Our Mission
We will advance health care through innovative science.  Alliances, researchservices and unique products define our role in the worldwide effort to
understand disease and develop therapeutic solutions.

---

| | 200 YEARS AGO
| | -------------

| |  | Lewis and Clark set out on a journey
|- |  | ------------------------------------

| | 100 YEARS AGO
| | -------------

| |  | Orville and Wilbur Wright made the first
controlled, powered, sustained flight in a heavier-than-air machine.
|- |  | -------------------------------------------------------------------------------------------------------------
| |  | Harley-Davidson produced their first motorcycle.                                                             
| |  | The ice cream cone was patented.                                                                             

| | 75 YEARS AGO
| | ------------

| |  | Alexander Fleming discovered the germ-killing properties of the mold
juice secreted by penicillum.
|- |  | ----------------------------------------------------------------------------------------------------
| |  | Walt Disney made his first animated cartoon,
Plane Crazy,featuring Mickey Mouse.                  

| | 50 YEARS AGO
| | ------------

| |  | Francis Crick and JamesWatson revealed the structure of DNA.                           
|- |  | ---------------------------------------------------------------------------------------
| |  | Sir
Edmund Hillary and Tenzing Norgay were the first to reach the top of Mount Everest.

| | 25 YEARS AGO
| | ------------

| |  | Louise Joy Brown, the worlds first baby conceived in vitro, was born.                                                                               
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Three Americans landed outside Paris after the first successful crossing of the
Atlantic Ocean from the U.S. in a balloon, a trip that took six days.

|FROM THE PRESIDENTS DESK

While this annual report is focused on results for our 29th year, you have
received it during the calendar year that will mark our 30th anniversary as a
business. Many of you will undoubtedly find this hard to believewe
couldnt possibly be contemporaries of Microsoft and Apple Computer. In this
age of transparency, I cannot tell a lie. We began this business before it was
fashionable for professors to start businesses, or even to admit that they had
done so. The sin of one age can become the fashion of the next, if you give the
world enough time to change.  We celebrate anniversaries in this report because
2003 was an outstanding year for them when we look back 25, 50, 100 and even 200
years.


Good things take time in this impatient world.  We made substantial progress as a
company in 2003.  We built a new organization of 350 very bright people across
five laboratory sites. We rounded out our strong focus on in-life studies of
new medicines.
It is my strong belief that a mammal is more than the sum of his/her parts. We
talk today a lot about genomics, proteomics and so forth, but progress in
developing drugs from knowledge of isolated components of mammals has not gone
nearly as well as what has long been accomplished with infectious bacteria, and
more recently with viruses. Those comparatively simple intact systems lend
themselves much better to detailed laboratory study than do mammals.
The devastating degenerative diseases we face such as diabetes, multiple
sclerosis, arthritis, Alzheimers and Parkinsons Diseases and too
many others have largely eluded attempts to reverse their course. At least we
now have an armamentarium of new tools to employ. But progress will take time,
perhaps quite a lot of time. Are we collectively willing to invest the resources
that are required? There are days when I have my doubts. |  | In truth, we are already spending enormous sums. Are we spending them wisely? In
the sciences we focus on at BASi, we work hard to improve processes, to get
appropriate data faster, to fully utilize IT resources and robotics, simply to
get more done. We aim not to waste a single mouse. We aim to turn around data
from clinical subjects as quickly as the science and regulatory compliance will
allow. Each day we can see areas where improvement is possible. Shareholders and
patients alike will benefit.
Letters such as this traditionally focus on financial results. We feel fortunate
to have survived our 29th year during these troubled times. We dramatically
added to capacity and our mantra for 2004 is to fill that capacity profitably.
Meanwhile, our shift toward more commercial life science products has continued.
Our Culex® product line has been extended and its acceptance is growing nicely,
even in the face of a tough capital expenditure climate for biopharm companies.
After all, it is a technology that gets more done, more quickly, with fewer
resources.


