UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                            ------------------------
                                    FORM 10-K
                 (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended: December 31, 2004

                                       OR
            ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                         COMMISSION FILE NUMBER 1-10173

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

                           LIFE SCIENCES RESEARCH INC.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                                    MARYLAND
                 (JURISDICTION OF INCORPORATION OR ORGANIZATION)
                                   52-2340150
                         IRS Employer Identification No.
            PO BOX 2360, METTLERS ROAD, EAST MILLSTONE, NJ 08875-2360
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 732 649-9961
           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      None
           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

-------------------------------------      ------------------------------------
      TITLE OF EACH CLASS                       NAME OF EACH EXCHANGE ON WHICH
                                                        REGISTERED
 Voting Common Stock $0.01 par value                       OTCBB

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or Section  15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant  was required to file such report),  and (2) has been subject to such
filing requirements for the past 90 days.

                 Yes X                     No __


Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment of this Form 10-K. [ x ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act)

                  Yes _                     No X

The aggregate market value of the Voting Common Stock held by  non-affiliates of
the  Registrant  was  $49,811,748  on June 30,  2004,  the last  business day of
Registrant's most recently completed second fiscal quarter.

Indicate the number of outstanding shares of each of the Registrant's classes of
common stock as of the latest practicable date.

      As of March 24, 2005 the Registrant had outstanding 12,464,339 shares
                             of Voting Common Stock


<PAGE>


<TABLE>

TABLE OF CONTENTS
<CAPTION>

ITEM                                                                                          PAGE

                                     PART I
<S>   <C>                                                                                     <C>

1.    Business ........................................................................         3

2.    Properties ......................................................................        13

3.    Legal Proceedings ...............................................................        13

4.    Submission of Matters to a Vote of Security Holders..............................        13

                                     PART II

5.    Market For Registrant's Common Equity, Related Stockholder Matters and
      Issuer Purchases of Equity Securities............................................        14

6.    Selected Consolidated Financial Data ............................................        19

7.    Management's Discussion and Analysis of Financial Condition and Results
      of Operation ....................................................................        21

7A.   Quantitative and Qualitative Disclosures About Market Risk.......................        34

8.    Financial Statements and Supplementary Data .....................................        35

9.    Changes in and Disagreements with Accountants on Accounting and Financial
      Disclosure ......................................................................        64

9(a)  Controls and Procedures .........................................................        64

                                    PART III

10.   Directors and Executive Officers of the Registrant...............................        65

11.   Executive Compensation ..........................................................        67

12.   Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters.................................................         73

13.   Certain Relationships and Related Transactions ..................................        74

14.   Principal Accountant Fees and Services ..........................................        75

                                     PART IV

15.   Exhibits and Financial Statements Schedules......................................        76


</TABLE>
<PAGE>


                                     PART I

ITEM 1.  BUSINESS

INTRODUCTION

Life  Sciences  Research,  Inc.  ("LSR")  and  subsidiaries  (collectively,  the
"Company")  is a  global  contract  research  organization,  offering  worldwide
pre-clinical and non-clinical  testing for biological safety evaluation research
services to pharmaceutical,  biotechnology, agrochemical and industrial chemical
companies.  The Company  serves the rapidly  evolving  regulatory and commercial
requirements to perform safety evaluations on new  pharmaceutical  compounds and
chemical  compounds  contained  within the products that humans use, eat and are
otherwise  exposed  to.  In  addition,  the  Company  tests  the  effect of such
compounds on the  environment and also performs work on assessing the safety and
efficacy of veterinary products.

As the  Company  continues  to  build  on  improving  fundamentals,  we have the
following strategy and goals:

o    To grow to significant  profitability and improved return on investment for
     our shareholders.
o    To be appreciated as the listening,  understanding  and reliable partner in
     creative  compound  development  and safety  assessment and to be the first
     choice for the industries we serve.
o    To provide our employees with the opportunity for individual development in
     a caring, rewarding and safe working environment.
o    To be recognized positively in the local communities in which we operate.

LSR was incorporated on July 19, 2001 as a Maryland  corporation.  It was formed
specifically  for the  purpose  of making a  recommended  all share  offer  (the
"Offer") for Life  Sciences  Research  Ltd (LSR Ltd)  formerly  Huntingdon  Life
Sciences  Group plc  ("Huntingdon").  The Offer was made on October 16, 2001 and
was  declared  unconditional  on January 10,  2002,  at which time LSR  acquired
approximately  89% of the outstanding  ordinary shares of Huntingdon in exchange
for  approximately 5.3 million shares of LSR Voting Common Stock. The subsequent
offer period expired on February 7, 2002, by which time approximately 92% of the
outstanding  ordinary  shares had been offered for  exchange.  LSR completed its
compulsory purchase under UK law of the remaining outstanding ordinary shares of
Huntingdon  on March 26,  2002 at which time  Huntingdon  became a wholly  owned
subsidiary of LSR, in exchange for a total of  approximately  5.9 million shares
of LSR Voting Common Stock (the "Exchange Offer").

Under accounting principles generally accepted in the United States ("US GAAP"),
the  Company  whose  stockholders  retain the  majority  interest  in a combined
business must be treated as the acquirer for accounting  purposes.  Accordingly,
the  Exchange  Offer is accounted  for as a reverse  acquisition  for  financial
reporting purposes.  The reverse acquisition is deemed a capital transaction and
the net assets of Huntingdon  (the  accounting  acquirer) are carried forward to
LSR (the legal acquirer and the reporting entity) at their carrying value before
the combination.  Although Huntingdon was deemed to be the acquiring corporation
for financial accounting and reporting purposes,  the legal status of LSR as the
surviving corporation does not change. The relevant acquisition process utilizes
the capital  structure of LSR and the assets and  liabilities  of Huntingdon are
recorded  at  historical  cost.  The equity of LSR is the  historical  equity of
Huntingdon, retroactively restated to reflect the number of shares issued in the
Exchange Offer.

LSR's  executive  office  is  based at the  Princeton  Research  Center  in East
Millstone, New Jersey.

HISTORY

Huntingdon was originally  incorporated in the UK in 1951 as a limited liability
company  to  provide  contract  research  services  to  the  UK  pharmaceutical,
agrochemical  and food  industries.  In 1964 it was  acquired by the US company,
Becton Dickinson. Over the next 20 years it successfully established itself as a
leading Contract  Research  Organization  (CRO) with business across a number of
sectors and with a number of leading pharmaceutical and agrochemical  companies.
In April 1983,  Huntingdon was  re-registered as a public limited company and in
1988 it was  floated  on the London  Stock  Exchange.  In early 1989  Huntingdon
obtained a listing for its ADR's on the New York Stock Exchange.

In  1995,  it  acquired  the  toxicology   business  of  APBI,   which  included
laboratories near Princeton, New Jersey and Newcastle and Eye, Suffolk in the UK
for a total  consideration  of $43 million.  Immediately upon  acquisition,  the
toxicology  business  of  APBI in the UK was  merged  with  that  of  Huntingdon
Research  Center Limited and the name of that company changed to Huntingdon Life
Sciences Limited.  The US business acquired operates as Huntingdon Life Sciences
Inc.

In the first half of 1997,  allegations  were made  relating  to animal care and
Good Laboratory Practice (GLP) against  Huntingdon's  operating  subsidiaries in
the UK and US. Those allegations and the UK Government's subsequent statement in
the House of Commons in July 1997 about its investigation into those allegations
caused  the  cancellation  of  booked  orders  and  a  decline  in  new  orders.
Significant trading losses and cash outflows resulted during the period from mid
1997 through 1998. Given the medium to long term element of many of Huntingdon's
activities  and the  reluctance  of clients to place new work until its finances
were stabilized,  Huntingdon required a substantial injection of finance to both
initially restore confidence and then to fund operations during the period until
it returned to profitability.

On September 2, 1998 a group of new investors,  led by Andrew Baker,  subscribed
(pound)15  million ($25 million) for 120 million  ordinary shares while existing
shareholders  and  institutional  investors took up a further 57 million shares,
contributing  (pound)7.1  million ($11.8 million).  After expenses of (pound)1.7
million ($2.9 million),  the issue of shares raised  (pound)20.4  million ($33.9
million).  On the same date Huntingdon's bankers agreed to continue Huntingdon's
credit  facilities at (pound)24.5  million ($40.8 million) until August 31, 2000
and this amount  remained fully drawn down.  This debt was refinanced on January
20, 2001 by means of a loan from HLSF LLC, a subsidiary  company of the Stephens
Group Inc., a related party at the time, which has since transferred the debt to
an unrelated third party. It is now repayable on June 30, 2006.

Since the  involvement of the new investor  group in 1998, the management  team,
led by Brian Cass,  believes  that LSR has  successfully  addressed  many of the
Company's past difficulties. Relationships with customers have been restored and
sales are growing at an encouraging rate.

In  November  1999,  a new so  called  "animal  rights"  group  known  as  "Stop
Huntingdon  Animal  Cruelty"  (SHAC) was formed in the UK with Huntingdon as its
target.  Since then, activists in both the UK and the US have continued focusing
on  Huntingdon  (now  LSR),  its  staff  and  directors,  but  also  many  other
stakeholders in the business,  including  shareholders,  financial institutions,
suppliers and customers. For further details see Other Information Pertaining to
the Company - Animal Rights Activism, below.

In October 2001, LSR commenced the Offer for Huntingdon,  which was completed in
March 2002 with Huntingdon becoming a wholly owned subsidiary of LSR. The effect
of the Offer was to re-domicile  Huntingdon's  corporate and legal  existence to
the US. As a US company  incorporated  in  Maryland,  LSR  benefits  from a more
hospitable  corporate  environment,  including corporate  governance and privacy
rules  and  regulations  that  benefit  LSR  security  holders.   Moreover,  the
investment  community in the US is more familiar  with the CRO  industry,  since
most publicly traded CRO's are domiciled in the US.

In March 2002, LSR completed a private  placement of  approximately  5.1 million
shares of Voting  Common  Stock at a per share  subscription  price of $1.50 per
share.

In April 2002,  LSR began  trading  its common  stock on the US Over the Counter
Bulletin Board (OTCBB).

DESCRIPTION OF BUSINESS

The Company provides pre-clinical and non-clinical  biological safety evaluation
research services to most of the world's leading pharmaceutical,  biotechnology,
agrochemical  and  industrial  chemical  companies.  The  purpose of this safety
evaluation is to identify risks to humans,  animals or the environment resulting
from the use or  manufacture  of a wide range of chemicals,  which are essential
components of our clients' products. The Company's services are designed to meet
the regulatory requirements of governments around the world.

The Company's aim is to develop its business  within these markets,  principally
in the  pharmaceutical  sector,  and through  organic  growth.  In doing so, the
Company  expects to benefit  from strong drug  pipelines  in the  pharmaceutical
industry and a growing trend towards  outsourcing as clients focus more internal
resources on research in the search for new compounds.

The Company's sales and marketing functions are specifically focused on two main
groups, pharmaceutical and non-pharmaceutical customers. As much of the research
activity  conducted  for  these two  customer  groups is  similar,  the  Company
believes it is appropriate, operationally, to view this as one business.

Pharmaceuticals and Biopharmaceuticals

The pharmaceutical research and development pathway is shown below:
<TABLE>
<CAPTION>

----------------------------- ---------------------------------------------------------------------- ----------------
<S>   <C>                    <C>                  <C>   <C>            <C>              <C>          <C>
       DRUG DISCOVERY                                   DRUG DEVELOPMENT                                MARKETING
----------------------------- ---------------------------------------------------------------------- ----------------
                              NON-CLINICAL                             CLINICAL
                                  Pre-Clinical
                              Toxicology
                              Pharmacology
                              Drug Metabolism
                              Pharmacokinetics
     Chemical Synthesis                                  Phase I          Phase II      Phase III       Phase IV
                                                         Safety           Efficacy      Long Term    Post marketing
                                                                                         efficacy     surveillance
                                                    ------------------ --------------- -------------
                                                    LONG TERM SAFETY STUDIES

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

</TABLE>

The Company  performs  non-clinical  testing in support of the drug  development
process.   This  primarily   consists  of  pre-clinical   outsourcing  from  the
pharmaceutical  industry,  as well as further  longer term  non-clinical  safety
testing  that is  performed  in  parallel  to human  clinical  testing  (such as
carcinogenicity   studies   and  safety   studies   relating   to   reproductive
implications).  Essentially  all of  this  work  is  performed  as a  result  of
regulatory  requirements  that seek to minimize  the risks  associated  with the
ultimate  testing and use of these  compounds  in humans.  Pre-clinical  testing
includes  studies  conducted  prior to the compound's  exposure to humans.  This
helps to  evaluate  both how the drug  affects  the body as well as how the body
affects the drug.  Utilizing advanced laboratory and toxicological  evaluations,
this work helps assess safe and appropriate dose regimens. Non-clinical testing,
which includes  longer term studies often conducted  concurrently  with clinical
(human)  testing,  can focus on identifying  and avoiding the longer term cancer
implications  of exposure to the  compound,  or  relating  to the  potential  of
possible reproductive implications. Over 80% of the Company's orders are derived
from this  pharmaceutical  sector. The Company views its non-clinical  market as
extending  to "proof of concept" in man (Phase 2A) and to  analytical  chemistry
support  for  clinical  trials.  Since 1999,  the Company has had  collaborative
relationships  with a  number  of  Phase  I  clinical  trial  units  and  offers
centralized clinical laboratory services in support of clinical trials.

The  Company  has also  actively  pursued  opportunities  to extend its range of
capabilities  supporting late stage drug  discovery,  focused around invitro and
invivo models for lead candidate drug  characterization  and optimization.  This
growing range of biological services is intended to position the Company to take
advantage of the increasing demand for a greater  understanding of the physical,
chemical  and  biological  properties  of  intended  therapeutics  prior  to the
commencement of pre-clinical and clinical testing.

The outsourced market for the late stage clinical trials (Phase 3 and beyond) is
also relevant to the Company.  While the Company does not preclude entering this
market in the future,  it has no plan to do so in the foreseeable  future, as it
is a very  different  business and one in which a number of major  companies are
already firmly established.

Market Growth

It is estimated that the pharmaceutical industry annual research and development
(R & D)  spending  is over $50 billion per year and is growing at around 10% per
annum. Approximately 20% of this is devoted solely to pre-clinical testing and a
further  10%  to  central  laboratory   services.   The  Company  believes  that
approximately  20-25% of the  pre-clinical  is  outsourced  and  almost  all the
central  laboratory  which means that the Company is today competing in a market
which exceeds $3 billion.  It is widely  believed that this market will continue
to grow for the  foreseeable  future,  both in absolute dollar amount and in the
percentage of pre-clinical work that is outsourced.

The market  for these  services  is  growing,  among  other  things,  due to the
following:

o    New drug  discovery  is  growing  fueled  by new  technologies  and  strong
     profits.  The information obtained from the Human Genome Project has led to
     the greater  understanding  of the  pathways  underlying  the  mechanism of
     disease. This has, in turn, led to a growth in the use and understanding of
     the  `omics  (genomics,  proteomics,  etc.) and  increased  focus on target
     receptor based discovery.

o    Preclinical development services should experience the higher growth first,
     as they are at the front end to receive  the  anticipated  wave of new drug
     candidates generated by advances in drug discovery technologies.

o    The need to replace earnings from drugs coming off patent,  and anticipated
     decreasing price flexibility in key markets,  is driving an increase in the
     number of drugs being put into development.

o    It is estimated there has been a 30% increase in the numbers of projects in
     pre-clinical development in the last four years.

o    There is also a growing trend towards the  outsourcing of development  work
     as clients focus more internal resource on discovery research in the search
     for new lead compounds.

o    The biotechnology  industry has become a significant source of business for
     the Company.  The number of drugs produced by the  biotechnology  industry,
     which  require US Food and Drug  Administration  (FDA)  approval  has grown
     substantially  over the past  decade.  Many  biotechnology  companies  have
     strategically  chosen  not to invest  in asset  intensive  development  and
     regulatory safety evaluation,  but rather to outsource major areas of R & D
     and  utilize  CROs to  perform  these  services.  This  frees them from the
     inefficient  utilization of in-house capabilities due to their sporadic and
     varied demand for these capabilities.

o    The process of  consolidation  within the  pharmaceutical  industry is also
     accelerating  the move  towards  outsourcing.  While there is a  short-term
     negative impact from mergers with development  pipelines being rationalized
     and a focus on integration rather than development,  longer-term  resources
     are  increasingly  invested in in-house  facilities  for discovery and lead
     optimization  rather than  development  and regulatory  safety  evaluation.
     Undertaking  development  work and safety  evaluation is the Company's core
     business.

As a result of these,  amongst  other  factors,  it is believed that the overall
market for  outsourced  services is  estimated  to be growing at a rate at least
equal  to  the  growth  of  research   and   development   expenditure   by  the
pharmaceutical industry.

Non-Pharmaceuticals

The Company currently generates  approximately 20% of its orders from safety and
efficacy testing of compounds for the  agrochemical,  industrial  chemical,  and
veterinary and food  industries.  During 2004  non-pharmaceutical  revenues were
approximately  the same as the  prior  year  and a  declining  percent  of total
revenues,   which  is  predicted  to  continue.   The  work  involved  has  many
similarities  and  often  uses  many  of the  same  facilities,  equipment,  and
scientific   disciplines   to  those   employed  in   pre-clinical   testing  of
pharmaceutical compounds.

The Company's business in these areas is again driven by governmental regulatory
requirements.  The Company's  services  address  safety  concerns  surrounding a
diverse range of products,  spanning such areas as  agricultural  herbicides and
other pesticides, medical devices, veterinary medicines, and specialty chemicals
used  in the  manufacture  of  pharmaceutical  intermediates,  and  manufactured
foodstuffs  and  products.  The Company  believes it is a clear market leader in
programs  designed to assess the safety,  environmental  impact and  efficacy of
agricultural chemicals as well as in programs to take new specialty chemicals to
market.

<PAGE>


Market Growth

It is estimated that the worldwide market for outsourced  contract research from
non-pharmaceutical  industries is approximately $300 million.  The growth in the
non-pharmaceutical  business  is  driven  both  by  the  introduction  of  novel
compounds,  and by legislation concerning the safety and environmental impact of
existing products.

The Company  believes that this segment is likely to experience  relatively  low
growth in the next few years,  although a number of market segments  included in
this broad area of business have the potential for some growth in the future due
to the following:

o    Continued  implementation  of  testing  requirements  for `high  production
     volume' (HPV) chemical products in Europe and the US.
o    Introduction of new  legislation  for the  notification of new and existing
     chemicals that are in use within the European Union (REACH).
o    Safety testing of specific  formulations of crop  protection  products on a
     country-by-country basis within the European Union (91/414).
o    More stringent regulations affecting compounds, which have the potential to
     adversely affect the environment, (e.g. biocides and endocrine disrupters).
o    Growth in  concerns  over food  safety,  (e.g.  additives  and  genetically
     modified foods, and the introduction of `nutraceuticals').

Safety  testing in these  industries  is also more likely to be  outsourced  as,
unlike the pharmaceutical  industry, fewer companies have comprehensive internal
laboratory  facilities.  While  overall R & D is not  growing,  we believe  that
increased outsourcing could provide business opportunities in this market.

Customers

The  Company  offers  worldwide   pre-clinical  and  non-clinical   testing  for
biological safety evaluation research services to pharmaceutical, biotechnology,
agrochemical  and industrial  chemical  companies.  In 2004 the Company received
orders from companies  ranging from the largest in their industries to small and
start-up  organizations.  37 clients  placed  over $1 million of orders with the
Company and the ten largest clients  accounted for  approximately 45% of orders.
No single client accounted for more than 10% of net revenues for 2004.

For net revenues  from  clients,  assets  attributable  to each of the Company's
business  segments,  other segment  information  and a geographical  analysis of
revenues from clients (based on the location of the client) for each of the last
three fiscal years, see note 13 to the audited consolidated financial statements
included elsewhere in this Annual Report.

Backlog

The majority of the  Company's  net revenues are earned under  contracts,  which
generally range in duration from a few months to three years. Revenue from these
contracts is generally  recognized over the term of the contract as services are
rendered.  The  Company  maintains  an order  backlog to track  anticipated  net
revenues for work that has yet to be earned.  Aggregate  backlog at December 31,
2004 was $119 million  compared to $93.5  million at December  31,  2003,  which
represents an increase of 14% exclusive of the impact of foreign exchange.

<PAGE>

COMPETITION

Competition in both the  pharmaceutical and  non-pharmaceutical  market segments
ranges from the in-house R&D divisions of large pharmaceutical, agrochemical and
industrial chemical companies who perform their own safety assessments, to "full
service"  providers - CROs like LSR,  who  provide a full range of  non-clinical
safety  services to the  industries  (such as Covance  Inc.,  and Charles  River
Laboratories International,  Inc., which acquired Inveresk Research in 2004) and
"niche" suppliers focusing on specific services, geographic areas, or industries
(such as MDS, WIL Research, or SafePharm Labs).

GOVERNMENT REGULATION OF OPERATIONS

Regulatory agencies

Since the services  provided by the Company are used to support  pharmaceutical,
biotechnological,  chemical or agrochemical product approval  applications,  its
laboratories are subject to both formal and informal  inspections by appropriate
regulatory  and  supervisory  authorities,  as well as by  representatives  from
client  companies.  The  Company  is  regularly  inspected  by US,  Japan and UK
governmental  agencies  because of the number and complexities of the studies it
undertakes.  In 1979, the US Food and Drug Administration  (FDA) promulgated the
Good Laboratory  Practice (GLP) regulations,  defining the standards under which
biological safety evaluations are to be conducted.  Other governmental  agencies
such as the  Environmental  Protection  Agency (EPA),  the Japanese  Ministry Of
Health  and  Welfare,  the  Japanese  Ministry  of  Agriculture,   Forestry  and
Fisheries,    and   the   UK    Department    of   Health,    have    introduced
compliance-monitoring  programs  with  similar  GLP  standards.  During 2004 the
Company  in the UK had 2 GLP  inspections;  and in the US an EPA  (Environmental
Protection  Agency)  inspection.  The Company has had numerous such  inspections
since 1995.

The Company's laboratory in the US is subject to the United States Department of
Agriculture  (USDA)  Animal  Welfare  Regulations  (Title  9,  Code  of  Federal
Regulations,  Subchapter  A). The  laboratory  is  regularly  inspected  by USDA
officials for compliance with these  regulations.  Compliance is assured through
an  Institutional  Animal Care and Use Committee,  comprising staff from a broad
range of disciplines within the Company and including  external  representation.
Furthermore,  in the US there is a  voluntary  certification  program  run by an
independent and  internationally  recognized  organization,  the Association for
Assessment and Accreditation of Laboratory  Animal Care (AAALAC).  The Company's
laboratories  in both  the US and UK are  accredited  under  this  program.  The
Company's  pre-clinical  services  are  subject to  industry  standards  for the
conduct of research and development studies that are embodied in the regulations
for GLP.  The FDA and other  regulatory  authorities  require  the test  results
submitted to such  authorities be based on studies  conducted in accordance with
GLP. The Company must also maintain reports for each study for specified periods
for auditing by the study sponsor and by FDA or other regulatory authorities.

The  Company's  operations  in the UK are  regulated by the Animals  (Scientific
Procedures)  Act 1986.  This  legislation,  administered  by the UK Home Office,
provides  for the control of  scientific  procedures  carried out on animals and
regulation   of  their   environment.   Personal   licenses   (the  Company  has
approximately  240  licensees) are issued by the UK Home Office to personnel who
are competent to perform  regulated  procedures and each program of work must be
authorized  in advance by a Project  Licensee.  Premises  where  procedures  are
carried  out  must  also  be  formally   designated   by  the  UK  Home  Office.
Consultations  and  inspections  are  regularly  undertaken  in order to  ensure
continued compliance with regulatory and legislative  requirements,  the Company
had 18 such visits in 2004.

At each of its  research  centers,  the  Company  ensures  the  availability  of
suitably experienced and qualified veterinary staff backed by a 24-hour call out
system.

COMPLIANCE WITH ENVIRONMENTAL REGULATIONS

While the Company  conducts its  business to comply with  certain  environmental
regulations,  compliance with such regulations does not impact  significantly on
its earnings or competitive  position.  Management  believes that its operations
are  currently  in  material   compliance  with  all  applicable   environmental
regulations.

OTHER INFORMATION PERTAINING TO THE COMPANY

Human Resources

The  Company's  most  important  resource is its people.  They have  created the
Company's knowledge base, its expertise and its excellent scientific reputation.
Scientists from the Company are represented at the highest levels in several US,
UK and international  committees on safety and toxicity  testing.  Several staff
members are  considered  leaders in their  respective  fields.  They  frequently
lecture at  scientific  seminars and  regularly  publish  articles in scientific
journals. This recognition has resulted in frequent assignments from clients for
consultation  services.  Some of the  Company's  staff  serve by  invitation  or
election on a number of scientific and industrial  advisory panels and groups of
certain  organizations  and agencies such as the FDA, the EPA, the UK Department
of Health, and the World Health Organization.

To ensure that this  experience  and  expertise is  transmitted  throughout  the
organization, the Company conducts training programs. For example, the Company's
study  director  training  programs  train  graduate  staff  in  all  phases  of
toxicology.  Also, in conjunction with the Institute of Animal  Technology,  the
Company  maintains what it believes to be one of the largest  animal  technician
training  programs in the world. The Company employs  approximately 240 licensed
personnel.

The number of employees in the Company at December 31, 2004 and 2003 were as
follows:

                         2004                      2003
US .............          247                       223
UK .............        1,129                     1,233
Japan ..........           11                        11
                   -----------               -----------
                        1,387                     1,467
                   -----------               -----------

The  reduction  in the UK  headcount  is a result  of the  restructuring  of the
business in the first quarter of 2004, arising from a consolidation of duplicate
facilities   in   response   to  changes  in  the   market,   particularly   for
non-pharmaceutical services.

Management and Labor Relations

The Company's  labor force is non-union and there has never been any  disruption
of the business through strikes or other employee action.  The Company regularly
reviews its pay and benefits  packages and  believes  that its labor  relations,
policies and practices and management  structure are  appropriate to support its
competitive position.

Acquisition of Huntingdon Life Sciences KK (HLS KK)

HLSKK has acted as the Company's  marketing  representative in Japan since 1996.
This Company was a joint venture, 50% of which was owned by Huntingdon.  On July
1, 2003,  the  remaining  50% of the shares in HLS KK, not  previously  owned by
Huntingdon,  was  purchased,  resulting  in  HLS  KK  becoming  a  wholly  owned
subsidiary  of  Huntingdon.  The  purchase  price is  payable  over a three year
period,  and is equal to the  greater of (a) $1  million  or (b) the  commission
which would have been paid if the  purchase had not happened at rates of between
2.5% and 4.5% of  billings  generated.  Payments  during  that three year period
shall be made at the rate which had been in effect for commissions  prior to the
acquisition, and is payable semi-annually.  The amount paid in 2004 was $577,000
(there were no payments made in 2003 that pertained to the purchase of the final
50% interest).

Prior to July 1, 2003,  the shares owned by Huntingdon in HLS KK were held as an
investment,  as the  day to day  control  of  HLS KK was  not  exercised  by the
Company.

<PAGE>

Research and Development

In addition to  experience  gained  through  research  activities  performed for
clients,  the Company  engages in  research in order to respond to the  changing
needs of clients and to maintain  competitiveness within the industries in which
it operates.  Most of the research  undertaken,  however, is an inherent part of
the research carried out on behalf of clients in completing  studies and as such
it is not identified separately.

Know-how and Patents

The Company  believes that its  proprietary  know-how plays an important role in
the success of its business.  Where the Company considers it appropriate,  steps
are  taken to  protect  its  know-how  through  confidentiality  agreements  and
protection  through  registration  of title or use.  However  the Company has no
patents, trademarks,  licenses, franchises or concessions which are material and
upon which any of the services offered are dependent.

