  Company  and  its
business before purchasing the shares of Common Stock offered hereby.           

DEPENDENCE ON AND RELATIONSHIP WITH CUSTOMERS                                   

    The  industry in which the  Company competes is characterized  by sales to a
relatively few  major  healthcare companies.  The  Company's top  ten  customers
accounted  for 76%,  75% and 82%  of the Company's  net sales in  1993, 1994 and
1995, respectively. One of the Company's customers, Bayer Corporation  ("Bayer")
accounted  for 26%,  35% and 50%  of the Company's  net sales in  1993, 1994 and
1995,  respectively.  Bayer  purchases   substantially  all  of  the   Company's
antibodies  for IVIG, a product line the  Company acquired in December 1994 as a
result of the acquisition of the Acadiana Group (the "Seramune Acquisition"). In
1993 Wolf Brandenburger, A.G., accounted for 15% of the Company's net sales  and
during  1995  another  customer, Behringwerke,  A.G.  accounted for  13%  of the
Company's net sales.  To date, most  of the  Company's sales have  been made  to
major healthcare companies that have been customers for many years; however, the
majority  of  such sales  have  been made  pursuant  to annual  purchase orders.
Moreover, the Company believes there is a trend for these customers to use fewer
suppliers. The Company's therapeutic products are sold to four major and several
smaller biological  product  manufacturers. Loss  of  any major  customer  or  a
material reduction in a major customer's purchases could have a material adverse
effect upon the Company.                                                        

    The  Company  has  two  long-term supply  contracts  with  Bayer  related to
antibodies for IVIG. There can be no  assurance that such contracts will not  be
terminated or that Bayer will not reduce its supply requirements pursuant to the
provisions  therefor in such agreements. The Company also has a long-term supply
contract with Abbott  Laboratories, Inc. ("Abbott").  These long-term  contracts
generally  provide for annual pricing negotiations.  Most of the Company's other
sales are made pursuant to annual purchase orders. Under the purchase orders and
the long-term contracts referred to above, once established, the pricing remains
fixed for the year. As  a result, the Company may  be adversely affected if  its
costs  of collecting and selling  its products rise during  a given year because
the Company may not be able to pass on the increased costs until the next annual
pricing. See "Management's  Discussion and Analysis  of Financial Condition  and
Results  of  Operations --  Liquidity and  Capital  Resources" and  "Business --
Marketing and Customers."                                                       

STRINGENT REGULATION                                                            

    The Company's collection, storage, labeling and distribution activities  are
subject   to  strict  regulation  and  licensing  by  the  U.S.  Food  and  Drug
Administration (the "FDA"). In addition, the Company's facilities in the  United
States  and abroad  are subject  to periodic inspection  by the  FDA. Failure to
correct any  deficiencies  or  to  otherwise  comply  with  applicable  laws  or
regulations  could subject the Company  to enforcement action, including product
seizures, recalls, center or facility closure, license revocations and civil and
criminal penalties,  any one  or more  of which  could have  a material  adverse
effect  on the Company's business. Changes in existing federal, state or foreign
laws or regulations could also have an adverse effect on the Company's business.
The industry continually  evaluates its practices  and procedures regarding  new
information  or  public concerns  over diseases  which  may be  transmitted from
donors through their blood  or blood components. Based  upon such evaluation,  a
certain portion of the population may be prohibited from donating in the future,
or  certain new testing and screening procedures may be required to be performed
with respect to certain donors. In certain circumstances, the loss of donors, or
the cost of additional testing procedures,  could have an adverse effect on  the
Company's operating results.                                                    

    One  of the  Company's strategies is  to expand the  collection of specialty
antibodies at certain  of the  Company's recently  acquired non-specialty  donor
centers  at which only antibodies for IVIG are currently being collected. Before
new donor centers  are opened or  new specialty antibodies  are collected at  an
existing  center,  the centers,  products,  procedures and  personnel  must meet
certain regulatory  standards to  obtain necessary  licenses and  approvals.  In
addition,  the production and  marketing of the  Company's antibody products and
its ongoing product development activities related to such products are  subject
to  extensive  regulation by  the  FDA. The  approval  process for  new products
typically takes several years and involves                                      

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considerable cost.  There can  be no  assurance that  even after  such time  and
expenditures, any approvals or licenses sought by the Company will be granted or
that  FDA review will  not involve delays adversely  affecting the marketing and
sale of the Company's products. Further, the Company is required to obtain  from
each  donor an informed consent regarding the donation procedure. Failure of the
Company to obtain an  adequate consent could have  a material adverse effect  on
the Company.                                                                    

    Laws and regulations with similar substantive and enforcement provisions are
also  in effect  in many  states and  foreign countries  where the  Company does
business. Any change in existing federal, state or foreign laws or  regulations,
or  in the  interpretation or  enforcement thereof,  or the  promulgation of any
additional laws or  regulations could have  an adverse effect  on the  Company's
business. See "Business -- Government and Industry Regulation."                 

FOREIGN RESTRICTIONS ON IMPORTATION OF BLOOD DERIVATIVES                        

    Sales  outside  the  United  States  in  1993,  1994  and  1995  represented
approximately 29%, 30%  and 31%, respectively,  of the Company's  net sales  for
those  years. Foreign  sales primarily are  to European  customers. Export sales
from the United States were $3.7 million, $5.3 million and $11.6 million  during
1993,  1994  and  1995,  respectively.  Concern over  blood  safety  has  led to
movements  in  a  number  of  European  and  other  countries  to  restrict  the
importation  of  blood and  blood  derivatives, including  antibodies, collected
outside the countries' borders  or, in the case  of certain European  countries,
outside  Europe.  To  date,  these  efforts  have  not  led  to  any  meaningful
restriction on  the importation  of blood  and blood  derivatives and  have  not
adversely  affected  the Company.  Such  restrictions, however,  continue  to be
debated and there can be no assurance that such restrictions will not be imposed
in the  future. If  imposed, such  restrictions could  have a  material  adverse
effect on the demand for the Company's products.                                

FLUCTUATIONS IN ANTIBODY SUPPLY AND DEMAND                                      

    As  a  result  of  factors  affecting both  the  demand  for  and  supply of
antibodies, worldwide demand for  many types of  antibodies has exceeded  supply
since  1991. Future demand for antibodies  could, however, be adversely affected
by a number of factors,  including technological developments resulting in  more
efficacious  or cost-effective  products or  more efficient  methods of sourcing
antibodies, healthcare reform, including  changes in third-party  reimbursement,
and  changes in domestic or  foreign regulation. There can  be no assurance that
the demand for antibodies the Company provides will remain strong in the future.
In addition, if new and/or more effective vaccines designed to eliminate certain
diseases that are currently treated with antibodies are successfully introduced,
demand for antibodies may also be adversely affected.                           

    The supply of antibodies has been constrained in recent years, due in  large
part  to more rigorous  screening procedures required  by regulatory authorities
and manufacturers  of antibody-based  products to  detect the  presence of  HIV,
hepatitis  viruses and other disease-causing  organisms. These safety procedures
have disqualified a portion of the  potential donor population. Supply has  also
decreased  as the potential  donor population with  certain specialty antibodies
has aged and  been lost to  attrition. These and  other factors could  adversely
affect  the  Company's  ability  to  source  antibodies  in  the  future. Future
fluctuations in the demand  for or supply of  antibodies could adversely  affect
the  Company.  See  "  -- Stringent  Regulation,"  "--  Foreign  Restrictions on
Importation of  Blood  Derivatives,"  " --  Uncertainty  Related  to  Healthcare
Reform;   No  Assurance  of  Adequate  Reimbursement,"  "--  Competition;  Rapid
Technological Change" and "Business -- Industry Overview."                      

RELIANCE ON FEW PRODUCTS                                                        

    Two of the Company's products (antibodies for IVIG and anti-D) accounted for
approximately 61%  of the  Company's net  sales in  1995. Loss  of either  major
product  line or  a material  reduction in  worldwide demand  for these products
could have a material adverse effect upon the Company.                          

ACQUISITION STRATEGY AND RELATED CAPITAL REQUIREMENTS                           

    To take advantage of consolidation opportunities in the industry and  expand
its  product  and  service  portfolio, the  Company's  strategy  includes growth
through acquisitions. The Company is subject to various risks associated with an
acquisition growth strategy, including the risk that the Company will be  unable
to  identify and  recruit suitable  acquisition candidates  in the  future or to
integrate and manage them or that any                                           

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acquisition will ultimately be  profitable. In addition, increasing  competition
may  increase  purchase  prices  for  acquisitions  to  levels  that  exceed the
Company's financial resources or that reduce the economic return to the Company.
The Company's expansion strategy may also require significant capital resources,
and the Company expects to use  cash and securities, including Common Stock,  as
the  principal consideration for future acquisitions. Capital is needed not only
for  acquisitions,  but  also  for  the  effective  integration,  operation  and
expansion  of  such businesses.  In the  event  that the  Common Stock  does not
maintain  a  sufficient  valuation  or  potential  acquisition  candidates   are
unwilling  to accept Common Stock as consideration, the Company will be required
to use cash  resources or use  other securities as  consideration. Although  the
Company's  bank  credit facility  provides up  to  $15 million  specifically for
acquisition financing,  the  Company  may  need to  raise  capital  through  the
issuance  of other long-term  or short-term indebtedness or  the issuance of its
securities in private or public transactions, which could result in dilution  of
existing  equity  positions,  increased  interest  and  amortization  expense or
decreased income  to fund  future  expansion. There  can  be no  assurance  that
acceptable  financing  for  future  acquisitions  or  for  the  integration  and
expansion of existing business can be obtained.                                 

UNCERTAINTY RELATED TO HEALTHCARE REFORM; NO ASSURANCE OF ADEQUATE REIMBURSEMENT

    Political, economic and regulatory influences are subjecting the  healthcare
industry  in  the United  States to  fundamental  change. Although  Congress has
failed to  pass  comprehensive health  care  reform legislation  thus  far,  the
Company anticipates that Congress and state legislatures will continue to review
and  assess alternative healthcare  delivery and payment systems  and may in the
future propose  and  adopt  legislation effecting  fundamental  changes  in  the
healthcare  delivery system. Legislative  debate is expected  to continue in the
future, and the Company cannot predict  what impact the adoption of any  federal
or state health care reform measures or future private sector reform may have on
its industry or business.                                                       

    In  both domestic and  foreign markets, sales by  the Company's customers of
products that  incorporate the  Company's products  may depend  in part  on  the
availability  of reimbursement from third-party payors such as government health
administration authorities,  private health  insurers and  other  organizations.
Third party payors are increasingly challenging the price and cost effectiveness
of  medical  products  and services.  There  can  be no  assurance  that pricing
pressures which may be experienced by the Company's customers will not adversely
affect the Company because of a  determination that these products are not  cost
effective  or because  of inadequate  third party  reimbursement levels  to such
customers. See "Business -- Government and Industry Regulation" and "Business --
Third Party Reimbursement."                                                     

COMPETITION; RAPID TECHNOLOGICAL CHANGE                                         

    The Company is engaged in the  business of providing antibodies, which is  a
competitive  and rapidly changing industry. Competition for customers is intense
and depends principally on the ability to provide products of the quality and in
the quantity required  by customers.  The Company competes  for antibody  donors
with  customers of the  Company who may  obtain antibody products  for their own
use, other  independent commercial  plasma collection  companies and  non-profit
organizations, such as the American Red Cross and community blood banks. Many of
these  competitors  have  access  to  greater  financial,  marketing  and  other
resources than the Company. Certain of the Company's specialty antibody products
are derived  from  donors  with  rare  antibody  characteristics,  resulting  in
increased  competition for such donors. If the Company is unable to maintain and
expand its  donor base,  its  business and  future  prospects may  be  adversely
affected.  Additionally, several companies are  attempting to develop and market
products to diagnose and treat diseases based upon technology which would lessen
or eliminate the  need for certain  antibodies. There can  be no assurance  that
competition  will not adversely affect the Company. See "Business -- Operations"
and "Business -- Competition."                                                  

DEPENDENCE ON KEY PERSONNEL                                                     

    The success of the Company's operations is dependent upon the experience and
ability of its senior management, Harold J. Tenoso, Ph.D., Terry Dobson, Charles
P. Harrison, Timm M. Hurst, Gary A. Kress,                                      

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Russell H. Plumb, and James F. Sowinski. Dr. Tenoso, Mr. Plumb and Mr.  Harrison
are  parties to  employment agreements  with the  Company. The  Company does not
maintain any key-man insurance on its senior management. The loss of any of such
persons  could  have  an   adverse  effect  on   the  Company's  business.   See
"Management."                                                                   

RISK OF PROFESSIONAL, PRODUCT AND HAZARDOUS WASTE LIABILITY; AVAILABILITY OF    
INSURANCE                                                                       

    To  increase  the  concentration  of  antibodies  it  provides,  the Company
immunizes qualified donors  using either  commercially available  vaccines or  a
proprietary  vaccine developed from the red  blood cells selected from certified
cell donors.  Although  the  Company  believes that  it  takes  the  precautions
required  by applicable regulations to minimize the risks of adverse reaction to
a vaccine or the risk of  infectious disease transmission via such cells,  these
risks cannot be entirely eliminated. Despite the precautions taken, in the event
of adverse reactions in donors, the Company could be held liable for any damages
that  result,  and  such  liability  could  adversely  affect  the  Company. See
"Business -- Product Liability and Insurance."                                  

    In  addition,  the  Company's  operations  involve  the  controlled  use  of
bio-hazardous  materials and chemicals.  Although the Company  believes that its
safety procedures for handling and disposing  of such materials comply with  the
standards  prescribed by state  and federal regulations,  the risk of accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of such an accident, the Company could be held liable for any  damages
that  result, and any such liability could  exceed the resources of the Company.
The  Company  may   incur  substantial   costs  to   maintain  compliance   with
environmental  regulations  as the  Company  further develops  its manufacturing
capacity. See "Business -- Government and Industry Regulation."                 

    The Company's operations also expose it to liability risks that are inherent
in the  testing, manufacturing  and marketing  of antibody-based  products.  The
Company  currently  maintains  professional, product  liability  and  errors and
omissions insurance. There can be no assurance that the coverage limits of  such
insurance would be adequate to protect the Company against any potential claims,
including   claims  based  upon  the  transmission  of  infectious  disease,  or
otherwise. In addition, there can be no assurance that the Company will be  able
to  obtain or maintain professional or product liability insurance in the future
on acceptable terms or with adequate coverage against potential liabilities. See
"Business -- Product Liability and Insurance."                                  

DEPENDENCE UPON SINGLE SOURCE SUPPLIERS                                         

    The Company purchases certain supplies for its operations from single source
suppliers. The  disruption of  existing supply  relationships could  impair  the
Company's ability to process, manufacture and test products or cause the Company
to  incur  costs  associated with  the  development of  alternative  sources. In
addition, in  some  instances FDA  approval  would  be required  to  replace  or
substitute  a supplier  or component  used by  the Company.  Any such disruption
could result  in delays  in obtaining  antibodies or  making product  shipments,
which  could have a material adverse effect on the Company's financial condition
and results of operations.                                                      

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS                                  

    The Company generates significant sales  from operations outside the  United
States   and  is  subject  to  risks  generally  associated  with  international
operations.  The  Company's  United  Kingdom  operations,  which  accounted  for
approximately  21%  and  18%  of  the Company's  net  sales  in  1994  and 1995,
respectively, generate  net  sales and  incur  expenses in  foreign  currencies.
Accordingly,  the Company's financial results  from international operations may
be affected  by  fluctuations  in currency  exchange  rates.  See  "Management's
Discussion  and Analysis of  Financial Condition and  Results of Operations" and
Notes 2 and 13 of Notes to Consolidated Financial Statements of the Company.    

CONTROL BY EXISTING STOCKHOLDERS                                                

    Upon consummation of this  offering, Samuel A.  Penninger, Jr., Chairman  of
the  Board of Directors,  certain other employees  and BancBoston Ventures, Inc.
will collectively have voting control over approximately 28% of the  outstanding
shares  of Common Stock. Accordingly, these  stockholders, should they choose to
act in concert, may be  in a position to control  the Company, elect all of  the
Company's directors,                                                            

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increase the authorized capital stock, dissolve, merge or sell the assets of the
Company,  generally direct the  affairs of the  Company and prevent  a change in
control of the Company. See "Principal and Selling Stockholders."               

CERTAIN ANTI-TAKEOVER PROVISIONS                                                

    Certain provisions  of the  Company's Amended  and Restated  Certificate  of
Incorporation  and  Amended  and  Restated  By-Laws  could  have  the  effect of
discouraging a  third  party from  pursuing  a non-negotiated  takeover  of  the
Company  and preventing certain  changes in control.  These provisions include a
staggered board,  advance  notice  to  the Board  of  Directors  of  stockholder
proposals  and stockholder nominees, limitations  on the ability of stockholders
to remove directors, call stockholders meetings and act by written consent,  the
requirement  that vacancies in  the Board of  Directors may be  filled only by a
majority of  the remaining  directors and  the ability  of the  Board to  issue,
without further stockholder approval, preferred stock with rights and privileges
that could be senior to the Common Stock. The Company also is subject to Section
203   of  the  Delaware  General  Corporation  Law  which,  subject  to  certain
exceptions, prohibits a  Delaware corporation from  engaging in any  of a  broad
range of business combinations with any "interested stockholder" for a period of
three  years  following  the date  that  such stockholder  became  an interested
stockholder. These provisions  could discourage  a third party  from pursuing  a
takeover  of the Company at a  price considered attractive by many stockholders,
since such  provisions  could  have  the effect  of  preventing  or  delaying  a
potential  acquirer  from achieving  control  of the  Company  and its  Board of
Directors.  See  "Description   of  Capital  Stock   --  Preferred  Stock"   and
"Description of Capital Stock -- Certain Provisions of the Company's Certificate
of Incorporation and By-Laws."                                                  

VOLATILITY OF STOCK PRICE                                                       

    There  has been significant volatility in  the market price of securities of
healthcare companies  and  emerging  companies generally,  and  the  Company  in
particular,  that often has been unrelated  to the operating performance of such
companies. The Company believes that factors such as legislative, regulatory and
technological developments,  failure to  meet securities  analysts'  performance
expectations  and  quarterly variations  in  financial results  could  cause the
market price of the Common Stock to fluctuate substantially.                    

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS                            

    Upon consummation of this offering,  the Company will have 9,386,302  shares
of  Common Stock outstanding. The 2,100,000 shares  of Common Stock sold in this
offering (2,415,000 if  the over-allotment option  is exercised), the  2,400,000
shares  sold by the  Company in the  IPO and 1,925,265  other shares (other than
shares held or  purchased by "affiliates"  of the Company)  are freely  tradable
without  restriction  or  further  registration under  the  Securities  Act. The
2,961,037 remaining shares of Common Stock are "restricted securities," as  that
term  is defined under  Rule 144 promulgated  under the Securities  Act, and may
only be sold pursuant to a registration statement under the Securities Act or an
applicable exemption from the registration  requirements of the Securities  Act,
including Rule 144 thereunder.                                                  

    In  addition, the Board  of Directors has  authorized the issuance  of up to
1,500,000 shares of Common Stock under  the Company's Amended and Restated  1994
Omnibus Incentive Plan (the "Omnibus Plan"). Of these shares, 664,860 shares are
issuable  upon the exercise of outstanding stock options granted by the Company,
of which options to purchase 218,363 are currently exercisable (exclusive of  an
aggregate  of 15,000 shares to  be sold by certain  Selling Stockholders in this
offering upon  the exercise  of outstanding  options) .  Further, the  Board  of
Directors  has authorized the issuance  of up to 360,000  shares of Common Stock
under  the  Company's  1995  Non-Employee  Directors'  Stock  Option  Plan  (the
"Director  Plan"),  of which  64,000 shares  are issuable  upon the  exercise of
outstanding stock options  granted by  the Company,  none of  which options  are
currently  exercisable. In addition,  the Board of  Directors has authorized the
issuance of  up to  250,000 shares  of  Common Stock  under the  Company's  1996
Employee  Stock Purchase Plan (the "Purchase Plan"),  none of which is issued or
outstanding. Finally, options held by an  officer to purchase 439,492 shares  of
Common Stock are also outstanding (exclusive of 50,000 shares to be sold by such
officer  in this offering upon the exercise of outstanding options). The Company
has filed or  intends to  file a  registration statement  on Form  S-8 with  the
Securities  and Exchange Commission (the "Commission") to register the shares of
Common Stock that are issuable under these plans and the option to the  officer.
There                                                                           

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are  also outstanding  the Convertible  Note (as  hereinafter defined)  which is
convertible into  250,000 shares  of  Common Stock  and  a warrant  to  purchase
147,749  shares of Common Stock (the "State Street Warrant"). The holder of this
warrant has registration rights with respect to these shares. Certain beneficial
holders of Common  Stock have  additional registration rights.  The exercise  of
these  registration rights could adversely affect the market price of the Common
Stock and could impair the Company's future ability to raise capital through  an
offering of its equity securities.                                              

    The  Company, the Selling Stockholders, the Company's directors and officers
and certain other stockholders, beneficially  owning in the aggregate  3,506,511
shares  of Common  Stock, have agreed  not to  offer, sell, contract  to sell or
otherwise dispose of any  shares of Common Stock  or any securities  convertible
into  or exercisable or exchangeable for Common Stock, without the prior written
consent of Smith Barney  Inc., for a period  of 90 days after  the date of  this
Prospectus.  No predictions can  be made as  to the effect,  if any, that market
sales of shares of existing stockholders or the availability for future sale  of
such  shares or shares in this offering will  have on the market price of shares
of Common Stock prevailing from time to time. The prevailing market price of the
Common Stock after the offering could  be adversely affected by future sales  of
substantial amounts of Common Stock by existing stockholders. See "Principal and
Selling Stockholders," "Shares Eligible for Future Sale" and "Underwriting."    

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USE OF PROCEEDS 

    The  net proceeds  to the  Company from  the sale  of the  900,000 shares of
Common Stock offered by the Company  hereby will be approximately $21.0  million
(approximately  $24.6  million  if the  Underwriters'  over-allotment  option is
exercised in full),  assuming a public  offering price of  $24.75 per share  and
after  deducting  estimated  offering expenses  and  underwriting  discounts and
commissions, and including $223,600  in proceeds to be  received by the  Company
from  the exercise of options  to purchase shares of  Common Stock being sold by
Selling  Stockholders   in  this   offering  ($395,600   if  the   Underwriters'
over-allotment  option is exercised in full). Of these net proceeds, the Company
expects to use (i)  approximately $6.8 million to  repay the amount  outstanding
under   the  Company's  Amended  and  Restated  Credit  Agreement  (the  "Credit
Agreement" or the "Revolving  Credit Facility") dated as  of July 20, 1995  with
NationsBank,  N.A. (South)  ("NationsBank"), which  currently bears  interest at
LIBOR plus 1.5% (6.9% as of March 31, 1996) per annum and matures in July  1998,
(ii)  approximately $951,000 to  repay in full two  outstanding notes payable of
$802,000 and $149,000 which  bear interest at  effective rates of  approximately
10%  and 16% per annum and mature in February 1997 and March 1999, respectively,
and (iii) $211,000 to repay in full a note payable, which bears interest at 8.5%
per annum and matures in March 1999,  which was incurred in connection with  the
acquisition  of the  assets of  a donor  center in  May 1995.  The remaining net
proceeds will  be  used for  working  capital and  general  corporate  purposes,
including   acquisitions  and  capital  expenditures  to  expand  the  Company's
monoclonal antibody  manufacturing capacity  in the  United Kingdom.  There  are
currently no definitive agreements or letters of intent related to any potential
acquisition.  See "Management's  Discussion and Analysis  of Financial Condition
and Results of Operations -- Overview," "-- Liquidity and Capital Resources" and
Note 6 of  Notes to Consolidated  Financial Statements of  the Company.  Pending
such  uses, the  net proceeds will  be invested  in short-term, interest-bearing
instruments.                                                                    

    The Company will not receive any of the net proceeds from the sale of Common
Stock offered by the Selling Stockholders, except for the proceeds received from
the exercise of options to purchase 65,000 shares of Common Stock.              

PRICE RANGE OF COMMON STOCK 

    The Common Stock was initially offered to  the public on June 14, 1995 at  a
price  of $11.50  per share  and is  quoted on  The Nasdaq  National Market. The
following table sets forth the range of high and low sale prices for the  Common
Stock for the periods indicated as reported on The Nasdaq National Market.      

                                                                [Download Table]

                            HIGH       LOW  
                           -------   -------
                                            
1995                                        
  Second fiscal quarter                     
   (from June 15)........  $11 3/4   $10 5/8
  Third fiscal quarter...   18 1/4    10 5/8
  Fourth fiscal                             
   quarter...............   17 3/4    14 3/4

1996                                        
  First fiscal quarter...   27 1/2    15    
  Second fiscal quarter                     
   (through May 3).......   27 3/8    23 1/4

    On  May 3, 1996,  the last sale  price of the  Common Stock was  $24 3/4 per
share, as reported on The Nasdaq National Market. At March 31, 1996, there  were
69 stockholders of record of the Common Stock.                                  

DIVIDEND POLICY 

    The  Company has  not paid any  dividends on  its Common Stock  to date. The
payment of dividends,  if any, in  the future  is within the  discretion of  the
Board  of  Directors and  will  depend on  the  Company's earnings,  its capital
requirements and financial condition. It is  the present intention of the  Board
of  Directors to retain all earnings, if  any, for use in the Company's business
operations and, accordingly, the Board of  Directors does not expect to  declare
or  pay any dividends in  the foreseeable future. In  addition, under the Credit
Agreement there are limitations on the Company's ability to pay dividends.      

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CAPITALIZATION

    The following  table  sets  forth the  consolidated  capitalization  of  the
Company  at March  31, 1996 and  as adjusted to  give effect to  the exercise of
options for 65,000 shares of Common Stock being sold by Selling Stockholders  in
this  offering, the sale  of the 900,000  shares of Common  Stock offered by the
Company hereby (at an assumed public offering price of $24.75 per share) and the
application of the net proceeds therefrom as described under "Use of Proceeds." 

                                                        [Enlarge/Download Table]

                                                                                            MARCH 31, 1996     
                                                                                        ---------------------- 
                                                                                         ACTUAL    AS ADJUSTED 
                                                                                        ---------  ----------- 
                                                                                        (IN THOUSANDS, EXCEPT  
                                                                                             SHARE DATA)       
                                                                                                               
Current maturities of long term debt and capital lease obligations..................... $     987  $       143 
                                                                                        ---------  ----------- 
                                                                                        ---------  ----------- 
Long term debt and capital lease obligations, less current maturities.................. $  10,559  $     3,557 
                                                                                        ---------  ----------- 
Stockholders' equity:                                                                                          
  Preferred Stock, $.01 par value; 1,000,000 shares authorized; no shares issued or                            
   outstanding.........................................................................        --           -- 
  Common Stock, $.01 par value; 30,000,000 shares authorized; 8,421,302 shares issued                          
   and outstanding, actual; and 9,386,302 shares issued and outstanding, as adjusted                           
   (1).................................................................................        84           94 
Additional paid-in capital (2).........................................................    29,402       50,832 
Retained earnings(3)...................................................................     8,760        8,760 
Cumulative translation adjustment......................................................        (4)          (4)
                                                                                        ---------  ----------- 
  Total stockholders' equity...........................................................    38,242       59,682 
                                                                                        ---------  ----------- 
    Total capitalization............................................................... $  48,801  $    63,239 
                                                                                        ---------  ----------- 
                                                                                        ---------  ----------- 

--------------                                                                  

(1) Does not  include (i)  664,860  shares of  Common  Stock issuable  upon  the
    exercise  of options  outstanding at March  31, 1996 under  the Omnibus Plan
    (exclusive of an aggregate of  15,000 shares of Common  Stock to be sold  by
    certain   Selling  Stockholders  in  this  offering  upon  the  exercise  of
    outstanding stock options),  (ii) 147,749  shares of  Common Stock  issuable
    upon  the  exercise of  the State  Street Warrant,  (iii) 439,492  shares of
    Common Stock  issuable upon  the  exercise of  options  held by  an  officer
    (exclusive  of an aggregate of  50,000 shares of Common  Stock to be sold by
    such officer  in  this  offering  upon the  exercise  of  outstanding  stock
    options),  and  (iv)  250,000  shares issuable  upon  conversion  of  the 9%
    convertible subordinated note due December  1997 in the principal amount  of
    $3,500,000  (the  "Convertible  Note").  See  "Management's  Discussion  and
    Analysis of Financial Condition and  Results of Operations -- Liquidity  and
    Capital Resources," "Management -- 1994 Omnibus Incentive Plan," "Management
    --  Employment Agreements"  and Note  5 of  Notes to  Consolidated Financial
Statements of the Company.                                              

(2) Includes $485,868 related  to the  income tax benefits  associated with  the
    exercise of non-qualified stock options held by certain Selling Stockholders
    who will sell the underlying shares pursuant to this offering. Also includes
    $222,950  to be  received by  the Company  upon the  exercise of  such stock
options.                                                                

(3) Does not include approximately $41,000 of extraordinary loss (net of  income
    taxes)  on the  early retirement of  indebtedness with the  proceeds of this
offering.                                                               

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SELECTED HISTORICAL FINANCIAL DATA

    The following selected historical financial data have been derived from  the
Consolidated  Financial Statements  of the  Company. The  Consolidated Financial
Statements of the Company and Notes thereto as of December 31, 1994 and 1995 and
for each of the years in the three-year period ended December 31, 1995, together
with the report thereon of Arthur Andersen LLP, independent public  accountants,
are  included elsewhere  in this  Prospectus. The  selected historical financial
data for the three-month  periods ended April  2, 1995 and  March 31, 1996  have
been  derived from the Company's unaudited consolidated financial statements and
include,  in  the  opinion  of  management,  all  normal  recurring  adjustments
necessary to present fairly the data for such periods. The operating results for
the  three-month periods are not necessarily  indicative of the results that may
be expected for a full year. The selected historical financial data below should
be read in conjunction with the Consolidated Financial Statements of the Company
and  Notes  thereto,  "Pro   Forma  Financial  Information"  and   "Management's
Discussion  and  Analysis  of  Financial Condition  and  Results  of Operations"
included elsewhere in this Prospectus.                                          

                                                        [Enlarge/Download Table]

                                                                                                         THREE MONTHS ENDED  
                                                               YEAR ENDED DECEMBER 31,                 ----------------------
                                                -----------------------------------------------------  APRIL 2,    MARCH 31, 
                                                  1991       1992       1993       1994       1995       1995        1996    
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
                                                                    (IN THOUSANDS, EXCEPT PER SHARE DATA)                    
                                                                                                                             
STATEMENT OF OPERATIONS DATA:                                                                                                
Net sales.....................................  $  14,211  $  17,883  $  22,938  $  30,100  $  52,124  $  11,968   $  14,779 
Costs and expenses:                                                                                                          
  Cost of sales...............................      9,570     12,797     14,487     16,796     31,525      7,302       8,665 
  Selling, general and administrative                                                                                        
   expenses...................................      2,921      3,391      4,076      6,290      8,217      1,845       2,293 
  Product development expenses................        465        610        728        829      1,973        601         589 
  Corporate relocation expenses...............         --         --      1,500         --         --         --          -- 
  Other expense (income), net.................         63       (322)       142         12      1,328        332         426 
  Interest expense............................        600        548        426        407      2,116        909         163 
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
Income before income taxes, extraordinary loss                                                                               
 and cumulative effect of accounting change...        592        859      1,579      5,766      6,965        979       2,643 
Provision for income taxes....................        265        331        680      2,227      2,499        347       1,015 
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
Income before extraordinary loss and                                                                                         
 cumulative effect of accounting change.......        327        528        899      3,539      4,466        632       1,628 
Extraordinary loss on early retirement of                                                                                    
 debt, net of income taxes....................         --         --         --       (103)    (1,823)        --          -- 
Cumulative effect of change in accounting for                                                                                
 income taxes.................................         --         --        301         --         --         --          -- 
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
Net income....................................        327        528      1,200      3,436      2,643        632       1,628 
Accretion of common stock put warrants........         --         --         --        186         45         25          -- 
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
Net income available for common                                                                                              
 stockholders.................................  $     327  $     528  $   1,200  $   3,250  $   2,598  $     607   $   1,628 
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
Net income per common share-primary:                                                                                         
  Income before extraordinary loss and                                                                                       
   cumulative effect of accounting change.....  $    0.05  $    0.09  $    0.14  $    0.54  $    0.58  $    0.10   $    0.18 
  Extraordinary loss..........................         --         --         --      (0.02)     (0.24)        --          -- 
  Cumulative effect of accounting change......         --         --       0.05         --         --         --          -- 
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
  Net income..................................  $    0.05  $    0.09  $    0.19  $    0.52  $    0.34  $    0.10   $    0.18 
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
Net income (loss) per common share-fully                                                                                     
 diluted:                                                                                                                    
  Income before extraordinary loss and                                                                                       
   cumulative effect of accounting change.....  $    0.05  $    0.08  $    0.14  $    0.54  $    0.58  $    0.10   $    0.18 
  Extraordinary loss..........................         --         --         --      (0.02)     (0.24)        --          -- 
  Cumulative effect of accounting change......         --         --       0.05         --         --         --          -- 
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
  Net income..................................  $    0.05  $    0.08  $    0.19  $    0.52  $    0.34  $    0.10   $    0.18 
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
Weighted average common and common equivalent                                                                                
 shares outstanding:                                                                                                         
  Primary.....................................      6,160      6,090      6,187      6,250      7,646      6,253       8,971 
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
  Fully diluted...............................      6,454      6,385      6,482      6,250      7,646      6,253       8,971 
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------



                                                                                                               AS OF         
                                                                 AS OF DECEMBER 31,                    ----------------------
                                                -----------------------------------------------------  APRIL 2,    MARCH 31, 
                                                  1991       1992       1993       1994       1995       1995        1996    
                                                ---------  ---------  ---------  ---------  ---------  ---------  -----------
                                                                               (IN THOUSANDS)                                
                                                                                                                             
BALANCE SHEET DATA:                                                                                                          
Working capital...............................  $   2,472  $   3,916  $   3,157  $   6,060  $   6,174  $   2,337   $   5,629 
Total assets..................................     10,818     10,899     12,811     50,135     50,324     46,906      57,606 
Long term debt and capital lease obligations,                                                                                
 less current maturities......................      4,302      3,983      3,076     32,708      6,751     27,886      10,559 
Stockholders' equity..........................      2,385      2,330      3,534      6,842     36,593      7,504      38,242 

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PRO FORMA FINANCIAL INFORMATION 

    The  following pro forma  financial information for  the year ended December
31, 1995 is based on the audited historical Consolidated Financial Statements of
the  Company  and  the  audited  historical  Combined  Financial  Statements  of
Southeastern Biologics, Inc., Plasma Management, Inc. and Concho Biologics, Inc.
(the  "Southeastern Group") included  elsewhere in this  Prospectus, adjusted to
give effect  to the  Southeastern  Acquisition and  the IPO  (collectively,  the
"Transactions"),  as if  they had  occurred on  January 1,  1995. The  pro forma
adjustments are based  upon available information  and certain assumptions  that
the Company believes are reasonable. The pro forma financial information for the
year  ended December 31, 1995  does not purport to  represent what the Company's
results of operations  would actually  have been  had the  Transactions in  fact
occurred  on January 1, 1995, or to  project the Company's results of operations
for any future period. The pro forma financial information for the three  months
ended  March 31, 1996 is based upon  the unaudited financial data of the Company
and the Southeastern Group and gives effect  to the results of operations as  if
the  Transactions had occurred on January 1, 1996 and the net proceeds were used
to repay long-term debt as described in "Use of Proceeds."                      