Id like to put in a special word for our team.  We have a terrific group of
people dedicated to our clients and to doing things right. None of us have seen
the remuneration that we read about for various contemporary firms. Weve
perhaps been too busy in the lab to be tempted by avarice. Nevertheless, we are
proud of what we have accomplished over the years and have plenty of enthusiasm
for what we will do next.


The economy seems to be turning back up, albeit in fits and starts.  We are ready
with people and facilities to take this company to the next level.


Peter T. Kissinger
President, Chairman and CEO
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|THE ADVENTURE BEGINS

2003 was a year in which we celebrated anniversaries of events that changed life
and the world as we know them... opening the frontiers of America, opening new
scientific frontiers, and the frontier of flight.
Mankind seems to have an insatiable thirst to explore the unknown, to conquer
ever-greater heights, to take on seemingly overwhelming challenges, often for a
greater good but sometimes simply for high adventure and the thrill of
discovery. In 1803, after the Louisiana Purchase had added 828,000 square miles
to the United States and increased the countrys land area by 140%, the
most common way to travel from the East Coast to the West Coast was to sail all
the way around the southern tip of South America, an arduous, months-long
journey.
When President Thomas Jefferson called upon his secretary and former Army
officer, Meriwether Lewis, to head a mission to explore the interior of the North
American continent, he had in mind three primary goalsfind a continuous
water route to the Pacific Ocean, the fabled Northwest Passage; strengthen
American claims to the Oregon Territory; and gather information about the
inhabitants and the country. In truth, the first real space race was
about to begin. With Britain to the north in Canada, Spain to the south
in Mexico, and everything in the middle up for grabs, expansion of power was the
primary goal; pragmatically, expansion of knowledge was secondary. |  | Merriwether Lewis and William Clark complemented one another perfectly
as co-commanders of their U.S. Corps of Discovery. Both were confident
and cooperative  and both were inventive spellers. They took
looner
observations, ate water millions, tracked
bearfooted Indians, accepted
their mission chearfully, and were proud to serve the Untied States.

Lewis called upon his old Army friend, William Clark, to be his co-commander.
When the two set out, they were looking for something they would never find,
because it wasnt there. The Northwest Passage existed only in the
explorers minds, but the aspect of its discovery was strong enough to move
them forward. They launched their expedition from what is now Illinois with a
company of 45 men, one keelboat, two pirogues, one dog and a collection of
scientific instruments. In nearly three years of travel through what are now 11
states, they documented everything, keeping journals totaling 13 volumes and
nearly a million words. Their daring journey, their observations and the
information they gathered captured imaginations and charted the future of
America.
When Pete Kissinger created his first analytical tool to monitor trace chemicals
for a high school science project, he had no idea this would evolve into a
career and a corporation that participates in developing drugs that improve the
lives of tens of millions of people every day. Lewis and Clark expected to find
volcanoes, wooly mastodons and the fabled Northwest Passage. Pete hoped simply
to win a top prize for his project. And he did, by the way.
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|In 1903, the same year that four young men built the first Harley-Davidson
motorcycle in a tiny wooden shed in Milwaukee, Orville and Wilbur Wright
launched the first controlled, sustained, piloted flight in a self-propelled
heavier than-air craft. Two very different modes of transportation, both were
made possible by the invention of a lightweight internal combustion engine. And
both happened because their creators went beyond the trial-and-error methods of
their contemporaries and employed great scientific ingenuity in the face of
limited resources.
And so it was with Pete Kissinger and BASi. As a young college chemistry
professor in the early 70s, the equipment needed to conduct his research did not
exist commercially, so Pete led a team that combined several innovations into a
system that revolutionized neuroscience. This tool made it possible for
researchers to monitor chemicals in the brain at barely discernable levels, and
it is still widely used today by researchers trying to understand the causes of
central nervous system disorders and to monitor patients for hypertension and
adrenal cancers.Through their own original scientific research, such as their wind tunnel
experiments, the Wrights discovered the principles of human flight, developed
the airplane and opened the era of aviation. |  | Originally working in his garage, Pete and a small part-time staff created and
built an impressive variety of chemical separation tools, electrochemical
analyzers, membrane sampling probes and animal research tools. The company
quickly grew into a respected manufacturer of equipment used mainly for research
and development in medical schools and the pharmaceutical industry.
As in business, everything that happens in science is built, in one way or
another, on work that precedes it. Understanding DNA was essential to the
exploration of biotechnology. Its discovery has been called the most important
biological work of the last 100 years, and may be the frontier for the next 100.
James Watson and Francis Crick perfected the structural model of DNA, but only
after Rosalind Franklins x-ray diffractions showed that the
wet form of DNA had all the characteristics of a helix, and her work
followed on that of Oswald Avery (1943), Linus Pauling (1948), Erwin Chargaff
(1950), and a host of others dating back to the late 19th century. Perhaps
Watson and Crick were able to go further and succeeded where others didnt
because their two minds together had a special harmonya case in which 1
plus 1 does not equal 2, but equals something more like 10. Both were
indifferent to boundaries in their thinking, were ambitious, and impatient with
authority, all qualities generally considered part of the entrepreneurial
spirit.
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|The first Harley-Davidson motorcycle had five owners and was
ridden more than 100,000 miles. The average new Harley
buyer is a 46-year-old man with an $80,000 household income.