Quality Assurance

The Company maintains extensive quality assurance  programs,  designed to ensure
that all testing  programs  meet client  requirements,  as well as all  relevant
codes,  standards  and  regulations.   Based  on  a  Master  Schedule,  periodic
inspections are conducted as testing  programs are performed to assure adherence
to  project  specifications  or  protocols  and final  reports  are  extensively
inspected to ensure consistency with data collected.

Animal Rights Activism

In  parallel   with  an  increase  in  so  called   "animal   rights"   activity
internationally  targeting  organizations  in the  CRO,  academic,  and  medical
research  community,  a new campaign  group (Stop  Huntingdon  Animal Cruelty or
SHAC) was formed in the UK during  November 1999 with  Huntingdon as its target.
SHAC's broad aim is to end all animal research, while its immediate and publicly
stated goal at that time was to "shut HLS down within three years". During 2000,
this  campaign  intensified  with  any  stakeholder  in  Huntingdon  becoming  a
potential  target;  this included staff,  directors,  institutional and personal
shareholders,   customers,  financial  institutions  and  other  suppliers.  The
protests  took  many  forms,  including  demonstrations  outside  the  Company's
facilities and in local towns;  distribution of propaganda;  abuse, intimidation
and threats directed at many of the stakeholders listed above; and in some cases
violence.

During  2001 and 2002 the  incidents  of violent  protest in the UK  appeared to
partly diminish. However, activists increased the focus of protest activities on
the  Company's  financial  institutions,  in  unsuccessful  attempts  to deprive
Huntingdon of its bank financing and to defeat the re-domiciling  transaction to
the US.  During  the  same  period,  in  large  part  due to the  successful  US
re-domiciling, animal rights activities of SHAC and the other groups expanded to
the US, with a focus on the Company's  stakeholders and suspected  stakeholders,
market makers and senior staff and directors.

To counter this "animal rights" campaign,  the Company has adopted a strategy of
openness and direct  cooperation  with all its  stakeholders,  the media and the
local communities.  The Company has taken every opportunity to promote the value
of the work it does in helping its customers  bring to market safe and effective
products.  Members of the media, schools,  local groups and national bodies have
visited the Company's facilities, toured the animal facilities and laboratories,
and talked with staff. These visitors have been consistently  impressed with the
Company's  ethics,  standards of animal welfare and the  professionalism  of its
staff.  As  a  consequence  of  the  Company's  high  profile  public  relations
activities and the irrationality of the "animal rights" messages, media coverage
has become  increasingly  positive  throughout the duration of the campaign.  In
both the US and the UK the media has  consistently  condemned the actions of the
SHAC campaign.

As a result of and in conjunction  with the Company's  leadership on this issue,
there has been a marked  increase  in  communication  campaigns  to educate  the
general  population  about the valuable  benefits of animal based research,  the
commitment to and progress in development of non-animal based alternatives,  and
the high  standard  of  animal  welfare  in which  this work is  conducted.  Our
clients'   recognition  for  our  scientific  and  professional   integrity  and
leadership  was evident in the  granting in October 2001 of the  prestigious  UK
Pharma  Industry  Individual  Achievement  Award to Brian  Cass,  the  Company's
President and Managing  Director.  In June 2002, in further  recognition  of his
contribution to science and professional achievements, Mr. Cass was appointed as
a Commander in the Most Excellent Order of the British Empire (CBE).  The highly
prestigious CBE is awarded on merit, for exceptional  achievement or service; it
is  recommended  by the Prime  Minister  of England  but decided by the Queen of
England.

In the UK the  Company  has  successfully  lobbied  politicians  and the British
parliament,   with  great  support  from  industry  trade  bodies  such  as  the
Association of the British Pharmaceutical Industry, Bioindustry Association, and
Research  Defence  Society.  As a result,  the British  Government has made very
positive statements in support of the Company and has been extremely critical of
the  illegal  acts  of some  "animal  rights"  supporters.  The  Government  has
introduced  legislation  to  offer  more  protection  to those  targeted  and is
encouraging  the police and courts to ensure the law is enforced.  This national
initiative continues to develop,  particularly as the government and police deal
with  protecting  other  animal  rights  targets in the UK,  including  academic
institutions. Of particular note, in January 2005 the UK Department of Trade and
Industry  announced  proposed  amendments to the previously  introduced  Serious
Organized  Crime and  Police  Bill that  would  create a new crime of  "economic
sabotage" by animal rights  extremists.  The new measures are designed to tackle
the  intimidation of businesses by animal rights  extremists by protecting firms
doing  business  with animal  research  facilities.  These new  measures  are in
addition to other  provisions of the bill introduced in 2004 that would create a
new  offense of  protesting  outside  someone's  home in such a way that  causes
harassment,  alarm or distress to residents;  provide additional police power to
direct  protestors  to leave  home  protests;  and extend  the  Protection  from
Harassment Act to cover various types of harassment by animal rights extremists.

In April  2003 the  Company  obtained  from the  London  High Court of Justice a
groundbreaking legal injunction protecting its employees against harassment from
SHAC and  similar  animal  rights  activists.  The  order,  obtained  under  the
Protection from Harassment Act, bans protesters from approaching within 50 yards
of employees homes and sets up similar  exclusion zones around the Company's two
UK  research  centers.  Several  months  later,  a group of five large  Japanese
pharmaceutical  companies  followed  a similar  course in  obtaining  protective
injunctions  for their  employees  who were being  harassed.  Since then,  other
companies   similarly   targeted  by  animal  rights  extremists  have  obtained
injunctions of this type.  Notably  during 2004,  Oxford  University  became the
target  of animal  rights  extremists  attempting  to halt the  construction  of
on-campus animal research facilities.  The University also successfully obtained
a broad-ranging injunction against such protests.

Although the animal rights  movement is more recent and less developed in the US
and  appears  to enjoy  less  public  support  than in the UK,  the  Company  is
addressing it proactively  with actions  similar to those it has utilized in the
UK.  These  steps  include  a  strategy  of  openness  and  media   cooperation;
legislative  and regulatory  lobbying in association  with industry trade bodies
such as Americans for Medical  Progress,  National  Association  for  Biomedical
Research and the Foundation for Biomedical Research; and legal actions including
close cooperation with law enforcement  authorities at all levels.  For example,
following  incidents  of vandalism at or  following  home  protests  against the
Company's US employees,  the Company  obtained orders of the New Jersey Superior
Court,  the New York Supreme  Court and the  California  Supreme  Court  placing
restrictions  on home protests by animal  rights  activists as well as limits on
the scope of protests at the Company's  Princeton Research Center.  During 2002,
criminal  indictments  were brought against SHAC extremists in New York City and
Boston. In the New York prosecution, felony convictions, including prison terms,
have been handed down. In Washington  D.C.,  legislation was enacted in May 2002
which  significantly   increased  the  penalties  under  the  Animal  Enterprise
Terrorism Act for acts of vandalism  against  medical  research and animal based
research  facilities.  In May 2004,  seven leading US animal rights  extremists,
including Kevin Kjonas, the President of SHAC-USA,  were arrested and criminally
indicted  by the New Jersey US  Attorney's  Office on federal  charges of animal
enterprise terrorism, interstate stalking and conspiracy to engage in interstate
stalking.  Each of the charges  carries a maximum penalty of three to five years
in federal  prison and a $250,000 fine for each count.  An  additional  criminal
charge of  conspiracy  to  anonymously  utilize a  telecommunications  device to
abuse,  threaten  and harass  persons was added to the  indictment  in September
2004. A trial date of June 1, 2005 has been set.

<PAGE>
Management  recognizes  that there has long been,  and  expects  that there will
continue to be,  individuals  with strong views that animals  should not be used
under any  circumstances  for the  betterment of humanity,  including for animal
based research. Regardless of whether there continues to be a direct impact from
this political issue on the Company's business, the Company remains committed to
continuing its initiatives to educate the community to the value of animal based
medical  research,  to advancing the important  strides our industry has made in
animal  welfare,  and to supporting with state of the art science and techniques
our  clients'  desire  to  maximize  the  safety of vital  new  compounds  being
developed for the betterment of society.

Available Information

Our Internet website is located at  http://www.lsrinc.net.  The reference to our
Internet  website  does  not  constitute   incorporation  by  reference  of  the
information contained on or hyperlinked from our Internet website and should not
be considered part of this document.

The  public  may read and copy any  materials  we file with the  Securities  and
Exchange  Commission  ("SEC") at the SEC's  Public  Reference  Room at 450 Fifth
Street, N.W..  Washington,  D.C. 20549. The public may obtain information on the
operation of the Public  Reference  Rooms by calling the SEC at  1-800-SEC-0330.
The SEC also  maintains an Internet  website that  contains  reports,  proxy and
information  statements  and  other  information  regarding  issuers  that  file
electronically   with  the  SEC.  The  SEC's  Internet  website  is  located  at
http://www.sec.gov.

<PAGE>
ITEM 2.  PROPERTIES

The Company's head office is situated  within the Princeton  Research  Center in
New Jersey.

The Company believes that its facilities,  described below, are adequate for its
operations  and that  suitable  additional  space will be  available if and when
needed.

The  following  table  shows the  location  of the  facilities  of the  Company,
approximate size, based on occupancy,  and the principal activities conducted at
such facilities each of which is owned by the Company.
<TABLE>
<CAPTION>

                                    Laboratories
Location                            and Offices       Size         Principal Activities
--------                            -----------       ----         --------------------
<S>                                 <C>               <C>          <C>
Princeton Research Center, East     150,000 sq.ft.    53.5 acres   Laboratories, animal accommodation and
Millstone, NJ, US                                                  offices
Huntingdon Research Center,         559,000 sq.ft.    80 acres     Laboratories, animal accommodation and
Huntingdon, England                                                offices
Eye Research Center, Eye, England   257,000 sq.ft.    28 acres     Laboratories, animal accommodation and
                                                                   offices

</TABLE>

ITEM 3.  LEGAL PROCEEDINGS

The Company is party to certain legal  actions  arising out of the normal course
of its  business.  In  management's  opinion,  none of these actions will have a
material effect on the Company's  operations,  financial condition or liquidity.
No  form  of  proceedings  has  been  brought,  instigated  or  is  known  to be
contemplated against the Company by any governmental agency.


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

The Company's 2004 annual meeting of stockholders  was held on December 2, 2004.
The  only  matter  submitted  for a vote of  stockholders  was the  election  of
directors for a one-year term.  All five of the Company's  directors at the time
were re-elected for an additional one-year term:


  Name                        For                  Withheld

  Andrew Baker                9,078,505            518
  Gabor Balthazar             9,078,990            1,003
  Brian Cass                  9,078,505            488
  Afonso Junqueiras           9,078,051            5,102
  Yaya Sesay                  9,078,551            16,302


In addition, 2,760 shares abstained from voting.

<PAGE>


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S  COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
        ISSUER PURCHASES OF EQUITY SECURITIES

LSR's Voting Common Stock trades on the Over the Counter  Bulletin Board (OTCBB)
Market under the symbol  "LSRI".  The closing  market price of the Voting Common
Stock on March 24, 2005 was $12.65 per share.

Until January 24, 2002  Huntingdon's  Ordinary  Shares were listed on the London
Stock Exchange Ltd., under the Stock Exchange Automated  Quotation symbol "HTD".
The company completed its re-domiciling  from the UK to the US on March 26, 2002
with a conversion  ratio of 50:1 for the HTD common  shares to LSR common shares
(or a ratio of 2 HTD ADRs per 1 LSR common  share).  LSR common stock  commenced
trading on the OTCBB on April 8, 2002.

The  Company's  common stock traded on the OTCBB during 2003 and 2004.  The high
and low  quarterly  sales price of LSR's  common  stock on the OTCBB for the two
years to December 31, 2004 were as follows:

                               HIGH SALES               LOW SALES
QUARTER ENDED                     PRICE                   PRICE
-------------
                            ------------------       -----------------
                                    $                       $
March 31, 2003                    2.80                     1.80
June 30, 2003                     2.90                     1.80
September 30, 2003                3.50                     1.80
December 31, 2003                 2.70                     1.50
March 31, 2004                    2.80                     1.75
June 30, 2004                     5.00                     1.60
September 30, 2004                7.15                     4.00
December 31, 2004                12.50                     6.95

The Company has not paid any cash  dividends in the two most recent fiscal years
and does not expect to declare or pay cash  dividends  on the  Company's  Voting
Common  Stock in the near  future.  The Board of Directors  will  determine  the
extent to which legally available funds will be used to pay dividends. In making
decisions regarding dividends, the Board will exercise its business judgment and
will take into  account  such  matters as results of  operations  and  financial
condition and any then-existing or proposed commitments for the use of available
funds.

See Item 7 for  discussion  of  restrictions  impacting  the export or import of
capital  or that  affect  the  remittance  of  dividends  or other  payments  to
non-resident holders of the Company's equity.

As of March 24, 2005, LSR had 2,202 holders of record of Voting Common Stock.

On March 28, 2002, LSR closed the sale in a private placement of an aggregate of
5,085,334  shares of voting  Common Stock at a price of $1.50 per share.  Of the
aggregate proceeds of approximately $7.6 million, $4.4 million was in cash, $2.4
million  represented  conversion  into  equity of debt owed to Mr.  Baker  ($2.1
million) and Focused Healthcare Partners ("FHP") ($0.3 million) and $825,000 was
paid with promissory  notes.  $128,000 of such promissory notes have been repaid
to the end of 2004.

Equity Incentive Plans

LSR 2001 Equity Incentive Plan (the "LSR 2001 Equity Incentive Plan")

The LSR Board has adopted the LSR 2001 Equity  Incentive  Plan.  Adoption of the
LSR 2001  Equity  Incentive  Plan  enables LSR to use stock  options  (and other
stock-based  awards) as a means to attract,  retain and motivate key  personnel.
This stock option plan was  approved by the  shareholders  of LSR,  prior to the
acquisition of Huntingdon.

Awards  under the LSR 2001  Equity  Incentive  Plan  (which has  designated  the
Compensation  Committee  for  such  purpose)  may  be  granted  by  a  committee
designated  by the LSR  Board  pursuant  to the  terms  of the LSR  2001  Equity
Incentive  Plan and may  include:  (i) options to purchase  shares of LSR Voting
Common Stock,  including  incentive stock options ("ISOs"),  non-qualified stock
options or both; (ii) stock appreciation rights ("SARs"), whether in conjunction
with  the  grant  of  stock  options  or  independent  of such  grant,  or stock
appreciation  rights  that  are only  exercisable  in the  event of a change  in
control or upon other events;  (iii)  restricted stock consisting of shares that
are subject to  forfeiture  based on the  failure to satisfy  employment-related
restrictions;  (iv) deferred stock,  representing the right to receive shares of
stock in the future;  (v) bonus  stock and awards in lieu of cash  compensation;
(vi) dividend equivalents,  consisting of a right to receive cash, other awards,
or other  property  equal in value to dividends paid with respect to a specified
number of shares of LSR Voting Common Stock or other periodic payments; or (vii)
other awards not  otherwise  provided for, the value of which are based in whole
or in part upon the value of the LSR Voting Common Stock.  Awards  granted under
the LSR 2001 Equity  Incentive Plan are generally not assignable or transferable
except pursuant to a will and by operation of law.

The flexible terms of the LSR 2001 Equity  Incentive Plan are intended to, among
other things, permit the Compensation Committee to impose performance conditions
with respect to any award,  thereby  requiring  forfeiture of all or part of any
award  if   performance   objectives   are  not  met  or  linking  the  time  of
exercisability  or  settlement  of an award  to the  attainment  of  performance
conditions.  For awards intended to qualify as "performance-based  compensation"
within the meaning of Section 162(m) of the United States Internal  Revenue Code
such  performance  objectives  shall be based  solely  on (i)  annual  return on
capital;  (ii) annual  earnings or earnings  per share;  (iii)  annual cash flow
provided by operations; (iv) changes in annual revenues; (v) stock price; and/or
(vi) strategic business criteria,  consisting of one or more objectives based on
meeting specified revenue,  market  penetration,  geographic  business expansion
goals, cost targets, and goals relating to acquisitions or divestitures.

LSR's  Compensation  Committee,  which administers the 2001 LSR Equity Incentive
Plan,  has the  authority,  among other  things,  to: (i) select the  directors,
officers and other  employees and  independent  contractors  entitled to receive
awards under the 2001 LSR Equity  Incentive  Plan;  (ii)  determine  the form of
awards,  or combinations of awards,  and whether such awards are to operate on a
tandem basis or in conjunction with other awards;  (iii) determine the number of
shares of LSR Voting  Common Stock or units or rights  covered by an award;  and
(iv) determine the terms and conditions of any awards granted under the 2001 LSR
Equity  Incentive Plan,  including any  restrictions or limitations on transfer,
any vesting schedules or the acceleration of vesting  schedules,  any forfeiture
provision or waiver of the same and including any terms and conditions necessary
or desirable to ensure the optimal tax result for  participating  personnel  and
the  Company  including  by way of example to ensure that there is no tax on the
grant of the rights and that such tax only  arises on the  exercise of rights or
otherwise when the LSR Voting Common Stock  unconditionally  vests and is at the
disposal of such participating  personnel. The exercise price at which shares of
LSR Voting Common Stock may be purchased  pursuant to the grant of stock options
under the 2001 LSR  Equity  Incentive  Plan is to be  determined  by the  option
committee at the time of grant in its discretion,  which discretion includes the
ability  to set an  exercise  price that is below the fair  market  value of the
shares of LSR Voting Common Stock covered by such grant at the time of grant.

The  number  of  shares  of LSR  Voting  Common  Stock  that may be  subject  to
outstanding  awards granted under the 2001 LSR Equity Incentive Plan (determined
immediately  after the grant of any  award)  may not  exceed 20  percent  of the
aggregate number of shares of LSR Voting Common Stock then outstanding.

The  2001  LSR  Equity  Incentive  Plan  may  be  amended,  altered,  suspended,
discontinued,  or  terminated  by  the  LSR  Board  without  LSR  Voting  Common
Stockholder  approval  unless such  approval is required by law or regulation or
under the rules of any stock exchange or automated quotation system on which LSR
Voting  Common  Stock  is  then  listed  or  quoted.  Thus,  LSR  Voting  Common
Stockholder  approval will not  necessarily  be required for  amendments,  which
might  increase the cost of the plan or broaden  eligibility.  LSR Voting Common
Stockholder approval will not be deemed to be required under laws or regulations
that condition favorable tax treatment on such approval,  although the LSR Board
may,  in its  discretion,  seek LSR Voting  Common  Stockholder  approval in any
circumstances in which it deems such approval advisable.

<PAGE>

The LSR Board has designated the Compensation Committee of the Board to serve as
the stock option committee.  LSR made grants under the LSR 2001 Equity Incentive
Plan on March 1, 2002 to certain directors and key employees at the time.

Grants to Directors
-------------------
Name                          Number Granted
Gabor Balthazar               20,000
John Caldwell                 20,000
Kirby Cramer                  40,000

Grants to Named Executive Officers
----------------------------------
Name                          Number Granted
----                          --------------
Andrew Baker                  200,000
Brian Cass                    200,000
Frank Bonner                  35,000
Julian Griffiths              60,000
Richard Michaelson            90,000

All such options have  ten-year  terms;  50% of the shares  subject to grant are
immediately  exercisable  with the remaining 50%  exercisable one year after the
grant date (meaning all such options fully vested as of March 1, 2003);  and all
have an exercise  price of $1.50 per share,  the price at which the Company sold
shares  of  Common  Stock in the  Private  Placement.  Options  to  purchase  an
aggregate of 1,188,000  shares of LSR Common Stock  (including  those  specified
above)  were  granted  during  the two  years  2002  and 2003 to  employees  and
directors, on the terms set forth above, are listed below.

Date of Grant             Numbers Granted              Exercise Price
-------------             ---------------              --------------
March 1, 2002               1,142,000                  $1.50
September 3, 2002              20,000                  $2.40
October 21, 2002               15,000                  $2.03
February 14, 2003              11,000                  $1.80

In 2004,  in  addition to the options  granted  under the 2004 LTIP  referred to
below,  options to purchase an  aggregate  of 67,100  shares of LSR Common Stock
were  issued,  all at exercise  prices  equal to the market price at the date of
grant, on the terms set forth in the previous paragraph, are listed below.

Date of Grant              Numbers Granted             Exercise Price
-------------              ---------------             --------------
April 12, 2004             37,100                      $1.85
October 28, 2004           17,400                      $7.70
December 15, 2004          12,600                      $9.52

2004 Long Term Incentive Plan

Effective  June 1, 2004 the Company  adopted the 2004 Long Term  Incentive  Plan
("2004 LTIP"), pursuant to the terms of the 2001 Equity Incentive Plan. The 2004
LTIP has two components:  a grant of stock options, with a vesting date of March
31, 2007, and a cash bonus to be awarded in 2007 based on 2006 Company financial
performance.

Options to purchase an aggregate of 362,663  shares of common stock were granted
to 32 key  employees  of the  Company  as of June 1, 2004  under the 2004  LTIP;
55,500 of such options were granted to Andrew Baker, the Company's  Chairman and
CEO,  55,500 of such options were granted to Brian Cass, the Company's  Managing
Director  and  President,  30,303  of  such  options  were  granted  to  Richard
Michaelson,  the  Company's CFO and  Secretary,  and 27,750 of such options were
granted to Julian  Griffiths,  the  Company's  UK  Director of  Operations.  The
exercise  price of all such  options is $3.30,  the  market  price of LSR common
stock on June 1, 2004. All such options have ten-year terms and are  exercisable
in full on March 31, 2007. At December 31, 2004,  356,419  shares under the 2004
LTIP option plan were outstanding and none were exercisable.

The following table  summarizes stock option activity under the Company's option
plans.
<TABLE>
<CAPTION>

                                               Shares        Wtd Avg.Ex Price      Number of securities remaining
                                               (000)                               available for future issuance
<S>                                          <C>                  <C>                           <C>
Outstanding - December 31, 2003                1,188               $1.52
Granted                                         430                $3.54
Lapsed                                         (105)               $1.78
Exercised                                      (127)               $1.51
                                             -----------     ------------------    --------------------------------
Outstanding - December 31, 2004                1,386               $2.13                        814,000
                                             -----------     ------------------    --------------------------------
Exercisable at end of year                      996
Weighted average fair value per
option granted in 2004 was                    $3.44
</TABLE>

Huntingdon Life Sciences Group plc Stock Option Plans

Huntingdon  Life  Sciences  Group plc issued  options prior to December 31, 1997
pursuant to several stock option plans. However, the ability to exercise options
under all such  Huntingdon  plans  lapsed on March 26, 2002 in  connection  with
LSR's  acquisition of Huntingdon,  except for those granted under the Unapproved
Stock Option Plan (the  "Unapproved  Plan").  Under the  Unapproved  Plan,  some
options  technically remain outstanding.  However,  such options are exercisable
only for shares of  Huntingdon,  a 100% wholly owned  subsidiary  of LSR, and as
such are considered to have no value.

Warrants

On October 9, 2001, on behalf of  Huntingdon,  LSR issued to Stephens Group Inc.
warrants  to  purchase  up to  704,425  shares of LSR Voting  Common  Stock at a
purchase  price of $1.50 per share.  Stephens Group Inc.  subsequently  sold the
warrants to independent  third parties.  The LSR warrants are exercisable at any
time  and  will  expire  on  October  9,  2011.  These  warrants  arose  out  of
negotiations  regarding the  refinancing  of the bank loan by the Stephens Group
Inc.,  (Stephens'  Loan) in January 2001. In accordance with APB Opinion No. 14,
Accounting for  Convertible  Debt and Debt Issued with Stock  Purchase  Warrants
("APB 14") the warrants  were recorded at their pro rata fair values in relation
to the proceeds received on the date of issuance.  As a result, the value of the
warrants was $430,000. 154,425 of such warrants were exercised in 2004.

On June 11, 2002 LSR issued to FHP warrants to purchase up to 410,914  shares of
LSR Voting Common Stock at a purchase price of $1.50 per share. The LSR warrants
are  exercisable  at any time and will expire on June 11, 2012.  These  warrants
arose out of  negotiations  regarding  the  provision  of the $2.9  million loan
facility made  available to the Company on September 25, 2000 by Mr. Baker,  who
controls FHP. In  accordance  with APB 14 the loan and warrants were recorded at
their pro rata fair values in relation to the  proceeds  received.  As a result,
the value of the warrants was $250,000.

On July 25, 2002, 100,000 warrants were issued at the deemed market price on the
day of $1.50 (the same price at which the Private Placement had been completed).
On October 15, 2003,  100,000  warrants were issued,  75,000 of which were at an
exercise  price of $2.50,  the market price on the day, and 25,000 of which were
issued at an exercise  price of $5.00 per share.  On October 24,  2003,  100,000
warrants  were  issued at the  market  price on the day of  $2.05.  In all three
cases, these warrants were issued to independent  consultants in connection with
financial and strategic advice.

<PAGE>

A summary of warrants outstanding at December 31, 2004 is as follows:

                         Warrants       Exercise Price     Expiration Date
October 9, 2001           550,000           $1.50          October 9, 2011
June 11, 2002             410,914           $1.50           June 11, 2012
October 24, 2003          100,000           $2.05          October 24, 2013

Share purchase loan

Brian Cass,  President and Managing  Director of LSR, acquired 400,000 shares of
LSR Common Stock in the Private Placement.  Mr Cass acquired such shares through
the delivery of two promissory  notes.  Both such promissory  notes, each in the
amount of (pound)211,679 ($406,403), are due on March 28, 2007; bear interest at
the rate of 5% per annum;  and are secured by the  200,000  shares of LSR Common
Stock  purchased  with the  proceeds  of each  such  loan.  The due date of each
promissory  note would be accelerated if Mr Cass  voluntarily  resigned from his
employment  with LSR or had his employment  terminated.  Repayment of one of the
promissory notes will be made by automatic deduction of (pound)44,000  ($84,476)
per year from the (pound)66,000 ($126,713) per year pension contribution made by
the Company to a pension plan  established by Mr Cass. The other note is further
collateralized by the (pound)214,500 ($412,000) accrued in such pension account.
In addition,  one-third of any yearly bonus received by Mr. Cass will be used to
reduce the principal of the  promissory  notes.  Total amount of this loan as of
December  31, 2004 is  (pound)363,000  ($697,000  at year-end  foreign  exchange
rates).

Julian Griffiths, a former director of LSR and current Director of Operations of
Huntingdon, acquired 50,000 shares of LSR Common Stock in the Private Placement.
Mr Griffiths acquired such shares through the delivery of a promissory note in
the principal amount of (pound)52,817 ($101,403), which was due on March 28,
2007; bore interest at the rate of 5% per annum; and was secured by the 50,000
shares of LSR Common Stock purchased with the proceeds of the loan. This loan
was paid in full in 2003.

Repurchase of equity securities

The Company did not repurchase any equity securities during 2004.


<PAGE>

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

The  selected  consolidated  financial  data  presented  below should be read in
conjunction  with  the  "Management's   Discussion  and  Analysis  of  Financial
Condition and Results of Operations", included elsewhere in this report. For the
purpose of this report,  it is assumed that LSR is the ultimate  parent  company
for  periods  prior  to July  19,  2001,  since  before  this  date,  LSR had no
substantive operations on a stand-alone basis.

The selected  consolidated  financial information as of December 31, 2004, 2003,
2002 and 2001 and for each of the four years in the period  ended  December  31,
2004 has been derived from LSR's audited  consolidated  financial statements and
the related notes  included in this Annual Report on Form 10-K beginning on page
34. Such financial statements have been prepared in accordance with US GAAP.