    For purposes of  presenting pro  forma results,  no changes  in revenues  or
expenses have been made to reflect the results of any modification to operations
that  might have been made had the  Transactions been consummated on the assumed
effective date of the Transactions. The pro forma expenses include the recurring
costs which  are directly  attributable to  the Transactions,  such as  interest
expense  and the  related tax  effects thereof,  and amortization  of intangible
assets. The pro forma financial information  should be read in conjunction  with
the  historical  Consolidated  Financial  Statements of  the  Company  and Notes
thereto and the  historical Combined  Financial Statements  of the  Southeastern
Group  and Notes  thereto included  elsewhere in  this Prospectus, "Management's
Discussion and Analysis of  Financial Condition and  Results of Operations"  and
"Use of Proceeds."                                                              

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PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1995 
(IN THOUSANDS, EXCEPT PER SHARE DATA) 

                                                        [Enlarge/Download Table]

                                                                                     ADJUSTMENTS              
                                                                                       FOR THE                
                                      COMPANY     ADJUSTMENTS        SOUTHEASTERN    SOUTHEASTERN     COMPANY 
                                    HISTORICAL    FOR THE IPO         GROUP (G)      ACQUISITION     PRO FORMA
                                    -----------  --------------     --------------  --------------   ---------
                                                                                                              
Net sales.......................... $   52,124   $          --      $       4,748   $          --    $ 56,872 
Costs and expenses:                                                                                           
  Cost of sales....................     31,525              --              4,174              --      35,699 
  Selling, general and                                                                                        
   administrative expenses.........      8,217            (347)(a)            674              --       8,544 
  Product development expenses.....      1,973              --                 --              --       1,973 
  Other expense (income), net......      1,328              --                (57)            154(h)    1,425 
  Interest expense.................      2,116          (1,349)(b)             92             323(i)    1,182 
                                    -----------        -------             ------         -------    ---------
Income (loss) before income taxes                                                                             
 and extraordinary loss............      6,965           1,696               (135)           (477)      8,049 
Provision (benefit) for income                                                                                
 taxes.............................      2,499             644(c)             (40)           (181)(c)    2,922
                                    -----------        -------             ------         -------    ---------
Income (loss) before extraordinary                                                                            
 loss..............................      4,466           1,052                (95)           (296)      5,127 
Extraordinary loss on early                                                                                   
 retirement of debt, net of income                                                                            
 taxes.............................     (1,823)          1,823(d)              --              --          -- 
                                    -----------        -------             ------         -------    ---------
Net income (loss)..................      2,643           2,875                (95)           (296)      5,127 
Accretion of common stock put                                                                                 
 warrants..........................         45             (45)(e)             --              --          -- 
                                    -----------        -------             ------         -------    ---------
Net income (loss) available for                                                                               
 common stockholders............... $    2,598   $       2,920      $         (95)  $        (296)   $  5,127 
                                    -----------        -------             ------         -------    ---------
                                    -----------        -------             ------         -------    ---------
Net income (loss) per common share                                                                            
 -- primary:                                                                                                  
  Income before extraordinary                                                                                 
   loss............................ $     0.58                                                       $   0.58 
  Extraordinary loss...............      (0.24)                                                            -- 
                                    -----------                                                      ---------
Net income......................... $     0.34                                                       $   0.58 
                                    -----------                                                      ---------
                                    -----------                                                      ---------
Weighted average common and common                                                                            
 equivalent shares outstanding:                                                                               
  Primary..........................      7,646           1,151(f)                                       8,797 
                                    -----------        -------                                       ---------
                                    -----------        -------                                       ---------

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NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME 
FOR THE PERIOD ENDED DECEMBER 31, 1995

(IN THOUSANDS)

(a)  To reflect the reversal of  compensation expense related to the accelerated
vesting of an option to an officer.                                     

(b) To reflect the decrease in interest expense with respect to the following:  

                                                        [Enlarge/Download Table]
                                                                                       
- Borrowings repaid in connection with the IPO under a term credit facility            
  in the aggregate principal amount of $16.7 million at an interest rate of            
  LIBOR plus 3.25% (a weighted average interest rate of 9.21%)..............  $     713
- Borrowings repaid in connection with the IPO under subordinated debt in              
  the (face) principal amount of $7.5 million at a stated interest rate of             
  10.9%, plus amortization of the original issue discount...................        577
- Reduction in debt issuance cost amortization on a term credit facility and           
  subordinated debt.........................................................         59
                                                                              ---------
                                                                              $   1,349
                                                                              ---------
                                                                              ---------

(c) To record the  income tax effect  of the pro forma  adjustment based on  the
Company's statutory tax rate.                                           

(d)  To reflect the reversal  in the extraordinary loss  of $1.8 million (net of
    income taxes) resulting from the  early retirement of subordinated debt  and
borrowings under a term credit facility in connection with the IPO.     

(e) Reduction in accretion of common stock put warrants terminated in connection
with the IPO.                                                           

(f)  To adjust  weighted average  shares to  reflect the  sale of  the 2,400,000
    shares of Common Stock in connection with the IPO as if the transaction  had
occurred on January 1, 1995.                                            

(g) Reflects the combined results of operations of six donor centers operated by
    the  Southeastern Group  acquired by  the Company  on March  6, 1996  in the
    Southeastern Acquisition for the period from January 1, 1995 to December 31,
    1995. The  Southeastern Acquisition  was accounted  for using  the  purchase
    method  of  accounting.  The  total  purchase  price  for  the  Southeastern
    Acquisition has been allocated to  the tangible and identifiable  intangible
    assets  based upon the  Company's preliminary estimates  of their fair value
with the excess of cost over net assets acquired allocated to goodwill. 

(h) To reflect the  increase in amortization expense  related to the  intangible
assets acquired in the Southeastern Acquisition:                        

                                                                [Download Table]
                                                                       
Goodwill....................................................  $     120
FDA Licenses................................................         24
Noncompete agreements.......................................         10
                                                              ---------
                                                              $     154
                                                              ---------
                                                              ---------

(i) To reflect the increase in interest expense with respect to the following:  

                                                        [Enlarge/Download Table]
                                                                                       
- Borrowings incurred in connection with the Southeastern Acquisition under            
  the Revolving Credit Facility in the aggregate principal amount of $4.7              
  million at an interest rate of LIBOR plus 1.5% (6.9% at March 31, 1996).... $     323
                                                                              ---------
                                                                              ---------

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PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 
1996
(IN THOUSANDS, EXCEPT PER SHARE DATA) 

                                                        [Enlarge/Download Table]

                                                                                                ADJUSTMENTS              
                                                                                                  FOR THE                
                                                                     COMPANY    SOUTHEASTERN   SOUTHEASTERN     COMPANY  
                                                                   HISTORICAL     GROUP(A)      ACQUISITION    PRO FORMA 
                                                                   -----------  -------------  -------------  -----------
                                                                                                                         
Net sales........................................................   $  14,779     $   1,016      $      --     $  15,795 
Costs and expenses:                                                                                                      
  Cost of sales..................................................       8,665           892             --         9,557 
  Selling, general and administrative expenses...................       2,293           104             --         2,397 
  Product development expenses...................................         589            --             --           589 
  Other expense (income), net....................................         426             2             38(b)        466 
  Interest expense...............................................         163            19             58(c)        240 
                                                                   -----------       ------          -----    -----------
Income (loss) before income taxes................................       2,643            (1)           (96)        2,546 
Provision (benefit) for income taxes.............................       1,015            --            (36)(d)        979
                                                                   -----------       ------          -----    -----------
Net income (loss)................................................   $   1,628     $      (1)     $     (60)    $   1,567 
                                                                   -----------       ------          -----    -----------
                                                                   -----------       ------          -----    -----------
Net income per common share:                                                                                             
  Primary........................................................   $    0.18                                  $    0.17 
                                                                   -----------                                -----------
                                                                   -----------                                -----------
Weighted average common and common equivalent shares outstanding:                                                        
  Primary........................................................       8,971                                      8,971 
                                                                   -----------                                -----------
                                                                   -----------                                -----------

--------------                                                                  

(a)  Reflects the combined results of  operations of six donors centers operated
    by the Southeastern Group acquired  by the Company on  March 6, 1996 in  the
    Southeastern  Acquisition for  the period from  January 1, 1996  to March 6,
    1996. The  Southeastern Acquisition  was accounted  for using  the  purchase
    method  of  accounting.  The  total  purchase  price  for  the  Southeastern
    Acquisition has been allocated to  the tangible and identifiable  intangible
    assets  based upon the  Company's preliminary estimates  of their fair value
with the excess of cost over net assets acquired allocated to goodwill. 

(b) To reflect the  increase in amortization expense  related to the  intangible
assets acquired in the Southeastern Acquisition:                        

                                                                [Download Table]
                                                                        
Goodwill.....................................................  $      30
FDA Licenses.................................................          6
Noncompete agreements........................................          2
                                                               ---------
                                                               $      38
                                                               ---------
                                                               ---------

(c) To reflect the increase in interest expense with respect to the following:  

                                                        [Enlarge/Download Table]
                                                                                       
- Borrowings incurred in connection with the Southeastern Acquisition under            
  the Revolving Credit Facility in the aggregate principal amount of $4.7              
  million at an interest rate of LIBOR plus 1.5% (6.9% at March 31, 1996).... $      58
                                                                              ---------
                                                                              ---------

(d)  To record the income  tax effect of the pro  forma adjustments based on the
Company's statutory tax rate.                                           

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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW                                                                        

    The  Company   is  a   leading  worldwide   provider  of   specialty   human
antibody-based  products  and  services  to  major  healthcare  companies. Until
November 1994, the business  of the Company  was conducted through  Serologicals
and  its wholly owned  subsidiary, Bioscot, Ltd.  ("Bioscot"). In November 1994,
the Board of Directors approved a corporate reorganization whereby  Serologicals
Holdings,  Inc., a Delaware corporation, was formed to become the parent company
of  Serologicals   and  Seramune,   Inc.  ("Seramune")   and  their   respective
subsidiaries.  Seramune was formed to consummate the Seramune Acquisition, which
occurred on December 23, 1994. In May 1995, Serologicals Holdings, Inc.  changed
its name to Serologicals Corporation.                                           

    As of March 31, 1996, Serologicals operated 13 donor centers that specialize
in  the collection  of specialty  antibodies. Bioscot  operated two FDA-licensed
monoclonal antibody manufacturing facilities  in Scotland. Seramune operated  26
donor  centers that  collect antibodies  for IVIG.  The acquisition  of Seramune
represented the Company's entry into the IVIG antibody market.                  

    In June 1995, the Company completed the IPO and issued 2.4 million shares of
Common Stock at a price of $11.50 per share. The net proceeds to the Company  of
$24.6  million, plus cash on hand of approximately $400,000, were used to retire
$7.5 million of subordinated debt and approximately $17.5 million of  borrowings
under a term credit facility incurred primarily for the Seramune Acquisition. An
extraordinary  charge  of $1.8  million (net  of income  taxes) was  recorded in
relation to the early extinguishment of  this debt and associated debt  issuance
costs.  Additionally, the Company recognized a non-recurring, non-cash charge of
$346,500 for compensation expense ($215,000 net of income taxes) related to  the
acceleration of vesting of an officer's stock options.                          

    In  July 1995, the  Company amended its  Credit Agreement with  its bank and
obtained  a  $20.0   million  Revolving  Credit   Facility  to  finance   future
acquisitions, product development and new business opportunities.               

RECENT ACQUISITIONS                                                             

    On  October  2, 1995,  the  Company acquired  all  of the  capital  stock of
Allegheny Biologicals, Inc. ("ABI"). ABI  operates two specialty donor  centers,
in   Jacksonville,  Florida  and  Pittsburgh,  Pennsylvania.  The  Company  paid
approximately $2.5 million in cash and also agreed to pay additional  contingent
consideration  of up to $500,000 in the  future based upon ABI achieving certain
performance measures. On February  14, 1996, the  Company purchased a  specialty
donor  center located  in Washington, D.C.  and certain other  assets located in
Jacksonville, Florida from Am-Rho Laboratories, Inc. (the "Am-Rho Acquisition").
The purchase price consisted of $1.1 million in cash at closing, the  assumption
of certain liabilities and forgiveness of a $500,000 note receivable from Am-Rho
Inc.,  the parent  of Am-Rho  Laboratories, Inc. On  March 6,  1996, the Company
acquired all of  the capital stock  of Southeastern Biologics,  Inc. and  Plasma
Management,  Inc. and  the assets of  Concho Biologics,  Inc. (the "Southeastern
Acquisition"). The  purchase  price  consisted  of $3.6  million  in  cash,  the
assumption   of  $1.1   million  of   indebtedness  and   additional  contingent
consideration to be paid based on the performance of the acquired business  over
the  12  months  subsequent  to  the closing.  All  of  these  acquisitions were
accounted for using the purchase method.                                        

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RESULTS OF OPERATIONS                                                           

    The following table sets  forth certain operating data  of the Company as  a
percentage of net sales for the years indicated below.                          

                                                        [Enlarge/Download Table]

                                                                                                      THREE MONTHS ENDED    
                                                                   YEAR ENDED DECEMBER 31,         -------------------------
                                                            -------------------------------------   APRIL 2,     MARCH 31,  
                                                               1993         1994         1995         1995          1996    
                                                            -----------  -----------  -----------  -----------  ------------
                                                                                                                            
Net sales..................................................     100.0%       100.0%       100.0%       100.0%        100.0% 
Gross profit...............................................      36.8         44.2         39.5         39.0          41.4  
Selling, general and administrative expenses...............      17.8         20.9         15.8         15.4          15.5  
Product development........................................       3.1          2.8          3.8          5.0           4.0  
Income before extraordinary loss...........................       3.9         11.8          8.6          5.3          11.0  
Net income available for common stockholders...............       5.2         10.8          5.0          5.1          11.0  

THREE MONTHS ENDED APRIL 2, 1995 AND MARCH 31, 1996                             

    Net  sales increased 23.5%, or  $2.8 million, from $12.0  million in 1995 to
$14.8 million in 1996. The increase in net sales was due primarily to  increased
shipments  of  anti-D  and  IVIG  antibodies  and,  to  a  lesser  extent, price
increases. Net  sales of  the Company's  therapeutic products  increased  38.9%,
while  net sales of its diagnostic  products decreased 10.4% from the comparable
period in the prior year. The decrease in net sales of diagnostics products  was
due  primarily to reduced shipments  of clinical diagnostic antibodies resulting
from temporary inventory shortages of certain antibodies.                       

    Gross profit increased 31.0%, or $1.4 million, from $4.7 million in 1995  to
$6.1  million in 1996. The increase in  gross profit is due largely to increased
net sales of  anti-D and  IVIG antibodies.  The increase  in gross  profit as  a
percentage  of  net sales  reflects  the increase  in  net sales  of  anti-D and
anti-HBs, which typically generate higher gross margins than those generated  on
non-specialty antibody-based products. Gross profit as a percentage of net sales
from  the Company's specialty products increased from  44.6% in 1995 to 51.4% in
1996 as a result of both price increases and lower per unit production costs.   

    Selling, general and administrative  expenses increased 24.2%, or  $447,000,
from  $1.8  million in  1995  to $2.3  million  in 1996.  The  increase resulted
primarily from  incremental  administrative  expenses associated  with  being  a
public  company, the  hiring of an  additional vice president  in February 1996,
general corporate  expenses  associated with  the  Company's relocation  of  its
Seramune  subsidiary to Colorado and incremental  expenses related to the Am-Rho
Acquisition and the acquisition of ABI.                                         

    Product development expenses decreased  approximately 2.0% from $601,000  in
1995  to  $589,000 in  1996. The  Company  anticipates that  product development
expenses, as a  percentage of sales,  will increase slightly  in 1996 over  1995
levels  due to increased  expenditures related to  the development of monoclonal
anti-D therapeutic antibodies.                                                  

    Other expense (income), net  increased 28.3%, or  $94,000, from $332,000  in
1995 to $426,000 in 1996 due primarily to amortization of intangible assets as a
result  of the acquisition of ABI in October 1995 and the Am-Rho Acquisition and
the Southeastern Acquisition in February 1996 and March 1996, respectively.     

    Interest expense  decreased 82.1%,  or $746,000,  from $909,000  in 1995  to
$163,000 in 1996, primarily as a result of the retirement of approximately $25.0
million in debt in June 1995 with proceeds from the IPO.                        

YEARS ENDED DECEMBER 31, 1994 AND 1995                                          

    Net  sales increased 73.2%, or $22.0 million,  from $30.1 million in 1994 to
$52.1 million in  1995. The  increase relates primarily  to net  sales of  $16.2
million  resulting from the Seramune  Acquisition, increased shipments of anti-D
and monoclonal antibodies and, to a lesser extent, price increases. Net sales of
the Company's  therapeutic and  diagnostic product  lines increased  118.9%  and
19.8%, respectively, from the prior year.                                       

    Gross profit increased 54.8%, or $7.3 million, from $13.3 million in 1994 to
$20.6  million  in  1995.  The  increase was  due  largely  to  $3.1  million of
additional   gross   profit   associated   with   Seramune's   net   sales    of

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IVIG  antibodies and  increased net  sales of  anti-D antibodies  and diagnostic
monoclonal antibodies,  which  are the  Company's  higher margin  products.  The
decrease  in gross profit as  a percentage of net  sales reflects the additional
net sales of IVIG antibodies, which generally generate gross margins lower  than
those  associated with specialty antibody-based  products. Gross profit from the
Company's specialty antibodies increased from 44.2% in 1994 to 48.8% in 1995.   

    Selling, general  and  administrative  expenses  increased  30.6%,  or  $1.9
million,  from $6.3 million in  1994 to $8.2 million  in 1995. Of this increase,
$635,000 was  due  to  administrative  expenses  related  to  the  new  Seramune
subsidiary,  $757,000 was to support additional growth  and the costs of being a
public entity and $141,000  was related to  upgrading the Company's  information
systems.  The remainder  was primarily  attributed to  a non-recurring, non-cash
charge to compensation expense of $346,500 related to the accelerated vesting of
an officer's stock  options in  connection with  the IPO.  Selling, general  and
administrative  expenses decreased  as a  percentage of  net sales  in 1995 from
1994.                                                                           

    Product  development  expenses  increased  137.9%,  or  $1.1  million,  from
$830,000  in 1994 to  $2.0 million in  1995. Of this  increase, $513,000 was the
result of a collaboration  between the Company and  the Scottish National  Blood
Transfusion Service ("SNBTS") to develop monoclonal anti-D therapeutic products.
Additionally,  the Company initiated several  other development projects in late
1994 and 1995 designed to enhance existing products, which resulted in increased
product development  expenses  in 1995.  The  Company anticipates  that  product
development  expenses, as a percentage of  sales, will increase slightly in 1996
resulting from continued development of monoclonal anti-D therapeutic antibodies
and the expansion into specialty biologic products and services.                

    Other expense (income), net increased $1.3  million from $12,000 in 1994  to
$1.3  million in 1995  due primarily to  amortization of intangible  assets as a
result of the acquisitions of Seramune and ABI.                                 

    Interest expense  increased  $1.7 million  from  $407,000 in  1994  to  $2.1
million  in 1995,  primarily from indebtedness  incurred in  connection with the
Seramune Acquisition.                                                           

    The effective tax  rate as reflected  in the provision  for taxes  decreased
from  38.6%  in 1994  to 35.9%  in 1995.  This  decrease is  due primarily  to a
significant increase in Bioscot's  pre-tax earnings which are  taxed at a  lower
rate than earnings in the United States.                                        

    Extraordinary  loss  (net  of  income  taxes)  increased  $1.7  million from
$103,000 in 1994 to $1.8 million in 1995 due to the early extinguishment of debt
in the second quarter from the  proceeds of the IPO. Approximately $1.4  million
of  this  amount relates  to  the acceleration  of  the original  issue discount
associated with the repayment of subordinated debt. The remainder relates to the
write-off of the debt issuance costs associated with the repayment of debt  from
IPO proceeds.                                                                   

YEARS ENDED DECEMBER 31, 1993 AND 1994                                          

    Net  sales increased 31.2%, or  $7.2 million, from $22.9  million in 1993 to
$30.1 million  in 1994  primarily as  a result  of increased  net sales  of  the
Company's  anti-D antibodies and to  a lesser extent net  sales of certain other
therapeutic and diagnostic specialty  antibodies. These increases resulted  both
from  increased product volume  and price increases. Net  sales of the Company's
therapeutic  and   diagnostic  product   lines   increased  49.9%   and   18.6%,
respectively, from 1993 to 1994.                                                

    Gross  profit increased 56.4%, or $4.8 million, from $8.5 million in 1993 to
$13.3 million  in 1994.  The increase  in gross  profit reflects  increased  net
sales,  a greater proportion of certain higher margin therapeutic and diagnostic
antibodies and  increased production  efficiencies from  the Company's  existing
operating facilities.                                                           

    Selling,  general  and  administrative  expenses  increased  54.3%,  or $2.2
million, from $4.1 million in 1993 to $6.3 million in 1994. The increase was due
primarily to additional selling and marketing expenses associated with a  higher
sales  volume, additional  professional and  legal expenses  associated with the
corporate reorganization and increased expenses related to information  systems,
bonus and incentive compensation and regulatory compliance.                     

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    Product  development expenses increased 14.0%, or $102,000, from $728,000 in
1993 to $830,000  in 1994. This  increase was attributed  to the development  of
diagnostic  monoclonal antibodies  and enhancements  to existing  products. As a
percentage of sales, product development  expenses decreased slightly from  3.2%
in 1993 to 2.8% in 1994.                                                        

    The  Company adopted  Statement of  Financial Accounting  Standards No. 109,
"Accounting for Income Taxes," effective January 1, 1993. Accordingly, income of
$301,000 related to the cumulative effect of this accounting change was recorded
in 1993. The effective tax rate as reflected in the provision for taxes in  1993
and 1994 were 43.1% and 38.6%, respectively.                                    

LIQUIDITY AND CAPITAL RESOURCES                                                 

    As  of March 31, 1996,  the Company had cash on  hand and working capital of
$1.6 million and $5.6 million, respectively.                                    

    Net cash flow provided by (used  in) operations for the quarter ended  April
2,  1995, was ($5,000) as  compared to $355,000 for  the quarter ended March 31,
1996. The increase in cash flow from operations resulted mainly from an increase
in net income of $1.0 million  due to improved profitability and lower  interest
expense  offset by an  increase in the  Company's receivables and  a decrease in
deferred revenues. Net cash flow provided by operations for 1993, 1994 and  1995
was  $1.7 million, $4.8 million and  $7.4 million, respectively. The increase in
cash flow provided by  operations in 1994 was  the result of improved  operating
margins  and improved management of  accounts receivable, inventory and accounts
payable, offset in part  by payment of  previously accrued corporate  relocation
expenses. Cash flow from operations increased in 1995 due primarily to increased
profitability,  improved  inventory  and  accounts  payable  management  and the
additional cash flow provided by the Seramune operations acquired in late 1994. 

    Net cash flow used  in investing activities for  the quarter ended April  2,
1995,  was $674,000 as compared to $5.1  million for the quarter ended March 31,
1996. The  increase in  investing  activities related  primarily to  the  Am-Rho
Acquisition  and the Southeastern  Acquisition. Net cash  flow used in investing
activities for 1993, 1994 and 1995 was $670,000, $32.0 million and $4.6 million,
respectively. The significant  change in  investing activities  in 1994  related
predominantly  to  the  Seramune  Acquisition and  the  corporate  relocation to
Atlanta.  Investing  activities  in  1995  included  the  acquisition  of  three
non-specialty  antibody  donor  centers and  the  acquisition of  ABI  for total
consideration  of  approximately   $3.0  million,   the  opening   of  two   new
non-specialty antibody donor center locations, and other capital expenditures in
the normal course of business.                                                  

    Net  cash flow  provided by  (used in)  financing activities,  including the
effects of changes  in foreign currency  rates, for the  quarter ended April  2,
1995  was ($4.8 million) as compared to $3.4 million for the quarter ended March
31, 1996. The increase in net cash flow provided by financing activities in  the
1996  period  related primarily  to the  repayment  in January  1995 of  a $25.5
million promissory note related to the  Seramune Acquisition with proceeds of  a
$21.0   million  term  credit  facility  as  compared  with  the  incurrence  of
approximately $4.7 million of  debt to finance  the Southeastern Acquisition  in
1996.  Net cash flow  provided by (used in)  financing activities, including the
effects of changes in foreign exchange rates, for 1993, 1994 and 1995 was  ($1.3
million),  $33.2 million  and ($6.8  million), respectively.  The net  cash flow
provided in 1994 was  primarily the result of  the senior and subordinated  debt
borrowed  in  connection with  the Seramune  Acquisition. The  net cash  used in
financing activities in 1995 relates primarily to (i) the repayment of the $25.5
million  short  term  promissory  note  due  to  the  sellers  in  the  Seramune
Acquisition with the proceeds of the $21.0 million term credit facility and $4.5
million  cash on hand, (ii) scheduled principal payments of $1.4 million related
to the term credit facility and (iii) cash provided by the IPO proceeds of $24.6
million.                                                                        

    On June 20, 1995, the  net proceeds from the  Company's IPO and $400,000  of
cash  on hand were  used to repay subordinated  debt of $7.5  million and a term
credit facility of $17.5 million. An extraordinary loss of $1.8 million (net  of
income  taxes) was  recorded which related  to the early  extinguishment of this
debt. At March 31, 1996, total long-term debt, including current maturities, was
$10.6 million.                                                                  

    Capital expenditures relate primarily  to the Company's facilities,  related
equipment  and  the  acquisition  or  development  of  additional  specialty and
non-specialty   antibody   donor    centers.   During    the   quarters    ended

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April  2,  1995, and  March  31, 1996,  capital  expenditures were  $403,000 and
$459,000, respectively. The  increase in  capital expenditures in  1996 was  due
primarily  to the renovation of  the two ABI donor  centers. For the years ended
1993, 1994 and 1995, capital expenditures  were $760,000, $2.1 million and  $1.5
million,  respectively. The increase in capital  expenditures in 1994 was due to
expenditures of approximately  $800,000 associated  with the  relocation of  the
Company's  headquarters  to  Atlanta,  $689,000 related  to  the  enhancement of
monoclonal production capacity and other expenditures in the ordinary course  of
business.  Capital  expenditures in  1995 related  primarily to  expenditures of
$583,000 by Seramune to relocate, add  and update a number of its  non-specialty
donor  centers;  expenditures of  $478,000  to expand  the  Company's monoclonal
production capacity; and other expenditures in the normal course of business.   

    During 1996,  the  Company anticipates  a  significant increase  in  capital
expenditures.  The  major  factors  affecting  this  increase  include  (i)  the
relocation and expansion  of the Company's  monoclonal production facilities  in
Scotland;  (ii) the  re-engineering and  upgrading of  the Company's information
systems to support its planned growth; and (iii) the development, relocation and
upgrading of specialty  and non-specialty donor  centers to increase  production
capabilities and efficiencies.                                                  

    In early 1996, the Company received a grant from a governmental authority in
Scotland  to defray a portion of the expenses associated with the relocation and
expansion  of  its  monoclonal  production  facilities.  The  grant  of  up   to
approximately  L580,000 is  payable to  the Company  in three  installments over
approximately three years and the timing and amount of the payments are  subject
to  (i)  the  level  of  capital expenditures  made  and  (ii)  the  creation of
additional jobs at Bioscot.                                                     

    On July 20,  1995, the Company  entered into the  Revolving Credit  Facility
with  NationsBank  providing  for  maximum  borrowings  of  $20.0  million.  The
Revolving Credit Facility has  a three-year term with  a variable interest  rate
and provides for a maximum of $15.0 million for future acquisitions. The Company
anticipates  using  the  proceeds from  the  Revolving Credit  Facility  to fund
capital expenditures, acquisitions and any increased working capital needs.  The
amount  outstanding  under the  Revolving Credit  Facility  was $2.1  million at
December 31, 1995 and $6.8 million at March 31, 1996.                           

    The Company  believes  that  existing cash  balances,  cash  generated  from
operations, net proceeds from this offering and the borrowing capacity available
under  the  Revolving  Credit Facility  are  sufficient to  fund  operations and
anticipated capital expenditures for at least the next 12 months and may be used
to fund the Company's acquisition strategy.                                     

    The Company is in the second year of a five-year supply contract with  Bayer
for  the  sale of  antibodies  for IVIG.  The  contract provides  for successive
one-year renewals, unless notice is given by either party, and commitments  from
Bayer  to purchase specified  amounts on an escalating  basis over the five-year
term. Revenues under this contract  represented 31.1% of the Company's  revenues
in  1995. Early termination of the contract could adversely affect the Company's
ability to meet  its financial obligations  in the short  term. In addition,  as
part  of  the Southeastern  Acquisition, the  Company  acquired a  second supply
contract  with  Bayer  for  the  sale   of  antibodies  for  IVIG,  with   terms
substantially similar to those contained in the Company's existing contract with
Bayer  except as  it relates  to volume levels.  See "Business  -- Marketing and
Customers."                                                                     

    On January 21, 1996, the Company entered into an amended agreement with  the
holders  of the Convertible Note issued in  the principal amount of $3.5 million
in connection with the Seramune Acquisition.  Under the terms of the  amendment,
the  earliest call date of the note was changed from January 21, 1996 to January
21, 1997, the interest rate  decreased to 9% from  12% and the conversion  price
increased to $14.00 from $10.93 per share of Common Stock. The amended agreement
decreases the number of shares issuable at conversion from approximately 320,500
shares to 250,000 shares.                                                       

    The  Company financed the  $1.1 million cash  paid at closing  of the Am-Rho
Acquisition  with  cash  on  hand.  On  March  6,  1996,  the  Company  borrowed
approximately $3.6 million under the Revolving Credit Facility to pay the amount
payable  at the  closing of  the Southeastern  Acquisition. The  assumed debt of
approximately $1.1  million associated  with  the Southeastern  Acquisition  was
repaid with proceeds from the Revolving Credit Facility during March 1996.      

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FOREIGN OPERATIONS                                                              

    The  Company's foreign  operations are primarily  conducted through Bioscot.
During the first  quarters of 1995  and 1996, foreign  operations accounted  for
18.6%  and 15.1%  of net sales  and 19.0%  and 14.6% of  income from operations,
respectively. In 1993, 1994  and 1995, foreign  operations accounted for  17.6%,
20.6%  and  17.8%  of  net sales  and  33.7%,  22.8% and  22.6%  of  income from
operations, respectively.  The increase  in net  sales associated  with  foreign
operations  in  1994  was  the  result  of  increased  shipments  of  monoclonal
antibodies. Export sales from the United States were $3.7 million, $5.3  million
and $11.6 million during 1993, 1994 and 1995, respectively. See Note 13 of Notes
to Consolidated Financial Statements of the Company.                            