The BASi Contract Research Organization has grown out of the companys
beginnings in much the same way. In the late 80s, a small group was formed
within the instrument applications department to provide fee-based analytical
services. By the early 90s, with the encouragement of several large
pharmaceutical companies, BASi created its contract research business, known
then as BAS Analytics, under the leadership of Ron Shoup. That business grew
rapidly, evolved into a broader range of services and now represents more than
70 percent of the companys total business.
BASis newest product family, the Culex® Automated Blood Sampler, introduced
in 2000, had its beginnings in both the companys instrument and contract
research businesses. Through the work of BASi engineers, technicians and
researchers, and with encouragement and invaluable input from pharmaceutical
clients, a large talented and innovative team developed this robotic system for
animal models of disease. The Culex system simplifies and streamlines the first
in-life step in the process of taking a drug to market. It replaces older, less
efficient and less accurate screening methods and has the potential to save
pharmaceutical companies significant time and millions of dollars in the
process. It operates 24/7 with minimal human input, and it helps a
pharmaceutical company learn much earlier in the development process whether a
drug will ever be viable in the marketplace. Culex exemplifies the BASi approach
of obtaining more and better information in parallel, rather than via a series
of studies, using fewer animals and fewer resources. |  | For an organization to grow and thrive it must have more than imagination and
excitement about science and new discoveries. It requires more than hard work
and entrepreneurial flair. It requires structure and organization and attention
to detail. Everyone knows that Sir Edmund Hillary and Tenzing Norgay were the
first to conquer the heights of Mount Everest in 1953. But few know that their
accomplishment, and their selection as the persons to make that climb, were the
result of an unassuming manager and a board of directorsnot because they
were necessarily the leading climbers of the day. The Himalyan Committee, an
affiliate of the Royal Geographical Society, chose Hillary to lead the way
because he was climbing well and because, frankly, he was in the right place at
the right time. Col. John Hunt, the very essence of the modern professional
manager, organized everythingall the rations and supplies and their
placement along the route, an army of climbers, porters, Sherpas and yaks that
would shuttle supplies ever higher as the expedition made its way to the peak.
On the final morning of their ascent, when Hillarys boots had frozen to
steel, it was a stove that had been planted in their camp, along with a
breakfast of crackers, lemonade and sardines that gave them the nourishment to
make the final effort to reach the top. So in the end, although talent and
enthusiasm will take you a long way up the mountain, its crackers and
sardines and diligent organization builders that get you to the top.
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|THE ADVENTURE CONTINUES
In 1997, when BASi became a public corporation, the company developed a
seven-year strategy with three essential elements. First, the company aimed to
expand the contract research portion of its business by providing quality
science and unique laboratory services. Second, with an extensive background in
bioanalysis and a strong regulatory and client history, the company would expand
by developing preclinical and clinical research services. And third, the company
would reach far beyond its home base in West Lafayette, Indiana and expand
geographically to locations nearer its main client base.
By the close of 2003, BASi had achieved all of those goals, fulfilling its
seven-year plan in just six years. With the acquisition of a clinical research
unit in Baltimore and a bioanalytical laboratory in Oregon, plus establishing a
state-of-the-art biomarkers lab in the United Kingdom, in combination with the
earlier addition of a toxicology lab in southern Indiana, BASi had realized its
structural goals. The company now has strategic locations near all major clients
and has expanded its array of services to the pharmaceutical industry from late
discovery, when a new molecule is first identified as a potential drug,
through clinical trials, when a new drug is introduced to humans and
where safety and effectiveness are established.When Sir Edmund Hillary and Tenzing Norgay first stood
atop Everest in 1953, they were also standing atop a
pyramid of people, a board of directors who redefined the
expedition as a corporate effort and built the ultimate
platform for success. |  | Alexander Fleming discovered the germ-killing properties of the
mold juice
secreted by penicillium in 1928 and knew it could have profound medical
value. Because he couldnt make enough penicillin to be useful in practice,
his discovery was dismissed as a mere curiosity. It was a decade later and
World War II was raging in Europe when Oxford University scientists
discovered Flemings work, revived research into penicillin and turned to
American pharmaceutical companies for production of the worlds
first
wonder drug.
With a long history of business pragmatism, akin to the Watson and Crick
combination BASi requires that 1 plus 1 equal at least 3, if not more. While
2003 was a year of low growth and disappointments in the pharmaceutical
industry, BASi stayed the course and substantially increased capacity via
capital improvements and talented new people.
Also in 2003 the company continued to substantially upgrade IT resources with
initiatives to improve internal audit controls, systems to manage drug safety
evaluation studies, and a new Virtual Private Network (VPN) system.
As a result of the companys acquisition and expansion programs, BASi was
named to the Fortune Small Business 100  Americas Fastest-Growing
Small Companies for 2003.
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|NEW FRONTIERS