The selected consolidated financial information as of December 31, 2000 has been
derived from Huntingdon's  audited  consolidated  financial statements including
Huntingdon's  Annual Report on Form 10-K for the period ended December 31, 2000.
Such financial statements have been prepared in accordance with US GAAP.
<TABLE>

                                                                         As of and for the year ended December 31
<CAPTION>

                                            ------------- --------------- -------------- ------------- --------------
                                                    2004            2003           2002          2001           2000
                                            -------------------------------------------------------------------------
                                                                 ($000, except per share data)
<S>                                             <C>             <C>            <C>            <C>            <C>
Statement of Operations Data
Revenues                                        $157,551        $132,434       $115,742       $99,206        $95,964
Cost of revenues                               (117,061)       (104,798)       (93,403)      (84,133)       (80,740)
                                            ------------- --------------- -------------- ------------- --------------
Gross profit                                      40,490          27,636         22,339        15,073         15,224
Selling, general and administrative             (24,666)        (20,867)       (18,075)      (15,966)       (15,140)
                                            ------------- --------------- -------------- ------------- --------------
Operating income/(loss) before
   other operating income/(expense)               15,824           6,769          4,264         (893)             84
Other operating income/(expense)                       -         (3,522)              -         (750)              -
                                            ------------- --------------- -------------- ------------- --------------
Operating income/(loss)                           15,824           3,247          4,264       (1,643)             84
Interest expense (net)                           (6,521)         (5,990)        (6,238)       (6,510)        (7,204)
Other income/(expense)
  Foreign exchange gain/(loss) on
      Convertible Capital Bonds                    3,345           4,760          4,977       (1,386)        (3,544)
  Gain on repurchase of
      Convertible Capital Bonds
  Capital Bonds                                        -             602          1,191             -              -
  Cost of currency hedge contract                  (455)               -              -             -              -
  Merger/Offer costs                                   -               -        (1,246)       (2,868)              -
  Refinancing costs                                    -               -              -         (217)        (1,819)
                                            ------------- --------------- -------------- ------------- --------------
Income/(loss) before income taxes                 12,193           2,619          2,948      (12,624)       (12,483)
Income tax benefit/(expense)                       5,401           1,109          (251)         2,996          2,720
                                            ------------- --------------- -------------- ------------- --------------
Net income/(loss)                                 17,594          $3,728         $2,697      ($9,628)       ($9,763)
                                            ------------- --------------- -------------- ------------- --------------
Income/(loss) per share
     -  basic                                      $1.45           $0.31          $0.25       ($1.64)        ($1.68)
     -  diluted                                    $1.29           $0.29          $0.24       ($1.64)        ($1.68)
Weighted average number of
Common stock (000)
     -  basic                                     12,153          11,958         10,679         5,868          5,824
     -  diluted                                   13,607          12,700         11,083         5,868          5,824

Balance Sheet Data
Working capital*                                  $1,800        $(3,911)         $(844)      $(1,896)      $(33,214)
Total assets                                     200,075         156,273        148,410       133,964        146,107
Long term debt and related party loans            89,685          87,560         84,075        88,123         50,209
Total shareholders deficit                       (2,064)         (8,446)        (7,804)       (4,724)          4,066
Common stock and paid in capital                  75,796          75,221         75,217        66,094         65,330
Book value per share                             ($0.17)         ($0.71)        ($0.73)       ($0.81)          $0.70


Other Financial Data
Depreciation and amortization                     $9,530          $9,049         $8,108        $8,307         $9,093
Capital expenditure                               11,096           8,716          4,177         3,295          3,648
Cash generated/(used) in the year                 16,070           2,627         12,404       (1,046)        (5,189)
Net days sales outstanding (DSO)                       4               8              9            47             36
Gross profit %                                      25.7           20.9%          19.3%         15.2%          15.9%
Operating income/(expense) before
  other operating income/(expense)%                10.0%            5.1%           3.7%        (0.9)%           0.1%
Operating income/(expense) %                       10.0%            2.5%           3.7%        (1.7)%           0.1%
Net income/(loss) %                                11.2%            2.8%           2.3%        (9.7)%        (10.2)%
Other operating income/(expense) is comprised of:
Restructuring costs                                    -        ($3,551)              -             -              -
Animal rights costs                                    -           (575)              -         (400)              -
Recovery/bad debt relating to
  bankruptcy of an exchange broker                     -             396              -         (350)              -
Share of associate company income                      -             208              -             -              -
                                            ------------- --------------- -------------- ------------- --------------
                                                       -         (3,522)              -         (750)              -
                                            ------------- --------------- -------------- ------------- --------------
<FN>

*Working capital is defined as current assets less current liabilities.
</FN>
</TABLE>

<PAGE>


ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

GENERAL

The following  should be read in  conjunction  with the  consolidated  financial
statements  of  LSR  as  presented  in  "Item  8,   Financial   Statements   and
Supplementary Data".

The Company is a global provider of pre-clinical and non-clinical safety testing
services to the pharmaceutical, agrochemical and industrial chemical industries.
The Company  provides those services under  contracts,  which may range from one
day to three years.  Income from these  contracts is  recognized as services are
rendered  towards the  preparation of the final report.  Contracts are generally
terminable  upon  notice by the client  with the client  being  responsible  for
reimbursing  the  Company  for the value of work  performed  through the date of
cancellation  plus the value of work required to wind down a study on an orderly
basis.

The Company's business is characterized by high fixed costs, in particular staff
and facility related costs. Such a high proportion creates favorable  conditions
for the Company as excess capacity is utilized, such as has been the case during
the last three years.  However,  during  periods of declining  revenue,  careful
planning  is  required  to reduce  costs  without  impairing  revenue-generating
activities.

RESULTS OF OPERATIONS

Year ended December 31, 2004 compared with year ended December 31, 2003

Revenues in the year ended December 31, 2004 were $157.6 million, an increase of
19% on revenues of $132.4  million for the year ended  December  31,  2003.  The
underlying increase,  after adjusting for the impact of the movement in exchange
rates was 8.5%; with the UK showing a 8.6% increase and the US an 8.4% increase.
Orders for the year ended  December  31,  2004,  at constant  exchange  rates of
$179.4  million were 24% above the previous  year.  At December 31, 2004 backlog
(booked-on  work)  amounted to  approximately  $119 million,  an increase of 27%
above the level at December 31, 2003 (14% net of foreign currency effect).  This
reflected  strong  demand in the industry as  companies  invested in their early
stage  pipelines  together  with LSR's success in winning new studies due to its
scientific expertise and focus on customer service.

Cost of sales in the year ended  December 31, 2004 were $117.1 million (74.3% of
revenue),  an  increase  of 11.7% on cost of sales of $104.8  million  (79.1% of
revenue) for the year ended  December 31, 2003.  This increase was partly due to
exchange  rate  movements,  which  increased  cost of sales in the year by $10.0
million.  Without these movements cost of sales would have increased by 2.2%. In
the UK cost  increases in sterling were only 2%, which is lower than the revenue
growth as capacity is filled without the corresponding  increase in fixed costs.
The main increase was in direct material costs  reflecting the higher  revenues,
offset by a reduction in labor costs as a result of the restructuring  completed
in the first  quarter.  Increases  in costs in the US were  3.3%,  mainly due to
increases in labor costs offset by a reduction in direct material costs compared
to the previous year.

Selling,  general and administrative expenses rose by 18.2% to $24.7 million for
the year ended December 31, 2004 (15.7% of revenue) from $20.9 million (15.8% of
revenue) in the year ended  December 31, 2004.  Of this  increase,  $2.1 million
related to exchange rate movements. This growth was due to a continuation of the
build-up of the sales activity during the year and higher labor costs, including
bonuses paid or accrued to senior employees.

Other operating  expenses in the year ended December 31, 2003 were $3.5 million.
These  comprised  $0.6 million in connection  with specific  legal actions taken
against animal rights groups and $3.5 million in respect of a  restructuring  of
the business. These restructuring costs comprise redundancy (severance) payments
and asset  write  downs in the UK  arising  from a  consolidation  of  duplicate
facilities  in  response  to  changes  in  the  market,   particularly  for  non
pharmaceutical  services  and  a  closure  of  excess  and  outdated  toxicology
capacity.  This  restructuring  was  effected to improve the  efficiency  of the
Company's  operations  without  impairing its ability to service clients' needs.
These  expenses were offset by income of $0.2 million  representing  the Group's
share of an associated company's income (recognized following its acquisition in
June 2003) and $0.4  million  from the  recovery  of funds,  written off in 2001
following the bankruptcy of an exchange broker.

Net  interest  expense  increased  by 8.9% to $6.5  million  for the year  ended
December  31,  2004 from $6.0  million  in the year  ended  December  31,  2003.
Excluding the effect of exchange rate movements, there was a net decline of $0.2
million, reflecting the full year impact of loans and bonds repaid during 2003.

Other income of $2.9 million for the year ended December 31, 2004 comprised $3.3
million from the non-cash  foreign  exchange  remeasurement  gain on the Capital
Bonds  denominated  in US dollars  (the  functional  currency  of the  financing
subsidiary that holds the bonds is UK sterling), offset by $0.4 million relating
to the cost of a currency  hedge  contract.  In the year ended December 31, 2003
there was other income of $5.4 million which was comprised of a non-cash foreign
exchange  remeasurement  gain on the  Capital  Bonds of $4.8  million and a $0.6
million gain made on the partial repurchase of the Capital Bonds.

Taxation benefit on income for the year ended December 31, 2004 was $5.4 million
representing  a benefit at 44%  compared to a taxation  benefit of $1.1  million
representing  a  benefit  at 42%  for  the  year  ended  December  31,  2003.  A
reconciliation  between  the US  statutory  tax rate and the  effective  rate of
income tax benefit on losses before income taxes for the year ended December 31,
2004 and December 31, 2003 is shown below:

                                                    % of income before
                                                       income taxes
                                                  2004               2003
                                                    %                  %
US statutory rate                                  35                 35
Foreign rate differential                          (6)                (3)
UK R & D credit and non-deductible items          (36)                13
State taxes                                         1                  2
Change in estimate                                (38)               (89)
                                             ----------------    --------------
Effective tax rate                                (44)               (42)
                                             ----------------    --------------

The main reason for the change in estimate above relates to the Huntingdon  2002
and 2003 tax  provisions.  The UK government from April 1, 2002 introduced a new
tax  allowance,  `Research  and  Development  (R & D)  Tax  Credit',  for  large
companies.  At the end of  2002,  it was not  certain  how this  would  apply to
Huntingdon.  When submitting Huntingdon's 2002 corporation tax computation,  and
following  discussions  with the UK Inland Revenue,  Huntingdon made a claim for
the R & D Tax Credit,  which has now been accepted.  The 2003 provision has been
included in the current year benefit as a change in estimate.  The 2004 claim is
part of the non-deductible items above.

The overall net income for the year ended  December  31, 2004 was $17.6  million
compared to $3.7 million in the year ended December 31, 2003. The diluted income
per share for the year ended  December 31, 2004 was $1.29  compared to $0.29 for
the year ended December 31, 2003.

Earnings  before  interest,   taxes,   depreciation  and   amortization,   other
income/(expense)  and  other  operating  expenses  in 2003  ("EBITDA")  was 25.4
million for 2004, or 16.1% of revenues,  compared with 14.6 million, or 11.0% of
revenues for 2003.

The Company  believes that EBITDA  information,  which for this Company excludes
other  income/(expense)  and other  operating  expenses,  enhances an investor's
understanding of our financial  performance and our ability to satisfy principal
and interest  obligations  with  respect to our  indebtedness.  However,  EBITDA
should not be considered in isolation or viewed as a substitute  for net income,
cash flow from  operations  or other  measures  of  performance  as  defined  by
generally  accepted  accounting  principles in the United States.  We understand
that  while  securities  analysts,  lenders  and others in their  evaluation  of
companies  frequently  use  EBITDA,  EBITDA as used  herein  is not  necessarily
comparable  to  other  similarly  titled  captions  of  other  companies  due to
potential  inconsistencies  in the method of  calculation.  Our management  uses
EBITDA  to  assess  financial  performance  and debt  service  capabilities.  In
assessing  financial  performance,  our  management  reviews EBITDA as a general
indicator of economic  performance  compared to prior  periods.  Because  EBITDA
excludes   interest,   income  tax,   depreciation   and   amortization,   other
income/(expense)  and other operating expenses,  EBITDA provides an indicator of
general  economic  performance  that is not  affected by changes in debt levels,
fluctuations  in interest rates or effective tax rates,  levels of  depreciation
and  amortization,  exchange  rate  movements  on the  Capital  Bonds or one off
operating  expenses.  Our management believes this type of measurement is useful
for comparing  general  operating  performance  from period to period and making
certain management decisions. Nevertheless, our management recognizes that there
are material  limitations  associated with the use of EBITDA as compared to n et
income, which reflects overall financial  performance,  including the effects of
interest, taxes,  depreciation,  amortization,  other income/(expense) and other
operating expenses.

Year ended December 31, 2003 compared with the year ended December 31, 2002

Revenues in the year ended December 31, 2003 were $132.4 million, an increase of
14% on revenues of $115.7  million for the year ended  December  31,  2002.  The
underlying increase,  after adjusting for the impact of the movement in exchange
rates was 7%;  with the UK  showing  a 6%  increase  and the US a 12%  increase.
Orders for the year ended December 31, 2003, at constant exchange rates, were 8%
below the previous year. A weakening in the market for  toxicology  services due
to extra capacity coming on stream at competitors,  combined with a reduction in
non  pharmaceutical  work in Europe,  were  responsible  for this fall.  After a
record  growth in orders in 2002,  backlog at  December  31,  2002  amounted  to
approximately $95 million and this sustained the growth in revenues.

Cost of sales in the year  ended  December  31,  2003 were  $104.8  million,  an
increase of 12% on cost of sales of $93.4  million  for the year ended  December
31,  2002.  This  increase  was partly due to  exchange  rate  movements,  which
increased  cost of sales in the year by $6.4 million.  Without  these  movements
cost of sales would have  increased by 5%. In the UK cost  increases in sterling
were only 5%,  which is lower  than the  revenue  growth as  capacity  is filled
without the  corresponding  increase in fixed  costs.  The main  increase was in
labor costs reflecting increases in staffing.  Increases in costs in the US were
only 6%, mainly due to lower increases in direct materials costs compared to the
UK.

Selling,  general and  administrative  expenses rose by 15% to $20.9 million for
the year ended  December 31, 2003 from $18.1 million in the year ended  December
31, 2002. Of this  increase,  $1.3 million  related to exchange rate  movements.
This growth was due to a  continuation  of the  build-up  of the sales  activity
during the year and higher labor costs.

Other  operating  expenses in the year ended December 31, 2003 were $3.5 million
compared with $0 in the year ended December 31, 2002. In the year ended December
31, 2003,  other  operating  expenses  comprised $0.6 million in connection with
specific  legal actions  taken against  animal rights groups and $3.5 million in
respect of a restructuring of the business.  These  restructuring costs comprise
redundancy  (severance)  payments and asset write downs in the UK arising from a
consolidation  of  duplicate  facilities  in  response to changes in the market,
particularly  for non  pharmaceutical  services  and a  closure  of  excess  and
outdated  toxicology  capacity.  This  restructuring  was  effected  in order to
improve the efficiency of the Company's operations without impairing its ability
to service clients' needs.  These expenses were offset by income of $0.2 million
representing  the Group's share of an associated  company's  income  (recognized
following  its  acquisition  in June 2003) and $0.4 million from the recovery of
funds, written off in 2001 following the bankruptcy of an exchange broker.

Interest  expense declined by 5% to $6.0 million for the year ended December 31,
2003 from $6.3 million in the year ended December 31, 2002. The main reasons for
this  reduction  were the repayment of the former  Stephens loan and Baker loan,
and the  repurchase of $1.4 million  (principal  amount) of the bonds,  together
with lower  interest rates on the non-bank debt (down from an average in 2002 of
5.77% to 5.5% in 2003).

Other income of $5.4 million for the year ended December 31, 2003 comprised $4.8
million from the non-cash  foreign  exchange  remeasurement  gain on the Capital
Bonds  denominated  in US dollars  (the  functional  currency  of the  financing
subsidiary  that holds the bonds is UK sterling)  and a $0.6 million gain on the
partial  repurchase of the Capital  Bonds.  In the year ended  December 31, 2002
there was other income of $4.9 million which was comprised of a non-cash foreign
exchange  remeasurement  gain on the  Capital  Bonds of $5.0  million and a $1.2
million gain made on the partial repurchase of the Capital Bonds; offset against
a $1.3 million charge  relating to the  finalization of the 2001 US redomiciling
Exchange Offer.

<PAGE>

Taxation benefit on income for the year ended December 31, 2003 was $1.1 million
representing  a benefit at 42%  compared to a taxation  expense of $0.3  million
representing   expense  at  8%  for  the  year  ended   December   31,  2002.  A
reconciliation  between  the US  statutory  tax rate and the  effective  rate of
income tax benefit on losses before income taxes for the year ended December 31,
2003 and December 31, 2002 is shown below:

                                         % of income before
                                            income taxes
                                       2003               2002
                                         %                  %
US statutory rate                       35                 35
Foreign rate differential               (3)                (9)
Non-deductible items                    13                (31)
State taxes                              2                  2
Change in estimate                     (89)                11
                                  ----------------    --------------
Effective tax rate                     (42)                 8
                                  ----------------    --------------

The main reason for the change in estimate above relates to the Huntingdon  2002
tax  provision.  The UK  government  from  April 1,  2002  introduced  a new tax
allowance,  `Research and Development (R & D) Tax Credit',  for large companies.
At the end of 2002, it was not certain how this would apply to Huntingdon.  When
submitting   Huntingdon's  2002  corporation  tax  computation,   and  following
discussions with the UK Inland Revenue,  Huntingdon has made a claim for the R &
D Tax Credit and this has been  included in the change in  estimate  figures for
2003  above.  Pending  the outcome of the 2002  claim,  the 2003  provision  has
excluded any further allowance.

The overall  net income for the year ended  December  31, 2003 was $3.7  million
compared to $2.7 million in the year ended December 31, 2002. The diluted income
per share for the year ended  December 31, 2003 was $0.29  compared to $0.24 for
the year ended December 31, 2002.

Earnings  before  interest,   taxes,   depreciation  and   amortization,   other
income/(expense) and other operating expenses (EBITDA) in 2003 was $14.6 million
or 11.0% of revenues, compared with $12.4 million or 10.7% of revenues in 2002.
<PAGE>

SEGMENT ANALYSIS

The analysis of the Company's  revenues and operating loss between  segments for
the three years ended December 31, 2004 is as follows:

The   performance  of  each  segment  is  measured  by  revenues  and  operating
income/(loss) before other operating expenses.
<TABLE>
<CAPTION>

Company                                                               2004                 2003               2002
                                                                      $000                 $000               $000
<S>                                                               <C>                  <C>                <C>

Revenues
           UK                                                      127,148              104,324             90,851
           US                                                       30,403               28,110             24,891
                                                            ---------------     ----------------   ----------------
                                                                  $157,551             $132,434           $115,742
                                                            ---------------     ----------------   ----------------
Operating income/(loss) before other operating expenses
           UK                                                       18,716                9,282              7,562
           US                                                        3,861                2,085                781
           Corporate                                               (6,753)              (4,598)            (4,079)
                                                            ---------------     ----------------   ----------------

                                                                   $15,824               $6,769             $4,264
                                                            ---------------     ----------------   ----------------
Other operating expense
           UK                                                            -              (3,155)                  -
           US                                                            -                    -                  -
           Corporate                                                     -                (367)                  -
                                                            ---------------     ----------------   ----------------
                                                                        $-             $(3,522)                 $-
                                                            ---------------     ----------------   ----------------
Operating income/(loss)
           UK                                                       18,716                6,127              7,562
           US                                                        3,861                2,085                781
           Corporate                                               (6,753)              (4,965)            (4,079)
                                                            ---------------     ----------------   ----------------
                                                                   $15,824               $3,247             $4,264
                                                            ---------------     ----------------   ----------------

</TABLE>

UK

2004 v 2003

Revenues  increased by 21.9% in the year ended  December 31, 2004  compared with
the year ended December 31, 2003. After allowing for the effect of exchange rate
movements the increase was 8.6%.  Orders for the year ended December 31, 2004 at
constant  exchange  rates were 23.7%  above the  previous  year and 11.7%  above
revenues for the year.

Costs  increased by 14.0% in the year ended  December 31, 2004 compared with the
year ended  December 31, 2003.  After  allowing for the effect of exchange  rate
movements, the increase was 2.8%. The main increase was in direct material costs
reflecting the increase in revenues;  however, this was offset by a reduction in
labor as a result of the restructuring undertaken in the first quarter.

The operating income before other operating expenses for the year ended December
31, 2004 was $18.7  million  compared  with $9.3 million in the year to December
31, 2003.

In the year ended December 31, 2003,  other  operating  expenses of $3.2 million
comprised  $3.5 million in respect of a  restructuring  of the  business.  These
restructuring  costs comprise  redundancy  (severance)  payments and asset write
downs  arising  from a  consolidation  of  duplicate  facilities  in response to
changes in the  market,  particularly  for non  pharmaceutical  services,  and a
closure of excess and outdated toxicology  capacity.  These expenses were offset
by income of $0.3  million  from the  recovery  of funds,  written  off in 2001,
following the bankruptcy of an exchange broker.

The  operating  income for the year ended  December  31, 2004 was $18.7  million
compared with $6.1 million in the previous year.

2003 v 2002

Revenues  increased by 15% in the year ended December 31, 2003 compared with the
year ended  December 31, 2002.  After  allowing for the effect of exchange  rate
movements  the increase was 6%.  Orders for the year ended  December 31, 2003 at
constant  exchange  rates  were 9.8%  below  the  previous  year and 2.3%  below
revenues for the year.  The Company  believes that a weakening in the market for
toxicology  services  due to extra  capacity  coming on  stream at  competitors,
combined with a decline in work being outsourced by the  Agrochemical  industry,
both  on new  chemical  entities  and as  re-registration  work  under  European
Directive  91/414/EEC  diminished,  were  responsible for this fall.  Backlog at
December 31, 2002 was 29% higher than a year  previously  and this sustained the
growth in revenues.

Costs  increased by 14% in the year ended  December 31, 2003  compared  with the
year ended  December 31, 2002.  After  allowing for the effect of exchange  rate
movements,  the increase was 4.5%.  The main cost  increases were in labor where
staff  numbers  were built up in response to the growth in orders in 2002.  With
the softness in orders in 2003 steps were taken to reduce staffing levels in the
second half of the year,  but the average  headcount  for the year was 28 higher
than in 2002.  Changes to Social Security charges,  which took effect from April
1, 2003, also added to labor costs.

The operating income before other operating expenses for the year ended December
31, 2003 was $9.3 million compared with $7.6 million in the year to December 31,
2002.

Other operating  expenses in the year ended December 31, 2003, were $3.1 million
compared with $0 in the year ended December 31, 2002. In the year ended December
31, 2003, other expenses comprised $3.5 million in respect of a restructuring of
the business. These restructuring costs comprise redundancy (severance) payments
and asset write downs arising from a  consolidation  of duplicate  facilities in
response to changes in the market, particularly for non pharmaceutical services,
and a closure of excess and outdated  toxicology  capacity.  These expenses were
offset by income of and $0.4 million from the recovery of funds,  written off in
2001, following the bankruptcy of an exchange broker.

The  operating  income for the year ended  December  31,  2003 was $6.1  million
compared with $7.6 million in the previous year.

US

2004 v 2003

Revenues  increased  by 8.4% in the year ended  December 31, 2004 as compared to
the year ended  December 31, 2003.  Orders for the year ended  December 31, 2003
were 25.1% above the previous year and 21.5% above revenues for the year.

Costs  increased by 2% in the year ended  December 31, 2004 as compared with the
year ended December 31, 2003. This cost increase was mainly due to higher direct
materials as a result of the higher revenues.

The  operating  income for the year ended  December  31,  2004 was $3.9  million
compared with an operating income of $2.1 million in the previous year.

2003 v 2002

Revenues increased by 13% in the year ended December 31, 2003 as compared to the
year ended  December 31, 2002.  Orders for the year ended December 31, 2003 were
4% below the previous year, but 6.9% above revenues for the year. A weakening in
the market for toxicology  services was responsible for the fall in orders,  but
the level of orders combined with the high level of backlog at December 31, 2002
sustained the growth in revenues.

Costs  increased by 8% in the year ended  December 31, 2003 as compared with the
year ended  December  31,  2002.  This cost  increase  was mainly  driven by the
increase  in  revenues;  however,  there were also  additional  costs due to the
increase in sales activity.

The  operating  income for the year ended  December  31,  2003 was $2.1  million
compared with $0.8 million in the previous year.

Corporate

2004 v 2003

Corporate  costs for the year ended  December  31,  2004 were $6.8  million,  an
increase of 47% on corporate  costs for the year ended December 31, 2003 of $4.6
million.  Excluding the effects of exchange rate movements the increase was 42%.
The main reasons for the increase are the  discretionary  bonus plan relating to
those senior employees in the Company's corporate  headquarters of $1.5 million,
together with general increases in labor costs and legal and professional fees.

In the year ended December 31, 2003, other operating  expenses were $0.4 million
for specific legal action taken against animal rights groups.

The  operating  loss for the  year  ended  December  31,  2004 was $6.8  million
compared  with an  operating  loss for the year ended  December 31, 2003 of $5.0
million.

2003 v 2002

Corporate  costs for the year ended  December  31,  2003 were $4.6  million,  an
increase of 13% on corporate  costs for the year ended December 31, 2002 of $4.1
million. Excluding the effects of exchange rate movements, the increase was 10%.
The main  reasons for the  increase  were  general  increases in labor costs and
legal and professional fees.

In the year ended December 31, 2003, other operating  expenses were $0.6 million
for specific legal action taken against  animal rights groups,  offset by income
of $0.2 million representing the Group's share of an associated company's income
(recognised following its acquisition in June 2003).

The  operating  loss for the  year  ended  December  31,  2003 was $5.0  million
compared with an operating  loss of $4.1 million for the year ended December 31,
2002.

LIQUIDITY AND CAPITAL RESOURCES

Bank Loan and Non-Bank Loans

On January 20, 2001,  the  Company's net non-bank  loan of  (pound)22.6  million
(approximately $43.4 million),  was refinanced by Stephens' Group Inc. and other
parties.  The loan was  transferred  from  Stephens  Group Inc., to an unrelated
third party  effective  February 11, 2002.  It is now repayable on June 30, 2006
and  interest is payable  quarterly  at LIBOR plus  1.75%.  At the same time the
Company was required to take all  reasonable  steps to sell off such of its real
estate assets through  sale/leaseback  transactions  and/or  obtaining  mortgage
financing  secured by the Company's  real estate assets to discharge  this loan.
The loan is held by LSR Ltd.,  and is secured by the  guarantees of wholly owned
subsidiaries of the Company  including,  LSR Ltd,  Huntingdon Life Sciences Ltd,
and Huntingdon Life Sciences Inc., and collateralized by all the assets of these
companies.

On October 9, 2001, on behalf of  Huntingdon,  LSR issued to Stephens Group Inc.
warrants  to  purchase  up to  704,425  shares of LSR Voting  Common  Stock at a
purchase price of $1.50 per share. These warrants were subsequently  transferred
to an unrelated third party.  These LSR warrants are exercisable at any time and
will  expire on  October  9,  2011.  These  warrants  arose out of  negotiations
regarding  the  refinancing  of the bank loan by the  Stephens  Group  Inc.,  in
January 2001. In accordance with APB Opinion No. 14,  Accounting for Convertible
Debt and Debt Issued with Stock  Purchase  Warrants ("APB 14") the warrants were
recorded at their pro rata fair values in relation to the  proceeds  received on
the date of  issuance.  As a result,  the value of the  warrants  was  $430,000.
154,425 of such warrants were exercised in 2004.