    The   functional  currency  of  Bioscot   is  the  British  pound  sterling.
Fluctuations in foreign exchange rates  can impact operating results,  including
total  revenues  and expenses,  when  translations of  the  subsidiary financial
statements  are  made  in  accordance  with  SFAS  No.  52,  "Foreign   Currency
Translation."  It has not  been the Company's  practice to hedge  its assets and
liabilities in the United  Kingdom or its intercompany  transactions due to  the
inherent  risks associated  with foreign  currency hedging  transactions and the
timing of payment between the Company and  Bioscot. In 1993, 1994 and 1995,  the
Company  recorded  foreign currency  transaction gains  of $37,000,  $72,000 and
$29,000, respectively.                                                          

OUTLOOK                                                                         

    The Company's strategy is to enhance its position in the specialty  antibody
segment of the industry and to take advantage of emerging opportunities relating
to  the provision of other  biologic products and services.  The key elements of
this strategy include (i)  expanding its core business  by increasing its  donor
base  and broadening  the range  of antibodies  it sources  and the  services it
provides; (ii) pursuing selective acquisitions to capitalize on opportunities in
a consolidating industry;  (iii) expanding customer  relationships by  providing
additional  services, allowing the Company to become more deeply involved in its
customers' product  development,  regulatory compliance  and  quality  assurance
programs;  (iv) seeking  to increase  the quality  of antibodies  and production
efficiencies; and (v) utilizing its existing donor center network and  expertise
in   biologic  product  development,  manufacturing  techniques  and  regulatory
compliance to capitalize on emerging  opportunities in specialty biologic  based
products  and services. However, there can be no assurance that the Company will
be successful in achieving any or all of the elements of its strategy.          

    External growth is a significant component of the Company's strategic  plan.
The   Company's  strategy  includes  acquisitions   of  selected  specialty  and
non-specialty donor centers,  as well  as businesses that  provide services  and
products  that are complementary to its  existing business. The Company believes
that these acquisitions will enable it to leverage its core competencies and its
general and administrative infrastructure, thereby creating economies of  scale.
However,  there can be  no assurance that  the Company will  be able to complete
suitable acquisitions in the future.                                            

    The Company intends to capitalize  on its existing monoclonal technology  to
take advantage of the increasing preference of its customers for more consistent
and   uniform  antibody  yields   achievable  through  monoclonal  manufacturing
techniques. To achieve this goal, the Company is committing capital resources to
expand its monoclonal antibody production facilities in Scotland. This expansion
will enable the Company to implement more efficient manufacturing techniques, as
well  as  provide  additional  production  capacity  for  diagnostic  monoclonal
products  and the development of therapeutic monoclonal products. The Company is
developing therapeutic monoclonal products  using the approach  that led to  the
Company's  ability to commercialize monoclonal products for diagnostic purposes.
However, there can be no  assurance that the Company  will be successful in  the
development of such products.                                                   

    The  industry in which the Company  operates is subject to strict regulation
and licensing by the FDA.  Similar regulation exists in  many of the states  and
foreign  countries  where the  Company  conducts business.  Changes  in existing
federal, state or foreign  laws or regulations could  have an adverse effect  on
the  Company's business.  The industry  continually evaluates  its practices and
procedures regarding new information or public concerns over diseases which  may
be  transmitted from donors through their  blood or blood components. Based upon
such evaluation, a  certain portion  of the  population may  be prohibited  from

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donating  in the future, or certain new  testing and screening procedures may be
required  to  be  performed   with  respect  to   certain  donors.  In   certain
circumstances, the loss of donors, or the cost of additional testing procedures,
could have an adverse effect on the Company's operating results.                

RECENT ACCOUNTING PRONOUNCEMENTS                                                

    In  March  1995, the  Financial Accounting  Standards Board  ("FASB") issued
Statement of Financial Accounting Standards No. 121 ("SFAS 121") "Accounting for
the Impairment of  Long-Lived Assets and  for Long-Lived Assets  to be  Disposed
Of", which becomes effective for fiscal years beginning after December 15, 1995.
SFAS  121  establishes  standards  for  determining  when  impairment  losses on
long-lived assets have occurred  and how impairment  losses should be  measured.
The  Company adopted SFAS 121 effective January 1, 1996. The financial statement
impact of adopting SFAS 121 was not material.                                   

    In October 1995, the FASB issued Statement of Financial Accounting Standards
No. 123 ("SFAS  123") "Accounting for  Stock-Based Compensation," which  becomes
effective  for  fiscal  years  beginning  after  December  15,  1995.  SFAS  123
establishes new  financial accounting  and reporting  standards for  stock-based
compensation  plans. However, entities  are allowed to  elect whether to measure
compensation expense for stock-based compensation under SFAS 123 or APB No.  25,
"Accounting  for Stock Issued  to Employees." The Company  has elected to remain
with the  accounting under  APB No.  25 and  will make  the required  pro  forma
disclosures  of net income and  earnings per share as  if the provisions of SFAS
123 had  been  applied  in  its December  31,  1996  financial  statements.  The
potential   impact  of  adopting  this  standard  on  the  Company's  pro  forma
disclosures of net income and earnings per share has not been quantified at this
time.                                                                           

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BUSINESS

GENERAL                                                                         

    The   Company   is  a   leading  worldwide   provider  of   specialty  human
antibody-based  products  and  services  to  major  healthcare  companies.   The
Company's  services, including donor recruitment,  donor management and clinical
testing services, enable the  Company to provide  value-added products that  are
used  as the  active ingredients in  therapeutic products for  the treatment and
management of  Rh  incompatibility in  newborns,  rabies and  hepatitis  and  in
diagnostic  products such as blood typing  reagents and diagnostic test kits. In
addition, the Company collects  and produces antibodies  for the manufacture  of
intravenous immune globulin, a product containing a broad spectrum of antibodies
for  use in the treatment of a  wide variety of medical indications. The Company
conducts its  operations through  a national  network of  39 donor  centers  and
through  laboratories located in the United  States and the United Kingdom. Many
of the Company's  donor centers  are strategically  located at  or near  medical
campuses,  enhancing the Company's  ability to source  specialty antibodies from
medical community referrals.                                                    

INDUSTRY OVERVIEW                                                               

    The human  blood products  and  services industry  encompasses a  number  of
markets,  with  products ranging  from  whole blood,  which  is used  for direct
transfusions, to blood components, such  as source plasma, specialty  antibodies
found  in source plasma, and other  specialty biologic components. Source plasma
(the  clear  liquid   portion  of  the   blood  characterized  by   non-specific
concentrations  of antibodies) is used to manufacture many products that treat a
variety of medical indications. Antibodies  are soluble components contained  in
plasma which are produced by the immune system to fight specific diseases.      

    The   largest   segment  of   the  industry   is  comprised   of  non-profit
organizations, such as the American Red  Cross and community blood banks,  which
supply  whole blood and other transfusible products to hospitals. The commercial
segment of the market is focused primarily on supplying source plasma, specialty
antibodies and specialty biologic components to healthcare companies for use  as
the  active ingredients in therapeutic and diagnostic products. According to The
Marketing Research  Bureau Inc.,  an independent  market research  company,  the
worldwide market for finished products made from plasma-based products has grown
from  $1.5 billion in 1984 to approximately $4.6 billion in 1994 and is expected
to approximate $6.4 billion by the year 2000.                                   

    The specialty  segment  of  the industry  includes  products  consisting  of
specialty  antibodies  and cells.  Specialty  antibodies are  typically  used to
manufacture products for treating persons exposed to or at risk of contracting a
specific disease and  to make diagnostic  products used to  screen patients  for
prior  exposure  to a  specific disease  or to  determine blood  type. Specialty
antibodies range from those used to treat tetanus and cytomegalovirus, which the
Company believes generally sell for approximately $85 to $90 per liter, to high-
end products such  as anti-D, an  antibody used to  treat Rh incompatibility  in
newborns,  anti-hepatitis and  antibodies for  blood typing  reagents, which the
Company believes generally  sell for approximately  $350 to $700  per liter.  By
comparison,  the average industry gross price  of source plasma is approximately
$75 to  $80  per liter.  The  Company's  pricing for  its  specialty  antibodies
averaged $413 per liter in 1995, an increase of approximately 10% over the prior
year.                                                                           

    The  Company  believes that  there are  a number  of factors  increasing the
demand for antibody-based products. In the treatment of certain diseases such as
rabies and Rh incompatibility in newborns, antibody-based products are the  only
generally  accepted  treatment or  prevention  for such  diseases.  In addition,
medical and scientific advances are increasing the demand for antibodies for new
and improved  therapies,  such as  the  recent  FDA approval  of  anti-D  immune
globulin  to  treat Idiopathic  Thrombocytopenic Purpura  (a platelet-destroying
disease common among  AIDS patients),  and the  relatively recent  use of  human
antibodies  to treat rabies. The Company also believes that healthcare reform is
spurring the demand for  alternatives to antibiotics and  vaccines, such as  the
use  of antibody-based products for disease management. Additionally, increasing
regulation and  concerns relating  to  blood safety  are  causing demand  for  a
broader array of antibody-based diagnostic tests used to evaluate blood samples.
The  demand  for  more diverse  diagnostic  tests  is also  increasing  as world
population migration is spreading diseases which were once                      

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confined to specific geographic areas. The Company also believes that the  aging
of  the U.S.  population is increasing  the demand  for specialty antibody-based
products that are as efficacious as, but less toxic than, many current treatment
regimens.                                                                       

    The Company believes that there a  number of factors which are limiting  the
supply  of antibody-based products. The supply  of antibodies has been adversely
affected by  the  more  rigorous screening  procedures  required  by  regulatory
authorities  and  manufacturers of  these  products, which  have  disqualified a
portion  of  the  potential  donor  population.  Second,  as  customers  require
increasingly higher concentrations of antibodies the qualified pool of donors is
further  reduced. This requirement  has resulted in an  increasing need to boost
the   concentration   of   antibodies   in   donors   through   vaccination   or
hyperimmunization.  Furthermore, the  regulatory licenses  required for antibody
collection sites  (donor centers),  testing facilities  and biological  products
serve as barriers to entry in the industry.                                     

    In  addition to the demand and  supply factors discussed above, the industry
is experiencing a number of trends. One such trend is the movement by healthcare
companies towards  obtaining  antibodies  and other  biologic  products  from  a
smaller  number  of suppliers  who  can supply  a  wide array  of  products. The
resulting  enhanced  relationships  between   healthcare  companies  and   these
suppliers  have  resulted  in an  increased  tendency by  some  major healthcare
companies to  outsource essential  complex regulatory,  testing and  specialized
manufacturing. In addition, the increased regulatory environment, as well as the
increasing  preference of customers for value-added services, requires suppliers
to have a high level of expertise  and capital resources and makes it  difficult
for  small companies to  compete effectively. As  a result of  these trends, the
industry is undergoing a consolidation.                                         

STRATEGY                                                                        

    The Company's  strategy  is  to  enhance  its  leadership  position  in  the
specialty  antibody-based products  industry and  to take  advantage of emerging
opportunities relating  to  the provision  of  specialty biologic  products  and
services. The key elements of this strategy include:                            

    INCREASE INTERNAL GROWTH.  The Company intends to increase its core business
by expanding its donor base through continued advertising and marketing efforts.
The  Company  also intends  to expand  the  range of  antibodies it  sources and
specialty services it provides at its  existing donor centers that currently  do
not  provide all of its  products and services. For  example, during 1995, 19 of
its non-specialty  centers,  which  previously were  licensed  only  to  collect
antibodies  used to manufacture IVIG, were licensed by the FDA to collect higher
margin specialty antibodies. During 1995, three additional non-specialty centers
were licensed  by  the FDA  to  collect  antibodies used  to  manufacture  IVIG.
Furthermore,  the Company is expanding  its monoclonal manufacturing capacity to
meet expected demand.                                                           

    PURSUE  SELECTIVE  ACQUISITIONS.    The  Company  believes  that  there  are
consolidation  opportunities  in  its  industry, and  as  a  consequence  of its
expertise, relationships  with major  customers and  donor network,  it is  well
positioned  to achieve financial and  operational efficiencies through selective
acquisitions. Examples of this  are the Seramune  Acquisition in December  1994,
whereby  the  Company acquired  16 donor  centers  and expanded  its therapeutic
product line,  the acquisition  of  ABI in  October  1995, whereby  the  Company
acquired  two specialty donor centers, the  Am-Rho Acquisition in February 1996,
whereby the Company acquired  one speciality donor  center and the  Southeastern
Acquisition   in  March  1996,  whereby  the  Company  acquired  six  additional
non-specialty donor centers.  The Company believes  that such acquisitions  will
enable  it to  leverage its  core competencies  and infrastructure  to allow the
acquired businesses  to  provide, on  an  incremental basis,  additional  higher
margin  specialty  products and  services. The  Company  intends to  continue to
pursue acquisitions  of  selected  donor  centers as  well  as  acquisitions  of
businesses  that provide  services and  products that  are complementary  to its
existing business.                                                              

    EXPAND CUSTOMER RELATIONSHIPS.  The Company intends to become more  involved
in its customers' product development, testing and quality assurance programs in
order  to increase the level  of sales to certain  customers and generate higher
margins. In order to continue to  enhance its relationships with customers,  the
Company intends to provide additional value-added services such as utilizing its
donor  network  and clinical  testing  capability to  characterize  and quantify
antibodies and other blood components. In addition, by                          

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working more closely with its customers,  the Company can anticipate demand  for
its products and services sooner and more effectively. In 1994, Abbott named the
Company  as one of two "Preferred  Providers" of clinical diagnostic antibodies,
thereby enabling the Company to become more integrated with Abbott.             

    IMPROVE EFFICIENCIES AND QUALITY.   The Company  also continues to  evaluate
ways  to more effectively administer vaccines that enhance the concentration and
quality of its  antibody products.  In addition,  the Company  intends to  focus
resources  on its  donor network  to be able  to identify,  more accurately, the
optimal donor profile, enabling the Company to decrease donor recruitment  costs
and  increase  donor retention.  The Company  also  plans to  seek opportunities
through established monoclonal techniques  to increase efficiencies and  quality
of  antibodies.  The  Company  currently  manufactures  50  monoclonal  antibody
products for diagnostic use,  which generated in excess  of $9.0 million of  net
sales  in 1995.  The Company  intends to  capitalize on  its existing monoclonal
technology to take advantage  of the increasing  preference of major  healthcare
companies for the more consistent and uniform antibody yields achievable through
monoclonal techniques.                                                          

    CAPITALIZE  UPON ADDITIONAL  GROWTH OPPORTUNITIES.   The  Company intends to
utilize its existing donor center network and expertise in product  development,
manufacturing  techniques  and regulatory  matters  to capitalize  upon emerging
opportunities in the healthcare services  market. The Company intends to  market
to  healthcare companies its  expertise in donor  recruitment and management, as
well as its network of donor centers, to conduct clinical trials for drugs under
development. In 1994, for example, the Company was engaged by Univax  Biologics,
Inc.  to conduct  a clinical  trial to  determine the  safety and  efficacy of a
product  derived  from   donors  who  received   an  experimental  HIV   vaccine
manufactured  by  Genentech, Inc.  Longer term,  the  Company intends  to pursue
opportunities in providing additional products and patient care services through
its donor center network, including  autologous blood processing and  collecting
and  providing stem cells and other therapeutic products and services to treat a
wide variety of diseases, thereby making  greater and more efficient use of  its
donor center infrastructure.                                                    

OPERATIONS                                                                      

    The  Company conducts its operations through  a national network of 39 donor
centers and through  laboratories located in  the United States  and the  United
Kingdom.  Many of  the Company's donor  centers are strategically  located on or
near medical  campuses,  enhancing the  Company's  ability to  source  specialty
antibodies  from medical community  referrals. During 1995,  the Company applied
for and received licenses to collect "pre-existing" antibodies from donors at 19
of its non-specialty donor centers. The  Company intends to further license  the
majority  of its  non-specialty donor  centers to  hyperimmunize donors  for the
purpose of expanding its capacity in the collection of specialty antibodies. The
Company anticipates it  may take  up to  24 months  to receive  FDA approval  to
hyperimmunize donors at any given donor center location.                        

    DONOR RECRUITMENT.  The Company obtains its specialty antibodies from donors
with  high concentrations  of the  antibodies sought.  The Company  maintains an
active communication network with medical professionals nationwide to assist  in
identifying these donors. In addition, the Company is able to identify and react
rapidly  to disease outbreaks in order  to recruit suitable donors for specialty
antibodies created  by such  specific diseases.  The Company  actively seeks  to
maintain  and replenish its donor base for its therapeutic products and recruits
worldwide through a  dedicated sourcing  team for its  diagnostic products.  The
Company also maintains an ongoing advertising program to recruit donors and make
medical professionals aware of its capabilities and needs.                      

    DONOR  SCREENING AND PRODUCT  COLLECTION.  Each  donor candidate undergoes a
process  that  includes  program  explanations,  extensive  screening  and   the
collection  of test samples. In addition, donors of specialty antibodies undergo
a physical  examination  and  qualification profiling.  Once  the  candidate  is
accepted as a donor, the Company collects antibodies from the donor at its donor
centers  through  an FDA  approved  collection procedure  called plasmapheresis,
which lasts between 40  and 60 minutes  and is very  similar to donating  blood.
Each  donation is quarantined at the donor center while test samples are sent to
the Company's  or its  customers'  clinical laboratory  for FDA  mandated  viral
marker screening tests (hepatitis,                                              

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HIV,  etc.) and characterization (i.e., special analytical tests to identify and
measure the quality of the targeted antibodies). Once all of the tests have been
successfully completed, product is then  matched to customer specifications  and
is generally available for shipment within ten to fourteen days of collection.  

    PRODUCT   CHARACTERIZATION.     The  Company   characterizes  its  specialty
antibodies to  ensure  that  concentrations meet  customer  specifications.  The
Company  maintains  extensive data  on each  of its  donors for  both regulatory
compliance and quality assurance.  This data base  enhances the Company's  donor
tracking  and  monitoring capabilities,  which help  assure  the quality  of the
antibodies for its customers. The  ability to accurately characterize and  trace
the  source  of  antibodies adds  value  to  the products  for  the  customer by
replacing steps the customer would otherwise have to perform.                   

    DONOR MANAGEMENT.   Through  incentive  programs and  an emphasis  on  donor
service, the Company encourages full and continuing participation by its donors.
As  an  integral  part  of donor  management,  the  Company's  staff continually
communicates  with  donors  to  reinforce  their  commitment.  The  Company  has
personnel and programs designed to make each visit to the donor center a smooth,
comfortable  and safe  experience. The  Company's expertise  in donor management
enables the  Company  to retain  many  donors  for years  of  repeated,  regular
donations,   thereby  enhancing  the   Company's  profitability.  The  Company's
specialty donors  typically donate  once or  twice per  week, with  many  having
continued  as donors  for as  long as  ten years.  A significant  portion of the
Company's specialty donors have entered into contracts with the Company pursuant
to which they have agreed to donate antibodies exclusively to the Company for  a
three-year period.                                                              

    HYPERIMMUNIZATION.    In  response  to industry  demands  to  produce higher
quality products, all of the Company's  13 specialty donor centers are  actively
involved    in   hyperimmunization   of   their   specialty   antibody   donors.
Hyperimmunization  is  the  use  of  FDA-approved  vaccines  to  stimulate   the
development or heighten the quantity of already existing specialty antibodies in
the  donor. Although  vaccines to conduct  hyperimmunization for  several of the
Company's products are commercially available,  the Company has a key  advantage
through  its existing inventory of, and  ongoing ability to manufacture, its own
FDA-approved vaccine  to produce  anti-D antibodies  in donors.  In some  cases,
antibody-producing white cells are also collected from hyperimmunized donors and
used   to   develop   monoclonal   products.   The   Company   intends   to  add
hyperimmunization capabilities at many of its non-specialty donor centers.      

    MONOCLONAL ANTIBODY PRODUCTION.  In  addition to collecting antibodies  from
its  donors, the Company produces monoclonal  antibodies from its 50 cell lines,
which  generated  over  $9.0  million  in  net  sales  in  1995.  The  Company's
FDA-licensed  monoclonal manufacturing  facilities in  Edinburgh and Livingston,
Scotland produce  monoclonal  antibody  products from  cells  derived  from  the
Company's donor network. Once suitable donors are identified by personnel at the
Company's  donor centers, activated  white cells are  collected and delivered to
its research  and development  laboratory in  London, England.  The white  blood
cells  are  cultivated into  a proliferating  cell  line and  then moved  to the
Company's monoclonal facility  in Edinburgh,  Scotland, where the  cell line  is
further  developed until it can be  grown for commercial production. Through its
monoclonal manufacturing capability, the Company has been able to introduce new,
second generation,  human  monoclonal  products  and also  begin  to  sell  more
profitable  finished products  outside the  United States,  such as  its line of
branded blood  typing reagents  for  use by  health  care workers  in  countries
outside  the United States.  The Company routinely  develops monoclonal antibody
cell lines  for use  in blood  typing reagents  and is  currently utilizing  its
expertise  and facilities  to develop  monoclonal cell  lines for  production of
antibodies used for therapeutic purposes.                                       

PRODUCTS                                                                        

    Through its value-added services, the  Company provides the antibodies  that
serve  as the active ingredients in  certain therapeutic and diagnostic products
manufactured by major  healthcare companies. The  Company's customers  generally
further process the Company's products. The finished materials are then packaged
and  distributed  as  intramuscular and  intravenous  therapeutic  or diagnostic
products. The Company also sells  some of its products, particularly  antibodies
for  blood typing reagents, directly to end users. Based on its knowledge of the
industry and its discussions with its customers, the Company believes that  with

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respect  to  anti-D antibodies,  it maintains  the largest  market share  in the
industry. In 1995, the Company derived  approximately 72% of its net sales  from
its  therapeutic  product  line,  a substantial  majority  of  which  related to
antibodies for IVIG  and anti-D, and  28% of  its net sales  from its  specialty
diagnostic antibodies.                                                          

SPECIALTY THERAPEUTIC PRODUCTS                                                  

    ANTI-D  IMMUNE GLOBULIN  ( "ANTI-D").   Since 1968,  anti-D immune globulin,
also known  as Rh  Immune  Globulin, has  been  prescribed by  obstetricians  to
prevent Rh incompatibility in newborns ("RhHDN"). This sometimes fatal condition
affecting  Rh  positive  infants  born  to  Rh  negative  women  is  due  to the
incompatibility of the blood of an Rh negative mother and her Rh positive child.
In March 1995, the  FDA approved a  new use for this  product, the treatment  of
Idiopathic  Thrombocytopenic Purpura ("ITP") in immunocompromised patients. ITP,
which is common in HIV positive patients, is a disease that is characterized  by
destruction  of  the patient's  platelets, which,  if  untreated, can  result in
internal hemorrhaging and  ultimately, death.  This condition may  affect up  to
100,000 Americans.                                                              

    The  Company believes that demand for  anti-D antibodies in the treatment of
RhHDN has generally followed the  birth rate of developed countries.  Continuing
supply  shortages  of anti-D  antibodies  have resulted  in  industry-wide price
increases over the past several years.  Moreover, now that the FDA has  approved
the use of anti-D antibodies for the treatment of ITP, the Company believes that
worldwide  demand for anti-D antibodies may  increase more rapidly over the next
five years.                                                                     

    ANTI-RABIES IMMUNE GLOBULIN ("RIG").  Anti-rabies immune globulin therapy is
prescribed for individuals  suspected of  recent exposure to  the rabies  virus.
Rabies  is commonly transmitted  by infectious saliva  from the bite  of a rabid
animal. RIG is administered as promptly as possible after exposure and  consists
of  antibodies directed against the live  virus particles with which the patient
may be infected. In the post-exposure treatment regimen, RIG is administered  in
conjunction  with a rabies vaccine, which is used to provide the patient with an
additional active immunity to the rabies virus.                                 

    ANTI-HEPATITIS  IMMUNE   GLOBULINS  ("ANTI-HBS"   AND  "ANTI-HAV").      The
traditional  use  for  these products  is  for  the prevention  of  hepatitis in
individuals who are at risk of contracting, or have had recent exposure to,  the
hepatitis B or A viruses. In addition, anti-HBs are used for intensive treatment
of  many liver transplant  patients. The Company  first began marketing anti-HAV
antibodies in 1995.                                                             

INTRAVENOUS IMMUNE GLOBULIN ("IVIG")                                            

    IVIG is derived from source plasma and  is comprised of a broad spectrum  of
antibodies.  IVIG is used in the treatment  of many medical indications (such as
CMV, ITP and Lupus), primarily for  patients with suppressed immune systems,  to
help build the body's defense against exposure to life threatening diseases. The
Company added the capability of producing antibodies for IVIG as a result of the
Seramune   Acquisition  in   December  1994.   In  1995,   the  Company  derived
approximately 31% of its net sales from this product.                           

SPECIALTY DIAGNOSTIC PRODUCTS                                                   

    ANTIBODIES FOR BLOOD  TYPING REAGENTS.   Blood typing reagents  are used  by
blood  banks and hospital  transfusion services to  assure compatibility between
the recipient and the donor's blood type. Until recently, blood typing  reagents
were made primarily from human sourced, or polyclonal, antibodies. Over the past
several  years, monoclonal  (cloned) antibodies  have been  developed to provide
high quality  antibodies  on a  consistent  basis, and  many  of these  are  now
FDA-approved   for  diagnostic  purposes.  In  1993,  the  FDA  accelerated  the
transition from  polyclonal  to  monoclonal antibodies  used  for  blood  typing
reagents when it did not extend approval of certain agents used to stimulate the
development of polyclonal antibodies in donors. The Company currently sources or
manufactures over 60 different antibodies used in the production of blood typing
reagents  that the Company  believes provide it with  a competitive advantage in
this market due to the desire of  customers to buy an entire panel of  different
antibodies for blood typing reagents from one manufacturer. These antibodies for
blood  typing reagents include 14 in polyclonal  form, 17 in both polyclonal and
monoclonal form and 33 in monoclonal form.                                      

    CLINICAL DIAGNOSTIC ANTIBODIES.  Through its expertise in donor recruitment,
the Company is able to locate and recruit donors who will provide antibodies and
other biological specimens that are known to be                                 

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positive or negative  for a  disease or  infection. The  Company provides  these
biological  specimens  for use  in clinical  diagnostic  test kit  controls. The
diseases for which the Company sources the largest number of clinical diagnostic
antibodies are CMV, rheumatoid arthritis, toxoplasmosis, hepatitis and HIV.  The
Company's recruiting capability is complemented by extensive in-house experience
in  the  laboratory disciplines  of  immunohematology, immunology,  serology and
clinical chemistry  to  characterize  human  specimens  to  meet  manufacturers'
requirements.  The  Company is  a  "Preferred Provider"  of  clinical diagnostic
antibodies to  Abbott  and  provides  additional  specialized  testing  of  such
products for them.                                                              

PRODUCT AND SERVICE DEVELOPMENT                                                 

    The  Company  is  engaged  in a  number  of  near-term  development projects
designed to  enhance its  existing  product lines.  These projects  include  the
development  of more efficacious donor immunization protocols to increase yields
and the development  of more efficient  techniques for the  manufacture of  both
polyclonal and monoclonal antibodies.                                           

    On  a longer  term basis  the Company intends  to utilize  its expertise and
incorporate established  technologies to  expand into  the product  and  service
areas set forth below.                                                          

    The  Company intends  to develop  therapeutic monoclonal  products using the
methodology that  led  to  the Company's  ability  to  commercialize  monoclonal
antibodies  for diagnostic purposes.  Monoclonal production techniques eliminate
the need for fractionation of the product  and may give the Company the  ability
to  market more value-added finished therapeutic products directly to end users.
Specifically, in order to  meet the expected demand  for anti-D antibodies,  the
Company  has  entered  into  a  collaboration  with  the  SNBTS  for  the  joint
development and  clinical  trial of  a  therapeutic monoclonal  anti-D  product.
Pursuant   to  the  agreement  with  the   SNBTS,  the  Company  has  paid  them
approximately $400,000  to date  under the  agreement and  is obligated  to  pay
L50,000  per  annum for  the  term of  the  agreement. In  addition,  if certain
development milestones are achieved,  the Company is obligated  to pay up to  an
additional L450,000. If the commercialization of this product is successful, the
SNBTS  will also be entitled to royalties of 6% of net sales of products derived
under the agreement and 13% of  license fees received from third parties.  Prior
collaboration  with  the SNBTS  has resulted  in  the development  of monoclonal
anti-D producing cell lines  for diagnostic products. However,  there can be  no
assurance  that  this  product will  be  successfully developed  or  receive the
requisite regulatory  approvals,  which are  likely  to take  several  years  or
longer, or that the Company will be able to commercialize it.                   

    The  Company also  intends to begin  developing capabilities in  the area of
extracorporeal blood  processing,  including  hematopoietic  stem  cell  ("HSC")
therapy  (precursor cells  found in bone  marrow currently used  to treat cancer
patients  undergoing  radiation  and  chemotherapy  regimens),  blood   platelet
collection  and supply and therapeutic  hemapharesis (treatment of blood outside
the body). The  Company believes  it can take  advantage of  its existing  donor
center infrastructure to provide a lower-cost setting for these services.       

    The Company intends to utilize its donor center infrastructure and expertise
in  recruiting and  retaining donors  to assist  developers of  new vaccines for
infectious diseases in testing the effectiveness of the vaccine in a  controlled
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MARKETING AND CUSTOMERS                                                         

    The  Company markets specialty  antibodies to over  200 customers worldwide,
including several  major healthcare  companies. In  1995 the  Company's  largest
customers included:                                                             

Bayer Corporation                                                       
Centeon (Behringwerke/Armour)                                           
Pharmacia AB                                                            
Abbott Laboratories, Inc.                                               
Centeon US (Armour Pharmaceutical Company)                              

Ortho Diagnostic Systems (Johnson & Johnson)                                    
Gamma Biologicals, Inc.                                                         
Diamed AG                                                                       
Immucor, Inc.                                                                   
Diagast                                                                         

    In  1993, 1994 and  1995, the top ten  customers accounted for approximately
76%, 75% and  82%, respectively, of  the Company's sales.  One of the  Company's
customers,  Bayer, accounted for 26%, 35% and  50% of the Company's net sales in
1993, 1994 and 1995, respectively. In 1993, Wolf Brandenburger, A.G., a European
distributor, accounted  for 15%  of  the Company's  net  sales and  during  1995
another  customer, Behringwerke,  A.G., accounted for  13% of  the Company's net
sales.  During  1994  and  1995,   the  Company's  domestic  sales   represented
approximately 70% and 68% of net sales, respectively.                           

    The  Company's therapeutic products are sold through its sales force of five
employees and, in certain  markets, through independent  brokers, to four  major
and  several  smaller pharmaceutical  companies. The  majority of  the Company's
therapeutic products are sold pursuant to annual purchase orders, and prices are
negotiated  annually.  In  December  1994,  in  connection  with  the   Seramune
Acquisition,  the Company and Bayer entered into a five-year supply contract for
the sale of IVIG antibodies, with successive one-year automatic renewals  unless
either  party gives  notice otherwise.  Pursuant to  the agreement,  the Company
agreed to sell and Bayer agreed  to purchase specified amounts on an  escalating
basis  over the five year  term. Bayer also has the  right under the contract to
purchase any  production by  the Company  in excess  of the  stipulated  minimum
amounts.  The agreement provides for  a fixed price until  December 31, 1996, at
which time the  price will  become subject  to annual  negotiations. After  such
date,  targeted liter  amounts to  be purchased  by Bayer  are subject  to a 20%
reduction. The  agreement  is subject  to  the maintenance  of  certain  quality
criteria,  certain termination  events and  production incentives.  In addition,
either Bayer or the Company can reduce  by up to 10% the quantity supplied  upon
notification. Early termination of this agreement by Bayer could have a material
adverse  effect on the Company. In connection with the Southeastern Acquisition,
the Company acquired another supply contract for the sale of IVIG antibodies  to
Bayer.  Such agreement expires in April 1999, with successive one-year automatic
renewals unless either party gives notice otherwise. Pursuant to this agreement,
the Company is  required to  sell and Bayer  is required  to purchase  specified
amounts on an escalating basis over the five year term. Bayer also has the right
under  the contract to purchase  any production by the  Company in excess of the
stipulated minimum  amounts. The  agreement  provided for  a fixed  price  until
January 31, 1995, at which time the price became subject to annual negotiations.
The  price was  renegotiated in March  1996 and  has been fixed  until March 31,
1997. The agreement is  subject to the maintenance  of certain quality  criteria
and  certain termination events. In addition, Bayer  can reduce by up to 10% the
quantity supplied upon notification.                                            

    The Company sells  specialty antibodies  for blood typing  reagents to  more
than  25  manufacturers or  suppliers of  blood  tying reagents  and independent
brokers. The polyclonal blood  typing reagent market can  be characterized as  a
spot  market with  limited advance sales  and commitments  to purchase typically
made orally after the customer receives a sample. Monoclonal antibodies used for
blood typing reagents represent a relatively new technology and require a highly
trained and  technical sales  staff, and  tend  to be  sold pursuant  to  annual
purchase  orders and, in certain cases, long term contracts. The capabilities of
the Company's  facilities  and  staff  allow for  the  marketing  of  monoclonal
antibodies  for blood typing reagents in  many forms, from unfinished product to
finished, vialed and branded product.                                           

    The Company's  clinical diagnostic  antibodies  are sold  to more  than  150
customers  in over  35 countries.  Clinical diagnostic  antibodies are primarily
sold to manufacturers of diagnostic test  kits for incorporation as controls  or
for  use in product development projects. The Company maintains a separate sales
group dedicated  to this  product line  due  to the  large number  of  customers
requiring personalized treatment and                                            

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the  special  product knowledge  required. The  Company sells  a portion  of its
clinical diagnostic antibodies pursuant to  a supply contract with Abbott  which
expires in December 1999. The agreement with Abbott is subject to termination on
30  days notice  upon the  occurrence of  certain events  related to  an uncured
breach of such agreement or immediately  upon the acquisition of control of  the
Company by a competitor of Abbott.                                              

ACQUISITIONS                                                                    

    The  antibody-based products  industry is undergoing  a consolidation driven
largely by  the  rising cost  and  complexity related  to  increased  regulatory
compliance  requirements.  This  is  particularly  evident  in  the  market  for
specialty antibodies. A significant component of the Company's business strategy
includes acquisitions which would enable it to participate in the  consolidation
of the industry and to add complementary products and services which will expand
its current product and service portfolio.                                      

    The  Company  has initiated  an acquisition  strategy to  acquire additional
donor center  locations throughout  the United  States in  order to  expand  its
sourcing network. The Company believes that these acquisitions will enable it to
leverage  its  core  competencies  and  infrastructure  to  allow  the  acquired
businesses  to  provide,  on  an  incremental  basis,  additional  higher-margin
specialty  products  and  services.  In  addition,  the  Company  believes  that
acquiring additional  donor center  operations  will allow  it to  leverage  its
general  and administrative costs  over a greater  volume of production, thereby
creating economies of scale. The Company also intends to pursue acquisitions  of
businesses  that provide  services and  products that  are complementary  to its
existing businesses. However, there can be no assurance that the Company will be
able to complete suitable acquisitions in the future.                           