The plan for 2004 is simple and can be outlined in three focal points.
First, BASi aims to put its new capacity to work.The company is now well
situated to grow as the economy allows. Although the company may consider new
acquisition opportunities as they appear, BASi does not intend to pursue them
until this goal is achieved.

Second, with new capacity and key staff the company has great opportunities to
be more efficient. A multi-pronged marketing initiative, a focus on global
sales, improved IT and a commitment to use personnel as efficiently as possible
will enable the company to provide more services to an expanded client base.

And third, the company is committed to invest in training, not just for new
people and not just for scientists. The company will ensure the tools and time
are committed to maintain excellence, both in science and in administration and
management.

The focus is on the years to come, not on quarters. The company is involved in
new biomedical ventures that mankind has never attempted before, and just like
the Lewis and Clark Expedition and other new ventures for centuries before, the
outcome is uncertain. BASi is searching. What they will find at the end is not
clear. What is clear is that the company will make a best effort and keep its
sights on the goals ahead. |  | In 1953, James Watson and Francis Crick announced they had
found the secret of life. And, indeed, they had when they
figured out that the double helix structure of DNA carries lifes
hereditary information and can unzip to make copies of
itself.

In 2002 there were more than 2000 experimental drugs in clinical trials and over
3000 new molecules had moved from discovery into preclinical development, but
only 17 distinctly new drugs were approved by the FDA. The Pharmaceutical
Manufacturers Association tells us that it takes 12 years on average for an
experimental drug to travel from lab to medicine chest. Only five in 5000
compounds that enter preclinical testing will get as far as human testing, and
only one of those five will be approved.

Potential major new clients have said they are looking for outsourcing partners
physically closer to their own R&D facilities to reduce travel costs and
liabilities. The company is now very well positioned, both geographically and
scientifically.