<PAGE>
Convertible Capital Bonds

The remainder of the Company's  long term  financing is provided by  Convertible
Capital  Bonds  repayable in September  2006.  At the time of the issue in 1991,
these bonds were for $50 million par and at December  31,  2004,  $46.2  million
were  outstanding.  They carry  interest  at a rate of 7.5% per  annum,  payable
biannually in March and  September.  During 2002,  the Company  repurchased  and
cancelled  $2,410,000 principal amount of such bonds resulting in a $1.2 million
gain recorded in other  income/expense.  In 2003 the Company further repurchased
and cancelled  $1,345,000  principal amount of such bonds resulting in a gain of
$0.6 million recorded in other  income/expense.  At the current conversion rate,
the  number  of shares of Voting  Common  Stock to be issued on  conversion  and
exchange of each unit of $10,000 comprised in a Bond would be 49. The conversion
rate is subject to adjustment in certain circumstances.

Related Party Loans

Financing  which  totaled  $5.7  million was provided to the company in 2000 and
2001 and was fully repaid in 2002. This financing had been provided in part by a
$2.9 million loan facility made available on September 25, 2000 by the Company's
Chairman and CEO, Mr. Baker.  In  connection  with this  financing,  the company
authorized,  subject to  shareholder  approval,  the  issuance  of  warrants  to
purchase  410,914 shares of LSR Voting Common Stock at a purchase price of $1.50
per share to FHP, a company  controlled by Mr. Baker. Such shareholder  approval
was granted on June 12, 2002. Additionally, other financing also included a $2.8
million  facility from the Stephens  Group Inc. made available on July 19, 2001.
Effective  February 11, 2002 the Stephens Group Inc. debt was  transferred to an
unrelated  third party.  $550,000 of the loan from Mr. Baker was  transferred to
and assumed by FHP in March 2001. On March 28, 2002, $2.1 million of Mr. Baker's
loan was converted into 1,400,000 shares of LSR Voting Common Stock and $300,000
of FHP's loan was converted into 200,000  shares of LSR Voting Common Stock;  in
each case as part of LSR's private placement of approximately 5.1 million shares
of Voting Common Stock. The remaining  principal  amounts were repaid in full to
Mr. Baker and FHP, inclusive of 10% interest,  respectively,  in 2002. The other
$2.8 million facility was also repaid in full as of October 1, 2002.

As noted  above,  on June 11, 2002 LSR issued to FHP  warrants to purchase up to
410,914  shares of LSR  Voting  Common  Stock at a  purchase  price of $1.50 per
share.  These LSR warrants are  exercisable  at any time and will expire on June
11, 2012.  These warrants arose out of  negotiations  regarding the provision of
the $2.9 million loan  facility  made  available to the Company on September 25,
2000 by Mr.  Baker,  who controls  FHP. In  accordance  with APB 14 the loan and
warrants were recorded at their pro rata fair values in relation to the proceeds
received. As a result, the value of the warrants was $250,000.

Common Shares

On January 10, 2002, LSR issued 99,900 shares of Voting Common Stock and 900,000
shares of Non-Voting Common Stock at a price of $1.50 per share (or an aggregate
of $1.5  million).  Effective  July 25, 2002,  all of the 900,000  shares of the
Non-Voting  Common Stock were  converted  into 900,000  shares of Voting  Common
Stock.

On March 28, 2002, LSR closed the sale in a private placement of an aggregate of
5,085,334  shares of Voting  Common Stock at a price of $1.50 per share.  Of the
aggregate proceeds of approximately $7.6 million, $4.4 million was in cash, $2.4
million  represented  conversion  into  equity of debt owed to Mr.  Baker  ($2.1
million) and FHP ($0.3  million) and  $825,000 was paid with  promissory  notes.
$128,000 of such promissory notes have been repaid through December 31, 2004.

<PAGE>
Cash flows

During the year ended  December  31, 2004 funds  generated  were $16.0  million,
increasing cash on hand and on short-term deposit from $17.3 million at December
31,  2003 to $33.3  million  at  December  31,  2004.  The cash  generated  from
operating,  investing and  financing  activities  were  generated as follows (in
millions):
<TABLE>
<CAPTION>

                                                         2004           2003         2002
                                                         ----           ----         ----
<S>                                                     <C>             <C>           <C>
Operating income before other operating expense          $15.8           $6.8          $4.3
Depreciation and loss on disposal of fixed assets          9.5            9.3           8.1
Impairment of fixed assets                                   -            2.0             -
Working capital movement                                  10.1          (0.6)           9.0
Interest                                                 (5.9)          (6.0)         (6.1)

Capital expenditure                                     (11.1)          (8.7)         (4.2)
Cash acquired on business acquisition                        -            1.9             -
Other (expense)/income                                   (2.6)          (1.5)         (1.2)
Loan repayments net of shares issued                     (0.1)          (1.1)           1.7
Effect of exchange rate changes on cash                    0.3            0.6           0.8
                                                     ----------     ----------    ----------
                                                          16.0           $2.7         $12.4
                                                     ----------     ----------    ----------
</TABLE>

Net  days  sales  outstanding  (DSOs)  at  December  31,  2004  were 4 days,  an
improvement  from the 8 days at December 31, 2003. DSO is calculated as a sum of
accounts  receivable,  unbilled  receivables  and  fees in  advance  over  total
revenue.  The impact on liquidity from a one-day change in DSO is  approximately
$357,000.

At December 31, 2004, the Company had a working capital surplus of $1.8 million.
The Company  believes that projected cash flow from  operations will satisfy its
contemplated cash requirements for at least the next 12 months.

Commitment and Contingencies

                                                  2004        2003        2002
                                                  $000        $000        $000
Operating lease expenses were as follows:
Hire of plant and equipment                        291        451         904
Other operating leases                             405        410         392

The Company leases certain equipment under various non-cancelable  operating and
capital  leases.  Future  minimum lease payments  required  under  operating and
capital leases are as follows:
<TABLE>
<CAPTION>

                                  Total                       2-3         4-5        After
                                                1 year       years       years      5 years
                                   $000          $000         $000        $000        $000
<S>                               <C>            <C>          <C>         <C>         <C>
Capital lease obligations          715           275          336         104          -
Operating leases                   801           508          268          25          -
                               ------------- ------------- ----------- ----------- -----------
                                  1,516          783          604         129          -
                               ------------- ------------- ----------- ----------- -----------
</TABLE>

All operating leases are for Plant & Equipment

The total cost of equipment  capitalized  under these capital leases is $981,000
and $546,000, at December 31, 2004 and 2003, respectively. Depreciation on these
capital  leases  amounted to $192,000 and $68,000 and $5,000 for the years ended
December 31, 2004, 2003 and 2002, respectively.  Accumulated depreciation on the
capital leases amounted to $114,000,  $87,000 and $20,000 for the years ended at
December 31, 2004, 2003 and 2002, respectively.

<PAGE>
Contingencies

The Company is party to certain  legal  actions  arising in the normal course of
its  business.  In  management's  opinion,  none of these  actions  will  have a
material effect on the Company's  operations,  financial condition or liquidity.
No  form  of  proceedings  has  been  brought,  instigated  or  is  known  to be
contemplated against the Company by any government agency.

ORDERS

New business  signings  totaled  $179.4  million for the year ended December 31,
2004, an increase of 24% exclusive of the impact of movements in exchange  rates
from the prior year. 2003 saw a rapid growth in business from the Pharmaceutical
industry and this growth in business was maintained in 2004,  with  particularly
strong order growth in toxicology  testing as companies  invested in their early
stage  pipelines.  However there was a decline in the amount of work  outsourced
from  the  Agrochemical   industry,   both  on  new  chemical  entities  and  as
registration work under European Directive 91/414/EEC diminished.

EXCHANGE RATE FLUCTUATIONS AND EXCHANGE CONTROLS

The Company operates on a worldwide basis and generally  invoices its clients in
the currency of the country in which the Company  operates.  Thus,  for the most
part, exposure to exchange rate fluctuations is limited as sales are denominated
in the same currency as costs.  Trading  exposures to currency  fluctuations  do
occur  as a  result  of  certain  sales  contracts,  performed  in the UK for US
clients, which are denominated in US dollars and contribute  approximately 9% of
total revenues. Management has decided not to hedge against this exposure.

Also,  exchange  rate  fluctuations  may have an  impact on the  relative  price
competitiveness  of the Company vis a vis  competitors  who trade in  currencies
other than  sterling or dollars.  Such  fluctuations  also have an impact on the
translation of the 7.5% Convertible Capital Bonds payable in September 2006.

The  Company  has  debt  denominated  in both USD and  GBP,  each of which  have
repayment  dates in 2006.  Whereas the Company's  functional  currency is the UK
pound  sterling,  which  results  in the  Company  recording  other  income/loss
associated with USD debt as a function of relative  changes in foreign  exchange
rates,  no decision  has been made as to which  currency  might be chosen as the
basis for replacement financing.  The Company recognizes that there has recently
been   volatility  in  exchange  rates  which  could  have  an  impact  on  such
refinancing.  To manage the volatility relating to these exposures, from time to
time, the Company may enter into certain  derivative  transactions.  The Company
holds and issues derivative financial  instruments for economic hedging purposes
only.  In December  2004 the Company  purchased a currency  hedge against the UK
pound sterling. The call amount of the hedge was (pound)15.4 million and the put
amount was $30 million.

Finally,  the  consolidated  financial  statements of LSR are  denominated in US
dollars.  Changes in exchange  rates  between the UK pound  sterling  and the US
dollar will affect the translation of the UK subsidiary's financial results into
US dollars for the purposes of reporting the consolidated financial results. The
process by which each foreign subsidiary's financial results are translated into
US dollars is as follows:  income  statement  accounts are translated at average
exchange  rates for the period;  balance sheet asset and liability  accounts are
translated at end of period exchange  rates;  and equity accounts are translated
at historical  exchange  rates.  Translation of the balance sheet in this manner
affects the  stockholders'  equity account referred to as the accumulated  other
comprehensive  loss  account.  Management  has decided not to hedge  against the
impact of exposures giving rise to these translation  adjustments as such hedges
may impact upon the Company's cash flow compared to the translation  adjustments
which do not affect cash flow in the medium term.

Exchange rates for translating sterling into US dollars were as follows:

                            At December 31              Average rate (1)
         2001                   1.4554                       1.4403
         2002                   1.6099                       1.5039
         2003                   1.7857                       1.6354
         2004                   1.9199                       1.8321

(1)  Based on the  average of the  exchange  rates on the last day of each month
     during the period.  On March 24, 2005 the noon buying rate for sterling was
     (pound)1.00 = $1.8709.

The  Company  has  not  experienced  difficulty  in  transferring  funds  to and
receiving funds remitted from those  countries  outside the US or UK in which it
operates and management expects this situation to continue.

While the UK has not at this time  entered  the  European  Monetary  Union,  the
Company has ascertained  that its financial  systems are capable of dealing with
Euro denominated transactions.

The  following  table  summarizes  the  financial  instruments   denominated  in
currencies  other  than the US  dollar  held by LSR and its  subsidiaries  as of
December 31, 2004:
<TABLE>
<CAPTION>

                                                            Expected Maturity Date
                                      2004    2005     2006    2007    2008  Thereafter    Total  Fair Value

(In US Dollars, amounts in thousands)
<S>                 <C>             <C>         <C>  <C>                                  <C>        <C>
Cash              - Pound Sterling  19,880       -        -       -       -          -    19,880     19,880
                  - Euro             1,691       -        -       -       -          -     1,691      1,691
                  - Japanese Yen     2,550       -        -       -       -          -     2,550      2,550
Accounts
receivable        - Pound Sterling  19,453       -        -       -       -          -    19,453     19,453
                  - Euro               520       -        -       -       -          -       520        520
                  - Japanese Yen     1,862       -        -       -       -          -     1,862      1,862

Debt              - Pound Sterling       -       -   43,086       -       -          -    43,086     43,086
                  - Japanese Yen       499      60        -       -       -          -       559        559
</TABLE>

COMPETITION

Competition in both the  pharmaceutical and  non-pharmaceutical  market segments
ranges from in-house research and development divisions of large pharmaceutical,
agrochemical  and industrial  chemical  companies,  who perform their own safety
assessments to contract research  organizations like the Company,  who provide a
full  range of  services  to the  industries  and niche  suppliers  focusing  on
specific services or industries.

This  competition  could have a material  adverse  effect on the  Company's  net
revenues  and net income,  either  through  in-house  research  and  development
divisions doing more work internally to utilize  capacity or through the loss of
studies to other competitors. As the Company operates on an international basis,
movements  in  exchange  rates,   particularly  against  sterling,  can  have  a
significant impact on its price competitiveness.

CONSOLIDATION WITHIN PHARMACEUTICAL INDUSTRY

The process of consolidation  within the  pharmaceutical  industry  continues to
accelerate the move towards outsourcing work to contract research  organizations
in the longer term as resources are increasingly invested in in-house facilities
for discovery and lead  optimization,  rather than  development  and  regulatory
safety evaluation.  However, in the short-term,  there is a negative impact with
development  pipelines being rationalized and a focus on integration rather than
development.  This can have a  material  adverse  impact  on the  Company's  net
revenues and net income.

ANIMAL RIGHTS ACTIVISM

Please refer to the detailed discussion under Item 1, on pages 10 to 12.

INFLATION

While most of the Company's net revenues are earned under fixed price contracts,
the effects of inflation do not generally have a material  adverse effect on its
operations  or  financial  condition  as only a minority of the  contracts  have
duration in excess of one year.

<PAGE>
CRITICAL ACCOUNTING POLICIES

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations discusses the Company's consolidated financial statements, which have
been prepared in accordance  with US GAAP.  The Company  considers the following
accounting policies to be critical accounting policies.

Revenue recognition

The majority of the  Company's  net revenues  have been earned under  contracts,
which generally range in duration from a few months to three years. Revenue from
these  contracts  is  generally  recognized  over the term of the  contracts  as
services are rendered. Contracts may contain provisions for renegotiation in the
event of cost  overruns due to changes in the level of work scope.  Renegotiated
amounts  are  included in net revenue  when earned and  realization  is assured.
Provisions  for losses to be incurred on contracts are recognized in full in the
period in which it is determined that a loss will result from performance of the
contractual arrangement.  Most service contracts may be terminated for a variety
of reasons by the Company's  customers,  either  immediately or upon notice of a
future date. The contracts  generally require payments to the Company to recover
costs  incurred,  including  costs to wind down the study,  and  payment of fees
earned to date,  and in some cases to provide the Company  with a portion of the
fees or income that would have been earned  under the  contract had the contract
not been terminated early.

Unbilled  receivables  are  recorded  for  revenue  recognized  to date  that is
currently  not  billable to the  customer  pursuant  to  contractual  terms.  In
general,  amounts become billable upon the achievement of certain aspects of the
contract  or  in  accordance  with  predetermined  payment  schedules.  Unbilled
receivables  are  billable  to  customers  within  one year from the  respective
balance sheet date. Fees in advance are recorded for amounts billed to customers
for which,  revenue has not been  recognized  at the balance sheet date (such as
upfront  payments  upon  contract   authorization,   but  prior  to  the  actual
commencement of the study).

If the Company does not accurately  estimate the resources required or the scope
of work to be  performed,  or does not manage its projects  properly  within the
planned  periods of time or satisfy its  obligations  under the contracts,  then
future  margins  may be  significantly  and  negatively  affected  or  losses on
existing  contracts  may  need to be  recognized.  While  such  errors  have not
historically  been  significant,  any such  resulting  reductions  in margins or
contract losses could be material to the Company's results of operations.

Use of estimates

The  preparation  of financial  statements in  conformity  with US GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities as of
the dates of the financial  statements and the results of operations  during the
reporting periods. These also include management estimates in the calculation of
pension  liabilities  covering  discount rates,  return on plan assets and other
actuarial assumptions. Although these estimates are based upon management's best
knowledge of current events and actions,  actual results could differ from those
estimates.

Taxation

The Company  accounts  for income  taxes under the  provisions  of  Statement of
Financial  Accounting  Standards ("SFAS") No. 109, "Accounting For Income Taxes"
("SFAS  109").  SFAS  109  requires  recognition  of  deferred  tax  assets  and
liabilities for the estimated future tax consequences of events  attributable to
differences  between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax credit
carry  forwards.  Deferred tax assets and liabilities are measured using enacted
rates in  effect  for the year in  which  the  differences  are  expected  to be
recovered  or settled.  The effect on  deferred  tax assets and  liabilities  of
changes in tax rates is  recognized in the statement of operations in the period
in which the enactment  rate changes.  Deferred tax assets and  liabilities  are
reduced  through the  establishment  of a valuation  allowance  at such time as,
based on  available  evidence,  it is more likely than not that the deferred tax
assets will not be realized.  While the Company has  considered  future  taxable
income and ongoing prudent and feasible tax planning strategies in assessing the
need  for the  valuation  allowance,  in the  event  that  the  Company  were to
determine  that it would not be able to realize all or part of its net  deferred
tax assets in the future,  an  adjustment  to the  deferred  tax assets would be
charged to income in the period such  determination was made.  Likewise,  should
the Company  determine  that it would be able to realize its deferred tax assets
in the  future  in excess  of its net  recorded  amount,  an  adjustment  to the
deferred tax assets would increase income in the period such  determination  was
made.

FORWARD LOOKING STATEMENTS

Statements in this Management's  Discussion and Analysis of Financial  Condition
and  Results of  Operations,  as well as in certain  other  parts of this Annual
Report on Form 10-K (as well as information included in oral statements or other
written statements made or to be made by the Company) that look forward in time,
are forward looking  statements  made pursuant to the safe harbor  provisions of
the Private  Litigation Reform Act of 1995.  Forward looking  statements include
statements concerning plans,  objectives,  goals,  strategies,  future events or
performance,  expectations,  predictions,  and assumptions and other  statements
which are other than  statements  of  historical  facts.  Although  the  Company
believes  such  forward-looking  statements  are  reasonable,  it  can  give  no
assurance that any  forward-looking  statements  will prove to be correct.  Such
forward-looking  statements  are subject  to, and are  qualified  by,  known and
unknown risks,  uncertainties and other factors that could cause actual results,
performance or achievements to differ materially from those expressed or implied
by those statements.  These risks,  uncertainties and other factors include, but
are not limited to the Company's  ability to estimate the impact of  competition
and of industry  consolidation  and risks,  uncertainties  and other factors set
forth in the  Company's  filings with the  Securities  and Exchange  Commission,
including without limitation this Annual Report on Form 10-K.

<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

LSR is subject to market  risks  arising  from  changes  in  interest  rates and
foreign currency exchange rates.

The  Company  has  debt  denominated  in both USD and  GBP,  each of which  have
repayment  dates in 2006.  Whereas the Company's  functional  currency is the UK
pound  sterling,  which  results  in the  Company  recording  other  income/loss
associated with USD debt as a function of relative  changes in foreign  exchange
rates,  no decision  has been made as to which  currency  might be chosen as the
basis for replacement financing.  The Company recognizes that there has recently
been   volatility  in  exchange  rates  which  could  have  an  impact  on  such
refinancing.  To manage the volatility relating to these exposures, from time to
time,  we might enter into certain  derivative  transactions.  We hold and issue
derivative financial instruments for economic hedging purposes only. In December
2004 the Company  purchased a currency hedge against the UK pound sterling.  The
call  amount of the hedge was  (pound)15.4  million and the put amount was $30.0
million.

Non-Bank Loans

The Company's  (pound)22.6  million ($43.4  million) credit facility is UK pound
sterling  denominated and does not contribute to transaction gains and losses on
the  income  statement  due to the  fact  that,  under US  GAAP,  the  Company's
functional  currency is sterling.  Interest on all outstanding  borrowings under
this credit facility is based upon LIBOR plus a margin,  approximately 6.28% per
annum for the year ended  December  31,  2004.  At December 31, 2004 this credit
facility was fully drawn down.

In the year ended December 31, 2004, a 1% change in LIBOR would have resulted in
a fluctuation in interest expense of $414,000.

Revenue

For the year ended  December 31, 2004,  approximately  81% of the  Company's net
revenues were from outside the US.

Convertible Capital Bonds

The Company's $46.2 million principal amount of Convertible Capital Bonds are US
dollar  denominated,  but are held by a non-US  subsidiary of the Company.  As a
result,  with respect to these bonds, the Company  experiences  exchange related
gains and losses which only has a non-cash  impact on the financial  statements,
based on the  movement  of  exchange  rates.  The  Company  is unable to predict
whether  it  will   experience   future   gains  or  future   losses  from  such
exchange-related risks on the bonds.

See Management's  Discussion and Analysis of Financial  Condition and Results of
Operations.

<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                                 Page


Independent Auditors' Report - December 31, 2004 and 2003                   36

Independent Auditors' Report - December 31, 2002                            37

Consolidated Statements of Operations-
Years ended December 31, 2004, 2003 and 2002                                38

Consolidated Balance Sheets - December 31, 2004 and 2003                    39

Consolidated Statements of Shareholders' (Deficit)/Equity and
Comprehensive Income/(Loss) - Years ended December 31, 2004, 2003
and 2002                                                                    41

Consolidated Statements of Cash Flows - Years ended December 31, 2004,
2003 and 2002                                                               43

Notes to Consolidated Financial Statements                                  44


<PAGE>


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
Life Sciences Research, Inc. and Subsidiaries

We have audited the  accompanying  consolidated  balance sheets of Life Sciences
Research,  Inc. and  Subsidiaries  (the  "Company")  as of December 31, 2004 and
2003,  and the related  consolidated  statements  of  operations,  shareholders'
equity (deficit) and comprehensive income/(loss), and cash flows for each of the
years then ended.  These  financial  statements  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial  statements  based on our  audits.  The  financial  statements  of the
Company as of  December  31,  2002 and for the year then  ended were  audited by
other  auditors  whose  report  dated March 26, 2003  expressed  an  unqualified
opinion on those statements.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting  Oversight Board (United States of America).  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 consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of the Company as of
December 31, 2004 and 2003, and the results of its operations and its cash flows
for  each of the  years  in the two  year  period  ended  December  31,  2004 in
conformity with accounting principles generally accepted in the United States of
America.



/s/Hugh Scott, P.C.
Lakewood, New Jersey

March 7, 2005


<PAGE>


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Life Sciences  Research,  Inc. and
Subsidiaries, East Millstone, New Jersey

We have audited the  accompanying  consolidated  balance  sheet of Life Sciences
Research, Inc. and Subsidiaries (the "Company") as of December 31, 2002, and the
related consolidated  statements of operations,  shareholders'  (deficit)/equity
and  comprehensive  loss,  and cash flows for the year ended  December 31, 2002.
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 audit.

We  conducted  our audit in  accordance  with  auditing  standards of the Public
Company  Accounting  Oversight Board (United  States)..  Those standards require
that we plan and perform the audit to obtain reasonable  assurance about whether
the financial  statements are free of material  misstatement.  An audit includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audit provides a reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects,  the financial  position of Life Sciences Research,  Inc. and
Subsidiaries  as of December 31, 2002,  and the results of their  operations and
their  cash flows for the year ended  December  31,  2002,  in  conformity  with
accounting principles generally accepted in the United States of America.

/s/Deloitte & Touche LLP

Princeton, New Jersey
March 26, 2003


<PAGE>
<TABLE>

Life Sciences Research Inc. and Subsidiaries
Consolidated Statements of Operations
Dollars in (000's), except per share amounts
<CAPTION>

                                                                      Year Ended December 31,
                                                                  2004                  2003                2002
<S>                                                         <C>                   <C>                 <C>
Revenues                                                      $157,551              $132,434            $115,742
Cost of sales                                                (117,061)             (104,798)            (93,403)
                                                    -------------------     -----------------     ---------------
Gross profit                                                    40,490                27,636              22,339
Selling, general and administrative expenses                  (24,666)              (20,867)            (18,075)
Other operating expense                                              -               (3,522)                   -
                                                    -------------------     -----------------     ---------------
Operating income                                                15,824                 3,247               4,264
Interest income                                                    114                    94                  66
Interest expense                                               (6,635)               (6,084)             (6,304)
Other income                                                     2,890                 5,362               4,922
                                                    -------------------     -----------------     ---------------
Income before income taxes                                      12,193                 2,619               2,948
Income tax benefit/(expense)                                     5,401                 1,109               (251)
                                                    -------------------     -----------------     ---------------
Net income                                                     $17,594                $3,728              $2,697
                                                    ===================     =================     ===============
Income per share
 -basic                                                          $1.45                 $0.31               $0.25
 -diluted                                                        $1.29                 $0.29               $0.24

Weighted average number of common stock outstanding
 -basic                                                     12,153,105            11,957,760          10,678,890
 -diluted                                                   13,607,308            12,699,576          11,083,416

<FN>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
</FN>
</TABLE>

<PAGE>

<TABLE>

Life Sciences Research Inc. & Subsidiaries
Consolidated Balance Sheets
Dollars in (000's), except per share amounts
<CAPTION>

                                                                              December 31,
ASSETS                                                                    2004             2003
<S>                                                                   <C>              <C>
Current assets:
Cash and cash equivalents                                              $33,341          $17,271
Accounts receivable, net of allowance of $255
and $561 in 2004 and 2003, respectively                                 27,841           17,515
Unbilled receivables                                                    11,516            8,246
Inventories                                                              2,024            1,901
Prepaid expenses and other current assets                                2,929            4,610
                                                                  -------------   --------------
Total current assets                                                   $77,651          $49,543
                                                                  -------------   --------------
Property and equipment, net                                            109,999         $101,547
Goodwill                                                                   901              832
Unamortized capital bonds issue costs                                      271              429
Deferred income taxes                                                   11,253            3,922
                                                                  -------------   --------------
Total assets                                                          $200,075         $156,273
                                                                  -------------   --------------
LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
Current liabilities:
Accounts payable                                                       $13,547          $12,508
Accrued payroll and other benefits                                       4,024            4,152
Accrued expenses and other liabilities                                  19,987           13,695
Short-term debt                                                            719              338
Fees invoiced in advance                                                37,574           22,761
                                                                  -------------   --------------
Total current liabilities                                              $75,851          $53,454
                                                                  -------------   --------------
Long-term debt                                                          89,685          $87,560
Pension liabilities                                                     36,603           21,414
Deferred income taxes                                                        -            2,291
                                                                  -------------   --------------

Total liabilities                                                     $202,139         $164,719
                                                                  -------------   --------------

(Continued)

</TABLE>

<PAGE>

<TABLE>

Life Sciences Research Inc. & Subsidiaries
Consolidated Balance Sheets (Continued)
Dollars in (000's), except per share amounts
<CAPTION>


                                                                              December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT) (Continued)                    2004             2003
<S>                                                                       <C>              <C>
Commitments and contingencies                                                    -                -
Shareholders' equity/(deficit)
Preferred Stock, $0.01 par value. Authorized: 5,000,000
Issued and outstanding: None                                                     -                -
Non-Voting Common Stock, $0.01 par value. Authorized: 5,000,000
Issued and outstanding: None                                                     -                -
Voting Common Stock, $0.01 par value. Authorized: 50,000,000
Issued and outstanding at December 31, 2004: 12,441,281
(December 31, 2003: 12,034,883)                                                125              120
Paid in capital                                                             75,671           75,101
Less: Promissory notes for issuance of common stocks                         (697)            (661)
Accumulated comprehensive loss                                            (34,724)         (22,973)
Accumulated deficit                                                       (42,439)         (60,033)
                                                                      --------------   ------------
Total shareholders' (deficit)                                             $(2,064)         $(8,446)
                                                                      --------------  -------------
Total liabilities and shareholders' equity/(deficit)                      $200,075         $156,273
                                                                      -------------   --------------