    In accordance  with this  strategy,  during 1995  the Company  acquired  two
specialty centers and three non-specialty donor centers. In the first quarter of
1996,  the Company completed  the acquisition of  one additional specialty donor
center,  assets  of   another  specialty  donor   center,  and  six   additional
non-specialty donor centers.                                                    

QUALITY ASSURANCE                                                               

    The  Company  maintains quality  assurance programs  designed to  assure the
efficacy and safety  of its  products and  compliance with  the requirements  of
regulatory  authorities and its  customers. In 1994,  the Company instituted its
Quality  Assurance  Program,  which  is  an  internally  maintained   regulatory
compliance  program. Through the Quality  Assurance Program the Company conducts
annual audits of  each facility to  monitor staff adherence  to regulations  and
protocols.  These audits are designed to  ensure adherence to Company procedures
and effectiveness  of staff  training  efforts. The  Company subscribes  to  the
Quality Plasma Program ("QPP"), which is a certification program administered by
the   American  Blood   Resources  Association   ("ABRA"),  an   industry  trade
organization. ABRA certifies  only those facilities  that it determines  provide
the  highest quality  products. Most  of the  Company's customers  require their
suppliers to be  QPP certified. All  of the Company's  donor center  facilities,
except  for one recently  acquired specialty donor  center and one non-specialty
center in the start-up phase, are QPP certified.                                

COMPETITION                                                                     

    The Company is engaged in the  business of providing antibodies, which is  a
competitive  and rapidly changing industry. Competition for customers is intense
and depends principally on the ability to provide products of the quality and in
the quantity required  by customers.  The Company competes  for antibody  donors
with  approximately 435 donor centers in  the United States. These donor centers
are operated  both by  customers of  the Company  for their  own use  and  other
independent  commercial  plasma  collection  companies  such  as  North American
Biologicals  Inc.,  which  the  Company  believes  is  the  largest  independent
collector  of source plasma in the United  States. In addition, the Company also
competes for donors with non-profit organizations such as the American Red Cross
and community blood banks. Certain of  these competitors have access to  greater
financial, marketing and other resources than the Company.                      

    The  Company competes for customers  with other independent antibody product
suppliers on the basis of price, reliability and quality of product, breadth  of
product  line  and  the ability  to  provide value-added  services.  The Company
competes for donors by  means of financial incentives  which the Company  offers
for                                                                             

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the  donation of  the antibodies  it collects,  by providing  donor services, by
implementing programs designed to attract and retain donors through education as
to the  uses for  collected  antibodies, by  encouraging  groups to  have  their
members  become  antibody  donors and  by  improving the  attractiveness  of the
Company's antibody donor  centers. Certain of  the Company's specialty  antibody
products  are derived from donors  with rare antibody characteristics, resulting
in increased competition for such donors.  If the Company is unable to  maintain
and  expand its donor base,  its business and future  prospects may be adversely
affected. Additionally, several companies are  attempting to develop and  market
products to treat diseases based upon technology which would lessen or eliminate
the  need for antibodies. Such products, if successfully developed and marketed,
could adversely affect the demand for antibodies. There can be no assurance that
competition will not adversely affect the Company.                              

    The Company  believes  that barriers  to  entry in  the  specialty  antibody
industry  are both significant and increasing.  The Company believes it takes up
to 18 months to obtain FDA approval for a non-specialty donor center, and  takes
from  15 to 24 months  to obtain the necessary  regulatory approvals in order to
begin shipping product from  a specialty donor  center which hyperimmunizes  its
donors.  In  addition  to  these regulatory  requirements,  once  the  center is
operational, a stable donor  base must be established  and maintained as  repeat
donors  are critical  to success for  both quality control  and profitability. A
significant  volume  of  donated  antibodies  and  sophisticated  screening  and
immunization procedures also are necessary in order to provide the diversity and
quality  of antibody products demanded by  the market. Due to increasing quality
requirements and more stringent testing procedures, there is an increasing  need
for economies of scale which generally only large firms can provide.            

GOVERNMENT AND INDUSTRY REGULATION                                              

    GENERAL.   The Company's activities are subject to significant regulation by
numerous  governmental  authorities  in  the  U.S.  and  internationally.  These
regulatory  authorities govern  the collection,  testing, manufacturing, safety,
efficacy,  labeling,   storage,   record  keeping,   transportation,   approval,
advertising  and promotion of the Company's products. The Company believes it is
in substantial compliance with all relevant laws and regulations.               

    The Company  is subject  to extensive  FDA regulation.  Thirty-eight of  the
Company's  donor centers  and the Company's  monoclonal manufacturing facilities
hold establishment licenses and  the Company's 13  specialty donor centers  have
numerous  product licenses, which are granted by the FDA for products shipped in
interstate commerce. The Company has  recently received FDA approval to  collect
pre-existing  specialty antibodies at 19 of  its non-specialty donor centers. In
addition, one of  the Company's  donor centers,  which was  opened during  early
1996,  is currently in  the process of undergoing  FDA licensure. New facilities
and new products at  each location must undergo  approval processes through  the
FDA.  Significant changes to  existing facilities or  products must also undergo
FDA review  prior to  implementation. The  Company's FDA-licensed  manufacturing
operations in the United States and abroad are required to adhere to FDA current
Good  Manufacturing  Practices and  are routinely  inspected  by the  FDA. Donor
centers must meet detailed standards for,  among other things, the screening  of
donors,  obtaining informed consent  from donors, the  collection of antibodies,
training of personnel and the testing and handling of biologic products. If  the
FDA  believes  that a  company is  not  in compliance  with applicable  laws and
regulations, it can institute  proceedings to issue  a warning letter  apprising
the  company of  violative conduct,  detain or  seize products,  issue a recall,
enjoin future operations  and assess  civil and criminal  penalties against  the
company, its officers or its employees. In addition, approvals or licenses could
be  withdrawn  in  certain  circumstances.  Failure  to  comply  with regulatory
requirements or  any adverse  regulatory action  could have  a material  adverse
effect on the Company.                                                          

    On occasion, the Company has received notifications from the FDA of possible
deficiencies  in the  Company's compliance with  FDA requirements.  To date, the
Company believes that it has addressed or corrected such deficiencies.          

    The Company is also  subject to additional  inspections by customer  quality
assurance  auditors,  ABRA  Quality  Plasma Program  auditors,  the  Health Care
Financing Administration (HCFA),  and state health  departments. HCFA  regulates
and  certifies  all clinical  testing  performed at  each  donor center  and the

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Company's  clinical   testing  laboratory   under  the   Clinical   Laboratories
Improvement  Act of 1988.  The Company's clinical  testing laboratory in Atlanta
(Clarkston), Georgia is also licensed by the FDA and the state of Georgia.      

    Outside the United States,  sales of the Company's  products are subject  to
additional  regulatory requirements, which vary  widely from country to country.
In the United Kingdom, the Company is  subject to the U.K. Health and Safety  at
Work  Act, which regulates  the safety precautions  required of manufacturers in
the United  Kingdom,  and to  various  other  regulations covering  the  use  of
genetically  engineered organisms in laboratory  and manufacturing processes. In
certain  countries,   the  Company's   customers  are   subject  to   regulatory
requirements  which may indirectly impact the  Company. In addition, some of the
Company's customers are requiring the Company  to comply with new standards  for
products  sold in the European Union countries (ISO9000 series standards). These
standards require special  training and  auditing and  continued development  of
internal  quality  assurance programs.  Bioscot is  the  first of  the Company's
subsidiaries to  receive ISO9001  certification.  Foreign laws  and  regulations
governing the Company's products may have a material impact on the Company.     

    The  industry in which the Company  operates is subject to strict regulation
and licensing by the FDA.  Similar regulation exists in  many of the states  and
foreign  countries  where the  Company  conducts business.  Changes  in existing
federal, state or foreign  laws or regulations could  have an adverse effect  on
the  Company's business.  The industry  continually evaluates  its practices and
procedures regarding new information or public concerns over diseases which  may
be  transmitted from donors through their  blood or blood components. Based upon
such evaluation, a  certain portion  of the  population may  be prohibited  from
donating  in the future, or certain new  testing and screening procedures may be
required  to  be  performed   with  respect  to   certain  donors.  In   certain
circumstances, the loss of donors, or the cost of additional testing procedures,
could have an adverse effect on the Company's operating results.                

    PRODUCT  APPROVALS.  Before new specialty antibody collection activities can
be initiated for each type of  specialty antibody at any donor center,  separate
approvals  for each type of  antibody to be collected  must be obtained from the
FDA. There can be  no assurance that  difficulties or delays  will not arise  in
connection   with  applications  for  approval   to  conduct  expanded  antibody
collection activities.                                                          

    Certain of the Company's  monoclonal antibodies which  are sold as  finished
products  require FDA licensing. The process  of completing clinical testing and
obtaining FDA approval for a new  biological product requires a number of  years
and  the expenditure  of substantial resources  due to  extensive laboratory and
human testing prior to market  approval. Pre-clinical studies must be  conducted
in  conformance with the FDA's good laboratory practice (GLP) regulations. Human
clinical  testing  must  be  conducted  with  the  oversight  of  one  or   more
institutional review boards and the FDA and meet the requirements of regulations
regarding  good clinical practices and the  protection of human subjects. In the
U.S., this process  includes the  filing of  an Investigational  New Drug  (IND)
exemption  with the FDA, which  must be accepted prior  to commencement of human
trials. An IND must  include pre-clinical data for  the product, from which  the
FDA  makes  a  determination of  the  product's  safety for  human  testing. FDA
regulations impose waiting periods and require continuous evaluation by the FDA.
In some instances the  IND application process can  result in substantial  delay
and expense.                                                                    

    Clinical trials to support Product License Applications (PLAs) typically are
conducted  in three sequential phases,  but the phases may  overlap. In Phase I,
the human trials generally begin with healthy volunteer subjects under carefully
controlled conditions,  and the  drug is  tested for  safety, dosage  tolerance,
metabolism,    distribution,    excretion    and    pharmacodynamics   (clinical
pharmacology). The  trials progress  to  Phase II  studies involving  a  limited
patient  population to determine  efficacy, dosage and  possible adverse effects
and safety risks. When a biological product is found to be effective and to have
an acceptable  safety profile  in Phase  II evaluations,  Phase III  trials  are
undertaken  to further evaluate clinical efficacy and to further test for safety
within an expanded patient population at geographically dispersed clinical study
sites.                                                                          

    At the conclusion of successful human trials, a product license  application
and  establishment license application  are submitted to the  FDA for review and
approval. The amount of detail required for such applications can be  extensive.
The  processing of the applications by the  FDA typically takes several years to

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complete. There is no assurance  that the FDA will  act favorably or quickly  in
making  such reviews and significant difficulties or costs may be encountered by
a company in  its efforts  to obtain  FDA approvals.  The FDA  may also  require
post-marketing  testing  and surveillance  to  monitor the  effects  of approved
products or  they may  place conditions  on approvals  that could  restrict  the
commercial  application  of  products.  Product approvals  may  be  withdrawn if
compliance with  regulatory standards  is not  maintained or  if problems  occur
following initial marketing.                                                    

    In  markets outside the  U.S., the licensing process  is similar in concept,
but can  vary  greatly  in detail.  Since  all  of the  Company's  products  are
developed  for  worldwide  use,  product development  projects  are  designed to
provide data acceptable to the various national regulatory authorities.         

    Federal, state and  foreign laws and  regulations regarding the  manufacture
and  sale of  blood products  are subject to  future change.  The Company cannot
predict what impact, if  any, such change might  have on its business.  However,
such changes could have a material impact on the Company's business.            

    OTHER.  The Company is also subject to government regulations enforced under
the  Environmental Protection Act, the  Clean Air Act, the  Clean Water Act, the
National Environmental  Policy  Act,  the  Toxic  Substances  Control  Act,  the
Resource  Conservation and  Recovery Act,  the Medical  Waste Tracking  Act, and
other national, state  or local  restrictions. The  Company is  also subject  to
workplace  safety  regulations  under  the Occupational  Safety  and  Health Act
(OSHA). The  Company believes  that it  is in  substantial compliance  with  all
applicable regulations.                                                         

THIRD PARTY REIMBURSEMENT                                                       

    In  both domestic and foreign markets,  sales by the Company's customers may
depend in part on the availability of reimbursement from third-party payors such
as government  health administration  authorities, private  health insurers  and
other  organizations. Third-party payors are  increasingly challenging the price
and cost-effectiveness  of  medical  products  and services.  There  can  be  no
assurance that pricing pressures experienced by the Company's customers will not
adversely  affect the Company because of a determination that these products are
not cost effective or because of inadequate third-party reimbursement levels  to
such  customers. Moreover, the Company's  profitability may be directly affected
by the availability  of third  party reimbursement for  any finished  monoclonal
product it seeks to sell.                                                       

EMPLOYEES                                                                       

    As  of March  15, 1996, the  Company employed approximately  662 persons, of
whom 608 were located  in the United  States and 54 were  located in the  United
Kingdom.  None of the Company's employees  is covered by a collective bargaining
agreement. The  Company believes  that its  relationship with  its employees  is
satisfactory.                                                                   

PROPERTIES                                                                      

    The  Company's 39  donor centers range  in size from  approximately 2,000 to
8,000 square feet and are leased from unaffiliated parties under leases expiring
through February 28, 2003.  A majority of these  leases contain renewal  options
which  permit the Company to renew the leases for a five year period at the then
fair rental  value.  The Company  believes  that in  the  normal course  of  its
business  it will  be able to  renew or  replace its existing  leases subject to
regulatory approval. See "-- Operations."                                       

    The Company's clinical laboratory and international headquarters are located
in Atlanta (Clarkston), GA; the monoclonal research and development laboratories
are in  London,  England and  the  Company's FDA  licensed  monoclonal  antibody
facilities  operate in  Edinburgh, Scotland (large  scale monoclonal production)
and Livingston, Scotland  (vialing and  labeling). All of  these facilities  are
leased under leases expiring from 1997 to 2013.                                 

    The  Company has begun  the expansion of  its monoclonal antibody production
capabilities  to  meet  current  and  future  demand  for  both  diagnostic  and
therapeutic  products. See  "Management's Discussion  and Analysis  of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."        

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PRODUCT LIABILITY AND INSURANCE                                                 

    The sourcing, processing and sale  of the Company's antibody-based  products
involve  a risk  of product and  professional liability claims.  The Company has
obtained product liability insurance in an  amount of $1.0 million per  incident
and $3.0 million in the aggregate per annum for each of the Company's facilities
on  an occurrence basis and professional liability insurance in the same amounts
on a claims made basis. The Company has recently obtained a $5.0 million  excess
liability umbrella insurance policy. There can be no assurance that the coverage
limits  of the Company's  insurance policy and/or  any rights of indemnification
and contribution  that  the  Company  may have  with  respect  to  its  customer
contracts  will offset potential claims. A  successful claim against the Company
in excess of insurance coverage and not subject to indemnification could have  a
material adverse affect on the Company.                                         

LEGAL PROCEEDINGS                                                               

    The Company is a party to litigation in the ordinary course of business. The
Company  does not  believe that  such litigation  is likely  to have  a material
adverse effect on its financial position or results of operations.              

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS                                                

    The following  table sets  forth  certain information  with respect  to  the
directors and executive officers of the Company:                                

                                                        [Enlarge/Download Table]

NAME                                AGE     POSITION                                             
----------------------------------  ---     -----------------------------------------------------
                                                                                                 
Harold J. Tenoso, Ph.D............      57  President, Chief Executive Officer and Director      
Samuel A. Penninger, Jr...........      54  Chairman of the Board of Directors                   
Terry Dobson......................      50  Vice President, International Development            
Charles P. Harrison...............      48  Vice President, Healthcare Services                  
Timm M. Hurst.....................      54  Vice President, Sales and Marketing                  
Gary A. Kress.....................      50  Vice President, Regulatory Affairs                   
Russell H. Plumb..................      37  Vice President, Finance and Administration, Chief    
                                             Financial Officer and Treasurer                     
James F. Sowinski.................      46  Vice President, Operations                           
Marcia T. Bates...................      46  Director                                             
James L. Currie...................      59  Director                                             
George M. Shaw, M.D., Ph.D........      42  Director                                             
Matthew C. Weisman................      54  Director                                             

    Harold  J. Tenoso, Ph.D. has served as President and Chief Executive Officer
of the Company since March  1993 and as a director  since August 1993. Prior  to
joining the Company, he served in various capacities since 1984 at UNIMED, Inc.,
a  publicly-held pharmaceutical  company, including  as Chief  Executive Officer
from January 1989 to April  1992, Chairman from January  1991 to April 1992  and
consultant from May 1992 to April 1993.                                         

    Samuel A. Penninger, Jr. has served as Chairman of the Board of Directors of
the  Company since March 1993, and from March 1983 until March 1993 he served as
President and a director  of the Company. Mr.  Penninger founded the Company  in
1971.  He has  served as  a director  of ABRA  and is  a member  of the American
Association of Blood Banks ("AABB").                                            

    Terry Dobson has served as Vice President, International Development of  the
Company  since January  1995. Mr. Dobson  was Managing Director  of Bioscot from
January 1990 to January  1995. Prior to joining  the Company upon the  Company's
acquisition  of  Bioscot,  Mr.  Dobson  served  as  the  Business  Manager,  FDA
Responsible Head and a director of Bioscot.                                     

    Charles P. Harrison has served as Vice President, Healthcare Services of the
Company since February 1996. Prior to joining the Company he was the  President,
Chief  Executive Officer,  Chief Financial  Officer and  a director  of Creative
Products Resource, Inc., a new product development and drug delivery firm,  from
January 1993 until January 1996. Prior to that time, he was the President, Chief
Financial Officer and a director of UNIMED, Inc., a publicly-held pharmaceutical
company,  from May 1986 until May 1993.  Mr. Harrison is presently a director of
Creative Products Resource, Inc.                                                

    Timm M.  Hurst has  served as  Vice President,  Sales and  Marketing of  the
Company  since April 1994. From 1984 until  April 1994, Mr. Hurst served as Vice
President  in  charge  of  disease   state  products,  technical  services   and
administration  of the Company. Prior to joining  the Company, Mr. Hurst was the
director of Sales and Marketing for Blood Products of Delmed, Inc. Mr. Hurst  is
a member of AABB.                                                               

    Gary  A.  Kress has  served  as Vice  President,  Regulatory Affairs  of the
Company since 1988. From 1974 until  1982 he served as Manager/Responsible  Head
and from 1982 until 1988 he served as Director of                               

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Operations/Responsible  Head of the Company.  Mr. Kress is a  member of AABB and
the American Society  for Clinical Laboratory  Science, and is  registered as  a
Medical Technologist by the American Society of Clinical Pathologists.          

    Russell  H. Plumb has served as  Vice President, Finance and Administration,
Chief Financial Officer and Treasurer since  joining the Company in April  1994.
Prior  to joining the Company, he was  a Senior Manager in the Corporate Finance
Group at Ernst & Young from April 1991 to April 1994. Prior to joining Ernst and
Young, he was a Managing Director  for Tunstall Consulting, a business  advisory
firm, from October 1987 to July 1990.                                           

    James  F. Sowinski has  served as Vice President,  Operations of the Company
since 1988. Mr. Sowinski joined the Company in 1977 as a donor center  Executive
Director  and  Responsible Head.  In addition  to  being a  member of  AABB, Mr.
Sowinski  is  a   licensed  medical   technologist  with   a  sub-specialty   in
immunohematology and is a member of the Florida Association of Blood Banks.     

    Marcia  T. Bates  has been  a director of  the Company  since November 1993.
Since June 1989,  Ms. Bates has  been a Vice  President of BancBoston  Ventures,
Inc., a venture capital fund, responsible for healthcare investing.             

    James  L. Currie has been a director  of the Company since December 1989. In
1985, Mr. Currie organized Essex Venture  Partners, a venture capital fund,  and
has  served as  its Managing  General Partner since  that time.  Mr. Currie also
serves  as   a  director   of  Ethical   Holdings,  Limited,   a   publicly-held
pharmaceutical   company,  and  Parexel  International  Corp.,  a  publicly-held
clinical trials company, and as  General Partner of The Woodlands/Essex  Venture
Fund III, L.P., a venture capital fund.                                         

    George M. Shaw, M.D., Ph.D. has been a director of the Company and member of
the  Company's Scientific Advisory Board since  August 1993. Dr. Shaw has served
as the Deputy Director and Senior Scientist at the Center for AIDS Research  and
as  Senior Scientist  at the  Comprehensive Cancer  Center at  the University of
Alabama at  Birmingham since  July 1988.  Dr. Shaw  has also  held teaching  and
research positions since 1985 in the Division of Hematology/Oncology (Department
of  Internal Medicine) at the  University of Alabama at  Birmingham, where he is
currently a Professor of Medicine.  Dr. Shaw is also  currently a member of  the
Scientific  Advisory Board of the Pediatric AIDS Foundation Ariel Project and an
External Advisory Committee Member for the  New York University Center for  AIDS
Research  and  the University  of California  at San  Francisco Center  for AIDS
Research.                                                                       

    Matthew C. Weisman has been a director of the Company since May 1992.  Since
1983,  Mr. Weisman has been  the President and Chief  Executive Officer of Cobey
Corporation, a consulting and private investment company. Mr. Weisman serves  as
a  trustee of Hebrew Rehabilitation Center for the Aged, a chronic care hospital
and geriatric teaching and research facility.  Since July 1994, Mr. Weisman  has
been  a director  of Orchard  Cove, Inc.,  a continuing  care facility providing
independent-living, assisted-living and skilled nursing facilities.             
--------------

    The number  of  directors  on the  Board  is  presently fixed  at  six.  The
Company's  Board of Directors  is divided into three  classes. Directors of each
class are elected  at the annual  meeting of  stockholders held in  the year  in
which  the term for such class expires and serve thereafter for three years. Ms.
Bates and Mr. Weisman serve  as Class 1 Directors  with their terms expiring  at
the  1996 Annual Meeting of Stockholders, Mr.  Currie and Mr. Penninger serve as
Class 2  Directors with  their terms  expiring  at the  1997 Annual  Meeting  of
Stockholders  and Dr. Tenoso and Dr. Shaw  serve as Class 3 Directors with their
terms  expiring  at  the  1998  Annual  Meeting  of  Stockholders.  For  further
information  on the effect of the  classified Board, see "Description of Capital
Stock."                                                                         

    The Board  of  Directors  has  a  Compensation  Committee,  which  currently
consists  of Marcia T. Bates and James  L. Currie. The Compensation Committee is
responsible for approving (or,  at the election  of the Compensation  Committee,
recommending  to the Board) compensation arrangements for officers and directors
of the Company, reviewing benefit plans and administering the Omnibus Plan,  the
Director Plan and the Purchase Plan.                                            

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    The Board of Directors also has an Audit Committee, which currently consists
of  Marcia T. Bates and  Matthew C. Weisman. The  Audit Committee is responsible
for selecting (or, at the election  of the Audit Committee, recommending to  the
Board)  the  independent auditors  of  the Company,  evaluating  the independent
auditors, reviewing  the scope  of  the annual  audit  with management  and  the
independent  auditors,  consulting with  management,  internal auditors  and the
independent auditors  as to  the  systems of  internal accounting  controls  and
reviewing the non-audit services performed by the independent auditors.         

DIRECTOR COMPENSATION                                                           

    Outside  directors are paid  $1,000 for each Board  meeting attended and are
reimbursed for  out-of-pocket expenses  in connection  with attendance  at  such
meetings.  Under the Serologicals option plan, Dr. Shaw and Mr. Weisman received
options as Directors which became options of the Company in connection with  the
Company's   reorganization  in  November   1994.  In  lieu   of  receiving  cash
compensation for  serving  as  a Director  and  as  a member  of  the  Company's
Scientific  Advisory Board,  Dr. Shaw  is compensated  pursuant to  a consulting
arrangement in the  aggregate amount  of $22,500  per annum.  Dr. Shaw  provides
technical and scientific consulting services to the Company relating to research
and development matters as requested by the Company from time to time.          

    On  August 9, 1995,  the Board of  Directors adopted the  Director Plan. The
Director Plan was amended by the  Board on February 27, 1996. Pursuant  thereto,
each  non-employee Director serving on the Board  on the date of the adoption of
the Director Plan and each person who thereafter becomes a non-employee Director
of the Company  is automatically  granted an option  (the "Lump  Sum Grant")  to
purchase  32,000 shares of  Common Stock on the  date of adoption  or on the day
after such  person's first  election  to the  Board, as  the  case may  be.  The
Director Plan also provides for the automatic grant of options to purchase 2,000
shares  of Common  Stock on  an annual  basis to  non-employee Directors  of the
Company who have (or  would have, had not  the non-employee director declined  a
Lump  Sum Grant) vested in  full in their Lump Sum  Grant, commencing on the day
after the first annual  meeting of stockholders  commencing after such  vesting.
The options shall be granted on the day after the annual meeting of stockholders
at  which Directors are elected each year.  The maximum number of shares subject
to options available for grant under the Director Plan is 360,000. The  exercise
price of the options is the fair market value of the Common Stock on the date of
grant.  The exercisability  of the  options vests  at the  rate of  25% per year
commencing on the first anniversary of the date of grant, subject to accelerated
vesting of the Lump Sum Grant for prior service as a director of the Company  or
any  subsidiary. Dr. Shaw  and Mr. Weisman  waived their rights  to the Lump Sum
Grant. The Compensation Committee administers the Director Plan. The Company has
submitted the Director Plan for stockholder approval at the 1996 Annual  Meeting
of  Stockholders, and no options may be  exercised under the Director Plan until
it receives such stockholder approval.                                          

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EXECUTIVE COMPENSATION                                                          

    The following table sets forth for the fiscal years ended December 31,  1995
and 1994 the compensation for services in all capacities to the Company of those
persons  who  were  at  December  31, 1995  the  Company's  President  and Chief
Executive Officer and the other four most highly compensated executive  officers
of the Company (the "Named Executive Officers"):                                

                                                        [Enlarge/Download Table]

                                                                ANNUAL COMPENSATION               LONG TERM COMPENSATION  
                                                      ----------------------------------------  --------------------------
                                                                                 OTHER ANNUAL   SECURITIES     ALL OTHER  
                                                        SALARY        BONUS      COMPENSATION   UNDERLYING   COMPENSATION 
NAME AND PRINCIPAL POSITION                  YEAR        ($)           ($)            ($)       OPTIONS (#)     ($)(1)    
-----------------------------------------  ---------  ----------  -------------  -------------  -----------  -------------
                                                                                                                          
Harold J. Tenoso, Ph.D. .................       1995  $  200,000  $   88,000(2)   $  62,964(3)      24,000     $   2,310  
President and Chief Executive Officer           1994     197,413     108,000(2)      12,490(3)     165,492         2,310  
Samuel A. Penninger, Jr. ................       1995     193,265       --             5,629(4)      --             2,310  
Chairman of the Board                           1994     193,265       --            80,191(5)      --             2,310  
Timm M. Hurst ...........................       1995     125,000      54,000(6)       --            14,400        --      
Vice President, Sales and Marketing             1994     132,822      65,900(6)       --            --             1,327  
James F. Sowinski .......................       1995     125,000      54,000(6)      33,516(7)      14,400         2,263  
Vice President, Operations                      1994     119,192      65,900(6)       --            --             1,779  
Gary A. Kress ...........................       1995     114,058      47,406(8)       --            13,200         2,062  
Vice President, Regulatory Affairs              1994     112,055      59,406(8)       --            --             1,676  

--------------                                                                  
(1) Consists of Company contribution to 401(k) plan.                            

(2) Includes  $51,000 and  $66,000 of deferred  compensation for  1995 and 1994,
respectively.                                                           

(3) Consists of automobile allowance, relocation expenses and reimbursement  for
taxes related thereto and premiums for term life insurance.             

(4) Consists of relocation expenses.                                            

(5) Consists  of $45,348 of relocation expenses and $34,843 of reimbursement for
taxes related thereto.                                                  

(6) Includes $31,125 and  $40,050 of  deferred compensation for  1995 and  1994,
respectively.                                                           

(7) Consists  of $21,383 of relocation expenses and $12,133 of reimbursement for
taxes related thereto.                                                  

(8) Includes $27,000 and  $36,000 of  deferred compensation for  1995 and  1994,
respectively.                                                           

EMPLOYMENT AGREEMENTS                                                           

    In  connection with the commencement of Dr. Tenoso's employment, the Company
entered into an  Employment Agreement with  him in March  1993 providing for  an
initial  term of three  years and subsequent  automatic one-year renewals unless
earlier terminated pursuant to the  provisions thereof. Such Agreement has  been
automatically renewed through March 1997. Such Agreement, as amended in December
1994, provides for a current base salary of $200,000 per annum, participation in
all  bonus and incentive plans of  the Company and certain insurance, automobile
and relocation  allowances and  other benefits.  In addition,  pursuant to  such
Agreement,  Dr.  Tenoso received  options to  purchase up  to 489,492  shares of
Common Stock, 336,000 of which have an initial exercise price of $3.44 per share
and 153,492 of  which have an  initial exercise  price of $5.50  per share.  The
exercisability  of all such options became vested in accordance with their terms
upon the Company's initial public offering. In connection with such vesting, the
Company recognized compensation expense of approximately $346,500 ($215,000  net
of  income taxes). The shares issuable upon  exercise of the options are subject
to certain  registration  and anti-dilution  rights.  See  Note 4  of  Notes  to
Consolidated Financial Statements of the Company.                               

    Dr.  Tenoso's Agreement further provides that in the event his employment is
terminated  within  six  months  of  a  Change  of  Control  or  a  Constructive
Termination, Dr. Tenoso shall receive a payment of 2.99                         

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times  his highest annual salary and bonus pursuant to the Agreement. "Change of
Control" is defined in the Agreement as (a) the acquisition by an individual  or
group other than Dr. Tenoso or a group including him of (i) beneficial ownership
of  30% of the Company's  voting securities or (ii)  all or substantially all of
the assets of the  Company, (b) commencement  of a tender  offer for the  Common
Stock, or (c) a majority change in the composition of the Board of Directors not
approved  by the current directors, and  a "Constructive Termination" is defined
as a change in title or positions, a material diminution in the nature or  scope
of authorities, powers, functions, duties or responsibilities, or a reduction of
10%  or more  of compensation and  benefits. Such  employment Agreement provides
that Dr. Tenoso shall be entitled to a bonus equal to the largest bonus received
by him during the term of the Agreement and to his base salary and benefits  for
the  later  of  the  remainder of  the  term  and  12 months  from  the  date of
termination in the event his employment is terminated by the Company other  than
for  cause (as defined in the Agreement),  death or disability, or by Dr. Tenoso
for a  constructive termination.  Such Agreement  also contains  confidentiality
provisions   for  the  period  of  employment   and  12  months  thereafter  and
non-competition  provisions  for  the  period   of  employment  and  24   months
thereafter.                                                                     

    In  addition, the Company has entered  into severance agreements with Samuel
A. Penninger, Jr., Gary A. Kress, Timm M. Hurst and James F. Sowinski. Each such
Agreement provides that  (i) in  the event  of termination  of such  executive's
employment  by  the Company  with or  without  cause at  any time  before normal
retirement age or (ii) in the event such executive's compensation is reduced  or
his  benefits are  materially reduced  and he  elects to  resign, such executive
shall be entitled  to continue  to receive  his base  monthly salary  (generally
defined  as the highest monthly salary excluding bonuses, since August 31, 1993)
for a number of months that is equal  to the number of years such executive  had
been  employed by the Company;  provided, however, that the  period shall not be
shorter than 12 months and shall not be longer than 24 months.                  