What does all this mean to BASi? It means that opportunities for the
companys products and services are very compelling. It means that
pharmaceutical and biotech companies have more reasons to outsource work to CROs
such as BASi, and to buy tools such as the companys epsilon ,
Empis and Culex® products for research and development. It means there
are virtually unlimited new frontiers to be explored.
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|BASi AND DRUG DEVELOPMENT


Each time a new chemical substance is isolated and believed to have therapeutic
value, a number of tests are performed, in a progression of mammals from a mouse
to a human, to establish whether the new substance will be sufficiently safe and
effective to justify full commercial development. This is accomplished through a
series of carefully controlled experiments.

First there is concern for the dose. How much? How pure? How often? The BASi
pharmaceutical analysis team concentrates on that aspect. They must know in
great detail what they are to study. Otherwise, the result will be ambiguous. |  | When a mammal ingests a foreign chemical, called a xenobiotic, many things can happen.
Some happen very quickly (within minutes) and others happen slowly (over years).
There are whole fields of science that get involved to sort out whats
going on. There are physical aspects such as blood pressure and temperature.
There are behavioral aspects such as fatigue and anxiety. There are chemical
topics such as where the dose went after it was administered orally, by IV or
transdermally (through the skin via a patch). Did it travel to the brain, or is
it concentrated in the joints? Where is it and how much is there? Then, what
endogenous biochemicals in the mammal responded to the presence of the new
xenobiotic invader? Are those changes of therapeutic benefit (pharmacology) or
are they indicative of a threat (toxicology)?

These are the topics BASi pursues with both products and services. The company
endeavors to design products that facilitate carrying out such studies more
precisely, more accurately and more quickly. The contract research divisions
design methods to do the same, all meeting rigorous quality standards imposed by
the FDA and many other agencies (USDA, EPA, NIH and others). The goal is
clear:  Better healthcare!
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SELECTED CONSOLIDATED FINANCIAL DATA

|                                                   | YEAR ENDED SEPTEMBER 30,             
|-------------------------------------------------- | -------------------------------------
|
|STATEMENT OF
  OPERATIONS DATA                     | (in thousands, except per share data)
|                                                  
|Service revenue                                    |                                      
|Product revenue                                    |                                      
|                                                   |                                      
|Total revenue                                      |                                      
|                                                  
|Cost of service revenue                            |                                      
|Cost of product revenue                            |                                      
|                                                   |                                      
|Total cost of revenue                              |                                      
|                                                   |                                      
|Gross profit                                       |                                      
|                                                   |                                      
|Operating expenses:                                |                                      
|Selling                                            |                                      
|Research and development                           |                                      
|General and administrative                         |                                      
|                                                   |                                      
|Total operating expenses                           |                                      
|                                                   |                                      
|Operating income (loss)                            |                                      
|Other (expense), net                               |                                      
|                                                   |                                      
|Income (loss) before income taxes                  |                                      
|Income taxes (benefit)                             |                                      
|                                                   |                                      
|Net income (loss)                                  |                                      
|                                                   |                                      
|Net income (loss) per share    Basic               |                                      
|Diluted                                            |                                      
|Weighted average commonshares outstanding    Basic |                                      
|Diluted                                            |                                      

|                                           | YEAR ENDED SEPTEMBER 30,
|------------------------------------------ | ------------------------
|
|BALANCE SHEET DATA:                        | (in thousands)          
|                                          
|Working capital (deficit)                  |                         
|Property and equipment, net                |                         
|Goodwill and other intangible  assets, net |                         
|Total assets                               |                         
|Long-term debt, less  current position     |                         
|Subordinated debt,  less current portion   |                         
|Shareholders' equity                       |                         

| | The above is selected audited consolidated financial data of the Company for the
five years ended September 30, 2003. This annual report has been produced in two
separate segments. One segment is a reprint of the BASi 10K for fiscal year 2003
which is enclosed. In the event the 10K information has been separated, it can
be obtained from the SEC or BASI web sites, or we would be pleased to mail or
email a copy at your request. | 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