<FN>
The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

</FN>
</TABLE>


<PAGE>
<TABLE>

Life  Sciences  Research  Inc.  and  Subsidiaries
Consolidated  Statements of Shareholders' (Deficit)/Equity and Comprehensive
Income/(Loss)
Dollars  in (000's), except per share amounts
<CAPTION>

                                  Common    Common     Promissory     Additional   Accum-ulatedAccumulated       Total
                                  Stock      Stock     Notes for        Paid in      Deficit   Other
                                            at Par    Issuance of       Capital                Compre-hensive
                                                      Common Stock                             Loss
<S>                                 <C>         <C>      <C>               <C>       <C>             <C>        <C>
Balance, December 31, 2001           5,847       $59         $-            $66,035   $(66,458)        $(4,360)  $(4,724)

Issue of Shares                      5,585        55          -              8,384           -               -     8,439
Promissory notes for issuance
of common stock                        500         5      (684)                679           -               -         -
Accumulated
comprehensive loss:
-    Net income for the                  -         -          -                  -       2,697               -         -
     year
-    Minimum pension
     liability, net of $5,903
     tax -Deficiency on UK
     defined benefit pension
     plan.                               -         -          -                  -           -        (13,507)
-    Translation
     adjustments,                        -         -          -                  -           -           (709)         -
     net of $569 tax                     -         -          -                  -           -                  (11,519)
Total Comprehensive Loss
                                -----------------------------------------------------------------------------------------
Balance, December 31, 2002          11,932      $119     $(684)            $75,098   $(63,761)       $(18,576)  $(7,804)
Issue of shares                        103         1          -                  3           -               -         4
Repayment of Promissory notes
                                         -         -         23                  -           -               -        23
Accumulated comprehensive loss:
    Net income for the year              -         -          -                  -       3,728               -         -
    Minimum pension liability,
    net of $971 deferred tax -
    Deficiency on UK defined
    benefit pension plan                 -         -          -                  -           -         (2,265)         -

    Translation adjustments,
    net of $123 tax                      -         -          -                  -           -         (2,132)         -
    Total comprehensive loss             -         -          -                  -           -               -     (669)

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

Balance, December 31, 2003          12,035      $120     $(661)            $75,101   $(60,033)       $(22,973)  $(8,446)

</TABLE>


<PAGE>
<TABLE>

Life Sciences Research Inc. and Subsidiaries
Consolidated Statements of Shareholders' (Deficit)/Equity and Comprehensive
Income/(Loss)
Dollars in (000's), except per share amounts
<CAPTION>


                                  Common    Common     Promissory     Additional   Accum-ulatedAccumulated       Total
                                  Stock      Stock     Notes for        Paid in      Deficit   Other
                                            at Par    Issuance of       Capital                Compre-hensive
                                                      Common Stock                             Loss

<S>                                 <C>         <C>      <C>               <C>       <C>             <C>        <C>
Balance, December 31, 2003          12,035      $120     $(661)            $75,101   $(60,033)       $(22,973)  $(8,446)
Issue of shares                        406         5          -                570           -               -       575
Increase in value net of
repayment of Promissory notes
                                         -         -       (36)                  -           -               -      (36)
Accumulated comprehensive loss:
    Net income for the year              -         -          -                  -      17,594               -         -
    Minimum pension liability,
    net of $4,385 deferred tax
    - Deficiency on UK defined
    benefit pension plan
                                         -         -          -                  -           -        (10,233)         -

    Translation adjustments,
    net of $232 tax                      -         -          -                  -           -         (1,518)         -
    Total comprehensive income
                                         -         -          -                  -           -               -     5,843
                                -----------------------------------------------------------------------------------------
Balance, December 31, 2004          12,441       125      (697)             75,671    (42,439)        (34,724)   (2,604)
                                -----------------------------------------------------------------------------------------

<FN>

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

</FN>
</TABLE>

<PAGE>

<TABLE>

Life Sciences Research Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Dollars in (000's) except per share amounts
<CAPTION>

                                                                               Year Ended December 31,
                                                                         2004           2003          2002
<S>                                                                 <C>             <C>           <C>
Cash flows from operating activities:
Net income                                                            $17,594         $3,728        $2,697
Adjustments to reconcile net income to net cash from operating
activities
Depreciation                                                            9,530          9,049         8,108
Impairment of fixed assets                                                  -          2,014             -
Loss on disposals of fixed assets                                           -            271             -
Foreign exchange gain on Capital Bonds                                (3,345)        (4,760)       (4,977)
Deferred income tax( benefit)/expense                                 (5,512)        (1,234)           188
Gain on repurchase of Capital Bonds                                         -          (602)       (1,191)
Share of profit on acquisition                                              -          (208)             -
Provision for losses on accounts receivable                             (302)            244           123
Amortization of capital bonds issue costs                                 179            165           191
Amortization of warrants                                                  179            290           156
Changes in operating assets and liabilities:
Accounts receivable, unbilled receivables and prepaid expenses        (8,974)          5,063         4,605
Inventories                                                                 -          (157)         (127)
Accounts payable, accrued expenses and other liabilities                4,841          2,048       (1,728)
Fees invoiced in advance                                               12,776        (5,972)         5,988
                                                                  ------------   ------------  ------------
Net cash provided by operating activities                             $26,966         $9,939       $14,033
                                                                  ------------   ------------  ------------
Cash flows from investing activities:
Purchase of property, plant and equipment                            (11,096)        (8,716)       (4,177)
Cash acquired with Subsidiary                                               -          1,893             -
                                                                  ------------   ------------  ------------
Net cash used in investing activities                               $(11,096)       $(6,823)      $(4,177)
                                                                  ------------   ------------  ------------

Cash flows from financing activities:
Proceeds from issue of common shares                                      539             27         6,039
Proceeds from long-term borrowings                                          -            444           334
Repayments of long-term borrowings                                          -        (1,328)       (4,627)
Repayments of short term borrowings                                     (651)          (253)             -
                                                                  ------------   ------------  ------------
Net cash (used)/provided by financing activities                       $(112)       $(1,110)        $1,746
                                                                  ------------   ------------  ------------

Effect of exchange rate changes on cash and cash equivalents              312            621           802
                                                                  ------------   ------------  ------------
Increase in cash and cash equivalents                                  16,070          2,627        12,404
Cash and cash equivalents at beginning of year                         17,271         14,644         2,240
                                                                  ------------   ------------  ------------
Cash and cash equivalents at end of year                              $33,341        $17,271       $14,644
                                                                  ------------   ------------  ------------
Supplementary disclosures:
Interest paid                                                          $5,928         $5,544        $6,110
Non-cash transactions:
Conversion of debt to equity                                               $-             $-        $2,400
Issuance of common stocks for promissory notes                             $-             $-          $684
<FN>

The accompanying notes are an integral part of these consolidated financial statements
</FN>
</TABLE>

<PAGE>

1.       THE COMPANY AND ITS OPERATIONS

Life  Sciences  Research  Inc.  ("LSR")  and  subsidiaries  (collectively,   the
"Company")  is a  global  contract  research  organization,  offering  worldwide
pre-clinical and non-clinical  testing for biological safety evaluation research
services to pharmaceutical,  biotechnology, agrochemical and industrial chemical
companies.  The Company  serves the rapidly  evolving  regulatory and commercial
requirements to perform safety evaluations on new  pharmaceutical  compounds and
chemical  compounds  contained within the products that humans use, eat, and are
otherwise exposed to. In addition,  it tests the effect of such compounds on the
environment  and also  performs  work on  assessing  the safety and  efficacy of
veterinary products.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies, is set out below:

Basis of Presentation

These  financial  statements  are  prepared in  conformity  with the  accounting
principles generally accepted in the United States of America ("US GAAP"). Under
US GAAP,  the  company  whose  stockholders  retain the  majority  interest in a
combined  business  must be treated as the  acquirer  for  accounting  purposes.
Accordingly,  the Exchange Offer is accounted for as a "reverse acquisition" for
financial  reporting  purposes.  The  reverse  acquisition  is  deemed a capital
transaction   and  the  net  assets  of  Huntingdon   Life  Sciences  Group  plc
("Huntingdon")  (the accounting  acquirer) are carried forward to LSR (the legal
acquirer  and  the  reporting   entity)  at  their  carrying  value  before  the
combination.  Although Huntingdon was deemed to be the acquiring corporation for
financial  accounting  and  reporting  purposes,  the legal status of LSR as the
surviving corporation does not change. The relevant acquisition process utilizes
the capital  structure of LSR and the assets and  liabilities  of Huntingdon are
recorded at historical  cost. In these financial  statements,  Huntingdon is the
operating entity for financial  reporting purposes and the financial  statements
for all periods presented represent  Huntingdon's financial position and results
of  operations.  The  equity  of LSR is the  historical  equity  of  Huntingdon,
retroactively  restated to reflect the number of shares  issued in the  Exchange
Offer.  Certain  reclassifications  and  eliminations  have been recorded in the
current year presentation to retroactively consolidate Huntingdon and LSR.

Principles of Consolidation

The consolidated  financial statements  incorporate the accounts of LSR and each
of its  subsidiaries.  All  inter-company  balances  have been  eliminated  upon
consolidation.

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments with an original
maturity date of three months or less at the date of purchase.

Allowance for Uncollectible Accounts

The  Company  establishes  an  allowance  for  uncollectible  accounts  which it
believes  is  adequate  to cover  anticipated  losses on the  collection  of all
outstanding trade receivable balances. The adequacy of the uncollectible account
allowance is based on historical information,  a review of customer accounts and
related  receivable  balances,  and management's  assessment of current economic
conditions.  The Company  reassesses  the allowance for  uncollectible  accounts
annually.

Inventories

Inventories  are valued on a FIFO  (first-in,  first out) method at the lower of
cost, or market value. They comprise materials and supplies.

Property, Plant and Equipment

Property, plant and equipment, stated at cost, is depreciated over the estimated
useful lives of the assets on a straight-line basis.  Estimated useful lives are
as follows:

    Buildings and facilities           15 - 50 years
    Plant and equipment                4 - 25 years
    Vehicles                           5 years
    Computers and software             3 - 5 years

Amounts  spent to repair and  maintain  these  assets  arising out of the normal
course of business are expensed in the period incurred.

Concentration of Credit Risk

The Company  maintains cash and cash  equivalents in US financial  institutions,
which, at times, may exceed federally insured limits. Based on the nature of the
financial  instruments and/or historical  realization of these instruments,  the
Company believes they bear minimal risk.

Income Taxes

The Company  accounts  for income  taxes under the  provisions  of SFAS No. 109,
"Accounting  For Income Taxes" ("SFAS 109").  SFAS 109 requires  recognition  of
deferred tax assets and liabilities for the estimated future tax consequences of
events  attributable  to differences  between the financial  statement  carrying
amounts of existing assets and  liabilities  and their  respective tax bases and
operating  loss  and  tax  credit  carry  forwards.   Deferred  tax  assets  and
liabilities are measured using enacted rates in effect for the year in which the
differences are expected to be recovered or settled.  The effect on deferred tax
assets and liabilities of changes in tax rates is recognized in the statement of
operations  in the period in which the  enactment  rate  changes.  Deferred  tax
assets and  liabilities  are reduced  through the  establishment  of a valuation
allowance at such time as, based on available  evidence,  it is more likely than
not that the deferred tax assets will not be realized.

Revenue Recognition

The majority of the  Company's  net revenues  have been earned under  contracts,
which generally range in duration from a few months to three years. Revenue from
these  contracts is  recognized  over the term of the  contracts as services are
rendered.  Contracts may contain  provisions for  renegotiation  in the event of
cost  overruns due to changes in the level of work scope.  Renegotiated  amounts
are included in net revenue when earned and  realization is assured.  Provisions
for losses to be incurred on contracts  are  recognized in full in the period in
which  it is  determined  that  a  loss  will  result  from  performance  of the
contractual arrangement.  Most service contracts may be terminated for a variety
of reasons by the Company's  customers  either  immediately  or upon notice at a
future date. The contracts  generally require payments to the Company to recover
costs  incurred,  including  costs to wind down the study,  and  payment of fees
earned to date,  and in some cases to provide the Company  with a portion of the
fees or profits  that would have been earned under the contract had the contract
not been  terminated  early.  Unbilled  receivables  are  recorded  for  revenue
recognized  to date that is currently  not billable to the customer  pursuant to
contractual  terms. In general,  amounts become billable upon the achievement of
certain  aspects of the contract or in  accordance  with  predetermined  payment
schedules.  Unbilled  receivables are billable to customers within one year from
the  respective  balance  sheet date.  Fees in advance are  recorded for amounts
billed to customers  for which  revenue has not been  recognized  at the balance
sheet date (such as upfront payments upon contract  authorization,  but prior to
the actual commencement of the study).

<PAGE>

Foreign Currencies

Transactions in currencies other than the functional  currency of the entity are
recorded  at the  rates of  exchange  at the date of the  transaction.  Monetary
assets and  liabilities  in currencies  other than the  functional  currency are
translated  at the rates of exchange  at the balance  sheet date and the related
transaction  gains and losses are  reported  in the  statements  of  operations.
Exchange gains and losses on foreign currency transactions are recorded as other
income  or  expense.  Certain  intercompany  loans  are  determined  to  be of a
long-term   investment  nature.  The  Company  records  gains  and  losses  from
re-measuring such loans as a component of other comprehensive income.

Upon  consolidation,  the results of operations of  subsidiaries  and associates
whose  functional  currency is other than the US dollar are  translated  into US
dollars at the average  exchange rate and assets and  liabilities are translated
at year-end  exchange  rates and capital  accounts are  translated at historical
exchange rates, and retained  earnings are translated at the weighted average of
historical rates.  Translation adjustments are presented as a separate component
of other accumulated comprehensive loss in the financial statements.

Goodwill and Other Intangible Assets

Effective 2003, the Company adopted SFAS No. 142, "Goodwill and Other Intangible
Assets," which  establishes  financial  accounting  and reporting  standards for
acquired  goodwill and other intangible assets (Note 4). In accordance with SFAS
No. 142, goodwill and indefinite-lived intangible assets are no longer amortized
but are reviewed at least annually for impairment.  Separate  intangible  assets
that have finite  useful  lives  continue to be amortized  over their  estimated
useful lives.

SFAS No. 142 requires that goodwill be tested  annually for  impairment  using a
two-step  process.  The first step is to  identify a potential  impairment.  The
second step of the impairment  test measures the amount of the impairment  loss.
The Company, after completing the first step of the process, concluded there was
no impairment of goodwill at December 31, 2004.

Impairment of Long-Lived Assets

The  Company  adopted  the  provisions  of SFAS  No.  144,  "Accounting  for the
Impairment or Disposal of Long-lived Assets".  The Company evaluates  long-lived
assets  whenever events or changes in  circumstances  indicate that the carrying
amount  of an  asset  may  not be  recoverable.  An  impairment  loss  would  be
recognized when estimated undiscounted future cash flows expected to result from
the use of the  asset  and its  eventual  disposal  are less  than its  carrying
amount. In such instances, the carrying value of long-lived assets is reduced to
the estimated fair value,  as determined  using an appraisal or discounted  cash
flows, as appropriate.

Restructuring Costs

The Company recognizes obligations  associated with restructuring  activities in
accordance  with SFAS No. 146,  "Accounting  for Costs  Associated  with Exit or
Disposal  Activities."  The Company adopted the provisions of SFAS No. 146 as of
the  beginning of fiscal 2003,  which  generally  requires a liability for costs
associated  with  an  exit or  disposal  activity  be  recognized  and  measured
initially  at its fair value in the period in which the  liability  is incurred.
The overall purpose of the Company's  restructuring  actions is to lower overall
operating  costs  and  improve  profitability  by  reducing  excess  capacities.
Restructuring  costs (Note 8) are typically recorded in other operating expenses
in the period in which the plan is approved by the Company's  senior  management
and, where material, the Company's Board of Directors, and when the liability is
incurred.

Leased Assets

Assets  held under the terms of capital  leases are  included  in  property  and
equipment and are  depreciated on a  straight-line  basis over the lesser of the
useful life of the asset or the term of the lease.  Obligations for future lease
payments, less attributable finance charges are shown within liabilities and are
analyzed between amounts falling due within and after one year.  Operating lease
rentals are charged to the Consolidated Statement of Operations as incurred.

Pension Costs

During the year the  Company  had two  defined  contribution  plans.  One of the
defined  contribution  pension  plans covers all employees in the US; the other,
employees in the UK. Prior to December 31, 2002, a defined  benefit pension plan
provided  benefits  to  employees  in the UK based on  their  final  pensionable
salary. As of December 31, 2002, the defined benefit pension plan was curtailed.
The gain on curtailment was recognized in the Statement of Operations  according
to SFAS No. 88,  "Employees'  Accounting for  Settlements  and  Curtailments  of
Deferred Benefit Pension Plan and for Termination Benefits". The pension cost of
the plan is accounted for in accordance with SFAS No. 87, "Employers' Accounting
For Pensions". Pension information is presented in accordance with the currently
required provisions of SFAS No. 132, "Employers'  Disclosures About Pensions And
Other Post Retirement Benefits". The net asset at transition, prior service cost
and net (loss)/gain  subject to  amortization,  outside the corridor,  are being
amortized on a  straight-line  basis over  periods of 15 years,  10 years and 10
years  respectively.  The  Company  recognized  all  actuarial  gains and losses
immediately for the purposes of its minimum pension liability.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the dates of the financial
statements and the results of operations during the reporting periods.  Although
these estimates are based upon management's best knowledge of current events and
actions, actual results could differ from those estimates.

Income Per Share

Income per share is computed in  accordance  with SFAS No.  128,  "Earnings  Per
Share".  Basic income per share is computed by dividing net income  available to
common  stockholders by the weighted average number of common shares outstanding
during the year.  The  computation of diluted income per share is similar to the
computation of basic income per share,  except that the denominator is increased
to  include  the  number  of  additional  common  shares  that  would  have been
outstanding  if the dilutive  potential  common shares had been issued.  Diluted
income per share  reflects the  potential  dilution that could occur if dilutive
securities and other contracts to issue common stock were exercised or converted
into common shares or resulted in the issuance of common shares that then shared
in the income of the Company.

Segment Analysis

In  accordance  with the  Statement of Financial  Accounting  Standards No. 131,
"Disclosures  About  Segments of an Enterprise  and Related  Information"  (SFAS
131), the Company  discloses  financial and  descriptive  information  about its
reportable   operating  segments.   Operating  segments  are  components  of  an
enterprise about which separate financial information is available and regularly
evaluated  by the chief  operating  decision  maker in deciding  how to allocate
resources and in assessing performance.

Loans and Warrants

In  accordance  with  Accounting   Principles   Board  ("APB")  Opinion  No.  14
"Accounting for Convertible Debt and Debt issued with Share Purchase  Warrants",
loans and warrants are recorded at their pro-rata fair values in relation to the
proceeds  received with the portion  allowable to the warrants  accounted for as
paid-in-capital.  The costs of raising long-term financing are capitalized as an
asset and are amortized,  using the effective interest method,  over the term of
the debt.

<PAGE>
Stock-Based Compensation

The  Company  accounts  for  its  stock  option  and  stock-based   compensation
arrangements plans using the intrinsic-value  method.  Under the intrinsic value
method,  the difference between the amount the employee will pay the Company for
stock acquired under the Company's incentive plans and the stock's fair value on
the date of grant is charged to expense.  Since  employees  must pay the Company
the grant date fair value for stock  options,  no expense is recorded  for stock
options.  (Alternatively,  if employees did not have to pay for stock issued for
deferred stock units  granted,  their grant date fair value would be recorded as
expense).

The following  table  reconciles net income and earnings per common stock (EPS),
as reported, to pro forma net income and EPS, as if the Company had expensed the
grant  date  fair  value of both  stock  options  and  deferred  stock  units as
permitted  by SFAS No. 123,  "Accounting  for Stock Based  Compensation"  ("SFAS
123").  These pro forma amounts may not be  representative of the initial impact
of  adopting  SFAS 123 since,  as  amended,  it permits  alternative  methods of
adoption.

<PAGE>
<TABLE>
<CAPTION>

                                                Year ended December         Year ended            Year Ended
                                                     31, 2004           December 31, 2003      December 31, 2002
                                              ------------------------ --------------------- ----------------------
                                                       $000                    $000                  $000
<S>                          <C>                  <C>                    <C>                    <C>
Net income                   As Reported              $17,594                 $3,728                $2,697
Less: Pro forma expense as
if stock options were
charged against net
income, net of tax
                                                       (281)                   (67)                  (59)

                             Pro forma                17,313                  $3,661                $2,638
Basic and Diluted EPS:       As Reported          $1.45 and $1.29        $0.31 and $0.29        $0.25 and $0.24
                             Pro forma            $1.42 and $1.27        $0.31 and $0.29        $0.25 and $0.24
</TABLE>

The weighted average fair value at the date of grant for options granted during
2004, 2003 and 2002 was $3.44, $1.03 and $0.87 respectively. The options granted
prior to 2002 are considered to have no value. These fair values were estimated
using the Black-Scholes option-pricing model, based on the following
assumptions:

<TABLE>
<CAPTION>
                                               2004             2003            2002
<S>                                          <C>              <C>             <C>
Dividend yield                                  0%               0%              0%
Volatility                                     135%              40%            40%
Risk-free interest rate                       4.63%             3.72%          3.72%
Expected term of options (in years)          10 years         10 years        10 years

</TABLE>

<PAGE>

3.       PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of December 31 consisted of the following:
<TABLE>
<CAPTION>

                                                                  2004            2003
                                                                  $000            $000
<S>                                                          <C>             <C>
Property, plant and equipment at cost:
Building and facilities                                        128,395         116,981
Plant, equipment, vehicles, computers and software             110,005         108,658
Assets in the course of construction                               330           1,045
                                                         -------------- ---------------
                                                               238,730         226,684
Less: Accumulated depreciation                               (128,731)       (125,137)
                                                         -------------- ---------------
Property and equipment, net                                   $109,999        $101,547
                                                         -------------- ---------------
</TABLE>

Depreciation expense aggregated $9,530,000,  $9,049,000 and $8,108,000 for 2004,
2003 and 2002 respectively.

The net book value of assets held under capital  leases and included above is as
follows:

                                    Cost       Depreciation   Net book
                                                                Value
                                    $000          $000          $000
At December 31, 2004                 981          114            867
At December 31, 2003                 546           87            459

4.    GOODWILL AND INTANGIBLE ASSETS

In June 2001, the FASB issued  Statement of Financial  Accounting  Standards No.
141, "Business  Combinations",  which eliminates the pooling of interests method
of accounting for business  combinations  and addresses the initial  recognition
and measurement of goodwill and other  intangible  assets acquired in a business
combination.  In June 2001,  the FASB issued  Statement of Financial  Accounting
Standards No. 142, "Goodwill and Other Intangible  Assets", or SFAS No. 142. The
Company  adopted SFAS No. 142 as of January 1, 2003.  SFAS No. 142 addresses the
financial  accounting and reporting  standards for the acquisition of intangible
assets outside of a business combination,  and for goodwill and other intangible
assets subsequent to their acquisition. This statement requires that goodwill be
separately  disclosed from other intangible assets in the statement of financial
position,  and no longer be amortized  but tested for  impairment  on a periodic
basis.

On July 1, 2003, the remaining 50% of the shares in HLS KK, not previously owned
by  Huntingdon,  was  purchased,  resulting  in HLS KK  becoming a wholly  owned
subsidiary  of  Huntingdon.  The  purchase  price is  payable  over a three year
period,  and is equal to the  greater of (a) $1  million  or (b) the  commission
which would have been paid if the purchase  had not  happened.  Payments  during
that  three year  period  shall be made at the rate which had been in effect for
commissions prior to the acquisition, and is payable semi-annually.  Goodwill on
purchase was Japanese Yen 99,500,000 ($901,000 at year end rates).

Prior to this date,  the shares  owned by  Huntingdon  in HLS KK were held as an
investment,  as the  day to day  control  of  HLS KK was  not  exercised  by the
Company.
<PAGE>

5.       INCOME TAXES

The components of income before taxes and the related  benefit/(expense) for tax
for the years ended December 31 are as follows:
<TABLE>
<CAPTION>

Income/(loss) before taxes                                 2004             2003              2002
                                                           $000             $000              $000
<S>                                                     <C>               <C>              <C>
United Kingdom                                           13,761            1,452             4,110
United States                                           (1,669)              887           (1,162)
Japan                                                       101              280                 -
                                                   -------------    -------------     -------------
                                                        $12,193           $2,619            $2,948
                                                   -------------    -------------     -------------

The benefit/(expense)for income taxes by location          2004              2003             2002
of the taxing jurisdiction for the years ended             $000              $000             $000
December 31, consisted of the following:
Current Taxation:
-        State Taxes - US                                  (72)              (39)             (63)
-        Corporate Tax - Japan                             (44)              (86)                -
Deferred taxation:
-        United Kingdom                                   4,864             2,263             (45)
-        United States                                      651           (1,029)            (143)
-        Japan                                                2                 -                -
                                                   -------------     -------------    -------------
                                                         $5,401            $1,109           $(251)
                                                   -------------     -------------    -------------
</TABLE>

Reconciliation  between  the US  statutory  rate  and the  effective  rate is as
follows:

                                            % of income/(loss) before income
                                                          taxes
                                                  2004        2003        2002
                                                     %           %           %

US statutory rate                                   35          35          35
Foreign rate differential                          (6)         (3)         (9)
UK R & D credit and non-deductible items          (36)          13        (31)
State taxes                                          1           2           2
Change in estimate                                (38)        (89)          11
                                           ------------  ----------  ----------
Effective tax rate                                (44)        (42)           8
                                           ------------  ----------  ----------

The main reason for the change in estimate above relates to the Huntingdon  2002
and 2003 tax  provisions.  The UK  government  introduced  a new tax  allowance,
`Research and Development (R & D) Tax Credit,  for large companies from April 1,
2002. At the end of 2002, it was not certain how this would apply to Huntingdon.
When submitting  Huntingdon's  2002 corporation tax  computation,  and following
discussions with the UK Inland Revenue,  Huntingdon has made a claim for the R &
D Tax Credit, which has now been accepted and the 2003 provision included in the
2004  change in  estimate.  The 2004 claim is part of the  non-deductible  items
above.

<PAGE>
The tax effects of temporary  differences that give rise to significant portions
of deferred tax assets and liabilities as of December 31 are as follows:

                                                           2004          2003
                                                           $000          $000
Current deferred tax assets:
Accrued liabilities                                           -             -
                                                      ----------   -----------
                                                             $-            $-
                                                      ----------   -----------
Non-current deferred tax assets:
Net operating losses - US                                 5,189         4,827
Net operating losses - UK                                20,801        17,624
Net operating losses - Japan                                 27             -
Net pension plan minimum liability adjustment - UK       10,968         6,423
Capital losses - UK                                      16,373        15,228
Valuation allowance - UK                               (16,373)      (15,228)
                                                      ----------   -----------
Net non-current deferred tax assets                     $36,985       $28,874
                                                      ----------   -----------


Non-current deferred tax liabilities:
Property and equipment -  US                                554           929
                       -  UK                             25,178        26,314
                                                      ----------   -----------
Total                                                   $25,732       $27,243
                                                      ----------   -----------
Net non-current deferred tax assets                     $11,253        $3,922

Net non-current deferred tax liabilities                     $-        $2,291

In  accordance  with SFAS No. 109, the Company nets all current and  non-current
assets and liabilities by tax jurisdiction.