1994 OMNIBUS INCENTIVE PLAN                                                     

    In October 1994, the Board of Directors approved the Omnibus Plan, which was
amended in April 1995 and  subsequently approved by the Company's  stockholders.
The Board of Directors amended and restated such plan again on February 27, 1996
to, among other things, increase the number of shares of Common Stock subject to
such plan from 432,000 to 1,500,000 and increase the annual limit on stock based
awards  from 50,000 to 100,000 per participant.  The Omnibus Plan is designed to
provide an incentive  to the  officers and certain  other key  employees of  and
consultants to the Company by making available to them an opportunity to acquire
a proprietary interest or to increase their proprietary interest in the Company.
The Omnibus Plan provides for compensatory awards (each an "Award") representing
or  corresponding  to up  to 1,500,000  shares  of Common  Stock. Awards  may be
granted for no consideration and consist  of stock options, stock awards,  stock
appreciation  rights ("SARs"),  dividend equivalents,  other stock  based awards
(such as phantom stock) and performance awards consisting of any combination  of
the  foregoing.  Any Award  issued under  the Omnibus  Plan which  is forfeited,
expires or terminates prior to vesting  or exercise will again be available  for
Award under the Omnibus Plan.                                                   

    The  Compensation  Committee of  the  Board of  Directors  (the "Committee")
administers the Omnibus Plan.  The Committee has the  full power and  authority,
subject  to the provisions of the Omnibus Plan, to designate participants, grant
Awards and determine the  terms of all  Awards. The Committee  has the right  to
make  adjustments with respect to Awards granted under the Omnibus Plan in order
to prevent dilution of the  rights of any holder.  Members of the Committee  are
not  eligible to  receive Awards  under the  Omnibus Plan  and are disinterested
within the meaning  of Section 16  of the  Securities Exchange Act  of 1934,  as
amended (the "Exchange Act") and outside directors within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code").           

    STOCK  AWARDS.   The Committee has  the right  to grant Awards  of shares of
Common Stock that are  subject to such  restrictions (including restrictions  on
transferability  and limitations on the right  to vote or receive dividends with
respect to  the  restricted  shares)  and such  terms  regarding  the  lapse  of
restrictions  as the Committee deems appropriate. Generally, upon termination of
employment for any reason during the restriction period, restricted shares shall
be forfeited to the Company.                                                    

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    OPTIONS ISSUED  UNDER OMNIBUS  PLAN.   The  terms  of specific  options  are
determined  by the Committee. Options granted  may be non-qualified or incentive
stock options within  the meaning of  Code Section 422.  The exercise price  per
share  for  a  non-qualified  option  is subject  to  the  determination  of the
Committee. Incentive stock options may not be  granted at less than 100% of  the
fair  market value at the  date of grant. Each  option will be exercisable after
the period or periods  specified in the option  Agreement, which will  generally
not exceed 10 years from the date of grant. Options may be issued in tandem with
SARs  ("Tandem Options") as a  performance award. SARs may  be granted upon such
terms as  the  Board  of Directors  or  the  Committee may  from  time  to  time
determine.                                                                      

    Upon  the exercise of an option, the  option holder shall pay to the Company
the exercise price plus the amount of the required Federal and state withholding
taxes, if any. Options  may be exercised and  the withholding obligation may  be
paid  for with  cash and, with  the consent  of the Committee,  shares of Common
Stock, other securities (including options) or other property. The periods after
termination of  employment  during  which  an option  may  be  exercised  is  as
determined by the Committee. In the absence of any specific determination by the
Committee, the following rules will apply. The unexercised portion of any option
granted  under the  Omnibus Plan will  generally be terminated  (a) three months
after the date on which the  optionee's employment is terminated for any  reason
other  than (i) cause, (ii)  mental or physical disability,  (iii) death or (iv)
retirement; (b) immediately  upon the termination  of the optionee's  employment
for  cause; (c) six months after the  date on which the optionee's employment is
terminated by reason of mental or physical disability; or (d)(i) 12 months after
the date  on  which  the  optionee's  employment  is  terminated  by  reason  of
retirement  or the death of the employee, or  (ii) nine months after the date on
which the optionee shall  die if such death  shall occur during the  three-month
period  following  the termination  of the  optionee's  employment by  reason of
retirement or mental or physical disability.                                    

    SARS.  An Award may consist of SARs. Upon exercising a SAR, the holder  will
be  paid by the  Company an amount in  cash equal to  the difference between the
fair market value of the shares of Common Stock on date of exercise and the fair
market value of the shares of Common Stock on the date of the grant of the  SAR,
less applicable withholding of Federal and state taxes. In no event may a holder
of a SAR, who is also an employee of the Company or its subsidiaries, exercise a
SAR if the aggregate amount to be received as a result of his or her exercise of
SARs  in the preceding twelve month  period exceeds such employee's current base
salary.                                                                         

    PERFORMANCE AWARDS CONSISTING  OF OPTIONS  AND SARS ISSUED  IN TANDEM  UNDER
OMNIBUS  PLAN.  Upon exercise of a  Tandem Option, the optionee will be entitled
to a credit toward the exercise price equal  to the value of the SARs issued  in
tandem  with the option exercised,  but not to exceed  the amount of the Federal
income tax  deduction  allowed to  the  Company in  respect  of such  SAR.  Upon
exercise  of a Tandem Option,  the related SAR shall  terminate, the value being
limited to the credit  which can be  applied only toward  the purchase price  of
Common Stock. In all cases, full payment of the net purchase price of the shares
must  be  made in  cash  or its  equivalent  at the  time  the Tandem  Option is
exercised,  together  with  the  amount  of  the  required  Federal  and   state
withholding  taxes, if  any. When  a SAR issued  as part  of a  Tandem Option is
exercised, the option to which  it related will cease  to be exercisable to  the
extent of the number of shares with respect to which the SAR was exercised.     

    OTHER  PERFORMANCE AWARDS ISSUED  UNDER THE OMNIBUS PLAN.   The Omnibus Plan
authorizes the Committee  to grant,  to the  extent permitted  under Rule  16b-3
promulgated  under the  Exchange Act and  applicable law, other  Awards that are
denominated or payable  in, valued  by reference to,  or otherwise  based on  or
related  to Common Stock.  Furthermore, the amount  or terms of  an Award may be
related to the performance of the Company  or to such other criteria or  measure
of performance as the Committee may determine.                                  

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OPTIONS GRANTS IN LAST FISCAL YEAR                                              

    The  following table sets forth each grant  of stock options made during the
year ended  December  31, 1995  to  each of  the  Named Executive  Officers  who
received options during such year:                                              

                                                        [Enlarge/Download Table]

                                                                                                  POTENTIAL REALIZABLE 
                                                                                                    VALUE AT ASSUMED   
                                          NUMBER OF                                               ANNUAL RATES OF STOCK
                                         SECURITIES      % OF TOTAL                                PRICE APPRECIATION  
                                         UNDERLYING   OPTIONS GRANTED    EXERCISE                  FOR OPTION TERM (2) 
                                           OPTIONS      TO EMPLOYEES       PRICE     EXPIRATION   ---------------------
NAME                                     GRANTED (1)   IN FISCAL YEAR     ($/SH)        DATE        5%($)      10%($)  
---------------------------------------  -----------  ----------------  -----------  -----------  ---------  ----------
                                                                                                                       
Harold J. Tenoso, Ph.D.................      24,000          22.3%       $    5.50    3/10/2005   $  83,040  $  210,480
Timm M. Hurst..........................      14,400          13.4             5.50    3/10/2005      49,824     126,288
James F. Sowinski......................      14,400          13.4             5.50    3/10/2005      49,824     126,288
Gary A. Kress..........................      13,200          12.3             5.50    3/10/2005      45,672     115,764

--------------                                                                  
(1) These  options become exercisable at the rate of 33 1/3% per year commencing
on the first anniversary of the date of grant.                          

(2) Potential realizable values are based on the fair market value per share  as
    determined   by  the  Company  on  the  date  of  the  grant  and  represent
    hypothetical gains  that could  be achieved  for the  respective options  if
    exercised  at the end  of the option  term. The dollar  amounts set forth in
    these columns are  the result of  calculations at the  five percent and  ten
    percent  rates  set by  the  Commission, and  are  not intended  to forecast
    possible future appreciation, if any, of  the Common Stock price. There  can
    be  no assurance that such  potential realizable values will  not be more or
less than that indicated in the table above.                            

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

    The following table sets forth information with respect to (i) the number of
unexercised options  held by  each  of the  Named  Executive Officers  who  held
options  as of December 31, 1995 and  (ii) the value of unexercised in-the-money
options (i.e., options  for which  the fair market  value of  the Common  Stock,
which  was $16.50 as  of December 31,  1995, exceeded the  exercise price) as of
December 31, 1995. None  of the Named Executive  Officers exercised any  options
during the fiscal year 1995.                                                    

                                                        [Enlarge/Download Table]

                                                         NUMBER OF SECURITIES                                    
                                                        UNDERLYING UNEXERCISED         VALUE OF UNEXERCISED      
                                                                OPTIONS                IN-THE-MONEY OPTIONS      
                                                        AT FISCAL YEAR END (#)        AT FISCAL YEAR END ($)     
NAME                                                   EXERCISABLE/UNEXERCISABLE    EXERCISABLE/UNEXERCISABLE (1)
---------------------------------------------------  -----------------------------  --------------------------   
                                                                                                                 
Harold J. Tenoso, Ph.D.............................         501,492/24,000             $6,233,292/$264,000       
Timm M. Hurst......................................            0/14,400                     0/$158,400           
James F. Sowinski..................................            0/14,400                     0/$158,400           
Gary A. Kress......................................            0/13,200                     0/$145,200           

--------------                                                                  
(1) Calculated  on the  basis of  the fair market  value ($16.50)  of the Common
    Stock as of December  31, 1995, as reported  on The Nasdaq National  Market,
minus the per share exercise price.                                     

1996 EMPLOYEE STOCK PURCHASE PLAN                                               

    The  Company  has determined  that it  would  be advisable  and in  the best
interests of the  Company and  its stockholders  to provide  incentives for  the
encouragement  of the highest level of performance by its employees by providing
such persons with an opportunity to obtain an ownership interest in the Company.
Accordingly, on February 27, 1996, the Board of Directors approved the  Purchase
Plan  under which 250,000 shares  of Common Stock may  be purchased by employees
through payroll deductions accumulated during various option periods.           

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    A  total of 250,000  shares of Common  Stock will be  available for issuance
under the Purchase  Plan. In  the event of  a change  in the number  or kind  of
shares pursuant to a reorganization, merger, recapitalization, reclassification,
stock  split, reverse stock split or similar event, appropriate adjustments will
be made  with respect  to  the maximum  number of  shares  subject to,  and  the
purchase price of shares under, the Purchase Plan.                              

    The  Purchase  Plan  provides  eligible employees  with  the  opportunity to
purchase shares of  Common Stock pursuant  to a payroll  deduction program.  The
Purchase  Plan provides  for three-month  purchase periods.  At the  end of each
three-month purchase period, shares would  be purchased automatically at 85%  of
the  lower of  the closing  price on the  first or  last day  of the three-month
purchase period, as reported on The Nasdaq National Market.                     

    An employee may have up to 25% of such employee's base compensation withheld
and applied to the purchase of  shares under the Purchase Plan. However,  during
any  one year  no employee  may purchase  Common Stock  under the  Purchase Plan
having a value of more than $25,000 at the time of purchase.                    

    All employees of  the Company and  its domestic subsidiaries  who have  been
continuously  employed for  a period  of at  least six  (6) months  prior to the
commencement of each three-month purchase period may participate in the Purchase
Plan. However, employees who are customarily employed for less than 20 hours per
week or for  less than  five months  in any calendar  year are  not eligible  to
participate.  Further, any  employee who owns,  or holds options  to acquire, or
who, as  a result  of participation  in the  Purchase Plan,  would own  or  hold
options to purchase five percent (5%) or more of the Company's securities is not
eligible to participate in the Purchase Plan.                                   

    A  participant may withdraw from the  Purchase Plan at any time. Termination
of a participant's employment for any reason, including retirement or death,  or
the   employee's  failure  to  remain   an  eligible  employee  also  terminates
participation in the  Purchase Plan. In  the event of  termination, all  payroll
deductions  previously  credited  to  the  participant's  account  are returned,
without interest. The Purchase Plan  allows for re-enrollment after waiting  for
one  complete three-month  purchase period,  except that  officers and directors
would be required to wait at least six (6) months before re-enrolling.          

    The Purchase Plan is administered by the Board of Directors of the  Company;
the  Board may  also adopt  and appoint  a committee  thereof to  administer the
Purchase Plan. The Board or  any committee so appointed  has the power to  make,
amend and repeal rules and regulations for the interpretation and administration
of  the Purchase Plan, all of which  are final and binding upon each participant
having an interest therein.                                                     

    The Purchase  Plan will  remain in  full force  until June  30, 2006  unless
terminated earlier by action of the Company's Board of Directors or until all of
the  shares reserved for issuance thereunder have been issued. The Purchase Plan
may be  terminated or  amended from  time to  time by  the Board  of  Directors,
provided  that  a participant's  existing  rights cannot  be  adversely affected
thereby, nor may any amendment be  made without the approval of stockholders  of
the  Company if such  amendment would authorize  a sale of  more shares than are
authorized for issuance or materially modify the requirements for eligibility to
participate in the plan.                                                        

LIMITATIONS ON LIABILITY OF OFFICERS AND DIRECTORS                              

    Section 102(b)(7) of the Delaware General Corporation Law ("DGCL") enables a
corporation to eliminate or limit personal liability of members of its Board  of
Directors  for violations of  a director's fiduciary duty  of care. However, the
elimination or limitation shall not apply where  there has been a breach of  the
duty of loyalty, failure to act in good faith, intentional misconduct or knowing
violation  of law, payment of a dividend or approval of a stock repurchase which
was deemed illegal, or where a director obtains an improper personal benefit.   

    The Company's  Amended and  Restated Certificate  of Incorporation  provides
that  a director of  the Company shall,  to the maximum  extent permitted by the
DGCL, have no personal liability to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director.                             

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    DGCL Section  145 permits  a  corporation organized  under Delaware  law  to
indemnify  directors  and  officers with  respect  to  any matter  in  which the
director of officer acted in good faith  and in a manner he reasonably  believed
to  be in or not opposed to the best interests of the Company, and, with respect
to any criminal action, he  had no reasonable cause  to believe his conduct  was
unlawful.                                                                       

    The  Company's Amended  and Restated  Certificate of  Incorporation provides
that any director, officer  or employee of the  Company involved in any  action,
suit  or proceeding, whether civil,  criminal, administrative, or investigative,
while acting in such capacity as a director, officer or employee of the  Company
or  as director,  officer or employee  of another  entity at the  request of the
Company, shall be indemnified  and held harmless by  the Company to the  fullest
extent permitted by the DGCL, against all expense, liability and loss reasonably
incurred or suffered by such person in connection therewith.                    

    The  Company has  entered into  separate but  identical indemnity agreements
(the "Indemnity Agreements")  with each  director and executive  officer of  the
Company  and expects to enter into  Indemnity Agreements with persons who become
directors or executive officers in the future. The Indemnity Agreements  provide
that  the  Company will  indemnify the  director  or officer  (the "Indemnitee")
against any  amounts  that  he  or  she becomes  legally  obligated  to  pay  in
connection  with any  claim against  him or  her based  upon any  act, omission,
neglect or breach of duty that he or she may commit, omit or suffer while acting
in his or her  capacity as a  director and/or officer  of the Company;  provided
that  such claim: (i)  is not based  upon the Indemnitee's  gaining any personal
profit or advantage to which he or she is not legally entitled; (ii) is not  for
an  accounting of profits  made from the  purchase or sale  by the Indemnitee of
securities of the Company  within the meaning of  Section 16(b) of the  Exchange
Act  or similar  provisions of any  state law; and  (iii) is not  based upon the
Indemnitee's knowingly fraudulent, deliberately dishonest or willful misconduct.
The Indemnity Agreements also  provide that all costs  and expenses incurred  by
the  Indemnitee in defending  or investigating such  claim shall be  paid by the
Company in  advance  of the  final  disposition  thereof unless  a  majority  of
directors  of the Company who  are not parties to  the action, independent legal
counsel in a  written opinion, the  stockholders of  the Company or  a court  of
competent  jurisdiction in  a final, unappealable  adjudication determines that:
(i) the Indemnitee did  not act in  good faith and  in a manner  that he or  she
reasonably  believed  to be  in  or not  opposed to  the  best interests  of the
Company; (ii) in the case of  any criminal action or proceeding, the  Indemnitee
had  reasonable  cause to  believe his  or  her conduct  was unlawful;  or (iii)
Indemnitee intentionally  breached  his  or  her duty  to  the  Company  or  its
stockholders.  Each Indemnitee has undertaken to repay the Company for any costs
or expenses so  advanced if  it shall  ultimately be  determined by  a court  of
competent  jurisdiction in a final, nonappealable adjudication that he or she is
not entitled to indemnification under the Indemnity Agreements.                 

SCIENTIFIC ADVISORY BOARD                                                       

    In March 1994, the Company formed  a Scientific Advisory Board comprised  of
four  distinguished scientists  and clinicians with  expertise in  the fields of
hematology, oncology, microbiology, pediatrics and cancer and AIDS research. The
Company formed the Board to  provide counsel to the  Company as it develops  new
therapeutic  and diagnostic  antibody products.  All of  the individuals  on the
Board are recognized as leading authorities  in their fields. The Board has  met
once and intends to meet at least three times a year in the future. The Chairman
of  the Scientific Advisory Board is George M.  Shaw, M.D., Ph.D., who is also a
director of the Company. See "--  Directors and Executive Officers." Members  of
the  Scientific Advisory Board are paid $1,200 for each meeting attended and are
reimbursed for  out-of-pocket  expenses in  connection  with such  meetings.  In
addition,  members of the Scientific Advisory Board  receive a one time grant of
options  to  purchase  1,000  shares  under  the  Omnibus  Plan.  The  Company's
Scientific  Advisory Board is composed of  the following individuals in addition
to Dr. Shaw:                                                                    

    Albert F. LoBuglio, M.D. is the Director of the Comprehensive Cancer  Center
at  the University of Alabama in Birmingham.  Prior to his present position, Dr.
LoBuglio was the  Director of  the Division of  Hematology and  Oncology at  the
Department  of Medicine at the University  of Alabama in Birmingham. He received
his M.D. (cum laude) at Georgetown University.                                  

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    Rein Saral,  M.D.  is Professor  of  Medicine  and President  of  the  Emory
University  System of Health Care, Inc., as  well as Director, The Emory Clinic.
Prior to his present position, Dr. Saral  was the Clinical Director at the  Bone
Marrow  Transplantation Unit at the Johns  Hopkins Oncology Center in Baltimore,
Maryland. He received his  B.A. at Grinnell College  in Grinnell, Iowa, and  his
M.D. at the Johns Hopkins School of Medicine.                                   

    Richard  J.  Whitley,  M.D.  is Professor  of  Pediatrics,  Microbiology and
Medicine, Department of  Pediatrics, University of  Alabama School of  Medicine.
Dr.  Whitley  also serves  as  the Associate  Director  for the  Center  of AIDS
Research at the University of Alabama, as well as the Vice-Chairman,  Department
of Pediatrics.                                                                  

CERTAIN TRANSACTIONS

    On  March  31,  1993,  the Company  guaranteed  a  $300,000  promissory note
executed jointly  by Samuel  A. Penninger,  Jr., the  Chairman of  the Board  of
Directors  of the Company, and Mary Ann  Penninger, the spouse of Mr. Penninger.
The promissory note, which  was fully repaid by  the Penningers on December  31,
1993,  was for a term  of sixty months and  bore interest at the  rate of 8% per
annum.                                                                          

    The Company believes that the above described transaction was on terms  fair
to  the Company and its stockholders and at least as favorable to the Company as
those available from  unaffiliated third  parties. Any  future transaction  with
directors,  executive  officers or  their affiliates  will be  made only  if the
transaction has been approved by a majority of the then disinterested members of
the Board of Directors on the basis  of their conclusion that the terms of  such
transaction  are no less favorable to the  Company than could have been obtained
from unaffiliated parties.                                                      

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PRINCIPAL AND SELLING STOCKHOLDERS

    The following table sets forth certain information as of March 31, 1996, and
as adjusted to reflect  the sale of  the shares of  Common Stock offered  hereby
(assuming  no exercise of the  Underwriter's over-allotment option) with respect
to the beneficial ownership of the Common Stock by (i) each person known by  the
Company  to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock, (ii) each Selling Stockholder, (iii) each director of the Company,
(iv) each Named  Executive Officer  and (v) all  officers and  directors of  the
Company as a group.                                                             

                                                        [Enlarge/Download Table]

                                       SHARES BENEFICIALLY OWNED                        SHARES BENEFICIALLY OWNED    
                                                BEFORE                                            AFTER              
                                             THE OFFERING                                   THE OFFERING (1)         
                                     -----------------------------   SHARES TO        -----------------------------  
NAME                                  NUMBER (2)      PERCENT (3)     BE SOLD          NUMBER (2)      PERCENT (3)   
-----------------------------------  -------------   ------------- -------------      -------------   -------------  
                                                                                                                     
BancBoston Ventures, Inc. .........     1,258,474              14.9%                       858,474               9.1%
100 Federal Street, Boston, MA                                                                                       
02110                                                                   400,000                                      
Marcia T. Bates (4)(5) ............     1,258,474              14.9                        858,474               9.1 
100 Federal Street, Boston, MA                                                                                       
02110                                                                   400,000                                      
Samuel A. Penninger, Jr. (6)(7)....       954,018              11.3      250,000           704,018               7.5 
Harold J. Tenoso, Ph.D. (6)(8).....       534,492               6.0       50,000(9)        484,492               4.9 
Gary A. Kress (6)(10)..............       462,486               5.5       55,000           407,486               4.3 
Timm M. Hurst (11).................       332,169               3.9       80,000           252,169               2.7 
James F. Sowinski (11)(12).........       289,018               3.4       50,000           239,018               2.5 
James L. Currie (13)...............         2,000                *      --                   2,000                *  
George M. Shaw (14)................        26,400                *        5,000(9)          21,400                *  
Matthew C. Weisman (14)............        24,000                *      --                  24,000                *  
Essex Venture Partners.............       145,455               1.7      145,000               455                *  
NationsBank Capital Corp...........       363,802               4.3      100,000           263,802               2.8 
Theodore L. Gail (6)(15)...........       165,240               2.0       55,000           110,240               1.2 
Russell H. Plumb (6)(16)...........        47,900                *       10,000(9)          37,900                *  
All executive officers and                                                                                           
directors                                                                                                            
 as a group (consisting of                                                                                           
 12 individuals) (17)..............     3,958,139              43.5      900,000(18)     3,058,139              30.6 

--------------                                                                  
*  Less than one percent.                                                     

(1) Does not reflect the exercise of the Underwriters' over-allotment option. If
    the over-allotment option is fully exercised, 150,000 shares, 40,000 shares,
    50,000 shares, 25,000 shares, 20,000 shares, 15,000 shares and 15,000 shares
    would  be sold  by the  Company, Mr. Penninger,  Dr. Tenoso,  Mr. Kress, Mr.
    Hurst,  Mr.  Sowinski  and  Mr.  Gail,  respectively,  and  the  amount  and
    percentage  of Common Stock  to be owned  beneficially by Messrs. Penninger,
    Tenoso, Kress, Hurst, Sowinski  and Gail and by  all executive officers  and
    directors  as a  group, after  completion of  the offering  would be 664,018
    shares (6.9%), 434,492 shares (4.3%), 382,486 shares (4.0%), 232,169  shares
    (2.4%),  224,018 shares  (2.3%), 95,240  shares (1.0%)  and 2,908,139 shares
(28.9%), respectively.                                                  

(2) This table identifies persons having  sole voting and investment power  with
    respect  to the shares set forth opposite  their names as of March 31, 1996,
    except as otherwise disclosed  in the footnotes to  the table, according  to
information publicly filed or furnished to the Company by each of them. 

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(3) Shares  beneficially  owned,  as  recorded in  this  table,  expressed  as a
    percentage of the shares of Common  Stock outstanding as of March 31,  1996.
    For  purposes of calculating each  person's beneficial ownership, any shares
    subject to options exercisable within 60  days of March 31, 1996 are  deemed
  to be beneficially owned by, and outstanding with respect to, such person.

 (4)Does  not include 32,000 shares issuable  upon the exercise of stock options
    which become  exercisable upon  the approval  of the  Director Plan  by  the
Company's stockholders.                                                 

 (5)Marcia  T.  Bates,  a  director  of the  Company,  is  a  vice  president of
    BancBoston Ventures, Inc. Ms. Bates may be deemed to be the beneficial owner
of the shares owned by BancBoston Ventures, Inc.                        

 (6)Addresses are c/o Serologicals Corporation, 780 Park North Boulevard,  Suite
110, Clarkston, Georgia 30021.                                          

 (7)904,018  of such shares are held jointly with Mary Ann Penninger, the spouse
of Mr. Penninger.                                                       

 (8) Includes  529,492 shares  of Common  Stock issuable  upon the  exercise  of
immediately exercisable stock options.                                  

(9) Represents shares issuable upon exercise of outstanding stock options.    

(10)  Includes  10,000 shares  of  Common Stock  issuable  upon the  exercise of
immediately exercisable stock options.                                  

(11) Includes  16,800 shares  of  Common Stock  issuable  upon the  exercise  of
immediately exercisable stock options.                                  

(12) Includes 300 shares beneficially owned by Mr. Sowinski as custodian for his
minor children.                                                         

(13)  Does not include 32,000 shares issuable upon the exercise of stock options
    which become  exercisable upon  the approval  of the  Director Plan  by  the
    Company's  stockholders.  Excludes  145,455  shares  held  by  Essex Venture
    Partners of which Mr.  Currie is the general  partner. Mr. Currie  disclaims
beneficial ownership of the shares held by Essex Ventures Partners.     

(14) Represents shares of Common Stock issuable upon the exercise of immediately
exercisable stock options.                                              

(15) Mr. Gail is an employee of the Company.                                    

(16)   Includes  47,400  shares  issuable   upon  the  exercise  of  immediately
exercisable stock options.                                              

(17) Includes 65,000 shares issuable upon exercise of outstanding stock options.

(18)  Includes  686,454  shares  of  Common  Stock  issuable  upon  exercise  of
    immediately  exercisable  stock  options.  Does  not  include  64,000 shares
    issuable upon the exercise  of stock options  which become exercisable  upon
the approval of the Director Plan by the Company's stockholders.        

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DESCRIPTION OF CAPITAL STOCK

COMMON STOCK                                                                    

    The  Company is authorized  to issue 30,000,000 shares  of Common Stock, par
value $0.01 per  share. As  of March  31, 1996  there were  8,421,302 shares  of
Common  Stock outstanding, held of  record by 69 holders.  The holders of Common
Stock are entitled to one vote for each  share held of record on all matters  to
be  voted on by stockholders. There is  no cumulative voting with respect to the
election of directors, with the result that the holders of more than 50% of  the
shares  voting for the election of directors can elect all of the directors then
up for election. The holders of  Common Stock are entitled to receive  dividends
when,  as  and  if declared  by  the Board  of  Directors out  of  funds legally
available therefor. In the  event of liquidation, dissolution  or winding up  of
the  Company, the holders of  Common Stock are entitled  to share ratably in all
assets remaining which are available for  distribution to them after payment  of
liabilities  and after provision  has been made  for each class  of stock having
preference over the Common  Stock. Holders of shares  of Common Stock, as  such,
have  no conversion, preemptive or other  subscription rights, and there are, no
redemption provisions applicable  to the  Common Stock. All  of the  outstanding
shares of Common Stock are fully paid and nonassessable.                        

PREFERRED STOCK                                                                 

    The  Company is authorized to issue 1,000,000 shares of preferred stock, par
value $.01 per share. The Board of Directors of the Company has the authority at
any time and from time to time to establish and designate one or more series  of
preferred  stock, to fix  the number of  shares of any  series (which number may
vary between  series)  and to  fix  the  dividend rights  and  preferences,  the
redemption price (if any) and terms, liquidation rights, sinking fund provisions
(if  any), conversion provisions  (if any) and  the voting powers  (if any). The
Board of Directors,  without stockholder approval,  could issue preferred  stock
with  voting and conversion rights that  could adversely affect the voting power
of holders of  the Common  Stock. Certain companies  have used  the issuance  of
preferred  stock as an anti-takeover  device, and the Board  of Directors of the
Company could, without stockholder approval, issue preferred stock with  certain
voting, conversion and/or redemption rights that could discourage any attempt to
obtain  control of  the Company in  a transaction  not approved by  the Board of
Directors. Although the Company does not intend to issue any shares of preferred
stock, there can be no assurance that the Company will not do so in the future. 

DELAWARE ANTI-TAKEOVER LAW                                                      

    The Company is  subject to  the provisions of  Section 203  of the  Delaware
General Corporation Law ("DGCL"). Section 203 provides, with certain exceptions,
that a Delaware corporation may not engage in certain business combinations with
a  person  or  affiliate or  associate  of  such person  who  is  an "interested
stockholder" for a period  of three years  from the date  such person became  an
interested  stockholder unless: (i)  the transaction resulting  in the acquiring
person's becoming an  interested stockholder,  or the  business combination,  is
approved  by the board of directors of the corporation before the person becomes
an interested stockholder; (ii) the interested stockholder acquires 85%  percent
or  more  of  the  outstanding  voting stock  of  the  corporation  in  the same
transaction which makes it an interested stockholder (excluding certain employee
stock option  plans); or  (iii)  on or  after the  date  the person  becomes  an
interested   stockholder,   the  business   combination   is  approved   by  the
corporation's board of directors and by the  holders of at least 66 2/3% of  the
corporation's  outstanding  voting  stock  at  an  annual  or  special  meeting,
excluding  shares   owned  by   the  interested   stockholder.  An   "interested
stockholder"  is defined as any person  that is (x) the owner  of 15% or more of
the outstanding voting stock of the corporation or (y) an affiliate or associate
of the corporation and was  the owner of 15% or  more of the outstanding  voting
stock  of the corporation at  any time within the  three year period immediately
prior to the date on which it is sought to be determined whether such person  is
an  interested stockholder. Under Delaware law, the Company could have opted out
of Section 203 but elected to be subject to its provisions.                     

CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BY-LAWS    

    The Company's Amended and Restated Certificate of Incorporation and  Amended
and  Restated By-laws contain several provisions that  may be deemed to have the
effect of making  more difficult the  acquisition of control  of the Company  by
means   of   a   hostile  tender   offer,   open  market   purchases,   a  proxy

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contest or otherwise. The provisions of the Amended and Restated Certificate  of
Incorporation  and the Amended and Restated By-laws discussed below are designed
to help to ensure that holders of Common Stock are treated fairly and equally in
a multi-step acquisition. In  addition, they are  intended to encourage  persons
seeking  to  acquire control  of  the Company  to  initiate such  an acquisition
through arm's-length negotiations with the Company's Board of Directors.        

    CLASSIFIED  BOARD  OF  DIRECTORS.    The  Company's  Amended  and   Restated
Certificate  of  Incorporation provides  that the  Board  of Directors  shall be
divided into three classes  of directors serving staggered  terms. One class  of
directors  will  be  elected  at  each  annual  meeting  of  stockholders  for a
three-year term. See "Management -- Directors and Executive Officers." Thus,  at
least  two annual  meetings of stockholders,  instead of one,  generally will be
required to change the  majority of the Company's  Board of Directors. This  may
have the effect of making it more difficult to acquire control of the Company by
means  of a  hostile tender  offer, open  market purchases,  a proxy  contest or
otherwise.                                                                      

    REQUIREMENTS  FOR  ADVANCE  NOTIFICATION   OF  STOCKHOLDER  NOMINATION   AND
PROPOSALS.   The Company's Amended  and Restated By-Laws require  60 to 90 days'
notice to the Company with regard  to stockholder proposals and the  nomination,
other  than by  or at  the direction of  the Board  of Directors  or a committee
thereof, of  candidates for  election  as directors.  Such notice  must  provide
specified  information, including information regarding  the ownership of Common
Stock by the person giving the notice, information regarding the proposal or the
nominees and information regarding the interest of the proponent in the proposal
or the nominations.                                                             

    SIZE OF  AND  FILLING  VACANCIES  ON THE  BOARD  OF  DIRECTORS;  REMOVAL  OF
DIRECTORS.   The Company's Amended and Restated Certificate of Incorporation and
Amended and  Restated  By-laws provide  that  (i)  the number  of  directors  is
determined  by the Board of  Directors, with a lower limit  of five and an upper
limit of 11 directors, (ii) a director  may be removed by stockholders only  for
cause  with the approval of the holders of  a majority of the total voting power
of all outstanding securities of the Company then entitled to vote generally  in
the  election of directors, voting together as  a single class, (iii) subject to
the rights of the holders of any  class or series of preferred stock,  vacancies
in  the Board of Directors resulting from death, resignation, removal (including
removal of a  director by  the stockholders for  cause) or  otherwise and  newly
created  directorships resulting  from any increase  in the  number of directors
shall be filled by a majority of  directors then in office and (iv) no  decrease
in  the authorized number of  directors shall shorten the  term of any incumbent
director.                                                                       

    STOCKHOLDER MEETINGS.   The Company's  Amended and  Restated Certificate  of
Incorporation and Amended and Restated By-laws provide that, subject only to the
rights  of holders of any class or series of preferred stock, only a majority of
the Company's Board, the Chairman, the President or the Chief Executive  Officer
are  entitled to call an annual meeting or a special meeting of stockholders. In
addition, subject only to the rights of holders of preferred stock, stockholders
may not take any action by written consent.                                     