QUARTERLY FINANCIAL DATAUNAUDITED (AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

|FOR THE QUARTER ENDED IN FISCAL 2003                
|----------------------------------------------------
|                                                    
|Tool revenue                                        
|Gross profit                                        
|Net income                                          
|Basic net income per common share outstanding (1)   
|Diluted net income per common share outstanding  (1)

|FOR THE QUARTER ENDED IN FISCAL 2002                
|----------------------------------------------------
|                                                    
|Total revenue                                       
|Gross profit                                        
|Net income                                          
|Basic net income per common share outstanding (1)   
|Diluted net income per common share outstanding  (1)

(1)        The sum of the net income per
common share may not equal the annual net income per share due to interim
quarter rounding.

| | BASi Vetronics develops and sells instruments used in veterinary clinics
and pharmaceutical research facilities to ensure the health of companion
animals and to monitor the safety and effectiveness of new drugs for both
animals and humans.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|BOARD OF DIRECTORS

Peter T. Kissinger, Ph.D.
Chairman, President and Chief Executive Officer

Ronald E. Shoup, Ph.D.
Chief Operating Officer, BASi Contract Research Services

Candice B. Kissinger
Senior Vice President and Research Director

William E. Baitinger
Special Assistant to the Vice President for Research
Purdue University

W. Leigh Thompson, Ph.D., M.D.
Chief Executive Officer,
Profound Quality Resources, Inc.

Leslie B. Daniels
Principal
CAI Advisors & Co., LLPEXECUTIVE MANAGEMENT

Peter T. Kissinger, Ph.D.
Chairman, President and Chief Executive Officer

Ronald E. Shoup, Ph.D.
Chief Operating Officer, BASi Contract Research Services

Candice B. Kissinger
Senior Vice President and Research Director

Craig S. Bruntlett, Ph.D.
Senior Vice President, Global Sales

Michael P. Silvon, Ph.D.
Vice President, Planning and Development, Interim CFO

Donnie A. Evans
Vice President, Engineering

Lina L. Reeves-Kerner
Vice President, Human Resources |  | CORPORATE INFORMATION
ANNUAL MEETING OF SHAREHOLDERS

February 26, 2004
BASi Corporate Center
West Lafayette, IndianaAUDITORS

Ernst & Young LLP
Indianapolis, IndianaTRANSFER AGENT

Corporate Trust Department
National City Bank
1900 East 9th Street
Cleveland, Ohio 44114COMMON SHARES

Bioanalytical Systems, Inc. common shares are traded on the NASDAQ
National Market under the symbol BASI.
The following table sets forth by calendar quarter the high and low sales prices
of the common shares on the NASDAQ National Market System. The approximate
number of holders of common shares is 1,600.FISCAL      1ST QTR.      2ND QTR.      3RD QTR.      4TH QTR.
2003
High            3.350              3.710            3.200             4.990
Low             2.660              2.690            2.750             2.790
2002
High            9.400              7.710            6.970             4.850
Low             5.170              6.500            5.100             3.000

The Company has not paid any cash dividends on its common shares for
the two most recent fiscal years. The Company has no intention to pay
cash dividends in the foreseeable future.INQUIRIES

A copy of the Companys 2003 Form 10-K Annual Report filed with the
Securities and Exchange Commission is available without charge upon
written request, and by visiting www.bioanalytical.com/invest/annual.html.
A copy of the Companys Code of Ethics is also available without charge
upon written request. Media inquiries and requests for the 10-K, the Code
of Ethics and investors kits should be directed to:
        Corporate Communications Director
        Bioanalytical Systems, Inc.
        2701 Kent Avenue
        West Lafayette, IN 47906 USA

Inquiries from shareholders, security analysts, portfolio managers, registered
representatives and other interested parties should be directed to:

        BASi Investor Relations
        NASDAQ: BASI
        765-463-4527
        www.bioanalytical.com
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