Of the gross amount of net operating losses in the US of $12,613,000, $2,817,000
expires  in  2012,  $6,163,000  expires  in  2018,  $523,000  expires  in  2019,
$1,087,000 expires in 2021, $492,000 expires in 2022, $3,000 expires in 2023 and
$1,528,000  expires in 2024. The gross amount of net operating  losses in the UK
of $67,218,000 have no expiration date. The Company has not provided a valuation
allowance on the net operating loss carry  forwards  because it believes that it
is more likely than not that those  amounts  will be  realized  through  taxable
income from future operations.  A full valuation allowance has been recorded for
the total benefit of capital losses incurred in prior years, as the Company does
not  anticipate  that the benefit  will be realized  in the  foreseeable  future
through the recognition of capital gains.

<PAGE>

6.       LONG-TERM DEBT AND RELATED PARTY LOANS

                                                 2004               2003
                                                 $000               $000
Non-bank loans                                 43,114             40,965
Capital leases, net of current                    376                400
portion
Convertible Capital Bonds                      46,195             46,195
                                     -----------------    ---------------
                                              $89,685            $87,560
                                     -----------------    ---------------
<TABLE>
<CAPTION>

Repayment Schedule                    Total          2006         2007          2008          2009       Thereafter
                                       $000          $000         $000          $000          $000          $000
<S>                                      <C>         <C>             <C>           <C>            <C>         <C>
Non bank loan                             43,114      43,114            -            -             -           -
Capital leases                               376         160          118           98             -           -
Convertible Capital Bonds                 46,195      46,195            -            -             -           -
                                   ------------- ------------- ------------ ------------- ------------- --------------
                                         $89,685     $89,469         $118          $98            $-          $-
                                   ------------- ------------- ------------ ------------- ------------- --------------
</TABLE>

Bank Loans and Non-Bank Loans

On  January  20,  2001,  the  Company's  non-bank  loan of  (pound)22.6  million
($43.4million  approximately),  was  refinanced by Stephens Group Inc. and other
parties. The loan was transferred from Stephens Group Inc. to an unrelated third
party  effective  February  11, 2002.  It is now  repayable on June 30, 2006 and
interest is payable  quarterly at LIBOR plus 1.75%. At the same time the Company
was  required to take all  reasonable  steps to sell off such of its real estate
assets through  sale/leaseback  transactions and/or obtaining mortgage financing
secured by the Company's  real estate assets to discharge this loan. The Company
is taking all reasonable steps to conduct these  transactions.  The loan is held
by LSR Ltd and is secured by the guarantees of the wholly owned  subsidiaries of
the Company including LSR Ltd., Huntingdon Life Sciences Ltd and Huntingdon Life
Sciences Inc., and collateralized by all the assets of these companies.

On October 9, 2001, on behalf of  Huntingdon,  LSR issued to Stephens Group Inc.
warrants  to  purchase  up to  704,425  shares of LSR Voting  Common  Stock at a
purchase price of $1.50 per share. These warrants were subsequently  transferred
to an unrelated  third party.  The LSR warrants are  exercisable at any time and
will  expire on  October  9,  2011.  These  warrants  arose out of  negotiations
regarding  the  refinancing  of the bank loan by the  Stephens  Group  Inc.,  in
January 2001. In accordance with APB Opinion No. 14,  Accounting for Convertible
Debt and Debt Issued with Stock  Purchase  Warrants ("APB 14") the warrants were
recorded at their pro rata fair values in relation to the  proceeds  received on
the date of issuance and treated as a debt  discount.  The value of the warrants
was $430,000. 154,425 of such warrants were exercised in 2004.

Convertible Capital Bonds

The remainder of the Company's  long term  financing is provided by  Convertible
Capital  Bonds  repayable in September  2006.  At the time of the issue in 1991,
these bonds were for $50  million  par and at  December  31, 2004 and 2003 $46.2
million  was  outstanding.  They  carry  interest  at a rate of 7.5% per  annum,
payable biannually in March and September.  During 2002, the Company repurchased
and  cancelled  $2,410,000  principal  amount of such bonds  resulting in a $1.2
million gain  recorded in other  income/expense.  In January  2003,  the Company
further  repurchased  and cancelled  $1,345,000  principal  amount of such bonds
resulting in a gain of $0.6 million.  At the current conversion rate, the number
of shares of Voting Common Stock to be issued on conversion and exchange of each
unit of $10,000  comprised in a Bond would be 49. The conversion rate is subject
to adjustment in certain circumstances.

<PAGE>

Related Party Loans

Financing  which  totaled  $5.7  million was provided to the Company in 2000 and
2001 and was fully repaid in 2002. This financing had been provided in part by a
$2.9 million loan facility made available on September 25, 2000 by the Company's
Chairman and CEO, Mr. Baker.  In  connection  with this  financing,  the company
authorized,  subject to  shareholder  approval,  the  issuance  of  warrants  to
purchase  410,914 shares of LSR Voting Common Stock at a purchase price of $1.50
per share to FHP, a company  controlled by Mr. Baker. Such shareholder  approval
was granted on June 12, 2002. Additionally, other financing also included a $2.8
million  facility from the Stephens  Group Inc. made available on July 19, 2001.
Effective  February 11, 2002 the Stephens Group Inc. debt was  transferred to an
unrelated  third party.  $550,000 of the loan from Mr. Baker was  transferred to
and assumed by FHP in March 2001. On March 28, 2002, $2.1 million of Mr. Baker's
loan was converted into 1,400,000 shares of LSR Voting Common Stock and $300,000
of FHP's loan was converted into 200,000  shares of LSR Voting Common Stock;  in
each case as part of LSR's private placement of approximately 5.1 million shares
of Voting Common Stock. The remaining  principal  amounts were repaid in full to
Mr. Baker and FHP, inclusive of 10% interest,  respectively,  in 2002. The other
$2.8 million facility was repaid in full as of October 1, 2002.

As noted  above,  on June 11, 2002 LSR issued to FHP  warrants to purchase up to
410,914  shares of LSR  Voting  Common  Stock at a  purchase  price of $1.50 per
share.  These LSR warrants are  exercisable  at any time and will expire on June
11, 2012.  These warrants arose out of  negotiations  regarding the provision of
the $2.9 million loan  facility  made  available to the Company on September 25,
2000 by Mr.  Baker,  who controls  FHP. In  accordance  with APB 14 the loan and
warrants were recorded at their pro rata fair values in relation to the proceeds
received. As a result, the value of the warrants was $250,000.

<PAGE>

7.    FAIR VALUE OF FINANCIAL INSTRUMENTS

The  Company's   principal   financial   instruments   comprise  cash  and  cash
equivalents,  accounts receivables, unbilled receivables and long-term debt. The
Company does not hold financial instruments for trading purposes.

The estimated fair value of the Company's  financial  instruments as of December
31, 2004 and 2003 is summarized  below.  Certain  estimates  and judgments  were
required to develop the fair value  amounts.  The fair value amounts shown below
are not  necessarily  indicative  of the amounts that the Company  would realize
upon disposition nor do they indicate the Company's intent or ability to dispose
of the financial instrument.
<TABLE>
<CAPTION>

                                                               2004                          2003
                                                        Carrying       Estimated        Carrying    Estimated
                                                           Value      Fair Value           Value   Fair Value
                                                            $000            $000            $000         $000
Primary financial instruments held or issued
  to finance the Company's operations:

<S>                                                      <C>             <C>             <C>          <C>
Cash and cash equivalents                                $33,341         $33,341         $17,271      $17,271
Accounts receivable                                       27,841          27,841          17,515       17,515
Short-term debt                                              719             719             338          338
Accounts payable                                          13,547          13,547          12,508       12,508
Fees invoiced in advance                                  37,574          37,574          22,761       22,761
Long-term debt (excluding the Convertible Capital
Bond)                                                     43,490          43,490          41,365       41,365
Convertible Capital Bond                                  46,195          46,195          46,195       36,956

</TABLE>

The following methods and assumptions were used by the Company in estimating its
fair value disclosure for financial instruments:

Cash and cash  equivalents,  capital leases - short term,  accounts  payable and
fees  invoiced  in  advance:   The  estimated  fair  value  of  these  financial
instruments approximates their carrying values due to their short maturities.

Accounts  receivables:  The estimated fair value of these financial  instruments
approximates  their  carrying  value  due to their  short  maturities,  less any
provision for bad debt.

Long-term debt: The carrying value of these financial  instruments  approximates
the fair value due to their variable interest rates.

Convertible Capital Bond: The estimated fair values of the Company's Convertible
Capital Bond is based on market prices at year-end.

8.       RESTRUCTURING COSTS

During the fourth quarter of 2003, the Company recorded restructuring charges of
$3,551,000  including  impairment  of fixed assets of  $2,014,000,  and employee
severance of $1,537,000  associated with the UK facilities.  These charges arose
from the  consolidation  of duplicate  facilities  in response to changes in the
market, particularly for non-pharmaceutical  services, and the closure of excess
and outdated toxicology capacity. This restructuring will improve the efficiency
of the Company's  operations and will not impair its ability to service clients'
needs.

<PAGE>

9. OTHER INCOME/(EXPENSE)
<TABLE>
<CAPTION>

                                                           2004           2003           2002
                                                           $000           $000           $000

<S>                                                       <C>            <C>            <C>
   Exchange gain/(loss) on capital bonds                  3,345          4,760          4,977
   Gain on partial repurchase of Capital Bonds                -            602          1,191
   Cost of currency hedge contract                        (455)              -              -
   Exchange offer costs                                       -              -         (1,246)
                                                    ---------------    -----------    -----------
                                                            $2,890         $5,362         $4,922
                                                    ---------------    -----------    -----------
</TABLE>

10.      COMMITMENTS AND CONTINGENCIES

Leases

Operating lease expenses were as follows:
                                                2004        2003        2002
                                                $000        $000        $000
Plant and equipment                              291        451         904
Other operating leases                           405        410         392

The Company leases certain equipment under various non-cancelable  operating and
capital  leases.  Future  minimum lease payments  required  under  operating and
capital leases are as follows:
<TABLE>
<CAPTION>

                                                       Operating Leases       Capital Leases
For the years ended December 31,
                                                             $000                  $000
<S>                                                          <C>                   <C>
2005                                                           508                   275
2006                                                           208                   198
2007                                                            60                   138
2008                                                            25                   104
2009                                                             -                     -
2010 and thereafter                                              -                     -
                                                       -----------------      ----------------
Total minimum lease payments                                   801                   715
                                                       =================

Less amounts representing interest                                                  (120)
                                                                              ----------------
Present value of net minimum lease payments                                          595
Less current portion of capital lease obligations                                   (219)
                                                                              ----------------
Non-current portion of capital lease obligations                                     376
                                                                              ================

</TABLE>

The total cost of equipment  capitalized  under these capital leases is $981,000
and $546,000 at December 31, 2004 and 2003, respectively.  Depreciation on these
capital leases amounted to $192,000,  $68,000, and $5,000 for the years ended at
December 31, 2004, 2003 and 2002, respectively.  Accumulated depreciation on the
capital leases amounted to $114,000,  $87,000 and $20,000 for the years ended at
December 31, 2004, 2003 and 2002, respectively.

Contingencies

The Company is party to certain legal  actions  arising out of the normal course
of its  business.  In  management's  opinion,  none of these actions will have a
material effect on the Company's  operations,  financial condition or liquidity.
No  form  of  proceedings  has  been  brought,  instigated  or  is  known  to be
contemplated against the Company by any government agency.

<PAGE>

11.      SHAREHOLDERS' EQUITY

Common Stock

As of December 31, 2004 and 2003 LSR had  outstanding  12,441,281 and 12,034,883
shares of Voting Common Stock of par value of $0.01 each respectively.

Share option plans

LSR 2001 Equity Incentive Plan (the "LSR 2001 Equity Incentive Plan")

The LSR 2001  Equity  Incentive  Plan was  adopted  effective  October  4, 2001.
Adoption of the LSR 2001 Equity  Incentive Plan enables LSR to use stock options
(and other  stock-based  awards) as a means to attract,  retain and motivate key
personnel. This stock option plan was approved by the shareholders of LSR, prior
to the acquisition of Huntingdon.

Awards  under the LSR 2001 Equity  Incentive  Plan may be granted by a committee
designated  by the LSR  Board  pursuant  to the  terms  of the LSR  2001  Equity
Incentive  Plan  (which  has  designated  the  Compensation  Committee  for such
purpose) and may include:  (i) options to purchase  shares of LSR Voting  Common
Stock,  including incentive stock options ("ISOs"),  non-qualified stock options
or both; (ii) stock  appreciation  rights ("SARs"),  whether in conjunction with
the grant of stock options or independent of such grant,  or stock  appreciation
rights  that are only  exercisable  in the event of a change in  control or upon
other events;  (iii)  restricted  stock consisting of shares that are subject to
forfeiture based on the failure to satisfy employment-related restrictions; (iv)
deferred stock, representing the right to receive shares of stock in the future;
(v)  bonus  stock  and  awards  in  lieu  of cash  compensation;  (vi)  dividend
equivalents,  consisting  of a right to receive  cash,  other  awards,  or other
property equal in value to dividends paid with respect to a specified  number of
shares of LSR Voting  Common Stock or other  periodic  payments;  or (vii) other
awards not  otherwise  provided for, the value of which are based in whole or in
part upon the value of the LSR Voting Common Stock. Awards granted under the LSR
2001 Equity  Incentive Plan are generally not assignable or transferable  except
pursuant to a will and by operation of law.

The flexible terms of the LSR 2001 Equity  Incentive Plan are intended to, among
other things, permit the Compensation Committee to impose performance conditions
with respect to any award,  thereby  requiring  forfeiture of all or part of any
award  if   performance   objectives   are  not  met  or  linking  the  time  of
exercisability  or  settlement  of an award  to the  attainment  of  performance
conditions.  For awards intended to qualify as "performance-based  compensation"
within the meaning of Section 162 (m) of the United States Internal Revenue Code
such  performance  objectives  shall be based  solely  on (i)  annual  return on
capital;  (ii) annual  earnings or earnings  per share;  (iii)  annual cash flow
provided by operations; (iv) changes in annual revenues; (v) stock price; and/or
(vi) strategic business criteria,  consisting of one or more objectives based on
meeting specified revenue,  market  penetration,  geographic  business expansion
goals, cost targets, and goals relating to acquisitions or divestitures.

LSR's  Compensation  Committee,  which administers the 2001 LSR Equity Incentive
Plan,  has the  authority,  among other  things,  to: (i) select the  directors,
officers and other  employees and  independent  contractors  entitled to receive
awards under the 2001 LSR Equity  Incentive  Plan;  (ii)  determine  the form of
awards,  or combinations of awards,  and whether such awards are to operate on a
tandem basis or in conjunction with other awards;  (iii) determine the number of
shares of LSR Voting  Common Stock or units or rights  covered by an award;  and
(iv) determine the terms and conditions of any awards granted under the 2001 LSR
Equity  Incentive Plan,  including any  restrictions or limitations on transfer,
any vesting schedules or the acceleration of vesting  schedules,  any forfeiture
provision or waiver of the same and including any terms and conditions necessary
or desirable to ensure the optimal tax result for  participating  personnel  and
the  Company  including  by way of example to ensure that there is no tax on the
grant of the rights and that such tax only  arises on the  exercise of rights or
otherwise when the LSR Voting Common Stock  unconditionally  vests and is at the
disposal of such participating  personnel. The exercise price at which shares of
LSR Voting Common Stock may be purchased  pursuant to the grant of stock options
under the 2001 LSR Equity Incentive Plan is to be determined by the Compensation
Committee at the time of grant in its discretion,  which discretion includes the
ability  to set an  exercise  price that is below the fair  market  value of the
shares of LSR Voting Common Stock covered by such grant at the time of grant.

The  number  of  shares  of LSR  Voting  Common  Stock  that may be  subject  to
outstanding  awards granted under the 2001 LSR Equity Incentive Plan (determined
immediately  after the grant of any  award)  may not  exceed 20  percent  of the
aggregate number of shares of LSR Voting Common Stock then outstanding.

The  2001  LSR  Equity  Incentive  Plan  may  be  amended,  altered,  suspended,
discontinued,  or  terminated  by the LSR Board  without LSR Common  Stockholder
approval  unless such  approval is  required by law or  regulation  or under the
rules of any stock  exchange or automated  quotation  system on which LSR Voting
Common Stock is then listed or quoted.  Thus,  LSR Common  Stockholder  approval
will not necessarily be required for  amendments,  which might increase the cost
of the plan or broaden eligibility.  LSR Common Stockholder approval will not be
deemed to be required  under laws or regulations  that  condition  favorable tax
treatment on such approval,  although the LSR Board may, in its discretion, seek
LSR Common  Stockholder  approval  in any  circumstances  in which it deems such
approval advisable.

The LSR Board has designated the Compensation Committee of the Board to serve as
the Stock Option Committee.  LSR made grants under the LSR 2001 Equity Incentive
Plan on March 1, 2002 to certain directors and key employees at that time.

Grants to Directors
Name                                     Number Granted
----                                     --------------
Gabor Balthazer                               20,000
John Caldwell                                 20,000
Kirby Cramer                                  40,000

Grants to Named Executive Officers
Name                                     Number Granted
----                                     --------------
Andrew Baker                                 200,000
Brian Cass                                   200,000
Frank Bonner                                  35,000
Julian Griffiths                              60,000
Richard Michaelson                            90,000


<PAGE>

All such options have  ten-year  terms;  50% of the shares  subject to grant are
immediately  exercisable  with the remaining 50%  exercisable one year after the
grant date (meaning all such options fully vested as of March 1, 2003);  and all
have an exercise  price of $1.50 per share,  the price at which the Company sold
shares  of  Common  Stock in the  Private  Placement.  Options  to  purchase  an
aggregate of 1,188,000  shares of LSR Common Stock  (including  those  specified
above)  were  granted  during  the two  years  2002  and 2003 to  employees  and
directors, on the terms set forth above, are listed below:

Date of Grant                Numbers Granted                Exercise Price
-------------                ---------------                --------------
March 1, 2002                  1,142,000                    $1.50
September 3, 2002                 20,000                    $2.40
October 21, 2002                  15,000                    $2.03
February 14, 2003                 11,000                    $1.80

In 2004,  in  addition to the options  granted  under the 2004 LTIP  referred to
below,  options to purchase an  aggregate  of 67,100  shares of LSR Common Stock
were  issued,  all at exercise  prices  equal to the market price at the date of
grant, on the terms set forth in the previous paragraph, are listed below.

Date of Grant                 Numbers Granted                Exercise Price
-------------                 ---------------                --------------
April 12, 2004                     37,100                    $1.85
October 28, 2004                   17,400                    $7.70
December 15, 2004                  12,600                    $9.52

2004 Long Term Incentive Plan

Effective  June 1, 2004 the Company  adopted the 2004 Long Term  Incentive  Plan
("2004 LTIP"), pursuant to the terms of the 2001 Equity Incentive Plan. The 2004
LTIP has two components:  a grant of stock options, with a vesting date of March
31, 2007, and a cash bonus to be awarded in 2007 based on 2006 Company financial
performance.

Options to purchase an aggregate of 362,663  shares of common stock were granted
to 32 key  employees  of the  Company  as of June 1, 2004  under the 2004  LTIP;
55,500 of such options were granted to Andrew Baker, the Company's  Chairman and
CEO,  55,500 of such options were granted to Brian Cass, the Company's  Managing
Director  and  President,  30,303  of  such  options  were  granted  to  Richard
Michaelson,  the  Company's CFO and  Secretary,  and 27,750 of such options were
granted  to Julian  Griffiths,  the  Company's  UK  Director  of  Operations.The
exercise  price of all such  options is $3.30,  the  market  price of LSR common
stock on June 1, 2004. All such options have ten-year terms and are  exercisable
in full on March 31, 2007. At December 31, 2004,  356,419  shares under the 2004
LTIP option plan were outstanding and none were exercisable.

The following table  summarizes stock option activity under the Company's option
plans.

<TABLE>
<CAPTION>
                                               Shares        Wtd Avg. Ex Price       Number of securities remaining
                                               (000)                                  available for future issuance
<S>                                           <C>                 <C>                          <C>
Outstanding - December 31, 2003               1,188               $1.52

Granted                                         430                $3.54
Lapsed                                         (105)               $1.78
Exercised                                      (127)               $1.51
                                             -----------     ------------------    ------------------------------------
Outstanding - December 31, 2004                1,386               $2.13                         814,000
                                             -----------     ------------------    ------------------------------------
Exercisable at end of year                      996
Weighted average fair value per
option granted in 2004 was                     $3.44
</TABLE>

Huntingdon Life Sciences Group plc Stock Option Plan

Huntingdon  Life  Sciences  Group plc issued  options prior to December 31, 1997
pursuant to several stock option plans. However, the ability to exercise options
under all such  Huntingdon  plans  lapsed on March 26, 2002 in  connection  with
LSR's  acquisition of Huntingdon,  except for those granted under the Unapproved
Stock Option Plan (the  "Unapproved  Plan").  Under the  Unapproved  Plan,  some
options  technically remain outstanding.  However,  such options are exercisable
only for shares of  Huntingdon,  a 100% wholly owned  subsidiary of LSR, and are
therefore considered to have no value.

Warrants

On October 9, 2001, on behalf of  Huntingdon,  LSR issued to Stephens Group Inc.
warrants  to  purchase  up to  704,425  shares of LSR Voting  Common  Stock at a
purchase  price of $1.50 per share.  Stephens Group Inc.  subsequently  sold the
warrants to independent  third parties.  The LSR warrants are exercisable at any
time  and  will  expire  on  October  9,  2011.  These  warrants  arose  out  of
negotiations  regarding the  refinancing  of the bank loan by the Stephens Group
Inc., in January 2001. In  accordance  with APB Opinion No. 14,  Accounting  for
Convertible  Debt and Debt Issued with Stock  Purchase  Warrants  ("APB 14") the
warrants were recorded at their pro rata fair values in relation to the proceeds
received on the date of  issuance.  As a result,  the value of the  warrants was
$430,000. 154,425 of such warrants were exercised in 2004.

On June 11, 2002 LSR issued to FHP warrants to purchase up to 410,914  shares of
LSR Voting Common Stock at a purchase price of $1.50 per share. The LSR warrants
are  exercisable  at any time and will expire on June 11, 2012.  These  warrants
arose out of  negotiations  regarding  the  provision  of the $2.9  million loan
facility made  available to the Company on September 25, 2000 by Mr. Baker,  who
controls FHP. In  accordance  with APB 14 the loan and warrants were recorded at
their pro rata fair values in relation to the  proceeds  received.  As a result,
the value of the warrants was $250,000.

On July 25, 2002, 100,000 warrants were issued at the deemed market price on the
day of $1.50 (the same price at which the Private Placement had been completed).
On October 15, 2003,  100,000  warrants  were issued  75,000 of which were at an
exercise  price of $2.50,  the market price on the day, and 25,000 of which were
issued at an exercise  price of $5.00 per share.  On October 24,  2003,  100,000
warrants  were  issued at the  market  price on the day of  $2.05.  In all three
cases, these warrants were issued to independent  consultants in connection with
financial and strategic advice.

A summary of warrants outstanding at December 31, 2004 is as follows:

Date of issue            Warrants        Exercise price    Expiration Date
October 9, 2001           550,000            $1.50         October 9, 2011
June 11, 2002             410,914            $1.50          June 11, 2012
October 24, 2003          100,000            $2.05         October 24, 2013

<PAGE>

12.  EMPLOYEE BENEFITS

Prior to December 31, 2002, the Company  operated the  Huntingdon  Life Sciences
Pension and Life  Assurance  Scheme (the "HLS Defined  Benefit  Pension Plan") a
funded pension plan providing  benefits,  based on final pensionable salary, for
certain  Company  employees  in the UK. The Plan had been closed to new entrants
from  April 5,  1997 and as of  December  31,  2002,  the  accumulation  of plan
benefits of employees in the plan was permanently suspended,  and therefore, the
HLS Defined  Benefit  Pension Plan was  curtailed.  This  suspension of benefits
resulted in a gain on  curtailment  of $8.4 million at December 31, 2002,  which
has been  recorded as a reduction of the  Company's  unrecognized  net actuarial
loss.

The  components  of the net  periodic  benefit  cost of the HLS Defined  Benefit
Pension Plan for the years ended December 31, are as follows:
<TABLE>
<CAPTION>

                                                                      2004                2003                2002
                                                                      $000                $000                $000
<S>                                                             <C>                 <C>                   <C>
Service cost, benefits earned during the year                            -                   -              $1,466
Interest cost on projected benefit obligation                       $7,294              $6,101               5,581
Expected return on plan assets                                     (8,298)             (7,279)             (6,455)
Amortization of transition asset                                     (145)               (277)               (238)
Amortization of actuarial loss                                         854                 710                   -
                                                               -------------       ------------       -------------
Net periodic (benefit)/cost                                          $(295)             $(745)                $354
                                                               -------------       ------------       -------------

The major assumptions used in calculating the pension expense were:

                                                                      2004                2003                 2002
Discount rate                                                         5.5%                5.5%                5.75%
Rate of increase of future compensation                                N/A                 N/A                  N/A
Long-term rate of return on plan assets                               8.0%                8.0%                8.25%

A reconciliation of the projected benefit obligation for the HLS Defined Benefit
Pension  Plan to the accrued  pension  expense  recorded as of December 31 is as
follows:

                                                                      2004                2003                 2002
                                                                      $000                $000                 $000
Projected benefit obligation                                    $(154,613)          $(123,892)            $(99,068)
Plan assets at market value                                        118,054             102,483               81,356
                                                               ------------       -------------       --------------

Funded status                                                    $(36,559)           $(21,409)            $(17,712)
Unrecognized net actuarial loss/(gain)                              41,211              24,875               19,678
Adjustment for minimum liability - pretax                         (41,211)            (24,734)             (19,296)
Unrecognized net asset at transition                                     -               (141)                (382)
                                                               ------------       -------------       --------------
(Accrued)/prepaid pension expense                                $(36,559)           $(21,409)            $(17,712)
                                                               ------------       -------------       --------------
Change in plan assets
Fair value of assets, beginning of year                           $102,483             $81,356              $86,492
Foreign currency changes                                             7,702               8,884                8,238
Actual gain/(loss) on plan assets                                   11,308              16,202             (13,299)
Employer contributions                                                 768                 809                1,654
Employee contributions                                                   -                   -                  752
Benefit payments                                                   (4,207)             (4,768)              (2,481)
                                                               ------------        ------------       --------------
Fair value of assets, end of year                                 $118,054            $102,483              $81,356
                                                               ------------        ------------       --------------
Change in projected benefits obligation
Projected benefit obligation, beginning of year                   $123,892             $99,068              $91,467
Foreign currency changes                                             9,311              10,819               10,013
Service cost                                                             -                   -                1,466
Interest cost                                                        7,643               6,216                5,581
Actuarial (gains)/losses                                            17,974              12,557                  681
Gain on curtailment                                                      -                   -              (8,411)
Employee contributions                                                   -                   -                  752
Benefit payments                                                   (4,207)             (4,768)              (2,481)
                                                               ------------        ------------       --------------
Projected benefit obligation, end of year                         $154,613            $123,892              $99,068
                                                               ------------        ------------       --------------

</TABLE>


On April 6, 1997 the Company established a defined  contribution plan, the Group
Personal Pension Plan, for Company employees in the UK. Additionally,  a defined
contribution  plan (401-K plan) is also  available  for employees in the US. The
retirement benefit expense for these plans for the year ended December 31, 2004,
2003 and 2002 were $3.6 million, $2.5 million and $1.3million respectively.

<PAGE>

13.  GEOGRAPHICAL ANALYSIS

During each of the years ended  December  31, 2004,  2003 and 2002,  the Company
operated  from within two segments  based on  geographical  markets,  the United
Kingdom and the United States. The Company had one continuing activity, Contract
Research, throughout these periods.