TRANSFER AGENT AND REGISTRAR                                                    

    The transfer agent and registrar for  the Common Stock is State Street  Bank
and Trust Company.                                                              

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SHARES ELIGIBLE FOR FUTURE SALE 

    Upon  consummation of this offering, the  Company will have 9,386,302 shares
of Common Stock outstanding. The 2,100,000  shares of Common Stock sold in  this
offering  (2,415,000 if the  over-allotment option is  exercised), the 2,400,000
shares sold by the  Company in the  IPO and 1,925,265  other shares (other  than
shares  held or  purchased by "affiliates"  of the Company)  are freely tradable
without restriction  or  further  registration under  the  Securities  Act.  The
2,961,037  remaining shares of Common Stock are "restricted securities," as that
term is defined  under Rule 144  promulgated under the  Securities Act, and  may
only be sold pursuant to a registration statement under the Securities Act or an
applicable  exemption from the registration  requirements of the Securities Act,
including Rule 144 thereunder.                                                  

    In addition,  the Board  of  Directors has  authorized 1,500,000  shares  of
Common  Stock  under  the Omnibus  Plan.  Of  these shares,  664,860  shares are
issuable upon the exercise of outstanding stock options granted by the  Company,
of  which options to purchase 218,363 are currently exercisable (exclusive of an
aggregate of 15,000 shares  to be sold by  certain Selling Stockholders in  this
offering  upon  the  exercise of  outstanding  options). Further,  the  Board of
Directors has authorized 360,000 shares of Common Stock under the Director Plan,
of which  64,000 shares  are issuable  upon the  exercise of  outstanding  stock
options granted by the Company, none of which options are currently exercisable.
In  addition, the  Board of  Directors has  authorized 250,000  shares of Common
Stock under the Purchase Plan, none of which is issued or outstanding.  Finally,
options  held by an officer to purchase  439,492 shares of Common Stock are also
outstanding (exclusive  of 50,000  shares to  be sold  by such  officer in  this
offering  upon the  exercise of outstanding  options). The Company  has filed or
intends to file  a registration  statement on Form  S-8 with  the Commission  to
register  the shares of Common Stock that are issuable under these plans and the
option to the officer. There also are outstanding the Convertible Note which  is
convertible  into 250,000 shares of Common Stock and the State Street Warrant to
purchase 147,749  shares  of  Common  Stock. The  holder  of  this  warrant  has
registration  rights  with  respect to  these  shares. The  Company  has granted
certain  additional  piggyback  and   demand  registration  rights  to   certain
beneficial  owners of its securities. The  exercise of these registration rights
could adversely affect the market price of the Common Stock and could impair the
Company's future ability  to raise  capital through  an offering  of its  equity
securities.                                                                     

    In  general, under  Rule 144  as currently in  effect, a  person (or persons
whose shares are aggregated), including an affiliate, who has beneficially owned
restricted shares  for at  least  two years  from the  later  of the  date  such
restricted  shares were acquired  from the Company and  (if applicable) the date
they were acquired from an affiliate, is entitled to sell within any three-month
period a number of  shares that does not  exceed the greater of  1% of the  then
outstanding  shares of Common Stock (93,863 shares based on the number of shares
to be outstanding immediately after this offering) or the average weekly trading
volume in the public market during the four calendar weeks preceding the date on
which notice of the sale is filed with the Commission. Sales under Rule 144  are
also subject to certain requirements as to the manner and notice of sale and the
availability  of public information concerning  the Company. Further, under Rule
144(k), if a period of at least three years has elapsed between the later of the
date restricted shares  were acquired from  the Company or  an affiliate of  the
Company,  and the person was not an affiliate for at least three months prior to
the sale, such person would be  entitled to sell the shares immediately  without
regard to volume limitations and the other conditions described above.          

    The  Company, the Selling Stockholders, the Company's directors and officers
and certain other stockholders, beneficially  owning in the aggregate  3,506,511
shares  of Common  Stock, have agreed  not to  offer, sell, contract  to sell or
otherwise dispose of any shares Common Stock or any securities convertible  into
or  exercisable  or  exchangeable for  Common  Stock without  the  prior written
consent of Smith Barney Inc. for a period ending 90 days after the date of  this
Prospectus.  No predictions can  be made as  to the effect,  if any, that market
sales of shares  of these stockholders  or the availability  of such shares  for
future  sale will have on the market  price of shares of Common Stock prevailing
from time  to  time. The  prevailing  market price  of  Common Stock  after  the
offering  could be adversely affected by  future sales of substantial amounts of
Common Stock by these stockholders.                                             

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UNDERWRITING

    Under the terms and subject to the conditions contained in the  Underwriting
Agreement  dated the  date hereof,  each Underwriter  named below  has severally
agreed to purchase, and the Company and the Selling Stockholders have agreed  to
sell  to such  Underwriter, shares  of Common  Stock which  equal the  number of
shares set forth opposite the name of such Underwriter below.                   

                                                        [Enlarge/Download Table]

                                                                                                       NUMBER OF 
UNDERWRITER                                                                                              SHARES  
-----------------------------------------------------------------------------------------------------  ----------
                                                                                                                 
Smith Barney Inc.....................................................................................            
Lehman Brothers Inc..................................................................................            
Volpe, Welty & Company...............................................................................            

                                                                                                       ----------
    Total............................................................................................   2,100,000
                                                                                                       ----------
                                                                                                       ----------

    The Underwriters are  obligated to  take and pay  for all  shares of  Common
Stock  offered hereby  (other than  those covered  by the  over-allotment option
described below) if any such shares are taken.                                  

    The Underwriters,  for whom  Smith  Barney Inc.,  Lehman Brothers  Inc.  and
Volpe, Welty & Company are acting as Representatives, propose initially to offer
part of the shares of Common Stock directly to the public at the public offering
price  set forth on the cover page hereof and part to certain dealers at a price
that represents a  concession not in  excess of $   per share  under the  public
offering  price. The  Underwriters may allow,  and such dealers  may re-allow, a
concession not in excess  of $   per share to other  Underwriters or to  certain
other  dealers. After  the public offering,  the public offering  price and such
concessions may be changed by the Underwriters.                                 

    The  Company  and   certain  Selling  Stockholders   have  granted  to   the
Underwriters  an  option,  exercisable  for  30  days  from  the  date  of  this
Prospectus, to purchase up to 315,000  additional shares of Common Stock at  the
public  offering  price set  forth on  the cover  page hereof  less underwriting
discounts  and  commissions.  See  "Principal  and  Selling  Stockholders."  The
Underwriters  may exercise such option to  purchase additional shares solely for
the purpose of covering over-allotments, if any, incurred in connection with the
sale of the shares offered hereby. To the extent such option is exercised,  each
Underwriter  will become obligated,  subject to certain  conditions, to purchase
approximately the same percentage  of such additional shares  as the number  set
forth  next to such Underwriter's name in the preceding table bears to the total
number of shares in such table.                                                 

    The Company, the Selling  Stockholders and the  Underwriters have agreed  to
indemnify  each other  against certain liabilities,  including liabilities under
the Securities Act.                                                             

    The Company, the Selling Stockholders, the Company's directors and  officers
and  certain other stockholders have agreed not to offer, sell, contract to sell
or otherwise dispose of any shares of Common Stock or any securities convertible
into or exercisable  or exchangeable  for Common  Stock, other  than the  shares
subject  to the Underwriters'  over-allotment option, without  the prior written
consent of Smith  Barney Inc. for  a period of  90 days after  the date of  this
Prospectus.                                                                     

    The  Underwriters and  certain selling group  members that  currently act as
market makers for the Common Stock may engage in "passive market making" in  the
Common  Stock in accordance with Rule 10b-6A under the Exchange Act. Rule 10b-6A
permits, upon the satisfaction of  certain conditions, underwriters and  selling
group members participating in a distribution that are also market makers in the
security  being  distributed to  engage  in limited  market  making transactions
during the  period  when Rule  10b-6  under  the Exchange  Act  would  otherwise
prohibit such activity. In general, under Rule 10b-6A,                          

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any  Underwriter or selling group member engaged in passive market making in the
Common Stock (i) may not effect transactions in, or display bids for, the Common
Stock at a price that exceeds the highest bid for the Common Stock displayed  by
a  market maker  that is  not participating  in the  distribution of  the Common
Stock, (ii) may not have net daily purchases of the Common Stock that exceed 30%
of its average daily trading volume in  such stock for the two full  consecutive
calendar  months  immediately  preceding  the filing  date  of  the registration
statement of which this Prospectus forms a part and (iii) must identify its bids
as bids made by a passive market maker.                                         

    In December 1994,  Volpe, Welty &  Company received a  fee of $222,750  plus
reimbursement  for  out-of-pocket  expenses of  $2,500  for  providing financial
advisory services to the  Company in connection  with the Seramune  Acquisition.
Over  the course of 1994  and the first quarter of  1995, Volpe, Welty & Company
rendered certain other financial  advisory services to the  Company and did  not
receive  compensation  therefor but  was  reimbursed for  out-of-pocket expenses
incurred in providing such services.                                            

LEGAL MATTERS 

    Certain legal  matters will  be  passed upon  for  the Company  by  Shereff,
Friedman,  Hoffman & Goodman, LLP, New York,  New York, and for the Underwriters
by Dewey Ballantine, New York, New York.                                        

EXPERTS 

    The Consolidated  Financial  Statements  of the  Company  and  the  Combined
Financial  Statements of the Southeastern Group  included in this Prospectus and
in the  Registration  Statement  have  been  audited  by  Arthur  Andersen  LLP,
independent  public accountants, to the extent and  for the periods set forth in
their reports appearing elsewhere herein and in the Registration Statement,  and
are  included herein in reliance  upon the authority of  said firm as experts in
giving said reports.                                                            

ADDITIONAL INFORMATION

    The Company is subject to the  information requirements of the Exchange  Act
and   in  accordance  therewith  files   reports,  proxy  statements  and  other
information with  the  Commission.  Such reports,  proxy  statements  and  other
information  can  be inspected  and copied  at  the public  reference facilities
maintained by  the Commission  at Judiciary  Plaza Building,  450 Fifth  Street,
N.W.,  Room 1024, Washington, D.C. 20549, and  its regional offices located at 7
World Trade Center, 13th Floor, New York, New York, 10048, and 500 West  Madison
Street,  Suite 1400, Chicago, Illinois 60661-2511.  Copies of such materials can
be obtained from  the Commission  at Judiciary  Plaza, 450  Fifth Street,  N.W.,
Washington, D.C. 20549, at prescribed rates.                                    

    The  Company has filed with the Commission, Washington, D.C., a Registration
Statement on Form S-1 under the Securities Act with respect to the Common  Stock
offered  hereby. This Prospectus does not  contain all the information set forth
in the  Registration  Statement and  the  exhibits and  schedules  thereto.  For
further information with respect to the Company and such Common Stock, reference
is  made to such Registration Statement and exhibits. A copy of the Registration
Statement on file  with the  Commission may  be obtained  from the  Commission's
principal office in Washington, D.C., upon payment of the fees prescribed by the
Commission.                                                                     

    The Company's Common Stock is traded on The Nasdaq National Market. Reports,
proxy  statements  and  other information  concerning  the Company  can  also be
inspected at  the  offices  of  The  Nasdaq  National  Market,  1735  K  Street,
Washington, D.C. 20006.                                                         

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                        [Enlarge/Download Table]
                                                                                          
SEROLOGICALS CORPORATION AND SUBSIDIARIES                                                 
  Report of Arthur Andersen LLP, Independent Public Accountants...................... F-2 
  Consolidated Balance Sheets as of December 31, 1994 and 1995 and March 31, 1996         
   (unaudited)....................................................................... F-3 
  Consolidated Statements of Income for the years ended December 31, 1993, 1994 and       
   1995, and the Three-Month Periods ended April 2, 1995 (unaudited) and March 31,        
   1996 (unaudited).................................................................. F-4 
  Consolidated Statements of Stockholders' Equity for the years ended December 31,        
   1993, 1994 and 1995, and the Three-Month Period ended March 31, 1996                   
   (unaudited)....................................................................... F-5 
  Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994       
   and 1995, and the Three-Month Periods ended April 2, 1995 (unaudited) and March        
   31, 1996 (unaudited).............................................................. F-6 
  Notes to Consolidated Financial Statements......................................... F-7 

SOUTHEASTERN GROUP                                                                        
  Report of Arthur Andersen LLP, Independent Public Accountants...................... F-22
  Combined Balance Sheets as of December 31, 1995 and March 6, 1996 (unaudited)...... F-23
  Combined Statements of Operations for the year ended December 31, 1995 and the          
   period from January 1, 1996 to March 6, 1996 (unaudited).......................... F-24
  Combined Statements of Stockholders' Equity for the year ended December 31, 1995        
   and the period from January 1, 1996 to March 6, 1996 (unaudited).................. F-25
  Combined Statements of Cash Flows for the year ended December 31, 1995 and the          
   period from January 1, 1996 to March 6, 1996 (unaudited).......................... F-26
  Notes to Combined Financial Statements............................................. F-27

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors                                                       
and Stockholders of                                                             
Serologicals Corporation:                                                       

    We have audited the accompanying consolidated balance sheets of SEROLOGICALS
CORPORATION  (a Delaware corporation)  AND SUBSIDIARIES as  of December 31, 1994
and 1995 and the related consolidated statements of income, stockholders' equity
and cash flows  for each of  the three years  in the period  ended December  31,
1995.  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  generally  accepted auditing
standards. Those standards require that we plan and perform the audit to  obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also  includes
assessing  the  accounting principles  used  and significant  estimates  made by
management, as well as evaluating the overall financial statement  presentation.
We believe that our audits provide a reasonable basis for our opinion.          

    In  our opinion, the financial statements  referred to above present fairly,
in all material respects, the financial position of Serologicals Corporation and
subsidiaries as  of  December  31,  1994  and 1995  and  the  results  of  their
operations  and their cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.  

    As discussed in Note 9  to the consolidated financial statements,  effective
January 1, 1993, the Company changed its method of accounting for income taxes. 

                       ARTHUR ANDERSEN LLP
Atlanta, Georgia                                                                
March 6, 1996                                                                   

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                                      DECEMBER 31,                    
                                                                ------------------------   MARCH 31,  
                                                                   1994         1995         1996     
                                                                -----------  -----------  ----------- 
                                                                                          (UNAUDITED) 
                                                                                                      
                                               ASSETS                                                 
CURRENT ASSETS:                                                                                       
  Cash and cash equivalents...................................  $ 6,900,854  $ 2,887,225  $ 1,570,611 
  Trade accounts receivable, less allowance for doubtful                                              
   accounts of $139,000 in 1994 and 1995......................    2,443,343    5,607,840    7,254,531 
  Inventories.................................................    4,367,104    3,865,635    4,285,827 
  Deferred income taxes.......................................      293,638      173,264      170,780 
  Other current assets........................................      320,163      561,496    1,072,511 
                                                                -----------  -----------  ----------- 
    Total current assets......................................   14,325,102   13,095,460   14,354,260 
                                                                -----------  -----------  ----------- 
PROPERTY AND EQUIPMENT, net...................................    6,219,376    6,595,410    7,239,829 
                                                                -----------  -----------  ----------- 
OTHER ASSETS:                                                                                         
  Goodwill, net...............................................   26,860,573   27,960,637   32,066,828 
  FDA licenses................................................    1,298,444    1,812,839    2,591,492 
  Debt issuance costs, net....................................      760,858       44,762       42,086 
  Noncompete agreement, net...................................      497,808      544,475    1,044,815 
  Other.......................................................      173,222      270,242      266,988 
                                                                -----------  -----------  ----------- 
    Total other assets........................................   29,590,905   30,632,955   36,012,209 
                                                                -----------  -----------  ----------- 
                                                                $50,135,383  $50,323,825  $57,606,298 
                                                                -----------  -----------  ----------- 
                                                                -----------  -----------  ----------- 
                                LIABILITIES AND STOCKHOLDERS' EQUITY                                  
CURRENT LIABILITIES:                                                                                  
  Current maturities of long-term debt and capital lease                                              
   obligations................................................  $ 3,205,340  $   272,255  $   987,464 
  Accounts payable............................................    1,414,069    2,240,215    2,555,513 
  Accrued liabilities.........................................    2,740,932    4,281,074    5,139,167 
  Accrued corporate relocation expenses.......................      370,004       50,630       43,223 
  Deferred revenue............................................      534,566       77,650      --      
                                                                -----------  -----------  ----------- 
    Total current liabilities.................................    8,264,911    6,921,824    8,725,367 
                                                                -----------  -----------  ----------- 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current                                            
 maturities...................................................   32,708,326    6,750,945   10,559,348 
                                                                -----------  -----------  ----------- 
OTHER LIABILITIES.............................................      131,678       58,390       79,422 
                                                                -----------  -----------  ----------- 
COMMITMENTS AND CONTINGENCIES (Notes 4, 6, 7, and 14)                                                 
COMMON STOCK PUT WARRANTS.....................................    2,188,000      --           --      
                                                                -----------  -----------  ----------- 
STOCKHOLDERS' EQUITY:                                                                                 
  Preferred stock, $.01 par value; 1,000,000 shares                                                   
   authorized, no shares issued...............................      --           --           --      
  Series A, convertible preferred stock, $.01 par value;                                              
   12,587 shares authorized, 12,587 and 0 shares issued and                                           
   outstanding in 1994 and 1995, respectively.................          126      --           --      
  Common stock, $.01 par value; 30,000,000 shares authorized,                                         
   4,131,010 and 8,406,251 shares issued and outstanding in                                           
   1994 and 1995, respectively................................       41,310       84,063       84,214 
  Additional paid-in capital..................................    2,571,071   29,339,537   29,401,566 
  Retained earnings...........................................    4,534,310    7,131,915    8,760,393 
  Unearned compensation.......................................     (346,500)     --           --      
  Cumulative translation adjustment...........................       42,151       37,151       (4,012)
                                                                -----------  -----------  ----------- 
    Total stockholders' equity................................    6,842,468   36,592,666   38,242,161 
                                                                -----------  -----------  ----------- 
                                                                $50,135,383  $50,323,825  $57,606,298 
                                                                -----------  -----------  ----------- 
                                                                -----------  -----------  ----------- 

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

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF INCOME 

                                                        [Enlarge/Download Table]

                                                                              THREE MONTHS ENDED   
                                             YEARS ENDED DECEMBER 31,       ---------------------- 
                                        ----------------------------------   APRIL 2,   MARCH 31,  
                                           1993        1994        1995        1995        1996    
                                        ----------  ----------  ----------  ----------  ---------- 
                                                                            (UNAUDITED) (UNAUDITED)
                                                                                                   
NET SALES.............................  $22,937,616 $30,100,113 $52,124,419 $11,968,239 $14,779,107
COSTS AND EXPENSES                                                                                 
  Cost of Sales.......................  14,487,373  16,796,099  31,525,001   7,301,590   8,664,809 
  Selling, General, and Administrative                                                             
   Expenses...........................   4,075,929   6,289,806   8,216,286   1,845,295   2,292,623 
  Product Development Expenses........     727,923     829,616   1,973,924     600,758     588,794 
  Corporate Relocation Expenses.......   1,500,000      --          --          --          --     
  Other Expense.......................     141,711      11,863   1,328,147     332,402     426,388 
  Interest Expense....................     426,145     407,258   2,116,018     909,279     162,811 
                                        ----------  ----------  ----------  ----------  ---------- 
INCOME BEFORE INCOME TAXES,                                                                        
 EXTRAORDINARY LOSS AND CUMULATIVE                                                                 
 EFFECT OF ACCOUNTING CHANGE..........   1,578,535   5,765,471   6,965,043     978,915   2,643,682 
PROVISION FOR INCOME TAXES............     680,200   2,226,744   2,498,894     346,614   1,015,204 
                                        ----------  ----------  ----------  ----------  ---------- 
INCOME BEFORE EXTRAORDINARY LOSS AND                                                               
 CUMULATIVE EFFECT OF ACCOUNTING                                                                   
 CHANGE...............................     898,335   3,538,727   4,466,149     632,301   1,628,478 
EXTRAORDINARY LOSS ON EARLY RETIREMENT                                                             
 OF DEBT, net of income taxes.........      --        (102,610) (1,822,988)     --          --     
CUMULATIVE EFFECT OF CHANGE IN                                                                     
 ACCOUNTING FOR INCOME TAXES..........     301,000      --          --          --          --     
                                        ----------  ----------  ----------  ----------  ---------- 
NET INCOME............................   1,199,335   3,436,117   2,643,161     632,301   1,628,478 
ACCRETION OF COMMON STOCK PUT                                                                      
 WARRANTS.............................      --         186,000      45,556      25,000      --     
                                        ----------  ----------  ----------  ----------  ---------- 
NET INCOME AVAILABLE FOR COMMON                                                                    
 STOCKHOLDERS.........................  $1,199,335  $3,250,117  $2,597,605  $  607,301  $1,628,478 
                                        ----------  ----------  ----------  ----------  ---------- 
                                        ----------  ----------  ----------  ----------  ---------- 
NET INCOME PER COMMON SHARE --                                                                     
 PRIMARY:                                                                                          
  Income before extraordinary loss and                                                             
   cumulative effect of accounting                                                                 
   change.............................  $     0.14  $     0.54  $     0.58  $     0.10  $     0.18 
  Extraordinary loss..................      --           (0.02)      (0.24)     --          --     
  Cumulative effect of accounting                                                                  
   change.............................        0.05      --          --          --          --     
                                        ----------  ----------  ----------  ----------  ---------- 
NET INCOME............................  $     0.19  $     0.52  $     0.34  $     0.10  $     0.18 
                                        ----------  ----------  ----------  ----------  ---------- 
                                        ----------  ----------  ----------  ----------  ---------- 
NET INCOME PER COMMON SHARE -- FULLY                                                               
 DILUTED:                                                                                          
  Income before extraordinary loss and                                                             
   cumulative effect of accounting                                                                 
   change.............................  $     0.14  $     0.54  $     0.58  $     0.10  $     0.18 
  Extraordinary loss..................      --           (0.02)      (0.24)     --          --     
  Cumulative effect of accounting                                                                  
   change.............................        0.05      --          --          --          --     
                                        ----------  ----------  ----------  ----------  ---------- 
NET INCOME............................  $     0.19  $     0.52  $     0.34  $     0.10  $     0.18 
                                        ----------  ----------  ----------  ----------  ---------- 
                                        ----------  ----------  ----------  ----------  ---------- 
WEIGHTED AVERAGE COMMON AND COMMON                                                                 
 EQUIVALENT SHARES OUTSTANDING:                                                                    
  Primary.............................   6,187,458   6,250,458   7,646,061   6,252,885   8,971,020 
                                        ----------  ----------  ----------  ----------  ---------- 
                                        ----------  ----------  ----------  ----------  ---------- 
  Fully Diluted.......................   6,482,195   6,250,458   7,646,061   6,252,885   8,971,020 
                                        ----------  ----------  ----------  ----------  ---------- 
                                        ----------  ----------  ----------  ----------  ---------- 

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

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 

                                                        [Enlarge/Download Table]

                                               COMMON STOCK          PREFERRED STOCK      ADDITIONAL              CUMULATIVE  
                                          ----------------------  ----------------------   PAID-IN    RETAINED    TRANSLATION 
                                           SHARES      AMOUNT      SHARES      AMOUNT      CAPITAL    EARNINGS    ADJUSTMENT  
                                          ---------  -----------  ---------  -----------  ----------  ---------  -------------
                                                                                                                              
BALANCE, DECEMBER 31, 1992............... 3,668,640   $     306      12,587   $     126   $2,624,006  $  84,858    $ (15,737) 
  Net income.............................    --          --          --          --           --      1,199,335       --      
  Change in cumulative translation                                                                                            
   adjustment............................    --          --          --          --           --         --            4,005  
                                          ---------  -----------  ---------       -----   ----------  ---------  -------------
BALANCE, DECEMBER 31, 1993............... 3,668,640         306      12,587         126    2,624,006  1,284,193      (11,732) 
  Net income.............................    --          --          --          --           --      3,436,117       --      
  Retirement of treasury shares..........  (120,000)     --          --          --         (363,284)    --           --      
  Exercise of common stock warrants......   582,370       4,853      --          --           --         --           --      
  Change in cumulative translation                                                                                            
   adjustment............................    --          --          --          --           --         --           53,883  
  Merger into Serologicals Holdings                                                                                           
   Cancellation of existing shares....... (4,131,010)     (5,159)   (12,587)       (126)      --         --           --      
   Issuance of new shares................ 4,131,010      41,310      12,587         126      (36,151)    --           --      
  Stock options granted..................    --          --          --          --          346,500     --           --      
  Accretion of common stock put                                                                                               
   warrants..............................    --          --          --          --           --       (186,000)      --      
                                          ---------  -----------  ---------       -----   ----------  ---------  -------------
BALANCE, DECEMBER 31, 1994............... 4,131,010      41,310      12,587         126    2,571,071  4,534,310       42,151  
  Net income.............................    --          --          --          --           --      2,643,161       --      
  Exercise of common stock warrants......   363,802       3,534      --          --           (3,534)    --           --      
  Conversion of preferred stock.......... 1,510,439      15,105     (12,587)       (126)     (14,979)    --           --      
  Accretion of common stock put                                                                                               
   warrants..............................    --          --          --          --           --        (45,556)      --      
  Exercise of stock options..............     1,000         114      --          --           11,385     --           --      
  Accelerated vesting of stock options...    --          --          --          --           --         --           --      
  Retirement of common stock put                                                                                              
   warrants..............................    --          --          --          --        2,233,556     --           --      
  Initial public offering of common                                                                                           
   stock, net of issuance costs.......... 2,400,000      24,000      --          --       24,542,038     --           --      
  Change in cumulative translation                                                                                            
   adjustment............................    --          --          --          --           --         --           (5,000) 
                                          ---------  -----------  ---------       -----   ----------  ---------  -------------
BALANCE, DECEMBER 31, 1995............... 8,406,251      84,063      --          --       29,339,537  7,131,915       37,151  
  Net income.............................    --          --          --          --           --      1,628,478       --      
  Exercise of stock options..............    15,051         151      --          --           62,029     --           --      
  Change in cumulative translation                                                                                            
   adjustment............................    --          --          --          --           --         --          (41,163) 
                                          ---------  -----------  ---------       -----   ----------  ---------  -------------
BALANCE, MARCH 31, 1996 (UNAUDITED)...... 8,421,302   $  84,214      --       $  --       $29,401,566 $8,760,393   $  (4,012) 
                                          ---------  -----------  ---------       -----   ----------  ---------  -------------
                                          ---------  -----------  ---------       -----   ----------  ---------  -------------



                                            UNEARNED     TREASURY                                                             
                                          COMPENSATION     STOCK      TOTAL                                                   
                                          -------------  ---------  ----------                                                
                                                                                                                              
BALANCE, DECEMBER 31, 1992...............   $  --        $(363,284) $2,330,275                                                
  Net income.............................      --           --       1,199,335                                                
  Change in cumulative translation                                                                                            
   adjustment............................      --           --           4,005                                                
                                          -------------  ---------  ----------                                                
BALANCE, DECEMBER 31, 1993...............      --         (363,284)  3,533,615                                                
  Net income.............................      --           --       3,436,117                                                
  Retirement of treasury shares..........      --          363,284      --                                                    
  Exercise of common stock warrants......      --           --           4,853                                                
  Change in cumulative translation                                                                                            
   adjustment............................      --           --          53,883                                                
  Merger into Serologicals Holdings                                                                                           
   Cancellation of existing shares.......      --           --          (5,285)                                               
   Issuance of new shares................      --           --           5,285                                                
  Stock options granted..................    (346,500)      --          --                                                    
  Accretion of common stock put                                                                                               
   warrants..............................      --           --        (186,000)                                               
                                          -------------  ---------  ----------                                                
BALANCE, DECEMBER 31, 1994...............    (346,500)      --       6,842,468                                                
  Net income.............................      --           --       2,643,161                                                
  Exercise of common stock warrants......      --           --          --                                                    
  Conversion of preferred stock..........      --           --          --                                                    
  Accretion of common stock put                                                                                               
   warrants..............................      --           --         (45,556)                                               
  Exercise of stock options..............      --           --          11,499                                                
  Accelerated vesting of stock options...     346,500       --         346,500                                                
  Retirement of common stock put                                                                                              
   warrants..............................      --           --       2,233,556                                                
  Initial public offering of common                                                                                           
   stock, net of issuance costs..........      --           --      24,566,038                                                
  Change in cumulative translation                                                                                            
   adjustment............................      --           --          (5,000)                                               
                                          -------------  ---------  ----------                                                
BALANCE, DECEMBER 31, 1995...............      --           --      36,592,666                                                
  Net income.............................      --           --       1,628,478                                                
  Exercise of stock options..............      --           --          62,180                                                
  Change in cumulative translation                                                                                            
   adjustment............................      --           --         (41,163)                                               
                                          -------------  ---------  ----------                                                
BALANCE, MARCH 31, 1996 (UNAUDITED)......   $  --        $  --      $38,242,161                                               
                                          -------------  ---------  ----------                                                
                                          -------------  ---------  ----------                                                

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

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                                                                    THREE MONTHS ENDED     
                                                               YEARS ENDING DECEMBER 31,         ------------------------- 
                                                         --------------------------------------    APRIL 2,     MARCH 31,  
                                                            1993          1994         1995          1995         1996     
                                                         -----------  ------------  -----------  ------------  ----------- 
                                                                                                 (UNAUDITED)   (UNAUDITED) 
                                                                                                                           
OPERATING ACTIVITIES:                                                                                                      
  Net income...........................................  $ 1,199,335  $  3,436,117  $ 2,643,161  $    632,301  $1,628,478  
                                                         -----------  ------------  -----------  ------------  ----------- 
  Adjustments to reconcile net income to net cash                                                                          
   provided by operating activities:                                                                                       
    Depreciation and amortization......................      724,753       912,109    2,628,373       718,039     815,044  
    Deferred income tax (benefit) provision............     (298,800)      257,340        8,260       106,997     (10,934) 
    Extraordinary loss, net............................      --            102,610    1,822,988       --           --      
    Cumulative effect of accounting change.............     (301,000)      --           --            --           --      
    Accrual (payments) for corporate relocation ex-                                                                        
     penses............................................    1,479,000    (1,108,996)    (319,374)      (73,425)     --      
    Vesting of stock options...........................      --            --           346,500       --           --      
    Changes in operating assets and liabilities, net of                                                                    
     effects from purchase of businesses:                                                                                  
      Trade accounts receivable, net...................     (932,869)      379,328   (3,027,658)   (1,593,807)  (1,945,357)
      Inventories......................................     (624,184)      (92,031)     563,268      (355,236)    (162,555)
      Other current assets.............................       59,632       (89,101)    (231,921)     (333,291)    (499,541)
      Accounts payable.................................      (39,619)      678,117    1,105,487        22,430      199,110 
      Accrued liabilities..............................      963,576     1,187,230    2,295,809       484,500      407,261 
      Deferred revenue.................................     (497,460)     (860,221)    (456,916)      386,546      (76,385)
                                                         -----------  ------------  -----------  ------------  ----------- 
        Total adjustments..............................      533,029     1,366,385    4,734,816      (637,247)  (1,273,357)
                                                         -----------  ------------  -----------  ------------  ----------- 
        Net cash provided by (used in) operating                                                                           
         activities....................................    1,732,364     4,802,502    7,377,977        (4,946)     355,121 
                                                         -----------  ------------  -----------  ------------  ----------- 
INVESTING ACTIVITIES:                                                                                                      
  Purchases of property and equipment..................     (758,895)   (2,075,313)  (1,495,189)     (403,159)    (459,099)
  Proceeds from note receivable........................       90,122       --           --            --           --      
  Purchase of businesses...............................      --        (29,744,032)  (2,696,584)      --        (4,638,415)
  Other................................................         (832)     (196,163)    (387,782)     (270,444)      (2,086)
                                                         -----------  ------------  -----------  ------------  ----------- 
        Net cash used in investing activities..........     (669,605)  (32,015,508)  (4,579,555)     (673,603)  (5,099,600)
                                                         -----------  ------------  -----------  ------------  ----------- 
FINANCING ACTIVITIES:                                                                                                      
  Proceeds from revolving line of credit...............    7,341,888    18,369,802   16,573,590     1,363,568    7,708,293 
  Payments on revolving line of credit.................   (7,878,059)  (19,749,184) (14,514,834)     (534,264)  (3,016,208)
  Proceeds from long-term debt and capital lease                                                                           
   obligations.........................................      386,747    34,498,000   21,747,699    21,054,555      --      
  Payments on long-term debt and capital lease                                                                             
   obligations.........................................     (978,351)   (1,172,272) (55,156,148)  (26,699,997)  (1,305,558)
  Payment of debt issuance costs.......................     (140,725)     (724,415)     (34,895)      --           --      
  Proceeds from issuance of warrant....................      --          2,002,000      --            --           --      
  Proceeds from exercise of stock options..............      --            --           --            --            62,181 
  Proceeds from initial public offering, net of issu-                                                                      
   ance costs..........................................      --            --        24,577,537       --           --      
                                                         -----------  ------------  -----------  ------------  ----------- 
        Net cash (used in) provided by financing                                                                           
         activities....................................   (1,268,500)   33,223,931   (6,807,051)   (4,816,138)   3,448,708 
                                                         -----------  ------------  -----------  ------------  ----------- 
EFFECT OF CHANGES IN FOREIGN EXCHANGE RATE.............      (16,620)       53,883       (5,000)       53,775      (20,843)
                                                         -----------  ------------  -----------  ------------  ----------- 
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS...     (222,361)    6,064,808   (4,013,629)   (5,440,912)  (1,316,614)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.........    1,058,407       836,046    6,900,854     6,900,854    2,887,225 
                                                         -----------  ------------  -----------  ------------  ----------- 
CASH AND CASH EQUIVALENTS, END OF PERIOD...............  $   836,046  $  6,900,854  $ 2,887,225  $  1,459,942   $1,570,611 
                                                         -----------  ------------  -----------  ------------  ----------- 
                                                         -----------  ------------  -----------  ------------  ----------- 

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

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  ORGANIZATION AND BUSINESS OPERATIONS                                        
    Serologicals  Corporation  (a Delaware  corporation),  formerly Serologicals
Holdings, Inc. (the  "Company"), is  a leading worldwide  provider of  specialty
human  antibody-based products and  services to major  healthcare companies. The
Company's services, including donor  recruitment, donor management and  clinical
testing  services,  enable the  Company  to provide  value-added, antibody-based
products that are used as the  active ingredients in therapeutic and  diagnostic
pharmaceutical products.                                                        

    As  of  December  31,  1995,  the  Company,  through  its  two  wholly owned
subsidiaries,   Serologicals,   Inc.   ("Serologicals")   and   Seramune,   Inc.
("Seramune"),  operated a national network  of 32 donor centers  (39 as of March
31, 1996) and laboratories located in the United States and Europe. Serologicals
and its wholly owned subsidiaries, Allegheny Biologicals Inc. ("ABI") and Am Rho
Laboratories, Inc. ("Am  Rho"), operate  12 donor centers  (13 as  of March  31,
1996)  that specialize in  the collection of  specialty antibodies. Bioscot Ltd.
("Bioscot"), a wholly owned subsidiary  of Serologicals, operates two U.S.  Food
and  Drug  Administration  ("FDA")  licensed  monoclonal  antibody manufacturing
facilities in Edinburgh, Scotland. Bioscot  is organized and existing under  the
laws  of Scotland. Seramune,  Inc. and its  subsidiaries ("Seramune") operate 20
donor centers (26 as of March  31, 1996) that collect non-specialty plasma  from
which a number of therapeutic products are derived.                             