The  accounting  policies  of the  operating  segments  are the  same  as  those
described  in the  summary  of  significant  accounting  policies.  Transactions
between segments, which are immaterial, are carried out on an arms-length basis.
Interest  income,  interest expense and income taxes are also not reported on an
operating  segment  basis  because they are not  considered  in the  performance
evaluation by the Company's chief operating decision-maker. Geographical segment
information is as follows:
<TABLE>
<CAPTION>

                                                                 US             UK          Corporate        Total
                                                                $000           $000            $000          $000

<C>                                                           <C>             <C>                  <C>      <C>
2004       Revenues                                           $30,403         $127,148             $-       $157,551
           Operating   income   before  other   operating
           income/(expense)                                     3,861           18,716         (6,753)        15,824
           Operating (loss)/income                              3,861           18,716         (6,753)        15,824
           Long-lived assets (A)                               19,567          143,143          3,753        166,463
           Property and equipment, net                          9,941          100,035             23        109,999
           Depreciation and amortization                        1,307            8,213             10          9,530
           Capital expenditure                                  2,066            9,023              7         11,096
           Total assets                                        25,521          169,939          4,615        200,075

2003       Revenues                                           $28,110         $104,324             $-       $132,434
           Operating income before other operating
           expense                                              2,085            9,282         (4,598)         6,769
           Operating income                                     1,914            6,127         (4,794)         3,247
           Long-lived assets (A)                               15,091          119,282          4,200        138,573
           Property and equipment, net                          9,395           92,126             26        101,547
           Depreciation & amortization                          1,896            9,431              7         11,334
           Capital expenditure                                  1,904            6,804              8          8,716
           Total assets                                        17,588          132,731          5,954        156,273

2002       Revenues                                           $24,891          $90,851             $-       $115,742
           Operating income before other expense/income
                                                                  781            7,562         (4,079)         4,264
           Operating income                                       781            7,562         (4,079)         4,264
           Long-lived assets (A)                               20,192          108,857          4,154        133,203
           Property and equipment, net                          9,611           84,928             35         94,574
           Depreciation & amortization                          1,334            6,768              6          8,108
           Capital expenditure                                    991            3,181              5          4,177
           Total assets                                        21,908          120,455          6,047        148,410

<FN>

(A)  Long-lived  assets exclude cash and cash equivalents and unamortized  costs
     of raising long-term debt.
</FN>
</TABLE>

<PAGE>

Revenues from customers (based on location of customers)

                                   2004            2003             2002
                                   $000            $000             $000
United States                    44,530          38,820           37,316
Europe                           78,277          61,110           51,551
Rest of World                    34,744          32,534           26,875
                          --------------   -------------     ------------
                               $157,551        $132,464         $115,742
                          --------------   -------------     ------------


14.  ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
<TABLE>
<CAPTION>

                                           Balance as of      Exchange       Charged to     Accounts     Balance as
                                           beginning of      Adjustment      operations    written off    of end of
                                              period                                                       period
                                               $000             $000            $000          $000          $000

Allowance for uncollectible accounts
deducted from trade debtors
<S>                                            <C>              <C>            <C>           <C>            <C>
December 31, 2004                               561              15             (94)          (227)          255
December 31, 2003                               287              29             250            (5)           561
December 31, 2002                               164              17             294           (188)          287

</TABLE>

15.  OTHER RELATED PARTY TRANSACTIONS

Share purchase loan

Brian Cass,  President and Managing  Director of LSR, acquired 400,000 shares of
LSR Common Stock in the Private Placement. Mr. Cass acquired such shares through
the delivery of two promissory  notes.  Both such promissory  notes, each in the
amount of (pound)211,679 ($406,403), are due on March 28, 2007; bear interest at
the rate of 5% per annum;  and are secured by the  200,000  shares of LSR Common
Stock  purchased  with the  proceeds  of each  such  loan.  The due date of each
promissory note would be accelerated if Mr. Cass  voluntarily  resigned from his
employment  with LSR or had his employment  terminated.  Repayment of one of the
promissory notes will be made by automatic deduction of (pound)44,000  ($84,476)
per year from the (pound)66,000 ($126,713) per year pension contribution made by
the Company to a pension plan established by Mr. Cass. The other note is further
collateralized by the (pound)214,500 ($412,000) accrued in such pension account.
In addition,  one-third of any yearly bonus received by Mr. Cass will be used to
reduce  principal  of the  promissory  notes.  Total  amount  of this loan as of
December  31, 2004 is  (pound)363,000  ($697,000  at year-end  foreign  exchange
rates).

Julian Griffiths, a former director of LSR and current Director of Operations of
Huntingdon, acquired 50,000 shares of LSR Common Stock in the Private Placement.
Mr. Griffiths  acquired such shares through the delivery of a promissory note in
the  principal  amount of  (pound)52,817  ($101,403),  which is due on March 28,
2007;  bears interest at the rate of 5% per annum;  and is secured by the 50,000
shares of LSR Common Stock  purchased  with the proceeds of the loan.  This loan
was totally repaid during 2003.

<PAGE>

16.  UNAUDITED QUARTERLY FINANCIAL INFORMATION

The following is a summary of unaudited quarterly financial  information for the
12 months ended December 31, 2004 and December 31, 2003.

<TABLE>
<CAPTION>

Year ended December 31, 2004                                        Quarter Ended
                                              March 31            June 30       September 30        December 31
                                                  $000               $000               $000               $000

<S>                                           <C>                <C>                <C>                <C>
Revenues                                       $37,236            $38,315            $40,855            $41,145
Cost of sales                                 (29,435)           (28,111)           (29,674)           (29,841)
                                      --------------------------------------------------------------------------
Gross profit                                     7,801             10,204             11,181             11,304
Selling and administrative expenses            (5,485)            (6,201)            (6,659)            (6,321)
Other operating (expense)/income                     -                  -                  -                  -
                                      --------------------------------------------------------------------------
Operating income                                 2,316              4,003              4,522              4,983
Interest income                                     14                 14                 13                 73
Interest expense                               (1,576)            (1,593)            (1,689)            (1,777)
Other  income/(expense)                          1,355              (625)              (105)              2,265
                                      --------------------------------------------------------------------------
Income/(Loss) before taxes                       2,109              1,799              2,741              5,544
Income tax (expense)/benefit                     (716)              (597)              (945)              7,659
                                      --------------------------------------------------------------------------
Net income                                      $1,393             $1,202             $1,796            $13,203
                                      --------------------------------------------------------------------------

Earnings per share                               $0.12              $0.10              $0.15              $1.07

                                                                    Quarter Ended
Year ended December 31, 2003                  March 31            June 30           September 30       December 31
                                                  $000               $000               $000             $000


Revenues                                       $31,901            $32,663            $32,723            $35,147
Cost of sales                                 (25,373)           (25,442)           (26,164)           (27,819)
                                      --------------------------------------------------------------------------
Gross profit                                     6,528              7,221              6,559              7,328
Selling and administrative costs               (4,921)            (5,395)            (5,189)            (5,362)
Other operating(expense)/income                      -              (132)                387            (3,777)
                                      --------------------------------------------------------------------------
Operating income/(loss)                          1,607              1,694              1,757            (1,811)
Interest income                                     16                 23                 10                 45
Interest expense                               (1,708)            (1,444)            (1,464)            (1,468)
Other (expense)/income                           (450)              2,179                308              3,325
                                      --------------------------------------------------------------------------
(Loss)/income before taxes                       (535)              2,452                611                 91
Income tax benefit/(expense)                       177              (592)              (215)              1,739
                                      --------------------------------------------------------------------------
Net (loss)/income                               $(358)             $1,860               $396             $1,830
                                      --------------------------------------------------------------------------

(Loss)/earnings per share                      $(0.03)              $0.16              $0.03              $0.15


</TABLE>

ITEM 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
             FINANCIAL DISCLOSURES

None

ITEM 9(a)  CONTROLS AND PROCEDURES

Evaluation  of  disclosure  controls and  procedures.  The  Company's  Principal
Executive  Officer  (the CEO) and  Principal  Financial  Officer  (the CFO) have
reviewed and evaluated the  effectiveness of the Company's  disclosure  controls
and procedures as of the end of the period covered in this report. Based on that
evaluation,  the Principal Executive Officer and the Principal Financial Officer
have concluded that the Company's current disclosure controls and procedures are
effective.  There have been no  significant  changes in the  Company's  internal
controls or in the other factors that significantly affect those controls.

<PAGE>



                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The table  below sets forth  certain  information  with  respect to the  current
directors and executive officers of LSR.

Name                   Age    Office Held

Andrew Baker           56     Director
                              Chairman of the Board and Chief Executive Officer
Gabor Balthazar        63     Director
Brian Cass             57     Director, Managing Director/President
Afonso Junqueiras      48     Director
Richard Michaelson     53     Chief Financial Officer & Secretary
Yaya Sesay             62     Director

(a)      Identification of Directors and Executive Officers

Andrew Baker became a director and Chairman and Chief  Executive  Officer of LSR
on January 10, 2002.  He was  appointed to the Board of  Huntingdon as Executive
Chairman in  September  1998.  He is a chartered  accountant  and has  operating
experience  in  companies  involved  in the  delivery  of  healthcare  ancillary
services. He spent 18 years until 1992 with Corning Incorporated ("Corning") and
held  the  posts  of  President  and CEO of  MetPath  Inc.,  Corning's  clinical
laboratory  subsidiary,  from  1985 to 1989.  He  became  President  of  Corning
Laboratory Services Inc. in 1989, which at the time controlled MetPath Inc. (now
trading  as  part  of  Quest  Diagnostics   Inc.),  and  Hazleton   Corporation,
G.H.Besselaar  Associates  and  SciCor  Inc.,  all three now  trading as part of
Covance Inc.  Since leaving  Corning in 1992, Mr. Baker has focused on investing
in  and  developing   companies  in  the  healthcare   sector  including  Unilab
Corporation,  a clinical laboratory services provider in California, and Medical
Diagnostics Management, a US based provider of radiology and clinical laboratory
services to health care payers. In 1997, he formed Focused  Healthcare  Partners
("FHP"),  an investment  partnership that acts as general partner for healthcare
startup and development companies.

Gabor  Balthazar  became a director of LSR on January 10, 2002. He was appointed
to the Board of Huntingdon as the Senior Independent  Non-Executive  Director in
March  2000.  He has been  active  in  international  marketing  and  management
consulting  for  almost  30  years.  He was a  founding  Board  member of Unilab
Corporation,  serving as President  from 1989 to 1992,  and continuing to sit on
Unilab's Board until November 1999. From 1985 to 1997, Mr. Balthazar served as a
consultant to Frankfurt Consult, the merger/acquisition  subsidiary of BHF-Bank,
Frankfurt,  Germany  and to Unilabs  Holdings  SA, a Swiss  clinical  laboratory
testing holding company, from 1987 to 1992. He is a graduate of the Columbia Law
School and the Columbia Business School in New York City.

Brian Cass, FCMA, CBE, became a director and Managing  Director/President of LSR
on January 10, 2002.  He was  appointed to the Board of  Huntingdon  as Managing
Director/Chief  Operating Officer in September 1998. Prior to joining Huntingdon
he was a Vice  President  of  Covance  Inc.  and  Managing  Director  of Covance
Laboratories Ltd.,  (previously Hazleton Europe Ltd) for nearly 12 years, having
joined  the  company in 1979 as  Controller.  Brian  Cass  worked at  Huntingdon
Research  Center  between 1972 and 1974 and has previous  experience  with other
companies  in the  electronics  and  heavy  plant  industries.  He has also held
directorships  with  North  Yorkshire  Training  &  Enterprise  Council  Ltd and
Business Link North  Yorkshire Ltd. In June 2002, Mr. Cass was also appointed as
a Commander in the Most Excellent Order of the British Empire (CBE).

Afonso  Junqueiras  became a director of LSR on January 15, 2003.  He is a civil
engineer and has been President and a director of a South American private civil
engineering firm since 1997.

Richard Michaelson became Chief Financial Officer and Secretary of LSR effective
January 10, 2002. Mr. Michaelson was Director of Strategic Finance of Huntingdon
from  September  1998 to December  2001.  He served as Senior Vice  President of
Unilab Corporation,  a clinical laboratory testing company based in Los Angeles,
California, from September 1997 to December 1997, Senior Vice President-Finance,
Treasurer and Chief Financial  Officer of Unilab from February 1994 to September
1997,  and Vice  President-Finance,  Treasurer  and Chief  Financial  Officer of
Unilab from November 1993 to February 1994. Mr.  Michaelson  also served as Vice
President of Unilab  beginning in October 1990. Mr.  Michaelson  joined MetPath,
Inc., the clinical laboratory  subsidiary of Corning  Incorporated,  in 1980 and
served as Vice  President  of MetPath  from 1983 and  Treasurer  of Corning  Lab
Services, Inc. from 1990 through, in each case, September 1992.

Yaya Sesay,  served as a senior  government  official  of an African  nation for
approximately 25 years, culminating in his service as Financial Secretary of the
Ministry of Finance for three years. For the past five years, Mr. Sesay has been
an   international   businessman   with  an  interest  in  the   development  of
pharmaceutical products.

The  Articles of Amendment  and  Restatement  of LSR provide that the  directors
shall be not less than one in number  and there  shall be no  maximum  number of
directors.  Any director  appointed by the board of directors  holds office only
until the next following annual meeting,  at which time he shall be eligible for
re-election by the  stockholders.  Directors may be removed from office only for
cause.

No  director  or  executive  officer  has a family  relationship  with any other
director or executive officer.

(b)      Code of Ethics

The Company has adopted a Senior Officer and Financial Personnel Code of Ethics.
A copy of such Code of Ethics is filed as Exhibit 14 in this Form 10-K.

<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION

In the 12 months ended December 31, 2004 and 2003 the aggregate  compensation of
the  Executive  Officers  and key  employees  as a group,  paid or accrued,  was
$3,322,247 and $1,584,541 respectively.

Employment Agreements

Andrew Baker

The  services  of Mr.  Baker  are  provided  for not less than 100 days per year
through a management  services  contract  between  Huntingdon and FHP. Mr. Baker
controls  FHP.  Under the  contract,  FHP agrees to provide the  services of Mr.
Baker as Chairman and CEO of the Company.  The management services contract will
continue until terminated on 12 months' written notice from either party.

Under  the  management   services   contract  FHP  is  paid  an  annual  fee  of
(pound)300,000.  Mr. Baker receives health and medical  insurance  benefits from
the company.  He is also  entitled to a  non-pensionable  car allowance of up to
(pound)1,000 per month. Mr. Baker receives  contributions to his private pension
arrangements,  equivalent to 33 percent of this basic annual fee. The management
services  contract  may be  terminated  if either FHP or Mr.  Baker is guilty of
serious misconduct or is in material breach of the terms of the contract,  among
other reasons.  In the event of termination  without "cause" following a "change
in control",  as defined,  FHP would  receive a payment equal to 2.99 times this
annualized  fee plus an amount  equal to 2.99 times all  incentive  compensation
earned  or  received  by  FHP  or Mr.  Baker  during  the  12  months  prior  to
termination.

Both  FHP  and  Mr.  Baker  are  bound  by  confidentiality  restrictions  and a
restriction  preventing  Mr. Baker from holding any interests  conflicting  with
those of the Company, without the Company's consent. Mr. Baker has undertaken to
the Company that, during the continuance of the management services contract, he
will not without the prior consent of the Company, be concerned or interested in
any business, which competes, or conflicts with the business of the Company.

Brian Cass

The  services  of Mr.  Cass are  provided  through a service  agreement  between
Huntingdon Life Sciences  Limited (a wholly owned  subsidiary of Huntingdon) and
Mr. Cass, which appoints Mr. Cass as President/Managing Director of the Company.
Mr. Cass' service  agreement can be terminated on two years' written notice from
either party.

Mr. Cass receives a gross salary of (pound)300,000  per annum. Under the service
agreement,  Mr.  Cass is also  entitled  to health  insurance,  life  insurance,
personal accident  insurance and medical expenses  insurance.  Mr. Cass receives
contributions to his private pension  arrangements,  equivalent to 33 percent of
his basic annual salary. He is also entitled to a non-pensionable  car allowance
of  (pound)1,000  gross  per  month and  (pound)2,000  per  month as  relocation
allowance.  Mr. Cass' service agreement also provides for payment to Mr. Cass of
a bonus,  at the absolute  discretion  of the Company's  Board.  In the event of
termination  without "cause"  following a "change in control",  as defined,  Mr.
Cass  would  receive a payment  equal to 2.99 times his  annual  salary  plus an
amount equal to 2.99 times all incentive  compensation earned or received by Mr.
Cass during the 12 months prior to termination.

Mr. Cass'  service  agreement may be terminated if Mr. Cass is guilty of serious
misconduct or is in material breach of the terms of the service  agreement or is
in breach of the model code for securities  transactions  by directors of listed
companies, among other reasons.

Mr. Cass is bound by confidentiality  restrictions and a restriction  preventing
him from being  engaged,  concerned or interested in any business that conflicts
with the business of the Company or any  subsidiary  unless either the Company's
Board  otherwise  consents  or the  interest  is  limited  to a holding or other
interest of no more than 5 percent of the total  amount of shares or  securities
of any company quoted on a recognized investment exchange.

<PAGE>

Richard Michaelson

The services of Mr.  Michaelson are provided through a service agreement between
him and Huntingdon Life Sciences Inc. (a wholly owned subsidiary of Huntingdon).
The service  agreement  appoints Mr.  Michaelson as Chief Financial  Officer and
Secretary of the Company. Mr. Michaelson's service agreement will continue until
terminated by Mr.  Michaelson  on thirty days'  written  notice or by Huntingdon
Life Sciences Inc. on 12 months'  written  notice.  In the event of  termination
without  "cause"  following a "change in control",  as defined,  Mr.  Michaelson
would  receive a payment  equal to 2.99 times his annual  salary  plus an amount
equal to 2.99  times  all  incentive  compensation  earned  or  received  by Mr.
Michaelson during the 12 months prior to termination.

Mr.  Michaelson  receives an annual salary of $300,000  gross and is entitled to
health insurance, life insurance,  personal accident insurance, medical expenses
insurance and  participation in the 401(k) Plan of Huntingdon Life Sciences Inc.
Mr.  Michaelson's  service agreement also provides for the payment of a bonus to
Mr. Michaelson in the absolute discretion of the Company's Board.

In addition,  Mr.  Michaelson is entitled to a car allowance of $1,000 gross per
month.

The  agreement  may be  terminated  if  Mr.  Michaelson  is  guilty  of  serious
misconduct  or is in  material  breach  of the terms of the  service  agreement,
amongst other reasons.

Mr.  Michaelson  is  bound by  confidentiality  restrictions  and a  restriction
preventing  him from being  engaged,  concerned  or  interested  in any business
conflicting with the business of the Company or any subsidiary  unless the Board
otherwise  consents or the interest is limited to a holding or other interest of
no more than 5  percent  of the total  amount  of  shares or  securities  of any
company quoted on a recognized investment exchange.

Discretionary bonus plan

The Company operates a discretionary  bonus plan for executive  officers and key
managers  based  upon  improvements  to  operating  income  and  achievement  of
pre-defined targets. No bonus awards were made in respect of 2001, 2002 or 2003.
In accordance with the Company performance  provisions  established in June 2004
by the Compensation Committee, aggregate bonus awards of $1,910,000 are expected
to be paid to 31 senior  employees  of the  Company in March 2005 as a result of
the  Company's  achievement  of  specified  fiscal year 2004  performance  goals
established by the Compensation Committee.

<PAGE>

The  following  table  shows the  remuneration  of  Executive  Officers  and key
employees in the 12 months ended December 31, 2004, 2003, and 2002:
<TABLE>


                                               Annual Compensation                        Long Term Compensation
                                                                                                  Awards
<CAPTION>
    Name And Principal        Year       Salary         Bonus         Other Annual           Number Of Shares
         Position                                                     Compensation          Underlying Options


<S>                           <C>       <C>            <C>               <C>                      <C>
Andrew Baker                  2004      427,489        576,000           141,805                  55,500
Chairman and Chief            2003      327,050           -              108,918                     -
Executive Officer             2002      300,780           -              100,160                  200,000

Brian Cass                    2004      427,489        576,000           218,691                  55,500
President                     2003      327,080           -              175,843                     -
                              2002      300,780           -              160,327                  200,000

Richard Michaelson            2004      287,952        150,000           42,108                   30,303
Chief Financial Officer       2003      222,108           -              18,633                      -
and                           2002      196,923           -              11,917                   90,000
Secretary


Julian Griffiths              2004      266,667        137,408           70,638                   27,750
Director of Operations        2003      204,425           -              44,692                      -
of Huntingdon                 2002      187,988           -              54,547                   60,000

Frank Bonner                  2004         -              -                 -                        -
Former Director of            2003      141,945           -              13,817                      -
Science &
Technology of Huntingdon      2002      221,073           -              20,053                   35,000

<FN>

Note - the bonuses were paid in March 2005
</FN>
</TABLE>

Messrs.  Baker,  Bonner, Cass and Griffiths are paid in UK pounds sterling.  The
amounts have been converted at the rate of 2004:  $1.8321,  2003:  $1.6354,  and
2002: $1.5039, to (pound)1.00 for the purposes of the above table.

The Officers' pension contributions are privately invested.

EQUITY INCENTIVE PLANS

LSR 2001 Equity Incentive Plan (the "LSR 2001 Equity Incentive Plan")

The LSR Board has adopted the LSR 2001 Equity  Incentive  Plan.  Adoption of the
LSR 2001  Equity  Incentive  Plan  enables LSR to use stock  options  (and other
stock-based  awards) as a means to attract,  retain and motivate key  personnel.
This stock option plan is approved by the shareholders.

Awards  under the LSR 2001 Equity  Incentive  Plan may be granted by a committee
designated  by the LSR  Board  pursuant  to the  terms  of the LSR  2001  Equity
Incentive  Plan  (which  has  designated  the  Compensation  Committee  for such
purpose) and may include:  (i) options to purchase  shares of LSR Voting  Common
Stock,  including incentive stock options ("ISOs"),  non-qualified stock options
or both; (ii) stock  appreciation  rights ("SARs"),  whether in conjunction with
the grant of stock options or independent of such grant,  or stock  appreciation
rights  that are only  exercisable  in the event of a change in  control or upon
other events;  (iii)  restricted  stock consisting of shares that are subject to
forfeiture based on the failure to satisfy employment-related restrictions; (iv)
deferred stock, representing the right to receive shares of stock in the future;
(v)  bonus  stock  and  awards  in  lieu  of cash  compensation;  (vi)  dividend
equivalents,  consisting  of a right to receive  cash,  other  awards,  or other
property equal in value to dividends paid with respect to a specified  number of
shares of LSR Voting  Common Stock or other  periodic  payments;  or (vii) other
awards not  otherwise  provided for, the value of which are based in whole or in
part upon the value of the LSR Voting Common Stock. Awards granted under the LSR
2001 Equity  Incentive Plan are generally not assignable or transferable  except
pursuant to a will and by operation of law.

The flexible terms of the LSR 2001 Equity  Incentive Plan are intended to, among
other things, permit the Compensation Committee to impose performance conditions
with respect to any award,  thereby  requiring  forfeiture of all or part of any
award  if   performance   objectives   are  not  met  or  linking  the  time  of
exercisability  or  settlement  of an award  to the  attainment  of  performance
conditions.  For awards intended to qualify as "performance-based  compensation"
within the meaning of Section 162(m) of the United States Internal  Revenue Code
such  performance  objectives  shall be based  solely  on (i)  annual  return on
capital;  (ii) annual  earnings or earnings  per share;  (iii)  annual cash flow
provided by operations; (iv) changes in annual revenues; (v) stock price; and/or
(vi) strategic business criteria,  consisting of one or more objectives based on
meeting specified revenue,  market  penetration,  geographic  business expansion
goals, cost targets, and goals relating to acquisitions or divestitures.

LSR's  Compensation  Committee,  which  will  administer  the  2001  LSR  Equity
Incentive Plan, will have the authority,  among other things, to: (i) select the
directors,  officers and other employees and independent contractors entitled to
receive awards under the 2001 LSR Equity Incentive Plan; (ii) determine the form
of awards, or combinations of awards,  and whether such awards are to operate on
a tandem basis or in conjunction  with other awards;  (iii) determine the number
of shares of LSR Voting Common Stock or units or rights covered by an award; and
(iv) determine the terms and conditions of any awards granted under the 2001 LSR
Equity  Incentive Plan,  including any  restrictions or limitations on transfer,
any vesting schedules or the acceleration of vesting  schedules,  any forfeiture
provision or waiver of the same and including any terms and conditions necessary
or desirable to ensure the optimal tax result for  participating  personnel  and
the  Company  including  by way of example to ensure that there is no tax on the
grant of the rights and that such tax only  arises on the  exercise of rights or
otherwise when the LSR Voting Common Stock  unconditionally  vests and is at the
disposal of such participating  personnel. The exercise price at which shares of
LSR Voting Common Stock may be purchased  pursuant to the grant of stock options
under the 2001 LSR  Equity  Incentive  Plan is to be  determined  by the  option
committee at the time of grant in its discretion,  which discretion includes the
ability  to set an  exercise  price that is below the fair  market  value of the
shares of LSR Voting Common Stock covered by such grant at the time of grant.

The  number  of  shares  of LSR  Voting  Common  Stock  that may be  subject  to
outstanding  awards granted under the 2001 LSR Equity Incentive Plan (determined
immediately  after the  grant of any  award)  may not  exceed 20 per cent of the
aggregate number of shares of LSR Voting Common Stock then outstanding.

The  2001  LSR  Equity  Incentive  Plan  may  be  amended,  altered,  suspended,
discontinued,  or  terminated  by  the  LSR  Board  without  LSR  Voting  Common
Stockholder  approval  unless such  approval is required by law or regulation or
under the rules of any stock exchange or automated quotation system on which LSR
Voting  Common  Stock  is  then  listed  or  quoted.  Thus,  LSR  Voting  Common
Stockholder  approval will not  necessarily  be required for  amendments,  which
might  increase the cost of the plan or broaden  eligibility.  LSR Voting Common
Stockholder approval will not be deemed to be required under laws or regulations
that condition favorable tax treatment on such approval,  although the LSR Board
may,  in its  discretion,  seek LSR Voting  Common  Stockholder  approval in any
circumstances in which it deems such approval advisable.

The LSR Board has designated the Compensation Committee of the Board to serve as
the stock option committee.

LSR made  grants  under the LSR 2001 Equity  Incentive  Plan on March 1, 2002 to
certain directors as of that date, and employees,  including the Named Executive
Officers:

Grants to Directors
-------------------
Name                          Number Granted
----                          --------------
Gabor Balthazar               20,000
John Caldwell                 20,000
Kirby Cramer                  40,000

Grants to Named Executive Officers
----------------------------------
Name                          Number Granted
----                          --------------
Andrew Baker                  200,000
Brian Cass                    200,000
Frank Bonner                  35,000
Julian Griffiths              60,000
Richard Michaelson            90,000

All such options have  ten-year  terms;  50% of the shares  subject to grant are
immediately  exercisable  with the remaining 50%  exercisable one year after the
grant date (meaning all such options, fully vested as of March 1, 2003); and all
have an exercise  price of $1.50 per share,  the price at which the Company sold
shares  of  Common  Stock in the  Private  Placement.  Options  to  purchase  an
aggregate of 1,188,000  shares of LSR Common Stock  (including  those  specified
above) were granted in the two years 2002 and 2003 to employees  and  directors,
on the terms set forth above, are listed below:

Date of Grant              Numbers Granted              Exercise Price
-------------              ---------------              --------------
March 1, 2002                    1,142,000                   $1.50
September 3, 2002                   20,000                   $2.40
October 21, 2002                    15,000                   $2.03
February  14, 2003                  11,000                   $1.80

In 2004,  in  addition to the options  granted  under the 2004 LTIP  referred to
below,  options to purchase an  aggregate  of 67,100  shares of LSR Common Stock
were  issued,  all at exercise  prices  equal to the market price at the date of
grant, on the terms set forth in the previous paragraph, are listed below.