    The  industry in which the Company  operates is subject to strict regulation
and licensing by the FDA.  Similar regulation exists in  many of the states  and
foreign  countries  where the  Company  conducts business.  Changes  in existing
federal, state or foreign  laws or regulations could  have an adverse effect  on
the Company's business.                                                         

    The  industry  is also  characterized  by sales  to  a relatively  few major
pharmaceutical companies.  One of  the  Company's customers,  Bayer  Corporation
("Bayer"),  accounted for approximately  one-half of the  Company's net sales in
1995 (Note 10). The Company has  a long-term supply contract with Bayer  related
to  non-specialty  antibodies  which  accounted  for  approximately  31%  of the
Company's net  sales  in 1995;  however,  there can  be  no assurance  that  the
contract  will  not be  terminated  or that  Bayer  will not  reduce  its supply
requirements pursuant to a provision in the agreement.                          

    Export sales from  the United  States represented approximately  22% of  net
sales  in 1995 (Note  13). Concern over blood  safety has led  to movements in a
number of European and other countries to restrict the importation of blood  and
blood  derivatives,  including  antibodies,  collected  outside  the  countries'
borders or, in the case of certain European countries, outside Europe. To  date,
these  efforts have not led to any  meaningful restriction on the importation of
blood and blood derivatives and have not adversely affected the Company.        

    The Company's business is dependent upon  its ability to attract and  retain
qualified  donors.  A  significant  portion of  the  industry's  potential donor
population has been disqualified  due in large part  to more rigorous  screening
procedures  required by  regulatory authorities. The  potential donor population
with certain specialty antibodies has also decreased due to aging and attrition.
The inability  to locate  and  procure donors  with specialty  antibodies  could
adversely affect the Company.                                                   

    The  Company generates  significant sales outside  the United  States and is
subject to risks  generally associated with  international operations.  Bioscot,
which  accounted for approximately 18% of the  Company's net sales in 1995 (Note
13), generates net sales and incurs expenses in foreign currencies. Accordingly,
the Company's financial results from international operations may be affected by
fluctuations in currency exchange rates.                                        

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                  

BASIS OF PRESENTATION                                                   

    The accompanying consolidated financial  statements include the accounts  of
the  Company and its two wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.                

APRIL 2, 1995 AND MARCH 31, 1996                                        

    The April 2, 1995 and March 31, 1996 financial statements (and related notes
thereto) are  unaudited, however,  in  the opinion  of management,  include  all
adjustments  which are of a recurring nature  and necessary for a fair statement
of financial position,  results of  operations and  cash flows  for the  periods
indicated.  However, these results and cash flows are not necessarily indicative
of results and cash flows which may be expected for a twelve month period.      

USE OF ESTIMATES                                                        

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

INVENTORIES                                                             

    Inventories are stated at the lower of cost or market, cost being determined
on a first-in, first-out basis. Market for antibody-based product inventories is
net realizable value and for supplies is replacement cost.                      

Inventories at December 31, 1994 and 1995 consisted of the following:   

                                                        [Enlarge/Download Table]

                                                                    1994          1995    
                                                                ------------  ------------
                                                                                          
Antibody-based products........................................ $  3,950,180  $  3,355,275
Supplies.......................................................      416,924       510,360
                                                                ------------  ------------
                                                                $  4,367,104  $  3,865,635
                                                                ------------  ------------
                                                                ------------  ------------

PROPERTY AND EQUIPMENT                                                  

    Fixed  assets are stated at cost and are depreciated using straight-line and
accelerated methods over  their estimated useful  lives for financial  reporting
purposes.   For  income  tax   purposes,  the  Company   uses  only  accelerated
depreciation methods. Depreciable  lives for equipment,  furniture and  fixtures
range  from three  to ten years.  Leasehold improvements are  amortized over the
shorter of the lease term or the economic lives of the assets. Expenditures  for
maintenance and repairs are charged to expense as incurred.                     

    Property  and  equipment at  December  31, 1994  and  1995 consisted  of the
following:                                                                      

                                                        [Enlarge/Download Table]

                                                                 1994           1995      
                                                             -------------  ------------- 
                                                                                          
Leasehold improvements...................................... $   3,030,485  $   4,026,564 
Laboratory and office equipment and furniture and                                         
 fixtures...................................................     6,481,634      7,170,726 
                                                             -------------  ------------- 
Total property and equipment................................     9,512,119     11,197,290 
Accumulated depreciation and amortization...................    (3,292,743)    (4,601,880)
                                                             -------------  ------------- 
Property and equipment, net................................. $   6,219,376  $   6,595,410 
                                                             -------------  ------------- 
                                                             -------------  ------------- 

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                      
ACCRUED LIABILITIES                                                     

    Accrued  liabilities  at  December  31,  1994  and  1995  consisted  of  the
following:                                                                      

                                                        [Enlarge/Download Table]

                                                                    1994          1995    
                                                                ------------  ------------
                                                                                          
Income taxes payable........................................... $    649,144  $  1,097,904
Accrued payroll, bonuses, and payroll taxes....................      787,642     1,573,819
Other..........................................................    1,304,146     1,609,351
                                                                ------------  ------------
                                                                $  2,740,932  $  4,281,074
                                                                ------------  ------------
                                                                ------------  ------------

REVENUE RECOGNITION AND DEFERRED REVENUE                                

    The Company's policy is to record revenue upon the shipment of its products.
The Company also receives advance payments from customers for future delivery of
specified  products. The deferred  revenue related to  these advance payments is
recognized when the specified products are shipped.                             

CASH EQUIVALENTS                                                        

    For purposes of  the statements  of cash  flows, the  Company considers  all
investments  purchased with an original  maturity of three months  or less to be
cash equivalents.                                                               

INCOME TAXES                                                            

    Effective January  1,  1993,  the Company  adopted  Statement  of  Financial
Accounting  Standards ("SFAS") No. 109, "Accounting for Income Taxes" ("SFAS No.
109"). The new standard requires an  asset and liability approach to  accounting
for  deferred income taxes based on  the differences between financial reporting
and income tax bases using enacted tax rates in effect for the year in which the
differences are expected to reverse (Note 9).                                   

FOREIGN OPERATIONS                                                      

    The financial statements of Bioscot  have been translated into U.S.  dollars
in  accordance with SFAS No. 52, "Foreign Currency Translation" ("SFAS No. 52").
Under SFAS No.  52, all balance  sheet accounts are  translated at the  exchange
rate  at year-end. Income statement items are translated at the average exchange
rate for the year. Translation adjustments  are not included in determining  net
income but are accumulated and reported as a separate component of stockholders'
equity.  Gains and  losses which result  from foreign  currency transactions are
included in the accompanying statements of income.                              

DEBT DISCOUNTS                                                          

    In accordance with  APB No.  16, "Business  Combinations," the  subordinated
notes  and  other notes  (Note  6) which  were  assumed in  connection  with the
acquisition of Bioscot in 1989 were discounted to reflect their present  values.
The  notes  are  payable in  British  pounds  sterling. The  debt  discounts are
amortized to interest expense using the effective interest method.              

    The Company recorded  an original  issue discount ("OID")  of $2,002,000  in
connection  with the issuance of a subordinated note and a related warrant (Note
6) in December 1994. In June 1995, the subordinated note was repaid in full with
the proceeds from the Company's Initial Public Offering ("IPO") (Note 3) and the
remaining OID was expensed.  The write-off of  approximately $1,400,000 (net  of
income taxes) was recorded as an extraordinary loss.                            

GOODWILL                                                                

    The  excess  of cost  over  the fair  market  value of  the  assets acquired
("goodwill") is being amortized to income on a straight-line basis over a period
of  25   years.  The   goodwill  relates   primarily  to   the  acquisition   of

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                      
Bioscot in 1989, the Seramune Acquisition in December 1994 (Note 4), and the ABI
acquisition  in  October 1995  (Note 4).  The  Company periodically  reviews the
carrying values  assigned to  goodwill based  upon expectations  of future  cash
flows  and  operating  income generated  by  the underlying  tangible  assets in
determining whether goodwill is recoverable.                                    

FDA LICENSES                                                            

    In connection  with the  Company's acquisitions  (Note 4),  it acquired  the
licenses  of the FDA-approved donor centers. The estimated fair value of the FDA
licenses is being amortized to income on a straight-line basis over a period  of
25 years.                                                                       

NONCOMPETE AGREEMENT                                                    

    In  connection with  the Company's  acquisitions (Note  4), it  entered into
noncompete agreements with the sellers.  The noncompete agreements for  Seramune
and  ABI  were valued  at  $500,000 and  $125,000,  respectively, and  are being
amortized to income on a  straight-line basis over a  period of five years,  the
term of the agreements.                                                         

DEBT ISSUANCE COSTS                                                     

    The  Company  has  incurred  debt  issuance  costs  in  connection  with its
long-term debt (Note 6). These costs  are capitalized and amortized to  interest
expense over the term of the debt.                                              

    During  1994,  the Company  incurred  debt issuance  costs  of approximately
$772,000 and recorded an  extraordinary loss of $102,610  (net of income  taxes)
related  to the write-off of previously  capitalized debt issuance costs. During
1995, the Company incurred debt issuance costs of approximately $35,000 and,  in
conjunction   with  the  Company's  IPO,   recorded  an  extraordinary  loss  of
approximately $454,000  (net  of  income  taxes) related  to  the  write-off  of
previously capitalized debt issuance costs.                                     

NET INCOME PER SHARE                                                    

    Net income per share is computed using the weighted average number of shares
of common stock outstanding. Common equivalent shares from convertible preferred
stock (using the if-converted method) and from stock options and warrants (using
the  treasury stock method) have been included in the computation when dilutive.
For periods presented, fully diluted net income per share has been presented  as
applicable  where the effect  of including related  common equivalent shares was
dilutive.                                                                       

RECENT ACCOUNTING PRONOUNCEMENTS                                        

    In March 1995, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 121, "Accounting for the Impairment of Long Lived Assets and for Long  Lived
Assets  to Be Disposed  Of," which becomes effective  for fiscal years beginning
after December 15, 1995. SFAS No. 121 establishes standards for determining when
impairment losses on long lived assets  have occurred and how impairment  losses
should  be measured. The Company adopted SFAS No. 121 effective January 1, 1996.
The financial statement impact of adopting SFAS No. 121 was not material.       

    In October 1995, the FASB issued  SFAS No. 123, "Accounting for Stock  Based
Compensation,"  which becomes effective  for years beginning  after December 15,
1995. SFAS No. 123 establishes new financial reporting and accounting  standards
for  stock based  compensation plans. However,  entities are  allowed to measure
compensation expense for stock based compensation under SFAS No. 123 or APB  No.
25,  "Accounting  for Stock  Issued to  Employees". The  Company has  elected to
remain with the  accounting under APB  No. 25  and make the  required pro  forma
disclosures  of net income and  earnings per share as  if the provisions of SFAS
No. 123 had  been applied  in its December  31, 1996  financial statements.  The
potential   impact  of  adopting  this  standard  on  the  Company's  pro  forma
disclosures of net income and earnings per share has not been quantified at this
time.                                                                           

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3.  INITIAL PUBLIC OFFERING                                                     
    On June 14, 1995, the Company completed an IPO of 2.4 million shares of  its
common  stock at $11.50  per share which  resulted in proceeds  of $27.6 million
(before underwriting discounts and other offering expenses). The net proceeds of
approximately $24.6  million were  used  to reduce  long-term debt.  This  early
retirement  of  debt resulted  in an  extraordinary  loss of  approximately $1.8
million (net of income taxes) due to early retirement costs associated with  the
$7.5  million subordinated note and the write-down of debt issuance costs (Notes
2 and 6).                                                                       

4.  ACQUISITIONS                                                                
    Effective December 23, 1994, the  Company acquired substantially all of  the
assets of the Acadiana Group through its newly formed subsidiary, Seramune, Inc.
under the terms of an asset purchase agreement (the "Seramune Acquisition"). The
acquired  assets  consisted primarily  of  fixed assets,  deposits/prepaids, and
intangibles. The purchase price was approximately $29,500,000, before  recording
certain acquisition expenses and adjustments, and was financed through two notes
to  the sellers,  a subordinated  note with an  affiliate of  a bank,  and a new
credit facility with a bank  (Note 6). This acquisition  was accounted for as  a
purchase  in accordance with APB No. 16, and accordingly, the purchase price has
been allocated to the assets acquired based  on the estimated fair values as  of
the  acquisition date. The excess  of the cost over  the estimated fair value of
the net assets acquired has been allocated to goodwill.                         

    The following unaudited pro forma data summarizes the results of  operations
for the periods indicated as if the Seramune Acquisition had occurred on January
1  of each  period. The  unaudited pro forma  information has  been prepared for
comparative purposes only and does not purport to represent what the results  of
operations of the Company would actually have been had the transactions occurred
on  the dates indicated or  what the results of operations  may be in any future
period.                                                                         

                                                                [Download Table]

                                            PRO FORMA YEAR  PRO FORMA YEAR
                                            ENDED DECEMBER  ENDED DECEMBER
                                               31, 1993        31, 1994   
                                            --------------  --------------
                                             (UNAUDITED)     (UNAUDITED)  
                                                                          
Net sales.................................    $37,958,632     $45,794,018 
Income (loss) before extraordinary loss                                   
 and cumulative effect of accounting                                      
 change...................................       (519,501)      2,288,166 
Net income (loss).........................       (218,501)      2,185,556 
Net income (loss) per common share........         $(0.03)          $0.32 

    During 1995, the Company  acquired two specialty  antibody centers from  ABI
and  individual donor centers from Eugene Plasma Corporation, Springfield Plasma
Corporation, and Alpha Therapeutics, Inc.  for an aggregate acquisition cost  of
approximately  $3,000,000. The Company's acquisition of ABI includes a provision
for contingent consideration based upon the incremental increase in revenues  of
the  acquired business. The purchase agreement caps the additional consideration
at a maximum  of $500,000. The  consideration is expected  to be determined  and
paid  in 1997.  The Company recorded  the above acquisitions  using the purchase
method  of  accounting  in  accordance  with  APB  No.  16.  The  costs  of  the
acquisitions  have been allocated to the estimated  fair value of the net assets
acquired. The Company has  preliminarily allocated the excess  of cost over  the
net assets acquired to goodwill and certain identifiable intangible assets.     

5.  STOCKHOLDERS' EQUITY                                                        

CAPITAL STOCK                                                           

    Under  the terms of  the amended and restated  articles of incorporation (as
amended in November 1994), the Company has authorized 7,500,000 shares of common
stock, 25,000  shares of  Series  A Preferred  Stock,  and 1,000,000  shares  of
preferred  stock that may  contain such preferences and  rights as determined by
the board of directors.  On May 10,  1995, the Company  increased the number  of
authorized shares of common stock from 7,500,000 to 30,000,000. In addition, the
number of authorized shares of                                                  

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5.  STOCKHOLDERS' EQUITY (CONTINUED)                                            
Series  A Preferred Stock was decreased from 25,000 to 12,587. Additionally, all
share information in the  notes to consolidated  financial statements have  been
restated  to give effect to  the two-for-one common stock  split effected on May
16, 1994 and the  six-for-five stock split  approved by the  Company on May  10,
1995.                                                                           

SERIES A PREFERRED STOCK                                                

    On  June 14, 1995, all  outstanding shares of Series  A Preferred Stock were
converted into shares  of common stock  of the Company  in conjunction with  the
Company's  successful  completion  of  its  IPO. The  holders  of  the  Series A
Preferred Stock received 1,510,439 shares of the Company's common stock.        

COMMON STOCK WARRANTS                                                   

    In connection with a bank credit agreement entered into in March 1993  (Note
6),  the Company issued  a warrant to a  bank to purchase  147,749 shares of the
Company's common stock at an exercise price of $3.44 per share of common  stock.
The warrant becomes exercisable at any time on or before March 9, 2003. No value
was  assigned to the warrant. The warrant holder had a put option to require the
Company to repurchase  the warrant  or any  shares previously  purchased by  the
warrant  holder exercisable on  the earlier of an  IPO by the  Company, or on no
more than three separate occasions during the period from March 9, 1996 to March
9, 2003.  The  common  stock put  warrant  was  being accreted  to  its  highest
redemption price, as defined in the agreement, from the date of issuance to June
14,  1995 and  was separately classified  in the accompanying  balance sheets as
"common stock put warrants". The accretion was $186,000 and $45,556 in 1994  and
1995,  respectively. Upon the successful completion of the Company's IPO on June
14, 1995, the  put option was  waived by  the warrant holder  and the  accretion
related  to the common stock put warrants was reclassified to additional paid-in
capital.                                                                        

    On April 29, 1994, the Company entered into warrant exercise agreements with
its two preferred  stockholders whereby  they exercised  warrants and  purchased
582,370 shares of common stock for $.01 per share. The purchase consideration of
$4,853  was based on the 485,308 shares acquired  at $.01 per share prior to the
six-for-five common stock split in 1995. The warrants were originally issued  on
December  20,  1989  at an  exercise  price  of $.01  per  share  unless certain
operating income  levels were  achieved. Since  the specified  operating  income
levels were not achieved, the warrant exercise price remained at $.01 per share.

    In connection with the issuance of the $7,500,000 (face amount) subordinated
note  (the "Subordinated Note") in December 1994  (Note 6), the Company issued a
warrant (the "NationsBanc Warrant") to an affiliate of a bank ("NationsBanc") to
purchase 364,036 shares of  the Company's common stock  at an exercise price  of
$.01  per  share.  The  Company  assigned the  NationsBanc  Warrant  a  value of
$2,002,000 based on an  estimated fair value  of $5.50 per  common share on  the
date  of  issuance.  As  of  December  31,  1994,  the  NationsBanc  Warrant was
classified within common stock put warrants in the accompanying balance  sheets.
During  1995, the Company paid the Subordinated  Note with the proceeds from the
IPO and wrote off the remaining  OID (Note 2). Additionally, in September  1995,
NationsBanc  exercised the NationsBanc Warrant to purchase 363,802 shares of the
Company's common stock at the exercise price of $.01 per share on a net issuance
basis.                                                                          

RETIREMENT OF TREASURY SHARES                                           

    During June 1992, the Company repurchased 120,000 shares of its common stock
for $363,284.  The  stock repurchase  was  accounted  for as  a  treasury  stock
transaction in 1992 and these shares were subsequently retired in November 1994.
As  a result, the treasury  stock was eliminated with  a corresponding charge to
additional paid-in capital during 1994.                                         

OFFICER STOCK OPTIONS                                                   

    During March 1993, the Company entered into an employment agreement with  an
officer.  As part  of the  agreement, the officer  was granted  two options (the
"base option" and the "market option") to purchase shares of common stock. Under
each option, the  officer can  purchase up to  168,000 shares  of the  Company's

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5.  STOCKHOLDERS' EQUITY (CONTINUED)                                            
common  stock at an exercise price of  $3.44 per share (the estimated fair value
on the date of grant).  During December 1994, the  market option was amended  in
order  to fix the  vesting period while  the option price  per share remained at
$3.44. The amendment of the market  option created a new measurement date  under
APB  No. 25,  which resulted in  the Company recording  unearned compensation (a
contra-account to stockholders'  equity) and an  increase in additional  paid-in
capital  in the  amount of  $346,500 as a  result of  granting the  option at an
amount below estimated  fair value.  In conjunction  with the  amendment of  the
market  option, the officer  was granted additional  options to purchase 153,492
shares of common stock at an exercise  price of $5.50, the fair market value  at
the  date of grant. All options have a term of ten years and became fully vested
as of the IPO  date of June  14, 1995. As  a result, in  June 1995, the  Company
recognized  the compensation expense  related to the  accelerated vesting of the
officer's stock options.                                                        

1994 OMNIBUS INCENTIVE PLAN                                             

    During November 1994, the Company approved the Omnibus Stock Incentive  Plan
(the  "Omnibus  Plan"). The  Omnibus  Plan provides  for  the issuance  of stock
options to key employees and directors. The Company has reserved 432,000  shares
for  issuance under the Omnibus Plan. Options granted under the Omnibus Plan can
have varying terms  as determined  by the  board of  directors. Options  granted
through  1995 under the  Omnibus Plan vest  ratably over three  years and have a
term of ten years.  At December 31,  1995, 95,600 options  to acquire shares  of
common stock were vested under the Omnibus Plan. A summary of changes of options
outstanding and other related information is as follows:                        

                                                        [Enlarge/Download Table]

                                                                   SHARES     PRICE RANGE 
                                                                  ---------  -------------
                                                                                          
Outstanding at December 31, 1993.................................    --           --      
  Granted........................................................   153,600  $  3.44-$6.88
                                                                  ---------               
Outstanding at December 31, 1994.................................   153,600  $  3.44-$6.88
  Granted........................................................   107,441  $  5.50-$6.88
                                                                  ---------               
Outstanding at December 31, 1995.................................   261,041  $  3.44-$6.88
                                                                  ---------               
                                                                  ---------               

    As  of December 31, 1995, the Company had 170,959 shares available for grant
under the Omnibus Plan. Subsequent to year-end, the Company amended the  Omnibus
Plan, subject to stockholder approval, to increase the number of shares reserved
under  the Omnibus Plan to 1,500,000.  Additionally, subsequent to year-end, the
Company granted options under the Omnibus Plan totaling 434,750 shares,  subject
to  stockholder approval of the  increase in the number  of shares available for
grant thereunder,  at prices  ranging from  $15.00 to  $18.50 per  share.  After
considering  these subsequent events, the number  of option shares available for
grant under the Omnibus Plan is 804,209.                                        

1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN                            

    During August 1995,  the Company initiated  the Non-employee Director  Stock
Option  Plan (the "Director Plan"). The  Director Plan provides for the issuance
of stock options  to non-employee  directors. The Company  has reserved  160,000
shares  for issuance under the Omnibus Plan. Pursuant to the Director Plan, each
person who  thereafter  becomes  a  non-employee  director  of  the  Company  is
automatically granted an option to purchase 32,000 shares of Common stock on the
date  of adoption or on the day after such person's first election to the Board.
The exercise  price of  the  options is  the fair  market  value of  the  Common

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5.  STOCKHOLDERS' EQUITY (CONTINUED)                                            
Stock  on the date of grant. Options granted to date under the Director Plan are
fully vested upon issuance. At December 31, 1995, 64,000 shares had vested under
the Director Plan. A summary of changes in options outstanding and other related
information is as follows:                                                      

                                                        [Enlarge/Download Table]

                                                                                      PRICE  
                                                                          SHARES      RANGE  
                                                                         ---------  ---------
                                                                                             
Outstanding at December 31, 1994........................................    --         --    
  Granted...............................................................    64,000  $   12.75
                                                                         ---------           
Outstanding at December 31, 1995........................................    64,000  $   12.75
                                                                         ---------           
                                                                         ---------           

    As of December 31, 1995, the  Company had 96,000 shares available for  grant
under  the  Director Plan.  Subsequent to  year end,  the Company  increased the
number of  shares  reserved under  the  Director  Plan to  360,000,  subject  to
shareholder approval. After giving effect to such increase, the number of option
shares available for grant under the Director Plan is 296,000.                  

COMMON SHARES RESERVED FOR ISSUANCE                                     

    Shares  of common stock reserved for issuance  at December 31, 1994 and 1995
consisted of the following:                                                     

                                                        [Enlarge/Download Table]

                                                                     1994        1995   
                                                                  ----------  ----------
                                                                                        
Various stock option agreements..................................    921,492   1,081,492
Conversion of preferred stock....................................  1,510,440      --    
Warrants.........................................................    511,784     147,789
                                                                  ----------  ----------
                                                                   2,943,716   1,229,281
                                                                  ----------  ----------
                                                                  ----------  ----------

    The Company  has reserved  a  sufficient number  of  common shares  for  the
potential conversion of the convertible subordinated note (Note 6).             

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.  LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS                                
    Long-term  debt and capital lease obligations  at December 31, 1994 and 1995
and March 31, 1996 consisted of the following:                                  

                                                        [Enlarge/Download Table]

                                                              DECEMBER 31                  
                                                         ---------------------  MARCH 31,  
                                                            1994       1995        1996    
                                                         ----------  ---------  ---------- 
                                                                                (UNAUDITED)
                                                                                           
$20,000,000 revolving credit facility, variable                                            
 interest rate (7.43% and 6.9% at December 31, 1995 and                                    
 March 31, 1996 (unaudited), respectively), payable on                                     
 July 20, 1998.........................................  $   --      $2,058,756 $6,750,841 
$3,500,000 convertible subordinated note payable,                                          
 interest at 12% at December 31, 1994 and 1995 and 9%                                      
 at March 31, 1996 (unaudited); interest payable                                           
 monthly, payable on December 23, 1997.................   3,500,000  3,500,000   3,500,000 
$25,500,000 promissory note payable, paid in full on                                       
 January 3, 1995, with proceeds from the new credit                                        
 facility and the Subordinated Note; secured by a                                          
 letter of credit with a bank..........................  25,500,000     --          --     
$7,500,000 senior subordinated note payable, interest                                      
 at 10.9% payable quarterly (net of unamortized                                            
 discount of $1,995,733 and $0 at December 31, 1994 and                                    
 1995, respectively); paid in full on June 14, 1995,                                       
 with the proceeds from the IPO........................   5,504,267     --          --     
Subordinated note payable with an effective interest                                       
 rate of 16%, principal due in full on February 1,                                         
 1997; interest at 5% payable quarterly (net of                                            
 unamortized discount of $101,016, $66,773 and $57,477                                     
 at December 31, 1994 and 1995 and March 31, 1996                                          
 (unaudited), respectively)............................     716,567    748,552     744,566 
Capital lease obligations at varying interest rates and                                    
 terms, maturing through July 1999.....................     382,689    201,674     182,230 
Other notes at varying interest rates and terms                                            
 maturing through March 2000 (net of unamortized                                           
 discount of $16,459, $10,213 and $8,615 at December                                       
 31, 1994 and 1995 and March 31, 1996 (unaudited),                                         
 respectively).........................................     310,143    514,218     369,175 
                                                         ----------  ---------  ---------- 
                                                         35,913,666  7,023,200  11,546,812 
Less current maturities................................   3,205,340    272,255     987,464 
                                                         ----------  ---------  ---------- 
                                                         $32,708,326 $6,750,945 $10,559,348
                                                         ----------  ---------  ---------- 
                                                         ----------  ---------  ---------- 

    In connection with the Seramune Acquisition  (Note 4) in December 1994,  the
Company issued the sellers a $25,500,000 promissory note (the "Seller Note") and
a  $3,500,000 convertible subordinated note (the "Convertible Note"). The Seller
Note was noninterest-bearing,  secured by a  letter of credit  with a bank,  and
repaid  on January 3, 1995  with proceeds from the  new bank credit facility and
the Subordinated Note discussed below. The Convertible Note had an interest rate
of 12% (payable monthly) and is due  on December 23, 1997. The Convertible  Note
had  a  conversion feature  whereby it  could  be converted  into shares  of the
Company's common stock at 95% of the Company's IPO price ($10.93). Subsequent to
year end, the Company amended its Convertible Note. Under the amended agreement,
the interest rate was reduced to 9%, the conversion price was changed to  $14.00
per  share of common stock, and the note is callable no earlier than January 21,
1997. The note is convertible at the option of the holder.                      

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.  LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (CONTINUED)                    
    On December 21, 1994,  the Company entered into  new credit agreements  (the
"New  Credit Facility") with NationsBank,  N.A. providing for maximum borrowings
of $27,500,000. The New Credit Facility was divided into a $21,000,000 term note
(the "Term Note") and a $6,500,000 revolving line of credit (the "Revolver"). On
January 3, 1995, the Company obtained $21,000,000 in proceeds from the Term Note
and used these funds along with the proceeds from the Subordinated Note to repay
the Seller  Note. The  Company  repaid the  Subordinated  Note and  reduced  the
principal  amount outstanding  under the  Term Note  with the  proceeds from the
Company's IPO (Note 3) during 1995.                                             

    On July 20, 1995,  the Company amended its  Revolver with NationsBank,  N.A.
(the  "New  Revolver").  The New  Revolver  provides for  maximum  borrowings of
$20,000,000, bears interest at a variable rate,  is payable in full on July  20,
1998  and  provides  for maximum  borrowings  of  up to  $15,000,000  for future
acquisitions. The  Company  may  elect  either a  floating  rate  or  Eurodollar
interest  rate  option  applicable to  borrowings  under the  New  Revolver. The
floating rate and Eurodollar interest rate  options are based on the base  rate,
as  defined, plus  a floating rate  margin that  fluctuates on the  basis of the
Company's leverage  ratio.  The  initial  floating rate  margin  under  the  New
Revolver  is 0% for  the floating rate  option and 1.5%  for the Eurodollar rate
option. The Company is required to pay a  fee of .375% on the unused portion  of
the New Revolver. The New Revolver is secured by substantially all of the assets
of  the  Company, the  Company's stock  in its  subsidiaries, and  the Company's
supply contract with a  major customer. The New  Revolver also contains  certain
financial  covenants that require the maintenance of minimum levels of cash flow
coverage, debt service coverage and minimum levels of net worth.                

    Future maturities  of  long-term  debt  and  capital  lease  obligations  at
December 31, 1995 are as follows:                                               

                                                                [Download Table]
                                                                      
1996....................................................  $   272,255 
1997....................................................    4,465,269 
1998....................................................    2,207,163 
1999....................................................      130,199 
2000....................................................       25,210 
                                                          ----------- 
                                                            7,100,096 
Less unamortized discount...............................      (76,896)
                                                          ----------- 
                                                          $ 7,023,200 
                                                          ----------- 
                                                          ----------- 

    The  Company made interest payments of approximately $399,000, $322,000, and
$2,206,000 during 1993,  1994, and  1995, respectively. During  1993, 1994,  and
1995,  the  Company entered  into capital  lease  arrangements for  property and
equipment for an aggregate principal amount of approximately $295,000, $140,000,
and $0, respectively.                                                           

    The Company has an interest  rate cap which has  the effect of limiting  its
exposure  to  an  increase in  interest  rates  with respect  to  $10,000,000 of
variable rate debt. The agreement has the effect of capping the Eurodollar  base
rate  (LIBOR) at 8.25%. The amount paid  for this agreement was $160,000 and the
Company has no  exposure to  additional costs  related thereto.  The Company  is
amortizing  the deferred cost related to the  interest rate cap over the life of
the contract as interest expense.                                               

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7.  COMMITMENTS AND CONTINGENCIES                                               

OPERATING LEASES                                                        

    The Company  leases  certain office  space  and laboratory  equipment  under
noncancelable   operating  lease   agreements.  Future   minimum  annual  rental
obligations under noncancelable operating leases as of December 31, 1995 are  as
follows:                                                                        

                                                                [Download Table]
                                                                     
1996....................................................  $ 1,715,785
1997....................................................    1,371,132
1998....................................................    1,028,219
1999....................................................      936,272
2000....................................................      259,990
Thereafter..............................................       54,162
                                                          -----------
                                                          $ 5,365,560
                                                          -----------
                                                          -----------

    Rent  expense was  approximately $841,000,  $766,000, and  $1,838,000 during
1993, 1994, and 1995, respectively.                                             

SUPPLY CONTRACT                                                         

    The Company is in  the second year  of a five-year  supply contract to  sell
non-specialty  antibodies  to  a  customer  at  specified  prices.  The contract
includes escalating minimum annual purchase  amounts by the customer subject  to
the  rights of such customer to reduce the amount purchased under certain terms.
The Company expects to meet its obligations under the supply contract.          