Date of Grant              Numbers Granted              Exercise Price
-------------              ---------------              --------------
April 12, 2004                       37,100                  $1.85
October 28, 2004                     17,400                  $7.70
December 15, 2004                    12,600                  $9.52

2004 Long Term Incentive Plan

Effective  June 1, 2004 the Company  adopted the 2004 Long Term  Incentive  Plan
("2004 LTIP"), pursuant to the terms of the 2001 Equity Incentive Plan. The 2004
LTIP has two components:  a grant of stock options, with a vesting date of March
31, 2007, and a cash bonus to be awarded in 2007 based on 2006 Company financial
performance.

Options to purchase an aggregate of 362,663  shares of common stock were granted
to 32 key  employees  of the  Company  as of June 1, 2004  under the 2004  LTIP;
55,500 of such options were granted to Andrew Baker, the Company's  Chairman and
CEO,  55,500 of such options were granted to Brian Cass, the Company's  Managing
Director  and  President,  30,303  of  such  options  were  granted  to  Richard
Michaelson,  the  Company's CFO and  Secretary,  and 27,750 of such options were
granted to Julian  Griffiths,  the  Company's  UK  Director of  Operations.  The
exercise  price of all such  granted  options is $3.30,  the market price of LSR
common  stock on June 1, 2004.  All such  options  have  ten-year  terms and are
exercisable  in full on March 31, 2007.  At December 31,  2004,  356,419  shares
under the 2004 LTIP option plan were outstanding and none were exercisable.

The following table  summarizes stock option activity under the Company's option
plans.
<TABLE>
<CAPTION>

                                               Shares        Wtd Avg. Ex Price      Number of securities remaining
                                               (000)                                 available for future issuance
<S>                    <C> <C>                 <C>                 <C>                          <C>
Outstanding - December 31, 2003                1,188               $1.52
Granted                                         430                $3.54
Lapsed                                         (105)               $1.78
Exercised                                       127                $1.51
                                             -----------     ------------------    ----------------------------------
Outstanding - December 31, 2004                1,386               $2.13                        814,000
                                             -----------     ------------------    ----------------------------------
Exercisable at end of year                      996
Weighted average fair value per
option granted in 2004 was                     $3.44

</TABLE>

Huntingdon Life Sciences Group plc Stock Option Plans

Huntingdon  Life  Sciences  Group plc issued  options prior to December 31, 1997
pursuant to several stock option plans. However, the ability to exercise options
under all such  Huntingdon  plans  lapsed on March 26, 2002 in  connection  with
LSR's  acquisition of Huntingdon,  except for those granted under the Unapproved
Stock Option Plan (the  "Unapproved  Plan").  Under the  Unapproved  Plan,  some
options  technically remain outstanding.  However,  such options are exercisable
only for shares of  Huntingdon,  a 100% wholly owned  subsidiary  of LSR, and as
such are considered to have no value.

Warrants

On October 9, 2001, on behalf of  Huntingdon,  LSR issued to Stephens Group Inc.
warrants  to  purchase  up to  704,425  shares of LSR Voting  Common  Stock at a
purchase  price of $1.50 per share.  Stephens Group Inc.  subsequently  sold the
warrants to independent  third parties.  The LSR warrants are exercisable at any
time  and  will  expire  on  October  9,  2011.  These  warrants  arose  out  of
negotiations  regarding the  refinancing  of the bank loan by the Stephens Group
Inc.,  (Stephens'  Loan) in January 2001. In accordance with APB Opinion No. 14,
Accounting for  Convertible  Debt and Debt Issued with Stock  Purchase  Warrants
("APB 14") the warrants  were recorded at their pro rata fair values in relation
to the proceeds received on the date of issuance.  As a result, the value of the
warrants was $430,000. 154,425 of such warrants were exercised in 2004.

On June 11, 2002 LSR issued to FHP warrants to purchase up to 410,914  shares of
LSR Voting Common Stock at a purchase price of $1.50 per share. The LSR warrants
are  exercisable  at any time and will expire on June 11, 2012.  These  warrants
arose out of  negotiations  regarding  the  provision  of the $2.9  million loan
facility made  available to the Company on September 25, 2000 by Mr. Baker,  who
controls FHP. In  accordance  with APB 14 the loan and warrants were recorded at
their pro rata fair values in relation to the  proceeds  received.  As a result,
the value of the warrants was $250,000.

On July 25, 2002, 100,000 warrants were issued at the deemed market price on the
day of $1.50 (the same price at which the Private Placement had been completed).
On October 15, 2003,  100,000  warrants were issued;  75,000 of which were at an
exercise  price of $2.50,  the market price on the day, and 25,000 of which were
issued at an exercise  price of $5.00 per share.  On October 24,  2003,  100,000
warrants  were  issued at the  market  price on the day of  $2.05.  In all three
cases, these warrants were issued to independent  consultants in connection with
financial and strategic advice.

A summary of warrants outstanding at December 31, 2004 is as follows:

                       Warrants         Exercise price      Expiration Date
October 9, 2001         550,000             $1.50           October 9, 2011
June 11, 2002           410,914             $1.50           June 11, 2012
October 24, 2003        100,000             $2.05           October 24, 2013

<PAGE>

ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

The  following  table sets  forth,  as of March 24,  2005,  certain  information
regarding the  beneficial  ownership of the shares of LSR common  stock,  by (a)
each person or entity who is known by LSR to own  beneficially 5% or more of its
outstanding  shares of Common Stock (none other than Mr. Baker and Mr. Cass, who
are each a  Director  and  Executive  Officer  of LSR);  (b)  each  Director  or
Executive  Officer of LSR or principal  subsidiary;  and (c) all  Directors  and
Executive Officers as a group.
<TABLE>
<CAPTION>

Name                                               Number of Shares              Percent of Outstanding Shares

<S>                                                       <C>        <C>                     <C>
Andrew Baker                                              2,311,060  (1)                     17.9%
Gabor Balthazar                                              20,000  (2)                       *
Brian Cass                                                  620,000  (3)                     5.1%

Afonso Junqueiras                                                --                           --
Richard Michaelson                                          330,390  (4)                     2.6%
Yaya Sesay                                                       --                           --
All Directors and Executive Officers
as a Group                                                3,281,450                          24.8%
<FN>

*  Signifies less than 1%. All percentages calculated on the basis of 12,441,281
   outstanding shares of Voting Common Stock outstanding at December 31, 2004.
   Shares subject to issuance upon presently  exercisable  options or Warrants
   are  included  in  the  number  of  outstanding   shares  for  purposes  of
   calculating  that holder's  percentage  interest,  as well as the aggregate
   percentage interest of all directors and Executive Officers as a group.

(1)  Includes  presently  exercisable  options to  purchase  200,000  shares and
     presently  exercisable  warrants to purchase  410,914 shares.  1,604,001 of
     such shares are beneficially  owned by Focused  Healthcare  Partners Ltd, a
     Bahamas corporation that is controlled by Mr. Baker. 490,914 of such shares
     (including  the 410,914 shares  subject to presently  exercisable  warrants
     noted above) are beneficially owned by Focused  Healthcare  Partners LLC, a
     New Jersey limited liability company that is controlled by Mr. Baker.

(2)  Includes presently exercisable options to purchase 20,000 shares

(3)  Includes presently exercisable options to purchase 200,000 shares

(4)  Includes presently exercisable options to purchase 90,000 shares

</FN>
</TABLE>

From  time to time US  depositary  institutions  hold  shares on behalf of their
clients to enable a market to be made in the LSR's shares.  No holdings of 5% or
more have been reported by those institutions at March 24, 2005.


<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(1)  A $2,910,800  ((pound)2,000,000) facility was made available to the Company
     on September  25, 2000 by the Company's  Chairman and CEO, Mr. Baker.  This
     had been drawn down in full. The loan was repayable on demand,  although it
     was subordinate to the bank loan, it was unsecured and interest was payable
     monthly  at a rate  of 10% per  annum.  By  Amendment  No.  2 to that  loan
     facility,  dated March 20, 2001,  FHP became party to the loan and $550,000
     of the amount loaned was transferred to FHP. On March 28, 2002 $2.1 million
     of Mr.  Baker's  loan was  converted  into  1,400,000  shares of LSR Voting
     Common Stock and $300,000 of FHP's loan was converted  into 200,000  shares
     of LSR Voting Common Stock. The remaining  principal amounts were repaid in
     full to Mr. Baker and FHP, respectively, in 2002.

(2)  On January 20, 2001 the  Company's  bank loan was  refinanced by means of a
     loan from HLSF,  LLC a  subsidiary  company of the  Stephens  Group Inc., a
     related  party at the time,  and the other two banks  that were part of the
     original loan  syndicate.  That loan was  transferred to an unrelated third
     party  effective  February 11, 2002.  The loan is now repayable on June 30,
     2006 and interest is payable in quarterly  breaks at a rate of "LIBOR" plus
     1.75% per annum. The loan is secured by guarantees from LSR, Inc., LSR Ltd,
     Huntingdon  Life  Sciences  Limited  and  Huntingdon  Life  Sciences  Inc.,
     collateralized by all the assets of those companies.

(3)  In accordance  with the terms of a facility  agreement  dated July 19, 2001
     and as amended on October 5, 2001, the Stephens Group Inc. made  $2,910,800
     ((pound)2,000,000)  available to the  Company,  which was  available  for a
     period of one year from July 19 2001.  That loan was transferred to another
     party  effective  February  11,  2002.  This  amount,  which is secured and
     subordinated to the bank debt, was drawn down in full. Interest was payable
     monthly at a rate of 10% per annum.  With the  consent of the bank  lender,
     one half of the facility was repaid on July 1, 2002,  and the remainder was
     repaid on October 1, 2002.

(4)  In October  2001 the  Company  issued to Stephen  Group  Inc.,  warrants to
     purchase up to 704,425 shares of Common Voting Stock at a purchase price of
     $1.50 per share.  These warrants  arose out of the  refinancing of the bank
     loan by the  Stephens  Group Inc.  in January  2001.  These  warrants  were
     subsequently  transferred to an unrelated  third party.  These warrants are
     exercisable at any time and will expire on October 9, 2011. 154,425 of such
     warrants were exercised in 2004.

     In  addition  at the  June  11,  2002  shareholders  meeting,  shareholders
     approved the  issuance to FHP of warrants to purchase up to 410,914  shares
     of  Common  Voting  Stock at a  purchase  price of $1.50 per  share.  These
     warrants  arose  out  of  negotiations   regarding  the  provision  of  the
     $2,910,800  ((pound)2,000,000)  loan facility made available to the Company
     on September 25, 2000 by Mr. Baker who controls FHP.

(5)  Brian Cass, President and Managing Director of LSR, acquired 400,000 shares
     of LSR Common Stock in the Private Placement. Mr. Cass acquired such shares
     through the delivery of two promissory  notes.  Both such promissory notes,
     each in the amount of (pound)211,679 ($406,403), are due on March 28, 2007;
     bear  interest at the rate of 5% per annum;  and are secured by the 200,000
     shares of LSR Common Stock  purchased  with the proceeds of each such loan.
     The due date of each  promissory  note  would be  accelerated  if Mr.  Cass
     voluntarily  resigned from his  employment  with LSR or had his  employment
     terminated.  Repayment  of one of the  promissory  notes  will  be  made by
     automatic   deduction  of   (pound)44,000   ($84,476)  per  year  from  the
     (pound)66,000  ($126,713) per year pension contribution made by the Company
     to a pension  plan  established  by Mr.  Cass.  The other  note is  further
     collateralized  by the  (pound)214,500  ($412,000)  accrued in such pension
     account.  In addition,  one-third of any yearly bonus  received by Mr. Cass
     will be used to reduce principal of the promissory  notes.  Total amount of
     this loan as of December 31, 2004 is  (pound)363,000  ($697,000 at year-end
     foreign exchange rates).

(6)  Julian  Griffiths,  a  former  director  of LSR  and  current  Director  of
     Operations of Huntingdon, acquired 50,000 shares of LSR Common Stock in the
     Private Placement.  Mr. Griffiths acquired such shares through the delivery
     of a promissory note in the principal amount of  (pound)52,817  ($101,403),
     which  was due on March  28,  2007;  bears  interest  at the rate of 5% per
     annum;  and was secured by the 50,000 shares of LSR Common Stock  purchased
     with the proceeds of the loan. This loan was fully repaid during 2003.
<PAGE>

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate fees billed for  professional  services  rendered by Hugh Scott PC
for the audit of the Company's  annual  financial  statements for the year ended
December 31, 2004 and for review of financial  statements  included in Form 10-Q
Filings for 2004 were $377,364, (2003 $107,147).

The  aggregate  fees  billed for  professional  services  rendered by Deloitte &
Touche for the audit of the Company's annual  financial  statements for the year
ended December 31, 2002 were $295,000.

Audit Related Fees

There were no fees billed for  assurance  and related  services by the Company's
principal accountant in either 2004, 2003 or 2002.

Tax Fees

Fees billed for tax  compliance,  tax advice and tax  planning by the  Company's
principal  accountant  in 2004,  2003,  and 2002 was  $27,176,  $10,155,  and $0
respectively.

All Other Fees

The fees billed for services  other than those  reported  above by the Company's
principal  accountant in 2004 were $36,229 (2003 $NIL).  These services were for
work on Sarbanes Oxley and other miscellaneous accounting research.

The  aggregate  fees  billed for  services  other than those  reported  above by
Deloitte  & Touche in 2002 were  $92,000.  Such  services  included  $72,000  in
services  provided in connection  with the Company's  registration  statement on
Forms S-4 regarding LSR's acquisition of Huntingdon.  The remainder of non-audit
fees primarily related to foreign payroll consultation.

The Audit  Committee  has  established  a  pre-approval  process  to review  and
pre-approve  all non-audit fees and services of the principal  accountants  that
are not `de  minimis'  (defined  as  amounts  greater  than 5% of the  principal
accountant's  audit  fees).  There were no such fees to be  approved  in 2004 or
2003.

<PAGE>

                                     PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1.      List of documents filed as part of this report

2.      Index to Financial Statements
        Life Sciences Research, Inc.

        Independent Auditors' Report

        Consolidated Statements of Operations- Years ended
        December 31, 2004, 2003, and 2002

        Consolidated Balance Sheets - December 31, 2004 and 2003

        Consolidated Statements of Changes in Shareholders' (Deficit)/Equity
        and Comprehensive Income/(Loss) Years ended December 31, 2004, 2003,
        and 2002

        Consolidated Statements of Cash Flows - Years ended December 31, 2004,
        2003, and 2002

        Notes to Consolidated Financial Statements

3.      Financial Statement Schedules

        Schedules are omitted  because they are not applicable or the required
        information is shown in the consolidated financial statements or notes
        thereto.

<PAGE>

List of Exhibits

Exhibit No.      Description of Exhibit

2.1  Letter of Intent,  dated August 27, 2001,  between the  Registrant and HLS.
     INCORPORATED  BY REFERENCE TO REGISTRANT'S  REGISTRATION  STATEMENT ON FORM
     S-4, REGISTRATION NUMBER 333-71408.

3.1  Articles of Amendment and Restatement of the Registrant adopted on November
     7, 2001.  INCORPORATED BY REFERENCE TO REGISTRANT'S  REGISTRATION STATEMENT
     ON FORM S-4, REGISTRATION NUMBER 333-71408.

3.2  Bylaws  of  the  Registrant.  INCORPORATED  BY  REFERENCE  TO  REGISTRANT'S
     REGISTRATION STATEMENT ON FORM S-4, REGISTRATION NUMBER 333-71408.

4.1  Subscription  Agreement  dated  August 1, 1991  among HIH  Capital  Limited
     ("HCL"),  HLS, Chase Manhattan Bank Luxembourg  S.A. (the  "Custodian"),  J
     Henry Schroder Wagg & Co. Limited and Others.  INCORPORATED BY REFERENCE TO
     HLS'  ANNUAL  REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED  SEPTEMBER  30,
     1991.

4.2  Trust  Deed,  dated  August 12, 1991 among HCL,  HLS and The Law  Debenture
     Trust  Corporation  plc  INCORPORATED BY REFERENCE TO HLS' ANNUAL REPORT ON
     FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1991.

4.3  Deed  Poll,  dated  August  12,  1991,  executed  by HLS.  INCORPORATED  BY
     REFERENCE  TO HLS'  ANNUAL  REPORT ON FORM 10-K FOR THE  FISCAL  YEAR ENDED
     SEPTEMBER 30, 1991.

4.4  Custodian  Agreement,  dated August 1, 1991 among the  Custodian,  HCL, and
     HLS.  INCORPORATED BY REFERENCE TO HLS'S ANNUAL REPORT ON FORM 10-K FOR THE
     FISCAL YEAR ENDED SEPTEMBER 30, 1991.

4.5  Deed Poll, dated October 16, 2001, executed by Registrant.  INCORPORATED BY
     REFERENCE TO REGISTRANT'S  REGISTRATION STATEMENT ON FORM S-4, REGISTRATION
     NO. 333-71408.

10.1 Security  Agreement  dated April 30, 1998 between  Huntingdon Life Sciences
     Inc., National  Westminster Bank PLC and various other banks.  INCORPORATED
     BY REFERENCE  TO HLS' ANNUAL  REPORT ON FORM 20-F FOR THE FISCAL YEAR ENDED
     DECEMBER 31, 1998.

10.2 An agreement dated August 7, 1998 between, inter alia, HLS, Huntingdon Life
     Sciences  Limited,  Huntingdon Life Sciences Inc. and National  Westminster
     Bank  PLC  replacing  the   facilities   agreement   dated  November  1995.
     INCORPORATED BY REFERENCE TO HLS' ANNUAL REPORT ON FORM 20-F FOR THE FISCAL
     YEAR ENDED DECEMBER 31, 1998.

10.3 An agreement between HLS, Huntingdon Life Sciences Limited, Huntingdon Life
     Sciences Inc. and various banks replacing the third intercreditor agreement
     between the parties dated March 17, 1998. INCORPORATED BY REFERENCE TO HLS'
     ANNUAL REPORT ON FORM 20-F FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.

10.4 A  Management  Services  Agreement  dated  August 7, 1998  between  HLS and
     Focused  Healthcare  Partners.  INCORPORATED  BY  REFERENCE  TO HLS' ANNUAL
     REPORT ON FORM 20-F FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.

10.5 A Deed  of  Undertaking  between  HLS and  Andrew  Baker.  INCORPORATED  BY
     REFERENCE  TO HLS'  ANNUAL  REPORT ON FORM 20-F FOR THE  FISCAL  YEAR ENDED
     DECEMBER 31, 1998.

10.6 Amendment dated January 26, 2000 to the Management Services Agreement dated
     August 7, 1999 between HLS and Focused Healthcare Partners. INCORPORATED BY
     REFERENCE  TO HLS'  ANNUAL  REPORT ON FORM 10-K FOR THE  FISCAL  YEAR ENDED
     DECEMBER 31, 1999.

10.7 Service Contract dated April 29, 1999 between  Huntingdon Life Sciences Ltd
     and Mr. B Cass INCORPORATED BY REFERENCE TO HLS' ANNUAL REPORT ON FORM 20-F
     FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.

10.8 Service Contract dated April 29, 1999 between  Huntingdon Life Sciences Ltd
     and Mr. J Griffiths.  INCORPORATED  BY  REFERENCE TO HLS' ANNUAL  REPORT ON
     FORM 20-F FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.

10.9 Service Contract dated April 29, 1999 between  Huntingdon Life Sciences Ltd
     and Dr F Bonner.  INCORPORATED  BY REFERENCE TO HLS' ANNUAL  REPORT ON FORM
     20-F FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.

10.10A  letter  of  appointment  dated  March  21,  2000  between  HLS and Mr. G
     Balthazar. INCORPORATED BY REFERENCE TO HLS' ANNUAL REPORT ON FORM 10-K FOR
     THE FISCAL YEAR ENDED DECEMBER 31, 1999.

10.11Option  Deed  dated   September  2,  1998  between  HLS  and  Andrew  Baker
     INCORPORATED BY REFERENCE TO HLS' ANNUAL REPORT ON FORM 20-F FOR THE FISCAL
     YEAR ENDED DECEMBER 31, 1998.

10.12Rules of the Huntingdon Life Sciences Group  Unapproved Share Option Scheme
     as amended on June 3, 1998. INCORPORATED BY REFERENCE TO HLS' ANNUAL REPORT
     ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999.

10.13Rules  of  the  Huntingdon  Life  Sciences  Group  Incentive   Option  Plan
     INCORPORATED BY REFERENCE TO HLS' ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
     YEAR ENDED DECEMBER 31, 1999.

10.14Registrant's  2001 Equity  Incentive  Plan.  INCORPORATED  BY  REFERENCE TO
     REGISTRANT'S  REGISTRATION  STATEMENT  ON  FORM  S-4,  REGISTRATION  NUMBER
     333-71408.

10.15Loan Facility  Letter,  dated  September  25, 2000,  between HLS and Andrew
     Baker. INCORPORATED BY REFERENCE TO HLS' ANNUAL REPORT ON FORM 10-K FOR THE
     FISCAL YEAR ENDED DECEMBER 31, 2000.

10.16Amendment  No. 1 to Loan  Facility  Letter,  dated as of February 22, 2001,
     between HLS and Andrew  Baker.  INCORPORATED  BY  REFERENCE  TO HLS' ANNUAL
     REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000.

10.17Amendment  No. 2 to Loan  Facility  Letter,  dated as of March 20, 2001, by
     and among Andrew Baker, HLS and Focused Healthcare  Partners.  INCORPORATED
     BY REFERENCE TO REGISTRANT'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
     ENDED DECEMBER 31, 2002.

10.18Amendment  Agreement  dated  February  19, 2001  relating  to a  Facilities
     Agreement dated August 7, 1998 among HLS,  Huntingdon Life Sciences Limited
     (HLSL),  Huntingdon  Life  Sciences  Inc.  (HLSI),  the Banks  (as  defined
     therein) and  Stephens  Group Inc. as Agent.  INCORPORATED  BY REFERENCE TO
     HLS'  ANNUAL  REPORT ON FORM 10-K FOR THE FISCAL  YEAR ENDED  DECEMBER  31,
     2000.

10.19Fifth  Intercreditor  Agreement,  dated  February  19, 2001 among  Stephens
     Group Inc. (as Agent), HLSF LLC, Allfirst Bank, Comerica Bank, the Company,
     HLSL, HLSI, Andrew Baker and Stephens Group Inc. (as Funder).  INCORPORATED
     BY REFERENCE  TO HLS' ANNUAL  REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
     DECEMBER 31, 2000.

10.20Subscription and Investor Rights Agreement,  dated October 9, 2001, between
     LSR  and  Walter   Stapfer.   INCORPORATED  BY  REFERENCE  TO  REGISTRANT'S
     REGISTRATION   STATEMENT  ON  FORM  S-4,   REGISTRATION   STATEMENT  NUMBER
     333-71408.

10.21Subscription and Investor Rights Agreement,  dated October 9, 2001, between
     LSR and the persons named therein as Investors.  INCORPORATED  BY REFERENCE
     TO REGISTRANT'S  REGISTRATION STATEMENT ON FORM S-4, REGISTRATION STATEMENT
     NUMBER 333-71408.

10.22Warrant,  dated October 9, 2001, issued by the Registrant.  INCORPORATED BY
     REFERENCE TO REGISTRANT'S  REGISTRATION STATEMENT ON FORM S-4, REGISTRATION
     STATEMENT NUMBER 333-71408.

10.23Form of Director's  Irrevocable  Undertaking.  INCORPORATED BY REFERENCE TO
     REGISTRANT'S  REGISTRATION  STATEMENT ON FORM S-4,  REGISTRATION  STATEMENT
     NUMBER 333-71408.

10.24Inducement  Agreement,  dated  October 9, 2001 between the  Registrant  and
     HLS.  INCORPORATED BY REFERENCE TO REGISTRANT'S  REGISTRATION  STATEMENT ON
     FORM S-4, REGISTRATION STATEMENT NUMBER 333-71408.

10.25Warrant,  dated June 11, 2002,  issued by the  Registrant.  INCORPORATED BY
     REFERENCE TO  REGISTRANT'S  PROXY  STATEMENT ON SCHEDULE 14A, DATED MAY 10,
     2002.

10.26Service  Agreement,  dated as of April 1,  2000,  between  Huntingdon  Life
     Sciences,  Inc.  and  Richard  Michaelson.  INCORPORATED  BY  REFERENCE  TO
     REGISTRANT'S  ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
     31, 2002.

10.27Amendment No. 1 to Service  Agreement  between  Huntingdon  Life  Sciences,
     Inc. and Richard  Michaelson,  dated as of April 15, 2002.  INCORPORATED BY
     REFERENCE TO  REGISTRANT'S  ANNUAL  REPORT ON FORM 10-K FOR THE FISCAL YEAR
     ENDED DECEMBER 31, 2002.

10.28Amendment  No. 1 to Service  Agreement  between  Huntingdon  Life  Sciences
     Limited  and  Brian  Cass,  dated as of April  15,  2002.  INCORPORATED  BY
     REFERENCE TO  REGISTRANT'S  ANNUAL  REPORT ON FORM 10-K FOR THE FISCAL YEAR
     ENDED DECEMBER 31, 2002.

10.29Amendment  No. 1 to Service  Agreement  between  Huntingdon  life  Sciences
     Limited and Julian Griffiths,  dated as of April 15, 2002.  INCORPORATED BY
     REFERENCE TO  REGISTRANT'S  ANNUAL  REPORT ON FORM 10-K FOR THE FISCAL YEAR
     ENDED DECEMBER 31, 2002.

10.30Amendment No. 2 to Management  Services  Agreement between  Huntingdon Life
     Sciences Group plc and Focused Healthcare  Partners,  dated as of April 15,
     2002.  INCORPORATED BY REFERENCE TO REGISTRANT'S ANNUAL REPORT ON FORM 10-K
     FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002.

14   Code of Ethics - FILED HEREWITH

21.1 Subsidiaries - FILED HEREWITH

31.1 Certification  of Chief  Executive  Officer  pursuant  to SEC Rule  13(a) -
     14(a). FILED HEREWITH

31.2 Certification  of Chief  Financial  Officer  pursuant  to SEC Rule  13(a) -
     14(a). FILED HEREWITH

32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.Section 1350.
     FILED HEREWITH

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.Section 1350.
     FILED HEREWITH

99.1 Press Release dated March 7, 2005,  announcing fourth quarter and full year
     2004 results.  INCORPORATED BY REFERENCE TO REGISTRANT'S  CURRENT REPORT ON
     FORM 8-K DATED MARCH 7, 2005.

<PAGE>


                                    SIGNATURE

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

                           Life Sciences Research Inc.
                                  (Registrant)



By:      /s/ Andrew Baker
Name:    Andrew Baker
Title:   Chairman and Chief Executive Officer
         and Director - Principal Executive Officer
Date:    March 30, 2005


By:      /s/ Richard Michaelson
Name:    Richard Michaelson
Title:   CFO & Secretary - Principal Financial and Accounting Officer
Date:    March 30, 2005


<PAGE>


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.

Signature                    Title              Date

/s/ Gabor Balthazar          Director           March 30, 2005
Gabor Balthazar

/s/ Brian Cass               Director           March 30, 2005
Brian Cass

/s/ Afonso Junqueiras        Director           March 30, 2005
Afonso Junqueiras

/s/ Yaya Sesay               Director           March 30, 2005
Yaya Sesay