LITIGATION                                                              

    The Company is involved in certain litigation arising in the ordinary course
of business. In  the opinion  of management,  the ultimate  resolution of  these
matters  will  not have  a material  adverse effect  on the  Company's financial
position or results of operations.                                              

8.  DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS                        

CASH EQUIVALENTS                                                        

    The Company estimates that the  fair value of cash equivalents  approximates
carrying value due to the relatively short maturity of these instruments.       

NOTES PAYABLE                                                           

    The  Company estimates  that the  fair value  of notes  payable approximates
carrying value based upon its effective  current borrowing rate for issuance  of
debt with similar terms and remaining maturities.                               

INTEREST RATE CAP                                                       

    The Company estimates that the fair value of its interest rate cap agreement
approximates the net carrying value of the agreement at December 31, 1995.      

    Disclosure  about the estimated fair value of financial instruments is based
on pertinent  information  available to  management  as of  December  31,  1995.
Although  management is not aware of any factors that would significantly affect
the reasonable fair value  amounts, such amounts  have not been  comprehensively
revalued  for purposes of these financial statements since this date and current
estimates of  fair value  may differ  significantly from  the amounts  presented
herein.                                                                         

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9.  INCOME TAXES                                                                
    Effective  January  1, 1993,  the  Company adopted  SFAS  No. 109  using the
cumulative catch-up method. Adoption of SFAS No. 109 resulted in a net credit to
income of  $301,000 for  the  cumulative effect  of  this change  in  accounting
principle.  The adoption of SFAS No. 109  had the effect of reducing 1993 income
before the cumulative effect of accounting change by $301,000.                  

    The income tax provision  (benefit) for the years  ended December 31,  1993,
1994, and 1995 consisted of the following:                                      

                                                        [Enlarge/Download Table]

                                                         1993          1994          1995    
                                                      -----------  ------------  ------------
                                                                                             
Current:                                                                                     
  U.S. federal and state............................. $   979,000  $  1,534,404  $  1,714,296
  International......................................     --            435,000       776,338
                                                      -----------  ------------  ------------
                                                          979,000     1,969,404     2,490,634
                                                      -----------  ------------  ------------
Deferred:                                                                                    
  U.S. federal and state.............................    (599,800)      290,744         8,260
  International......................................     301,000       (33,404)            0
                                                      -----------  ------------  ------------
                                                         (298,800)      257,340         8,260
                                                      -----------  ------------  ------------
Income tax provision................................. $   680,200  $  2,226,744  $  2,498,894
                                                      -----------  ------------  ------------
                                                      -----------  ------------  ------------

    The  income tax  provision as reported  in the statements  of income differs
from the  amounts  computed by  applying  federal  statutory rates  due  to  the
following:                                                                      

                                                        [Enlarge/Download Table]

                                                          1993         1994          1995     
                                                       ----------  ------------  ------------ 
                                                                                              
Federal income taxes at statutory rate................ $  536,702  $  1,960,260  $  2,368,115 
State income taxes, net of federal income tax                                                 
 benefit..............................................     56,385       250,306       278,601 
Goodwill amortization.................................     19,063        19,063        19,063 
Other.................................................     68,050        (2,885)     (166,885)
                                                       ----------  ------------  ------------ 
                                                       $  680,200  $  2,226,744  $  2,498,894 
                                                       ----------  ------------  ------------ 
                                                       ----------  ------------  ------------ 

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9.  INCOME TAXES (CONTINUED)                                                    
    Deferred  income tax  assets and liabilities  for 1994 and  1995 reflect the
impact of temporary differences  between the amounts  of assets and  liabilities
for financial reporting and income tax reporting purposes. Temporary differences
which  give rise to deferred tax assets and liabilities at December 31, 1994 and
1995 are as follows:                                                            

                                                        [Enlarge/Download Table]

                                                                     1994         1995     
                                                                  -----------  ----------- 
                                                                                           
Deferred tax assets:                                                                       
  Accrued corporate reorganization expenses...................... $   129,200  $    19,000 
  Accruals and reserves..........................................     115,460      489,095 
  Unearned compensation..........................................     --           131,670 
  Other..........................................................     201,900       94,584 
                                                                  -----------  ----------- 
                                                                      446,560      734,349 
                                                                  -----------  ----------- 
Deferred tax liabilities:                                                                  
  Goodwill amortization..........................................     --          (319,632)
  Excess tax depreciation........................................    (184,600)    (242,255)
  Other..........................................................    (100,000)     (18,762)
                                                                  -----------  ----------- 
                                                                     (284,600)    (580,649)
                                                                  -----------  ----------- 
Net deferred tax asset........................................... $   161,960  $   153,700 
                                                                  -----------  ----------- 
                                                                  -----------  ----------- 

    The Company did not record any valuation allowance against the deferred  tax
asset  at December 31, 1995 because it is more likely than not that the deferred
tax asset will be realizable through future taxable income.                     

    The Company made income tax payments of approximately $226,000,  $1,953,000,
and $1,176,000 during 1993, 1994, and 1995, respectively.                       

10. SIGNIFICANT CUSTOMERS                                                       
    The  Company's ten largest  customers accounted for  approximately 76%, 75%,
and 82% of  net sales for  the years ended  December 31, 1993,  1994, and  1995,
respectively.  Certain customers made  up greater than  10% of net  sales of the
Company for the years ended December 31, 1993, 1994, and 1995 as follows:       

                                                        [Enlarge/Download Table]

                                                                     1993         1994         1995    
                                                                  -----------  -----------  -----------
                                                                                                       
Bayer Corporation................................................      26.4%        34.9%        49.7% 
WBAG.............................................................      14.7          8.0        --     
Berhingwerke.....................................................     --           --            13.0% 

    In 1993  and 1994,  Behringwerke purchased  the Company's  products  through
WBAG, a European distributor.                                                   

11. EMPLOYEE SAVINGS PLAN                                                       
    The  Company maintains a  separate defined contribution  401(k) savings plan
for all eligible employees. Under the plan, the Company contributes a  specified
percentage  of each eligible employee's compensation. The employees become fully
vested in the Company's contribution after three years of service. The Company's
contributions approximated  $52,000, $57,000,  and $69,000  in 1993,  1994,  and
1995, respectively.                                                             

12. CORPORATE RELOCATION EXPENSES                                               
    During  November 1993, the board of directors approved the relocation of the
Company's corporate headquarters from  Pensacola, Florida, to Atlanta,  Georgia.
The  Company recorded a charge in 1993  of $1,500,000 for the estimated costs of
the relocation.                                                                 

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. SEGMENT REPORTING                                                           
    The Company's operations  consist of  two primary  geographic segments,  the
United States and Europe, as set forth below:                                   

                                                        [Enlarge/Download Table]

                                                     1993           1994           1995     
                                                 -------------  -------------  -------------
                                                                                            
Net sales to unaffiliated customers:                                                        
  United States................................. $  18,907,147  $  23,895,809  $  42,851,428
  Europe........................................     4,030,469      6,204,304      9,272,991
                                                 -------------  -------------  -------------
                                                 $  22,937,616  $  30,100,113  $  52,124,419
                                                 -------------  -------------  -------------
                                                 -------------  -------------  -------------
Income from operations:                                                                     
  United States................................. $   1,423,613  $   4,742,794  $   6,766,926
  Europe........................................       722,778      1,441,798      2,279,065
                                                 -------------  -------------  -------------
                                                 $   2,146,391  $   6,184,592  $   9,045,991
                                                 -------------  -------------  -------------
                                                 -------------  -------------  -------------
Identifiable assets:                                                                        
  United States................................. $   8,920,697  $  45,506,763  $  44,685,600
  Europe........................................     3,890,312      4,628,620      5,638,225
                                                 -------------  -------------  -------------
                                                 $  12,811,009  $  50,135,383  $  50,323,825
                                                 -------------  -------------  -------------
                                                 -------------  -------------  -------------
Capital expenditures:                                                                       
  United States................................. $     657,982  $   1,372,269  $   1,050,321
  Europe........................................       100,913        703,044        444,868
                                                 -------------  -------------  -------------
                                                 $     758,895  $   2,075,313  $   1,495,189
                                                 -------------  -------------  -------------
                                                 -------------  -------------  -------------
Depreciation and amortization:                                                              
  United States................................. $     308,412  $     533,347  $   2,159,396
  Europe........................................       416,341        378,762        468,977
                                                 -------------  -------------  -------------
                                                 $     724,753  $     912,109  $   2,628,373
                                                 -------------  -------------  -------------
                                                 -------------  -------------  -------------

    Total  export  sales from  the United  States  to Europe  were approximately
$3,668,000,  $5,322,000,   and  $11,598,000   during  1993,   1994,  and   1995,
respectively.  The remaining sales  to customers outside  the United States were
sourced from Bioscot.                                                           

14. SUBSEQUENT EVENTS                                                           
    In addition  to  the subsequent  events  disclosed in  Notes  5 and  6,  the
following events have occurred subsequent to December 31, 1995:                 

    On  February 14, 1996, the Company  acquired a specialty antibody center and
other assets from Am-Rho Laboratories, Inc. for approximately $1.7 million.  The
Company  formed a  wholly owned  subsidiary of  Serologicals for  the purpose of
acquiring  the  assets  of  such  center.  The  Company  will  account  for  the
acquisition as a purchase in accordance with APB No. 16.                        

    On  February  27,  1996,  the  Company's  board  of  directors  approved the
authorization of an employee stock purchase  plan for eligible employees of  the
Company  and designated subsidiaries and  authorized 250,000 shares for issuance
under this plan.  Participants may use  up to  25% of their  compensation, to  a
maximum  of $25,000 per year, to purchase  the Company's common stock at the end
of each fiscal quarter  for 85% of  the lower of the  beginning or ending  stock
price in the plan period.                                                       

    Effective  March 6,  1996, the  Company acquired  the stock  of Southeastern
Biologics, Inc. and Plasma Management Inc., and the assets of Concho  Biologics,
Inc. (collectively referred to as the "Southeastern                             

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SEROLOGICALS CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14. SUBSEQUENT EVENTS (CONTINUED)                                               
Acquisition")  for  approximately  $4.75 million  plus  additional consideration
based upon the performance  of the acquired  businesses. The acquired  companies
will  become  wholly owned  subsidiaries of  Seramune.  The acquisition  will be
accounted for as a purchase in accordance with APB No. 16.                      

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors                                                       
and Stockholders of                                                             
Serologicals Corporation:                                                       

    We  have  audited the  accompanying combined  balance sheet  of SOUTHEASTERN
GROUP (as described in Note 1) as of December 31, 1995 and the related  combined
statements  of operations, changes  in stockholders' equity,  and cash flows for
the year then ended.  These financial statements are  the responsibility of  the
Group's  management.  Our  responsibility  is to  express  an  opinion  on these
financial statements based on our audit.                                        

    We conducted  our  audit  in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence  supporting
the  amounts and disclosures in the financial statements. An audit also includes
assessing the  accounting  principles used  and  significant estimates  made  by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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 Southeastern  Group as of
December 31, 1995 and the results of  their operations and their cash flows  for
the year then ended in conformity with generally accepted accounting principles.

                       ARTHUR ANDERSEN LLP

Atlanta, Georgia                                                                
April 10, 1996                                                                  

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SOUTHEASTERN GROUP (NOTE 1) 
COMBINED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                                                       DECEMBER 31,     MARCH 6,    
                                                                                           1995           1996      
                                                                                       -------------  ------------- 
                                                                                                        (UNAUDITED) 
                                                                                                                    
                                       ASSETS                                                                       
CURRENT ASSETS:                                                                                                     
  Cash and cash equivalents..........................................................  $    105,747   $      68,975 
  Accounts receivable................................................................       216,945         164,731 
  Inventories........................................................................       266,198         242,000 
  Due from affiliates................................................................       202,286         197,417 
  Prepaids and other current assets..................................................        12,282          14,966 
                                                                                       -------------  ------------- 
    Total current assets.............................................................       803,458         688,089 
                                                                                       -------------  ------------- 
PROPERTY AND EQUIPMENT:                                                                                             
  Furniture, fixtures, and equipment.................................................       775,335         781,930 
  Leasehold improvements.............................................................       480,828         480,833 
                                                                                       -------------  ------------- 
                                                                                          1,256,163       1,262,763 
  Less accumulated depreciation......................................................      (662,563)       (677,470)
                                                                                       -------------  ------------- 
    Net property and equipment.......................................................       593,600         585,293 
                                                                                       -------------  ------------- 
OTHER ASSETS:                                                                                                       
  Goodwill, net of accumulated amortization of $23,190 and $25,249 as of December 31,                               
   1995 and March 6, 1996, respectively..............................................       103,639         101,580 
  Other..............................................................................        10,634          10,634 
                                                                                       -------------  ------------- 
    Total other assets...............................................................       114,273         112,214 
                                                                                       -------------  ------------- 
                                                                                       $  1,511,331   $   1,385,596 
                                                                                       -------------  ------------- 
                                                                                       -------------  ------------- 

                                        LIABILITIES AND STOCKHOLDERS' EQUITY                                        

CURRENT LIABILITIES:                                                                                                
  Current maturities of long-term debt...............................................  $    583,334   $     588,334 
  Due to affiliates..................................................................        68,000          40,000 
  Accounts payable...................................................................        52,171          92,890 
  Accrued liabilities................................................................       108,884          77,399 
                                                                                       -------------  ------------- 
    Total current liabilities........................................................       812,389         798,623 
                                                                                       -------------  ------------- 
LONG-TERM DEBT, less current maturities..............................................       666,666         555,555 
                                                                                       -------------  ------------- 
COMMITMENTS AND CONTINGENCIES (Note 5)                                                                              
STOCKHOLDERS' EQUITY:                                                                                               
  Common stock, no par value; 15,500 shares authorized, 2,580 shares issued and                                     
   outstanding.......................................................................        67,000          67,000 
  Accumulated deficit................................................................       (34,724)        (35,582)
                                                                                       -------------  ------------- 
    Total stockholders' equity.......................................................        32,276          31,418 
                                                                                       -------------  ------------- 
                                                                                       $  1,511,331   $   1,385,596 
                                                                                       -------------  ------------- 
                                                                                       -------------  ------------- 

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

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SOUTHEASTERN GROUP (NOTE 1) 

COMBINED STATEMENTS OF OPERATIONS 

                                                        [Enlarge/Download Table]

                                                                                     PERIOD FROM  
                                                                                     JANUARY 1,   
                                                                      YEAR ENDED        1996      
                                                                     DECEMBER 31,        TO       
                                                                         1995       MARCH 6, 1996 
                                                                     -------------  ------------- 
                                                                                     (UNAUDITED)  
                                                                                                  

NET SALES........................................................... $  4,747,937   $   1,015,796 
COSTS AND EXPENSES:                                                                               
  Cost of sales.....................................................    4,174,259         891,953 
  Selling, general, and administrative..............................      674,286         103,978 
  Other expense (income), net.......................................      (57,252)          2,059 
  Interest expense..................................................       91,721          18,664 
                                                                     -------------  ------------- 
LOSS BEFORE INCOME TAXES............................................     (135,077)           (858)
BENEFIT FROM INCOME TAXES...........................................       39,600              -- 
                                                                     -------------  ------------- 
NET LOSS............................................................ $    (95,477)  $        (858)
                                                                     -------------  ------------- 
                                                                     -------------  ------------- 

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

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SOUTHEASTERN GROUP (NOTE 1) 
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY 

                                                        [Enlarge/Download Table]

                                                                      COMMON STOCK                       TOTAL     
                                                                  --------------------  ACCUMULATED   STOCKHOLDERS'
                                                                   SHARES     AMOUNT      DEFICIT        EQUITY    
                                                                  ---------  ---------  ------------  ------------ 
                                                                                                                   
BALANCE, December 31, 1994.......................................     2,580  $  67,000   $   60,753    $  127,753  
  Net loss.......................................................    --         --          (95,477)      (95,477) 
                                                                  ---------  ---------  ------------  ------------ 
BALANCE, December 31, 1995.......................................     2,580     67,000      (34,724)       32,276  
  Net loss.......................................................    --         --             (858)         (858) 
                                                                  ---------  ---------  ------------  ------------ 
BALANCE, March 6, 1996 (Unaudited)...............................     2,580  $  67,000   $  (35,582)   $   31,418  
                                                                  ---------  ---------  ------------  ------------ 
                                                                  ---------  ---------  ------------  ------------ 

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

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SOUTHEASTERN GROUP (NOTE 1) 
COMBINED STATEMENTS OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                                                                     PERIOD FROM
                                                                                                     JANUARY 1, 
                                                                                        YEAR ENDED     1996 TO  
                                                                                       DECEMBER 31,   MARCH 6,  
                                                                                           1995         1996    
                                                                                       ------------  -----------
                                                                                                    (UNAUDITED) 
                                                                                                                
OPERATING ACTIVITIES:                                                                                           
  Net loss............................................................................  $  (95,477)   $    (858)
                                                                                       ------------  -----------
  Adjustments to reconcile net loss to net cash provided by (used in) operating                                 
   activities:                                                                                                  
    Depreciation and amortization.....................................................     122,132       16,966 
    Deferred income tax benefit.......................................................     (44,600)      --     
    Gain on disposal of assets........................................................     (39,500)      --     
  Changes in operating assets and liabilities:                                                                  
    Accounts receivable...............................................................     (61,063)      52,214 
    Inventories.......................................................................      24,886       24,198 
    Due from affiliates...............................................................     246,895        4,869 
    Other assets......................................................................      (5,924)      (2,684)
    Due to affiliates.................................................................      (5,000)     (28,000)
    Accounts payable..................................................................       6,193       40,719 
    Accrued liabilities...............................................................    (195,518)     (31,485)
                                                                                       ------------  -----------
        Total adjustments.............................................................      48,501       76,797 
                                                                                       ------------  -----------
        Net cash (used in) provided by operating activities...........................     (46,976)      75,939 
                                                                                       ------------  -----------
INVESTING ACTIVITIES:                                                                                           
  Purchases of property and equipment.................................................    (361,837)      (6,600)
  Proceeds from sale of assets........................................................     167,373       --     
                                                                                       ------------  -----------
        Net cash used in investing activities.........................................    (194,464)      (6,600)
                                                                                       ------------  -----------
FINANCING ACTIVITIES:                                                                                           
  Proceeds from revolving line of credit..............................................     955,000       40,000 
  Payments on revolving line of credit................................................    (920,000)      --     
  Proceeds from long-term debt........................................................     252,000       --     
  Payments on long-term debt..........................................................    (112,837)    (146,111)
                                                                                       ------------  -----------
        Net cash (used in) provided by financing activities...........................     174,163     (106,111)
                                                                                       ------------  -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS.............................................     (67,277)     (36,772)
CASH AND CASH EQUIVALENTS, beginning of period........................................     173,024      105,747 
                                                                                       ------------  -----------
CASH AND CASH EQUIVALENTS, end of period..............................................  $  105,747    $  68,975 
                                                                                       ------------  -----------
                                                                                       ------------  -----------

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SOUTHEASTERN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS

1.  ORGANIZATION AND BUSINESS OPERATIONS                                        
    The  Southeastern Group (the  "Group") consists of  three corporations under
common control which operate six U.S Food and Drug Administration licensed donor
centers located in Iowa, Louisiana, and Texas. The common stock ownership of the
Group  primarily  consists  of  three  principal  stockholders  (the  "Principal
Stockholders").  The donor centers collect non-specialty antibodies derived from
source plasma  used as  the active  ingredients in  Intravenous Immune  Globulin
("IVIG"),  a therapeutic pharmaceutical product which the Company sells to Bayer
Corporation ("Bayer"), under the terms of a plasma supply agreement. The  supply
agreement  provides for the purchase  of specified amounts over  the life of the
five-year term. The contract expires in 1999, with successive one-year renewals,
unless either party  gives notice  otherwise. There  can be  no guarantees  that
Bayer  will not reduce  its supply requirements  pursuant to a  provision in the
agreement. Three separate  corporations operate  the donor  centers as  detailed
below.  The  accompanying combined  financial  statements include  the following
entities:                                                                       

                                                        [Enlarge/Download Table]

                                                                                     FEDERAL 
                                                                      JURISDICTION   INCOME  
                                                                           OF          TAX   
              NAME                             LOCATION               INCORPORATION  STATUS  
---------------------------------  ---------------------------------  ------------  ---------
                                                                                    (Notes 2 
                                                                                    and 6)   
                                                                                             
Southeastern Biologics, Inc.       Baton Rouge, Louisiana, and Cedar  Louisiana              
 (two centers)                      Falls, Iowa                                         C    
Plasma Management, Inc. (three     Monroe, Louisiana; Austin, Texas;  Louisiana              
 centers)                           and Alexandria, Louisiana                           C    
Concho Biologics, Inc.             San Angelo, Texas                  Texas             S    

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                  

BASIS OF COMBINATION AND PRESENTATION                                   

    The accompanying  combined  financial  statements of  the  Group  have  been
presented  on  a  combined  basis  because  of  common  ownership,  control, and
management and because the entities are  subject to a business combination  with
Serologicals  Corporation (the "Company"),  a Delaware corporation,  on March 6,
1996 (Note 8).  The combined financial  statements contain all  accounts of  the
Group.   All  significant  intercompany  accounts  and  transactions  have  been
eliminated in combination.                                                      

USE OF ESTIMATES                                                        

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

INVENTORIES                                                             

    Inventories are stated at the lower of cost or market, cost being determined
on a first-in, first-out basis. Market for antibody-based product inventories is
net realizable value. Inventories consist entirely of antibody-based products.  

PROPERTY AND EQUIPMENT                                                  

    Fixed  assets are stated at cost and are depreciated using straight-line and
accelerated methods over  their estimated  useful lives.  Depreciable lives  for
furniture,  fixtures, and  equipment range from  five to  seven years. Leasehold
improvements are amortized over the shorter  of the lease terms or the  economic
lives  of the  assets. Expenditures for  maintenance and repairs  are charged to
expense as incurred.                                                            

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SOUTHEASTERN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                      
REVENUE RECOGNITION                                                     

  The Group's policy is to record revenue upon the shipment of its products.

INCOME TAXES                                                            

    One of the entities in the Group has elected status as an S corporation  for
federal  income tax  purposes (Note 1).  Accordingly, all  tax attributes (i.e.,
items of gain, loss, credits, etc.) are reported on the respective stockholders'
individual income tax returns. No pro  forma income tax provision was  reflected
as the provision and related tax attributes were not material.                  

    The  C corporations of the  Group (Note 1) are  included in the consolidated
federal income tax returns of their respective parent companies. The income  tax
provisions   for  the  C  corporations  are   computed  on  a  separate  company
(stand-alone) basis. State income taxes are based on the state income tax  rates
in  effect in the states where the C corporations operate. The C corporations do
not have formal tax sharing arrangements with their parent companies.           

    Effective January 1, 1992, the C corporations of the Group adopted Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes"  ("SFAS
No.  109"). SFAS No. 109 requires an  asset and liability approach to accounting
for deferred income taxes based  on the differences between financial  reporting
and income tax bases using enacted tax rates in effect for the year in which the
differences are expected to reverse (Note 6).                                   

GOODWILL                                                                

    The  excess  of cost  over  the net  assets  acquired ("goodwill")  is being
amortized to income  on a straight  line basis over  a period of  25 years.  The
goodwill  relates to the purchase of two donor centers during 1991 and one donor
center during 1994. The Group periodically reviews the carrying values  assigned
to  goodwill  based  upon expectations  of  undiscounted future  cash  flows and
operating income  generated by  the underlying  tangible assets  in  determining
whether goodwill is recoverable.                                                

CASH EQUIVALENTS                                                        

    For  purposes  of  the statement  of  cash  flows, the  Group  considers all
investments purchased with an  original maturity of three  months or less to  be
cash equivalents.                                                               

RECENT ACCOUNTING PRONOUNCEMENTS                                        

    In  March  1995, the  Financial Accounting  Standards Board  ("FASB") issued
Statement of Financial  Accounting Standards No.  121 ("SFAS 121"),  "Accounting
for the Impairment of Long Lived Assets and for Long Lived Assets to be Disposed
Of", which becomes effective for fiscal years beginning after December 15, 1995.
SFAS  121 establishes standards  for determining when  impairment losses on long
lived assets have  occurred and how  impairment losses should  be measured.  The
Group adopted SFAS 121 effective January 1, 1996. The financial statement impact
of adopting SFAS 121 was not material.                                          

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SOUTHEASTERN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

3.  LONG-TERM DEBT                                                              
    Long-term  debt at December 31, 1995 and March 6, 1996 (unaudited) consisted
of the following:                                                               

                                                                [Download Table]

                                                       DECEMBER    MARCH 6,   
                                                       31, 1995      1996     
                                                      -----------  ---------  
                                                                   (UNAUDITED)
                                                                              
Term notes payable, bearing interest at either prime                          
 or LIBOR (5.69% and 5.42% at December 31, 1995 and                           
 March 6, 1996 (unaudited), respectively) plus 1%,                            
 payable in semiannual installments of $111,111;                              
 interest payable quarterly                            $1,000,000  $ 888,889  

$250,000 revolving line of credit with a bank at                              
 prime (8.5% and 8.25% at December 31, 1995 and                               
 March 6, 1996 (unaudited), respectively) plus                                
 1.75%; interest payable monthly                         165,000     165,000  

$100,000 revolving line of credit with a bank at                              
 prime (8.5% and 8.25% at December 31, 1995 and                               
 March 6, 1996 (unaudited), respectively) plus                                
 1.25%; interest payable at maturity                      50,000      90,000  

Other notes at varying interest rates and terms           35,000          --  
                                                      -----------  ---------  
                                                       1,250,000   1,143,889  

Less current maturities                                 (583,334)   (588,334) 
                                                      -----------  ---------  
                                                       $ 666,666   $ 555,555  
                                                      -----------  ---------  
                                                      -----------  ---------  

Future maturities of long-term debt at December 31, 1995 are as follows:

                                                                [Download Table]
                                                                     
1996....................................................  $   583,334
1997....................................................      222,222
1998....................................................      222,222
1999....................................................      222,222
                                                          -----------
                                                          $ 1,250,000
                                                          -----------
                                                          -----------

    The long-term debt obligations  of the Group are  secured by its  inventory,
certificates  of  deposits, and  certain  life insurance  policies.  The Group's
obligations do not contain any  restrictive convenants. The Group made  interest
payments  of approximately  $90,000 during 1995  and $4,000 for  the period from
January 1, 1996 to March 6, 1996.                                               

4.  DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS                        

CASH EQUIVALENTS                                                        

    The Group estimates  that the  fair value of  cash equivalents  approximates
carrying value due to the relatively short maturity of these instruments.       

NOTES PAYABLE                                                           

    The  Group  estimates  that the  fair  value of  notes  payable approximates
carrying value based upon its effective  current borrowing rate for issuance  of
debt with similar terms and remaining maturities.                               

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SOUTHEASTERN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

5.  COMMITMENTS AND CONTINGENCIES                                               

OPERATING LEASES                                                        

    The  Group  leases certain  office space  and equipment  under noncancelable
operating lease  agreements.  Future  minimum annual  rental  obligations  under
noncancelable operating leases at December 31, 1995 were as follows:            

                                                                [Download Table]
                                                                     
Year ending December 31:                                             
1996....................................................  $   326,690
1997....................................................      297,763
1998....................................................      266,470
1999....................................................      258,000
2000....................................................       73,000
                                                          -----------
                                                          $ 1,221,923
                                                          -----------
                                                          -----------

    Rent  expense totaled approximately $280,000 during  1995. Of the total rent
expense, approximately $150,000 was paid to the Principal Stockholders (Note 7).

LITIGATION                                                              

    The Group is involved in certain  litigation arising in the ordinary  course
of  business. In  the opinion  of management,  the ultimate  resolution of these
matters will  not  have a  material  adverse  effect on  the  Group's  financial
position or results of operations.                                              

6.  INCOME TAXES                                                                
The income tax provision for 1995 consisted of the following:           

                                                                [Download Table]
                                                                              
Current:                                                                      
  U.S. Federal and State..........................................  $   5,000 
Deferred:                                                                     
  U.S. Federal and State..........................................    (44,600)
                                                                    --------- 
        Total income tax benefit..................................  $ (39,600)
                                                                    --------- 
                                                                    --------- 

    Deferred  income tax assets and liabilities  reflect the impact of temporary
differences  between  the  amounts  of  assets  and  liabilities  for  financial
reporting  and income tax reporting purposes. As of December 31, 1995, temporary
differences which  give rise  to  deferred tax  assets  and liabilities  are  as
follows:                                                                        

                                                                [Download Table]
                                                               
Deferred tax asset:                                            
  Net operating losses.........................    $  133,000  
                                                 --------------
Deferred tax liabilities:                                      
  Tax depreciation in excess of book                           
   depreciation................................       (30,000) 
  Accruals for book in excess of tax...........      (111,740) 
                                                 --------------
  Net deferred tax liability...................    $   (8,740) 
                                                 --------------
                                                 --------------

    The  components  of  the  deferred  tax  assets  and  liabilities  of  the S
corporation are not material to the combined financial position of the Group and
therefore are not disclosed.  The federal statutory corporate  rate is 35%.  The
only  significant reconciling  item between the  federal statutory  rate and the
Group's effective  tax rate  for the  period ended  December 31,  1995 is  state
taxes,  net of the federal  income tax benefit. At  December 31, 1995, the Group
has estimated  tax net  operating loss  ("NOL") carryforwards  of  approximately
$350,000   available  to   reduce  future   federal  taxable   income.  The  NOL
carryforwards expire in  2010 and  are subject  to examination  by the  Internal
Revenue Service.                                                                

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SOUTHEASTERN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

7.  RELATED-PARTY TRANSACTIONS                                                  

    The  Group  rents  certain  facilities  and  equipment  from  the  Principal
Stockholders (Note 5) under short-term  lease agreements. At December 31,  1995,
the  Group owed the  Principal Stockholders $40,000  for accrued rent associated
with such  leases, and  is included  in due  to affiliates  in the  accompanying
combined balance sheets.                                                        

    At  December  31,  1995, the  Group  also owed  affiliates  amounts totaling
$28,000 and had amounts due from affiliates totaling $202,286. Those amounts are
separately stated on the face of the accompanying combined balance sheets.      

8.  SUBSEQUENT EVENT                                                            

ACQUISITION BY SERAMUNE, INC.                                           

    Effective March  6, 1996,  the Company  acquired the  stock of  Southeastern
Biologics, Inc. and Plasma Management, Inc., and the assets of Concho Biologics,
Inc.   (collectively  referred   to  as  the   "Southeastern  Acquisition")  for
approximately  $4.75  million  plus  additional  consideration  based  upon  the
performance  of  the acquired  businesses.  The acquired  companies  will become
wholly owned subsidiaries of  Seramune, Inc., a wholly  owned subsidiary of  the
Company.  The acquisition  will be  accounted for  under the  purchase method of
accounting in accordance with APB No. 16.                                       

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    Montage  of pictures  showing donor facility,  donor, scientist, technician,
product and mother and child.                                                   

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-------------------------------------------                                     
                                     -------------------------------------------
-------------------------------------------                                     
                                     -------------------------------------------

    NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO  GIVE
ANY  INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN  OR MADE, SUCH  INFORMATION OR REPRESENTATION  MUST NOT BE  RELIED
UPON  AS  HAVING  BEEN  AUTHORIZED  BY  THE  COMPANY  OR  ANY  UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR  DOES
IT  CONSTITUTE AN OFFER TO SELL OR A SOLICITATION  OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED  HEREBY TO  ANY PERSON  IN ANY  JURISDICTION IN  WHICH IT  IS
UNLAWFUL  TO MAKE SUCH  AN OFFER OR  SOLICITATION. NEITHER THE  DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE  ANY
IMPLICATION  THAT THE  INFORMATION CONTAINED  HEREIN IS  CORRECT AS  OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.                                                  

--------------

TABLE OF CONTENTS 

                                                                [Download Table]

                                                    PAGE   
                                                    -----  
                                                           
Prospectus Summary.............................           3
Risk Factors...................................           6
Use of Proceeds................................          12
Price Range of Common Stock....................          12
Dividend Policy................................          12
Capitalization.................................          13
Selected Historical Financial Data.............          14
Pro Forma Financial Information................          15
Management's Discussion and Analysis of                    
 Financial Condition and Results of                        
 Operations....................................          19
Business.......................................          26
Management.....................................          38
Certain Transactions...........................          47
Principal and Selling Stockholders.............          48
Description of Capital Stock...................          50
Shares Eligible for Future Sale................          52
Underwriting...................................          53
Legal Matters..................................          54
Experts........................................          54
Available Information..........................          54
Index to Financial Statements..................         F-1

2,100,000 SHARES

[LOGO]

COMMON STOCK

--------

PROSPECTUS

          , 1996

--------- 

SMITH BARNEY INC. 

LEHMAN BROTHERS 

VOLPE, WELTY & COMPANY

-------------------------------------------                                     
                                     -------------------------------------------
-------------------------------------------                                     
                                     -------------------------------------------

Dates Referenced Herein   and   Documents Incorporated by Reference

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		12/31/96		26		65
Filed on:		5/7/96
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		3/15/96		37
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		3/6/96		18		86
		2/27/96		41		75
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		1/31/95		33
		1/3/95		70		71
		1/1/95		6		18
		12/31/94		6		80
		12/23/94		20		66
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		12/31/93		22		74
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		12/31/92		60
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